Lode-Star Mining Inc. - Quarter Report: 2015 March (Form 10-Q)
| UNITED STATES | |
| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| FORM 10-Q | |
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x
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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| Commission file number 000-53676 | |
INTERNATIONAL GOLD CORP.
NEVADA
666 Burrard Street, Suite 600
Vancouver, British Columbia
Canada V6E 4M3
(778) 370-1372
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES x NO o
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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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o
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Non-accelerated Filer
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o
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Smaller Reporting Company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 47,658,000 as of May 10, 2015.
1
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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3 |
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Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014
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4 |
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Statements of Operations for the Three Months ended March 31, 2015 and 2014 (unaudited)
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5 |
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Statements of Cash Flows for the Three Months ended March 31 2015 and 2014 (unaudited)
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6 |
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Notes to Financial Statements (unaudited)
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7 |
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Item 2. Management’s Discussion and Analysis Of Financial Condition and Results of Operations
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12 |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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17 |
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Item 4. Controls and Procedures
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17 |
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PART II - OTHER INFORMATION
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Item 1A. Risk Factors
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17 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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18 |
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Item 6. Exhibits
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19 |
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SIGNATURES
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20 |
2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INTERNATIONAL GOLD CORP.
INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
3
INTERNATIONAL GOLD CORP.
INTERIM BALANCE SHEETS
(Stated in U.S. Dollars)
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MARCH 31
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DECEMBER 31
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|||||||
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2015
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2014
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(Unaudited)
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||||||||
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ASSETS
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Current
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||||||||
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Cash
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$
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13,242
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$
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5,372
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Prepaid fees
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697
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-
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||||||
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13,939
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5,372
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|||||||
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Mineral Property Interest
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230,180
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230,180
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$
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244,119
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$
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235,552
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LIABILITIES
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Current
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Accounts payable and accrued liabilities
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$
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21,443
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$
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38,397
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Loans payable
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289,013
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275,178
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310,456
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313,575
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Contractual Obligations, Commitments And Subsequent Events (Note 7)
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STOCKHOLDERS’ DEFICIENCY
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Capital Stock
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Authorized:
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100,000,000 voting common shares with a par value of $0.00001 per share
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Issued:
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46,509,000 common shares at March 31, 2015 and December 31, 2014
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465
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465
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Additional Paid-In Capital
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922,215
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922,215
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Shares To Be Issued
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53,213
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-
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Accumulated Deficit
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(1,042,230
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)
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(1,000,703
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)
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||||
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(66,337
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)
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(78,023
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)
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$
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244,119
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$
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235,552
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The accompanying condensed notes are an integral part of these interim financial statements.
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Approved on behalf of the Board of Directors
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/s/ Mark Walmesley
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/s/ Thomas Temkin
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Director
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Director
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4
INTERNATIONAL GOLD CORP.
INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
(Stated in U.S. Dollars)
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THREE MONTHS ENDED
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|||||||
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MARCH 31
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2015
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2014
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Revenue
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$
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-
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$
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-
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Operating Expenses
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Consulting services
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423
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25,917
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Corporate support services
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1,285
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-
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Interest, bank and finance charges
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4,188
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2,353
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Office, foreign exchange and sundry
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10,297
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(2,468
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)
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Professional fees
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20,352
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2,742
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Transfer and filing fees
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4,982
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2,114
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41,527
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30,658
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Net Loss For The Period
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$
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(41,527
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)
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$
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(30,658
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)
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Basic And Diluted Loss Per Common Share
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$
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(0.00
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)
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$
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(0.00
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)
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Weighted Average Number Of Common Shares Outstanding
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46,509,000
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11,509,000
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The accompanying condensed notes are an integral part of these interim financial statements.
5
INTERNATIONAL GOLD CORP.
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
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THREE MONTHS ENDED
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MARCH 31
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2015
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2014
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Cash Provided By (Used In)
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Operating Activities
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Net loss for the period
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$
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(41,527
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)
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$
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(30,658
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Accrued interest payable
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(22,730
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2,035
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Net changes in non-cash operating working capital items
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(Increase) in prepaid expenses
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(697
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)
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-
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(Decrease) increase in accounts payable and accrued liabilities
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(16,954
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)
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11,459
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(81,908
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)
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(17,164
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)
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Financing Activities
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Loan advances
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89,778
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17,095
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Net Increase (Decrease) In Cash
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7,870
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(69
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)
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Cash, Beginning Of Period
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5,372
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21
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Cash (Checks issued in excess of funds on deposit), End Of Period
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$
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13,242
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$
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(48
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)
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Supplemental Disclosure Of Cash Flow Information
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Cash paid during the period for:
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Interest
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$
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-
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$
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-
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Income taxes
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$
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-
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$
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-
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Shares to be issued for debt settlements
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$
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53,213
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$
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-
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The accompanying condensed notes are an integral part of these interim financial statements.
