Golden Matrix Group, Inc. - Quarter Report: 2009 October (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
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[X]
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Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
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For
the quarterly period ended October 31,
2009
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[ ]
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Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
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For
the transition period __________ to __________
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Commission
File Number: 333-153881
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Source Gold
Corp.
(Exact
name of small business issuer as specified in its charter)
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Nevada
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N/A
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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100-11245
Valley Ridge Dr. N.W,
Calgary, Alberta, Canada T3B
5V4.
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(Address
of principal executive offices)
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(403) 922-8562
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(Issuer’s
telephone number)
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_______________________________________________________
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(Former
name, former address and former fiscal year, if changed since last
report)
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Check
whether the issuer (1) 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 issuer 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). [ ]
Yes [ ] No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
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[ ]
Large accelerated filer
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[ ] Accelerated
filer
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[ ]
Non-accelerated filer
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[X] Smaller
reporting company
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). [ ] Yes [X]
No
State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 44,900,000 common shares as of December 14,
2009.
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TABLE OF
CONTENTS
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Page
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PART I – FINANCIAL INFORMATION
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PART II – OTHER INFORMATION
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PART
I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Our
unaudited interim consolidated financial statements included in this Form
10-Q are as follows:
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These
unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form
10-Q. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating
results for the interim period ended October 31, 2009 are not necessarily
indicative of the results that can be expected for the full year.
SOURCE GOLD CORP.
（Formerly Ibex
Resources Corp.）
(An
Exploration Stage Company)
INTERIM
CONSOLIDATED BALANCE SHEETS
October
31, 2009 and July 31, 2009
(Stated
in US Dollars)
(Unaudited)
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ASSET
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October 31
2009
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July 31
2009
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|||
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Current
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|||||
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Cash
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$ | 53,517 | $ | 8,014 | |
| $ | 53,517 | $ | 8,014 | ||
| LIABILITIES | |||||
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Current
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|||||
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Accounts payable and accrued
liabilities
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$ | 31,589 | $ | 4,690 | |
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Promissory
note payable – Note 8
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1,866 | 1,842 | |||
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Due to related party – Note
5
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3,000 | 1,000 | |||
| 36,455 | 7,532 | ||||
| STOCKHOLDERS’ EQUITY | |||||
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Preferred
stock, $0.001 par value 20,000,000 shares
authorized, none outstanding
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|||||
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Common
stock, $0.001 par value – Note 6 180,000,000
shares
authorized 44,800,000
( July 31, 2009: 44,400,000) shares issued
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44,800 | 44,400 | |||
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Additional
paid in capital
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167,575 | 67,975 | |||
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Deficit
accumulated during the exploration stage
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(195,313) | (111,893) | |||
| 17,062 | 482 | ||||
| $ | 53,517 | $ | 8,014 | ||
Nature
of Operations and Ability to Continue as a Going Concern –
Note 2
Commitments
–
Notes 7 and 9
Subsequent
events – Notes 6, 7 and 9
(An
Exploration Stage Company)
INTERIM
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
for
the three month period ended October 31, 2009, the three month period ended
October 31, 2008
and
the period from June 4, 2008 (Date of Inception) to October 31,
2009
(Stated
in US Dollars)
(Unaudited)
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Three Months Ended
October 31, 2009
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Three Months Ended
October 31, 2008
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Cumulative
June 4, 2008
(Date of Inception) to
October 31, 2009
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||||||
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Expenses
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||||||||
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Accounting and audit
fees
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$ | 17,891 | $ | 15,762 | $ | 51,076 | ||
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Bank charges
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67 | 206 | 468 | |||||
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Foreign exchange
loss
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1,045 | 8 | 4,325 | |||||
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Legal fees
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13,202 | 13,677 | 44,446 | |||||
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Management fees – Note
5
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3,000 | 3,000 | 16,000 | |||||
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Mineral property option
costs
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46,640 | 1,875 | 50,357 | |||||
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Mineral property exploration
costs
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- | 12,250 | 16,685 | |||||
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Office expenses
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600 | 600 | 3,200 | |||||
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Regulatory
expenses
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- | - | 4,000 | |||||
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Transfer agent and filing
fees
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975 | 945 | 4,756 | |||||
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Net
loss and comprehensive loss for the period
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$ | (83,420) | $ | (48,323) | $ | (195,313) | ||
