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MainStreetChamber Holdings, Inc. - Quarter Report: 2013 April (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended April 30, 2013
 
[  ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period                  to __________
 
Commission File Number:  333-146442

Goldspan Resources, Inc.
(Exact name of small business issuer as specified in its charter)

 

Nevada 26-3342907
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
     

 

836 S Vance St., Unit E, Lakewood, CO  
(Address of principal executive offices)

 

303-875-1044
(Issuer’s telephone number)
_______________________________________________________________

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[ ] Yes [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.

 

[ ] Large accelerated filer

[ ] Non-accelerated filer

[ ] Accelerated filer

[X] Smaller reporting company

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 80,449,631 as of June 10, 2013.

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TABLE OF CONTENTS



Page

PART I – FINANCIAL INFORMATION

Item 1: Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3: Quantitative and Qualitative Disclosures About Market Risk 8
Item 4T: Controls and Procedures 8

 

PART II – OTHER INFORMATION

Item 1: Legal Proceedings 9
Item 1A: Risk Factors 9
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 9
Item 3: Defaults Upon Senior Securities 9
Item 4: Mine Safety Disclosures 9
Item 5: Other Information 9
Item 6: Exhibits 10
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PART I - FINANCIAL INFORMATION

 

Item 1.      Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:


F-1  Balance Sheets as of April 30, 2013 and July 31, 2012 (unaudited);
F-2  Statements of Operations for the three and nine months ended April 30, 2013 and April 30, 2012 and from Inception on March 2, 2007 through April 30, 2013 (unaudited);
F-3  Statements of Cash Flows for the nine months ended April 30, 2013 and April  30, 2012 and from Inception on March 2, 2007 through April 30, 2013 (unaudited);
F-4  Notes to Financial Statements;

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation and for the financial statements to be not misleading have been included. Operating results for the interim period ended April 30, 2013 are not necessarily indicative of the results that can be expected for the full year.

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 GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Balance Sheets

(Unaudited)

 

    April 30,    July 31, 
    2013    2012 
ASSETS          
CURRENT ASSETS          
           
Cash  $206   $727 
           
Total Current Assets   206    727 
           
TOTAL ASSETS  $206   $727 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
           
CURRENT LIABILITIES          
           
Accounts payable  $27,368   $3,142 
Accruals   10,725    —   
Shareholder loan   7,010    22,958 
Loan payable   110,000      
           
Total Current Liabilities   155,103    26,100 
           
STOCKHOLDERS' EQUITY (DEFICIT)          
           
Common stock - $0.001 par value; 400,000,000 shares   authorized; 80,449,631 and 65,199,631 shares issued and outstanding, respectively   80,450    65,200 
Additional paid-in capital   953,082    599,582 
Deficit accumulated during the development stage   (1,188,429)   (690,155)
           
Total Stockholders' Equity (Deficit)   (154,897)   (25,373)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $206   $727 

 

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

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GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Statements of Operations

(unaudited)

 

               From Inception
   For the Three  For the Three  For the Nine  For the Nine  on March 2,
   Months Ended  Months Ended  Months Ended  Months Ended  2007 Through
   April 30,  April 30,  April 30,  April 30,  April 30,
   2013  2012  2013  2012  2013
                
REVENUES  $—     $—     $—     $—     $—   
                          
OPERATING EXPENSES                         
                          
Management fees   15,000    —      96,664    —      133,543 
Professional fees   186,140    9,985    227,150    10,991    866,295 
Option expenses   5,000    —      165,000    —      165,000 
General and administrative   3,647    912    5,485    1,027    20,616 
                          
Total Operating Expenses   209,787    10,897    494,299    12,018    1,185,454 
                          
LOSS FROM OPERATIONS   (209,787)   (10,897)   (494,299)   (12,018)   (1,185,454)
                          
OTHER INCOME/EXPENSE                         
                          
Interest expense   (2,632)   —      (3,975)   —      (3,975)
Extinguishment of debt   —      —      —      —      1,000 
                          
LOSS BEFORE INCOME TAXES   (212,419)   (10,897)   (498,274)   (12,018)   (1,188,429)
                          
PROVISION FOR INCOME TAXES   —      —      —      —      —   
                          
NET LOSS  $(212,419)  $(10,897)  $(498,274)  $(12,018)  $(1,188,429)
                          
BASIC LOSS PER SHARE  $(0.00)  $(0.00)  $(0.01)  $(0.00)     
                          
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING   79,616,298    61,882,964    72,814,446    61,556,480      

 

 

The accompanying notes are a integral part of these financials statements.