6
INTERNATIONAL GOLD CORP.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
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1.
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BASIS OF PRESENTATION AND NATURE OF OPERATIONS
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Organization and Nature of Operations
International Gold Corp. (“the Company”) was incorporated in the State of Nevada, U.S.A., on December 9, 2004. The Company’s principal executive offices are located in Vancouver, British Columbia, Canada. The Company was originally formed for the purpose of acquiring exploration stage, natural resource properties. The Company acquired a mineral property interest from Lode Star Gold Inc., a private Nevada corporation (“LSG”) on December 11, 2014 (Note 3) in consideration for the issuance of 35,000,000 common shares of the Company. As a result of this transaction, control of the Company was acquired by LSG.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern.
The future of the Company is dependent upon its ability to establish a business and to obtain new financing to execute a business plan. As shown in the accompanying financial statements, the Company has incurred accumulated losses of $1,042,230 for the period from December 9, 2004 (inception) to March 31, 2015, and has had no revenue. There is no assurance that management’s plans to seek additional capital through private placements of its common stock will be realized, and these factors cast substantial doubt upon the use of the going concern assumption. These 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.
Basis of Presentation
The unaudited financial information furnished herein reflects all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. These first quarter financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s report on Form 10-K for the year ended December 31, 2014. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure which would substantially duplicate the disclosure contained in the Company’s financial statements for the fiscal year ended December 31, 2014, has been omitted. The results of operations for the three month period ended March 31, 2015 are not necessarily indicative of results for the entire year ending December 31, 2015.
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). 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. All dollar amounts are in U.S. dollars unless otherwise noted.
The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
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a)
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Basis of Accounting
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The Company’s financial statements have been prepared using the accrual method of accounting. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
7
INTERNATIONAL GOLD CORP.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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b)
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Cash and Cash Equivalents
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Cash consists of cash on deposit with high quality major financial institutions. For purposes of the balance sheets and statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of 90 days or less to be cash equivalents. At March 31, 2015 and December 31, 2014, the Company had no cash equivalents.
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c)
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Foreign Currency Accounting
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The Company’s functional currency is the U.S. dollar. Head office financing and investing activities are generally in Canadian dollars. Transactions in Canadian currency are translated into U.S. dollars as follows:
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i)
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monetary items at the exchange rate prevailing at the balance sheet date;
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ii)
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non-monetary items at the historical exchange rate; and
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iii)
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revenue and expense items at the rate in effect of the date of transactions.
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Gains and losses arising on the settlement of foreign currency denominated transactions or balances are recorded in the statements of operations.
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d)
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Fair Value of Financial Instruments
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ASC Topic 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
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§
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Level 1 – defined as observable inputs such as quoted prices in active markets;
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§
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Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
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§
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Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
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The Company’s financial instruments consist of cash, accounts payable and accrued liabilities, and loans payable. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Accounts payable and accrued liabilities and loans payable are measured using “Level 2” inputs as there are no quoted prices in active markets for identical instruments. The carrying values of cash, accounts payable and accrued liabilities, and loans payable approximate their fair values due to the immediate or short term maturity of these financial instruments.
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e)
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Use of Estimates and Assumptions
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The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions are determining the fair value of transactions involving related parties and common stock. Actual results may differ from the estimates.
8
INTERNATIONAL GOLD CORP.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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f)
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Basic and Diluted Earnings (Loss) Per Share
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The Company reports basic earnings or loss per share in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings or loss per share is calculated based on the weighted average number of common stock outstanding during the period. In periods with net income, the diluted per share amounts would include the dilutive effect of any common stock equivalents such as outstanding warrants or stock options. In periods with net losses, basic and diluted loss per share are the same, as including the effect of any common stock equivalents would be anti-dilutive. The Company has no stock option plan, warrants or other dilutive securities.
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g)
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Income Taxes
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The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
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h)
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Recent Accounting Pronouncements
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The Company has implemented all applicable new accounting pronouncements that are in effect. Those 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.
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3.
