Nevada Canyon Gold Corp. - Quarter Report: 2017 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: September 30, 2017

or

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

For the transition period from ______ to ______

Commission File No. 000-55600

NEVADA CANYON GOLD CORP.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code: (888) 909-5548

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 preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 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. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Yes [  ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [  ] No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 10, 2017, the number of shares outstanding of the issuer’s sole class of common stock, par value $0.0001 per share, is 44,050,000.

table of contents

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

Nevada Canyon Gold Corp.

Balance Sheets

(Presented in US Dollars)

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

Nevada Canyon Gold Corp.

Statements of Operations

(Presented in US Dollars)

(Unaudited)

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

Nevada Canyon Gold Corp.

Statements of Cash Flow

(Presented in US Dollars)

(Unaudited)

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

NEVADA CANYON GOLD CORP.

Notes to the Interim Financial Statements

For the three and nine months ended September 30, 2017 and 2016

(Unaudited)

NOTE 1 - NATURE OF BUSINESS

Nevada Canyon Gold Corp. (the “Company”) was incorporated under the laws of the state of Nevada on February 27, 2014. On July 6, 2016, the Company changed its name from Tech Foundry Ventures, Inc. to Nevada Canyon Gold Corp.

On April 28, 2016, the Company split its common stock on a 10:1 basis. All shares and per share amounts have been retroactively restated to account for the split.

Going Concern

The Company’s unaudited interim financial statements are prepared using accounting principles generally accepted in the United States of America (“US GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has only recently begun its exploration operations and has not generated or realized any revenues from these business operations. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that the Company will be able to continue as a going concern. These unaudited interim financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds, and/or a private placement of common stock.

NOTE 2 - BASIS OF PRESENTATION

The unaudited interim financial statements of the Company have been prepared in accordance with US GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The unaudited interim financial statements should be read in conjunction with those financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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.

NOTE 3 – RELATED PARTY TRANSACTIONS

Amounts due to related parties at September 30, 2017 and December 31, 2016:

(a) These advances are non-interest bearing, unsecured and due on demand.

NOTE 4 – MINERAL PROPERTY INTERESTS

Lapon Canyon Gold Property

On December 17, 2015, the Company entered into a definitive agreement with Nevada Canyon Gold Corporation, a Nevada privately held corporation with the President and CEO in common (“NCG”), to acquire all of NCG’s rights, titles and interests in and into an exploration agreement with an option to form a joint venture with Walker River Resources Corp., a Canadian public company (“WRR”), dated September 15, 2015 (the “Agreement”). WRR owns a 100% undivided interest in and to the Lapon Canyon Gold (the “Property”), containing the Lapon Canyon claims, the subject of the Agreement.

The Agreement did not grant the Company an interest in or to the Lapon Canyon claims, or any equity interest in WRR, but rather, granted the Company the right to earn up to an undivided 50% interest in the Lapon Canyon claims by incurring, over a two-year period, $500,000 in exploration and other expenses required to carry out a work program established and operated by WRR on the Lapon Canyon claims (“Eligible Expenses”) and, thereafter, granted the Company an option to enter into a joint venture with WRR for further exploration and development of the Lapon Canyon claims. In addition, the Agreement granted the Company the first right of refusal to acquire an additional 20% interest in the Lapon Canyon claims by the expenditure of additional funds and performance of additional tasks, all related to the joint venture.

Full consideration for all rights in and to the Agreement consisted of the following: payment of $65,000 by the Company to NCG, comprised of an initial cash deposit of $25,000, a cash payment of $30,000 and the balance of $10,000 paid through the issuance of 1,000,000 restricted common shares of the Company issued to NCG at a price of $0.01. All consideration had been fully paid as at December 31, 2015.

On July 5, 2017, the Company entered into a property purchase agreement (the “Purchase Agreement”) with WRR on the Lapon Canyon Project. Under the terms of the Purchase Agreement WRR agreed to buy back the Company’s 30% interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares (the “WRR Warrant”). Each WRR Warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the WRR Warrants contain a provision which prevents the Company to exercise any part of the WRR Warrants which would result in the Company owning 10% or more of the issued and outstanding shares of WRR.