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 GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Statements of Cash Flows

(unaudited)

 

         From Inception
   For the Nine  For the Nine  on March 2,
   Months Ended  Months Ended  2007 Through
   April 30,  April 30,  April 30,
   2013  2012  2013
OPERATING ACTIVITIES         
          
Net loss  $(498,274)  $(177,128)  $(1,188,429)
Adjustments to reconcile net loss to net cash used by operating activities               
Common stock issued for services   233,750    173,179    711,750 
Common stock issued for extension fee   100,000    —      100,000 
Changes in operating assets and liabilities:               
Increase (decrease) in accounts payable   11,523    3,788    27,368 
Increase (decrease) in accruals   10,725    —      10,725 
                
Net Cash Used in Operating Activities   (142,276)   (161)   (338,586)
                
INVESTING ACTIVITIES   —      —      —   
                
FINANCING ACTIVITIES               
                
Proceeds from loan   110,000    —      110,000 
Shareholder loans, net   (3,245)   —      7,010 
Contributed capital   —      —      65,269 
Shares issued for cash   35,000    —      156,513 
                
Net Cash Provided by Financing Activities   141,755    —      338,792 
                
NET INCREASE (DECREASE) IN CASH   (521)   (161)   206 
                
CASH AT BEGINNING OF PERIOD   727    161    —   
                
CASH AT END OF PERIOD  $206   $—     $206 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION               
                
CASH PAID FOR:               
                
Interest  $—     $—     $—   
Income Taxes  $—     $—     $—   
                
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:               
                
Common stock issued for prepaid consulting  $162,500   $—     $642,245 
Common stock issued for option  $100,000   $—     $100,000 
Shareholder loan converted to contributed capital  $—     $—     $4,000 
Accounts payable converted to contributed capital  $—     $—     $61,269 

 

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

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GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Notes to Financial Statements

April 30, 2013 and July 31, 2012

 

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at January 31, 2013 and for all periods presented herein, and for them to be not misleading, have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s July 31, 2012 audited financial statements. The results of operations for the periods ended April 30, 2013 are not necessarily indicative of the operating results for the full year.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

No recent accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.

 

NOTE 3 - LOAN DUE TO THIRD PARTY

 

The Company has issued a convertible Note that provides for funding up to $250,000 with terms as follows:

 

Annual interest accrues at the rate of ten (10%) per annum until paid, with the note and interest all due December 31, 2014.

 

The Note may be converted at the option of the note holder at any time prior to December 31, 2013 with the unpaid principal and accrued interest converted at the Common Share price of $.10.

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GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Notes to Financial Statements

April 30, 2013 and July 31, 2012

 

NOTE 4 - RELATED PARTY TRANSACTIONS

 

A shareholder has made various loans to the Company to cover ongoing operating costs. The loans are non interest bearing, unsecured and due upon demand.

 

NOTE 5 - SUBSEQUENT EVENTS

 

On April 5, 2012, we entered into a non-binding letter of intent with Alix Resources Corp. (“Alix”) for the potential purchase of an option to acquire a 60% ownership interest in certain mineral properties known as the “Golden Zone Property” located in the State of Alaska (the “Property”). The Property is located along the south flank of the Alaska Range 15 miles west of the Parks Highway, approximately halfway between the cities of Anchorage and Fairbanks. Alix has the existing option on the Property (the “Underlying Option”) which was entered into in September of 2010 with Hidefield Gold Inc. and Mines Trust Company (collectively the "Owners") whereby Alix can earn up to a 70% interest in the Property.

 

The letter of intent contemplates the sale of an option to us which, when exercised in conjunction with the Underlying Option held by Alix, will result in our ownership of 60% of the Property, with Alix retaining 10% ownership.

 

The letter of intent was to expire on May 15, 2012 provided no definitive agreement was reached between the Parties. On June 22, 2012 Alix and Goldspan agreed to extend the May 15, 2012 deadline to July 15, 2012.

 

On August 7, 2012, the agreement was extended to August 31, 2012, and a non-refundable deposit of $35,000 was paid. On December 7, 2012, the letter of intent was further extended, and the following payment schedule was agreed to: a series of three $100,000 (Canadian dollars) payments due December 31, 2012; January 31, 2013; and February 28, 2013. Goldspan also agreed to reimburse Alix no later than February 28, 2013 for costs totaling approximately $203,700 relating to the Gold Zone property. Goldspan also agreed to reimburse Alix $76,811, for amounts due under the Underlying Option. In consideration of Alix granting this extension, Goldspan issued 5,000,000 common shares in December, 2012 at a valuation of $100,000.

