Golden Matrix Group, Inc. - Quarter Report: 2013 October (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2013

[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 000-54840

SOURCE GOLD CORP.

(Name of small business issuer in its charter)

Nevada		46-1814729
(State of incorporation)		(I.R.S. Employer Identification No.)

1155 Camino Del Mar #162

Del Mar, CA 92014

(Address of principal executive offices)

(949) 427-0430

 (Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] 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 [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

As of December 16,2013, there were 134,712,305shares of the registrant’s $0.001 par value common stock issued and outstanding.

SOURCE GOLD CORP.*

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Source Gold Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,"”SRGL,” "our," "us," the "Company," refers to Source Gold Corp.

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

SOURCE GOLD CORP.

(An Exploration Stage Company)

Condensed Consolidated Financial Statements

(Expressed in US dollars)

October 31, 2013 (unaudited)

Financial Statement Index

Consolidated Balance Sheets (2013 unaudited)

       4

Consolidated Statements of Operations and Comprehensive Loss (unaudited)                            5                                       

Consolidated Statement of Cash Flows (unaudited)                                                                      9

Notes to the Consolidated Financial Statements (unaudited)

      10

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 1

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for financial information and with the instructions to Form 10-Q of Regulation S-K. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended July 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the three months ended October 31, 2013 are not necessarily indicative of the results that may be expected for the year ending July 31, 2014.

The condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are presented in United States dollars.  

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., (‘IRC”) a company incorporated in Alberta, Canada on August 1, 2008; Northern Bonanza Inc, (‘NBI”) a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, (“SB”) a Limited Liability Company incorporated in Nevada, USA on June 18, 2010; and Vulture Gold LLC (“Vulture”), a Nevada Limited Liability Company which was acquired on August 7, 2010.

All significant inter-company transactions and balances have been eliminated.

Note 2

Nature of Operations and 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.

On January 24, 2013, the Company increased the number of authorized common shares of the Company from 180,000,000 to 900,000,000 shares.

During the year ended July 31, 2009, the Company acquired via its subsidiary company IRC Exploration Ltd. (“IRC”), a mineral claim located in British Columbia, Canada. During the year ended July 31, 2010, the mineral property option agreement for the claim in British Columbia was abandoned.

During the year ended July 31, 2010, the Company acquired two additional mineral properties located in Ontario, Canada.  The Company also incorporated two new subsidiary companies, Northern Bonanza Inc. (“NBI”) to hold its mineral properties located in Ontario, Canada, and Source Bonanza LLC (“SB”) to hold its mineral properties located in the USA.  The Company also transferred its Ontario mineral properties to NBI during the year ended July 31, 2010.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 2

Natures of Operations and Going Concern - (Cont’d)

On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, (“Vulture”) a Nevada Limited Liability Company.  (Note 8c)

On March 28, 2012, the Company entered into a property option agreement to acquire a 100% undivided right in three tenures comprising 2,785 acres in northern British Columbia, Canada. (Note 8d)

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.

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 fiscal year.  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.

The Company has yet to achieve profitable operations, has accumulated losses of $14,816,510 since inception, has working capital deficiency of $402,094, has no source of recurring revenues, 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. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

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.

Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary companies IRC Exploration Ltd., (‘IRC”) a company incorporated in Alberta, Canada on

August 1, 2008; Northern Bonanza Inc., (‘NBI”) a company incorporated in Ontario, Canada on June 30, 2010; Source Bonanza LLC, (“SB”) a Limited Liability Company incorporated in Nevada, USA on June 18, 2010 and Vulture Gold LLC, (“Vulture”) a Nevada Limited Liability Company which was acquired on August 7, 2010.

All significant inter-company transactions and balances have been eliminated.

Cash and Cash Equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Exploration Stage Company

The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered an exploration stage company.  All losses accumulated since inception have been considered as part of the Company’s exploration stage activities.

Mineral Properties

The Company is primarily engaged in the acquisition, exploration, and development of mineral properties.

Mineral property acquisition costs are capitalized in accordance with FASB ASC 930-805, “Extractive Activities-Mining,” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures.  Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met.  In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis.

Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards.  Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

To date the Company has not established any proven or probable reserves on its mineral properties.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 4

Computer equipment

	October 31,		July 31,
	2013		2013
Cost
Computer equipment	$                 1,973		$                  1,973
Accumulated depreciation	(1,354)		(1,108)
Net book value	$                    619		$                     865

Note 5

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.

