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Quarter Report: 2013 September (Form 10-Q)
Bravo Multinational Inc. - Quarter Report: 2013 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission file number 000-53505
GOLDLAND HOLDINGS CO.
(Exact name of small business issuer as specified in its charter)
| |
DELAWARE
| 90-0350814
|
(State or other jurisdiction of incorporation or organization)
| (IRS Employer Identification No.)
|
1001 3rd Ave., W., Bradenton, Florida 34205
(Address of principal executive offices)
(941) 761-7819
(Issuer’s telephone number, including area code)
_______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]Non-accelerated filer [ ] Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 398,288,809 shares as of November 1, 2013.
1
GOLDLAND HOLDINGS CO.
FORM 10-Q REPORT INDEX
PART I. FINANCIAL INFORMATION
3
Item 1. Financial Statements
3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
11
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
15
Item 4. Controls and Procedures.
15
PART II. OTHER INFORMATION.
15
Item 1. Legal Proceedings.
15
Item 1A. Risk Factors.
16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
16
Item 3. Defaults upon Senior Securities.
16
Item 4. Mine Safety Disclosures.
16
Item 5. Other Information.
16
Item 6. Exhibits.
16
SIGNATURES
17
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLDLAND HOLDINGS CO.
BALANCE SHEET
SEPTEMBER 30, 2013 AND DECEMBER 31, 2012
| | | |
ASSETS
| September 30, 2013
(unaudited)
| | December 31, 2012
(audited)
|
Cash and cash equivalents
| $ -
| | $ -
|
Prepaid expenses
| 494,549
| | 52,498
|
Other assets
| 3,000
| | 3,000
|
Total current assets
| 497,549
| | 55,498
|
| | | | |
Mining Properties
| 360,000
| | 360,000
|
| | | | |
Total Assets
| $ 857,549
| | $ 415,498
|
| | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT
| | | |
| | | | |
Liabilities:
| | | |
Accounts payable
| $ 99,520
| | $ 70,470
|
Due to related parties
| 713,129
| | 1,168,882
|
Total current liabilities (all current)
| 812,649
| | 1,239,352
|
| | | | |
| | | | |
Stockholders' deficit:
| | | |
Preferred stock, 5,000,000 shares authorized
| -
| | -
|
Common stock, par value $0.0001, 400,000,000 shares authorized, 398,288,809 and 318,604,604 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively
| 39,829
| | 31,860
|
Additional paid in capital
| 12,166,113
| | 10,598,127
|
Accumulated deficit
| (12,161,042)
| | (11,453,841)
|
Total stockholders' deficit
| 44,900
| | (823,854)
|
| | | | |
Total Liabilities and Stockholders' Equity (Deficit)
| $ 857,549
| | $ 415,498
|
See accompanying notes to financial statements
3
GOLDLAND HOLDINGS CO.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
| | | |
| | 2013
| | 2012
|
| | | | |
Revenues:
| $ 750,000
| | $ 750,000
|
| | | | |
Expenses:
| | | |
Consulting fees
| 60,441
| | 121,291
|
Compensation expense
| 1,365,528
| | 1,151,142
|
General and administrative
| 31,232
| | 17,116
|
Total expenses
| 1,457,201
| | 1,289,549
|
| | | | |
Loss from operations
| (707,201)
| | (539,549)
|
| | | | |
Interest expense
| -
| | -
|
| | | | |
Net Loss
| $ (707,201)
| | $ (539,549)
|
| | | | |
| | | | |
Net loss per common share – basic and fully diluted
| $ -
| | $ -
|
| | | | |
Weighted average number of common shares outstanding – basic and fully diluted
| 397,046,058
| | 274,697,227
|
See accompanying notes to financial statements
4
GOLDLAND HOLDINGS CO.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
| | | |
| | 2013
| | 2012
|
| | | | |
Revenues:
| $ 250,000
| | $ 250,000
|
| | | | |
Expenses:
| | | |
Consulting fees
| 12,965
| | 14,986
|
Compensation expense
| 455,176
| | 383,714
|
General and administrative
| 21,332
| | 6,301
|
Total expenses
| 489,473
| | 405,001
|
| | | | |
Loss from operations
| (239,473)
| | (155,001)
|
| | | | |
Interest expense
| -
| | -
|
| | | | |
Net Loss
| $ (239,473)
| | $ (155,001)
|
| | | | |
| | | | |
Net loss per common share – basic and fully diluted
| $ -
| | $ -
|
| | | | |
Weighted average number of common shares outstanding – basic and fully diluted
| 398,288,809
| | 276,332,070
|
See accompanying notes to financial statements
5
GOLDLAND HOLDINGS CO.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
| | | |
| | 2013
| | 2012
|
Cash flows from operating activities:
| | | |
Net income (loss)
| $ (707,201)
| | $ (539,549)
|
Adjustments to reconcile net earnings (loss) to net cash (used in) operating activities:
| | | |
Issuance of common stock for services