 

Goldspan defaulted on the agreed to series of $100,000 payments that were to commence December 31, 2012.

 

On May 21, 2013, we entered into an Agreement to Extend our Letter of Intent with Alix Resources Corp. (“Alix”) regarding the “Golden Zone” mineral properties in Alaska (the “Extension Agreement”).

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GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Notes to Financial Statements

April 30, 2013 and July 31, 2012

 

NOTE 5 - SUBSEQUENT EVENTS (continued)

 

The Extension Agreement provided the following terms:

 

1. We will provide a nonrefundable payment in the amount of $25,000 to Alix Resources no later than May 31, 2013. Upon receipt of the $25,000, Alix will surrender 500,000 shares of the total 5,000,000 shares our common stock issued in December 2012 as a part of the previous Agreement to Extend the Letter of Intent.

2. We will provide a second payment of $75,000 to Alix no later than June 30, 2013 as full payment of the terms to extend our option to purchase controlling interest in the Golden Zone properties through Alix Resources Corp. Upon receipt of the second payment in the amount of $75,000, Alix will surrender an additional 1,000,000 shares of our common stock.

3. During the interim period between the payments set forth above, Alix and Goldspan will modify their plan of operation to acquire controlling interest in Golden Zone on terms which are mutually agreeable to both parties. Tender and acceptance of the second payment outlined above will be contingent upon reaching a mutually acceptable plan for operations and financing of the Golden Zone mineral project.

4. In the event that Alix is offered another desirable financial and business partner opportunity with regard to the Golden Zone properties during this interim period, Alix shall have the right to contract with another partner with no penalty or recourse by either Alix or Goldspan. In that event, we will retain the 500,000 shares of our common stock surrendered by Alix, Alix shall retain the initial $25,000 payment, and we will be released from any obligation to pay the second payment of $75,000 upon written notice within ten business days of Alix’s receiving a more desirable offer.

 

The obligation of $25,000 that was due to Alix by before May 31, 2013 was not paid. Consequently the Company is currently in default of the extension agreement and the terms of the Option Agreement and all extensions thereon are null and void. There are no other discussions to further extend the Option Agreement and the Company has no indications that there will be any successful resolutions as the cancellation of the Option Agreement terminates any interest the Company had in Alix's option position to the Golden Zone property.

 

The total option expense paid to Alix totaled $160,000 comprised of cash in the amount of $60,000 and the valuation for the 5,000,000 shares issued at $.02 per share for a value of $100,000.

 

Goldspan Resources, Inc entered into a Letter of Intent (LOI) to acquire controlling interest in the oil, gas and water rights of Bonanza Oil & Gas (BO&G) for an amount of $2 million. A refundable $5,000 earnest deposit, that has been classified as an option expense, was paid on December 24, 2012. GRI did due diligence over a 45 day period. GRI was not able to act in a reasonable time frame to complete its due diligence nor to raise additional capital that may have held the Option to Purchase (LOI) active.

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GOLDSPAN RESOURCES, INC.

(A Development Stage Company)

Notes to Financial Statements

April 30, 2013 and July 31, 2012

 

NOTE 5 - SUBSEQUENT EVENTS (continued)

 

Therefore, the Company surrendered its right to the refundable $5,000 earnest deposit to cover costs incurred by BO&G in providing geologists, geological surveys and such to support the due diligence efforts of GRI.

 

On March 4, 2013, we entered into a non-binding Letter of Intent (the “LOI”) with Equipment & Trucks Inc. (“ETI”) a privately held heavy equipment sales and rental company located in Loveland, Colorado, for the option to purchase an 80% ownership interest in ETI.

 

The LOI provides for the following transactions:

 

- We have agreed to issue one million (1,000,000) shares of common stock as a good faith deposit toward the contemplated acquisition

- We have agreed to use our best efforts to secure a line of credit for ETI in the amount of $1.5 million by March 31, 2013

- We have agreed to use our best efforts to increase the line of credit secured for ETI to a total amount of $5 million by September 30, 2013

- We have agreed to use our best efforts to increase the line of credit secured for ETI to a total amount of $10 million by December 31, 2013

- Upon ETI’s receipt of a line of credit in the amount of $5 million, and no later than December 31, 2013, the parties will enter into a definitive share exchange agreement regarding the proposed acquisition.

