UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 2018
Commission File Number 000-32629
PACIFIC GOLD & ROYALTY CORP.
(Exact name of registrant as specified in charter)
| | |
Wyoming | | 98-0408708 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
848 N. Rainbow Blvd. #2987, Las Vegas, Nevada | | 89107 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code (416) 214-1483
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 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 large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x
Emerging Growth Company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
As of July 16, 2018, the Company had outstanding 8,944,909,409 shares of its common stock, par value $0.00001.
TABLE OF CONTENTS
2
PART I
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Pacific Gold & Royalty Corp.
Consolidated Balance Sheets
| | | | | |
| March 31, | | December 31, |
| 2018 | | 2017 |
| | | | | |
ASSETS | | | | | |
Current Assets: | | | | | |
Cash and Cash Equivalents | $ | - | | $ | 58,538 |
Amounts Receivable for Assets Sale | | - | | | - |
Total Current Assets | | - | | | 58,538 |
Other Assets: | | | | | |
Total Other Assets | | - | | | - |
TOTAL ASSETS | $ | - | | $ | 58,538 |
| | | �� | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | |
Current Liabilities: | | | | | |
Accounts Payable | $ | 396,508 | | $ | 396,641 |
Accrued Expenses | | 222,578 | | | 264,420 |
Total Current Liabilities | | 619,086 | | | 661,061 |
Long Term Liabilities: | | | | | |
Accrued Interest - Promissory Notes | | 55,965 | | | 47,970 |
Promissory Notes, long - term portion | | 319,840 | | | 319,840 |
Accrued Interest - Related Party Notes Payable | | 360,561 | | | 339,267 |
Related Party Notes Payable - long - term portion | | 2,444,044 | | | 2,451,844 |
Total Liabilities | | 3,799,496 | | | 3,819,982 |
Stockholders' Deficit: | | | | | |
Preferred Stock - $0.001 par value; 5,000,000 shares authorized, 0 and 300,000 shares outstanding at September 30, 2017 and December 31, 2016 | | - | | | - |
Common Stock - $0.0000000001 par value; 10,000,000,000 shares authorized, 8,944,909,409 and 4,469,909,409 shares issued and outstanding at December 31, 2017 and December 31, 2016 | | - | | | - |
Additional Paid-in Capital | | 44,789,026 | | | 44,789,026 |
Accumulated Deficit | | (48,588,522) | | | (48,550,470) |
Total Stockholders' Deficit | | (3,799,496) | | | (3,761,444) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | - | | $ | 58,538 |
See accompanying notes to the consolidated financial statements
3
Pacific Gold & Royalty Corp.
Consolidated Statements of Operations
| | | | | |
| Quarter Ended |
| March 31, | | March 31, |
| 2018 | | 2017 |
Revenue: | | | | | |
Total Revenue | $ | - | | $ | - |
Production Costs | | | | | |
Depreciation | | - | | | - |
Gross Margin | | - | | | - |
Operating Expenses: | | | | | |
General and Administrative | | 14,605 | | | 16,742 |
Mining claims | | - | | | - |
Total Operating Expenses | | 14,605 | | | 16,742 |
Loss from Operations | | (14,605) | | | (16,742) |
Other Income (Expenses) | | | | | |
Gain (Loss) on Extinguishment of Debt | | - | | | - |
Gain (Loss) on Sale of Royalty | | - | | | - |
Change in Fair Value of Derivative Liability | | - | | | - |
Gain (Loss) on Sale of Mining Claims | | 45,842 | | | - |
Imputed Interest Income | | - | | | - |
Foreign Exchange Gain (Loss) | | - | | | - |
Other Income | | - | | | - |
Gain (Loss) on Sale of Equipment | | - | | | - |
Bad Debt Expense | | - | | | - |
Interest Expense | | (69,290) | | | (72,854) |
Impairment Loss | | - | | | - |
Amortization of Debt Discount | | - | | | - |
Total Other Income (Expenses) | | (23,448) | | | (72,854) |
Net Loss | | (38,053) | | | (89,596) |
| | | | | |
Basic and Diluted Loss per Share | $ | (0.000004) | | $ | (0.00002) |
Weighted Average Shares Outstanding: | | | | | |
Basic and Diluted | | 8,944,909,409 | | | 4,370,455,857 |
See accompanying notes to the consolidated financial statements
4
Pacific Gold & Royalty Corp.