Closing of the Purchase Agreement was subject to the acceptance of the TSX Venture Exchange, which was received on July 17, 2017. All securities issued pursuant to the Purchase Agreement are subject to a hold period expiring on November 20, 2017.

At initial recognition, the Company recorded $1,008,869 as fair market value of 9,100,000 common shares of WRR based on then current share price of $0.11 (CAD$0.14) per share, and $1,318,650 as fair market value of WRR Warrants.

The fair value of the WRR Warrants was determined using the Black-Scholes Option pricing model at the issuance date using the following assumptions:

The transaction resulted in $2,262,519 gain from the sale of mineral assets, and was recorded in the statement of operations.

During the nine-month period ended September 30, 2017, the Company incurred $29,292 in Eligible Expenses (2016 – $236,010) on the Lapon Canyon claims of which $29,292 represented exploration expenses (2016 – $153,453).

Garfield Flats Project

On June 7, 2017, the Company entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC (the “Vendor”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of six (6) Orsa Claims and six (6) Lazy Claims totaling 240 acres. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

In order to retain the rights to the exploration lease, the Company is required to make the following minimum annual payments:

In addition to the minimum annual payments, the Company agreed to pay the Vendor a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

At any time during the term of the Garfield Agreement the Company has a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by the Company to the Vendor, cannot be applied or credited against the Purchase Price, however, once the Company exercises its option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

On August 2, 2017, the Company entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to lease the Lazy Claims, consisting of three claims (the “Lazy Claims Property”). The term of the Lazy Claims Agreement is ten years, and is subject to extension for additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. The Company agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, the Company will not be required to pay a $2,000 annual minimum payment.

During the three-month period ended September 30, 2017, the Company staked an additional 69 Orsa Claims and 75 Lazy Claims, with a total paid cost of $54,152. These claims were added to the Garfield Flats Project.

NOTE 5 – EQUITY INVESTMENT

On July 5, 2017, the Company entered into the “Purchase Agreement” with WRR on the Lapon Canyon Project to sell the Company’s 30% interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares. The transaction completed on July 18, 2017. All securities issued pursuant to the Purchase Agreement are subject to a hold period expiring on November 20, 2017.

At initial recognition, the Company recorded $2,327,519 as long-term equity investment, which consisted of $1,008,869 fair market value of 9,100,000 common shares of WRR based on then current share price of $0.11 (CAD$0.14) per share, and $1,318,650 as fair market value of WRR Warrants (Note 4).

Each WRR Warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the WRR Warrants contain a provision which prevents the Company to exercise any part of the WRR Warrants which would result in the Company owning 10% or more of the issued and outstanding shares of WRR.

At September 30, 2017, the fair market value of the equity investment was calculated to be $2,355,137, and consisted of $1,020,833 associated with fair market value of 9,100,000 common shares of WRR, as revalued at September 30, 2017, and $1,334,304 associated with fair market value of WRR Warrants.

At September 30, 2017, the fair value of the WRR Warrants was revalued using the Black-Scholes Option pricing model using the following assumptions:

The revaluation of the equity investment in WRR resulted in $27,618 gain, which was mainly associated with the fluctuation of the foreign exchange rates between the US and Canadian dollars. The Company records its equity investment in WRR as Fair Value through other comprehensive income/loss (FVOCI), and as such the gain on revaluation was recorded as part of other comprehensive income included in stockholders’ equity.

NOTE 6 – NOTES AND ADVANCES PAYABLE

During the nine-month period ended September 30, 2017, the Company received $55,000 from an arm’s length party as an advance for its operating activities. The advance is non-interest bearing, unsecured and due on demand.

NOTE 7 – CONSULTING REVENUE

During the nine-month period ended September 30, 2017, the Company recorded $20,000 in consulting revenue associated with the services provided to Walker River Resources Corp.

NOTE 8 – STOCKHOLDERS’ EQUITY

The Company was formed with one class of common stock, $0.0001 par value and is authorized to issue 100,000,000 common shares, and one class of preferred stock, $0.0001 par value and is authorized to issue 10,000,000 preferred shares. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they chose to do so, elect all of the directors of the Company.

