VNUE, Inc. - Quarter Report: 2014 February (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 February 28, 2014
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission file number 000-53462
TIERRA GRANDE RESOURCES
INC.
(Exact name of registrant as specified in its charter)
| Nevada | 98-054-3851 |
| (State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
| organization) |
Cnr Stirling Hwy & Fairlight St.
Mosman Park, Western
Australia 6012
Australia
(Address of principal
executive offices)
+61 8 9384 6835
(Registrant’s telephone number
including area code)
Indicate by check mark whether the registrant (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 require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of 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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting company [ x ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ]
As of April 17, 2014, the registrant’s outstanding common stock consisted of 95,769,712 shares.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
| Tierra Grande Resources Inc. |
| (An Exploration Stage Company) |
| February 28, 2014 |
Index
3
| Tierra Grande Resources Inc. |
| (An Exploration Stage Company) |
| Consolidated Balance Sheets |
| (Unaudited) |
| February 28, | May 31, | |||||
| 2014 | 2013 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash | $ | 61,241 | $ | 39,983 | ||
| Total Current Assets | 61,241 | 39,983 | ||||
| Property and Equipment, net accumulated depreciation of $4,330 and $3,585, respectively | 906 | 1,651 | ||||
| Website Development Costs, net accumulated amortization of $0 | – | 5,500 | ||||
| Total Assets | $ | 62,147 | $ | 47,134 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 11,605 | $ | 3,583 | ||
| Total Liabilities | 11,605 | 3,583 | ||||
| Stockholders’ Equity | ||||||
| Preferred Stock, 20,000,000 shares
authorized, $0.0001 par value, None issued and outstanding |
– |
– |
||||
| Common Stock, 500,000,000 shares authorized, $0.0001 par
value 95,769,712 shares and 78,269,712 shares issued and outstanding, respectively |
9,577 |
7,877 |
||||
| Additional Paid-in Capital | 9,220,528 | 9,052,228 | ||||
| Deficit Accumulated During the Exploration Stage | (9,179,563 | ) | (9,016,554 | ) | ||
| Total Stockholders’ Equity | 50,542 | 43,551 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 62,147 | $ | 47,134 |
The accompanying notes are an integral part of these unaudited consolidated financial statements
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| Tierra Grande Resources Inc. |
| (An Exploration Stage Company) |
| Consolidated Statements of Expenses |
| (Unaudited) |
| Accumulated | |||||||||||||||
| from April 4, | |||||||||||||||
| For the | For the | For the | For the | 2006 | |||||||||||
| Three Months | Three Months | Nine Months | Nine Months | (Date of | |||||||||||
| Ended | Ended | Ended | Ended | Inception) to | |||||||||||
| February 28, | February 28, | February 28, | February 28, | February 28, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | |||||||||||
| Expenses | |||||||||||||||
| General and administrative | $ | 5,194 | $ | 32,466 | $ | 36,643 | $ | 234,763 | $ | 3,046,109 | |||||
| Exploration mineral property costs | – | 3,805 | 65,009 | 10,911 | 252,140 | ||||||||||
| Professional fees | 32,005 | 3,965 | 55,857 | 35,119 | 765,361 | ||||||||||
| Total Expenses | 37,199 | 40,236 | 157,509 | 280,793 | 4,063,610 | ||||||||||
| Net Loss Before Other Expenses | (37,199 | ) | (40,236 | ) | (157,509 | ) | (280,793 | ) | (4,063,610 | ) | |||||
| Other Income (Expenses) | |||||||||||||||
| Interest income | – | – | – | – | 2,276 | ||||||||||
| Miscellaneous income | – | – | – | – | 1,467 | ||||||||||
| Interest expense | – | – | – | – | (59,588 | ) | |||||||||
| Accretion of convertible debenture discount | – | – | – | – | (31,396 | ) | |||||||||
| Gain on disposal of property and equipment | – | – | – | – | 7,277 | ||||||||||
| Impairment of website development costs | (5,500 | ) | – | (5,500 | ) | – | (5,500 | ) | |||||||
| Total Other Income (Expenses) | (5,500 | ) | – | (5,500 | ) | – | (85,464 | ) | |||||||
| Net Loss From Continuing Operations | (42,699 | ) | (40,236 | ) | (163,009 | ) | (280,793 | ) | (4,149,074 | ) | |||||
| Results from discontinued operations | – | – | – | – | (5,030,489 | ) | |||||||||
| Net Loss | $ | (42,699 | ) | $ | (40,236 | ) | $ | (163,009 | ) | $ | (280,793 | ) | $ | (9,179,563 | ) |
| Net Loss Per Share – Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