The fair value hierarchy for valuation inputs 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 three levels; the level 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.

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, and accounts payable and accrued liabilities, 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, exceptfor 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.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 6

Related Party Transactions

All related party transactions have been recorded at the exchange value which was the amount of consideration established and agreed to by the related parties.

As of October 31, 2013, due to related party includes $10,820(July 31, 2013 - $3,429) owing to Grid Petroleum.

During the three month period ended October 31, 2013, the Company incurred management fees of $37,500 (three month period ended October 31, 2012 - $18,000) owed to the Company’s president and Syndication Capital.

Note 7

Convertible Notes Payable

				October 31,		July 31,
				2013		2013
	Promissory Note #2			30,000		30,000
	Promissory Note #4			9,300		24,900
	Promissory Note #5			12,000		12,000
	Promissory Note #6			11,774		11,774
	Promissory Note #7			27,500		27,500
	Promissory Note #8			44,978		44,978
	Promissory Note #9			11,000		11,000
	Promissory Note #10			11,000		11,000
	Promissory Note #11			57,500		57,500
	Promissory Note #12			7,500		7,500
	Promissory Note #13			7,500		7,500
	Promissory Note #14			11,000		-
	Promissory Note #15			7,500		-
	Promissory Note #16			11,000		-
	Promissory Note #17			7,500		-
	Promissory Note #18			11,000		-
	Promissory Note #19			7,500		-
				$      285,552		$    245,652
		Debt discount		-		(8,600)
		Debt discount - BCF		(36,407)		(89,152)
	Notes payable, net of discount			249,145		147,900
		Accrued interest		11,755		7,973
				$      260,900		$    155,873

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 7   

Convertible Notes Payable – (Cont’d)

Promissory Note #2

On March 19, 2012, the Company received $30,000 cash from the issuance of a convertible promissory note in the amount of $30,000.  The promissory note is unsecured, interest free and repayable upon demand.

The note may be converted at the option of the holder into Common stock of the Company.  The fixed conversion price is $0.01 per share.  Accordingly the note may be converted into 3,000,000 common shares of the Company.

The Company determined that this Promissory note should be accounted for in accordance with FASB ASC 470-20 which addresses “Accounting for Convertible Securities with Beneficial Conversion Features".  The beneficial conversion feature is calculated at its intrinsic value (that is, the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (per share being $0.08), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.

Promissory Note #4

On October 5, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $42,500.    The promissory note is unsecured, bears interest at 8% per annum, and matures on July 10, 2013.  During the three month period ended October 31, 2013 the Company accrued $324 (three month period ended October 31, 2012 - $242) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On April 4, 2013, the Company recorded an initial derivative liability of $79,440 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the three month period ended October 31, 2013, the Company issued 25,545,733 common shares upon the conversion of $15,600 of the principal balance into common stock, and $31,913 of the derivative liability was re-classified as additional paid in capital upon conversion.

As of October 31, 2013, principal balance of $9,300 (October 31, 2012 - $nil) accrued interest of $2,947 (October 31, 2012 - $242) and a derivative liability of $13,891 (October 31, 2012 - $nil) was recorded.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #5

On October 30, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $12,000. The promissory note is unsecured; bears interest at 8% per annum, and matured on April 30, 2013.  During the three month period ended October 31, 2013, the Company accrued $242 (October 31, 2012 - $nil) in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On April 29, 2013, the Company recorded an initial derivative liability of $13,844 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the three month period ended October 31, 2013, the Company recorded a gain of $1,041 (October 31, 2012 - $nil) due to the change in value of the derivative liability during the period.

As of October 31, 2013, principal balance of $12,000 (October 31, 2012 - $nil) accrued interest of $963 (October 31, 2012 - $nil) and a derivative liability of $17,924 (October 31, 2012 - $nil) was recorded.

Promissory Note #6

On December 18, 2012, the Company converted a loan payable of $11,774 to a convertible promissory note.  The promissory note is unsecured, bears interest at 8% per annum, and matures on June 18, 2013. During the three month period ended October 31, 2013, the Company accrued $237 (October 31, 2012 - $nil) in interest expense.