On April 28, 2016, the Company split its common stock on a 10:1 basis. The stock split did not affect the par value of the Company’s common stock. As a result, the stated capital on the Company’s balance sheet attributable to the Company’s common stock was increased proportionately based on the stock split ratio, and the additional paid-in capital account was credited with the amount by which the stated capital was increased. All shares and per share amounts have been retroactively restated to account for the split.

During the nine-month period ended September 30, 2017, the Company did not have any transactions that resulted in issuance of its common stock, or warrants or options to acquire its common stock.

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.

Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K.

Examples of forward looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our future products, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:

Actual results and developments may materially differ from those expressed in, or implied by, such statements due to a number of factors, including:

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.

The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited condensed interim financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited condensed interim financial statements.

In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Nevada Canyon Gold Corp., a Nevada corporation, unless the context requires otherwise.

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three and nine months ended September 30, 2017 and 2016. You should refer to the Financial Statements and related Notes in conjunction with this discussion.

General

We are an exploration stage Company. We have only recently begun our exploration operations and have not generated or realized any revenues from these business operations.

We were a party to an Exploration Agreement (the “Agreement”) with Option to form a Joint Venture with Walker River Resources Corp. (“WRR”) on its wholly-owned Lapon Canyon Gold Project (“Lapon Canyon Project”, or “the Property”) located approximately 40 miles southeast of Yerington, Nevada. The Agreement did not grant us an interest in or to the Property, or any equity interest in WRR, but rather, granted us the right to earn up to an undivided 50% interest in the Property by incurring eligible expenditures of $500,000 (over a two-year period) in exploration and other expenses required to carry out a work program established and operated by WRR on the Property (the “Eligible Expenses”).

On July 5, 2017, we entered into a property purchase agreement (the “Purchase Agreement”) with WRR on the Lapon Canyon Project. Under the terms of the Purchase Agreement WRR agreed to buy back our 30% interest in the Lapon Canyon Project, which was prorated based on the amount of eligible expenditures we’ve incurred as of that date, in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares (the “WRR Warrants”). Each warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the warrants contain a provision which prevents us from exercising any warrants which would result in us owning 10% or more of the issued and outstanding shares of WRR. Closing of the Purchase Agreement was subject to the acceptance of the TSX Venture Exchange, which was received on July 17, 2017. All securities issued pursuant to the Second Option Agreement are subject to a hold period expiring on November 20, 2017.

On June 7, 2017, we entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC ( “Goodsprings”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of six Orsa Claims and six Lazy Claims totaling 240 acres located in sections 27 and 28 of T 7 N, R 32 E, Mineral County, Nevada about 18 miles southeast of the town of Hawthorne. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

In order to retain the rights to the exploration lease, we are required to make the following minimum annual payments:

In addition to the minimum annual payments, we agreed to pay Goodsprings a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

At any time during the term of the Agreement we have a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by us to Goodsprings, cannot be applied or credited against the Purchase Price; however, once we exercise our option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

On August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, to lease rights to three additional Lazy claims totaling 60 acres and located in the vicinity of our new Garfield Property. The term of the Lazy Claims Agreement is ten years, and is subject to extension for an additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment.

During the three-month period ended September 30, 2017, we staked an additional 69 Orsa Claims and 75 Lazy Claims, with a total paid cost of $54,152. These claims were added to the Garfield Flats Project.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our unaudited condensed interim financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing and investing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our unaudited condensed interim financial statements include estimates as to the appropriate carrying value of certain assets and liabilities, which are not readily apparent from other sources.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited interim financial statements for the three and nine months ended September 30, 2017, and 2016, together with notes thereto, which are included in this Quarterly Report on Form 10-Q, as well as our most recent audited financial statements on Form 10-K for the year ended December 31, 2016.

Results of Operations

Three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016:

Revenues. During the three months ended September 30, 2017, we recorded $5,000 in revenue from consulting services we’ve provided to WRR. During the nine months ended September 30, 2017, we recorded $20,000 in revenue from consulting services we’ve provided to WRR. We did not have similar revenues during the three and nine months ended September 30, 2017. Due to the exploration rather than the production nature of our business, we do not expect to have significant operating revenue in the foreseeable future.

