UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31,June 30, 2019
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File No. 000-17106
LKA GOLD INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware | 91-1428250 |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) | |
3724 47th Street Ct. N.W.
Gig Harbor, Washington 98335
(Address of principal executive offices)
(253) 514-6661
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Class | Trading Symbol | Name of Exchange on Which Registered |
Common | LKAI | OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant 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. See the definitions 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 [X] Smaller reporting company [X] Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) 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 Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
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: May 20,August 29, 2019 – 27,741,36127,697,684 shares of common stock.
PART I
Item 1. Financial Statements
The Financial Statements of LKA Gold Incorporated, a Delaware corporation (the "Registrant," the "Company" or "LKA") required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
LKA GOLD INCORPORATED
Consolidated Balance Sheets
(Unaudited)
ASSETS
| | March 31, 2019 | | | December 31, 2018 | | | June 30, 2019 | | | December 31, 2018 | |
CURRENT ASSETS | | | | | | | | | | | | |
Cash | | $ | 26,412 | | | $ | 61,696 | | | $ | 7,687 | | | $ | 61,696 | |
Prepaid expenses | | | 11,000 | | | | 833 | | | | 7,000 | | | | 833 | |
Total Current Assets | | | 37,412 | | | | 62,529 | | | | 14,687 | | | | 62,529 | |
FIXED ASSETS | | | | | | | | | | | | | | | | |
Land, equipment, mining claims and asset retirement liabilities | | | 849,140 | | | | 849,140 | | |
Land, equipment, mining claims and asset retirement obligations | | | | 849,140 | | | | 849,140 | |
Accumulated deprecation | | | (401,041 | ) | | | (398,884 | ) | | | (403,199 | ) | | | (398,884 | ) |
Total Fixed Assets, Net of Accumulated Depreciation | | | 448,099 | | | | 450,256 | | | | 445,941 | | | | 450,256 | |
OTHER NON-CURRENT ASSETS | | | | | | | | | | | | | | | | |
Reclamation bonds | | | 149,156 | | | | 149,156 | | | | 149,156 | | | | 149,156 | |
| | | | | | | | | | | | | | | | |
TOTAL ASSETS | | $ | 634,667 | | | $ | 661,941 | | | $ | 609,784 | | | $ | 661,941 | |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Consolidated Balance Sheets (Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
| | March 31, 2019 | | | December 31, 2018 | | | June 30, 2019 | | | December 31, 2018 | |
CURRENT LIABILITIES | | | | | | | | | | | | |
Accounts payable | | $ | 185,430 | | | $ | 184,096 | | | $ | 212,962 | | | $ | 184,096 | |
Accounts payable – related party | | | 10,726 | | | | 6,670 | | | | 10,325 | | | | 6,670 | |
Note Payable – related party | | | 12,702 | | | | 12,702 | | | | 12,702 | | | | 12,702 | |
Wastewater discharge liability | | | 99,974 | | | | 99,974 | | | | 99,182 | | | | 99,974 | |
Derivative liability | | | 52,188 | | | | 54,653 | | | | 38,593 | | | | 54,653 | |
Convertible note payable | | | 50,000 | | | | 50,000 | | | | 80,000 | | | | 50,000 | |
Note payable | | | 10,000 | | | | 10,000 | | | | 10,000 | | | | 10,000 | |
Accrued interest payable | | | 9,511 | | | | 5,882 | | | | 12,083 | | | | 5,882 | |
Accrued wages and advances payable to officer | | | 87,489 | | | | 49,989 | | | | 124,989 | | | | 49,989 | |
Total Current Liabilities | | | 518,020 | | | | 473,966 | | | | 600,836 | | | | 473,966 | |
LONG-TERM LIABILITIES | | | | | | | | | | | | | | | | |
Convertible note payable, net of $45,083 and $50,718 in debt issuance costs and debt discount, respectively | | | 84,917 | | | | 79,282 | | |
Asset retirement obligation | | | 122,950 | | | | 122,950 | | |
Convertible note payable, net of $43,112 and $50,718 in debt issuance costs and debt discount, respectively | | | | 56,888 | | | | 79,282 | |
Asset retirement obligations | | | | 122,950 | | | | 122,950 | |
Total Liabilities | | | 725,887 | | | | 676,198 | | | | 780,674 | | | | 676,198 | |
STOCKHOLDERS' DEFICIT | | | | | | | | | | | | | | | | |
Preferred stock; $0.001 par value, 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively | | | - | | | | - | | | | - | | | | - | |
Common stock, $0.001 par value, 50,000,000 shares authorized, 27,741,308 and 27,697,684 shares issued and 27,741,308 and 27,697,684 shares outstanding, respectively | | | 27,741 | | | | 27,741 | | |
Common stock, $0.001 par value, 50,000,000 shares authorized, 27,741,308 and 27,741,308 shares issued and 27,697,684 and 27,697,684 shares outstanding, respectively | | | | 27,741 | | | | 27,741 | |
Additional paid-in capital | | | 19,959,183 | | | | 19,959,183 | | | | 19,996,173 | | | | 19,959,183 | |
Treasury stock; 43,624 and 43,624 shares at cost, respectively | | | (86,692 | ) | | | (86,692 | ) | | | (86,692 | ) | | | (86,692 | ) |