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Basic
and diluted loss per share
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$ | (0.00) | $ | (0.00) | ||||
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Weighted
average number of shares outstanding
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44,413,043 | 44,400,000 | ||||||
SEE ACCOMPANYING NOTES
SOURCE GOLD CORP.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the
three month period ended October 31, 2009, the three month period ended October
31, 2008
and the
period from June 4, 2008 (Date of Inception) to October 31, 2009
(Stated
in US Dollars)
(Unaudited)
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Three Months Ended
October 31, 2009
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Three Months Ended
October 31, 2008
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Cumulative
June 4, 2008
(Date of Inception) to
October 31, 2009
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Cash
Flows used in Operating Activities
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Net
loss for the period
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$ | (83,420) | $ | (48,323) | $ | (195,313) | ||
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Items
not involving cash:
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Mineral property option
costs
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- | - | 1,842 | |||||
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Foreign exchange and adjustment
on promissory note
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24 | - | 24 | |||||
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Changes in non-cash working
capital items:
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Prepaid
expenses
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- | 87 | - | |||||
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Accounts payable and accrued
liabilities
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26,899 | (4,675) | 31,589 | |||||
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Net
cash provided by (used in) operating activities
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(56,497) | (52,911) | (161,858) | |||||
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Cash
Flows from Financing Activities
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Capital stock
issued
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100,000 | - | 212,375 | |||||
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Increase (decrease) in due to
related party
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2,000 | (1,200) | 3,000 | |||||
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Net
cash provided by (used in) provided by financing
activities
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102,000 | (1,200) | 215,375 | |||||
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(Decrease)
increase in cash during the period
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45,503 | (54,111) | 53,517 | |||||
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Cash,
beginning of the period
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8,014 | 116,300 | - | |||||
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Cash,
end of the period
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$ | 53,517 | $ | 62,189 | $ | 53,517 | ||
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Supplemental
information
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||||||||
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Interest
and taxes paid in cash
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$ | - | $ | - | $ | - | ||
SEE ACCOMPANYING NOTES
SOURCE GOLD CORP.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
INTERIM
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
for the
period from June 4, 2008 (Date of Inception) to October 31, 2009
(Stated
in US Dollars)
(Unaudited)
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Common
Shares
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Additional
Paid
In
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Deficit
Accumulated
During
the
Exploration
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|||||||||||||
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Number
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Cash
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Capital
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Stage
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Total
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Capital
stock issued for
cash: –
at $0.002
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24,000,000 | $ | 24,000 | $ | 24,000 | $ | - | $ | 48,000 | ||||||
| – at $0.0035 | 20,400,000 | 20,400 | 51,000 | - | 71,400 | ||||||||||
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Less:
commission
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- | - | (7,025) | - | (7,025) | ||||||||||
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Net
loss for the period
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- | - | - | (9,089) | (9,089) | ||||||||||
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Balance
July 31, 2008
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44,400,000 | 44,400 | 67,975 | (9,089) | 103,286 | ||||||||||
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Net
loss for the year
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- | - | - | (102,804) | (102,804) | ||||||||||
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Balance
July 31, 2009
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44,400,000 | 44,400 | 67,975 | (111,893) | 482 | ||||||||||
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Capital
stock issued for
cash:
– at $0.25
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400,000 | 400 | 99,600 | - | 100,000 | ||||||||||
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Net
loss for the period
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- | - | - | (83,420) | (83,420) | ||||||||||
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Balance
October 31, 2009
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44,800,000 | $ | 44,800 | $ | 167,575 | $ | (195,313) | $ | 17,062 | ||||||
SEE ACCOMPANYING NOTES
SOURCE GOLD CORP.
（Formerly Ibex
Resources Corp.）
(An
Exploration Stage Company)
NOTES
TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
October
31, 2009
(Stated
in US Dollars)
(Unaudited)
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Note
1.
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Basis of
Presentation
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While
the information presented in the accompanying October 31, 2009 interim
consolidated financial statements is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash flows for
the interim period presented in accordance with the accounting principles
generally accepted in the United States of America. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring
nature. These consolidated financial statements should be read
in conjunction with the Company’s July 31, 2009 audited financial
statements.
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Operating
results for the three months ended October 31, 2009 are not necessarily
indicative of the results that can be expected for the year ending July
31, 2010.
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Note
2
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Nature
of Operations and Ability to
Continue as a Going Concern
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The
Company was incorporated in the state of Nevada, United States of America on
June 4, 2008. The Company is an exploration stage company and was
formed for the purpose of acquiring exploration and development stage mineral
properties. The Company’s year-end is July 31. On August 31, 2009,
the Company changed its name to Source Gold Corp. in order to reflect the
current focus of the Corporation.