Operating expenses. Our operating expenses include exploration expenses, general and administrative expenses, professional fees and transfer agent and filing fees. During the three-month period ended September 30, 2017, our operating expenses decreased by $129,613, or 89%, to $15,650 for the three months then ended, compared to $145,263 for the comparable period in 2016. This change was mainly associated with reduced exploration expenses and professional fees, as the drilling program we carried out on the Lapon Canyon claims (the “Exploration Program”), which was required under our Agreement with WRR to earn a 50% interest in a joint venture, was completed in our Fiscal 2016, and only minimal exploration activities took place during the three-month period ended September 30, 2017.

During the nine-month period ended September 30, 2017, our operating expenses decreased by $174,965, or 73%, to $63,748 for the nine months ended September 30, 2017, as compared to $238,713 for the comparable period in 2016. This change was associated with reduced exploration operations on the Lapon Property, as the drilling program on the Lapon Canyon claims (the “Exploration Program”), which was required under our Agreement with WRR to earn a 50% interest in a joint venture, was completed in our Fiscal 2016. During the nine-month period ended September 30, 2017, we recorded $29,292 in exploration expenses directly associated with the Exploration Program, as compared with $153,453 we spent during the nine-month period ended September 30, 2017. Our general and administrative expenses decreased by $30,668, or 67%, to $14,915 for the nine months ended September 30, 2017, compared with $45,583 for the nine-month period ended September 30, 2016. The greater general and administrative expenses during the comparable period were in part attributable to the fair value of 800,000 common shares we issued to Nevada Canyon Gold Corporation, a Nevada privately held corporation, with the President and CEO in common (“NCG”), which were valued at $8,000. The shares were issued to purchase the intangible assets of NCG which included its corporate name, domain name and all related content. In addition to the above, our professional fees decreased by $23,601 to $6,500 we incurred during the nine-month period ended September 30, 2017, as compared to $30,101 we incurred during the comparable period in 2016. Greater professional fees in our Fiscal 2016 were mainly associated with legal and audit fees which increased in parallel with increased business activity.

Other items. During the nine-month period ended September 30, 2017, we recorded $2,262,519 gain from the sale of our 30% interest in the Lapon Canyon Gold Property to WRR in exchange for 9,100,000 common shares and warrants to acquire an additional 11,900,000 common shares of WRR. At the time of the transaction the fair market value of the shares was determined to be $1,008,869 based on then current share price of $0.11 (CAD$0.14) per share, and the fair market value of WRR Warrants was determined to be $1,318,650 using the Black-Scholes Option pricing model at the issuance date using the following assumptions: expected warrant life of 5 years, expected dividend yield of 0%, an average risk-free interest rate of 1.48% and an average expected stock price volatility of 155.82%.

Net income (loss). At September 30, 2017, we recorded net income of $2,251,869 for the three-month period then ended, as compared to net loss of $142,851 for the three-month period ended September 30, 2016. The change from net loss to net income resulted from the valuation of WRR shares and WRR Warrants we received in exchange for our 30% interest in the Lapon Canyon Gold Property, which were in part offset by our operating expenses. 

On a year-to-date basis, our net income was $2,218,771, as compared to net loss of $238,794 for the nine-month period ended September 30, 2016. The change from net loss to net income resulted from the valuation of WRR shares and WRR Warrants we received in exchange for our 30% interest in the Lapon Canyon Gold Property, which were in part offset by our operating expenses. 

Comprehensive income (loss). As at September 30, 2017, our comprehensive income included $27,618 gain on fair value of equity investments, which resulted from revaluation of WRR Shares and WRR Warrants we received in exchange for our 30% interest in Lapon Canyon Gold Property. The gain resulted mainly from the fluctuation of exchange rates between the US and Canadian dollars.

Liquidity and Capital Resources

As of September 30, 2017, we had a cash balance of $4,508, and working capital deficit of $152,303 with cash flows used in operations totaling $42,129 for the period then ended. During the nine-month period ended September 30, 2017, our operations were funded with $55,000 non-interest bearing advance we received from an arm’s length party, $20,000 we received on account of our consulting services provided to WRR, and with $9,000 in advances we received from our directors (net of $5,000 repayment of prior reimbursable expenses).