Accumulated deficit | | | (19,991,452 | ) | | | (19,914,489 | ) | | | (20,108,112 | ) | | | (19,914,489 | ) |
Total Stockholders' Deficit | | | (91,220 | ) | | | (14,257 | ) | | | (170,890 | ) | | | (14,257 | ) |
| | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 634,667 | | | $ | 661,941 | | | $ | 609,784 | | | $ | 661,941 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Consolidated Statements of Operations
(Unaudited)
| | For the Three Months Ended March 31, | | | For the Three Months Ended June 30, | | | For the Six Months Ended June 30, | |
| | 2019 | | | 2018 | | | 2019 | | | 2018 | | | 2019 | | | 2018 | |
| | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES | | | | | | | | | | | | | | | | | | |
Exploration and related costs | | $ | 36 | | | $ | - | | | $ | 8,328 | | | $ | 11,627 | | | $ | 8,364 | | | $ | 11,627 | |
General and administrative | | | 15,798 | | | | 20,060 | | | | 26,210 | | | | 58,851 | | | | 42,008 | | | | 78,911 | |
Officer salaries | | | 37,500 | | | | 238,925 | | | | 37,500 | | | | 37,500 | | | | 75,000 | | | | 276,425 | |
Professional and consulting | | | 16,510 | | | | 2,775 | | | | 16,335 | | | | 51,334 | | | | 32,845 | | | | 54,109 | |
Total Operating Expenses | | | 69,844 | | | | 261,760 | | | | 88,373 | | | | 159,312 | | | | 158,217 | | | | 421,072 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING LOSS | | | (69,844 | ) | | | (261,760 | ) | | | (88,373 | ) | | | (159,312 | ) | | | (158,217 | ) | | | (421,072 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
OTHER INCOME (EXPENSES) | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on debt conversion | | | - | | | | (309,406 | ) | | | - | | | | - | | | | - | | | | (309,406 | ) |
Derivative gain (loss) | | | 2,465 | | | | (3,031 | ) | | | (23,395 | ) | | | 5,370 | | | | (20,930 | ) | | | 2,339 | |
Interest expense, net | | | (9,584 | ) | | | (571,013 | ) | | | (4,892 | ) | | | (21,647 | ) | | | (14,476 | ) | | | (592,660 | ) |
Total Other Income (Expenses) | | | (7,119 | ) | | | (883,450 | ) | | | (28,287 | ) | | | (16,277 | ) | | | (35,406 | ) | | | (899,727 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
NET LOSS | | $ | (76,963 | ) | | $ | (1,145,210 | ) | | $ | (116,600 | ) | | $ | (175,589 | ) | | $ | (193,623 | ) | | $ | (1,320,799 | ) |
NET LOSS PER SHARE - BASIC AND DILUTED | | $ | (0.00 | ) | | $ | (0.06 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.06 | ) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | | | 27,741,308 | | | | 19,681,608 | | | | 27,697,684 | | | | 27,459,841 | | | | 27,697,684 | | | | 23,716,935 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Unaudited Consolidated Statements of Stockholders' Equity (Deficit)
For the Three Months Ended March 31,June 30, 2018 and 2019
(Unaudited)
| | Preferred Stock | | | Common Stock | | | Treasury Stock | | | Additional | | | Accumulated | | | Total Stockholders' | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Paid-In Capital | | | Deficit | | | Equity (Deficit) | |
Balance, December 31, 2017 | | | - | | | $ | - | | | | 19,261,717 | | | $ | 19,262 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 18,020,363 | | | $ | (18,324,756 | ) | | $ | (371,823 | ) |
Common stock issued for related party payable, accrued wages and accrued interest | | | - | | | | - | | | | 601,898 | | | | 602 | | | | - | | | | - | | | | 119,778 | | | | - | | | | 120,380 | |
Common stock issued for related party convertible debt and accrued interest | | | - | | | | - | | | | 3,224,990 | | | | 3,225 | | | | - | | | | - | | | | 951,179 | | | | - | | | | 954,404 | |
Common stock issued for officer bonus | | | - | | | | - | | | | 1,750,000 | | | | 1,750 | | | | - | | | | - | | | | 199,675 | | | | - | | | | 201,425 | |
Retirement of derivative | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 263,325 | | | | - | | | | 263,325 | |
Net loss for the three months ended March 31, 2018 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,145,210 | ) | | | (1,145,210 | ) |
Balance, March 31, 2018 | | | - | | | $ | - | | | | 24,838,605 | | | $ | 24,839 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,554,320 | | | $ | (19,469,966 | ) | | $ | 22,501 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2018 | | | - | | | $ | - | | | $ | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,959,183 | | | $ | (19,914,489 | ) | | $ | (14,257 | ) |
Net loss for the three months ended March 31, 2019 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (76,963 | ) | | | (76,963 | ) |
Balance, March 31, 2019 | | | - | | | $ | - | | | | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,959,183 | | | $ | (19,991,452 | ) | | $ | (91,220 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | | Common Stock | | | Treasury Stock | | | Additional | | | Accumulated | | | Total Stockholders' | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Paid-In Capital | | | Deficit | | | Equity (Deficit) | |