| 49,251
| | 103,500
|
Issuance of common stock for compensation
| 1,526,704
| | -
|
Increase (decrease) in operating assets and liabilities:
| | | |
Accounts payable and accrued expenses
| 29,050
| | (19,342)
|
Prepaid expenses
| (442,051)
| | (370,587)
|
Due to related party
| (455,753)
| | 826,227
|
Net cash provided by (used in) operating activities
| -
| | 249
|
| | | | |
Net increase (decrease) in cash and cash equivalents
| -
| | 249
|
Cash and equivalents at beginning of period
| -
| | 276
|
Cash and equivalents at end of period
| $ -
| | $ 525
|
| | | | |
| | |
| | 2013
| 2012
|
SUPPLEMENTARY DISCLOSURE OF NONCASH TRANSACTIONS
| | |
| | | |
Shares issued for services
| $ 49,251
| $ 103,500
|
Shares issued for compensation
| $ 1,526,704
| $ -
|
Non-cash lease income
| $ (750,000)
| $ (750 000)
|
See accompanying notes to financial statements.
6
GOLDLAND HOLDINGS CO.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
(UNAUDITED)
| | | | | | | |
| | Common Shares
| Preferred Shares
| Common Stock, At Par
| Preferred Stock
| Additional Paid in Capital
| Accumulated Deficit
| Total Shareholder's Deficit
|
| | | | | | | | |
Balance at 12/31/12
| 318,604,604
| -
| $ 31,860
| $ -
| $ 10,598,127
| $ (11,453,841)
| $ (823,854)
|
| | | | | | | | |
Shares issued for services
| 3,349,017
| -
| 335
| -
| 48,916
| -
| 49,251
|
Shares issued for compensation
| 76,335,188
| | 7,634
| | 1,519,070
| | 1,526,704
|
Net loss
| -
| -
| -
| -
| -
| (707,201)
| (707,201)
|
Balance at 09/30/13
| 398,288,809
| -
| $ 39,829
| $ -
| $ 12,166,113
| $ (12,161,042)
| $ 44,900
|
See accompanying notes to financial statements.
7
GOLDLAND HOLDINGS CO.
NOTES TO INTERIM FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
GoldLand Holdings Co, (the “Company,” “we” or “us”) was originally formed as Montrose Ventures, Inc. in the State of Delaware on May 25, 1989. On April 23, 1996, the Company’s name was changed to Java Group, Inc., and on September 1, 2004 the name was changed to Consolidated General Corp. On August 7, 2007, the Company’s name was changed to GoldCorp Holdings Co. On October 15, 2010, our name was changed to GoldLand Holdings Co.
The Company owns land and lease claims on War Eagle Mountain in the state of Idaho. The Company has entered into a lease agreement with Silver Falcon Mining, Inc. (“Silver Falcon”) under which Silver Falcon is entitled to mine the land and the Company is entitled to lease payments of $1,000,000 per year and a 15% royalty on all minerals extracted by Silver Falcon from tailing piles on our land or through shafts or adits located on our land.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue is recognized when earned according to lease and royalty agreements. Lease income is recognized as earned on a monthly basis according to the terms of the lease. Royalty income is recognized as minerals are extracted and refined.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value.
Facilities and equipment
Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. The facilities and equipment are depreciated using the straight-line method at rates sufficient to depreciate such costs over the estimated productive lives, which do not exceed the related estimated mine lives, of such facilities based on proven and probable reserves.
Impairment of Long-Lived Assets
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, price trends and related factors), production levels and operating costs of production and capital, all based on life-of-mine plans. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves and other material that is not part of the measured, indicated or
8
inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold or other commodities that will be obtained after taking into account losses during mineral processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties.
Goodwill
The Company evaluates, on at least an annual basis during the fourth quarter, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. To accomplish this, the Company compares the estimated fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds its estimated fair value, the Company compares the implied fair value of the reporting unit’s goodwill to its carrying amount, and any excess of the carrying value over the fair value is charged to earnings. The Company’s fair value estimates are based on numerous assumptions and it is possible that actual fair value will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties.
