HQDA ELDERLY LIFE NETWORK CORP. - Quarter Report: 2008 December (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

or

Commission File Number 000-52417

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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ____ No   X   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

DYNAMIC GOLD CORP.
FORM 10-Q
TABLE OF CONTENTS

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PART 1. FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Nature and Continuance of Operations (Note 1), Going Concern (Note 3), Commitment (Note 11) and Subsequent Event (Note 12)

On behalf of the Board:

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

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

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Supplemental Disclosures with Respect to Cash Flows (Note 10)

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

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

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Recently adopted accounting pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 – Fair Value Measurements (“SFAS 157”). The statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the FASB issued Staff Position No. FAS 157-2 which proposed a one year deferral for the implementation of SFAS 157 for non-financial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis (less frequent than annually). On 1 July 2008 the Company elected to implement this Statement with the one-year deferral. Given the nature of the Company’s current financial instruments, the adoption of SFAS No. 157 did not have a material impact on the Company’s financial position, results of operations or cash flows. Beginning 1 July 2009, we will adopt the provisions for nonfinancial assets and nonfinancial liabilities that are not required or permitted to be measured at fair value on a recurring basis. The Company is in the process of evaluating this standard with respect to its effect on nonfinancial assets and liabilities and has not yet determined the impact that it will have on its consolidated financial statements upon full adoption in 2009.

In February 2007, the FASB issued SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities – including an amendment of FASB Statement No. 115 ("SFAS 159"). The statement permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS 159 is to provide opportunities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Company adopted SFAS No. 159 on 1 July 2008. The adoption of SFAS No. 159 did not have a material effect on our financial condition, results of operations or cash flows as the Company did not elect this fair value option.

New accounting pronouncements

In December 2007, the FASB issued SFAS No. 141(R) – Business Combinations (“SFAS 141(R)”). SFAS 141(R) changes the accounting for business combinations both at the acquisition date and in subsequent reporting periods. SFAS 141(R) requires the acquiring company to measure almost all assets acquired and liabilities assumed in the acquisition at fair value as of the acquisition date. The standard is effective for fiscal years beginning on or after 15 December 2008 and should be applied prospectively with the exception of income taxes which should be applied retrospectively for all business combinations. Early adoption is prohibited. The adoption of SFAS 141(R) is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160 – Non-controlling Interests in Consolidated Financial Statements an amendment to Accounting Research Bulletin (“ARB”) No. 51 (“SFAS 160”). SFAS 160 requires non-controlling interests in a subsidiary to be initially measured at fair value and classified as a separate component of equity. The standard is effective for fiscal years beginning on or after 15 December 2008 and should be applied prospectively with the exception of the presentation and disclosure requirements which should be applied retrospectively if comparative financial statements are presented. Early adoption is prohibited. The adoption of SFAS 160 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

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The provision for refundable federal income tax consists of the following:

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at 31 December 2008, the Company has an unused net operating loss carry-forward balance of approximately $183,613 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2024 and 2029.

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

The terms “Dynamic Gold”, “Company”, “we”, “our”, and “us” refer to Dynamic Gold Corp. and its subsidiary, as a consolidated entity, unless the context suggests otherwise.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this Form 10-Q that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation the Risk Factors set forth in our Annual Report on Form 10-KSB/A for the year ended June 30, 2008 including the following:

• our failure to obtain additional financing;
• our inability to continue as a going concern;
• the unique difficulties and uncertainties inherent in the mineral exploration business;
• the inherent dangers involved in mineral exploration;
• our President’s and Secretary/Treasurer’s inability to devote a significant amount of time to our business operations;
• environmental, health and safety laws in British Columbia;
• local and multi-national economic and political conditions;
• natural hazards on the Coast of British Columbia, Canada; and
• our common stock.

General

On January 8, 2008, we acquired, through our wholly owned subsidiary, a 100% interest in two gravel claims called the Northern Gravel Claims and Super Mammoth Gravel Claims (the “Super Mammoth Gravel Project”) situated on tidewater along the Homfray Channel for $25,000. The Super Mammoth Gravel Project consist of two mineral claim tenures that are approximately 124.1 each hectares (“ha”) in size (total 248.2 ha). A detailed report used in obtaining aggregate samples has been filed and accepted by the British Columbia’s Gold commissioner’s office in September 2007. The claims are currently in good standing until their respective anniversary dates of November 6, 2014 (Northern Gravel Claim) and January 19, 2015 (Super Mammoth Claim).

On June 5, 2008, a comprehensive National Instrument 43-101 compliant report (the “report”) on the Super Mammoth Gravel Project was completed. The report was prepared in accordance with the guidelines of National Instrument 43-101 “Standards of Disclosure for Mineral Projects” and is based on data and geological information gathered from public sources, assessment files, historical information, British Columbia provincial government maps and reports. The source information of data presented in the report discusses the geology and mineral potential of the Super Mammoth Gravel Project and is believed to be reliable and accurate.

