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 October 31, 20132014

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT

 

Commission file number: 0-17386

 

CYCLONE URANIUM CORPORATION

 (Exact name of the registrant as specified in its charter)

 

 Nevada  

88-0227654

 (State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

 

2186 S. Holly St., Suite 1045

Denver, CO  80222

(Address of principal executive offices)

 

303-800-0678

Telephone number, including

Area code

 

(Former name or former address if changed since last report)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x  No o 

 

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 o 

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

 

Large accelerated filer o     Accelerated filer o     Non-accelerated filer o   Smaller reporting Company x 

 

There were 149,562,125159,562,125 shares of the issuer's common stock, par value $0.001, outstanding as of December 10, 2013.11, 2014.

 

1

EXCHANGE RATES

 

Except as otherwise indicated, all dollar amounts described in this Report are expressed in United States (US) dollars.

 

CONVERSION TABLE

 

For ease of reference, the following conversion factors are provided:

 

 

1 mile = 1.6093 kilometers

1 metric tonne = 2,204.6 pounds

1 foot = 0.305 meters

1 ounce (troy) = 31.1035 grams

1 acre = 0.4047 hectare

1 imperial gallon = 4.5546 liters

1 long ton = 2,240 pounds

1 imperial gallon = 1.2010 U.S. gallons

 

Forward Looking Statements

 

The Company desires to take advantage of the "safe harbor" provisions contained in Section 27A of the Securities Act of 1933, as amended (the "1933 Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is including this statement herein in order to do so:

 

From time to time, the Company's management or persons acting on the Company's behalf may wish to make, either orally or in writing, forward-looking statements (which may come within the meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act), to inform existing and potential security holders regarding various matters including, without limitation, projections regarding financial matters, timing regarding transfer of licenses and receipts of government approvals, effects of regulation and completion of work programs.

 

Such forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believes," "expect," "anticipate," "goal" or other words that convey the uncertainty of future events or outcomes. Forward-looking statements by their nature are subject to certain risks, uncertainties and assumptions and will be influenced by various factors. Should one or more of these forecasts or underlying assumptions prove incorrect, actual results could vary materially.

 

2

 

 

CYCLONE URANIUM CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED OCTOBER 31, 20132014

 

CONTENTS

 

PART I – Financial Information

 

 

 

Item 1.  Financial Statements

4

 

 

Condensed consolidated financial statements and notes (unaudited):

 

 

 

Balance sheets 

4

 

 

    Statements of operations

5

 

 

    Statements of cash flows 

6

 

 

    Notes to unaudited condensed consolidated financial statements 

7

 

 

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

1513

 

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

2116

 

 

Item 4. Controls and Procedures 

2116

 

 

PART II – Other Information

 21

 

 

Item 1. Legal Proceedings

2117

 

 

Item 1A. Risk Factors 

2117

 

 

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

2217

 

 

Item 3.  Defaults Upon Senior Securities   

2217

 

 

Item 4.  Mine Safety Disclosure 

2218

 

 

Item 5.  Other Information  

2218

 

 

Item 6. Exhibits 

2319

     Signatures

Signatures

2420

3

 

ITEM 1. Financial Statements and Notes

 

Cyclone Uranium Corporation

Condensed Consolidated Balance Sheets

 

October 31,

2014

(unaudited)

 

January 31,

2014

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

$

323

 

$

2,582

Restricted deposits

 

35,184

 

 

35,184

Prepaid and other current assets

 

1,000

 

 

81,607

Total Current Assets

 

36,507

 

 

119,373

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

Mineral interests

 

-

 

 

1,400,000

Total Other Assets

 

-

 

 

1,400,000

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

36,507

 

$

1,519,373

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable and accrued expenses

$

366,779

 

$

255,886

Accounts payable and accrued expenses - related party

 

107,350

 

 

88,657

Accounts payable and accrued expenses - shareholders

 

555,230

 

 

550,620

Notes payable-shareholders

 

195,000

 

 

345,000

Note payable

 

300,000

 

 

300,000

Total Current Liabilities

 

1,524,359

 

 

1,540,163

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

Common stock, $0.001 par value, 600,000,000 shares authorized

 

 

 

 

 

159,562,125 and 149,562,125 shares issued and outstanding, respectively

 

159,561

 

 

149,561

Additional paid-in capital

 

21,369,193

 

 

21,268,482

Accumulated (deficit)

 

(23,016,606)

 

 

(21,438,833)

Total Stockholders' Equity (Deficit)

 

(1,487,852)

 

 

(20,790)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

36,507

 

$

1,519,373

 

(An Exploration Stage Company)

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31,

2013

(unaudited)

 

January 31,

2013

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

$

8,603

 

$

21,323

Restricted deposits

 

35,106

 

 

35,000

Prepaid and other current assets

 

123,771

 

 

139,413

Total Current Assets

 

167,480

 

 

195,736

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

Mineral interests

 

1,400,000

 

 

1,400,000

Total Other Assets

 

1,400,000

 

 

1,400,000

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

1,567,480

 

$

1,595,736

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable and accrued expenses

$

208,051

 

$

98,996

Accounts payable and accrued expenses - related party

 

80,273

 

 

88,303

Notes payable-shareholders

 

311,713

 

 

195,000

Note payable

 

300,000

 

 

300,000

Accounts payable and accrued expenses - shareholders

 

536,648

 

 

496,156

Total Current Liabilities

 

1,436,685

 

 

1,178,455

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 600,000,000 shares authorized 149,562,125 and 141,062,125 shares issued and outstanding, respectively

 

149,561

 

 

141,061

Additional paid-in capital

 

21,268,908

 

 

20,988,642

Accumulated (deficit) prior to exploration stage

 

(15,353,115)

 

 

(15,353,115)

Accumulated (deficit) during exploration stage

 

(5,934,559)

 

 

(5,359,307)

Total Stockholders' Equity (Deficit)

 

130,795

 

 

417,281

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

1,567,480

 

$

1,595,736

 

 

 

 

 

 

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

 

4

4

 

 

(An Exploration Stage Company)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

February 1, 2001

(Inception of

ExplorationStage)

to October 31,

 

For the three months ended

 

For the nine months ended

 

 

October 31,

 

October 31,

 

 

2013

 

2012

 

2013

 

2012

 

2013

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

-

 

$

-

 

$

-

 

$

-

 

$

44,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

-

 

 

-

 

 

-

 

 

-

 

 

50,000

Exploration expense

 

34,470

 

 

66,584

 

 

137,383

 

 

164,368

 

 

1,799,969

Impairment of mineral interests

 

-

 

 

-

 

 

-

 

 

281,477

 

 

621,277

Write down of inventory to fair value

 

-

 

 

-

 

 

-

 

 

-

 

 

125,000

General and administrative

 

36,102

 

 

132,856

 

 

266,494

 

 

405,594

 

 

4,826,206

TOTAL OPERATING EXPENSES

 

70,572

 

 

199,440

 

 

403,877

 

 

851,439

 

 

7,422,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) FROM OPERATIONS

 

(70,572)

 

 

(199,440)

 

 

(403,877)

 

 

(851,439)

 

 

(7,378,212)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - related party

 

-

 

 

(6,947)