Effective
September 10, 2009, the Company increased the number of authorized common shares
of the Company from 90,000,000 to 180,000,000 shares and its authorized
preferred shares from 10,000,000 to 20,000,000 shares per director’s resolution
dated August 31, 2009. The Company also conducted a four to one
forward stock split of the Company’s issued and outstanding common shares per
director’s resolution dated August 31, 2009. Following this stock split, the
number of outstanding shares of the Company’s common stock increased from
11,100,000 shares to 44,400,000 shares. All share and per share information in
these financial statements has been retro-actively restated for all periods
presented to give effect of this stock split.
During
the prior year, the Company’s subsidiary acquired another mineral claim located
in British Columbia, Canada. During the period ended October 31,
2009, the Company acquired a mineral claim located in Ontario,
Canada The Company intends on exploring its mineral properties and
has not yet determined the existence of economically recoverable
reserves. The recoverability of amounts incurred on its mineral
properties is dependent upon the existence of economically recoverable reserves
in the property, confirmation of the Company’s interest in the underlying
mineral claims, the ability of the Company to obtain the necessary financing to
complete their development, and the attainment and maintenance of future
profitable production or disposition thereof.
Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
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Note
2
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Nature of Operations
and Ability to Continue as a Going Concern –
(cont’d)
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These
financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which assumes that the
Company will be able to meet its obligations and continue its operations for its
next twelve months. Realization values may be substantially different
from carrying values as shown and these financial statements do not give effect
to adjustments that would be necessary to the carrying values and classification
of assets and liabilities should the Company be unable to continue as a going
concern. At October 31, 2009, the Company has working capital which will not be
sufficient to sustain operations and conduct exploration activities over the
next twelve months. The Company has yet to achieve profitable operations, has
accumulated losses of $195,313 since its inception and expects to incur further
losses in the development of its business, all of which casts substantial doubt
about the Company’s ability to continue as a going concern. The
Company’s ability to continue as a going concern is dependent upon its ability
to generate future profitable operations and/or to obtain the necessary
financing from shareholders or other sources to meet its obligations and repay
its liabilities arising from normal business operations when they come
due.
Management
has no formal plan in place to address this concern but considers that the
Company will be able to obtain additional funds by equity financing and/or
related party advances, however there is no assurance of additional funding
being available or on acceptable terms, if at all.
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Note
3
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Summary of Significant
Accounting Policies
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The
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America
and are stated in US dollars. Because a precise determination
of many assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily involves the
use of estimates, which have been made using careful judgment. Actual
results may vary from these
estimates.
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The
financial statements have, in management’s opinion, been properly prepared
within the framework of the significant accounting policies summarised
below:
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Principles of
Consolidation
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These
consolidated financial statements include the accounts of the Company and
IRC Exploration Ltd., a wholly owned subsidiary incorporated in Canada on
August 1, 2008. All significant inter-company transactions and
balances have been eliminated.
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Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
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Note
3
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Summary of Significant
Accounting Policies – (cont’d)
Newly Adopted
Accounting Pronouncements
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In
June 2009, the Financial Accounting Standards Board ("FASB") issued
authoritative guidance which established the FASB Standards Accounting
Codification ("Codification") as the source of authoritative GAAP
recognized by the FASB to be applied to nongovernmental entities, and
rules and interpretive releases of the SEC as authoritative GAAP for SEC
registrants. The Codification supersedes all the existing
non-SEC accounting and reporting standards upon its effective date and,
subsequently, the FASB will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. The guidance is not intended to change or alter
existing GAAP. The guidance became effective for the Company on September
15, 2009. The guidance did not have an impact on the Company's
financial position, results of operations or cash flows. All
references to previous numbering of FASB Statements, FASB Staff Positions
or Emerging Issues Task Force Abstracts have been removed from the
financial statements and accompanying footnotes.
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In
May 2009, the FASB issued authoritative guidance for subsequent events.
The guidance provides authoritative accounting literature related to
evaluating subsequent events that was previously addressed only in the
auditing literature. The guidance is similar to the current guidance with
some exceptions that are not intended to result in significant change to
current practice. The guidance defines subsequent events and also requires
the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. The Company adopted the
disclosure provisions of the guidance as of August 1, 2009. The
adoption did not have an impact on the Company's financial position,
results of operations or cash flows.
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In
December 2007, the FASB issued authoritative guidance for non-controlling
interests in consolidated financial statements which established new
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a
subsidiary. Specifically, this requires the recognition of a
non-controlling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent's equity. The
amount of net income attributable to the non-controlling interest will be
included in consolidated net income on the face of the income
statement. The guidance clarifies that changes in a parent's
ownership interest in a subsidiary that do not result in deconsolidation
are equity transactions if the parent retains its controlling financial
interest. In addition, this statement requires that a parent recognize a
gain or loss in net income when a subsidiary is
deconsolidated. Such gain or loss will be measured using the
fair value of the non-controlling equity investment on the deconsolidation
date. The guidance also includes expanded disclosure
requirements regarding the interests of the parent and its non-controlling
interest. The Company adopted the disclosure provisions of the
guidance as of August 1, 2009. The adoption of this guidance
had no effect on our financial
statements.