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MINERAL PROPERTY INTEREST
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On December 5, 2014, the Company entered into a subscription agreement (the “Subscription Agreements”) with Lode Star Gold Inc. (“LSG”), a private Nevada corporation controlled by the spouse of the Company’s current President, pursuant to which the Company agreed to issue 35,000,000 shares of its common stock, valued at $230,180, to LSG in exchange for a 20% undivided interest in and to the mineral claims owned by LSG. The mineral claims, known as the “Goldfield Bonanza Project” (the “Property”), are located in the State of Nevada.
The execution of the Subscription Agreement was one of the closing conditions of an Option Agreement dated October 4, 2014, pursuant to which the Company acquired the sole and exclusive option to earn up to an 80% undivided interest in and to the Property. In order to earn the additional 60% interest in the Property, the Company is required to fund all expenditures on the Property and pay LSG an aggregate of $5 million in cash in the form of a net smelter royalty, each beginning on the Closing Date, which was December 11, 2014. Until such time as the Company has earned the additional 60% interest, the net smelter royalty will be split 79.2% to LSG, 19.8% to the Company and 1% to the former Property owner.
If the Company fails to make any cash payments to LSG within one year of the Closing Date, it is required to pay LSG an additional $100,000, and in any subsequent years in which the Company fails to complete the payment of the entire $5 million described above, it must make quarterly cash payments to LSG of $25,000 until such time as the Company has earned the additional 60% interest in the Property.
In addition, the Option Agreement provides that the Company will act as the operator on the Property and that a management committee will be formed, comprised of representatives from the Company and LSG, with voting based on each party’s proportionate interest, to supervise exploration of the Property and approve work programs and budgets. To March 31, 2015, no work programs had been approved.
9
INTERNATIONAL GOLD CORP.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
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4.
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CAPITAL STOCK
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During the quarter ended March 31, 2015, the Company did not receive any cash subscriptions for shares of its common stock.
On January 9, 2015, agreements were reached in connection with the loans of $24,696 (CAD $28,650) and $1,767 (CAD $2,050) whereby the loan amounts were to be converted to Company shares at a price of CAD $0.05, to result in the issuance of 573,000 and 41,000 common shares respectively. Those shares were issued on April 6, 2015 and are included in Shares To Be Issued on the Balance Sheet.
On March 19, 2015, an agreement was reached to modify the terms of a loan such that $26,750 of accrued interest together with a premium was to be converted to Company shares at a price of $0.05 per share, to result in the issuance of 535,000 common shares. Those shares were issued on April 6, 2015 and are included in Shares To Be Issued on the Balance Sheet.
During the year ended December 31, 2014, the Company received no cash subscriptions for shares of its common stock, however, on December 11, 2014, the Company issued 35,000,000 shares, valued at $230,180, in exchange for a mineral property interest as described in Note 3.
The Company has no stock option plan, warrants or other dilutive securities.
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5.
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LOANS PAYABLE
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At March 31, 2015, the Company had the following loans payable:
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i)
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$1,000: unsecured; interest at 15% per annum; originally due on April 20, 2012.
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·
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On March 19, 2015, $4,000 was paid by the Company in partial settlement of the December 31, 2014 principal balance of $5,000.
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ii)
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$75,000: unsecured; interest at 10% per annum from January 10, 2015.
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·
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One-half of the outstanding principal, or $37,500, and any accrued interest shall become due and payable on written demand in full on the earlier of June 9, 2015 or the date on which the Company completes one or more debt or equity financings that generate aggregate gross proceeds of at least $250,000;
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·
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The balance of the outstanding principal, or $37,500, and any accrued interest shall become due and payable on written demand in full on January 9, 2016; and
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·
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The Company shall have the right to repay all or any part of the Principal and any accrued interest to the Lender at any time and from time to time, without any premium.
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iii)
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$36,556: unsecured; interest at 5% per annum; with no specific terms of repayment.
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iv)
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$165,000: unsecured; interest at 5% per annum from January 1, 2015; with no specific terms of repayment.
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v)
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$3,943: unsecured; non-interest bearing; with no specific terms of repayment.
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At December 31, 2014, the Company had the following loans payable:
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i)
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$5,000: unsecured; interest at 15% per annum; originally due on April 20, 2012.
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|
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ii)
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$75,000: unsecured; interest at 10% per annum; originally due on August 2, 2011.
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iii)
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$34,160: unsecured; interest at 5% per annum; with no specific terms of repayment.
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iv)
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$24,696: unsecured; non-interest bearing; with no specific terms of repayment (converted on January 9, 2015 to shares that were issued on April 6, 2015).