 

 

-

 

 

(22,272)

 

 

(162,032)

Interest expense

 

(34,872)

 

 

(139,976)

 

 

(103,477)

 

 

(139,976)

 

 

(278,881)

Interest expense - shareholder

 

(48,503)

 

 

 

 

 

(68,003)

 

 

 

 

 

(68,003)

Relief of payables and other indebtedness

 

-

 

 

-

 

 

-

 

 

-

 

 

66,935

Other income

 

-

 

 

4

 

 

105

 

 

4

 

 

2,404,793

Interest income

 

-

 

 

-

 

 

-

 

 

-

 

 

37,709

TOTAL OTHER INCOME (EXPENSES)

 

(83,375)

 

 

(146,919)

 

 

(171,375)

 

 

(162,244)

 

 

2,000,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) BEFORE TAXES

 

(153,947)

 

 

(346,359)

 

 

(575,252)

 

 

(1,013,683)

 

 

(5,377,691)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

-

 

 

-

 

 

-

 

 

-

 

 

556,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)

$

(153,947)

 

$

(346,359)

 

$

(575,252)

 

$

(1,013,683)

 

$

(5,934,559)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARESOUTSTANDING,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 BASIC AND DILUTED

 

149,404,516

 

 

141,062,125

 

 

144,622,632

 

 

131,999,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cyclone Uranium Corporation

Condensed Consolidated Statement of Operations (unaudited)

For the three and nine months ended October 31, 2014 and 2013

 

For the three months ended

October 31,

 

For the nine months ended

October 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

(unaudited)

 

(unaudited)

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Exploration expense

 

11,461

 

 

34,470

 

 

80,607

 

 

137,383

General and administrative

 

37,504

 

 

36,102

 

 

144,186

 

 

266,494

TOTAL OPERATING EXPENSES

 

48,965

 

 

70,572

 

 

224,793

 

 

403,877

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(48,965)

 

 

(70,572)

 

 

(224,793)

 

 

(403,877)

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 

 

 

 

 

 

 

Interest expense - related party

 

-

 

 

-

 

 

-

 

 

-

Interest expense

 

(34,872)

 

 

(34,872)

 

 

(103,478)

 

 

(103,477)

Interest expense - shareholder

 

(5,323)

 

 

(48,503)

 

 

(43,446)

 

 

(68,003)

Impairment of mineral interests

 

(1,400,000)

 

 

-

 

 

(1,400,000)

 

 

-

Relief of payables and other indebtedness

 

188,836

 

 

-

 

 

188,836

 

 

-

Other income

 

5,108

 

 

-

 

 

5,108

 

 

105

TOTAL OTHER INCOME (EXPENSES)

 

(1,246,251)

 

 

(83,375)

 

 

(1,352,980)

 

 

(171,375)

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE TAXES

 

(1,295,216)

 

 

(153,947)

 

 

(1,577,773)

 

 

(575,252)

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(1,295,216)

 

$

(153,947)

 

$

(1,577,773)

 

$

(575,252)

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE,

      

 

 

 

 

 

BASIC AND DILUTED

$

(0.01)

 

$

(0.00)

 

$

(0.01)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OFCOMMON STOCK SHARES OUTSTANDING,

      

 

 

 

 

 

BASIC AND DILUTED

 

157,388,212

 

 

149,404,516

 

 

154,836,850

 

 

144,622,632

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

 

5

 

 

 

 

 

 

 

 

 

 

(An Exploration Stage Company)

 

 

 

 

 

 

 

 

STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period from

February 1, 2001

(Inception of

Exploration Stage

to October 31,

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

October 31,

2013

 

October 31,

2012

 

 

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net (loss)

$

(575,252)

 

$

(1,013,683)

 

$

(5,934,559)

Adjustments to reconcile net (loss) to net cash (used in) operating activities:

 

 

 

 

 

 

 

Income from sale of mineral interests

 

-

 

 

-

 

 

(2,235,000)

Writedown of inventory to market value

 

-

 

 

-

 

 

125,000

Impairment of mineral interests

 

-

 

 

281,477

 

 

621,277

Relief of payables and other indebtedness

 

-

 

 

-

 

 

(66,935)

Depreciation

 

-

 

 

-

 

 

7,062

Common stock issued for services

 

-

 

 

-

 

 

419,814

Stock compensation

 

52,193

 

 

199,924

 

 

1,244,794

Non cash interest expense

 

33,286

 

 

132,332

 

 

33,286

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Inventory

 

-

 

 

-

 

 

50,000

Prepaid and other current assets

 

15,536

 

 

(52,724)

 

 

(60,987)

Accounts payable and accrued expenses

 

109,055

 

 

(5,341)

 

 

758,267

Accounts payable and accrued expenses, related party

 

(8,030)

 

 

-

 

 

(8,030)

Asset retirement obligation

 

-

 

 

-

 

 

(52,000)

Accounts payable and accrued expenses - shareholders

 

40,492

 

 

39,768

 

 

571,348

Net cash (used in) operating activities

 

(332,720)

 

 

(418,247)

 

 

(4,526,663)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Cash received in New Fork acquisition

 

-

 

 

297,564

 

 

297,564

Cash received in Tournigan acquisition

 

-

 

 

-

 

 

12,829

Proceeds from sale of mineral interests

 

-

 

 

-

 

 

2,235,000

Release of reclamation bonds

 

-

 

 

-

 

 

895,000

Net cash provided by investing activities

 

-

 

 

297,564

 

 

3,440,393

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayment of amounts due to Tournigan Energy, Inc.

 

-

 

 

-

 

 

(330,000)

Cash received from sale of common stock

 

170,000

 

 

50,000

 

 

1,026,486

Proceeds from the exercise of stock options

 

-

 

 

-

 

 

35,000

Proceeds from notes payable

 

150,000

 

 

300,000

 

 

485,000

Proceeds from notes payable - shareholder

 

-

 

 

-

 

 

350,500

Repayment of note payable - shareholder

 

-

 

 

(149,000)

 

 

(1,181,568)

Capital contribution by shareholder

 

-

 

 

-

 

 

689,068

Net cash provided by financing activities

 

320,000

 

 

201,000

 

 

1,074,486

 

 

 

 

 

 

 

 

 

INCREASE(DECREASE) IN CASH

 

(12,720)

 

 

80,317

 

 

(11,784)

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

21,323

 

 

315

 

 

20,387

 

 

 

 

 

 

 

 

 

Cash, end of period

$

8,603

 

$

80,632

 

$

8,603

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Reclassification of capital contributions to note payable

$

-

 

$

-

 

$

864,068

Initial debt discount to record warrants to additional paid in capital

$

-

 

$

-

 

$

-

Conversion of notes payable and accrued interest to common stock

$

-

 

$

-

 

$

329,181

Conversion of amounts due to shareholders to common stock

$

-

 

$

-

 

$

374,089

Common shares issued for stock subscriptions - shareholder

$

-

 

$

-

 

$

433,813

Conversion of amounts due to affiliate to stock subscription

$

-

 

$

-

 

$

131,282

Purchase of inventory via direct payment by shareholder

$

-

 

$

-

 

$

175,000

Contribution of accounts payable and accrued expenses - shareholder

$

-

 