Stock Based Compensation
The Company has issued and may issue stock in lieu of cash for certain transactions. The fair value of the stock, which is based on comparable cash purchases, third party quotations, or the value of services, whichever is more readily determinable, is used to value the transaction
Use of Estimates
The Company’s Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Company’s Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
Basic and Diluted Per Common Share
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Because we have incurred net losses, basic and diluted loss per share are the same since additional potential common shares would be anti-dilutive.
9
Research and Development
The Company expenses research and development costs as incurred.
NOTE 3 - RELATED PARTY TRANSACTIONS
In January 2013, Silver Falcon issued 12,000,000 shares of its Class A Common Stock valued at $294,000 to various officers of Goldland (who are also Silver Falcon officers) to pay compensation owed to them by Goldland for part of the year 2013. The value of the shares issued by Silver Falcon was recorded as an amount due to related party on our balance sheet.
As of September 30, 2013, the amount due to Silver Falcon was $ 708,629, the amount due to Diamond Creek Mill, Inc., a wholly-owned subsidiary of Silver Falcon, was $2,650, the amount due from Pierre Quilliam was $4,100, the amount due from Palmirs, Inc., a wholly-owned subsidiary of Silver Falcon, was $800, and the amount due to Bisell Investments, LLC was $6,750. The amounts are non-interest bearing, unsecured demand loans.
Silver Falcon is obligated to pay Goldland $83,333 per month as rent under a mining lease. Instead of paying the rent in cash, Silver Falcon has, since January 1, 2012, satisfied its rental obligation by reductions in the amount it is owed from Goldland.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In August 2010, Richard (Robert) Corrigan, acting as a debtor in possession in his personal bankruptcy case, filed an adversary proceeding against us to recover amounts due under a consulting agreement dated July 1, 2009. The consulting agreement provided that Mr. Corrigan would provide certain consulting, mapping and assaying services on three lode claims owned by us on War Eagle Mountain. The consulting agreement provided that Mr. Corrigan’s compensation would be a bonus of $150,000, which would be payable in the form of 150,000 shares of common stock, and monthly consulting payments of $5,000 per month. The consulting agreement also provided that Mr. Corrigan was entitled to monthly transportation expenses of $250 per month. We terminated Mr. Corrigan on December 8, 2009 for nonperformance. In 2011, Mr. Corrigan’s case was converted to a Chapter 7 case. In November 2011, Mr. Corrigan’s bankruptcy trustee filed an amended complaint in the adversary proceeding, in which Chapter 7 trustee seeks recovery of the $150,000 bonus and the balance of the unpaid consulting fees and travel expense allowance of $60,900, for a total of $210,900, plus interest and attorney’s fees.
On June 19, 2013, the Company learned that the District Court for the Third Judicial District of the State of Idaho for the County of Owyhee entered a default judgment against the Company in the case. The default judgment grants a judgment against the Company in the amount of $284,449. The Company retained new counsel who filed a motion to vacate the default judgment. On September 19, 2013, the court entered a memorandum opinion setting aside the default judgment. As a result, the Company plans to continue defending the action vigorously.
NOTE 5 - CAPITAL STOCK
At September 30, 2013, the Company's authorized capital stock was 400,000,000 shares of Common Stock, par value $0.0001 per share, and 5,000,000 shares of Preferred Stock, par value $0.0001 per share. On that date, the Company had outstanding 398,288,809 shares of Common Stock, and no shares of Preferred Stock. During the three months ended September 30, 2013, the Company did not issue any shares of common stock.
NOTE 6 – GOING CONCERN
10
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. However, the Company has incurred a net loss of ($707,201) for the nine months ended September 30, 2013. The Company has remained in business primarily through the deferral of salaries by management, loans from the Company’s chief executive officer, loans from a significant shareholder, and the issuance of shares of common stock to procure certain services. The Company intends on financing its future development activities from the same sources, until such time that funds provided by operations are sufficient to fund working capital requirements.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
NOTE 7 – PREPAID EXPENSES
In January 2013, Silver Falcon issued 12,000,000 shares of its Class A Common Stock valued at $294,000 to various officers of Goldland (who are also Silver Falcon officers) to pay compensation owed to them by Goldland for the year 2013. In January 2013, the Company issued 76,335,188 of common stock valued at $1,526,704 to pay compensation to our officers for 2013. We capitalized these payments as a prepaid expense, and are amortizing the amounts over the twelve months of 2013.