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v)
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$100,000: unsecured; non-interest bearing; with no specific terms of repayment.
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vi)
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$1,767: unsecured; non-interest bearing; with no specific terms of repayment (converted on January 9, 2015 to shares that were issued on April 6, 2015).
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vii)
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$4,310: unsecured; non-interest bearing; with no specific terms of repayment.
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As of March 31, 2015, interest totaling $7,514 (December 31, 2014 - $30,244) was accrued on the loan amounts.
10
INTERNATIONAL GOLD CORP.
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)
(Stated in U.S. Dollars)
|
6.
|
RELATED PARTY TRANSACTIONS AND AMOUNTS DUE
|
Transactions with related parties were in the normal course of operations and have been valued in these financial statements at the exchange amount, which is the amount of consideration agreed to and established by the related parties.
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a)
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Related Party Amounts Due
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At March 31, 2015, $4,264 (December 31, 2014 - $15,300) included in accounts payable was due to a company controlled by a former director and president of the Company.
At March 31, 2015, the following loan amounts and accrued interest were due to related parties:
|
|
i)
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$37,785 (December 31, 2014 - $35,043) including $1,229 (December 31, 2014 - $883) in accrued interest, to the current president of the Company.
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|
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ii)
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$166,646 (December 31, 2014 - $100,000) including $1,646 (December 31, 2014 - $Nil) in accrued interest, to the majority shareholder of the Company.
|
|
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iii)
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$3,942 (December 31, 2014 - $4,310) to the controlling shareholder of the majority shareholder of the Company.
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b)
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Consulting Services
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During the three months ended March 31, 2015, the Company incurred $Nil (2014 - $25,917) in consulting fees to a former Director and President of the Company. See Note 7.
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7.
|
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND SUBSEQUENT EVENTS
|
See Note 3 for details about the Company’s obligations and commitments regarding its Mineral Property Interest.
See Note 4 for details regarding common shares of the Company which were issued on April 6, 2015.
On February 21, 2012, the Company entered into a consulting agreement whereby the former sole director and officer of the Company was to provide services as the Company’s CEO, COO, CFO and Corporate Secretary.
|
|
·
|
The agreement was amended effective July 1, 2012 such that the compensation became monthly installments of $9,000 CAD plus applicable taxes, with a new 48 month term.
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|
|
·
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The consulting agreement, which would otherwise have extended to June 2016, was terminated with immediate effect in accordance with a settlement agreement dated December 5, 2014.
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·
|
Under the terms of that settlement agreement, the Company agreed to pay an aggregate of $34,000 CAD.
|
|
|
·
|
Of that amount, $5,250 CAD ($4,140 USD) was outstanding and included in accounts payable at March 31, 2015.
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Management has evaluated subsequent events and the impact on the reported results and disclosures and has concluded that no other significant events require disclosure as of the date these financial statements were issued.
11
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ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. In addition to historical financial information, the following discussion includes a number of forward-looking statements that reflect our plans, estimates and our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results
Recent Developments
On August 29, 2014, we entered into a Letter of Intent (the “LSG LOI”) with Lode-Star Gold, Inc. (“LSG"), a private Nevada corporation, pursuant to which we agreed to issue shares of our common stock and make certain payments to LSG in consideration for the acquisition of an interest in LSG's Nevada Goldfield Bonanza property (the “Property”). As a result of the intended transaction, control of us would be acquired by LSG.
On October 4, 2014, we entered into a definitive mineral option agreement (the "Option Agreement") with which superseded the LSG LOI. Pursuant to the Option Agreement, we were to issue LSG 35,000,000 shares of our common stock in exchange for a 20% undivided interest in the Property (the “Acquisition”). In order to earn an additional 60% undivided interest in the Property (for a total of 80%), we are required to fund all expenditures on the Property and pay LSG an aggregate of $5 million in cash in the form of a net smelter returns ("NSR") royalty, each beginning on the closing date of a subscription agreement for the shares (the “Closing Date”). Until such time as ITGC has earned the additional 60% interest, the NSR royalty will be split as to 79.2% to LSG, 19.8% to and 1% to the former Property owner.
On December 5, 2014, we entered into a subscription agreement (the “Subscription Agreement”) with LSG pursuant to which we agreed to issue the 35,000,000 shares. On the Closing Date of December 11, 2014, we satisfied all the closing conditions in the Subscription Agreement and issued the 35,000,000 shares of our common stock to LSG, thereby completing the Acquisition. As a result of the Acquisition, LSG became our controlling stockholder.