$

-

 

$

50,000

Contribution of amounts due Tournigan Energy Ltd to capital

$

-

 

$

-

 

$

873,327

Common shares issued for New Fork acquisition

$

-

$

2,000,000

$

2,030,300

Cyclone Uranium Corporation

Statements of Cash Flows (unaudited)

For the nine months ended October 31, 2014

 

For the nine months ended

 

October 31,

2014

October 31,

2013

 

 

(unaudited)

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net loss

$

(1,577,773)

$

(575,252)

Adjustments to reconcile net (loss) to net cash (used in) operating activities:

 

 

 

 

Impairment of mineral interests

 

1,400,000

 

-

Relief of payables and other indebtedness

 

(188,836)

 

-

Stock based compensation

 

10,711

 

52,193

Non cash interest expense

 

-

 

33,286

Changes in assets and liabilities:

 

 

 

 

Prepaid and other current assets

 

80,607

 

15,536

Accounts payable and accrued expenses

 

110,893

 

109,055

Accounts payable and accrued expenses, related party

 

18,693

 

(8,030)

Accounts payable and accrued expenses - shareholders

 

43,446

 

40,492

Net cash used in operating activities

 

(102,259)

 

(332,720)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Cash received from sale of common stock

 

100,000

 

170,000

Proceeds from notes payable

 

-

 

150,000

Net cash provided by financing activities

 

100,000

 

320,000

 

 

 

 

 

INCREASE DECREASE IN CASH

 

(2,259)

 

(12,720)

 

 

 

 

 

Cash, beginning of period

 

2,582

 

21,323

Cash, end of period

$

323

$

8,603

 

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

6

 

6

 

 

CYCLONE URANIUM CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 20132014

(Unaudited)

 

NOTE 1 – Nature of Operations and Basis of Presentation

 

Cyclone Uranium Corporation (“Cyclone” or the “Company”), and its subsidiaries are engaged in the business of mining and mineral exploration.  This includes locating, acquiring, exploring, improving, leasing and developing mineral interests, primarily in the field of precious metals.uranium.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) pursuant to Item 210 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K and 10-K/A for the year ended January 31, 2013.2014.

 

The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in the Report on Form 10-K and 10-K/A for the year ended January 31, 2013,2014, and are supplemented throughout the notes to condensed consolidated financial statements. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Report on the Form 10-K and 10-K/A for the year ended January 31, 2013.2014.

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

 

NOTE 2 - AcquisitionIn June 2014, the FASB issued ASU No. 2014-10, which amended Accounting Standards Codification (ASC) Topic 915 Development Stage Entities. The amendment eliminates certain financial reporting requirements surrounding development stage entities, including an amendment to the variable interest entities guidance in ASC Topic 810, Consolidation. The amendment removes the definition of New Fork Uranium Corporationa development stage entity from the ASC, thereby removing the financial reporting distinction between development stage entities and other entities from U.S. GAAP. Consequently, the amendment eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

 

On March 14, 2012,This amendment is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. The Company has made the election to early adopt this amendment effective June 30, 2014 and, as a result, the Company entered into a Stock Purchase Agreement (“is no longer presenting or disclosing the Agreement”) wherebyinformation previously required under Topic 915. The early adoption was made to reduce data maintenance by removing all incremental financial reporting requirements for development stage entities. The adoption of this amendment alters the shareholders of New Fork Uranium Corporation (“New Fork”) sold alldisclosure requirements of the issued and outstanding sharesCompany, but it does not have any material impact on the Company’s financial position or results of New Fork to the Company in exchangeoperations for the issuance to the shareholders of an aggregate of 50,000,000 shares of common stock, at $0.001 par value, of the Company.current or any prior reporting periods.

 

7In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact the adoption of ASU 2014-15 will have on our financial statements and related disclosures.

 

The 50,000,000 shares of common stock of the Company issued pursuant to the Agreement were issued pro rata to all of the shareholders of New Fork on the basis of 0.877192983 shares of the Company’s common stock for each outstanding New Fork share of common stock issued and outstanding on the effective date of the Agreement.7

 

New Fork holds 521 mining claims in the areas adjacent to the Company’s Cyclone Rim uranium exploration properties in Sweetwater County, Wyoming. New Fork’s assets are comprised of 521 federal mining claims covering about 10,000 acres of Bureau of Land Management (“BLM”) land. These claims cover a large portion of the sinuous, uranium bearing roll-front that exists in this part of south-central Wyoming. The Company’s existing Cyclone Rim claims cover a 28 mile extent of the western portion of this same roll-front trend. This area of Sweetwater County is a historical uranium-mining district that is seeing a resurgence of development activity. The Company now holds significant acreage on key uranium ground in the Red Desert.

The transaction described above relating to the acquisition of New Fork was accounted for as a business combination. A summary of the transaction is presented below:

Fair Value of net tangible assets acquired:

 

 

 

 

 

Cash

$

297,564

Prepaid expenses and other assets

 

89,989

Accounts payable

 

(69,030)

Acquired net assets (100%)

$

318,523

 

 

 

Purchase Price:

 

 

Issuance of 50,000,000 shares of stock

$

2,030,300

Total

$

2,030,300

 

 

 

Mineral rights

$

1,711,777

 

 

 

NOTE 3 – Loss Per Share

Basic loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of shares and dilutive common stock equivalents outstanding. During periods when they are anti-dilutive, common stock equivalents are not included in the calculation.

8

 

 

NOTE 42 - Going Concern

 

The Company has an accumulated deficit of $21,287,674$23,016,606 and has a working capital deficit of $1,269,205$1,487,852 at October 31, 2013.2014.  The Company has no current revenue producing operations and is in default on all of its $300,000 and $35,000 notes payable.outstanding debt.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

The ability of the Company to achieve its operating goals and thus positive cash flows from operations is dependent upon the future market price of metals, future capital raising efforts, and the ability to achieve and sustain efficient revenue producing operations. Management's plans will require additional financing, reduced exploration activity or disposition of or joint ventures with respect to mineral properties.Whileproperties. While the Company has been successful in these capital raising endeavors in the past, there can be no assurance that its future efforts and anticipated operating improvements will be successful.

 

The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

NOTE 53 - Notes Payable

 

Shareholders

 

In 2005, a shareholder advanced $30,000 to the Company for working capital purposes and to assist in identification of new mining properties.  This loan is due on demand and bore interest at 5% per annum through January 31, 2009, at which time the interest rate increased to 10% per annum.  During the years ended January 31, 2010 and 2009, the shareholder advanced an additional $50,000 and $80,000, respectively, under substantially identical terms. On August 31, 2011, the shareholder advanced a further $150,000 and added an additional $30,000 on October 27, 2011, for a loan total of $340,000 at January 31, 2012. The additional loans were drafted under identical terms of previous loans advanced to the Company. Payments of $180,000 were made on these loans during the year ended January 31, 2013.  As of October 31, 20132014 principal and interest due are $160,000 and $104,966.$126,189.