After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On June 17, 2013, the Company recorded an initial derivative liability of $19,145 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the three month period ended October 31, 2013, the Company recorded a gain of $1,022 (October 31, 2012 - $nil) due to the change in value of the derivative liability during the period.

As of October 31, 2013, principal balance of $11,774 (October 31, 2012 - $nil) accrued interest of $818 (October 31, 2012 - $nil) and a derivative liability of $17,585 (October 31, 2012 - $nil) was recorded.

Promissory Note #7

On January 23, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $27,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on

October 25, 2013.  During the three months ended October 31, 2013, the Company accrued $555 (October 31, 2012 - $nil) in interest expense.

After 180 days from issuance the note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On July 23, 2013, the Company recorded an initial derivative liability of $48,150 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the three month period ended October 31, 2013, the Company recorded a gain of $9,511 (October 31, 2012 - $nil) due to the change in value of the derivative liability during the period.

As of October 31, 2013, principal balance of $27,500 (October 31, 2012 - $nil) accrued interest of $1,694 (October 31, 2012 - $nil) and a derivative liability of $41,075 (October 31, 2012 - $nil) was recorded.

Promissory Note #8

On May 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $44,978.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $907 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $44,978 (October 31, 2012 - $nil) and accrued interest of $1,804 (October 31, 2012 - $nil) was recorded.

Promissory Note #9

On June 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $222 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $11,000 (October 31, 2012 - $nil) and accrued interest of $367 (October 31, 2012 - $nil) was recorded.

Promissory Note #10

On July 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures

on January 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $222 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $11,000 (October 31, 2012 - $nil) and accrued interest of $294 (October 31, 2012 - $nil) was recorded.

Promissory Note #11

On May 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $57,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 30, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month periodended October 31, 2013, the Company accrued $1,159 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $57,500 (October 31, 2012 - $nil) and accrued interest of $1,928 (October 31, 2012 - $nil) was recorded.

Promissory Note #12

On June 30, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on December 31, 2013.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $151 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $7,500 (October 31, 2012 - $nil) and accrued interest of $202 (October 31, 2012 - $nil) was recorded.

Promissory Note #13

On July 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on January 31, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $151 (October 31, 2012 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #13 – (Cont’d)

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

As of October 31, 2013, principal balance of $7,500 (October 31, 2012 - $nil) and accrued interest of $151 (October 31, 2012 - $nil) was recorded.

Promissory Note #14

On August 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $219 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $7,700 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of October 31, 2013, principal balance of $11,000 (October 31, 2012 - $nil) and accrued interest of $219 (October 31, 2012 - $nil) was recorded.

Promissory Note #15

On August 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 3, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $100 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #15 – (Cont’d)

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $2,250 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of October 31, 2013, principal balance of $7,500 (October 31, 2012 - $nil) and accrued interest of $100 (October 31, 2012 - $nil) was recorded.

Promissory Note #16

On September 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $145 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $3,300 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of October 31, 2013, principal balance of $11,000 (October 31, 2012 - $nil) and accrued interest of $145 (October 31, 2012 - $nil) was recorded.

Promissory Note #17

On September 30, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 31, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $51 (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $3,750 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #17 – (Cont’d)

As of October 31, 2013, principal balance of $7,500 (October 31, 2012 - $nil) and accrued interest of $51 (October 31, 2012 - $nil) was recorded.

Promissory Note #18

On October 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $72(October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $5,500 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of October 31, 2013, principal balance of $11,000 (October 31, 2012 - $nil) and accrued interest of $72 (October 31, 2012 - $nil) was recorded.

Promissory Note #19

On October 31, 2013 the Company entered into a Convertible Promissory Note with Dhugald Pinchin in the sum of $7,500.  The promissory note is unsecured, bears interest at 8% per annum, and matures on April 30, 2014.  The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.  During the three month period ended October 31, 2013, the Company accrued $nil (October 31, 2012 - $nil) in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

During the three month period ended October 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $750 (October 31, 2012 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of October 31, 2013, principal balance of $7,500 (October 31, 2012 - $nil) and accrued interest of $nil (October 31, 2012 - $nil) was recorded.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 8

Derivative Liabilities

 

The Company issued financial instruments in the form of convertible notes with embedded conversion features.  The convertible notes payable have conversion rates which are indexed to the market value of the Company’s common stock price.