If we fail to make any cash payments to LSG within one year of the Closing Date, we are required to pay LSG an additional $100,000, and in any subsequent years in which we fail to complete the payment of the entire $5 million described above, we must make quarterly cash payments to LSG of $25,000 until such time as we have earned the additional 60% interest in the Property.
The Property is located in west-central Nevada, in the Goldfield Mining District at Latitude 37° 42’, and Longitude 117° 14’. The claims comprising the Property are located in surveyed sections 35 and 36, Township 2 South, Range 42 East, and in sections 1, 2, 11, and 12, Township 3 South, Range 42 East, in Esmeralda County, Nevada. The Property is accessible by traveling approximately one-half mile northeast of the community of Goldfield, along a county-maintained road that originates at U.S. Highway 95, which runs through “downtown” Goldfield. The town of Goldfield, which is the Esmeralda county seat (population 300), is approximately 200 air miles south of Reno and 180 air miles north of Las Vegas.
The Property consists of 31 patented claims and 1 unpatented millsite claim, covering a total of approximately 460 acres, or 186 hectares. Only the single unpatented claim is administered by the United States Bureau of Land Management, and annual assessment filings and payments are due on it. The patented claims are owned as private land by LSG, and only annual property taxes must be paid.
The Option Agreement provides that we will act as the operator on the Property and that a management committee will be formed, comprised of representatives from us and LSG, with voting based on each party’s proportionate interest, to supervise exploration of the Property and approve work programs and budgets. As the operator, we are also obliged to perform a number of functions, including the following:
|
|
§
|
Consider, develop and submit work programs to the management committee for consideration and approval, and to implement work programs when approved;
|
|
|
§
|
Carry out operations in a prudent and workmanlike manner and in accordance with all applicable laws and regulations, and all agreements, permits and licenses relating to the Property and LSG;
|
|
|
§
|
Pay and discharge all wages and accounts for material and services and all other costs and expenses that may be incurred by us in connection with our operations on the property;
|
|
|
§
|
Maintain and keep in force and, upon request by LSG provide reasonable documentary verification of, levels of insurance as are reasonable in respect of our activities in connection with the Property;
|
12
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
|
|
|
§
|
Maintain true and correct books, accounts and records of expenditures; and
|
|
|
§
|
Deliver to the management committee quarterly and annual progress reports.
|
To the issuance date of this report, no work programs have been approved.
Personnel
We have no employees. Our president and CEO, Mark Walmesley, receives no compensation for his services. We expect to continue to use outside consultants, advisors, attorneys and accountants as necessary.
Robert Baker, our Corporate Secretary and Director, resigned from his positions with us effective April 17, 2015. Mr. Baker was previously our President and CEO.
On January 19, 2015, Thomas Temkin was appointed as Chief Operating Officer and to the Board of Directors. Mr. Temkin is a Certified Professional Geologist and a Qualified Person under National Instrument (NI) 43101, with more than 38 years of experience in the mining industry, primarily in exploration in the Western United States. He is currently a consulting geologist working with LSG. Mr. Temkin has been associated with LSG and the Property for over 15 years and has been instrumental through its entire exploration program to date.
On January 22, 2015, Daniel Capparelli was appointed as Vice President of Mine Development and Operations. Mr. Capparelli has been associated with the mining industry for over 21 years, primarily in the Western United States. He has been associated with several successful gold projects as Project Superintendent & Operations Manager
On April 22, 2015, Pam Walters was appointed as our Corporate Secretary to replace Robert Baker. Ms. Walters has been associated with the mining industry for over 25 years and has managed the corporate finance and business operations of LSG and its owners.
LSG’s History
LSG was incorporated in the State of Nevada on March 13, 1998 for the purpose of acquiring exploration stage mineral properties. It currently has one shareholder, Lonnie Humphries, who is the spouse of Mark Walmesley, our Chief Financial Officer, Treasurer and director prior to the completion of the Acquisition, and now our President and Chief Executive Officer as well. Mr. Walmesley is also the Director of Operations and a director of LSG.
LSG is an exploration stage company and has not generated any revenues since its inception. The Property represents its only material asset. LSG acquired the leases to the Property in 1997 and became the registered and beneficial owner of the Property on September 19, 2009. Since the earlier of those dates, it has conducted contract exploration work on the Property but has not determined whether it contains mineral reserves that are economically recoverable.