 

On January 7, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $35,000. The terms of the note include an interest rate of 15% that is accrued and due upon maturity. The note and accrued interest was due and payable July 7, 2013. As of October 31, 2013,2014, the Company had recorded $4,286$8,213 in accrued interest. In connection with the note payable, the Company issued a warrant to purchase 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $25,417 using a Black Scholes option pricing model using inputs described in Note 8,5, and the full expense was recorded as of the date of issuance.  As of October 31, 2013,2014, the Company is in default on the note.  On October 31, 20132014 the balance due, including interest is $39,286.$44,536.  We are currently engaged in discussions with the lender to extend the note.

 

9

On August 30, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $150,000. The terms of the note include an interest rate of 30% per annum.  The note iswas due and payable 120 days from August 30, 2013.  In addition, the Note was secured by a pledge of certain shares of common stock owned by James Baughman, CEO of the Company.  In connection with the financing agreement, on August 30, 2013 the Company issued a warrant to purchase 5,000,000 shares of common stock, exercisable on or before August 30, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $119,698 using a Black Scholes option pricing model using inputs described in Note 8.5.  Theproceeds from the note were allocated to notes payable and warrants based on the relative fair value of the debt and warrants.  An amount of $33,286 was expensed in the quarter ended October 31, 2013. The remaining amount of $33,287 will be$66,573 was amortized and expensed over the life of the note which maturesmatured December 30, 2013.

8

On August 27, 2014, the Company entered into a Settlement Agreement and General Release document with the lender that releases the Company’s obligation to pay on this note in exchange for 400,000 common shares of WestMountain Gold, Inc. that had been pledged by James Baughman, which had been collateralized per the note.  The principal balance due of $150,000, accrued interest of $38,836 and legal expenses of $2,500, for a total of $191,336, was due on this obligation. The Company recorded an accrual and legal expense for the $2,500. The principal and interest was recorded as other income as a debt extinguishment. With the release of this obligation, the Company has $-0- balance due on the note.

 

Non-affiliated

 

On August 31, 2012 the Company entered into a $300,000 bridge loan financing arrangement with an unaffiliated accredited investor, the proceeds of which were used to pay maintenance fees to the Bureau of Land Management and general operating expenses of the Company.  The note payable bears interest at a rate of 15% per annum and was due and payable on or before October 30, 2012.  As of October 31, 2013,2014, the Company is in default on the note.Thenote.  The default interest rate is 45%. As of October 31, 20132014 the balance due, including interest, is $446,550. In addition, the note$584,900. The Note is secured by all of the property of the Company. We are currently engagedCompany in discussions with the lenderaddition to extend the note.  

In connection with the financing agreement, on August 31, 2012 the Company issued a warrant to purchase 6,814,000pledge of certain shares of common stock exercisable on or before August 31, 2017 at $0.02 per share.owned by James Baughman, Maria Baughman, Purcell Group LLC and Publican Capital Corporation.  The fair valueCompany is currently engaged in settlement negotiations with lender for payment of the warrant at the date of grant was $132,332 using a Black Scholes option pricing model using inputs described in Note 8, and the full expense was recorded as of the date of issuance.note.

 

NOTE 6 - Asset Retirement Obligations and Restricted Deposits

Asset retirement obligations relate to legal obligations for site restoration and clean-up costs for exploration drilling activities in Arizona and Wyoming. The Company posts restricted deposits with US government agencies that are legally restricted for the purpose of settling these obligations.

During 2008 and 2009, TUSA carried out the required reclamation work and reseeding of affected areas in Wyoming. During the year ended January 31, 2010, the Wyoming Department of Environmental Quality (WDEQ) inspected the property and subsequently released $575,600 of restricted deposits. Approximately $340,000 of this amount was used to pay annual mineral claim fees, $200,000 was paid to Tournigan Energy, and the balance was used for operations.

During the year ended January 31, 2011, the remaining reclamation work was completed, and $304,400 of restricted deposits was released. Approximately $127,000 of this amount was used to pay annual mineral claim fees, $130,000 was paid to Tournigan Energy, and $47,000 was used for operations.

The balance of restricted deposits at October 31, 2013 was $35,106, which may be released upon future inspection by the Arizona BLM.

10

NOTE 7 -4 – Stockholders’ Equity (Deficit)

 

During the year ended January 31, 2012,On June 9, 2014 the Company, issued a total of 800,000 in shares to two individuals who had previously donated their time to the Company. 750,000 shares at $0.04 per share were granted and expensed as consulting expense and an additional 50,000 shares at $0.04 were granted to a related party and expensed as website expense. A related party forgave notes payable in the amount of $600,000. This amount was recorded as a contribution to capital.The Company issued a total of 6,323,820 common shares in settlement of debt of $410,860.

During the year ended January 31, 2013, the Company issued 50,000,000 shares to the shareholders of New Fork at $0.04 per share, 2,000,000 shares for a one-year investor relations services that terminated on March 19, 2013 at $0.05 per share valued at $100,000, and 2,000,000 units each consisting of one common share and one half warrant for cash of $50,000. The Company completed a private placement transaction in the amount of $50,000 by the issuance of 2,000,00010,000,000 shares of common stock at $0.04 per share.for a $100,000 investment received from an accredited investor.  Each share included one-half of aalso includes one warrant exercisable at $0.05 per share.

On August 28, 2013, Accredited Members, Inc. was issued 500,000 of common stock at a price of $0.02 per share in exchange for an accounts payable for professional services provided to the Company. Each share also included one-half warrant exercisable at $0.25 per share with a term of five years from issuance.

During the nine months ended October 31, 2013 the Company, for a total of $170,000 issued 8,500,000 shares of common stock at $0.02 per share. Each share also included one-half warrant exercisable at $0.25 per share with a term of five years from issuance. This issuance included the Accredited Members, Inc. transaction described above, which was the only equity based transaction for the quarter ended October 31, 2013.  Based on the terms and conditions of the warrants, we have concluded that all of the warrants issued meet the criteria for equity classification.

 

NOTE 85 - Common Stock Options and Warrants   

 

The Company's 2012 Stock Option Plan adopted by the Board of Directors on September 17, 2012 states that the exercise price of each option will be granted at an amount that equals the fair market value at the date of grant. All options vest at a time determined at the discretion of the Company's Board of Directors. All options expire if not exercised within 10 years from the date of grant, unless stated otherwise by the Board of Directors upon issuance.

 

11

The Company records stock-based compensation expense ratably over the vesting period for the fair value of options granted under the Company's 2012 Stock Option Plan. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

On March 29, 2012, the Company issued stock options of 2,500,000 to the officers and directors. The options were priced at $0.06 per share and expire five years from the date of issuance. The fair value of the option grant was estimated on the date of grant utilizing the Black-Scholes option pricing model. The fair value of these options was determined to be $99,924 based on the following assumptions: expected life of options of 5 years, expected volatility of 305.3%, risk-free interest rate of 1.01% and no dividend yield.

 

On March 25, 2013 the Company issued stock options to purchase 4,000,000 shares of common stock to an individual providing contract CFO services to the Company, half of which vested upon issuance and twenty five percent will vest in each of the subsequent two years of service to the Company.  The options were priced at $0.02 per share and will expire five years from the date of issuance.  The fair value of the option grant was estimated on the date of grant utilizing the Black-Scholes option pricing model.  The fair value of these options was determined to be $79,498 Based on the following assumptions: expected life of the options of 5 years, expected volatility of 243.9%, risk-free interest rate of 0.80% and no dividend yield.  These options will be expensed over their vesting schedule.