During the three month period ended October 31, 2013, the Company has a balance of derivative liabilities for embedded conversion features related to convertible notes payable of face value $90,475 (October 31, 2012 - $nil).  During the three month period ending October 31, 2013, $15,600 (October 31, 2012 - $nil) of convertible notes payable were converted into common stock of the Company.

These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP. The valuation assumptions are classified within Level 1 inputs and Level 2 inputs.

The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above:

		October 31,
		2013
Balance, beginning of year		$        133,962
Initial recognition of derivative liability		-
Fair value change in derivative liability		(11,574)
Conversion of derivative liability to APIC		(31,913)
Balance as of October 31, 2013		$          90,475

Note 9   Common Stock

The Company is authorized to issue 20,000,000 shares of it $0.001 par value preferred stock and 900,000,000 shares of its $0.001 par value common stock.

During the three month period ended October 31, 2013, the Company issued 25,545,733 common shares upon the conversion of $15,600 principal of a promissory note into common stock.

Warrants and Options

As of October 31, 2013 and July 31, 2013, there were no warrants or options outstanding to acquire any additional shares of the Company’s common stock.

Note 10     Mineral Properties

a)  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 was the issuance of 2,000,000 common shares of the Company, cash payments totaling $103,718 (CDN$110,000), and aggregate exploration expenditures of $969,268 (CDN$1,000,000) as follows:

i)

Cash payments:

*

$46,640 (CDN$50,000) upon execution of the Option agreement (paid);

*

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

ii)

Exploration expenditures of $484,768 (CDN$500,000) on or before December 31, 2010, and $969,268 (CDN$1,000,000) in aggregate on or before December 31, 2011.

In aggregate to July 31, 2011, the Company incurred exploration expenditures aggregating $32,080 (CDN$32,836) (See below regarding status of the agreement)

iii)

The issuance of 2,000,000 common shares (none issued) to the shareholders of the optionor, as directed by the optionor.

Upon earning its 50% interest in the option, the Company was to enter into a joint venture agreement to develop and operate the property.

Pursuant to the agreement, if commercial production had been achieved and the Company sold or otherwise disposed of metals and minerals that had been produced and removed from the KRK West properties, the Company would pay Thunder Bay a 3% Net Smelter Return royalty.

In the event the Company sold or caused the sale of products other than to a smelter or refinery or otherwise caused the removal of products from the Property, the Company would pay a 2% Net Smelter Return Royalty. Alternatively, the Company could buy back the royalty right for $1,000,000 for each breccia pipe that reached commercial production.

The property option agreement was stated in Canadian dollars.  The US dollar equivalent was converted using the foreign exchange rate at July 31, 2010 for all future commitments.

During the year ended July 31, 2010, the Company learned that the optionor had allowed the underlying claims to lapse, and therefore the option agreement was null and void.

The Company, and a director of the Company (The Company subsequently purchased these claims from the director), purchased the claims from persons who re-staked the claims for an aggregate amount of $27,577.  Subsequent to acquisition, the claims were transferred to the Company’s wholly owned subsidiary, Northern Bonanza Inc.  Due to the lapse of the underlying claims the Company impaired a total of $131,295 of acquisition costs incurred as of July 31, 2010 made up of the initial $103,718 payment and the additional payment of $27,577.

The original optionor represents that control of the claims remains with the optionor and that the Company has no right to further explore the property.  The Company disagrees with this assertion and accordingly, ownership to the claims is in dispute.  On January 6, 2011 the Ministry of Northern Development, Mines and Forestry, Canada, was to adjudicate upon the ownership of the claims.  The hearing did not occur as the other party filed for a change of venue.  A determination regarding the change of venue has not yet been made and a date for rendering the decision has not yet been established.  Mediation regarding the matter was deferred until late 2011 and prior to the hearing the optionor cancelled the mediation.  