 

The LOI with ETI has been cancelled by the Company and there is no further liability or obligations by the Company to ETI.

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Item 2.     Management’s Discussion and Analysis or Plan of Operation

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Company Overview and Plan of Operations

 

We were incorporated on March 2, 2007, under the laws of the state of Nevada.

 

On April 5, 2012, we entered into a non-binding letter of intent with Alix Resources Corp. (“Alix”) for the potential purchase of an option to acquire a 60% ownership interest in certain mineral properties known as the “Golden Zone Property” located in the State of Alaska (the “Property”). The Property is located along the south flank of the Alaska Range 15 miles west of the Parks Highway, approximately halfway between the cities of Anchorage and Fairbanks. Alix has the existing option on the Property (the “Underlying Option”) which was entered into in September of 2010 with Hidefield Gold Inc. and Mines Trust Company (collectively the "Owners") whereby Alix can earn up to a 70% interest in the Property.

 

The letter of intent contemplated the sale of an option to us which, when exercised in conjunction with the Underlying Option held by Alix, would result in our ownership of 60% of the Property, with Alix retaining 10% ownership. In order to maintain our rights under the contemplated option agreement and ultimately exercise the option, the letter of intent contemplated that we would make the following payments:

 

  a) pay Alix Resources an amount of CDN $1,000,000 as follows:
i) an initial amount of CDN $200,000 upon execution of the Definitive Agreement;
  ii) an additional amount of CDN $300,000 on or before that date which is 12 months from the date of the Definitive Agreement; and
  iii) the remaining amount of CDN $500,000 on or before that date which is 24 months from the date of the Definitive Agreement;
b) fund CDN $3,500,000 in exploration expenditures as follows:
  i) an initial amount of CDN $1,500,000 on or before that date which is 12 months from the date of the Definitive Agreement; and
  ii) the remaining CDN $2,000,000 on or before that date which is 24 months from the date of the Definitive Agreement; and
c) assume all payment obligations of the Alix Group under the Underlying Agreement, including but not limited to:
  i) all outstanding and ongoing cash payments required under Section 2.3 of the Underlying Agreement;
  ii) all outstanding and ongoing share issuance obligations under Section 2.3 of the Underlying Agreement, such that Goldspan shall issue securities in its capital in lieu and in replacement of Alix Resources issuing securities in its respective capital;
  iii) all cash payment and share issuance obligations under Section 2.8 of the Underlying Agreement, such that Goldspan shall issue securities in its capital in lieu and in replacement of Alix Resources issuing securities in its respective capital; and
  iv) all lease payments, taxes or other amounts payable to the State of Alaska or other governmental authorities with respect to the Property.
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Alix was required to notify the Owners of the Property of the letter of intent. Upon exercise of our option, the Owners would have the option to form a joint venture with us and Alix or sell their remaining 30% interest in the Property in exchange for an overriding perpetual royalty equal to 2.5% of the net smelter returns.

 

The letter of intent was non-binding and was conditional upon the parties’ entry into a definitive agreement, the completion of our due diligence on the Property, and the approval of the Owners and any necessary regulatory approvals.

 

The letter of intent was to expire on May 15, 2012, provided no definitive agreement was reached between the Parties. On June 22, 2012 Alix and Goldspan agreed to extend the May 15, 2012 deadline to July 15, 2012.

 

On August 7, 2012, the agreement was further extended to August 31, 2012, and a non-refundable deposit of $35,000 was paid. On December 7, 2012, the letter of intent was further extended, and the following payment schedule was agreed to: a series of three $100,000 (Canadian dollars) payments due December 31, 2012; January 31, 2013; and February 28, 2013. We also agreed to reimburse Alix no later than February 28, 2013 for costs totaling approximately $203,700 relating to the Property. We also agreed to reimburse Alix $76,811, for amounts due under the Underlying Option. In consideration of Alix granting this extension, we issued 5,000,000 common shares in December, 2012 at a valuation of $100,000.

 

We defaulted on the agreed to series of $100,000 payments that were to commence December 31, 2012.

 

Subsequently, on May 21, 2013, we entered into an Agreement to Extend the Letter of Intent with Alix (the “Extension Agreement”). The Extension Agreement provided as follows:

 

1. We would provide a nonrefundable payment in the amount of $25,000 to Alix Resources no later than May 31, 2013. Upon receipt of the $25,000, Alix would surrender 500,000 shares of the total 5,000,000 shares our common stock issued in December 2012 as a part of the previous Agreement to Extend the Letter of Intent.

