Golden Matrix Group, Inc. - Quarter Report: 2010 January (Form 10-Q)

mainbody.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended January 31, 2010

[ ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period to __________

	Commission File Number: 333-153881

Source Gold Corp.

(Exact name of small business issuer as specified in its charter)

Nevada	N/A
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2 Toronto Street, Suite 234

Toronto, Ontario, Canada M5C 2B5

(Address of principal executive offices)

(289) 208-5537

(Issuer’s telephone number)

100-11245 Valley Ridge Dr. N.W,

Calgary, Alberta, Canada T3B 5V4

(Former name, former address and former fiscal year, if changed since last report)

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.

[ ] Large accelerated filer	[ ] Accelerated filer
[ ] Non-accelerated filer	[X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 45,020,000 common shares as of March 16, 2010.

Table of Contents

	TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4T:	Controls and Procedures	8
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	9
Item 1A:	Risk Factors	9
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3:	Defaults Upon Senior Securities	9
Item 4:	Submission of Matters to a Vote of Security Holders	9
Item 5:	Other Information	9
Item 6:	Exhibits	10

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited interim consolidated financial statements included in this Form 10-Q are as follows:
F-1	Interim Consolidated Balance Sheets as of January 31, 2010 and July 31, 2009.
F-2	Interim Consolidated Statements of Operations and comprehensive loss for six and three months ended January 31, 2010 and 2009 and period from June 4, 2008 (Inception) to January 31, 2010;
F-3	Interim Consolidated Statements of Cash Flows for the six months ended January 31, 2010 and 2009 and period from June 4, 2008 (Inception) to January 31, 2010;
F-4	Interim Consolidated Statement of Stockholders’ Equity for period from June 4, 2008 (Inception) to January 31, 2010;
F-5	Notes to Unaudited Interim Consolidated Financial Statements;

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 January 31, 2010 are not necessarily indicative of the results that can be expected for the full year.

Table of Contents

SOURCE GOLD CORP.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

January 31, 2010 and July 31, 2009

(Stated in US Dollars)

(Unaudited)

		January 31,		July 31
ASSET		2010		2009

Current
Cash		$	17,961	$	8,014

		$	17,961	$	8,014

LIABILITIES

Current
Accounts payable and accrued liabilities		$	13,394	$	4,690
Promissory note payable – Note 8			-		1,842
Due to related party – Note 5			-		1,000

			13,394		7,532

STOCKHOLDERS’ EQUITY

Preferred stock, $0.001 par value
20,000,000	shares authorized, none outstanding
Common stock, $0.001 par value – Note 6
180,000,000	shares authorized
	44,900,000 (July 31, 2009: 44,400,000) shares issued		44,900		44,400
Additional paid in capital			267,475		67,975
Deficit accumulated during the exploration stage			(307,808)		(111,893)

			4,567		482

		$	17,961	$	8,014

Nature of Operations and Ability to Continue as a Going Concern – Note 2

Commitments – Note 7

Subsequent events – Note 9

SEE ACCOMPANYING NOTES

F-1

Table of Contents

SOURCE GOLD CORP.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

for the three and six month periods ended January 31, 2010 and January 31, 2009 and the period from June 4, 2008 (Date of Inception) to January 31, 2010

(Stated in US Dollars)

(Unaudited)

									Cumulative June 4,
									2008
	Six Months		Six Months		Three Months		Three Months		(Date of
	Ended		Ended		Ended		Ended		Inception) to
	January 31,		January 31,		January 31,		January 31,		January 31,
	2010		2009		2010		2009		2010

