Golden Matrix Group, Inc. - Quarter Report: 2014 April (Form 10-Q)

Converted by EDGARwiz

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 April 30, 2014

[ ] 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

[srgl10q43014_10q001.jpg]

SOURCE GOLD CORP.

(Name of small business issuer in its charter)



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

200 S. Virginia Street, 8th FloorReno, Nevada 89501

(Address of principal executive offices)

(775) 398-3134

(Registrant’s telephone number)

1155 Camino Del Mar #162

Del Mar, CA 92014


(Former name or former address, if changed since last report)

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



Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

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

As of May 21, 2014, there were 343,848,674 shares of the registrant’s $0.001 par value common stock issued and outstanding.

SOURCE GOLD CORP.*

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	4

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	37


PART II.OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	38

ITEM 1A.	RISK FACTORS	38

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	39

ITEM 4.	MINE SAFETY DISCLOSURES	39

ITEM 5.	OTHER INFORMATION	39

ITEM 6.	EXHIBITS	39

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)

April 30, 2014 (unaudited)

Financial Statement Index

Consolidated Balance Sheets (2014unaudited)

Consolidated Statements of Operations and Comprehensive Loss (unaudited)

Consolidated Statement of Cash Flows (unaudited) 7

Notes to the Consolidated Financial Statements (unaudited)


SOURCE GOLD CORP.
(An Exploration Stage Company)
Condensed Consolidated Balance Sheets

	As of	As of
	April 30, 2014	July 31, 2013
ASSETS

Current assets:
Cash and cash equivalents	$ 32	$ 14
Loan receivable	-	-
Prepaid expenses	815	815
Total current assets	847	829
Computer equipment	127	865
Mineral property	85,000	85,000
Other assets	-	-
TOTAL ASSETS	$ 85,974	$ 86,694

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$ 46,433	$ 38,398
Notes payable, net of discount	562,760	147,900
Notes payable interest	31,167	7,973
Notes payable, derivative liability	157,796	133,962
Due to related party	10,820	10,820
Loan payable	2,306	711
Total Current Liabilities	811,283	339,765
Shareholder's equity:
Preferred stock, $0.001 par value; 20,000,000 shares authorized, none outstanding	-	-
Common stock, $0.001 par value; 900,000,000 shares authorized; 273,571,658 (July 31, 2013 - 103,014,399) shares issued and outstanding	273,572	103,014
Additional paid in capital	14,401,948	14,326,942
Accumulated other comprehensive loss	(683)	(683)
Retained earnings (accumulated deficit)	(15,400,146)	(14,682,344)
Total shareholders' equity	(725,309)	(253,071)
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$ 85,974	$ 86,694

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


SOURCE GOLD CORP.
(An Exploration Stage Company)
Condensed Consolidated Statements of Operations and Comprehensive Loss

							From
							Inception
							(June 04, 2008
	Three months ended		Nine months ended			to
	April 30,		April 30,			April 30,
	2014	2013		2014	2013		2014)

Sales	$ -	$ -		$ -	$ -		$ -
Cost of goods sold	-	-		-	-		-
Gross profit	-	-		-	-		-
Operating expenses
Accounting and audit fees	5,250	5,609		10,925	29,264		226,267
Depreciation	246	246		738	738		1,846
G&A expenses	53,996	25,675		196,397	29,705		354,115
Management fees	52,500	45,000		142,500	81,000		11,354,720
Mineral property exploration costs	-	-		-	3,317		159,263
Mineral property option impairment	-	-		-	-		2,203,611
Professional fees	5,455	6,170		100,690	24,969		365,094
Tax penalties and interest	-	-		-	-		80,347
Other operating expenses	-	-		-	-		-
Net loss from operations	(117,447)	(82,699)		(451,250)	(168,992)		(14,745,263)
Other income/ (expense)
Foreign exchange (gain) loss	-	-		-	7		(9,166)
FV change of derivative liability	(21,548)	26,243		(48,583)	26,243		(67,791)
Interest on convertible notes	(87,635)	(116,784)		(217,969)	(120,602)		(407,039)
Convertible debt discount	-	25,799		-	(86,629)		(170,886)
Net loss before income taxes	(226,630)	(147,442)		(717,802)	(349,974)		(15,400,146)
Income tax expense	-	-		-	-		-
Net Loss	(226,630)	(147,442)		(717,802)	(349,974)		(15,400,146)
Other comprehensive gain (loss)							-
Foreign currency translation adjustments	-	-		-	(155)		(683)
Comprehensive Loss	(226,630)	(147,442)		(717,802)	(350,129)		(15,400,829)