Balance, March 31, 2018 | | | - | | | $ | - | | | | 24,838,605 | | | $ | 24,839 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,554,319 | | | $ | (19,469,966 | ) | | $ | 22,500 | |
Common stock issued for cash – related party | | | - | | | | - | | | | 2,702,703 | | | | 2,702 | | | | - | | | | - | | | | 497,298 | | | | - | | | | 500,000 | |
Common stock issued for services | | | - | | | | - | | | | 100,000 | | | | 100 | | | | - | | | | - | | | | 18,870 | | | | - | | | | 18,970 | |
Net loss for the three months ended June 30, 2018 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (175,589 | ) | | | (175,589 | ) |
Balance, June 30, 2018 | | | - | | | $ | - | | | | 27,641,308 | | | $ | 27,641 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 20,070,487 | | | $ | (19,645,555 | ) | | $ | 365,881 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2019 | | | - | | | $ | - | | | $ | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,959,183 | | | $ | (19,991,452 | ) | | $ | (91,220 | ) |
Derivative liability retired to equity | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 36,990 | | | | - | | | | 36,990 | |
Net loss for the three months ended June 30, 2019 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (116,660 | ) | | | (116,660 | ) |
Balance, June 30, 2019 | | | - | | | $ | - | | | | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,996,173 | | | $ | (20,108,112 | ) | | $ | (170,890 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Unaudited Consolidated Statements of Stockholders' Equity (Deficit)
For the Six Months Ended June 30, 2018 and 2019
| | Preferred Stock | | | Common Stock | | | Treasury Stock | | | Additional | | | Accumulated | | | Total Stockholders' | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Paid-In Capital | | | Deficit | | | Equity (Deficit) | |
Balance, December 31, 2017 | | | - | | | $ | - | | | | 19,261,717 | | | $ | 19,262 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 18,020,363 | | | $ | (18,324,756 | ) | | $ | (371,823 | ) |
Common stock issued for related party payable, accrued wages and accrued interest | | | - | | | | - | | | | 601,898 | | | | 602 | | | | - | | | | - | | | | 119,778 | | | | - | | | | 120,380 | |
Common stock issued for related party convertible debt and accrued interest | | | - | | | | - | | | | 3,224,990 | | | | 3,225 | | | | - | | | | - | | | | 951,179 | | | | - | | | | 954,404 | |
Common stock issued for officer bonus | | | - | | | | - | | | | 1,750,000 | | | | 1,750 | | | | - | | | | - | | | | 199,675 | | | | - | | | | 201,425 | |
Common stock issued for cash – related party | | | - | | | | - | | | | 2,702,703 | | | | 2,702 | | | | - | | | | - | | | | 497,298 | | | | - | | | | 500,000 | |
Common stock issued for services | | | - | | | | - | | | | 100,000 | | | | 100 | | | | - | | | | - | | | | 18,870 | | | | - | | | | 18,970 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retirement of derivative | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 263,324 | | | | - | | | | 263,324 | |
Net loss for the six months ended June 30, 2018 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,320,799 | ) | | | (1,320,799 | ) |
Balance, June 30, 2018 | | | - | | | $ | - | | | | 27,641,308 | | | $ | 27,641 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 20,070,487 | | | $ | (19,645,555 | ) | | $ | 365,881 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2018 | | | - | | | $ | - | | | $ | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,959,183 | | | $ | (19,914,489 | ) | | $ | (14,257 | ) |
Derivative liability retired to equity | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 36,990 | | | | - | | | | 36,990 | |
Net loss for the six months ended June 30, 2019 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (193,623 | ) | | | (193,623 | ) |
Balance, June 30, 2019 | | | - | | | $ | - | | | | 27,741,308 | | | $ | 27,741 | | | | 43,624 | | | $ | (86,692 | ) | | $ | 19,996,173 | | | $ | (20,108,112 | ) | | $ | (170,890 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)
| | For the Three Months Ended March 31, | | | For the Six Months Ended June 30, | |
| | 2019 | | | 2018 | | | 2019 | | | 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | |
Net loss | | $ | (76,963 | ) | | $ | (1,145,210 | ) | | $ | (193,623 | ) | | $ | (1,320,799 | ) |
Items to reconcile net loss to net cash used by operating activities: | | | | | | | | | |
Items to reconcile net loss to net cash used in operating activities: | | | | | | | | | |
Depreciation and amortization | | | 2,157 | | | | 2,158 | | | | 4,315 | | | | 4,316 | |
Amortization of debt issuance costs | | | - | | | | 9,176 | | | | 7,606 | | | | 9,383 | |
Amortization of debt discount | | | 5,635 | | | | 538,720 | | | | - | | | | 556,840 | |
(Gain) loss on derivative | | | (2,465 | ) | | | 3,031 | | |
Derivative (gain) loss | | | | 20,930 | | | | (2,339 | ) |