We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the nine-month period ended September 30, 2017. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under the advances payable, or to support our exploration program. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources.

To provide us with the necessary capital to accomplish our plan of operation we intend to seek additional financing in the form of equity or debt. There can be no assurance that we will be successful in our efforts to raise additional capital.

Cash Flow

Net cash used in operating activities: Our net cash used in operating activities decreased by $193,662, or 82%, to $42,129 for the nine months ended September 30, 2017, compared with $235,791 for the comparable period in 2016. During the nine months ended September 30, 2017, we used $43,748 to cover our cash operating costs and $981 to increase our prepaid expenses. These uses of cash were offset by $2,600 increase in amounts payable to our vendors.

During the nine-month period ended September 30, 2016, our net cash used in operating activities increased by $180,860, or 329%, to $235,791 as compared with $54,931 for the comparable period in 2015. During the nine months ended September 30, 2016, we used $230,713 to cover our cash operating costs, and to increase our prepaid expenses by $11,872. These uses of cash were offset by increase in our accounts payable of $6,794.

Certain non-cash transactions: During the nine months ended September 30, 2017, our operating costs included $2,262,519 gain from the sale of our 30% interest in the Lapon Canyon Gold Property to WRR in exchange for 9,100,000 common shares and warrants to acquire an additional 11,900,000 common shares of WRR.

During the nine months ended September 30, 2016, our operating costs included $81 in accrued interest on $100,000 note payable we issued to an arms-length party, as well as $8,000 in share-based payment we recorded on issuance of 800,000 common shares to NCG in exchange for its intangible assets, including its corporate name, domain name and all related content.

Net cash used in investing activities: During the nine months ended September 30, 2017, we paid $15,000 as an initial payment to acquire Garfield Property pursuant to our exploration lease and option to purchase agreement with Goodsprings Development LLC. In addition, we paid $54,152 to acquire an additional 69 Orsa Claims and 75 Lazy Claims in the vicinity of our Garfield Flats Project.

During the nine months ended September 30, 2016, we did not have any investing transactions that would have effected our cash flows.

Net cash provided by financing activities: Our net cash provided by financing activities decreased by $240,494, or 79%. During the nine-month period ended September 30, 2017, we received $55,000 non-interest bearing advance from an arm’s length party; in addition, we advanced $9,000 from our directors (net of $5,000 repayment of prior reimbursable expenses). All advances are interest free and due on demand.

During the nine months ended September 30, 2016, our net cash provided by financing activities increased by $295,994, or 3,482%, to $304,494 compared with $8,500 for the comparable period in 2015. We received $375,000 in gross proceeds from a private placement for 3,750,000 shares of our common stock at $0.10 per share, which we closed on June 21, 2016. We received $30,000 advance from our CEO and President free of interest and payable on demand.

On August 1, 2016, we renegotiated the terms of the note payable we issued to an arms-length party, extending the maturity date to August 2, 2016, and reducing the interest rate to 0.75%. We repaid the note payable and accrued interest totaling $100,506 in accordance with the new terms on August 2, 2016.

Going Concern

At September 30, 2017, we had a working capital deficit of $152,303 and cash on hand of $4,508, which is not sufficient enough to carry out our current plan of operations, however we are in the process of procuring funds sufficient to fund our operations until we are able to finance our operations through cash flow. There can be no assurance that we will be able to procure funds sufficient for such purpose. If operating difficulties or other factors (many of which are beyond our control) delay our realization of revenues or cash flows from operations, we may be limited in our ability to pursue our business plan. Moreover, if our resources from obtaining additional capital or cash flows from operations, once we commence them, do not satisfy our operational needs or if unexpected expenses arise due to unanticipated pressures or if we decide to expand our business plan beyond its currently anticipated level or otherwise, we will require additional financing to fund our operations, in addition to anticipated cash generated from our operations. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In a worst-case scenario, we might not be able to fund our operations or to remain in business, which could result in a total loss of our stockholders’ investment. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.

Income Tax Benefit

The Company has a prospective income tax benefit resulting from a net operating loss carry forwards that may offset any future operating profit.

Impact of Inflation

We believe that inflation has had a negligible effect on operations over the past fiscal quarter.