 

2. We would provide a second payment of $75,000 to Alix no later than June 30, 2012 as full payment of the terms to extend our option to purchase controlling interest in the Golden Zone properties through Alix Resources Corp. Upon receipt of the second payment in the amount of $75,000, Alix would surrender an additional 1,000,000 shares of our common stock.

 

3. During the interim period between the payments set forth above, Alix and Goldspan would modify their plan of operation to acquire controlling interest in Golden Zone on terms which are mutually agreeable to both parties. Tender and acceptance of the second payment outlined above would be contingent upon reaching a mutually acceptable plan for operations and financing of the Golden Zone mineral project.

 

4. In the event that Alix was offered another desirable financial and business partner opportunity with regard to the Golden Zone properties during this interim period, Alix would have the right to contract with another partner with no penalty or recourse by either Alix or Goldspan. In that event, we would retain the 500,000 shares of our common stock surrendered by Alix, Alix would retain the initial $25,000 payment, and we would be released from any obligation to pay the second payment of $75,000 upon written notice within ten business days of Alix’s receiving a more desirable offer.

 

The $25,000 that was due to Alix by before May 31, 2013 under the Extension Agreement was not paid. Consequently we are currently in default of the extension agreement and the terms of the Letter of Intent and all extensions thereon are null and void. There are no other discussions to further extend the Letter of Intent and we have no indications that there will be any successful resolutions as the cancellation of the Letter of Intent terminates any interest the Company had in Alix's option position to the Golden Zone property.

 

On March 4, 2013, we entered into a non-binding Letter of Intent (the “LOI”) with Equipment & Trucks Inc. (“ETI”) a privately held heavy equipment sales and rental company located in Loveland, Colorado, for the option to purchase an 80% ownership interest in ETI.

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The LOI provided for the following transactions:

 

- We agreed to issue one million (1,000,000) shares of common stock as a good faith deposit toward the contemplated acquisition

- We agreed to use our best efforts to secure a line of credit for ETI in the amount of $1.5 million by March 31, 2013

- We agreed to use our best efforts to increase the line of credit secured for ETI to a total amount of $5 million by September 30, 2013

- We agreed to use our best efforts to increase the line of credit secured for ETI to a total amount of $10 million by December 31, 2013

- Upon ETI’s receipt of a line of credit in the amount of $5 million, and no later than December 31, 2013, the parties would enter into a definitive share exchange agreement regarding the proposed acquisition.

 

Under the terms of a Notice of Default dated April 30, 2013, we have cancelled the LOI with ETI and we and ETI have mutually released one another from any further liability or obligations under the LOI.

 

Expected Changes in Number of Employees, Plant, and Equipment

 

We do not have plans to purchase any physical plant or any significant equipment or to change the number of our employees during the next twelve months.

 

Results of Operations for the three and nine months ended April 30, 2013 and 2012

 

We incurred operating expenses of $1,185,454 and net losses in the amount of $1,188,429 from our inception on March 2, 2007 through the period ending April 30, 2013. We had no operating income for the three months ended April 30, 2013. We incurred operating expenses in the amount of $209,787 and a net loss in the amount of $212,419 during the three months ended April 30, 2013. These expenses included accounting fees of $1,750, investor relations services of $167,500, legal fees of $15,700, management fees of $15,000, an option loss for a forfeited land deposit of $5,000, interest expense of $2,632 and other costs in the amount of $4,837.

 

By way of comparison we incurred operating expenses of $10,897 for the three months ended April 30, 2012. These expenses included auditing fees of $8,500, legal fees of $250, accounting fees of $1,000, license fees of $650, transfer agent fees of $235 and other costs of $262.

 

We incurred operating expenses of $494,299 and a net loss in the amount of $498,274 during the nine months ended April 30, 2013 compared to operating expenses and a net loss in the amount of $12,018 during the nine months ended April 30, 2012. By way of comparison our operating expenses for the nine months ended April 30, 2013 included accounting fees of $8,550, auditing fees of $6,250, investor relations of $182,245, legal fees of $27,561, Management fees of $96,664, an option fee of $160,000 on the Golden Zone property, loss for a good faith deposit of $5,000 (classified as an option fee), and other costs in the amount of $12,004. By way of comparison our operating expenses for the nine months ended April 30, 2012 totaled $12,018 included auditing fees of $8,500, accounting fees of $1,000, legal fees of $606, license fees of $650, transfer agent fees of $885 and other fees of $377.