 

9

On March 25, 2013 the Company issued stock options to purchase 500,000 shares of common stock to an individual providing contract accounting services to the Company, half of which vested upon issuance and the other half will vest after one year of service to the Company.  The options were priced at $0.02 per share and will expire five years from the date of issuance.  The fair value of the options granted is estimated using the market price at the end of each quarter. The fair value of these options as of the date of grant was determined to be $9,937. On the date of grant, utilizing the Black-Scholes model, the following assumptions were used: expected life of the options of 5 years, expected volatility of 243.9%, risk-free interest rate of 0.80% and no dividend yield.  These options will be expensed over their vesting schedule.

 

 

 

 

Options

 

 

Number of

Shares

Weighted

Average

Exercise

Price

 

 

 

Outstanding at January 31, 2013

10,250,000

$0.17

Issued

4,500,000

$0.02

Exercised

-

-

Expired/Cancelled

-

-

Outstanding at October 31, 2013

14,750,000

$0.12

Exercisable at October 31, 2013

12,500,000

$0.14

 

12

 

 


Weighted

Average

Exercise

Price

 

 

 

 

Number of
Shares

Options

 

 

 

 

 

 

Outstanding at January 31, 2014

 

14,750,000

$

0.12

Issued

 

-

 

-

Exercised

 

-

 

-

Expired/Cancelled

 

-

 

-

Outstanding at October 31, 2014

 

14,750,000

$

0.12

Exercisable at October 31, 2014

 

13,750,000

$

0.13

 

The following table summarizes information about stock options at October 31, 2013:2014:

 

 

 

 

 

 

 

 

Range of

Prices

Weighted

Average

Number

Outstanding

 

 

Contractual

Life

Weighted

Average

Exercise

Price

Weighted

Average

Number

Exercisable

Weighted

Average

Exercise

Price

 

 

 

 

 

 

$0.02

4,500,000

4.40 yrs

$0.02

2,250,000

$0.02

$0.05

2,000,000

2.55 yrs

$0.05

2,000,000

$0.05

$0.06

5,650,000

2.18 yrs

$0.06

3,150,000

$0.06

$0.08

500,000

1.22 yrs

$0.08

500,000

$0.08

$0.30

100,000

1.22 yrs

$0.30

100,000

$0.30

$0.60

2,000,000

2.10 yrs

$0.60

2,000,000

$0.60

On June 19, 2012 the Company issued 2,000,000 shares of common stock and a warrant to purchase 1,000,000 shares of common stock at $0.05 per share within a three year period.

On August 31, 2012, in connection with a note payable, the Company entered into a Warrant Purchase Agreement with an unaffiliated accredited investor. As part of the terms of the note, the Company issued a five year warrant to the lender to purchase 6,814,000 shares of Company common stock, exercisable at $0.02 per share. The fair value of these warrants at the date of grant was $132,332 using a Black Scholes option pricing model and the following assumptions: expected life of warrants is five years, expected volatility rate of 194.81%, risk free rate of 0.59%, and an exercise price of $0.02. The $132,332 was fully expensed on the date of issuance.

On January 7, 2013, in connection with a note payable, the Company entered into a Warrant for Purchase of Common Stock agreement with a related party investor. As stated in the agreement, the Company granted 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share. The fair value of these warrants at the date of grant was $25,417 using a Black Scholes option pricing model and the following assumptions: expected life of warrants is three years, expected volatility rate of 210.18%, risk free rate of 0.41%, and an exercise price of $0.02. The $25,417 was fully expensed on the date of issuance.

During the quarter ended October 31, 2013 the Company issued 500,000 shares of common stock at $0.02 per share in exchange for certain services provided to the Company.  In addition 250,000 warrants were issued to the same service provider  which are exercisable at $0.25 per share with a term of five years from the grant date.

13

 

 

Weighted

Average

Number

Outstanding

 

 

 

 

 

Weighted

Average

Number

Exercisable

 

Weighted

Average

Exercise

Price

Range of

Prices

 

 

 

 

Weighted

Average

Exercise

Price

 

 

 

 

Contractual

Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.02

 

4,500,000

 

3.40 yrs

 

$0.02

 

3,500,000

 

$0.02

$0.05

 

2,000,000

 

1.55 yrs

 

$0.05

 

2,000,000

 

$0.05

$0.06

 

5,650,000

 

1.18 yrs

 

$0.06

 

3,150,000

 

$0.06

$0.08

 

500,000

 

0.22 yrs

 

$0.08

 

500,000

 

$0.08

$0.30

 

100,000

 

0.22 yrs

 

$0.30

 

100,000

 

$0.30

$0.60

 

2,000,000

 

1.35 yrs

 

$0.60

 

2,000,000

 

$0.60

 

 

 

 

Weighted

Average

Exercise

Price

 

 

 

 

 

 

Number of

Shares

 

Warrants

 

 

 

 

 

 

 

Outstanding at January 31, 2014

 

18,064,000

 

$0.08

Issued

 

10,000,000

 

$0.05

Exercised

 

-

 

-

Expired/Cancelled

 

-

 

-

Outstanding at October 31, 2014

 

28,064,000

 

$0.07

Exercisable at October 31, 2014

 

28,064,000

 

$0.07

10

 

 

 

 

 

 

Warrants

 

 

Number of

Shares

Weighted

Average

Exercise

Price

 

 

 

Outstanding at January 31, 2013

8,814,000

$0.02

Issued

9,250,000

$0.09

Exercised

-

-

Expired/Cancelled

-

-

Outstanding at October 31, 2013

18,064,000

$0.08

Exercisable at October 31, 2013

18,064,000

$0.08

On October 31, 2013,2014, the Company had the following outstanding warrants:

     

 

 

Exercise

Price

 

 

Number

of Shares

 

Remaining

Contractual

Life

Exercise Price

Times Number

of Shares

Weighted

Average

Exercise

Price

 

 

 

 

 

$0.02

12,814,000

3.32 yrs

$256,280

$0.02

$0.05

1,000,000

1.64 yrs

$50,000

$0.05

$0.25

4,250,000

2.58 yrs

$1,000,000

$0.25

 

18,064,000

 

 

 

 

 

 

 

 

 

 

Weighted

Average

Exercise

Price

 

 

 

 

Remaining

Contractual

Life

 

Exercise Price

Times Number

of Shares

 

Exercise

Price

 

Number

of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.02

 

12,814,000

 

2.32 yrs

 

$

256,280

 

$0.02

$0.05

 

11,000,000

 

4.25 yrs

 

$

550,000

 

$0.05

$0.25

 

4,250,000

 

3.58 yrs

 

$

1,000,000

 

$0.25

 

 

28,064,000

 

 

 

 

 

 

 

Fair Value Considerations:

 

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

 

Level 1 valuations:

 

Quoted prices in active markets for identical assets and liabilities.

Level 2 valuations:

 

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.

Level 3 valuations:

 

Significant inputs to valuation model are unobservable.