In October 2011, the Company, as a result of the cancellation of the mediation hearing with William J. Wheeler regarding the Thunder Bay claims, decided the best course of action was to file suit.  Accordingly, a suit was filed against Thunder Bay and Wheeler in Ontario Superior Court of Justice. In the suit we detail the breach of the Agreement by Thunder Bay and Wheeler and request:

*

An order transferring an application regarding mining claims pending before the Office of the Mining and Lands Commissioner to the  Ontario Superior Court of Justice to be consolidated with this action;

*

A declaration regarding our ownership and Thunder Bay and Wheeler’s ownership with respect to certain mining claims; and

*

$1,200,000 in damages from Thunder Bay and Wheeler.

b) During the year ended July 31, 2010, the Company entered into a property purchase agreement, which was formalized on May 4, 2010, to acquire a 100% interest in 21 mining claims located in the Northern Ontario for $50,767 (Cdn$51,800).  During the year ended July 31, 2010, the Company incurred an additional $17,741 in staking costs in relation to these claims.  Subsequent to acquisition the claims and exploration costs were transferred to NBI at cost.

During the year ended July 31, 2010, the Company made exploration advances to the operator amounting to $47,806.  As of July 31, 2010 the operator had incurred exploration expenses aggregating $20,118 resulting in net advances held being $26,968.  During the year ended July 31, 2011, the Company made further advances to the operator of $7,040.  

During the year ended July 31, 2011 the operator incurred exploration expenditures of $34,008 and the Company also incurred direct exploration expenditures of $47,335.

As of July 31, 2013, the operator held exploration advances amounting to $nil (2012 - $nil). Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs incurred of $68,599 for these mineral properties was deemed to be fully impaired as of July 31, 2011.

c) On August 7, 2010, the Company acquired a 100% interest in Vulture Gold LLC, (“Vulture”) a Nevada limited Liability Company.  Vulture holds 27 mineral claims in Maricopa County, Arizona, known as the Vulture Mine.  As consideration for the acquisition the Company issued 4,000,000 common shares with a fair value of $2,000,000.

This transaction has been recorded as an asset acquisition and the fair value paid has been allocated to the cost of acquisition of the mineral property.

Due to lack of funding, the Company has no immediate plans to explore these mines to determine resources available and consequently the costs of $2,000,000 incurred for these mineral properties is deemed to be fully impaired.

d) On March 28, 2012, the Company entered into a property option agreement whereby the Company was granted an option to earn a 100% interest in 3 mineral tenures located in Northern British Columbia.  The option agreement is denominated in US dollars.  

Consideration for the option was the issuance of 1,000,000 common shares of the Company on March 28, 2012 valued at $80,000, (issued) and cash payment of $5,000 by April 2, 2012 (paid) and aggregate exploration expenditures of $25,000 by September 15, 2013.

During the three month period ended October 31, 2013, the Company incurred exploration expenditures of $nil (October 31, 2012 - $3,317) on the property.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

October 31, 2013

(Unaudited)

Note 11   

Income Taxes

The Company had no income tax expense during the reported period due to net operating losses.

A reconciliation of income tax expense to the amount computed at the statutory rates is as follows:

	2013		2012
Operating loss for the three month period ended October 31	$      (134,167)		$      (88,976)
Average statutory tax rate	34%		34%
Expected income tax provisions	$        (45,617)		$      (30,252)
Unrecognized tax loses	(45,617)		(30,252)
Income tax expense	$                   -		$                  -

The Company has net operating losses carried forward of approximately $14,816,510 for tax purposes whichmay be recognized in future periods, not to exceed 20 years.

Note 12  

Commitments

The Company has an ongoing agreement with a director of the company to provide management services for $7,500 per month.  Either party may terminate the agreement with one month’s written notice.

Note 13  Subsequent events

On December 5, 2013, a holder of a convertible note converted a total of a total of $2,830 of principal into 6,152,174 shares of our common stock at a price of $0.00046.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

	October 31, 2013 $	July 31, 2013 $
Current Assets	886	829
Current Liabilities	402,980	339,765
Working Capital (Deficit)	(402,094)	(338,936)

Cash Flows

Three Months Ended

	October 31, 2013 $		October 31, 2012 $
Cash Flows from (used in) Operating Activities	(56,483)		(65,423)
Cash Flows from (used in) Investing  Activities	-		-
Cash Flows from (used in) Financing  Activities	56,540	56,033
Net Increase (decrease) in Cash During Period	57	(9,545)

Results for the Three Months Ended October 31, 2013 Compared to the Three Months Ended October 31, 2012

Operating Revenues

The Company’s revenues for the three months ended October 31, 2013 and October 31, 2012 were $nil and $nil, respectively.  We do not anticipate earning additional revenues until such time that we enter into commercial production of our claims.  We are presently in the 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.