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Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
|
Note
3
|
Summary of Significant
Accounting Policies – (cont’d)
Newly Adopted
Accounting Pronouncements –
(cont’d)
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|
In
June 2008, the FASB issued authoritative guidance for determining whether
an instrument (or an embedded feature) is indexed to an entity’s own
stock. This guidance provides that an entity should use a two
step approach to evaluate whether an equity-linked financial instrument
(or embedded feature) is indexed to its own stock, including evaluating
the instrument’s contingent exercise and settlement
provisions. It also clarifies on the impact of foreign currency
denominated strike prices and market-based employee stock option valuation
instruments on the evaluation. The Company adopted the disclosure
provisions of the guidance as of August 1, 2009. The adoption
of this guidance had no effect on the financial position and results of
operations of the Company.
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In
December 2007 the FASB issued authoritative guidance which amended the
existing guidance for business combinations. The revised
guidance establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree. The guidance also
provides direction for recognizing and measuring the goodwill acquired in
the business combination and determines what information to disclose to
enable users of the financial statements to evaluate the nature and
financial effects of the business combination. This guidance became
effective for the Company on August 1, 2009. The adoption of
this revised guidance had no effect on our financial
statements.
|
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| Newly Issued Accounting Pronouncements |
In June
2009, the FASB issued authoritative guidance which amended the existing guidance
for the consolidation of variable interest entities, to address the elimination
of the concept of a qualifying special purpose entity. The guidance also
replaces the quantitative-based risks and rewards calculation for determining
which enterprise has a controlling financial interest in a variable interest
entity with an approach focused on identifying which enterprise has the power to
direct the activities of a variable interest entity, and the obligation to
absorb losses of the entity or the right to receive benefits from the entity.
Additionally, the guidance requires any enterprise that holds a variable
interest in a variable interest entity to provide enhanced disclosures that will
provide users of financial statements with more transparent information about an
enterprise's involvement in a variable interest entity. The guidance is
effective for the Company commencing August 1, 2010. The Company
believes that the guidance will not have a material impact on its financial
position, results of operations or cash flows.
Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
|
Note
3
|
Summary of Significant
Accounting Policies – (cont’d)
Newly Issued
Accounting Pronouncements –
(cont’d)
|
|
In
June 2009 the FASB issued authoritative guidance which amended existing
guidance for the accounting for transfers of financial
assets. The objective of this guidance is to improve the
relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements
about a transfer of financial assets; the effects of a transfer on its
financial position, financial performance, and cash flows; and a
transferor’s continuing involvement, if any, in transferred financial
assets. This guidance is effective for the Company commencing
August 1, 2010. Earlier application is
prohibited. This guidance must be applied to transfers
occurring on or after the effective date. The Company is assessing the
effect that the implementation of this guidance will have on the financial
statements.
|
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In
June 2008, the FASB ratified authoritative guidance for determining
whether instruments granted in share-based payment transactions are
participating securities. The guidance addresses whether instruments
granted in share-based payment awards are participating securities prior
to vesting and, therefore, must be included in the earnings allocation in
calculating earnings per share under the two-class method. The guidance
requires that unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend-equivalents be treated as
participating securities in calculating earnings per share. The guidance
is effective for the Company on August 1, 2010, and shall be
applied retrospectively to all prior periods. The Company
believes that the guidance will not have a material impact on its
financial position, results of operations or cash
flows.
|
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Note
4
|
Financial
Instruments
|
Fair
value is defined as the price that would be received upon sale of an asset or
paid upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on
assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition, the fair
value of liabilities should include consideration of non-performance risk
including our own credit risk.
In
addition to defining fair value, the standard expands the disclosure
requirements around fair value and establishes a fair value hierarchy for
valuation inputs is expanded. The hierarchy prioritizes the inputs
into three levels based on the extent to which inputs used in measuring fair
value are observable in the market. Each fair value measurement is
reported in one of the three levels which is determined by the lowest level
input that is significant to the fair value measurement in its entirety. These
levels are:
|
|
Level
1 – inputs are based upon unadjusted quoted prices for identical
instruments traded in active
markets.
|
Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
|
Note
4
|
Financial Instruments
– (cont’d)
|
|
|
Level
2 – inputs are based upon significant observable inputs other than quoted
prices included in Level 1, such as quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation
techniques for which all significant assumptions are observable in the
market or can be corroborated by observable market data for substantially
the full term of the assets or
liabilities.