Per share information
Basic, weighted number of common shares outstanding	200,947,802	71,762,871		152,146,231	63,433,087
Net profit/(loss) per common share	(0.00)	(0.00)		(0.00)	(0.01)

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


SOURCE GOLD CORP.
(An Exploration Stage Company)
Condensed Consolidated Statements of Cash Flows
			From
			Inception
	Nine months ended		(June 4, 2008
	April 30,		to
	2014	2013	April 30, 2014)
Cash flows from operating activities
Net loss	(717,802)	(349,974)	(15,400,146)
Adjustment to reconcile net loss to net cash in operating activities
Fair value change of derivative liability	48,583	26,243	67,791
Convertible debt interest expense	80,673	150,637	354,580
Beneficial conversion feature of convertible notes	112,402	-	190,478
Depreciation	738	738	1,846
Mineral property option costs	-	-	1,842
Impairment loss on mineral property option	-	-	2,199,894
Management fees from stock options	-	-	10,960,000
Changes in assets and liabilities:
(Increase) decrease in loans receivable	-	-	-
(Increase) decrease in prepaid expenses	-	(675)	(815)
(Decrease) increase in accrued interest	-	-	2,165
(Decrease) increase in accounts payable and accrued liabilities	8,035	46,729	44,268
(Decrease) increase in notes payable, interest	24,894	4,108	32,867
Net cash used in operating activities	(442,477)	(122,194)	(1,545,229)

Cash flows from investing activities
Purchase of computer equipment	-	-	(1,973)
Mineral property option acquisition	-	-	(204,894)
Net cash flows used in investing activities	-	-	(206,867)

Cash flows from financing activities
Payments from promissory notes	440,900	93,774	787,310
Due to related party	-	12,353	10,820
Proceeds from loan payable	1,595	711	2,306
Proceed from issuance of common stock	-	-	952,375
Net cash provided by financing activities	442,495	106,838	1,752,811

Effect of foreign exchange on cash	-	(155)	(683)

Change in cash and cash equivalents	18	(15,511)	32
Cash and cash equivalents at the beginning of the period	14	15,620	-
Cash and cash equivalents at the end of the period	32	109	32

Supplementary disclosure for non-cash investing and financing activities
Shares issued for mineral property	$ -	$ -	$ 2,080,000

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

April 30, 2014

(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 nine months ended April 30, 2014 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

April 30, 2014

(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 $15,400,146 since inception, has working capital deficiency of $810,436, 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

April 30, 2014

(Unaudited)

Note 4

Computer equipment


	April 30,	July 31,
	2014	2013
Cost
Computer equipment	$ 1,973	$ 1,973

Accumulated depreciation	(1,846)	(1,108)

Net book value	$ 127	$ 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

April 30, 2014

(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 April 30, 2014, due to related party includes $10,820(April 30, 2013 - $15,782) owing to Grid Petroleum.

During the year ended July 31, 2010, the former president of the Company granted an option to the current president of the Company to acquire up to 20,000,000 common shares of the Company as detailed in Note 7, common stock.

On November 1, 2009, the Company entered into a Corporate Management Services Agreement with the President of the Company for management services. Pursuant to the agreement the President would receive a signing bonus of $7,500 (paid November 1, 2009) and $5,000 per month beginning December 1, 2009 for services rendered plus reimbursement of the Company’s expenses. The agreement may be terminated by either party upon 30 days written notice.

On June 21, 2011, the Company amended the agreement by issuing a resolution to reflect a payment of $6,000 per month for services rendered.

On October 31, 2012, the Former President of the Company acquired 10,000,000 common shares of the Company in a private transaction. As of October 31, 2012 the President holds 16.4% interest in the common stock of the Company.

During the nine month period ended April 30, 2014, the Company recorded management fees of $nil (nine month period ended April 30, 2013 - $36,000) owed to the Company’s former president.