| Weighted Average Shares Outstanding | 92,936,000 | 78,770,000 | 86,707,000 | 78,266,000 |
The accompanying notes are an integral part of these unaudited consolidated financial statements
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| Tierra Grande Resources Inc. | |||||||||
| (An Exploration Stage Company) | |||||||||
| Consolidated Statements of Cash Flows | Accumulated | ||||||||
| (Unaudited) | For the | For the | from April 4, 2006 | ||||||
| Nine Months | Nine Months | (Date of | |||||||
| Ended | Ended | Inception) to | |||||||
| February 28, | February 28, | February 28, | |||||||
| 2014 | 2013 | 2014 | |||||||
| Operating Activities | |||||||||
| Net loss | $ | (163,009 | ) | $ | (280,793 | ) | $ | (9,179,563 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities | |||||||||
| Accretion of convertible debenture discount | – | – | 31,396 | ||||||
| Depreciation and amortization | 745 | 1,256 | 4,330 | ||||||
| Shares issued for mineral property costs | – | – | 2,323,600 | ||||||
| Impairment of mineral property costs | – | – | 2,230,125 | ||||||
| Impairment of website development costs | 5,500 | – | 5,500 | ||||||
| Stock-based compensation | – | 45,833 | 718,953 | ||||||
| Gain on disposal of property and equipment | – | – | (7,277 | ) | |||||
| Loss from discontinued operations | – | – | 37,785 | ||||||
| Bad debt expense | – | – | 63,344 | ||||||
| Changes in operating assets and liabilities | |||||||||
| Accounts payable and accrued liabilities | 8,022 | (98,256 | ) | 587,906 | |||||
| Advances | – | (54,592 | ) | – | |||||
| Other receivables | – | 451 | (2,288 | ) | |||||
| Prepaid expenses and other current assets | – | – | (11,043 | ) | |||||
| Due to related parties | – | (828 | ) | (202,229 | ) | ||||
| Net Cash Used in Operating Activities | (148,742 | ) | (386,929 | ) | (3,399,461 | ) | |||
| Investing Activities | |||||||||
| Acquisition of mineral properties | – | – | (2,230,125 | ) | |||||
| Acquisition of property and equipment | – | (1,273 | ) | (89,969 | ) | ||||
| Proceeds from disposition of subsidiaries | – | – | 32,970 | ||||||
| Proceeds from disposal of property and equipment | – | – | 24,777 | ||||||
| Proceeds from disposal of property and equipment in discontinued operations | – | – | 12,496 | ||||||
| Website development costs | – | (5,500 | ) | (5,500 | ) | ||||
| Net Cash Used in Investing Activities | – | (6,773 | ) | (2,255,351 | ) | ||||
| Financing Activities | |||||||||
| Advances from related parties | – | – | 196,671 | ||||||
| Repayments to related parties | – | – | (59,026 | ) | |||||
| Advances to related party receivable | – | – | (63,344 | ) | |||||
| Proceeds from related party receivable | – | – | 10,000 | ||||||
| Proceeds from notes payable | – | – | 61,694 | ||||||
| Repayment of note payable | – | – | (73,362 | ) | |||||
| Proceeds from loans payable | – | – | 387,218 | ||||||
| Repayment of loans payable | – | – | (25,000 | ) | |||||
| Proceeds from the issuance of common stock | 170,000 | – | 5,448,352 | ||||||
| Proceeds from common stock subscription | - | 30,000 | 40,350 | ||||||
| Share issuance costs | – | – | (207,500 | ) | |||||
| Net Cash Provided by Financing Activities | 170,000 | 30,000 | 5,716,053 | ||||||
| Increase (Decrease) In Cash | 21,258 | (363,702 | ) | 61,241 | |||||
| Cash - Beginning of Period | 39,983 | 446,623 | – | ||||||
| Cash – End of Period | $ | 61,241 | $ | 82,921 | $ | 61,241 |
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| Non-Cash Investing and Financing Activities: | |||||||||
| Convertible debt issued to settle loans payable | $ | – | $ | – | $ | 350,000 | |||
| Convertible debt issued to settle related party advances | $ | – | $ | – | $ | 150,000 | |||
| Common stock issued for mineral property acquisitions | $ | – | $ | – | $ | 2,201,100 | |||
| Common stock issued for finders fee | $ | – | $ | – | $ | 100,000 | |||
| Common stock issued for prior period accrued services | $ | – | $ | 240,625 | $ | 412,625 | |||
| Disposal of property and equipment for debt settlement | $ | – | $ | – | $ | 16,952 | |||
| Conversion of debt to stock | $ | – | $ | – | $ | 66,332 | |||
| Issuance of stock for settlement of accrued interest | $ | – | $ | – | $ | 477,661 | |||
| Supplemental Disclosures: | |||||||||
| Interest paid | $ | – | $ | – | $ | 21,897 | |||
| Income tax paid | $ | – | $ | – | $ | – |
The accompanying notes are an integral part of these unaudited consolidated financial statements
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| Tierra Grande Resources Inc. |
| (An Exploration Stage Company) |