NOTE 8 – ACQUISITION OF CASINO EQUIPMENT AND RELATED TRANSACTIONS
On September 19, 2013, our wholly-owned subsidiary, Universal Entertainment SAS, Inc., entered into an Asset Purchase Agreement with Universal Entertainment SAS, Ltd., a corporation formed under the laws of the Country of Colombia, to acquire certain casino equipment (the “Equipment”). The Asset Purchase Agreement was subsequently amended in November 2013. Under the Asset Purchase Agreement, as amended, the Company agreed to effect the following transactions:
·
The Company will acquire the Equipment for 17,450,535 shares of the Company’s Common Stock after giving effect to a proposed one for ten reverse stock split.
·
At closing of the purchase of the Equipment, the Company will enter into a lease (the “Lease”) of the Equipment to VOMBLOM & POMARE S.A., a company formed under the laws of Colombia, which provides for lease payments of $700,000 per year, payable $58,333 per month, and a term of five years with one five year renewal option.
·
The Company will effect a one for ten reverse split of its common stock.
·
The Company will issue 17,000,000 shares of post-split common stock to various officers, directors and significant shareholders as compensation for past services and support of the Company.
·
The Company will enter into agreements to cancel all of its outstanding options for $100 payable to each of the optionholders.
·
The Company will enter into consulting agreements with six individuals, which provide for cumulative annual compensation of $1,235,000 payable in shares of the Company’s common stock on a trimester basis, and the issuance of 19,977,980 shares of post-split common stock as signing bonuses.
11
The Asset Purchase Agreement includes a number or representations and warranties of the seller, including that the seller is duly organized and in good standing; that the seller is authorized to enter into the Asset Purchase Agreement and consummate the transactions provided for therein; that the Company will acquire good title to the Equipment free and clear of all liens, claims or encumbrances; that the seller is not acquiring the Company’s shares with a view to redistribute them; that the seller has reviewed the Company’s SEC filings
The closing of the Equipment Acquisition is conditioned on the completion of a one for ten reverse split of the Company’s common stock, all of the representations and warranties of both parties being true as of the closing date, the execution of the Lease, the issuance of the bonus shares described below, the cancellation of the options described below, the execution of the consulting agreements described below, among other things.
NOTE 9 – SUBSEQUENT EVENTS
In November 2013, the Company amended the Asset Purchase Agreement to purchase certain casino equipment, as described in Note 8 herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Disclosure Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Forward Looking Statements”). All statements other than statements of historical fact included in this report are Forward Looking Statements. In the normal course of its business, the Company, in an effort to help keep its shareholders and the public informed about the Company’s operations, may from time-to-time issue certain statements, either in writing or orally, that contain or may contain Forward-Looking Statements. Although the Company believes that the expectations reflected in such Forward Looking Statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, past and possible future, of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by the Company, or projections involving anticipated revenues, earnings, levels of capital expenditures or other aspects of operating results. All phases of the Company operations are subject to a number of uncertainties, risks and other influences, many of which are outside the control of the Company and any one of which, or a combination of which, could materially affect the results of the Company’s proposed operations and whether Forward Looking Statements made by the Company ultimately prove to be accurate. Such important factors (“Important Factors”) and other factors could cause actual results to differ materially from the Company’s expectations are disclosed in this report. All prior and subsequent written and oral Forward Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Important Factors described below that could cause actual results to differ materially from the Company’s expectations as set forth in any Forward Looking Statement made by or on behalf of the Company.
Overview
12
On September 14, 2007, we acquired an interest in 174.82 acres of land on War Eagle Mountain in Idaho from two of our major shareholders for a total of 90,000,000 shares of our common stock. We acquired a 100% interest in 103 acres, and a 29.166% interest in 71.82 acres. We also lease five placer claims on War Eagle Mountain from the U.S. Bureau of Land Management, each of which covers approximately 20 acres, or approximately 100 acres in total. Subsequently, as a result of a survey of portions of War Eagle Mountain, we allowed our unpatented placer claims to lapse and reapplied for new unpatented lode claims covering the same veins. The new unpatented lode claims cover more acreage and are better oriented in the direction of the three veins in the mountain. The new unpatented lode claims cover 282.85 acres, as compared to 103 acres covered by the unpatented places claims that they replaced.