On May 15, 2013 the Company entered into an employment agreement with Dhugald Pinchin providing a signing bonus equivalent to $50,000 USD or stock and $7,500 per month salary.

During the nine month period ended April 30, 2014, the Company recorded management fees of $67,500 (nine month period ended April 30, 2013 - $nil) owed to the Company’s president.

Note 7

Convertible Notes Payable


		April 30,	July 31,
		2014	2013
Promissory Note #2		30,000	30,000
Promissory Note #4		-	24,900
Promissory Note #5		12,000	12,000
Promissory Note #6		11,774	11,774
Promissory Note #7		18,930	27,500
Promissory Note #8		-	44,978
Promissory Note #9		-	11,000
Promissory Note #10		-	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	-
Promissory Note #20		176,000	-
Promissory Note #21		11,000	-
Promissory Note #22		7,500	-
Promissory Note #23		16,000	-
Promissory Note #24		37,500	-
Promissory Note #25		7,500	-
Promissory Note #26		7,000	-
Promissory Note #27		7,500	-
Promissory Note #28		16,000	-
Promissory Note #29		7,500	-
Promissory Note #30		16,000	-
Promissory Note #31		26,500	-
Promissory Note #32		38,178	-
Promissory Note #33		17,824	-
Promissory Note #34		7,500	-
Promissory Note #35		16,000	-
Promissory Note #36		7,500	-
		$ 623,706	$ 245,652
	Debt discount	(59,446)	(8,600)
	Debt discount - BCF	(1,500)	(89,152)
Notes payable, net of discount		562,760	147,900
	Accrued interest	31,167	7,973
		$ 593,928	$ 155,873

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.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

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 nine month period ended April 30, 2014 the Company accrued $503 (nine month period ended April 30, 2013 - $1,928) 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.

On November 14, 2013, the Company was charged a late filing penalty and $4,650 was credited to the principal balance with a corresponding debit to the statement of operations.

During the nine month period ended April 30, 2014, the Company recorded a loss of $21,227 (April 30, 2013 - $968) due to the change in value of the derivative liability during the period.

During the nine month period ended April 30, 2014, the Company issued 74,458,397 common shares upon the conversion of $29,550 of the principal balance and $1,700 of interest into common stock, and $67,031 of the derivative liability was re-classified as additional paid in capital upon conversion.

As of April 30, 2014, principal balance of $nil (April 30, 2013 - $42,500) accrued interest of $1,426 (April 30, 2013 - $1,928) and a derivative liability of $nil (April 30, 2013 - $51,886) was recorded.

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 nine month period ended April 30, 2014, the Company accrued $718 (April 30, 2013 - $476) in interest expense.

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 nine month period ended April 30, 2014, the Company recorded a gain of $1,223 (April 30, 2013 - $nil) due to the change in value of the derivative liability during the period.

As of April 30, 2014, principal balance of $12,000 (April 30, 2013 - $12,000) accrued interest of $1,439 (April 30, 2013 - $476) and a derivative liability of $17,742 (April 30, 2013 - $13,844) was recorded.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

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 nine month period ended April 30, 2014, the Company accrued $704 (April 30, 2013 - $343) 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 nine month period ended April 30, 2014, the Company recorded a gainof $1,199(April 30, 2013 - $nil) due to the change in value of the derivative liability during the period.

As of April 30, 2014, principal balance of $11,774 (April 30, 2013 - $11,774) accrued interest of $1,285 (April 30, 2013 - $343) and a derivative liability of $17,408 (April 30, 2013 - $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 nine months ended April 30, 2014, the Company accrued $2,031 (April 30, 2013 - $464) in interest expense.

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 nine month period ended April 30, 2014, the Company recorded a loss of $22,865 (April 30, 2013 - $nil) due to the change in value of the derivative liability during the period.

On November 14, 2013, the Company was charged a late filing penalty and $13,750 was credited to the principal balance with a corresponding debit to the statement of operations.

During the nine month period ended April 30, 2014, the Company issued 52,470,291 common shares upon the conversion of $22,320 of the principal balanceinto common stock, and $45,463 of the derivative liability was re-classified as additional paid in capital upon conversion.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #7 (Cont’d)

As of April 30, 2014, principal balance of $18,930 (April 30, 2013 - $27,500) accrued interest of $3,170 (April 30, 2013 - $464) and a derivative liability of $27,988 (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $2,258 (April 30, 2013 - $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.