| Notes to the Consolidated Financial Statements |
| (Unaudited) |
| 1. |
Nature of Operations and Continuance of Business |
|
The Company was incorporated in the State of Nevada on April 4, 2006. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal business is the acquisition and exploration of mineral properties. Effective April 10, 2013, the Company changed its name from Buckingham Exploration Inc. to Tierra Grande Resources Inc. On August 9, 2010, the Company incorporated 0887717 B.C. Ltd., a wholly-owned subsidiary in British Columbia, Canada. On February 28, 2013, the Company acquired a 100% interest in Tierra Grande Resources, S.A.C. (“Tierra”), a company incorporated in Peru, in consideration for $10. |
| 2. |
Going Concern |
|
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has not paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at February 28, 2014, the Company has working capital of $49,636 and an accumulated deficit of $9,179,563. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | |
|
As at February 28, 2014, the Company had $61,241 cash in the bank. The Company requires a minimum of $200,000 to proceed with their plan of operations over the next twelve months. If they achieve less than the full amount of financing that they require they will scale back planned exploration activities and day to day operations in order to reduce exploration expenses and general and administrative expenses to a level appropriate to the financial resources available. There can be no assurance that the Company will be able to raise sufficient funds to pay the expected operating expenses for the next twelve months. |
| 3. |
Interim Financial Statements |
|
The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended May 31, 2013, included in the Company’s Annual Report on Form 10-K filed on September 16, 2013 with the SEC. | |
|
The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at February 28, 2014, and the results of its operations and cash flows for the three and nine months ended February 28, 2014 and 2013. The results of operations for the three and nine months ended February 28, 2014, are not necessarily indicative of the results to be expected for future quarters or the full year. | |
|
The accompanying unaudited interim consolidated financial statements include the accounts of Tierra Grande Resources Inc. and its wholly owned subsidiaries 0887717 B.C. Ltd. and Tierra Grande Resources, S.A.C. All significant intercompany balances and transactions have been eliminated in the consolidation. |
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| 4. |
Common Stock | |
| a) |
During the nine months ended February 28, 2014, the Company issued 14,000,000 shares of common stock at $0.01 per share for proceeds of $140,000 under a private placement. | |
| b) |
During the nine months ended February 28, 2014, the Company issued 3,000,000 shares of common stock at $0.01 per share for proceeds of $30,000. The shares have not been issued yet. | |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Statement Regarding Forward-Looking Information
The statements in this quarterly report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business.
You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.
Presentation of Information
As used in this quarterly report, the terms "we", "us", "our" and the “Company” mean Tierra Grande Resources Inc. and its subsidiaries, unless the context requires otherwise.
All dollar amounts in this quarterly report refer to US dollars unless otherwise indicated.
Overview
We were incorporated as a Nevada company on April 4, 2006. We have been engaged in the acquisition and exploration of mineral properties since our inception. We have not generated any revenues and have incurred losses since inception.
We currently own a 100% interest in the Dome mineral properties, located in the Province of British Columbia, Canada. In addition, we own a 100% interest in two mineral properties (known as the Byng and Tramp claims) also located in the Province of British Columbia, Canada. We owned an option to acquire a 100% interest in the Lady Ermalina mineral properties, located in the Province of British Columbia, Canada, which has expired. As the Byng and Tramp claims are located adjacent to the Lady Ermalina claims, we plan to dispose of our interest in these properties going forward. We have conducted limited exploration work on our mineral properties and none of our properties has been determined to contain any mineral resources or reserves of any kind.