Expenses
Accounting and audit fees	$	29,007	$	22,772	$	11,116	$	7,010	$	62,192
Bank charges		362		280		295		74		763
Foreign exchange (gain) loss		845		13		(200)		5		4,125
Legal fees		16,870		19,139		3,668		5,462		48,114
Management fees – Note 5		20,500		6,000		17,500		3,000		33,500
Mineral property option costs		103,718		1,875		57,078		-		107,435
Mineral property exploration costs		5,346		15,865		5,346		3,615		22,031
Office expenses		11,852		1,200		11,252		600		14,452
Regulatory expenses		-		4,000		-		4,000		4,000
Shareholder communications		6,285		-		6,285		-		6,285
Transfer agent and filing fees		1,130		3,481		155		2,536		4,911

Net loss for the period	$	(195,915)	$	(74,625)	$	(112,495)	$	(26,302)	$	(307,808)

Basic and diluted loss per share	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)

Weighted average number of shares outstanding		44,642,391		44,400,000		44,871,739		44,400,000

SEE ACCOMPANYING NOTES

F-2

Table of Contents

SOURCE GOLD CORP.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the six month periods ended January 31, 2010 and January 31, 2009 and the period from

June 4, 2008 (Date of Inception) to January 31, 2010

(Stated in US Dollars)

(Unaudited)

					Cumulative
					June 4,
					2008
	Six Months		Six Months		(Date of
	Ended		Ended		Inception) to
	January 31,		January 31,		January31,
	2010		2009		2010

Cash Flows used in Operating Activities
Net loss for the period	$	(195,915)	$	(74,625)	$	(307,808)
Items not involving cash:
Mineral property option costs		-		-		1,842
Foreign exchange adjustment		33		395		33

Changes in non-cash working capital items:
Prepaid expenses		-		(72)		-
Accounts payable and accrued liabilities		8,704		(8,848)		13,394

Net cash provided by (used in) operating activities		(187,178)		(83,940)		(292,539)

Cash Flows from Financing Activities
Capital stock issued, net cash commission		200,000		-		312,375
Promissory note paid		(1,875)		-		(1,875)
Decrease in due to related party		(1,000)		(1,200)		-

Net cash provided by (used in) provided by financing activities		197,125		(1,200)		310,500

Increase (decrease) in cash during the period		9,947		(85,140)		17,961

Cash, beginning of the period		8,014		116,300		-

Cash, end of the period	$	17,961	$	31,160	$	17,961

Supplemental information

Interest and taxes paid in cash	$	-	$	-	$	-

SEE ACCOMPANYING NOTES

F-3

Table of Contents

SOURCE GOLD CORP.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

INTREIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

for the period from June 4, 2008 (Date of Inception) to January 31, 2010

(Stated in US Dollars)

(Unaudited)

							Deficit
							Accumulated
					Additional		During the
	Common Shares				Paid In		Exploration
	Number		Cash		Capital		Stage		Total

Capital stock issued for cash: – at $0.002		24,000,000	$	24,000	$	24,000	$	-	$	48,000
– at $0.0035		20,400,000		20,400		51,000		-		71,400
Less: commission		-		-		(7,025)		-		(7,025)
Net loss for the period		-		-		-		(9,089)		(9,089)

Balance July 31, 2008		44,400,000		44,400		67,975		(9,089)		103,286
Net loss for the year		-		-		-		(102,804)		(102,804)

Balance July 31, 2009		44,400,000		44,400		67,975		(111,893)		482
Capital stock issued for cash: – at $0.25		400,000		400		99,600		-		100,000
Capital stock issued for cash: – at $1.00		100,000		100		99,900		-		100,000
Net loss for the period		-		-		-		(195,915)		(195,915)

Balance January 31, 2010	$	44,900,000	$	44,900	$	267,475	$	(307,808	$	4,567

SEE ACCOMPANYING NOTES

F-4

Table of Contents

SOURCE GOLD CORP.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

January 31, 2010

(Stated in US Dollars)

(Unaudited)

Note 1.

Basis of Presentation

While the information presented in the accompanying January 31, 2010 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 (notes thereto) included in the Company's Annual Report on Form 10-K.

Operating results for the six months ended January 31, 2010 are not necessarily indicative of the results that can be expected for the year ending July 31, 2010.