On May 1, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $44,978 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $27,733 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

On March 17, 2014, a replacement note was issued and the principal balance of $44,978 was transferred LG Capital Funding, LLC.

As of April 30, 2014, principal balance of $nil (April 30, 2013 - $nil), accrued interest of $3,155 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $574 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #9 (Cont’d)

On June 1, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $11,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $7,393 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

On March 26, 2014, a replacement note was issued and the principal balance of $11,000 was transferred Gel Properties, LLC.

As of April 30, 2014, principal balance of $nil (April 30, 2013 - $nil), accrued interest of $719 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $574 (April 30, 2013 - $nil) in interest expense.

On July 1, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $11,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $9,207 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

On March 26, 2014, a replacement note was issued and the principal balance of $11,000 was transferred Gel Properties, LLC.

As of April 30, 2014, principal balance of $nil (April 30, 2013 - $nil), accrued interest of $646 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $3,441 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #11 (Cont’d)

On May 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $57,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $38,333 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $57,500 (April 30, 2013 - $nil), accrued interest of $4,210 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $448 (April 30, 2013 - $nil) in interest expense.

On June 30, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $7,500 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $6,236 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil), accrued interest of $499 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $448 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #13 (Cont’d)

On July 31, 2013 interest expense relating to the beneficial conversion feature of this convertible note of $5,250 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the nine month period ended April 30, 2014, debt discount of $5,250 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil), accrued interest of $448 (April 30, 2013 - $nil) and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $656 (April 30, 2013 - $nil) in interest expense.

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $7,700 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $7,700 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $11,000 (April 30, 2013 - $nil), accrued interest of $656 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $398 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #15 (Cont’d)

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $2,250 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $2,250 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil), accrued interest of $398 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $582 (April 30, 2013 - $nil) in interest expense.

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $3,300 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $3,300 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $11,000 (April 30, 2013 - $nil), accrued interest of $582 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $348 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #17 (Cont’d)

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $3,750 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $3,750 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil), accrued interest of $348 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $509 (April 30, 2013 - $nil) in interest expense.

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $5,500 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $5,500 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $11,000 (April 30, 2013 - $nil), accrued interest of $509 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $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 nine month period ended April 30, 2014, the Company accrued $297 (April 30, 2013 - $nil) in interest expense.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #19 (Cont’d)

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $750 (April 30, 2013 - $nil) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $750 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil), accrued interest of $297 (April 30, 2013 - $nil), and debt discount of $nil (April 30, 2013 - $nil) was recorded.

Promissory Note #20

On November 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $176,000. 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 nine month period ended April 30, 2014, the Company accrued $6,943 (April 30, 2013 - $nil) in interest expense.

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $nil (April 30, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of April 30, 2014, principal balance of $176,000 (April 30, 2013 - $nil) and accrued interest of $6,943 (April 30, 2013 - $nil) was recorded.

Promissory Note #21

On November 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 May 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 nine month period ended April 30, 2014, the Company accrued $434 (April 30, 2013 - $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 April 30, 2014, principal balance of $11,000 (April 30, 2013 - $nil) and accrued interest of $434 (April 30, 2013 - $nil) was recorded.

Promissory Note #22

On November 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 May 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 nine month period ended April 30, 2014, the Company accrued $248 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $248 (April 30, 2013 - $nil) was recorded.

Promissory Note #23

On December 1, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 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 nine month period ended April 30, 2014, the Company accrued $526 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $16,000 (April 30, 2013 - $nil) and accrued interest of $526 (April 30, 2013 - $nil) was recorded.

Promissory Note #24

On December 13, 2013, the Company received funding pursuant to a convertible promissory note in the amount of $37,500. The promissory note is unsecured, bears interest at 8% per annum, and matures

on September 17, 2014. During the nine months ended April 30, 2014, the Company accrued $1,135 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $37,500 (April 30, 2013 - $nil) and accrued interest of $1,135 (April 30, 2013 - $nil) was recorded.

Promissory Note #25

On December 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 June 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 nine month period ended April 30, 2014, the Company accrued $197 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $197 (April 30, 2013 - $nil) was recorded.