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Our strategy is to identify, acquire and develop assets that present near term cash-flow opportunities with the emphasis on creating early cash flow to enable our company to consider other corporate opportunities. We seek out, acquire, explore and potentially develop projects, whether by way of acquisition of full ownership, joint venture or other acceptable structure.
We continue reviewing what we believe to be opportunities with potential in Peru, South America through our strategic alliance with ExploAndes S.A.C. (“ExploAndes”). ExploAndes is a leading firm of geology consultants and project logistics managers located in Peru assisting in the identification, assessment and development of projects in South America. ExploAndes has a proven track record of delivering professional services to the South American mining industry from mineral project review and assessment to project management.
We expect our strategic alliance with ExploAndes to lead to potential opportunities in South America in line with our strategy. In that regard, in February 2013, we acquired all of the outstanding shares of Tierra Grande Resources S.A.C., a Peruvian company, through which we plan to conduct operations in South America.
In July 2013, we entered into a Letter of Intent to acquire the Buldibuyo Gold Project in Peru. The Buldibuyo Gold Project offers us the opportunity to deliver near term gold production and cash flow. It is our intention to acquire 100% of the gold project, which has produced high grade ore in the past. With support from our strategic relationships and personnel in Peru, we have completed our initial due diligence review and are currently in negotiations to acquire the project.
We have also entered a strategic alliance with Mining Plus Pty Ltd (“Mining Plus”), a leading firm of mining and geoscience consultants with offices in Australia, Canada and Peru, to assist in the identification, assessment and development of projects. We expect the alliance with Mining Plus to lead to other potential opportunities in line with our strategy. Via the strategic alliance with Mining Plus, we have ready access to over 50 seasoned mining industry professionals to assist in the potential development of projects.
See our Annual Report on Form 10-K for the year ended May 31, 2013 for more information regarding our business.
Our plan of operations for the next 12 months is to acquire and advance the Buldibuyo gold project. We also plan to dispose of the Byng and Tramp claims and may conduct a small exploration project on our Dome mineral claims. We anticipate we will require approximately $5 million to carry out our plans over the next 12 months. As of February 28, 2014, we had cash of $61,241 and working capital of $49,636 and will require significant financing to pursue our exploration plans. There can be no assurance that we will obtain the required financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.
Results of Operations
The following discussion and analysis of our results of operations and financial condition for the nine and three months ended February 28, 2014 should be read in conjunction with our unaudited interim consolidated financial statements and related notes included in this report, as well as our most recent annual report on Form 10-K for the year ended May 31, 2013 filed with the SEC.
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Three Months Ended February 28, 2014 Compared to Three Months Ended February 28, 2013
Lack of Revenues
We have earned no revenues and have sustained operational losses since our inception on April 4, 2006 to February 28, 2014. As of February 28, 2014, we had an accumulated deficit of $9,179,563. We anticipate that we will not earn any revenues during the current fiscal year as we are an exploration stage company.
Expenses
From April 4, 2006 (date of inception) to February 28, 2014, our total expenses were $4,063,610 comprised of $765,361 in professional fees, $252,140 in mineral property costs and $3,046,109 in general and administrative expenses.
Our total expenses decreased to $37,199 for the three months ended February 28, 2014 from $40,236 for the three months ended February 28, 2013 mainly due to an overall reduction in our operations. We have completed our initial due diligence review of the Buldibuyo Gold Project and are currently in negotiations to acquire the project. As a result, our mineral property costs decreased to $Nil for the three months ended February 28, 2014 from $3,805 for the three months ended February 28, 2013, our general and administrative expenses decreased to $5,194 in the current period from $32,466 in the prior period, and professional fees for the three months ended February 28, 2014 increased to $32,005 from $3,965 in the prior period. We also incurred a charge of $5,500 in the current period as we impaired our web site development costs as the web site was not built to operate as we anticipated.
Net Loss
For the three months ended February 28, 2014, we recognized a net loss of $42,699, compared to $40,236 for the three months ended February 28, 2013.
Nine Months Ended February 28, 2014 Compared to Nine Months Ended February 28, 2013
Lack of Revenues
We have earned no revenues and have sustained operational losses since our inception on April 4, 2006 to February 28, 2014. As of February 28, 2014, we had an accumulated deficit of $9,179,563. We anticipate that we will not earn any revenues during the current fiscal year as we are an exploration stage company.