Plan of Operations
Over the next 12 months, we plan to complete the first phase of a proposed two phase program involving preliminary work, as follows:
Preliminary Work
The preliminary underground scope of work of approximately $250,000 will complete the hoist retro fitting and rehab work of LSG’s existing underground workings and obtain all necessary regulatory compliance to initiate Phase 1.
Phase 1 – The Church Zone & Stope Zone
The purpose of this phase is to define a mineral resource estimate in compliance with National Instrument 43-101 of the Canadian Securities Administrators. It is our intention to complete work addressing both surface and underground targets in two separate areas: the Church Zone and the Stope Zone. In this Phase, we expect to perform 15,000 feet of combined RC and core surface drilling on the Church Zone at an estimated cost of $500,000, plus 2,250 feet of underground drilling at an anticipated cost of US$225,000, both in order to extend the known high-grade gold zones,
In our opinion the Stope Zone is mine-ready, and therefore, during Phase 1 we anticipate determining how best to execute the extraction of mineralized rock. As part of Phase 1, we may conduct some confirmation drilling in the Red Hills Stope Zone at an anticipated cost of $150,000, although to execute drilling in some areas will require additional access work.
13
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
|
In addition, we plan to begin preparing and filing all necessary permitting applications at an approximate cost of $100,000.
If we are able to complete Phase 1 as planned, we expect to commence Phase 2 which consists of a one year work program for which we have yet to prepare a detailed budget.
We anticipate that we will require a minimum of $1,916,000 to pursue our plan of operations over the next 12 months, as follows:
|
Description
|
Amount
($)
|
|
Underground access and workings retrofitting (Preliminary Work)
|
250,000
|
|
Completion of surface and underground drilling (Church Zone)
|
725,000
|
|
Preparation of feasibility study (Church Zone)
|
50,000
|
|
Follow-up surface and underground drilling (Stope Zone)
|
150,000
|
|
Laboratory work
|
60,000
|
|
Mine site security
|
60,000
|
|
Permitting application expenses
|
100,000
|
|
Management fees
|
120,000
|
|
Consulting fees
|
198,000
|
|
Marketing and investor relations expenses
|
60,000
|
|
Professional fees
|
60,000
|
|
Rent, travel and lodging expenses
|
60,000
|
|
Transfer and filing fees
|
13,000
|
|
Website development expenses
|
10,000
|
|
Total
|
1,916,000
|
We do not currently have sufficient funds to carry out our entire plan of operations, so we intend to meet the balance of our cash requirements for the next 12 months through a combination of debt financing and equity financing through private placements. Currently we are active in contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements; however, we do not currently have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings.
If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options, although we cannot provide any assurance that any such options will be available to us or on terms reasonably acceptable to us. Further, if we are unable to secure any additional financing then we plan to reduce the amount that we spend on our operations, including our management-related consulting fees and other general expenses, so as not to exceed the capital resources available to us. Regardless, our current cash reserves and working capital may not be sufficient to enable us to sustain our business for the next 12 months, even if we do decide to scale back our operations
Going Concern
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our expenses. This is because we have not generated any revenues to date and we cannot currently estimate the timing of any possible future revenues. Our only source for cash at this time is investments by others in our common stock, or loans.
14
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
|
Results of Operations
To March 31, 2015
The following summary of our results of operations should be read in conjunction with our financial statements for the period ended March 31, 2015 which are included with this Report.
|
Three Months Ended March 31
|
Change
|
|||||||||||||||
|
2014
|
2013
|
Amount
|
Percentage
|
|||||||||||||
|
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
|||||||||
|
Operating Expenses
|
$
|
41,527
|
$
|
30,658
|
$
|
10,869
|
35%
|
|||||||||
|
Net (Loss) Income
|
$
|
(41,527
|
)
|
$
|
(30,658
|
)
|
$
|
(10,869
|
)
|
35%
|
||||||
Revenues
We have had no operating revenues since our inception on December 9, 2004. We recorded a net loss of $41,527 for the three month period ended March 31, 2015 and have an accumulated deficit of $1,042,230. The possibility and timing of revenue being generated from our mineral property interest is uncertain.