Promissory Note #26

On January 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $7,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 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 nine month period ended April 30, 2014, the Company accrued $183 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,000 (April 30, 2013 - $nil) and accrued interest of $183 (April 30, 2013 - $nil) was recorded.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #27

On January 31, 2014 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 July 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 nine month period ended April 30, 2014, the Company accrued $146 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $146 (April 30, 2013 - $nil) was recorded.

Promissory Note #28

On February 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 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 nine month period ended April 30, 2014, the Company accrued $309 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $16,000 (April 30, 2013 - $nil) and accrued interest of $309 (April 30, 2013 - $nil) was recorded.

Promissory Note #29

On February 28, 2014 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 August 28, 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 nine month period ended April 30, 2014, the Company accrued $100 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $100 (April 30, 2013 - $nil) was recorded.

Promissory Note #30

On March 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 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 nine month period ended April 30, 2014, the Company accrued $210 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $16,000 (April 30, 2013 - $nil) and accrued interest of $210 (April 30, 2013 - $nil) was recorded.

Promissory Note #31

On March 17, 2014, the Company received funding pursuant to a convertible promissory note in the amount of $26,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 17, 2015. During the nine months ended April 30, 2014, the Company accrued $256 (April 30, 2013 - $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 50% of the market price, where market price is defined as “the lowest closing bid price of the ten prior trading days on the OTCBB including the day upon which a Notice of Conversion is received by the Company.”

As of April 30, 2014, principal balance of $26,500 (April 30, 2013 - $nil) and accrued interest of $256 (April 30, 2013 - $nil) was recorded.

Promissory Note #32

On March 17, 2014, the Company arranged a debt swap under which Syndication Capital Note #8 for $44,978 was transferred to LG Capital Funding, LLC. The promissory note is unsecured, bears

interest at8% per annum and matures on March 17, 2015. The note also contains customary events of default. During the nine month period ended April 30, 2014, the Company accrued $389 (nine month period ended April 30, 2013 - $nil) in interest expense.

Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $64,366 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the nine month period ended April 30, 2014, the Company recorded a loss of $1,760 (nine month period ended April 30, 2013 - $nil) due to the change in value of the derivative liability during the period, and debt discount of $5,422 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

During the nine month period ended April 30, 2014, the Company issued 19,428,571 common shares upon the conversion of $6,800 of the principal balance and $9,679 of the derivative liability was re-classified as additional paid in capital upon conversion.

As ofApril 30, 2014, principal balance of $38,178 (April 30, 2013 - $nil)accrued interest of $389 (April 30, 2013 - $nil), debt discount of $39,556 (April 30, 2013 - $nil) and a derivative liability of $56,447 (April 30, 2013 - $nil) was recorded.

Promissory Note #33

On March 26, 2014, the Company arranged a debt swap under which Syndication Capital Note #9 for $11,000 and Syndication Capital Note #10 for $11,000 wastransferred to Gel Properties, LLC. The promissory note is unsecured, bears interest at8% per annum and matures on March 26, 2015.The note also contains customary events of default. During the nine month period ended April 30, 2014, the Company accrued $153 (nine month period ended April 30, 2013 - $nil) in interest expense.

Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $67,153 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the nine month period ended April 30, 2014, the Company recorded a loss of $5,153 (nine month period ended April 30, 2013 - $nil) due to the change in value of the derivative liability during the period, and debt discount of $2,110 (nine month period ended April 30, 2013 - $nil) was accreted to the statement of operations.

During the nine month period ended April 30, 2014, the Company issued 24,200,000 common shares upon the conversion of $4,176 of the principal balance and $34,095 of the derivative liability was re-classified as additional paid in capital upon conversion.

As ofApril 30, 2014, principal balance of $17,824 (April 30, 2013 - $nil)accrued interest of $153 (April 30, 2013 - $nil), debt discount of $19,890 (April 30, 2013 - $nil) and a derivative liability of $38,211 (April 30, 2013 - $nil) was recorded.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 7

Convertible Notes Payable – (Cont’d)

Promissory Note #34

On March 31, 2014 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 September 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 nine month period ended April 30, 2014, the Company accrued $49 (April 30, 2013 - $nil) in interest expense.

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $49 (April 30, 2013 - $nil) was recorded.