On October 11, 2007, we entered into a lease of our mineral rights to Silver Falcon, which is responsible for all mining activities on War Eagle Mountain. We are entitled to annual lease payments of $1,000,000, payable on a monthly basis, a monthly nonaccountable expense reimbursement of $10,000 during any month in which ore is mined from the leased premises, and a royalty of 15% of all amounts paid to Silver Falcon from the processing of ore produced from tailing piles on the premises or through shafts or adits located on the premises. The lease initially provided that lease payments must commence April 1, 2008. Because Silver Falcon has been unable to commence operations according to its original schedule, we have agreed to extend the commencement date several times, to January 1, 2012, and extended the lease term by an equal amount each time. The lease currently expires on October 1, 2026.
To date, Silver Falcon’s operations have consisted of processing tailings left on the mine site from prior mining operations. Silver Falcon has constructed a milling operation at the base of the mountain, and is in the process of constructing a metallurgical lab to further process concentrate produced in its milling operation. Silver Falcon has also made substantial capital improvements to the mountain and roads. Before Silver Falcon begins mining raw ore from the mountain, it will need to complete a confirmation phase designed to locate and prove up reserves in the mountain in order to develop a comprehensive plan for the full development of the mine site. Later, after Silver Falcon completes a confirmation program to prove up and locate reserves on the property, and make further capital improvements to the mine site, it plans to begin mining and processing raw ore.
Our revenue, profitability, and future growth rate depend substantially on factors beyond our control, including Silver Falcon’s success in the commencement of mining operations on our properties, as well as economic, political, and regulatory developments and fluctuations in the market prices of minerals processed from minerals derived from our properties.
Results of Operations
Nine Months ended September 30, 2013 and 2012
We reported revenues of $750,000 and $750,000 during the nine months ended September 30, 2013 and 2012, respectively. All of our revenues for both periods constitute base rental payments under our lease with Silver Falcon.
We reported losses from operations during the nine months ended September 30, 2013 and 2012 of ($707,201) and ($539,549), respectively. The increased operating loss in 2013 as compared to 2012 was largely attributable to an increase in compensation expense of $214,386 offset by a decrease in consulting fees of $60,850.
We reported a net loss during the nine months ended September 30, 2013 and 2012 of ($707,201) and ($539,549), respectively.
Three Months ended September 30, 2013 and 2012
13
We reported revenues of $250,000 and $250,000 during the three months ended September 30, 2013 and 2012, respectively. All of our revenues for both periods constitute base rental payments under our lease with Silver Falcon.
We reported losses from operations during the three months ended September 30, 2013 and 2012 of ($239,473) and ($155,001), respectively. The increased operating loss in 2013 as compared to 2012 was largely attributable to an increase in compensation expense of $71,462 offset by a decrease in consulting fees of $2,021.
We reported a net loss during the three months ended September 30, 2013 and 2012 of ($239,473) and ($155,001), respectively.
Liquidity and Sources of Capital
The following table sets forth the major sources and uses of cash for the nine months ended September 30, 2012 and 2013:
| | | |
| | Nine months ended September 30,
|
| | 2012
| | 2013
|
Net cash provided by (used) in operating activities
| $ 249
| | $ -
|
Net cash provided by (used) in investing activities
| -
| | -
|
Net cash provided by (used) in financing activities
| -
| | -
|
Net (decrease) increase in unrestricted cash and cash equivalents
| $ 249
| | $ -
|
| | | | |
Comparison of 2012 and 2013
Operating activities (used) contributed $249 of cash in 2012, as compared to $0 of cash in 2013. Major non-cash items that affected our cash flow from operations in 2012 were increases in prepaid expenses of $370,587, offset by an increase in advances payable to a related party of $826,227.
Major non-cash items that affected our cash flow from operations in 2013 were an increase in prepaid expenses of $442,051 and reduced advances payable to a related party of $455,753, offset by an increase in stock issued for compensation of $1,526,704.
There were no investing or financing activities in either 2012 or 2013.
Current Liquidity
Our balance sheet as of September 30, 2013 reflects cash and current assets of $497,549, current liabilities of $812,649, and a working capital deficit of ($315,100). However, most of our current liabilities consist of balances due to related parties, and most of our current assets consist of prepaid compensation paid to our officers which is capitalized as a prepaid expense.
We have executed a lease agreement with Silver Falcon, which provides for an annual lease payment of $1,000,000 payable in monthly installments, and a royalty equal to 15% of the proceeds of any ore produced from tailing piles or through shafts or adits located on our property on War Eagle Mountain. Effective January 1, 2012, Silver Falcon resumed making the monthly lease payments due under our lease with Silver Falcon; however, the lease payments are being satisfied by crediting the payment amount against the amount that we owe Silver Falcon, rather than by cash payments.