Capital Expenditures

The Company expended no amounts on capital expenditures for the nine months ended September 30, 2017.

Unproved Mineral Properties

As of the date of this quarterly report on Form 10-Q, our mineral interests are comprised of the following:

Garfield Flats Project

On June 7, 2017, we entered into an exploration lease and option to purchase agreement (the “Garfield Agreement”) with Goodsprings Development LLC (“Goodsprings”), a Nevada limited liability corporation on the Garfield Flats Project (the “Garfield Property”), consisting of 12 claims totaling 240 acres located in sections 27 and 28 of T 7 N, R 32 E, Mineral County, Nevada about 18 miles southeast of the town of Hawthorne. The term of the Garfield Agreement is ten years, and is subject to extension for two additional terms of ten years each.

In order to retain the rights to the exploration lease, we are required to make the following minimum annual payments:

In addition to the minimum annual payments, we agreed to pay Goodsprings a 2% production royalty based on the gross returns from the production and sale of minerals from the Garfield Property.

At any time during the term of the Agreement we have a right to acquire 100% ownership of the Garfield Property for a one-time payment of $300,000 (the “Purchase Price”). The minimum annual payments paid by us to Goodsprings, cannot be applied or credited against the Purchase Price, however, once we exercise our option to acquire the Garfield Property, the minimum annual payments shall be credited against the production royalties payable.

Lazy Claims

On August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources US Inc. (“Tarsis”), a Nevada corporation, on three additional Lazy Claims totaling 60 acres and located in Mineral County, Nevada about 18 miles southeast of the town of Hawthorne (the “Lazy Claims”).

The term of the Lazy Claims Agreement is ten years, and is subject to extension for an additional two consecutive 10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment.

Additional Claims Acquisition

During the three-month period ended September 30, 2017, we staked an additional 69 Orsa Claims and 75 Lazy Claims, with a total paid cost of $54,152. These claims were added to the Garfield Flats Project.

Lapon Canyon Property

On December 17, 2015, we entered into a definitive agreement (the “Agreement”) with Nevada Canyon Gold Corporation, to acquire all of NCG’s rights, titles and interests in and into an exploration agreement with an option to form a joint venture with Walker River Resources Corp. dated September 15, 2015. WRR owns a 100% undivided interest in and to the Lapon Canyon Gold Property, containing the Lapon Canyon claims (“the Property”), which is the subject of the Agreement.

The Agreement did not grant us an interest in or to the Property, or any equity interest in WRR, but rather, granted us the right to earn up to an undivided 50% interest in the Property by incurring $500,000 (over a two-year period) in eligible exploration and other expenses required to carry out an Exploration Program established and operated by WRR on the Property (the “Eligible Expenses”). On October 15, 2016, we incurred required $250,000 in Eligible Expenses, and earned the 25% interest to the Property.

On July 5, 2017, we entered into a Purchase Agreement with WRR on the Property. As at the date of the Purchase Agreement our interest in the Property was 30%. Under the terms of the Purchase Agreement WRR agreed to buy back our 30% interest in the Lapon Canyon Project in exchange for 9,100,000 common shares of WRR and warrants to acquire an additional 11,900,000 common shares. Each WRR Warrant is exercisable for a period of five years without further consideration into one common share in the capital of WRR. The terms of the WRR Warrants contain a provision which prevents us from exercising any of the WRR Warrants which would result in us owning 10% or more of the issued and outstanding shares of WRR. The above securities were issued on July 18, 2017, upon acceptance of the Purchase Agreement by the TSX Venture Exchange, and are subject to a hold period expiring on November 20, 2017.

Off-Balance Sheet Arrangements

None.

Use of Estimates

Areas where significant estimation judgments are made and where actual results could differ materially from these estimates are the carrying value of certain assets and liabilities which are not readily apparent from other sources and the classification of net operating loss and tax credit carry forwards.

We evaluate impairment of our long-lived assets by applying the provisions of SFAS No. 144. In applying those provisions, we have not recognized any impairment charge on our long-lived assets during the nine months ended September 30, 2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

Item 4. Controls and Procedures

We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

During the nine-month period ended September 30, 2017, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Inherent Limitations of Internal Controls

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

Management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 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 internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

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

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

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.