 

14

We classify assets and liabilities measured at fair value in their entirety based on the lowest level of input that is significant to their fair value measurement. We measure all our stock options issued to contractors that are required to be measured at fair value on a recurring basis using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.While we had no outstanding instruments asliabilities.  On March 25, 2013, options to purchase 4,500,000 shares of January 31, 2013 that required fair value measurement, 4,500,000 optionscommon stock were issued to contractors, on March 25, 2013 which require fair value measurement for the unvested options on a quarterly basis.

 

The options were revalued again using the Black-Scholes option pricing model for the quarter ended October 31, 20132014 based on the following assumptions: expected life of the options of 4.503.50 years, expected volatility of 228.3%205.34%, risk-free interest rate of 1.31%1.62% and a stock price of $0.016,$0.01 per share.  Based on these assumptions, the Company calculated that the value for the unvested options had declineddecreased by $27,126$2,938 during the quarter which was recorded as a negative stock option expense in the quarter ended October 31, 2013.2014. 

11


NOTE 96 - Related Party Transactions

 

During 2011, Minex Exploration which is controlled by our Director Gregory Schifrin, provided services to New Fork related to maintaining our mining claims in Sweetwater County, Wyoming for $86,358. As of October 31, 2013,2014, $51,359 was owed to Minex Exploration for these services.

 

 

NOTE 7 – Mineral Interests and Maintenance Fees

On September 2, 2014 the annual lease payments to the Bureau of Land Management were due for our federal mining claims covering about 10,000 acres of land in Arizona and Wyoming and account for substantially all of the assets in the Company.  We were unable to raise the capital required to make these payments to the BLM and as a result have lost all rights and interests in these claims. As of October 31, 2013 James G. Baughman, our CEO and Director, was owed $14,500 in fees and $2,192 in accrued benefits for his duties as CEO and $12,222 in expense reimbursements.  As2014, the Company recorded a loss of $1.4 million related to the mineral interests. For the three months ended October 31, 2013,2014, the entire amountCompany recorded an exploration expense of $28,914 was owed$11,461. All prepaid expenses related to Mr. Baughman.maintenance fees are now at $-0- on the Balance Sheet.   

Management is currently assessing the options for the Company going forward.

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 ITEM 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Cautionary Statement about Forward-Looking Statements

 

This Form 10-Q contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “hopes,” “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, the Company’s plans for a drill program, the Company’s potential for joint venture partners, and other characterizations of future events or circumstances are forward-looking statements. The Company’s properties are without known reserves and any proposed projects or drill programs are exploratory in nature.  Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified under “Risk Factors” in our Form 10-K and 10-K/Afor the year ended January 31, 2013.2014.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.

 

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The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.

 

Overview

 

Cyclone Uranium Corporation (formerly known as Fischer-Watt Gold Company, Inc., collectively with its subsidiaries, "Cyclone Uranium", “Cyclone" or the "Company"), was formed under the laws of the State of Nevada in 1986. Cyclone Uranium's primary business is mining and mineral exploration, and to that end to own, acquire, improve, sell, lease, convey lands or  mineral  claims or any  right,  title or  interest  therein;  and to search, explore,  prospect or drill for and exploit ores and minerals therein or thereupon.

 

Mineral Properties

 

Through several acquisitions, the Company evolved and has focused on building a portfolio of uranium mining claims in Wyoming, South Dakota and Arizona, the most recent of which was the March 14, 2012 acquisition of New Fork.  New Fork's assets are comprised of 521 federal mining claims covering about 10,000 acres of BLM land.  These claims cover a large portion of the sinuous, uranium bearing roll-front that exists in this part of south-central Wyoming.  The Company’s existing Cyclone Rim claims cover a 28-mile extent of the western portion of this same roll-front trend.  This area of Sweetwater County is a historical uranium-mining district that is seeing a resurgence of development activity.  TheUntil September 2, 2014 the Company now holdsheld significant acreage on key uranium ground in the Red Desert.  The Company is currently in negotiations to replace the mineral properties that were lost.

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On March 19, 2012, James G. Baughman was appointed Chairman, President, CEO, and acting Chief Financial Officer to succeed Peter Bojtos who had held those positions since 2005.  Mr. Baughman is an experienced geologist and mining company executive with proven management skills, and possesses an international background in the mining industry. Mr. Baughman has worked as a geologist for more than 25 years in mining operations and mineral exploration projects for precious, base metals, and uranium and has also provided technical services and project management for a number of major and junior mining companies.

 

Corporate Strategy

Management believes that givenOn September 2, 2014 the global supply and demand outlook for uranium over the next several years that demand could likely exceed supply which in turn could cause uranium prices to increase substantially from their current levels as well as prompt the large uranium producers to acquire uranium properties that could one day go into production.  The Company has strategically amassed a portfolio of mining claims that are largely focused on a historically productive uranium mining region in Wyoming and can maintain control of these claims going forward for an annual cost of approximately $200,000 annually in lease payments to the Bureau of Land Management.

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AlthoughManagement were due for our federal mining claims covering about 10,000 acres of land in Arizona and Wyoming and account for substantially all of the assets in the Company.  We were unable to raise the capital required to make these payments to the BLM and as a result have lost all rights and interests in these claims. As of October 31, 2014, the Company can maintain controlrecorded a loss of these claims going forward for a fairly minimal cost, management believes that it can significantly increase$1.4 million related to the value of the properties by investing in drill programs to define the resource of these claims.  The strategy would be to implement drill programs focused on our Cyclone Rim and New Fork properties in a phased approach over the next couple of years.  Management estimates the total required investment for these drill programs to be between $8 million and $15 million with the costs being weighted more heavily toward the later phases and depending on the results from the earlier phases.  The Company’s business plan will require additional capital through debt or equity financing to fund these programs, which may not be available at reasonable terms, if at all.

The advantages of implementing a phased drill program are that the Company can assess the results of the earlier phases to be more strategic in investing in the later, more expensive phases and by raising capital incrementally for each phase, management believes that it can minimize the dilutive effect of each subsequent equity raise by demonstrating added value of its claims with each drill program.  Assuming these drill programs are successful, management believes that they will substantially increase the value of it properties which would increase shareholder value.    mineral interests.

 

Results of Operations

 

The following discussion involves the results of operations for the quarters ended October 31, 2013three and October 31, 2012 and for the nine months ended October 31, 20132014 and October 31, 2012.2013.

 

The Company had no revenue from production during the quartersthree and nine months ended October 31, 20132014 or 20122013 as the Company had no properties in production.

 

Exploration expenses for the quarterthree months ended October 31, 20132014 were $34,470$11,461 compared to $66,584$34,470 for the quarterthree months ended October 31, 2012.  Exploration2013.  For the nine months ended October 31, 2014 and October 31, 2013, the exploration expenses may fluctuate slightly going forward aswere $80,607 and $137,383, respectively. This decrease for the Company adjusts its claim portfolio, but should remainthree and nine months are attributed to management’s decision to not renew certain claims that were deemed to be more speculative in this general range until the Company islast year which weren’t adding to the Company’s strategy and then not being able to expand its exploration drill program.renew all of the Company’s claims in September 2014.