14
Until we begin receiving cash payments from Silver Falcon, we will be dependent on the deferral of salaries by our management, the issuance of shares of our common stock for services, and on loans from Silver Falcon, our officers and a significant shareholder to pay other administrative expenses.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2 of Notes to Financial Statements. At this time, we are not required to make any material estimates and assumptions that affect the reported amounts and related disclosures of assets, liabilities, revenue, and expenses. However, as we begin actual mining operations, we may be required to make estimates and assumptions typical of other companies in the mining business.
For example, we will be required to make critical accounting estimates related to future metals prices, obligations for environmental, reclamation, and closure matters, mineral reserves, and accounting for business combinations. The estimates will require us to rely upon assumptions that were highly uncertain at the time the accounting estimates are made, and changes in them are reasonably likely to occur from period to period. Changes in estimates used in these and other items could have a material impact on our financial statements in the future.
Our estimates will be based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Going Concern
The Company's financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. However, the Company has incurred a net loss of ($707,201) for the nine months ended September 30, 2013. The Company has remained in business primarily through the deferral of salaries by management, loans from the Company’s chief executive officer, loans from a significant shareholder and the issuance of shares of common stock to procure certain services. The Company intends on financing its future development activities from the same sources, until such time that funds provided by operations are sufficient to fund working capital requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Because the Company is a smaller reporting company, it is not required to provide the information called for by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
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Pierre Quilliam, our chief executive officer, and Thomas C. Ridenour, our chief financial officer, are responsible for establishing and maintaining our disclosure controls and procedures. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to the our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2013. Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the evaluation date, such controls and procedures were effective.
Changes in internal controls
There were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
P
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In August 2010, Richard Corrigan, acting as a debtor in possession in his personal bankruptcy case, filed an adversary proceeding against the Company to recover amounts due under a consulting agreement dated July 1, 2009. The consulting agreement provided that Mr. Corrigan would provide certain consulting, mapping and assaying services on three lode claims owned by the Company on War Eagle Mountain. The consulting agreement provided that Mr. Corrigan’s compensation would be a bonus of $150,000, which would be payable in the form of 150,000 shares of common stock, and monthly consulting payments of $5,000 per month. The consulting agreement also provided that Mr. Corrigan was entitled to monthly transportation expenses of $250 per month. The Company terminated Mr. Corrigan on December 8, 2009 for nonperformance. In 2011, Mr. Corrigan’s case was converted to a Chapter 7 case. In November 2011, Mr. Corrigan’s bankruptcy trustee filed an amended complaint in the adversary proceeding, in which Chapter 7 trustee seeks recovery of the $150,000 bonus and the balance of the unpaid consulting fees and travel expense allowance of $60,900, for a total of $210,900, plus interest and attorney’s fees.
On June 19, 2013, the Company learned that the District Court for the Third Judicial District of the State of Idaho for the County of Owyhee entered a default judgment against the Company in the case. The default judgment grants a judgment against the Company in the amount of $284,449. The Company retained new counsel who filed a motion to vacate the default judgment. On September 19, 2013, the court entered a memorandum opinion setting aside the default judgment. As a result, the Company plans to continue defending the action vigorously.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS IN SENIOR SECURITIES.
None.
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ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
| | | |
|
|
No.
| Description
|
31.1
| Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
|
32.1
| Section 1350 Certification of Chief Executive Officer
|
31.2
| Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
|
32.2
| Section 1350 Certification of Chief Financial Officer
|
EX-101.INS
| XBRL INSTANCE DOCUMENT
|
EX-101.SCH
| XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
EX-101.CAL
| XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
EX-101.DEF
| XBRL TAXONOMY DEFINITION LINKBASE
|
EX-101.LAB
| XBRL TAXONOMY EXTENSION LABELS LINKBASE
|
EX-101.PRE
| XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
| | |
| GOLDLAND HOLDINGS CO.
|
Date: November 14, 2013
|
/s/ Pierre Quilliam
|
| By: Pierre Quilliam, Chief Executive Officer
(principal executive officer)
|
| | |
Date: November 14, 2013
|
/s/ Thomas C. Ridenour
|
| | By: Thomas C. Ridenour, Chief Financial Officer
(principal financial and accounting officer)
|
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