Note 2

Nature of Operations and Ability to Continue as a Going Concern

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 a mineral claim located in British Columbia, Canada. During the period ended January 31, 2010, the Company acquired another 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.

F-5

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 2

Nature of Operations and Ability to Continue as a Going Concern – (cont’d)

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 January 31, 2010, 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 $307,808 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.

Note 3 Summary of Significant Accounting Policies

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.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies consistent with year-end.

Principles of Consolidation

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.

F-6

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 3 Summary of Significant Accounting Policies – (cont’d)

Newly Adopted Accounting Pronouncements

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.

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.

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.

F-7

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 3

Summary of Significant Accounting Policies – (cont’d)

Newly Adopted Accounting Pronouncements – (cont’d)

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.

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.

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.

F-8

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(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.

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.

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:

F-9

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 4

Financial Instruments – (cont’d)

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

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 3 inputs, except for cash which is at level 1. 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 $Nil (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 six month period ended January 31, 2010, the Company incurred management fees of $3,000 (six month period to January 31, 2009 - $6,000) charged by the Company’s former president and $17,500 (six month period ended January 31, 2009 - $Nil) charged by the Company’s 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.

F-10

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

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 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

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 receives $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.

On November 1, 2009, the Company entered into a Corporate Management Services Agreement with the newly appointed 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 from December 1, 2009 plus expenses for services rendered. The agreement may be terminated by either party upon 30 days written notice.

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 $50,452 (CDN$54,000) and aggregate exploration expenditures of $225,302 (CDN$241,000) as follows:

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 7

Commitments – (cont’d)

(cont’d)

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);

·	$46,735 (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), $29,015 (CDN$31,000) in aggregate on or before July 31, 2010; $225,302 (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.

The property option agreements were stated in Canadian dollars. The US dollar equivalent is converted using the foreign exchange rate at January 31, 2010 for all future commitments.

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 “KRK West” 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 $103,718 (CDN$110,000), and aggregate exploration expenditures of $937,241 (CDN$1,000,000) as follows:

i)	Cash payments:

· $46,640 (CDN$50,000) upon execution of the Option agreement (paid in the three months period ended October 31, 2009);

· $57,078(CDN$60,000) on or before December 1, 2009 (paid)

On November 26, 2009 and December 7, 2009 the Company made cash payments of $30,000 (CDN$31,785) and $27,078 (CDN$28,215) respectively.

ii)

Exploration expenditures of $467,621 (CDN$500,000) on or before December 31, 2010, and $934,971 (CDN$1,000,000) in aggregate on or before December 31, 2011.

F-12

Table of Contents

Source Gold Corp.

(formerly Ibex Resources Corp.)

(An Exploration Stage Company)

Notes to the Interim Consolidated Financial Statements

January 31, 2010

(Stated in US Dollars)

Note 7

Commitments – (cont’d)

(cont’d)

During the six month period ended January 31, 2010, the Company incurred exploration expenditures aggregating $5,345 (CDN$5,428)

iii)

The issuance of 2,000,000 common shares to the shareholders of the optionor, as directed by the optionor.

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 achieved and the Company sells or otherwise disposes of metals and minerals that has been produced and removed from the KRK West 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.

The property option agreements were stated in Canadian dollars. The US dollar equivalent is converted using the foreign exchange rate @ January 31, 2010 for all future commitments.

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 $1,842 (CND$2,000) Note 7. The note was unsecured, non-interest bearing, and was due on or before January 31, 2010. On November 6, 2009 the Company paid and settled the note.

Note 9

Subsequent events

Subsequent to January 31, 2010, the Company issued 120,000 common shares at $1.00 per share for total proceeds of $120,000 pursuant to a private placement.

The Company evaluated subsequent events through the financial statements filing date of March 16, 2010.

F-13

Table of Contents

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. We also hold 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.

Table of Contents

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 (paid);

§	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 common stock in the near future. Thunder Bay is agreeable to this slight extension from the original terms.