Loss on debt conversion | | | - | | | | 309,406 | | | | - | | | | 309,406 | |
Common stock issued for compensation expenses | | | - | | | | 201,425 | | | | - | | | | 201,425 | |
Common stock issued for services | | | | - | | | | 18,970 | |
Changes in operating assets and liabilities | | | | | | | | | | | | | | | | |
Increase in prepaid expenses and other assets | | | (10,167 | ) | | | (7,500 | ) | | | (6,167 | ) | | | (5,000 | ) |
Increase in accounts payable and accrued expenses | | | 4,963 | | | | 25,868 | | | | 34,275 | | | | 2,259 | |
Increase in accounts payable – related party | | | 4,056 | | | | 7,769 | | | | 3,655 | | | | 3,241 | |
Increase in accrued wages | | | 37,500 | | | | 37,500 | | |
Increase (decrease) in accrued wages | | | | 75,000 | | | | (12,890 | ) |
Net Cash Used in Operating Activities | | | (35,284 | ) | | | (17,657 | ) | | | (54,009 | ) | | | (235,188 | ) |
| | | | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | - | | | | - | | | | | | | | | |
Cash paid for reclamation bond | | | | - | | | | (34,346 | ) |
Net Cash Used in Investing Activities | | | | - | | | | (34,346 | ) |
| | | | | | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
Cash overdraft | | | - | | | | (343 | ) | | | - | | | | (981 | ) |
Common stock issued for cash – related party | | | | - | | | | 500,000 | |
Proceeds from notes payable, related party | | | - | | | | 18,000 | | | | - | | | | 18,000 | |
Net Cash Provided by Financing Activities | | | - | | | | 17,657 | | | | - | | | | 517,019 | |
| | | | | | | | | | | | | | | | |
INCREASE (DECREASE) IN CASH | | | (35,284 | ) | | | - | | |
CHANGE IN CASH | | | | (54,009 | ) | | | 247,485 | |
| | | | | | | | | | | | | | | | |
CASH AT BEGINNING OF PERIOD | | | 61,696 | | | | - | | | | 61,696 | | | | - | |
| | | | | | | | | | | | | | | | |
CASH AT END OF PERIOD | | $ | 26,412 | | | $ | - | | | $ | 7,687 | | | $ | 247,485 | |
| | | | | | | | | | | | | | | | |
CASH PAID FOR: | | | | | | | | | | | | | | | | |
Interest | | $ | 300 | | | $ | 200 | | | $ | 300 | | | $ | 6,225 | |
Income taxes | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | |
NON-CASH TRANSACTIONS | | | | | | | | | | | | | | | | |
Common stock issued for convertible debt and interest | | $ | - | | | $ | 644,998 | | |
Common stock issued for convertible debt and interest – related parties | | | $ | - | | | $ | 644,998 | |
Common stock issued for related party payable and accrued wages | | $ | - | | | $ | 120,379 | | | $ | - | | | $ | 120,379 | |
Derivative liability retired to equity upon conversion | | $ | - | | | $ | 263,325 | | |
Derivative liability retired to equity | | | $ | 36,990 | | | $ | 263,324 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements. | | | | | | | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
LKA GOLD INCORPORATED
Notes to the Unaudited Consolidated Financial Statements
March 31,June 30, 2019
NOTE 1 -ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements presented are those of LKA Gold, Incorporated, a Delaware corporation and its wholly owned subsidiary LKA International, Inc., a Nevada corporation ("LKA" or the "Company"). LKA was incorporated on March 15, 1988, under the laws of the State of Delaware. LKA is currently engaged in efforts to expand mine production and continues to seek additional investment opportunities.
The accompanying unaudited consolidated financial statements have been prepared by LKA pursuant to the rules and regulations of the Securities and Exchange Commission. 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 in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with LKA's most recent audited financial statements. Operating results for the threesix months ended March 31,June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
In February 2016, the FASB issued ASC 842, Leases ("ASC 842"). ASC 842 related to leases to increase transparency and comparability among organizations by requiring the recognition of right of use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is also required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented using a modified retrospective approach, with certain practical expedients available.
The Company elected to early adopt ASC 842 effective January 1, 2018 and have elected all available practical expedients. The standard did not have a material impact on our financial statements as we have no outstanding leases.
Net Income (Loss) per Common Share
Basic net income (loss) per share is computed on the basis of the weighted average number of common shares outstanding during each year. Diluted net income (loss) per share is computed similar to basic net income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
For the three and six months ended March 31,June 30, 2019 and 2018, the Company realized net losses, resulting in outstanding warrants, and outstanding convertible debt having an antidilutive effect.