The Super Mammoth Gravel Project is located at Lloyd Point on the east arm of Toba Inlet situated 50 kilometers east of Campbell River, British Columbia, Canada and 28 kilometers north of Powell River on the British Columbia mainland. The existence of the Super Mammoth gravel deposit has been identified by Lands and Water British Columbia Inc. and has been the subject of numerous preliminary investigations over the years, with the potential to host a year round future sand and gravel aggregate operation with tidewater access that could supply growing demand for a range of raw materials to both British Columbia, Washington State, California and other United States and Pacific Rim coastal construction markets. The Super Mammoth Gravel Project is situated between sea level to about 300 meters in elevation that comprises a sorted accumulation of sand and gravel.

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Plan of Operations

Our plan of operations for the twelve months following the date of this report is to determine the Super Mammoth Gravel Project additional targets for future mineral exploration and development. Our 43-101 Report, which was finalized June 5, 2008, recommended a two-phase program. Phase 1 of the two-phase program outlines a three-stage program which covers a period of one month and will cost approximately $100,000. The three-stage program includes detailed mapping and sampling, clearing of the old road and north-south line cutting, which will facilitate further geological work and provide the requirements of a proposed seismic survey. The seismic survey would be carried out as stage-three of the first phase of the exploration program recommended in the report. The stage-three seismic survey of up to 5km total length will assist in establishing a preliminary three dimensional modeling and shape of the deposit. Once complete, and subject to the results of the report obtained in Phase 1, the Company will continue to Phase 2. Phase 2 is expected to take one month to complete and cost up to $200,000. Phase 2 will consist of 1,200 meters of drilling to determine shape (volume) of the deposit and the quality of the aggregate material.

The recoverability of amounts from the property will be dependent upon discovering economically recoverable reserves with specifications which are suitable for commercial products as defined by ASTM and CSA. Considerable further investigation will be required to establish the size of the deposit towards understanding its economic viability, the environmental concerns of the area and the social impact on various stakeholders.

In the next twelve months, we also anticipate spending an additional $120,000 on administrative fees, including professional fees payable in connection with the filing of this registration statement and complying with reporting obligations. Total expenditures over the next twelve months are therefore expected to be approximately $420,000.

Our cash reserves are not sufficient to meet our expected obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. As well, our management is prepared to provide us with short-term loans; during the six month period ended December 31, 2008, the company borrowed $NIL (30 June 2008 - $90,000) from an officer, director and shareholder of the Company. This promissory note payable bears interest at 10% per annum, $11,865 (30 June 2008 - $6,511) interest has been accrued and is secured by a general assignment over all the assets of the Company and is due and repayable January 8, 2009.

On 8 January 2009, the Company entered into a loan amending agreement with an officer, director and shareholder of the Company (the “Loan Amending Agreement”). The Loan Amending Agreement extended the repayment date on the amount due from 8 January 2009 to 8 January 2010.

We cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through additional loans from our officers, directors or shareholders’ to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.

If we do not secure additional funding for exploration expenditures, we may consider seeking an arrangement with a joint venture partner that would provide the required funding in exchange for receiving a part interest in the Super Mammoth Gravel Project. We have not undertaken any efforts to locate a joint venture partner. There is no guarantee that we will be able to locate a joint venture partner who will assist us in funding exploration expenditures upon acceptable terms.

If we are unable to arrange additional financing or find a joint venture partner for the Super Mammoth Gravel Project, our business plan will fail and operations will cease.

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Results of Operations for Six Month Period Ending December 31, 2008

We have not earned any revenues from our incorporation on January 21, 2004 to December 31, 2008. We have not commenced the exploration stage of our business and can provide no assurance that we will be successful in discovering economic mineralization on the property.

The Company’s net loss for the six month period ended December 31, 2008 was $58,455 compared to a net loss of $38,824 for the six month period ended December 31, 2007. The increase in net loss for the six month period ended December 31, 2008 is mainly attributed to bank charges and interest and legal and accounting fees.

There were no mineral property expenditures related to the Super Mammoth Gravel Project for the six month periods ended December 31, 2008 and December 31, 2007. The Company did not conduct exploration activities during these periods.

Bank charges and interest have increased $6,176 to $6,275 for the six month period ended December 31, 2008 from $99 for the six month period ended December 31, 2007. The increase in bank charges and interest period over period is due mainly to the interest incurred on the loan of $115,000 from a director and officer of our Company, our President, Mr. Tim Coupland.

Legal and accounting fees increased $7,189 to $12,732 for the six month period ended December 31, 2008 from $5,543 for the six month period ended December 31, 2007. The increase in legal and accounting fees period over period is due mainly to professional fees incurred to prepare and file our regulatory quarterly and annual filings with the United States Securities and Exchange Commission.

During the six month period ended December 31, 2008, an officer and director of the Company made contributions to capital for management fees in the amount of $30,000 (2007 - $30,000) and for rent in the amount of $1,800 (2007 - $1,800).

We have not attained profitable operations and are dependent upon obtaining financing to pursue exploration activities. For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern.