|
|
|
Level
3 – inputs are generally unobservable and typically reflect management’s
estimates of assumptions that market participants would use in pricing the
asset or liability. The fair values are therefore determined using
model-based techniques that include option pricing models, discounted cash
flow models, and similar
techniques.
|
The
carrying value of the Company’s financial assets and liabilities which consist
of cash, accounts payable and accrued liabilities, promissory note payable, and
due to related parties in management’s opinion approximate their fair value
due to the short maturity of such instruments. These financial assets
and liabilities are valued using level 1 inputs. Unless
otherwise noted, it is management’s opinion that the Company is not exposed to
significant interest, exchange or credit risks arising from these financial
instruments.
|
Note
5
|
Related Party
Transactions
|
The
amount due to related party is due to the Company’s former president for unpaid
management fees of $3,000 (July 31, 2009: unpaid management fees of
$1,000). These amounts are unsecured, non-interest bearing and have
no specific terms for repayment.
On
June 16, 2008 the Company received and accepted a subscription to purchase
24,000,000 common shares at $0.002 per share for aggregate proceeds of $48,000
from Company’s former president. The subscription agreement permitted
the Company to accept US$48,000 or CDN$48,000 in full settlement of the share
subscription. The share subscription was settled in Canadian
dollars. On June 16, 2008 the shares were issued.
During
the three month period ended October 31, 2009, the Company incurred $3,000
(three month period to October 31, 2008 - $3,000) of management fees charged by
the Company’s former president.
|
Note
6
|
Capital Stock – Note 1
Issued:
On
June 16, 2008, the Company issued 24,000,000 common shares to the
Company’s former president at $0.002 per share for total proceeds of
$48,000.
On
July 31, 2008, the Company issued 20,400,000 common shares at $0.0035 per
share for total proceeds of $71,400 pursuant to a private
placement. The Company paid commissions of $7,025 for net
proceeds of $64,375.
|
Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
|
Note
6
|
Capital Stock – Note 1
Issued:
|
On
October 26, 2009, the Company issued 200,000 common shares at $0.25 per share
for total proceeds of $50,000 pursuant to a private placement.
On
October 30 2009, the Company issued 200,000 common shares at $0.25 per share for
total proceeds of $50,000 pursuant to a private placement.
On November 26, 2009, the Company issued 100,000
common shares at $1.00 per share for total proceeds of $100,000 pursuant to a
private placement.
|
Note
7
|
Commitments
|
|
|
a)
|
On
July 1, 2008, the Company entered into a Corporate Management Services
Agreement with the Company’s president at the time for management
services. Pursuant to the agreement the former President will
receive $1,000 per month plus expenses for services
rendered. The agreement was terminated effective November 1,
2009, and the former President resigned on November 6,
2009.
|
|
|
b)
|
On
August 11, 2008, the Company’s wholly owned subsidiary, IRC Exploration
Ltd. (“IRC”), entered into a property option agreement whereby IRC was
granted an option to earn up to an 85% interest in one mineral claim (the
“Queen” claim) consisting of 457.7 hectares located in the Omineca Mining
Division of British Columbia. The option agreement is
denominated in Canadian dollars. Consideration for the option
is cash payments totalling $50,357 (CDN$54,000) and aggregate exploration
expenditures of $224,878 (CDN$241,000) as
follows:
|
|
i)
|
Cash
payments:
|
|
·
|
$1,875
(CDN$2,000) upon execution of the Option agreement
(paid);
|
|
·
|
$1,842
(CDN$2,000) on or before July 31, 2009
(paid);
|
|
·
|
$46,640
(CDN$50,000) on or before July 31.
2010.
|
|
|
ii)
|
Exploration
expenditures of $14,157 (CDN$15,000) on or before July 31, 2009 (expenses
incurred), $28,990 (CDN$31,000) in aggregate on or before July 31, 2010;
$224,878 (CDN$241,000) in aggregate on or before July 31,
2011.
|
|
|
Upon
earning its 85% interest in the option, the Company shall enter into a
joint venture agreement to develop and operate the
property.
|
|
|
c)
|
On
October 26, 2009, the Company, entered into a property option agreement
whereby the Company was granted an option to earn up to a 50% interest in
19 mineral claims (the “Thunder Bay” claims) located in the Thunder Bay
Mining Division of Ontario. The option agreement is denominated
in Canadian dollars. Consideration for the option is the
issuance of 2,000,000 common shares of the company, cash payments
totalling $102,608 (CDN$110,000), and aggregate exploration expenditures
of $932,800 (CDN$1,000,000) as
follows:
|
Source
Gold Corp.