The following table summarizes the potential shares of common stock that were excluded from the computation of basic and diluted net loss per share for the three and six months ended March 31,June 30, 2019 and 2018 as such shares would have had an anti-dilutive effect:
| | For the Three Months Ended March 31, | | | For the Three Months Ended June 30, | |
| | 2019 | | 2018 | | | 2019 | | 2018 | |
Convertible debt | | | 460,000 | | | 400,000 | | | | 560,000 | | | 400,000 | |
Common stock warrants | | | 20,834 | | | 20,834 | | | | 20,834 | | | 20,834 | |
Total | | | 480,834 | | | 420,834 | | | | 580,834 | | | 420,834 | |
| | For the Six Months Ended June 30, | |
| | 2019 | | | 2018 | |
Convertible debt | | | 560,000 | | | | 400,000 | |
Common stock warrants | | | 20,834 | | | | 20,834 | |
Total | | | 580,834 | | | | 420,834 | |
NOTE 2 -RELATED PARTY TRANSACTIONS
Office Space
LKA pays a company owned by an officer and shareholder $1,500 per month for office rent and expenses. The affiliated company (Abraham & Co., Inc. a FINRA member and registered investment advisor) also executes LKA's securities transactions and manages its investment portfolio. LKA owes Abraham & Co., Inc. $9,448$7,947 and $6,447 as of March 31,June 30, 2019 and December 31, 2018, respectively.
Related Party Payables – Notes, Accounts and Wages Payable
At March 31,June 30, 2019 and December 31, 2018, LKA owes $1,278$2,378 and $223, respectively, for purchases made on the personal credit card of LKA's President, Kye Abraham.
At March 31,June 30, 2019 and December 31, 2018, LKA owes an entity controlled by LKA's President and Chairman, Kye Abraham, $12,702 and $12,702, respectively, for short-term loans that do not accrue interest, are unsecured and due upon demand.
NOTE 3 -CONVERTIBLE DEBENTURES
During October 2015, LKA issued a convertible debenture for $50,000 in cash. The convertible debenture accrues interest at 7.5% per annum, is unsecured, due in three years from the date of issuance and is convertible into shares of LKA common stock at any time at the option of the holder at a rate of $0.50 per share. Interest is due in semi-annual payments. During December 2018, LKA entered into a one-year extension agreement through October 20, 2019 in exchange for a reduction of the conversion price to a fixed $0.25 per share. The modification of this note was not deemed substantial.
During April 2016, LKA issued two $50,000 Convertible Debentures for $100,000 in cash. The Convertible Debentures accrue interest at 7.5% per annum due in semi-annual payments, are unsecured, due in five years from the dates of issuance and are convertible into shares of LKA common stock at any time at the option of the holder at a rate of $0.50 per share. Interest is due in semi-annual payments.
On April 26, 2017, LKA issued a convertible debenture in the amount of $50,000 for cash. Principal on the Convertible Debenture is due April 26, 2020. The Convertible Debenture accrues interest at 7.5% and is convertible at any time into shares of LKA common stock at $0.50 per share. Interest is due on a semiannual basis. During April 2018, the holder of the convertible note elected to convert a total of $20,000 in convertible debt principal, leave a principal balance of $30,000 at March 31,June 30, 2019 and December 31, 2018.
For the October 2015 convertible debenture, if any event of default occurs, the interest rate increases to 15% per annum. During the default period, the convertible note holder shall hold voting power equal to the voting power of the number of common shares of the Company into which the note is convertible at the default conversion rate. Also, during the default period the holders of all 7.5% convertible debentures as a class may appoint a representative that shall be an observer to the above notedBoard of Directors until such time as the default conditions no longer exist.
For the April 2016 and April 2017 convertible debentures, if any event of default occurs, the interest rate increases to 15% per annum and the conversion rate shall be decreased to $0.25 per share. During the default period, the convertible note holder shall hold voting power equal to the voting power of the number of common shares of the Company into which the note is convertible at the default conversion rate. Also, during the default period the holders of all 7.5% convertible debentures as a class may appoint a representative that shall be an observer to the Board of Directors until such time as the default conditions no longer exist. As a result of the reset provision in the conversion price, the conversion options embedded in these instruments are classified as a liability in accordance with ASC 815 and were recognized as a debt discount on the date these notes were issued along with $12,500 of debt issuance costs.
During April 2019, as a result of LKA not being able to contact the threelenders to get a waiver of non-compliance regarding the failure to pay the April semiannual interest payment, two $50,000 convertible notes originally issued in October 2015 and April 2016 respectively, are considered in default.
During the six months ended March 31,June 30, 2019 and 2018, LKA recognized $5,635$7,606 and $9,988$27,901 of interest expense from the amortization of the debt discount, respectively.
NOTE 4 -DERIVATIVE LIABILITY
LKA analyzed the conversion options embedded in the convertible debentures for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the instruments embedded in the above referenced convertible notes should be classified as liabilities and recorded at fair value due to reset provisions in the conversion prices.
During April 2019, as a result of default on a $50,000 convertible note, the previously variable conversion rate is now a fixed conversion rate of $0.25 per share and is no longer subject to derivative liability treatment. As such, LKA retired the $36,990 fair value amount of the derivative liability to additional paid-in capital.