Expenses – Three months ended March 31, 2015 and 2014
Notable period over period differences are as follows:
|
Three Months Ended March 31
|
Change
|
|||||||||||||||
|
2015
|
2014
|
Amount
|
Percentage
|
|||||||||||||
|
Consulting services
|
$
|
423
|
$
|
25,917
|
$
|
(25,494
|
)
|
(98%)
|
||||||||
|
Corporate support services
|
$
|
1,285
|
$
|
-
|
$
|
1,285
|
-
|
|||||||||
|
Interest, bank and finance charges
|
$
|
4,188
|
$
|
2,353
|
$
|
1,835
|
78%
|
|||||||||
|
Office, foreign exchange and sundry
|
$
|
10,297
|
$
|
(2,468
|
)
|
$
|
12,765
|
517%
|
||||||||
|
Professional fees
|
$
|
20,352
|
$
|
2,742
|
$
|
17,610
|
642%
|
|||||||||
|
Transfer and filing fees
|
$
|
4,982
|
$
|
2,114
|
$
|
2,868
|
137%
|
|||||||||
|
|
§
|
Consulting services decreased as a result of the cancellation in December, 2014 of a contract in with our former president.
|
|
|
§
|
Corporate support services were received in Q1 2015 on a limited basis, whereas in Q1 2014, the agreement to supply those services had been suspended.
|
|
|
§
|
Interest, bank and finance charges increased primarily due to interest of approximately $2,000 being charged from January 1, 2015 on the loan totaling $165,000 from LSG.
|
|
|
§
|
Office, foreign exchange and sundry was higher in 2015 primarily due to increases in the following items as a result of the new mineral property interest: Promotion – approximately $3,000; Licenses and permits – approximately $2,000; and IT – approximately $7,000.
|
|
|
§
|
Professional fees were higher in 2015 primarily due to increases in the following items: audit and accounting services – approximately $15,000, due to year over year differences in the timing of billings, and legal fees in Q1 2015 of approximately $3,000, related to filing our Super 8-K, with none in Q1 2014.
|
|
|
§
|
Transfer and filing fees were higher in Q1 2015 mainly due to a filing fee in Q1 2015 of approximately $2,000 for our Annual Information Form required by Canadian securities regulations, with no equivalent in Q1 2014, together with increased Edgar filing costs of approximately $1,000.
|
15
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
|
Balance Sheet at March 31, 2015 and December 31, 2014
Items with notable period-end differences are as follows:
|
March 31
|
December 31
|
Change
|
|||||||||||
|
2015
|
2014
|
Amount
|
Percentage
|
||||||||||
|
Cash
|
$
|
13,242
|
$
|
5,372
|
$
|
7,870
|
147%
|
||||||
|
Accounts payable and accrued liabilities
|
$
|
21,443
|
$
|
38,397
|
$
|
(16,954
|
)
|
(44%)
|
|||||
|
Loans payable
|
$
|
289,013
|
$
|
275,178
|
$
|
13,835
|
5%
|
||||||
|
Shares to be issued
|
$
|
53,213
|
$
|
-
|
$
|
53,123
|
-
|
||||||
|
|
§
|
Cash increased during the period for the reasons outlined in the Cash Flows section below.
|
|
|
§
|
Accounts payable and accrued liabilities decreased mainly due to payment of legal fees accrued at year end (approximately $6,000) and a portion of the settlement amount due to our former president (approximately $11,000).
|
|
|
§
|
Loans payable increased due to the receipt in 2015 of loan amounts totalling approximately $67,000, together with an increase in accrued interest of approximately $4,000, offset by a loan repayment of $4,000 and settlements of loans and accrued interest for common shares to be issued of approximately $53,000.
|
|
|
§
|
Shares to be issued increased as a result of agreements to settle certain loan amounts and accrued interest payable for shares, which were issued subsequent to the end of Q1 2015.
|
Liquidity and Capital Resources
As of March 31, 2015, our total assets were $244,119, and our total liabilities were $310,456.
Our working capital as at March 31, 2015 and December 31, 2014 and the changes between those dates are summarized as follows:
|
|
March 31
|
December 31
|
Increase/(Decrease)
|
|||||||||||||
|
2015
|
2014
|
Amount
|
Percentage
|
|||||||||||||
|
Current Assets
|
$
|
13,939
|
5,372
|
$
|
8,567
|
159%
|
||||||||||
|
Current Liabilities
|
310,456
|
313,575
|
(3,119
|
)
|
(1%
|
)
|
||||||||||
|
Working Capital (Deficiency)
|
$
|
(296,517
|
)
|
(308,203
|
)
|
$
|
11.686
|
(4%)
|
||||||||
The decrease in our working capital deficiency from December 31, 2014 to March 31, 2015 is explained by the changes outlined above for the following Balance Sheet items: Cash (an increase of approximately $8,000), Accounts payable and accrued liabilities (a decrease of approximately $17,000), and Loans payable (an increase of approximately $14,000).