Table of Contents

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 January 31, 2010 and 2009 and Period from June 4, 2008 (Date of Inception) until January 31, 2010

Table of Contents

We incurred operating expenses in the amount of $112,495 for the three months ended January 31, 2010, compared with $26,302 for the three months ended January 31, 2009. The significant increase was due to the increase in management fees, mineral property option costs, and mineral property exploration costs related to the Thunder Bay claims.Operating expenses for the three months ended January 31, 2010 consisted primarily of mineral property option costs of $57,078 cash payment for the property option agreement for the Thunder Bay claims, accounting and audit expenses of $11,116, legal fees of $3,668, management fees of $17,500, office expenses of $11,252, mineral exploration costs of $5,346, and shareholder communication costs of $6,285. Operating expenses for the three months ended January 31, 2009 consisted primarily of mineral exploration property costs of $3,615, accounting and audit expenses of $7,010, legal fees of $5,462, management fees of $3,000, and regulatory expenses of $4,000.

We incurred operating expenses in the amount of $195,915 for the six months ended January 31, 2010, compared with $74,625 for the six months ended January 31, 2009. Operating expenses for the six months ended January 31, 2010 consisted primarily of mineral property option costs of $103,718 cash payment for the property option agreement for the Thunder Bay claims, accounting and audit expenses of $29,007, legal fees of $16,870, management fees of $20,500, office expenses of $11,852, mineral exploration costs of $5,346, and shareholder communication costs of $6,285. Operating expenses for the six months ended January 31, 2009 consisted primarily of mineral exploration property costs of $15,865, accounting and audit expenses of $22,772, legal fees of $19,139, management fees of $6,000, office expenses of $1,200, mineral property option costs of $1,875, and regulatory expenses of $4,000.

We incurred operating expenses in the amount of $307,808 for the period from June 4, 2008 (Date of Inception) through January 31, 2010.

We therefore incurred a net loss of $112,495 for the three months ended January 31, 2010, as compared with $26,302 for the three months ended January 31, 2009; $195,915 for the six months ended January 31, 2010, as compared with $74,625 for the six months ended January 31, 2009; and $307,808 for the period from June 4, 2008 (Date of Inception) through January 31, 2010. The significant increase in net loss was due to the increase in management fees, mineral property option costs, and mineral property exploration costs related to the Thunder Bay claims.

Liquidity and Capital Resources

As of January 31, 2010, we had total current assets of $17,961 as compared to $8,014 for the year ended July 31, 2009. We had $13,394 in current liabilities as of January 31, 2010 as compared to $7,532 for the year ended July 31, 2009. Thus, we had working capital of $4,567 as of January 31, 2010 as compared to $482 as of July 31, 2009.

Net cash used in operating activities were $187,178 for the six months ended January 31, 2010 and $292,539 for the period from June 4, 2008 (Date of Inception) to January 31, 2010. Our main source of cash was from the sale of our common stocks which generated $200,000 which was used to repay the promissory note and due to related party, resulted net cash generated from financing activities of $197,125 for the six months ended January 31, 2010, and $310,500 for the period from June 4, 2008 (Date of Inception) through January 31, 2010.

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 as at July 31, 2009 that they have substantial doubt we will be able to continue as a going concern.

Table of Contents

Off Balance Sheet Arrangements

As of January 31, 2010, 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 January 31, 2010, the Company had not yet achieved profitable operations, has accumulated losses of $307,808 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 January 31, 2010. 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 January 31, 2010, our disclosure controls and procedures were ineffective as of the end of the period covered, due to the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.There have been no changes in our internal controls over financial reporting during the quarter ended January 31, 2010.

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.

Table of Contents

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.

In March, 2010, the Company issued 120,000 common shares at $1.00 per share for total proceeds of $120,000 pursuant to a private placement.

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 January 31, 2010.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Table of Contents

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:	March 16, 2010

	By: /s/ Lauren Notar Lauren Notar Title: Chief Executive Officer and Director