During the threesix months ended March 31,June 30, 2019, LKA recorded a loss of $20,930 and during the six months ended June 30, 2018, LKA recorded a gain of $2,465 and during the three months ended March 31, 2018, LKA recorded a loss of $3,031$2,339 on mark-to-market of the conversion options.
The following table summarizes the derivative liabilities included in the consolidated balance sheets at March 31,June 30, 2019:
Balance, December 31, 2018 | | $ | 54,653 | |
Gain on change in fair value | | | (2,465 | ) |
Balance, March 31, 2019 | | $ | 52,188 | |
Balance, December 31, 2018 | | $ | 54,653 | |
Derivative liability retired to equity | | | (36,990 | ) |
Loss on change in fair value | | | 20,930 | |
Balance, June 30, 2019 | | $ | 38,593 | |
The Company valued its derivatives liabilities using the Black-Scholes option-pricing model. Assumptions used during the threesix months ended March 31,June 30, 2019 include (1) risk-free interest rates of 2.48%1.75% - 2.88%2.38%, (2) lives of between 1.90.84 and 2.11.99 years, (3) expected volatility between 261%258% - 287%386%, (4) zero expected dividends, (5) conversion prices as set forth in the related instruments, and (6) the common stock price of the underlying share on the valuation dates.
NOTE 5 - NOTIFICATION OF POSSIBLE ENVIRONMENTAL REMEDIATION
In 2002 the Federal Bureau of Land Management (the "BLM") advised LKA of its desire to extend to the Ute-Ulay Property certain environmental clean-up ("remediation") activities that it is conducting on neighboring properties that LKA does not own. The BLM commissioned and obtained three engineering evaluation and cost analysis ("EE/CA") studies/reports on the Ute-Ulay and the neighboring public lands in 2002-2006. These EE/CA studies analyzed the current environmental state of the Ute-Ulay property and other properties in the area. The studies identified a large volume of mine tailings and metals loading of shallow ground water, with elevated levels of arsenic, cadmium and lead being present. The BLM's most recent study, "Value Engineering Study on the Ute Ulay Mine/Mill Site – Final Report" dated January 5, 2006, projected the costs of remediation and property stabilization on the Ute-Ulay property to be approximately $2.1 million. Based upon discussions with Hinsdale County, Colorado officials, Colorado Department of Public Health & Environment Ute-Ulay project supervisor, the Federal Environmental Protection Agency's (the "EPA") regional manager, and legal counsel, the actual costs associated with this effort are expected to be approximately $1.2 million; substantially below previous BLM estimates. Under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the EPA may either require a property owner to perform the necessary cleanup or the agencies may perform the work and seek recovery of costs against the property owner and previous owners. While it cannot be determined with absolute certainty until the project is completed, LKA's status as a "de minimis" participant and the fact that remediation activities are focused on property located largely outside of LKA's permitted operating area, LKA management expects this project will have a negligible impact on the LKA's financial condition. Accordingly, pursuant to Generally Accepted Accounting Principles, and all discussions with the above named agencies to date, LKA management believes it is unlikely there will be a material impact to its financial statements and no liability for this project has been recorded as of March 31,June 30, 2019. Actual completion of remediation work at the site was completed in late 2014 by the EPA. The EPA has not yet issued its notice of final determination.
NOTE 6 -WASTEWATER DISCHARGE LIABILITY COMMITMENTS AND CONTINGENCIES
Wastewater Discharge Liability
During the fourth quarter of 2014, LKA received a Notice of Violation (NOV) from the Colorado Department of Health and Environment (CDPHE) for failure to meet certain requirements of the Company's wastewater discharge permit. During 2016, the Company undertook all corrective actions specified in the NOV, under CDPHE oversight, and believes it is in compliance with the terms of its permit. Work is required to modify and upgrade the mine's water treatment process in 2019 to meet regulatory requirements and bring LKA back into compliance with its discharge permit requirements. Until this work is completed to the satisfaction of CDPHE, the Company is considered to be in a "non-compliance" status with the terms of its discharge permit and additional penalties could be assessed beyond those described (anticipated) above. Engineering and lab testing is ongoing and further modifications (upgrades) to the Company's water treatment system is scheduled for late spring or early summer of 2019. Once completed, LKA expects improvements to its water treatment system will meet or exceed regulatory requirements. It is currently expected that any financial penalty assessed and any further corrective actions will not likely cost less than $75,000 but not more than $150,000. If LKA is unsuccessful in achieving full compliance with permit requirements, it may be subject to additional penalties or revocation of its discharge permit. As a result, LKA has accrued a liability of $99,974$99,182 and $99,974 as of March 31,June 30, 2019 and December 31, 2018, respectively, as there is no better estimate of the amount of loss within this range.
Vendor Litigation Settlement
During November 2018, LKA was served with a vendor lawsuit, resulting in a judgement against the Company in the amount of approximately $141,000, including attorney fees. As a result, LKA accrued a total of $141,000 in accounts payable as of December 31, 2018 to cover the full amount of the judgement. During the six months ended June 30, 2019, LKA believes it has incurred an additional $9,000 in expenses related to the ultimate settlement and accordingly accrued an additional $9,000 in accounts payable as of June 30, 2019. The amount accrued in accounts payable was $141,000 and $150,000 as of December 31, 2018 and June 30, 2019, respectively.