Cost of Revenues

The Company’s cost of revenues for the three months ended October 31, 2013 and October 31, 2012 were $nil and $nil, respectively.

General and Administrative Expenses

General and administrative expenses for the three months ended October 31, 2013 and October 31, 2012 were $57,364 and $55,047, respectively.  General and administrative expenses consisted primarily of consulting fees, management fees, legal fees and accounting and audit fees.  The increase was primarily attributable to an increase in Management fees for normal operations.

Net Loss

Net loss for the three months ended October 31, 2013 was $(134,167) compared with a net loss of $(88,976) for the three months ended October 31, 2012.  The increased net loss is due to an increase in interest on convertible notes – Note 7.

Results for the Period from June 4, 2008 (inception of exploration state) Through October 31, 2013

Operating Revenues

The Company’s revenues for the period from June 4, 2008 (inception of exploration state) through October 31, 2013 were $nil.

Cost of Revenues

The Company’s cost of revenues for the period from June 4, 2008 (inception of exploration state) through October 31, 2013 were $nil.

General and Administrative Expenses

General and administrative expenses for the period from June 4, 2008 (inception of exploration state) through October 31, 2013 were $14,351,380.  General and administrative expenses consist primarily of consulting fees, officer compensation, management fees, legal fees, office expenses, and professional fees appropriate for being a public company.

Net Loss

Net loss for the period from June 4, 2008 (inception of exploration state) through October 31, 2013 was $(14,816,510).

Liquidity and Capital Resources

As at October 31, 2013, the Company had a cash balance and total assets of $886 and $86,505, respectively, compared with $829 and $86,694 of cash and total assets, respectively, as of July 31, 2013. The decrease in cash was due to normal operating activities and the decrease in total assets was due to the use of cash for operations.

As at October 31, 2013, the Company had total liabilities of $402,980 compared with $339,765 as of July 31, 2013. The increase in total liabilities was attributed to the issuance of a notes payable, derivative liabilities and an increase in accounts payable and accrued liabilities.

The overall working capital deficit increased from $402,094 at July 31, 2013 to $338,936 at October 31, 2013.

Cashflows from Operating Activities

During the three months ended October 31, 2013, cash used in operating activities was $(56,483) compared to $(65,423) for the three months ended October 31, 2012.  The decrease  in the amounts of cash used for operating activities was primarily due to the noncash expenses relating to the discount and interest on convertible notes. .

Cashflows from Investing Activities

During the three months ended October 31, 2013 cash used in investing activities was $nil compared to $nil for the Three months ended October 31, 2012.

Cashflows from Financing Activities

During the three months ended October 31, 2013, cash provided by financing activities was $56,540 compared to $56,033 for the three months ended October 31, 2012.  

Quarterly Developments

None

Subsequent Developments

None

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited 2012 financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is 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 by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of October 31, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on December 4, 2013, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On October 26, 2009, we entered into an agreement with Thunder Bay Minerals, Inc. (the “Agreement” and “Thunder Bay”, respectively) under which we 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. During the year ended July 31, 2010, we learned that Thunder Bay had allowed the KRK West Claims to lapse, and therefore the option agreement was null and void. As discussed above, we were able to re-purchase 13 of the 19 KRK West Claims from persons who re-staked the claims for an aggregate amount of $27,578. We also incurred exploration

expenditures of $555 in relation to these claims. Subsequent to acquisition of the claims they were transferred to our wholly owned subsidiary, Northern Bonanza, Inc.

Thunder Bay currently maintains that control of the KRK West Claims remains with it and that we have no right to further explore the property. We disagree with this assertion and accordingly ownership to the claims is in dispute.

On January 6, 2011, the Ministry of Northern Development, Mines and Forestry, Canada, was to adjudicate upon the ownership of the claims. The hearing did not occur as the other party filed for a change of venue and mediation regarding the matter was scheduled. Two days prior to the scheduled mediation, William J. Wheeler (“Wheeler”), the principal of Thunder Bay, cancelled the mediation.