 

General and administrative expenses for the quarterthree months ended October 31, 2013 amounted2014 were $37,505 compared to $36,102 compared to $132,856 for the quarterthree months ended October 31, 2012.  General2013.  For the nine months ended October 31, 2014 and 2013, general and administrative expenses decreasedwere $144,186 and $266,494, respectively. This decrease for the three and nine month comparable periods are attributed primarily due to greatera decrease in professional services incurred over the past year.in 2014.

 

Total other expenses for the quarter ended October 31, 2013 were $83,375 compared to $146,919 for the quarter ended October 31, 2012.  This decrease was primarily due to a large one-time  interest expense recorded for a short-term note in the third quarter 2012 related to warrants issued with the note. (See Footnote #8.) 

For the quarter ended October 31, 2013, the Company reported a net loss of $153,947 compared to a net loss of $346,359 for the quarter ended October 31, 2012.

The Company had no revenue from production during the ninethree months ended October 31, 2013 or 2012 as the Company had no properties in production.

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Exploration expenses2014 were $661,351 compared to $83,375 for the ninethree months ended October 31, 2013 were $137,383 compared to $164,368 for the nine months ended October 31, 2012.  Exploration expenses may fluctuate slightly going forward as the Company adjusts its claim portfolio, but should remain in this general range until the Company is able to expand its exploration drill program.

General and administrative expenses for the nine months ended October 31, 2013 amounted to $266,494 compared to $405,594 for the nine months ended October 31, 2012.  This decrease is primarily due to cost cutting measures and efficiencies introduced by management. 

2013.  Total other expenses for the nine months ended October 31, 2014 and October 31, 2013 were $768,080 and $171,375, respectively. The increase in both comparable periods were due to the $1.4M write off of mineral interests and the forgiveness of indebtedness for a past due note payable. (See Footnotes 3 and 7)

For the three months ended October 31, 2014, the Company reported a net loss of $1,295,216 compared to $162,244a net loss of $153,947 for the three months ended October 31, 2013. For the nine months ended October 31, 2014, the Company reported a net loss of $1,577,773 compared to a net loss of $575,252 for the nine months ended October 31, 2012.  The increase was primarily due to an increase in interest expense as a result of the increased level of debt that was incurred over the past twelve months. 

For the nine months ended October 31, 2013, the Company reported a net loss of $575,252 compared to a net loss of $1,013,683 for the nine months ended October 31, 2012.2013.

   

Liquidity and Financial Condition

 

The Company had unrestricted cash on hand at October 31, 2013,2014, of $8,603$323 compared to $21,323$2,582 on January 31, 2013.2014.  The Company also holds restricted cash of $35,106$35,184 relating to reclamation bonds covering the mineral properties acquired from Tournigan Energy.

 

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Current liabilities amounted to $1,436,685$939,459 on October 31, 20132014 compared to $1,178,455$1,540,163 on January 31, 20132014. This decrease of which $195,000 were owed to affiliates for both periods.  We also increased current liabilities$600,704 is associated with a $300,000 bridge loan from a non-affiliate on Augustthe forgiveness of debt that was recorded during the nine months ended October 31, 2012, which is in default, and a $150,000 loan from a company shareholder on August 30, 2013.2014. Current assets amounted to $167,480$36,507 resulting in a working capital deficit of $1,269,205$902,952 at October 31, 2013.2014.

 

Cash used in operating activities for the nine months ended October 31, 20132014 was $332,720$102,259 compared to $418,247$332,720 for the nine months ended October 31, 2012.2013.

 

Cash provided from investing activities for the nine months ended October 31, 2013 was $-0- compared to $297,564 for the nine months ended October 31, 2012.  This decrease was due to an infusion of cash from the New Fork acquisition in 2012.

Cash provided by financing activities for the nine months ended October 31, 20132014 was $320,000$100,000 compared to $201,000$320,000 for the nine months ended October 31, 2012.  The increase was primarily due to proceeds from the sale of common stock and loans, offset by repayment of a portion of a shareholder note payable. 2013. 

 

The first phase of drilling activities onBecause the Wyoming properties will likely cost between $3 million and $4 million.  If we areCompany was unable to raisemake its annual lease payments on September 2, 2014 to the additional capital necessary for these activities at favorable terms, we will postpone these drilling programs until we are able to do so andBureau of Land Management, it recorded an impairment of its assets.  Other than nominal cash, used in operating activities would remain in line with current levels.

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The Company recognizes its need for additional funding either from equity sales or borrowings to create a more favorable working capital ratio and allow for a more aggressive property acquisition program. The Company also recognizes that there is no assurance that adequate additional financing is either available or achievable on terms acceptable to it, if at all.

Management needs to raise between $3 million and $4 million to fund the first phases of drilling programs for the Company’s Cyclone Rim and New Fork properties. The scope of this phase would likely include drilling as many as 100 drill holes on these properties to determine the presence or absence of uranium mineralization with the intent of being able to eventually establish and support an inferred mineral resource calculation for these claims. If the Company has insufficient cash on hand, management hasno assets.  It is currently trying to raise additional capital and is exploring and evaluating additional assets to acquire.  The Company is currently in negotiations to replace the ability to postpone these activities until financing is available.  Shouldmineral assets that be the case, management has the ability to run the Company at its current level of activity and operating cash requirements going forward which require raising approximately $500,000 in capital over the next twelve months.

On August 30, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $150,000. The terms of the note include an interest rate of 30% per annum.  The note is due and payable 120 days from August 30, 2013.  In connection with the financing agreement, on August 30, 2013 the Company issued a warrant to purchase 5,000,000 shares of common stock, exercisable on or before August 30, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $119,698 using a Black Scholes option pricing model using inputs described in Note 8. An amount of $33,286 was expensed in the quarter ended October 31, 2013. The remaining amount of $33,287 will be amortized and expensed over the life of the note which matures December 30, 2013 at the end of this fiscal year.were lost.

 

The Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced significant net losses since inception and has a significant negative working capital position.  These issues raise substantial doubt about the Company's ability to continue as a going concern.

 

Other

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Management believes that the Company has adequately reserved its reclamation commitments. Management also believes that the Company is substantially in compliance with all environmental regulations.

While it intends to continue with its uranium exploration, management also continues to evaluate precious and/or base-metal mineral properties with a view to developing into a cash generating, profitable, producing mine. The chief area of interest is in the western United States.

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Contractual Obligations

The Company entered into an employment agreement with James Baughman on March 19, 2012.  The term is indefinite and provides for an annual salary of $36,000.  Upon termination without cause, Mr. Baughman is entitled to two times the annual salary, two times the targeted annual bonus and accrued but unused vacation time.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.

 

Recently issued and adopted accounting pronouncements

In June 2014, the FASB issued ASU No. 2014-10, which amended Accounting Standards Codification (ASC) Topic 915 Development Stage Entities. The amendment eliminates certain financial reporting requirements surrounding development stage entities, including an amendment to the variable interest entities guidance in ASC Topic 810, Consolidation. The amendment removes the definition of a development stage entity from the ASC, thereby removing the financial reporting distinction between development stage entities and other entities from U.S. GAAP. Consequently, the amendment eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

This amendment is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. The Company has made the election to early adopt this amendment effective June 30, 2014 and, as a result, the Company is no longer presenting or disclosing the information previously required under Topic 915. The early adoption was made to reduce data maintenance by removing all incremental financial reporting requirements for development stage entities. The adoption of this amendment alters the disclosure requirements of the Company, but it does not have any material impact on the Company’s financial position or results of operations for the current or any prior reporting periods.