 

Our losses are attributable to our operating expenses combined with a lack of any revenues during our current stage of development.

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Liquidity and Capital Resources

 

As of April 30, 2013, we had $206 in cash and no other assets. We had current liabilities of $155,103 and a working capital deficit of $154,897.

 

On December 12, 2012, we received funding in the amount of $100,000 under a 10% Convertible Promissory Note issued to Arlon Franz (the “Note”). On February 28, 2013 we received additional funding of $10,000 for a Note issued to Equipment & Trucks Inc. ("ETI") under the same terms as the Arlon Franz 10% Convertible Promissory Note . The Note bears interest at a rate of 10% per year, with all principal and interest coming due on December 31, 2013. The Note is convertible in whole or in part, at the option of the holder, into shares of our common stock at a price of $0.10 per share.

 

As discussed above, on May 21, 2013 we entered into an Agreement to Extend our Letter of Intent with Alix Resources, Inc. ("Alix") regarding he "Golden Zone" mineral properties in Alaska. Under the terms of the Extension Agreement, we were obligated, among other items, to pay to Alix $25,000 on or before May 31, 2013. That payment was not made and we are currently in default of the Extension Agreement. There are currently no negotiations to remedy the default. Unless we are able to raise significant funds in the near future, there is no expectation that any further extensions will be executed with Alix for the Golden Zone property.

 

We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

 

Off Balance Sheet Arrangements

 

As of April 30, 2013, there were no off balance sheet arrangements.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis. As of April 30, 2013 we had a working capital deficit of $154,897 and an accumulated deficit of $1,188,429 since inception. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Management plans to continue to provide for our capital needs by the issuance of common stock and related party advances.

 

Critical Accounting Policies

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We do not believe that any accounting policies fit this definition for our company.

 

Recently Issued Accounting Pronouncements

 

No recent accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4T. Controls and Procedures 


We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of April 30, 2013. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, 2013 our disclosure controls and procedures were not effective. There have been no changes in our internal controls over financial reporting during the quarter ended April 30, 2013.

 

Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Limitations on the Effectiveness of Internal Controls

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.   Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

1. We issued 1,250,000 shares of common stock to Richard E. Barsom under the terms of a consulting agreement dated March 19, 2013, as further discussed in Item 5, below.

 

2. We issued 2,500,000 shares of common stock to LS, LLC under the terms of a consulting agreement dated December 13, 2012, as further discussed in Item 5, below.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

None

 

Item 5. Other Information

 

1. We have received short term advances from a shareholder totaling $7,010. These advances have been made to cover operating costs until we can generate our own cash flow. These advances are non interest bearing and will be repaid to the shareholder when we have sufficient capital to repay them.

 

2. On December 13, 2013, we entered into Term Sheet with LS, LLC (“LS”) under which LS agreed to provide us with business development and financial consulting assistance as an independent contractor. The agreement calls for initial compensation to LS of $25,000 and 2,500,000 shares of common stock. After a ninety (90) day evaluation period, an additional 2,500,000 shares of common stock are issuable to LS as compensation.

 

3. On March 19, 2013, we entered into a consulting agreement with Richard E. Barsom under which Mr. Barsom has agreed to provide us with business and financial consulting services for an initial term of six (6) months. The agreement calls for initial compensation to Mr. Barsom of 1,250,000 shares of common stock. At the end of the initial six month term, the agreement will be extended for an additional six months if Mr. Barsom has: (i) helped us to achieve a 10-day trailing average stock price of at least $0.35 per share, and (ii) has helped to raise at least $2 million in new equity investment as part of a private placement. If the agreement is extended, Mr. Barsom will be paid an additional 1,250,000 shares of common stock.

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Item 6.      Exhibits

 

Exhibit Number

Description of Exhibit

 

10.1 10% Convertible Promissory Note issued to Equipment & Trucks Inc.
10.2 Notice of Default under Letter of Intent with Equipment & Trucks Inc.
10.3 Term Sheet with LS, LLC
10.4 Consulting Agreement with Richard E. Barsom
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101** The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2013 formatted in Extensible Business Reporting Language (XBRL).
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SIGNATURES

 

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.

 

Goldspan Resources, Inc.

 

By: /s/ David Hedderly-Smith
 

David Hedderly-Smith

Chief Executive Officer, and Director

June 19, 2013

 

By: /s/ Iain Stewart
 

Iain Stewart

Chief Financial Officer, Secretary, Treasurer, and Director

  June 19, 2013
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