NOTE 7 - GOING CONCERN
LKA's consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, LKA has recently accumulated significant losses, has a working capital deficit and has negative cash flows from operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the LKA's ability to continue as a going concern are as follows:
LKA is currently engaged in an exploration program at the Golden Wonder mine with the objective of returning the mine to a commercial producing status. The exploration program, which began in November 2008, has involved extensive sampling/assaying for the purpose of identifying possible new production zones within the mine. During this evaluation period, sampling and analysis of exposed veins yielded encouraging results and some precious metals revenues. While encouraging, no conclusion can be drawn at this time about the commercial viability of the mine and LKA continues to evaluate potential merger, joint venture or lease agreements for the property.
In order to support continued operation of the mine, LKA completed a $500,000 capital funding raise in April 2018 and will need to raise additional funds to support operations during 2019.
There can be no assurance that LKA will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of LKA to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward‑looking Statements
Statements made in this Quarterly Report which are not purely historical are forward‑looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words "may," "would," "could," "should," "expects," "projects," "anticipates," "believes," "estimates," "plans," "intends," "targets" or similar expressions.
Forward‑looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward‑looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, international gold prices, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward‑looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward‑looking statements to reflect events or circumstances occurring after the date of such statements.
Results of Operations
For The Three Months Ended March 31,June 30, 2019 Compared to the Three Months Ended March 31,June 30, 2018
LKA had no revenues during the three months ended March 31,June 30, 2019 and 2018.
Exploration expenses were minimal in the three months ended March 31,June 30, 2019 and noneat $8,328, compared to $11,627 during the three months ended March 31, 2018 asJune 30, 2018. Low exploration expenses are a result of exploration wasbeing temporarily ceased in late 2017.
Professional fees increaseddecreased by $13,735$34,999 during the three months ended March 31,June 30, 2019 to $16,510$16,335, compared to $51,334 during the three months ended March 31, 2018.June 30, 2018, mainly as a result of a one-time payment of $28,500 during the 2018 period for consulting expense. We had no such large payments during the comparable 2019 period.
General and administrative expenses decreased by $4,262$32,641 in the three months ended March 31,June 30, 2019 to $15,798$26,210, compared to $58,851 during the three months ended March 31,June 30, 2018. The decrease was mainly due to a $29,190 decrease in promotion expense during the three months ended June 30, 2019 as a result of the payment of cash and common stock for services valued at $29,419 during the three months ended June 30, 2018. We had no such large expenses in the 2019 period. The decrease was partially offset by the recognition of a one-time loss on litigation accrual of $9,000 during the three months ended June 30, 2019, while we had no such losses in the 2018 period.
Officer salaries and bonuses decreased $201,425, or 84%remained flat at $37,500 during theboth three months ended March 31, 2019, compared to $238,925 during the three months ended March 31, 2018. The decrease is due to the valuation of 1,750,000 shares of common stock issued to our President and Chairman as a bonus valued at $201,425 during the three months ended March 31, 2018, we had no such charges during the current period.month periods.
We incurred an operating loss of $69,844$88,373 during the three months ended March 31,June 30, 2019, as compared to an operating loss of $261,760$159,312 in the three months ended March 31,June 30, 2018. The $191,916,$70,939, or approximately 73%45% decrease, is mainly due to the decrease in officer salariesgeneral and bonuses during the three months ended March 31, 2019, partially offset by increases inadministrative and professional fees as compared to the prior period.
We incurred total other expense of $7,119$28,287 during the three months ended March 31,June 30, 2019, as compared to $883,450 in other expenses$16,277 in the three months ended March 31,June 30, 2018. The $876,331,$12,010, or approximately 99%74% increase, is mainly due to a $561,429 decrease$28,765 increase in interest expense in the three months ended March 31, 2019 as compared to 2018, as well as the recognition of a one-time loss on debt conversion of $309,406derivative during the three months ended March 31, 2018.June 30, 2019. The decreases wereincrease in derivative loss was partially offset by a $5,496 decrease in the loss on derivative. The$16,755 decrease in interest expense, is mainly duefrom the recognitionreduction of $547,896 in debt issuance and discount amortization during the three months ended March 31, 2018 relatedJune 30, 2019 compared to the conversion of several convertible notes prior to expiration.2018 period.
Net loss totaled $76,963,$116,660, or $0.00 per share, in the three months ended March 31,June 30, 2019, compared to a net loss of $1,145,210,$175,589, or $0.06$0.01 per share in the three months ended March 31,June 30, 2018.
For The Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018
LKA had no revenues during the six months ended June 30, 2019 and 2018.
Exploration expenses were minimal in the six months ended June 30, 2019 at $8,364, compared to $11,627 during the six months ended June 30, 2018. Low exploration expenses are a result of exploration being temporarily ceased in late 2017.