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are currently assessing the impact the adoption of ASU 2014-15 will have on our financial statements and related disclosures.

 

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the other updates are expected to have a material impact on the Company's consolidated financial statements.

Business Combinations

On March 14, 2012, Cyclone and the Shareholders of New Fork Uranium Corporation (“New Fork”), a Wyoming corporation, entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) whereby the shareholders of New Fork sold all of the issued and outstanding shares of New Fork to Cyclone in exchange for the issuance to the shareholders of an aggregate of 50,000,000 shares of common stock, $.001 par value, of Cyclone.

The 50,000,000 shares of common stock of Cyclone issued pursuant to the Stock Purchase Agreement were issued pro rata to all of the shareholders of New Fork on the basis of 0.877192983 shares of Cyclone’s common stock for each outstanding New Fork share of common stock issued and outstanding on the effective date of the Stock Purchase Agreement.

In a shareholder meeting held in November 2012, shareholders voted to change the name of the Company from Fischer-Watt Gold Company, Inc. to Cyclone Uranium Corporation. 

Critical Accounting Policies

There were no material changes to critical accounting policies since January 31, 2013.

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Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

           Not applicable.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of October 31, 2013,2014, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer).  Based upon and as of the date of that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures are not effective to timely alert management to material information required to be included in our periodic reports filed with the Securities and Exchange Commission  and to ensure that information required to be disclosed in such reports is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosures.  However, management believes that the financial statements included in this report present fairly, in all material respects, the Company’s consolidated financial position, results of operations and cash flows for the periods presented.  Due to our limited financial resources and limited personnel we are not able to, and do not intend to, immediately take any action to remediate the material weaknesses identified.

 

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Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to our management, including our principal executive officer as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There has not been any change in our internal controls over financial reporting that occurred during our quarterly period ended October 31, 20132014 that has materially affected, or is reasonable likely to materially affect, our internal controls over financial reporting.

 

  

PART II - OTHER INFORMATION

 

Item 1.  LEGAL PROCEEDINGS

 

None.

 

Item 1A.  RISK FACTORS

 

There have been no material changes to the risk factors set forth in Item 1A. to Part II of our Form 10-K, as filed on AprilMay 16, 2013,2014, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors.

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Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES

 

On August 30, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $150,000. The terms of the note include an interest rate of 30% per annum. The note is due and payable 120 days from August 30, 2013. In connection with the financing agreement, on August 30, 2013June 9, 2014 the Company, issued a warrant to purchase 5,000,00010,000,000 shares of common stock exercisable on or before August 30, 2016 at $0.02 per share. The fair value of the warrant at the date of grant was $119,698 usingfor a Black Scholes option pricing model using inputs described in Note 8. An amount of $33,286 was expensed in the quarter ended October 31, 2013. The remaining amount of $33,287 will be amortized and expensed over the life of the note which matures December 30, 2013 at the end of this fiscal year.

On August 28, 2013, Accredited Members, Inc. was issued 500,000 of common stock at a price of $0.02 per share in exchange for$100,000 investment received from an accounts payable for professional services provided to the Company.accredited investor.  Each share will also included one-halfinclude one warrant exercisable at $0.25$0.05 per share with a term of five years from issuance.

The common stock and warrants were issued to the investors in reliance  Based on the exemption from registration contained in Rule 506terms and conditions of Regulation D under the Securities Actwarrants, we have concluded that all of 1933. No commissions or other remuneration were paid on the transactions set forth above. warrants issued meet the criteria for equity classification.

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

On January 7, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $35,000. The terms of the note include an interest rate of 15% that is accrued and paid at the time of maturity. The note and accrued interest are due and payable July 7, 2013. As of October 31, 2014, the Company recorded $8,213 in accrued interest. In connection with the note payable, the Company issued a Warrant to purchase 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $25,417 using a Black Scholes option pricing model using inputs described in Note 5, and the full expense was recorded as of the date of issuance.  As of October 31, 2014, the Company was unable to repay the note, thus, the Company is in default on the note.  On October 31, 2014 the balance due, including interest is $43,213.  We are currently engaged in discussions with the lender with regard to negotiating an extension on the note.

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On August 31, 2012 the Company entered into a $300,000 bridge loan financing arrangement with an unaffiliated accredited investor, the proceeds of which were used to pay maintenance fees to the Bureau of Land Management and general operating expenses of the Company.  The note payable bears interest at a rate of 15% per annum and was due and payable on or before October 30, 2012.  As of October 31, 2013, the Company was unable to repay the note, thus,2014, the Company is in default on the note.  The default interest rate is 45%. As of October 31, 20132014 the balance due, including interest, is $446,550. In addition, the note$584,900. The Note is secured by all of the property of the Company.Company in addition to a pledge of certain shares of common stock owned by James Baughman, Maria Baughman, Purcell Group LLC and Publican Capital Corporation.  The Company received notification of the lender's intent to forclose on the pledged assets and the Company is currently engaged in settlement negotiations with the lender with regard to satisfying the lender's demand for payment.  

On January 7, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $35,000. The termspayment of the note include an interest rate of 15% that is accrued and paid at the time of maturity. The note and accrued interest are due and payable July 7, 2013. As of October 31, 2013, the Company recorded $4,286 in accrued interest. In connection with the note payable, the Company issued a Warrant to purchase 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $25,417 using a Black Scholes option pricing model using inputs described in Note 8, and the full expense was recorded as of the date of issuance.  As of October 31, 2013, the Company was unable to repay the note, thus, the Company is in default on the note.  On October 31, 2013 the balance due, including interest is $39,286.  We are currently engaged in discussions with the lender with regard to negotiating an extension on the note.

 

Item 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

Item 5. OTHER INFORMATION

 

None.

 

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Item 6. EXHIBITS

 

Exhibit No.

Document

3.1

Articles of Incorporation, as amended. Filed as Exhibit 2.3 to Form 10-QSB filed January 6, 1998 and incorporated herein by reference.

 

 

3.2

By-laws of the Corporation. Amended and Restated. Filed as Exhibit 3.3 to Form 10-QSB filed December 16, 1996 and incorporated herein by reference.

 

10.1

Subscription Agreement Promissory Note and Warrant Purchase Agreement, dated August 30, 2013 between the Corporation and Perry L. Miller.

10.2

Promissory Note, dated August 30, 2013 between the Corporation and Perry L. Miller.

 

 

31

Officers Certification under Section 302 of the Sarbanes-Oxley Act of 2002 for James G. Baughman. Filed herewith.

 

 

32

Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 for James G. Baughman. Filed herewith.

 

101

Interactive data files pursuant to Rule 405 of Regulation S-T. Filed herewith.

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CYCLONE URANIUM CORPORATION

Date:  

Date:

December 16, 2013

22, 2014

By:

/s/ James G. Baughman

James G. Baughman

President and Chief Executive Officer and acting Chief Financial Officer

 

 

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