Liquidity and Capital Resources

At December 31, 2008, we had cash on hand of $15,319 and liabilities of $171,409 consisting of accounts payable and accrued liabilities of $44,544 and cash advances from our president, Tim Coupland, for $126,865.

Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. We will require additional funding in order to cover all anticipated administration costs and to proceed with the recommendations of the National Instruments 43-101 report on the Super Mammoth Gravel Project, estimated to cost a minimum of $300,000. We do not have any arrangements in place for any future equity financing and there is no guarantee we will be able to obtain the funding necessary to continue as a going concern.

Capital Expenditures

The Company had no capital expenditures for the period from inception to December 31, 2008. At present there are no transactions being contemplated by Management or the Board that would affect the financial condition, results of operations and cash flows of any asset of the Company.

Employees

At present, we have no employees, other than our current officers and directors, who devote their time as required to our business operations.

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Research and Development Expenditures

We have incurred a total of $1,000 in connection with a geological report concerning the Sobeski Lake Gold property. We have not incurred any other research and development expenditures since our incorporation.

An additional $Nil (2007 - $Nil, 30 June 2008 - $11,500) has been incurred in connection with the preparation and completion of the Comprehensive National Instrument 43-101 compliant report on the Super Mammoth Gravel Project.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements that would require disclosure.

Subsequent Event

On January 8, 2009, the Company entered into a Loan Amending Agreement, which extended the repayment date on the fund due to a related party from January 8, 2009 to January 8, 2010.

Critical Accounting Policies

Our interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management's application of accounting policies.

Mineral property costs

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

Mineral property acquisition costs are initially capitalized as tangible assets when purchased in accordance with EITF 04-2. At the end of each fiscal quarter end, the Company assesses the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

Mineral property exploration costs are expensed as incurred.

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.

As of the date of these interim consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

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Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are engaged in the acquisition of mineral and gravel projects and related activities including exploration engineering, permitting and the preparation of feasibility studies. The value of our properties is related to mineral and gravel commodity prices and changes in the price of these commodities could affect our ability to generate revenue from our portfolio of projects.

Commodity prices may fluctuate widely from time to time and are affected by numerous factors, including the following: expectations with respect to the rate of inflation, exchange rates, interest rates, global and regional political and economic circumstances and governmental policies. Mineral prices and the price for gravel have been extremely volatile over the last year. The demand for, and supply of gravel affect gravel prices, but not necessarily in the same manner as demand and supply affect the prices of other commodities. The supply and demand for gravel is determined primarily by construction and road building activity.

As of December 31, 2008 we do not consider the risks associated with changes in foreign exchange rates between the U.S. dollar and the Canadian dollar to be material to our financial condition or results of operations as a result of our primary projects being located in Canada and the majority of funds raised and paid to the majority of our vendors are Canadian dollars.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Based on the management’s evaluation (with the participation our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of December 31, 2008, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934 (the "Exchange Act") are effective to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-Q is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

(b) Internal Control over Financial Reporting

Management's annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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Under the supervision and with the participation of our management, including Tim Coupland, our President and Chief Executive Officer, and Chantal Schutz, our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting and preparation of our quarterly financial statements as of December 31, 2008 and believe they are effective.

Based upon their evaluation of our controls, Tim Coupland, our President and Chief Executive Officer, and Chantal Schutz, our Chief Financial Officer, has concluded that, there were no significant changes in our internal control over financial reporting or in other factors during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation report of the registered public accounting firm

This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

Changes in internal control over financial reporting

There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

Changes in Internal Controls

Based on the evaluation as of December 31, 2008, Tim Coupland, our President and Chief Executive Officer, and Chantal Schutz, our Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting or in any other areas that could significantly affect our internal controls subsequent to the date of his most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.

ITEM 1A. RISK FACTORS

Not Applicable

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS

None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5 – OTHER INFORMATION

None

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ITEM 6 – EXHIBITS

The following exhibits are furnished as required by Item 601 of Regulation S-B.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DYNAMIC GOLD CORP.

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Exhibit 21

SUBSIDIARY COMPANIES

We have one subsidiary company:

Dynamic Gravel Holdings Ltd.

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Exhibit 31.a

CERTIFICATION

I, Tim Coupland, certify that:

Date: February 6, 2009

/ s / Tim Coupland         
Tim Coupland, President and CEO

(Principal Executive Officer)

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Exhibit 31.b

CERTIFICATION

I, Chantal Schutz, certify that:

Date: February 6, 2009

/ s / Chantal Schutz               
Chantal Schutz, CFO

(Principal Accounting Officer)

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Exhibit 32.a

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q (the “Report”) of Dynamic Gold Corp. (the “Company”) for the quarter ended December 31, 2008, each of Tim Coupland, the Chief Executive Officer, and Chantal Schutz, the Chief Financial Officer, of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned’s knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/ s / Tim Coupland
Tim Coupland, Principal Executive Officer
February 6, 2009

/ s / Chantal Schutz
Chantal Schutz, Principal Financial Officer
February 6, 2009

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