(Formerly
Ibex Resources Corp.)
(An
Exploration Stage Company)
Notes
to the Interim Consolidated Financial Statements
October
31, 2009
(Stated
in US Dollars)
|
Note
7
|
Commitments –
(cont’d)
|
|
c)
|
On
October 26, 2009, the Company, entered into a property option agreement
whereby the Company was granted an option to earn up to a 50% interest in
19 mineral claims (the “Thunder Bay” claims) located in the Thunder Bay
Mining Division of Ontario. The option agreement is denominated
in Canadian dollars. Consideration for the option is the
issuance of 2,000,000 common shares of the company, cash payments
totalling $102,608 (CDN$110,000), and aggregate exploration expenditures
of $932,800 (CDN$1,000,000) as
follows:
|
|
i)
|
Cash
payments:
|
|
·
|
$46,640
(CDN$50,000) upon execution of the Option agreement
(paid);
|
|
·
|
$55,968
(CDN$60,000) on or before December 1,
2009.
|
|
·
|
On
November 26, 2009 and December 7, 2009 the Company made cash payments of
$30,196(CDN$31,785) and $26,686(CDN$28,215)
respectively.
|
|
|
ii)
|
Exploration
expenditures of $466,400 (CDN$500,000) on or before December 31, 2010, and
$932,800 (CDN$1,000,000) in aggregate on or before December 31,
2011.
|
|
|
iii)
|
The
issuance of 2,000,000 common shares to the shareholders of the optionor,
as directed by the optionor, within 30 days of the closing of the
transaction.
|
|
|
Upon
earning its 50% interest in the option, the Company shall enter into a
joint venture agreement to develop and operate the
property.
|
Pursuant to the agreement, if
commercial production has been acheived and the Company sells or otherwise
disposes of metals and minerals that has been produced and removed from the
Thunder Bay properties, the Company will pay Thunder Bay a 3% Net Smelter Return
royalty. In the event the Company sells or causes the sale of products other
than to a smelter or refinery or otherwise causes the removal of products from
the Property, the Company will pay a 2% Net Smelter Return Royalty.
Alternatively, the Company can buy back the royalty right for $1,000,000
for each breccia pipe that reaches commercial production.
|
Note
8
|
Promissory note
payable
|
Pursuant
to a promissory note dated July 31, 2009, the Company promised to pay the owner
of the “Queen” claim $1,866 (CND$2,000). The note is unsecured, non-interest
bearing, and is due on or before January 31, 2010.
|
Note
9
|
Subsequent
events
|
On
November 1, 2009, the Company entered into a Corporate Management Services
Agreement with the President of the Company for management
services. Pursuant to the agreement the President will receive a
signing bonus of $7,500 (paid November 1, 2009) and $5,000 per month plus
expenses for services rendered. The agreement may be terminated by
either party upon 30 days written notice.
The
Company evaluated subsequent events through the financial statements filing date
of December 14, 2009.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will
continue,” “will likely result,” and similar expressions. We intend
such forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and are including this statement for purposes of complying with
those safe-harbor provisions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks and uncertainties
which may cause actual results to differ materially from the forward-looking
statements. Our ability to predict results or the actual effect of future plans
or strategies is inherently uncertain. Factors which could have a
material adverse affect on our operations and future prospects on a consolidated
basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and
uncertainties should also be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
Overview
We are an
exploration stage company that intends to engage in the exploration of mineral
properties. We hold an option to acquire an 85% interest in the Queen
claim, located in the Omineca district of central British Columbia,
Canada. During the current reporting period, we entered into a property
option agreement whereby the Company was granted an option to earn up to a 50%
interest in 19 mineral claims known as the KRK West Claim, located north of
Thunder Bay, Ontario, Canada.
The
Queen Claim
The Queen
Claim is located approximately 75 miles north-west of the central British
Columbia city of Prince George, and approximately 40 miles west of the town of
McKenzie. Access to the property is by way of logging roads, approximately 3
miles south of the MacKenzie – Kemess Mine Road. An electric power line follows
the MacKenzie – Kemess road.
Our
business plan is to proceed with the exploration of the Queen claim to determine
whether there are commercially exploitable reserves of gold or other metals on
the claim. We intend to proceed with the initial exploration program
as recommended by our consulting geologist.
Phase I
of the recommended geological program cost us a total of $16,685 and has been
paid to our mineral property operator during the early part of 2009. Phase I
consisted of on-site surface reconnaissance, mapping, sampling, and geochemical
analyses. The field work portion of this program has been completed and we have
received the geochemical analysis and our geological consultants’ report on
Phase I of our exploration program. As of the date of this report,
however, our board of directors has not had the opportunity to review the report
and decide on a course of action.