Professional fees decreased by $21,264 during the six months ended June 30, 2019 to $32,845, compared to $54,109 during the six months ended June 30, 2018, mainly as a result of a one-time payment of $28,500 during the 2018 period for consulting expense. We had no such large payments during the comparable 2019 period.
General and administrative expenses decreased by $36,903 in the six months ended June 30, 2019 to $42,008, compared to $78,911 during the six months ended June 30, 2018. The decrease was mainly due to a $29,190 decrease in promotion expense during the six months ended June 30, 2019 as a result of the payment of cash and common stock for services valued at $29,419 during the six months ended June 30, 2018. We had no such large expenses in the 2019 period. The decrease was partially offset by the recognition of a one-time loss on litigation accrual of $9,000 during the six months ended June 30, 2019, we had no such losses in the 2018 period.
Officer salaries and bonuses were $75,000 during the six months ended June 30, 2019, compared to $276,425 during the six months ended June 30, 2018. The $201,425 difference is due the issuance of 1,750,000 shares valued at $201,425 as an officer bonus during the 2018 period, while we had no such bonuses during the comparable 2019 period.
We incurred an operating loss of $158,217 during the six months ended June 30, 2019, as compared to an operating loss of $421,072 in the six months ended June 30, 2018. The $262,855, or approximately 62% decrease, is mainly due to the decrease in officer salaries and bonuses, as well as decreases in general and administrative and professional fees as compared to the prior period as discussed above.
We incurred total other expense of $35,406 during the six months ended June 30, 2019, as compared to $899,727 in the six months ended June 30, 2018. The $864,321, or approximately 96% decrease, is mainly due to a $578,184 decrease in interest expense from the reduction of debt discount amortization during the six months ended June 30, 2019 compared to the 2018 period. Additionally, we recognized a one-time loss on debt settlement of $309,406 during the six months ended June 30, 2018. The decreases were partially offset by a $23,269 increase in loss on derivatives.
Net loss totaled $193,623, or $0.01 per share, in the six months ended June 30, 2019, compared to a net loss of $1,320,799, or $0.06 per share in the six months ended June 30, 2018.
Liquidity
Current assets at March 31, 2018June 30, 2019 totaled $26,412$7,687 in cash and $11,000$7,000 in prepaid expenses, as compared to $61,696 in cash and $833 in prepaid expenses at December 31, 2018.
During the threesix months ended March 31,June 30, 2019, our operating activities used net cash of $35,284$54,009 compared to $17,657$235,188 in the comparable 2018 period. No cash was provided byCash used in investing activities was $34,346 in eitherthe six months ended June 30, 2018 period while financingand $0 in the comparable 2019 period. Financing activities provided no cash in the threesix months ended March 31,June 30, 2019 and $17,657$517,019 during the threesix months ended March 31,June 30, 2018 mainly from the issuance of common stock for cash to a related party debt.party.
At March 31,June 30, 2019, the Company had a working capital deficit of $480,608,$586,149, as compared to $411,437 at December 31, 2018.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures 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.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of March 31,June 30, 2019, our disclosure controls and procedures were not effective as the Company lacks appropriate segregation of duties and has an insufficient number of employees responsible for the accounting and financial reporting functions. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in internal control over financial reporting
Our management, with the participation of the chief executive officer and chief financial officer, has concluded that there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 1A. Risk Factors.
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable
Item 3. Defaults Upon Senior Securities.
None; not applicable
Item 4. Mine Safety Disclosures.
The Company is the owner of the Golden Wonder Mine (the "Mine") located near Lake City, Colorado. The Mine is subject to the jurisdiction and regulation of the Mine Safety and Health Administration, ("MSHA") a division of the U.S. Department of Labor. As of the date of this report, the Mine is in compliance with all mine safety requirements of MSHA.None, not applicable.
Item 5. Other Information.
During the threesix months ended March 31,June 30, 2019, there were no material changes to the procedures by which security holders may recommend nominees to the Registrant's Board of Directors.
Item 6. Exhibits.
Exhibit No. Identification of Exhibit
31.1 31.2 32 | Certification of Kye Abraham Pursuant to Section 302 of the Sarbanes-Oxley Act. Certification of Nanette Abraham Pursuant to Section 302 of the Sarbanes-Oxley Act. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document* |
101.PRE. | XBRL Taxonomy Extension Presentation Linkbase* |
101.LAB | XBRL Taxonomy Extension Label Linkbase* |
101.DEF | XBRL Taxonomy Extension Definition Linkbase* |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase* |
101.SCH | XBRL Taxonomy Extension Schema* |
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed "furnished" and not "filed" or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed "furnished" and not "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections. These exhibitsdata files will be added inattached to a futurelater amended filing.
SIGNATURES
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
LKA GOLD INCORPORATED
Date: | May 20,August 29, 2019 | | By: | /s/Kye Abraham |
| | | | Kye Abraham, President, Chairman of the Board and DirectorChief Executive Officer |
| | | | |
Date: | May 20,August 29, 2019 | | By: | /s/Nanette Abraham |
| | | | Nanette Abraham, Secretary, TreasurerChief Financial Officer and DirectorChief Accounting Officer |