Promissory Note #35

On April 1, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 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 nine month period ended April 30, 2014, the Company accrued $102 (April 30, 2013 - $nil) in interest expense.

During the nine month period ended April 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $1,500 (April 30, 2013 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

As of April 30, 2014, principal balance of $16,000 (April 30, 2013 - $nil), accrued interest of $102 (April 30, 2013 - $nil) and debt discount of $1,500 (April 30, 2013 - $nil) was recorded.

Promissory Note #36

On April 30, 2014 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 October 30, 2014. The Conversion Price shall mean par .001 multiplied by the number of Common

As of April 30, 2014, principal balance of $7,500 (April 30, 2013 - $nil) and accrued interest of $nil (April 30, 2013 - $nil) was recorded.

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 nine month period ended April 30, 2014, the Company has a balance of derivative liabilities for embedded conversion features related to convertible notes payable of face value $157,796 (April 30, 2013- $56,394). During the nine month period ending April 30, 2014, $64,546 (April 30, 2013 - $84,300) of convertible notes payable principal and interest 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:


		April 30,
		2014
Balance, beginning of year		$ 133,962
Initial recognition of derivative liability		131,519
Fair value change in derivative liability		48,583
Conversion of derivative liability to APIC		(156,268)
Balance as of April 30, 2014		$ 157,796

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 nine month period ended April 30, 2014, the Company issued 170,557,259common shares upon the conversion of $64,546 principal and interest of promissory notes into common stock.

Warrants and Options

As of April 30, 2014 and July 31, 2013, there were no warrants or options outstanding to acquire any additional shares of the Company’s common stock.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

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:

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.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 10

Mineral Properties – (Cont’d)

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.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 10

Mineral Properties – (Cont’d)

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.

During the nine month period ended April 30, 2014, the Company incurred exploration expenditures of $nil (April 30, 2013 - $3,317) on the property.

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.

As at April 30, 2014, no exploration expenditures have been incurred on the property.

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:



	2014	2013
Operating loss for the nine month period ended April 30	$ (717,802)	$ (349,974)
Average statutory tax rate	34%	34%
Expected income tax provisions	$ (244,053)	$ (118,991)
Unrecognized tax loses	(244,053)	(118,991)
Income tax expense	$ -	$ -

The Company has net operating losses carried forward of approximately $15,400,146 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 May 6,2014, a holder of a convertible note converted a total of $7,270of principal into 12,982,143 shares of our common stock at a price of $0.00056.

Source Gold Corp.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Financial Statements

April 30, 2014

(Unaudited)

Note 13

Subsequent events – (Cont’d)

On May 13, 2014, a holder of a convertible note converted a total of $1,120 of principal into 14,000,000 shares of our common stock at a price of $.00008.

On May 14, 2014, a holder of a convertible note converted a total of $11,178 of principal and $149 of interest into 28,317,600 shares of our common stock at a price of $0.0004.

On May 15, 2014, a holder of a convertible note converted a total of $6,590of principal into 14,977,273 shares of our common stock at a price of $0.00044.

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



	April 30, 2014 $	July 31, 2013 $
Current Assets	847	829
Current Liabilities	811,283	339,765
Working Capital (Deficit)	(810,436)	(338,936)

Cash Flows

Nine Months Ended



	April 30, 2014 $	April 30, 2013 $
Cash Flows from (used in) Operating Activities	(442,477)	(122,194)
Cash Flows from (used in) Investing Activities	-	-
Cash Flows from (used in) Financing Activities	442,495	106,838
Net Increase (decrease) in Cash During Period	18	(15,511)

Results for the Nine Months Ended April 30, 2014 Compared to the Nine Months Ended April 30, 2013

Operating Revenues

The Company’s revenues for the nine months ended April 30, 2014 and April 30, 2013 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 nine months ended April 30, 2014 and April 30, 2013 were $nil and $nil, respectively.

General and Administrative Expenses

General and administrative expenses for the nine months ended April 30, 2014 and April 30, 2013 were $451,250 and $168,992, 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 and professional fees for normal operations.

Net Loss

Net loss for the nine months ended April 30, 2014 was $(717,802) compared with a net loss of $(349,974) for the nine months ended April 30, 2013. The increased net loss is due to an increase in G&A expenses and interest on convertible notes.