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Expenses
Our total expenses decreased to $157,509 for the nine months ended February 28, 2014 from $280,793 for the nine months ended February 28, 2013 mainly due to lower general and administrative expenses. General and administrative expenses decreased to $36,643 in the current period from $234,763 in the prior period, primarily resulting from a reduction in overall operating expenses in the current period as we focused on the Buldibuyo Gold Project in Peru. During the nine months ended February 28, 2014, we have been conducting a due diligence review of the Buldibuyo Gold Project and, as a result, our professional fees for the nine months ended February 28, 2014 increased to $55,857 from $35,119 in the prior period, and our mineral property costs increased to $65,009 for the nine months ended February 28, 2014 from $10,911 for the nine months ended February 28, 2013. We also incurred a charge of $5,500 in the current period as we impaired our web site development costs as the web site was not built to operate as we anticipated.
Net Loss
For the nine months ended February 28, 2014, we recognized a net loss of $163,009, compared to $280,793 for the nine months ended February 28, 2013.
Liquidity and Capital Resources
As of February 28, 2014, we had cash of $61,241, working capital of $49,636, total assets of $62,147, total liabilities of $11,605 and an accumulated deficit of $9,179,563.
Financing Activities
We have funded our operations primarily by a combination of private placements, advances from related parties and loans. From April 4, 2006 (date of inception) to February 28, 2014, financing activities provided cash of $5,716,053, primarily from the sale of our common stock and loans.
During the nine months ended February 28, 2014, financing activities provided cash of $170,000, compared to $30,000 in the nine months ended February 28, 2013, from the sale of our common stock.
Operating Activities
Operating activities used cash of $148,742 for the nine months ended February 28, 2014, compared to $386,929 for the nine months ended February 28, 2013. An increase in accounts payable and accrued liabilities provided cash of $8,022 in the nine months ended February 28, 2014, compared to a decrease in same using cash of $98,256 in the prior period. A decrease in advances used cash of $0 in the current period, compared to $54,592 in the prior period. A decrease in other receivables provided cash of $0 in the current period, compared to $451 in the prior period. An increase in amounts due to/from related parties used cash of $0 in the current period, compared to $828 in the prior period.
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Investing Activities
Investing activities used cash of $0 in the nine months ended February 28, 2014, compared to $6,773 in the prior period relating to the purchase of property and equipment and the impairment of our web site development costs.
We expect that our total expenses will increase over the next year as we increase our business operations. We do not anticipate generating any revenues over the next year. Our plan of operations for the next 12 months is to acquire and advance the Buldibuyo gold project. We also plan to dispose of the Byng and Tramp claims and may conduct a small exploration project on our Dome mineral claims. We anticipate we will require approximately $5 million to carry out our plans over the next 12 months. As at February 28, 2014, we had cash of $61,241 and working capital of $49,636 and will require significant financing to pursue our exploration plans.
There can be no assurance that we will obtain any additional financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Going Concern
Our consolidated financial statements for the period ended February 28, 2014 have been prepared on a going concern basis and Note 2 to the statements identifies issues that raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our common stock and loans from related and other parties to fund our operations. We do not anticipate generating any revenues in the foreseeable future, and if we are unable to raise equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROL AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
14
In connection with the preparation of this report, an evaluation was carried out by our principal executive officer and principal financial officer of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of February 28, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.
Based on that evaluation, and the material weaknesses outlined below, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding required disclosures.
A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of disclosure controls and procedures as of November 30, 2013, the following deficiencies were identified:
1. Lack of proper segregation of duties due to limited personnel.
2. Lack of a formal review process that includes multiple levels of review, resulting in adjustments related to related party other receivable.
Management is currently evaluating remediation plans for the above control deficiencies.
In light of these control deficiencies, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s disclosure controls or internal controls.
Changes in Internal Control
During the quarter ended November 30, 2013, there were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not a party to any pending material legal proceedings and are not aware of any material legal proceedings threatened against us or of which our property is the subject. None of our directors, officers or affiliates: (i) are a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
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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.
| Tierra Grande Resources Inc. | |
| /s/ Andrew Gasmier | |
| Date: April 17, 2014 | Andrew Gasmier |
| President |
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