Phase II
would entail further on-site surface reconnaissance, mapping, sampling,
geochemical analyses and backhoe trenching based on the outcome of the Phase I
exploration program. The Phase II program will cost approximately
$16,000. We anticipate commencing this phase in the Spring of
2010.
The
budget for Phase III of our exploration program is tentative in nature as the
actual exploration program to be undertaken will depend upon the outcomes of the
Phase I and Phase II exploration programs. Phase III of our exploration program,
if undertaken, may commence in the spring or early summer of 2010, and will
consist of laying out grids over the mineral claim, trenching, further sampling
and assaying, a geophysical program, and the diamond drilling and drill core
sampling of ten, 1,000 foot holes. It is currently estimated that Phase III will
cost approximately $210,000.
The
existence of commercially exploitable mineral deposits in the Queen Claim is
unknown at the present time and we will not be able to ascertain such
information until we receive and evaluate the results of our exploration
program.
The
KRK West Claim
On
October 26, 2009, we entered into an agreement with Thunder Bay Minerals, Inc.
(“Thunder Bay”) under which were granted an option to acquire an undivided 50%
interest in 19 mineral claims known as the KRK West Claim, located north of
Thunder Bay, Ontario, Canada. In consideration of the 50% interest in
the Twin Falls Claim, we agreed as follows:
|
§
|
to
pay $110,000 (CDN) to Thunder Bay with $50,000 (CDN) of that amount due
upon execution of the Agreement before commencing due diligence of the
claims (paid) and the balance of $60,000 (CDN) on or before December
1, 2009;
|
|
§
|
to
incur $500,000 (CDN) in expenditures on the claims before December 31,
2010 and $500,000 in expenditures on the claims before December 31, 2011;
and
|
|
§
|
to
issue 2,000,000 shares of our common stock to the shareholders of Thunder
Bay within 30 days of closing the
transaction.
|
On
November 26, 2009 and December 7, 2009, we made payments of $31,785 (CDN) and
$28,215 (CDN) respectively. We expect to issue the 2,000,000 shares of our comon
stock in the near future. Thunder Bay is agreeable to this slight extension from
the original terms.
Under the
agreement, Thunder Bay will act as operator and define the nature of and execute
all exploration programs and subsequent phases of development on the
claims.
If we are
able to pay the consideration for the claims (as set forth above), we will be
entitled to a 50% interest in the claims, which are currently subject to a 3%
Net Smelter Royalty in favor of James Wheeler, President of Thunder Bay. In the
event we acquire an interest in the claims, we and Thunder Bay have further
agreed to enter into a joint venture agreement for further exploration and
development of the claims.
We
received initial results from samples assayed by Accurassay Laboratories in
Thunder Bay, Ontario, Canada. The samples were taken from the KRK West Property
in the Beardmore-Geraldton Greenstone Belt in Northwestern Ontario,
Canada.
Based
upon the initial exploration program of trenching, channel sampling, geological
mapping and a TEM survey covering our claim group on over 15 square miles of the
KRK West Property, we have identified three main areas of interest.
The first
area of interest is the Little Brother Claim Group, where a number of samples
were taken from an area along a northern grandiorite with intermediate
volcanics, which yielded visible gold occurrences. Assay results from this
initial sampling program have yielded very encouraging high-grade gold assays of
9.55/oz per ton (270.74 grams/ton). Separate samples assayed from this area have
similarly yielded very high-grade copper of 15.5%.
The
second area of interest is close to the eastern portion of the property east of
Peddle Lake. This area is the most active on the property where a number of
drill collars belonging to a previous operator were drilled during the 1970's.
The ground observations in the trenches and historical assessment have indicated
a large disrupted zone carrying high gold and silver values.
The third
area of interest is the most westerly area of the property near Musca Lake,
along a continuous shear zone. The Musca Lake zone consists of a quartz flooded
shear which pinches and swells along its strike length.
We will
continue with an aggressive exploration program, centered on the major fault
lines and areas of interest which traverse our mineral claims. Accurassay
Laboratories is currently processing more than 250 trench samples from our three
main areas of interest on the KRK West Property, and further assay results are
expected within the next few weeks.
Results
of Operations for the Three Months Ended October 31, 2009 and 2008 and Period
from June 4, 2008 (Date of Inception) until October 31, 2009
We
generated no revenue for the period from June 4, 2008 (Date of Inception) until
October 31, 2009. We do not anticipate earning revenues until such time that we
exercise our option and enter into commercial production of our
claims. We are presently in the pre-exploration stage of our business
and we can provide no assurance that we will discover commercially exploitable
levels of mineral resources, or if such resources are discovered, that we will
enter into commercial production.