Results for the Period from June 4, 2008 (inception of exploration state) Through April 30, 2014

Operating Revenues

The Company’s revenues for the period from June 4, 2008 (inception of exploration state) through April 30, 2014 were $nil.

Cost of Revenues

The Company’s cost of revenues for the period from June 4, 2008 (inception of exploration state) through April 30, 2014 were $nil.

General and Administrative Expenses

General and administrative expenses for the period from June 4, 2008 (inception of exploration state) through April 30, 2014 were $14,745,263. 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 April 30, 2014 was $(15,400,146).

Liquidity and Capital Resources

As at April 30, 2014, the Company had a cash balance and total assets of $847 and $85,974, 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 April 30, 2014, the Company had total liabilities of $811,283 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 $338,936 at July 31, 2013 to $810,436 at April 30, 2014.

Cashflows from Operating Activities

During the nine months ended April 30, 2014, cash used in operating activities was $(442,477) compared to $(122,194) for the nine months ended April 30, 2013. 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 nine months ended April 30, 2014 cash used in investing activities was $nil compared to $nil for the nine months ended April 30, 2013.

Cashflows from Financing Activities

During the nine months ended April 30, 2014, cash provided by financing activities was $442,495 compared to $106,838 for the nine months ended April 30, 2013.

Quarterly Developments

On March 25, 2014, The Corporation appointed Edward Aruda, to the positions of the President, Treasurer, Secretary and as a Director, effective immediately. The Board of Directors also accepted the resignation from Dhugald Pinchin from all capacities to the Corporation effective immediately. His resignation is for personal reasons and is not in connection with any known disagreement with the Company on any matter.

Edward J. Aruda, age 55, is the founder, President and a Director of Santa Rosa Resources Inc., since its formation in 2007. He has much personal experience and leadership skills in the oil and gas industries, from the manufacturing of drilling equipment to the development of oil and gas properties. Mr. Aruda began his career in 1977 working for Smith Tool, a division of Smith International, a major manufacturer of oil and gas well drilling bits. In 1990 Mr. Aruda became involved in the investment banking and financing of oil and gas programs. Mr. Aruda worked as a Registered Representative of the NASD and previously held series 22, 6 and 63 licenses. He has overseen the successful financing and development of numerous oil and gas properties throughout the southwest.

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 April 30, 2014, 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, and amended on May 28, 2014, 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 April 30, 2014, 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:

From February 1, 2014, until April 30, 2014, the holders of a convertible notes converted $37,406 of principal and interest into 111,069,021 shares of its common stock.

2. Subsequent Issuances:

From May 1, 2014, until May 21, 2014, the holders of a convertible notes converted a total of $26,307 of principal and interest into 70,277,016 shares of our common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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	Promissory Note by and between the Company and Syndication Capital, LLC., dated October 1, 2013.	Filed with the SEC on December 4, 2013, as part of our Annual Report on Form 10-K.
10.22	Promissory Note by and between the Company and Dhugald Pinchin, dated October 31, 2013.	Filed herewith.
10.23	Promissory Note by and between the Company and Syndication Capital, LLC, dated February 1, 2014	Filed herewith.
10.24	Promissory Note by and between the Company and Dhugald Pinchin, dated February, 28, 2014.	Filed herewith.
10.25	Promissory Note, by and between the Company and Syndication Capital, LLC, date March 1, 2014.	Filed herewith.
10.26	Promissory Note, by and between the Company and LG Capital Funding, LLC, dated March 17, 2014.	Filed herewith.
10.27	Promissory Note, by and between the Company and LG Capital Funding, LLC, dated March 17, 2014.	Filed herewith.
10.28	Promissory Note, by and between the Company and Gel Properties, LLC, dated March 26, 2014.	Filed herewith.
10.29	Promissory Note by and between the Company and Dhugald Pinchin, dated March 31, 2014.	Filed herewith.
10.30	Promissory Note by and between the Company and Syndication Capital, LLC, dated April 1, 2014.	Filed herewith.
10.31	Promissory Note by and between the Company and Dhugald Pinchin, dated April 30, 2014.	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: June 13, 2014		/s/ Edward Aruda
		Edward Aruda
		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: June 13, 2014	/s/ Edward Aruda
	By: Edward Aruda Its: Director