Cash Flows
|
Three Months Ended March 31
|
Change
|
|||||||||||||||
|
2014
|
2013
|
Amount
|
Percentage
|
|||||||||||||
|
Cash Flows (Used In) Provided By:
|
||||||||||||||||
|
Operating Activities
|
$
|
(81,908
|
)
|
(17,164
|
)
|
$
|
(64,744
|
)
|
(377%
|
)
|
||||||
|
Financing Activities
|
89,778
|
17,095
|
72,683
|
425%
|
||||||||||||
|
Net increase (decrease) in cash
|
7,870
|
(69
|
)
|
7,939
|
(11,505%
|
)
|
||||||||||
Cash Used In Operating Activities
|
|
|
The period over period increase in cash used in operating activities of approximately $65,000 is due to the following:
|
|
|
·
|
Operating expenses were higher by approximately $11,000 (comprised of the differences explained above under Expenses) in Q1 2015 than in Q1, 2014;
|
|
|
·
|
The change in accrued interest payable had a net period over period difference of approximately $25,000, comprised of a decrease of approximately $23,000 in the current quarter, compared to an increase of approximately $2,000 in Q1, 2014;
|
|
|
·
|
Prepaid expenses increased approximately $1,000 in Q1, 2015 compared to no increase in the prior year period;
|
|
|
and
|
16
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
|
|
|
·
|
The period over period difference in the change in accounts payable and accrued liabilities was approximately $28,000, comprised of a decrease of approximately $17,000 in Q1, 2015, compared to an increase of approximately $11,000 in Q1, 2014.
|
Cash Provided By Financing Activities
|
|
The increase in cash provided by financing activities was due to net loan advances in Q1, 2015 of approximately $63,000, plus approximately $27,000 of accrued interest converted to shares to be issued, compared to loan advances of approximately $17,000 in Q1, 2014.
|
As of the date of this quarterly report, we have yet to generate any revenues from our business operations. Our ability to generate adequate amounts of cash to meet our needs is entirely dependent on the issuance of shares or loans.
Our principal source of working capital has been in the form of loans and subscriptions for our common stock. For the foreseeable future, we will have to continue to rely on those sources for funding. We have no assurance that we can successfully engage in any further private sales of our securities or that we can obtain any additional loans.
|
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
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted 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 as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were effective as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
|
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 information under this item. Our business is subject to risks inherent in the establishment of a new business enterprise, including, without limitation, the items listed in Item 1A RISK FACTORS in our report filed on Form 10-K for the year ended December 31, 2014.
17
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|
We had no unregistered sales of securities during the three months ended March 31, 2015.
Shares for debt settlements
On January 9, 2015, agreements were reached in connection with the loans totaling $24,696 whereby the loan amounts were to be converted to a total of 614,000 of our common shares. Those shares were issued on April 6, 2015 and are included in Shares To Be Issued on the March 31, 2015 Balance Sheet. The lenders were not US persons.
On March 19, 2015, an agreement was reached to modify the terms of a loan such that $26,750 of accrued interest together with a premium was to be converted to 535,000 of our common shares. Those shares were issued on April 6, 2015 and are included in Shares To Be Issued on the March 31, 2015 Balance Sheet. The lender was not a US person.
Other than that, or as disclosed in previous reports on Forms 10-Q, 10-K or 8-K, we have not issued any equity securities that were not registered under the Securities Act within the past three years.
18
|
ITEM 6.
|
EXHIBITS.
|
The following documents are included herein:
|
Exhibit No.
|
Document Description
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
19
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 15th day of May, 2015.
|
INTERNATIONAL GOLD CORP.
|
|||
|
BY
|
“Mark Walmesley”
|
||
|
Mark Walmesley
|
|||
|
President, Principal Executive Officer, Treasurer, Principal Financial Officer, and Principal Accounting Officer
|
|||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
|
Signature
|
Title
|
Date
|
|
/s/ Mark Walmesley
|
Director, President, Chief Executive Officer and Chief Financial Officer
|
May 15, 2015
|
|
Mark Walmesley
|
||
|
/s/ Thomas Temkin
|
Director and Chief Operating Officer
|
May 15, 2015
|
|
Thomas Temkin
|
20
EXHIBIT INDEX
|
Exhibit No.
|
Document Description
|
|
31.1
|
Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive and Chief Financial Officer.
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
21