As a result of the cancellation, we decided the best course of action was to file suit. Accordingly, we filed an action against Thunder Bay and Wheeler in Ontario Superior Court of Justice. In the suit we detail the breach of the Agreement by Thunder Bay and Wheeler and request:

·

An order transferring an application regarding mining claims to Ontario Superior Court to be consolidated with this action;

·

A declaration regarding our ownership and Thunder Bay and Wheeler’s ownership with respect to certain mining claims; and

·

$1,200,000 in damages from Thunder Bay and Wheeler.

The Company entered into a formal settlement agreement with a vendor to settle an amount due of Cdn$34,000 by monthly installments of Cdn$5,000 commencing May 15, 2011. As of October 31, 2013, Cdn$30,000 of the total amount due has been paid.

Other than the foregoing we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.Quarterly Issuances:

On August 9, 2013, the holder of a convertible note converted $3,000 of principal and interest into 4,545,455 shares of its common stock at a price of $0.00066.

On August 29, 2013, the holder of a convertible note converted $3,200 of principal and interest into 5,245,902 shares of its common stock at a price of $0.00061.

On September 9, 2013, the holder of a convertible note converted a total of $3,100 of principal and interest into 5,254,237 shares of its common stock at a price of $0.00059.

On September 16, 2013, the holder of a convertible note converted $3,200 of principal and interest into 5,245,902 shares of its common stock at a price of $0.00061.

On October 21, 2013, the holder of a convertible note converted $3,100 of principal and interest into 5,254,237 shares of its common stock at a price of $0.00059.

2. Subsequent Issuances:

On December 5, 2013, a holder of a convertible note converted a total of a total of $2,830 of principal and interest into 6,152,174 shares of our common stock at a price of $0.00046.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

On August 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital, LLC. Under the terms of the promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8%, with a February 1, 2014 maturity date. This note also contains customary events of default.

             On August 31, 2013, the Company entered into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of March 3, 2014. This note also contains customary events of default.

On September 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a March 1, 2014 maturity date. This note also contains customary events of default.

             On September 30, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of March 31, 2014. This note also contains customary events of default.

On October 1, 2013, the Company entered into an Unsecured Promissory Note with Syndication Capital LLC. Under the terms of this promissory note the Company has borrowed $11,000.00 from Syndication Capital, LLC, which accrues interest at an annual rate of 8% with a April 1, 2014 maturity date. This note also contains customary events of default.

On October 31, 2013, the Company into an Unsecured Promissory Note with our sole director and officer.  Under the terms of the promissory note the Company has borrowed $7,500.00 from our sole officer and director, which accrues interest at an annual rate of 8% with a maturity date of April 30, 2014. This note also contains customary events of default.

Previous Independent Registered Public Accounting Firm

	1.	On October 21, 2013, Anton & Chia LLP (“Anton & Chia”) resigned as independent auditor our Company.

 

	2.	The reports of Anton & Chia on the Company’s consolidated unaudited financial statements as of and for the periods ended April 30, 2013 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Company’s ability to continue as a going concern.

 

	3.	The board of directors of the Company represented by the board of directors discussed the resignation with Anton & Chia and reluctantly accepted such resignation.

 

	4.	During the Company's most recent interim periods, and any subsequent interim period preceding the resignation on October 21, 2013, there were no disagreements between the Company and Anton & Chia on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Anton & Chia, would have caused Anton & Chia to make reference to the subject matter of the disagreement(s) in connection with his reports.
	5.	The Company has provided Anton & Chia with a copy of the disclosures it is making in response to this Item.  The Company has requested Anton & Chia to furnish a letter addressed to the Commission stating whether it agrees with the statements made by the Company and, if not, stating the respects in which it does not agree.  The Company has filed the letter furnished by Anton & Chia as an exhibit to our Current Report on Form 8-K filed with the SEC on October 25, 2013.

New Independent Registered Public Accounting Firm

On October 23, 2013, the Company engaged W. T. Uniack & Co. CPA’s as its new independent registered public accounting firm.  During the two most recent fiscal years and through October 23, 2013, the Company had not consulted with W. T. Uniack & Co. CPA’s regarding any of the following:

1.

The application of accounting principles to a specific transaction, either completed or proposed;

2.

The type of audit opinion that might be rendered on the company’s consolidated financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that W. T. Uniack & Co. CPA’s concluded was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial report issues; or

3.

Any matter that was the subject of a disagreement, as that term is defined in item 304(a)(1)(iv) of Regulation S-K.

ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit				Filing
3.1	Articles of Incorporation				Filed with the SEC on October 7, 2008 as part of our Registration of Securities on Form S-1.
3.2	Bylaws				Filed with the SEC on October 7, 2008 as part of our Registration of Securities on Form S-1.
3.3	Extension of Option Agreement.				Filed with the SEC on November 15, 2011, as part of our Annual Report on Form 10-K.
3.4	Resolution Increasing Management Compensation Agreement.				Filed with the SEC on November 15, 2011, as part of our Annual Report on Form 10-K.
10.1	Mineral Property Option Agreement, by and between the Company and Thunder Bay Minerals, Inc., dated October 26, 2009.				Filed with the SEC on October 28, 2009, as part of our Current Report on Form 8-K.
10.2	Purchase Agreement between the Company and John Sadowski, President of North Star Prospecting, Inc., dated May 4, 2010.				Filed with the SEC on May 10, 2010, as part of our Current Report on Form 8-K.
10.3	Purchase Agreement between the Company and Lauren Notar, dated July 30, 2010.				Filed with the SEC on August 4, 2010, as part of our Current Report on Form 8-K.
10.4	Purchase Agreement between the Company and Vulture Gold, LLC., dated August 7, 2010.				Filed with the SEC on August 12, 2010 as part of our Current Report on Form 8-K.
10.5	Promissory Note by and between the Company and Asher Enterprises, Inc., dated January 23, 2012.				Filed with the SEC on March 15, 2012 as part of our Quarterly Report on Form 10-Q.
10.6	Promissory Note by and between the Company and Greenshoe Investments, dated March 19, 2012.				Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.
10.7	Property Option Agreement, dated March 28, 2012.				Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.
10.8	Promissory Note by and between the Company and Asher Enterprises, Inc., dated May 14, 2012.				Filed with the SEC on June 14, 2012 as part of our Quarterly Report on Form 10-Q.
10.9	Promissory Note by and between the Company and Asher Enterprises, Inc., dated October 5, 2012				Filed with the SEC on November 7, 2012 as part of our Annual Report on Form 10-K.
10.10	Promissory Note by and between the Company and Syndication Capital, LLC., dated May 1, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.11	Employment Agreement by and between the Company and Dhugald Pinchin, dated May 15, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.12	Promissory Note by and between the Company and Dhugald Pinchin, dated May 31, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.13	Promissory Note by and between the Company and Syndication Capital, LLC, dated June 1, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.14	Promissory Note by and between the Company and Dhugald Pinchin, dated June 30, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.15	Promissory Note by and between the Company and Syndication Capital, LLC., dated July 1, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.16	Promissory Note by and between the Company and Dhugald Pinchin, dated July 31, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.17	Promissory Note by and between the Company and Syndication Capital, LLC., dated August 1, 2013				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.18	Promissory Note by and between the Company and Dhugald Pinchin, dated August 31, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.19	Promissory Note by and between the Company and Syndication Capital, LLC., dated September 1, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.20	Promissory Note by and between the Company and Dhugald Pinchin, dated September 30, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.21 10.22	Promissory Note by and between the Company and Syndication Capital, LLC., dated October 1, 2013. Promissory Note by and between the Company and Dhugald Pinchin, dated October 31, 2013.				Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K. Filed herewith.
16.1	Representative Letter from DeJoya Griffith, LLC, dated January 8, 2013.				Filed with the SEC on January 9, 2013 as part of our Quarterly Report on Form 10-Q.
16.2	Representative Letter from Anton & Chia, LLP, dated October 25, 2013.				Filed with the SEC on October 25, 2013 as part of our Current Report on Form 8-K.
21.01	List of Subsidiaries				Filed with the SEC on June 19, 2013 as part of our Quarterly Report on Form 10-Q.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14				Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14				Filed herewith.
32.01	Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act				Filed herewith.
101.INS*	XBRL Instance Document				Furnished herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document				Furnished herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document				Furnished herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document				Furnished herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document				Furnished herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document				Furnished herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SOURCE GOLD CORP.
Dated: December 19, 2013		/s/ Dhugald Pinchin
		Dhugald Pinchin
		Its: President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Dated: December 19, 2013	/s/ Dhugald Pinchin
	By: Dhugald Pinchin Its: Director