We
incurred operating expenses in the amount of $83,420 for the three months ended
October 31, 2009, compared with $48,323 for the three months ended October 31,
2008. Operating expenses for the three months ended October 31, 2009 consisted
primarily of mineral property option costs of $46,640 cash payment upon
execution of the property option agreement for the Thunder Bay claims,
accounting and audit expenses of $17,891, legal fees of $13,202, and management
fees of $3,000. Operating expenses for the three months ended October
31, 2008 consisted primarily of mineral exploration property costs of $12,250,
accounting and audit expenses of $15,762, legal fees of $13,677, and management
fees of $3,000. We incurred operating expenses in the amount of
$195,313 for the period from June 4, 2008 (Date of Inception) through October
31, 2009. These operating expenses consisted primarily of accounting and audit
expenses of $51,076, legal fees of $44,446, mineral property option costs of
$50,357, mineral property exploration payments of $16,685, and management fees
of $16,000.
Liquidity
and Capital Resources
As of
October 31, 2009, we had total current assets of $53,517 as compared to $8,014
for the year ended July 31, 2009. We had $36,455 in current
liabilities as of October 31, 2009 as compared to $7,532 for the year ended July
31 2009. Thus, we had working capital of $17,062 as of October 31, 2009 as
compared to $482 as of July 31, 2009.
Net cash
used in operating activities were $56,497 and $161,858 for the three months
ended October 31, 2009 and for the period from June 4, 2008 (Date of Inception)
to October 31, 2009, respectively. Our main source of cash was from the sale of
our common stocks which generated $215,375 in cash flow to date since the date
of our inception.
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue significant exploration activities beyond those planned for the current
fiscal year. For these reasons, our auditors stated in their report
to our audited financial statements for the period from June 4, 2008 (Date of
Inception) to July 31, 2009 that they have substantial doubt we will be able to
continue as a going concern.
Off
Balance Sheet Arrangements
As of
October 31, 2009, there were no off balance sheet arrangements.
Going
Concern
Our
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern, which
assumes that we will be able to meet our obligations and continue our operations
for the next fiscal year. Realization values may be substantially
different from carrying values as show. At October 31, 2009, the
Company had not yet achieved profitable operations, has accumulated losses of
$195,313 since inception, and expects to incur further losses in the development
of its business, all of which casts substantial doubt about the Company’s
ability to continue as a going concern. The Company will require
additional financing in order to meet its ongoing levels of corporate overhead
and discharge its liabilities as they come due. While the Company has
been successful in securing financings in the past, there is no assurance that
it will be able to do so in the future, particularly in light of current global
economic conditions. Accordingly, these financial statements do not
give effect to adjustments, if any, that would be necessary should the Company
be unable to continue as a going concern. If the going concern assumption was
not appropriate then the adjustments required to report the Company’s assets and
liabilities on a liquidation basis could be material to these financial
statements.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk
A smaller
reporting company is not required to provide the information required by this
Item.
Item 4T. Controls and
Procedures
We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of October 31, 2009. This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer and our Chief Financial Officer, Lauren Notar. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that, as of October 31, 2009, our disclosure controls and procedures were
ineffective as of the end of the period covered. There have been no changes in
our internal controls over financial reporting during the quarter ended October
31, 2009.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Limitations on the
Effectiveness of Internal Controls
Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.
PART
II – OTHER INFORMATION
Item 1. Legal Proceedings
We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
Item 1A: Risk Factors
A smaller
reporting company is not required to provide the information required by this
Item.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds
On
October 26, 2009, the Company issued 200,000 common shares at $0.25 per share
for total proceeds of $50,000 pursuant to a private placement.
On
October 30 2009, the Company issued 200,000 common shares at $0.25 per share for
total proceeds of $50,000 pursuant to a private placement.
On November 26, 2009, the Company issued 100,000 common shares at
$1.00 per share for total proceeds of $100,000 pursuant to a private
placement.
These
shares were issued in reliance on the exemption from registration found in
Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 of
Regulation D promulgated thereunder.
Item 3. Defaults upon Senior
Securities
None
Item 4. Submission of Matters to a Vote
of Security Holders
No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarterly period ended October
31, 2009.
Item 5. Other Information
None
Item 6. Exhibits
|
Exhibit
Number
|
Description
of Exhibit
|
SIGNATURES
In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
Source
Gold Corp.
|
|
|
Date:
|
December
15, 2009
|
|
By: /s/ Lauren
Notar
Lauren
Notar
Title: Chief
Executive Officer and
Director
|