Consolidated Statements of Cash Flows (Unaudited)
| | | | | |
| Three Months Ended |
| March 31, 2018 | | March 31, 2017 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net Income (Loss) | $ | (38,053) | | $ | (89,597) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities | | | | | |
Depreciation and Depletion | | - | | | - |
Imputed Interest Income | | - | | | - |
Bad Debt Expense | | - | | | - |
Non-cash Portion of Interest on Convertible Debt | | - | | | - |
Issuance of Stock for Services | | - | | | - |
Asset Write Down | | - | | | - |
Asset Impairment Loss | | - | | | - |
(Gain) Loss on Sales of Assets | | - | | | - |
(Gain on disposal of Subsidiary | | - | | | - |
(Gain) Loss on Extinguishment of Debt | | - | | | - |
Deferred Rent | | - | | | - |
Amortization of Debt Discount | | - | | | - |
Change in Fair Value of Derivative Liability | | - | | | - |
Changes in: | | | | | |
Inventory | | - | | | - |
Amounts Receivable on Assets Sale | | - | | | - |
Prepaid Expenses | | - | | | - |
Accounts Payable | | (133) | | | 4,652 |
Accrued Expenses – Related Party Salary and Expenses | | (45,842) | | | - |
Accrued Expenses | | (41,842) | | | 12,000 |
Accrued Interest | | 29,289 | | | 72,854 |
NET CASH USED IN OPERATING ACTIVITIES | | (96,581) | | | (91) |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Purchases and Development of Property Plant, Equipment and Mineral Rights | | - | | | - |
Investment in Reclamation Bond | | - | | | - |
Net Change in Deposits | | - | | | - |
Proceeds from Sale of Subsidiary | | - | | | - |
Proceeds from Sale of Mining Claims | | 45,842 | | | - |
NET CASH USED IN INVESTING ACTIVITIES | | 45,842 | | | - |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
Payments on Related Party Notes Payable | | (7,800) | | | - |
Proceeds from Related Party Notes Payable | | - | | | - |
Proceeds from Promissory Notes | | - | | | - |
Payment on Convertible Notes | | - | | | - |
Proceeds from Convertible Notes | | - | | | - |
NET CASH PROVIDED BY FINANCING ACTIVITIES | | (7,800) | | | - |
| | | | | |
NET CHANGE IN CASH AND CASH EQUIVALENTS | | (58,539) | | | (91) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | | 58,538 | | | 229 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | - | | $ | 138 |
| | | | | |
Cash paid during the year for: | | | | | |
Interest | $ | - | | $ | - |
Income Taxes | $ | - | | $ | - |
Non-cash financing and investing activities: | | | | | |
Change in and accelerated amortization of derivative liability on conversions | $ | - | | $ | - |
Accrued Interest added to Note Principal | $ | - | | $ | - |
Conversion of Related Party Notes Payable into Common Stock | $ | - | | $ | - |
Assignment of Portion of Promissory Note to Convertible Note | $ | - | | $ | - |
Assignment of Portion of Related Party Notes to Convertible Note | $ | - | | $ | - |
Conversion of Accrued Interest into Common Stock | $ | - | | $ | - |
Conversion of Related Party Notes into Preferred Shares | $ | - | | | - |
Amounts Receivable for Assets Sale | $ | - | | $ | - |
Deemed Dividend related to Conversion of Debt to Preferred Shares | $ | - | | $ | - |
See accompanying notes to the consolidated financial statements
5
Pacific Gold & Royalty Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2018
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Pacific Gold & Royalty Corp. (“Pacific Gold” or “the Company”) was originally incorporated in Nevada on December 31, 1996 under the name of Demand Financial International, Ltd. On October 3, 2002, Demand Financial International, Ltd. changed its name to Blue Fish Entertainment, Inc. On August 5, 2003, the name was changed to Pacific Gold Corp. On August 22, 2017 the name was changed to Pacific Gold & Royalty Corp. and the Company’s state of incorporation was moved to Wyoming additionally the Company changed its authorized common shares to 50,000,000,000 and changed its common share par value to $0.00001. Pacific Gold is engaged in the identification, acquisition, and development of prospects believed to have gold, vanadium, uranium, and tungsten mineral deposits. Pacific Gold currently owns royalties on mining property in Nevada and Colorado.
Basis of Presentation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States ("GAAP") and are expressed in U.S. dollars. The Company's fiscal year-end is December 31.
Principle of Consolidation
The consolidated financial statements include all of the accounts of Pacific Gold & Royalty Corp. All significant inter-company accounts and transactions have been eliminated.
Reclassification of Accounts
Certain accounts in the prior period have been reclassified to conform to the current year presentation.
Significant Accounting Principles
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the consolidated financial statements are published, and (iii) the reported amount of net sales, expenses and costs recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of consolidated financial statements; accordingly, actual results could differ from these estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31, 2018 and December 31, 2017 cash includes cash in the bank.
Mineral Rights
All mine-related costs, other than acquisition costs, are expensed prior to the establishment of proven or probable reserves. Reserves designated as proven and probable are supported by a final feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are legally extractable at the time of reserve determination. Once proven or probable reserves are established, all development and other site-specific costs are capitalized.
Capitalized development costs and production facilities are depleted using the units-of-production method based on the estimated gold which can be recovered from the ore reserves processed.
Lease development costs for non-producing properties are amortized over their remaining lease term if limited. Maintenance and repairs are charged to expense as incurred.
As per Industry Guide 7, there are no proven or probable reserves as of March 31, 2018.
6
Income Taxes
In accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, Pacific Gold recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered.
Loss per Share
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2017 and 2016, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. As of March 31, 2018 and December 31, 2017, respectively, the Company had 15,129,677,300 and 15,129,677,300 of potentially dilutive common stock equivalents.
Advertising
The Company’s policy is to expense advertising costs as incurred. For the three months ended March 31, 2018 and 2017, the Company incurred $0 and $0, respectively, in advertising costs.
Convertible Debentures
Convertible debt is accounted for under ASC 470-20, Debt – Debt with Conversion and Other Options. The Company records a beneficial conversion feature (BCF) related to the issuance of convertible debt that have conversion features at fixed or adjustable rates that are in-the-money when issued and records the fair value of warrants issued with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features, both of which are credited to paid-in-capital. The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of following ASC Topic 718 Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. For a conversion price change of a convertible debt issue, the additional intrinsic value of the debt conversion feature, calculated as the number of additional shares issuable due to a conversion price change multiplied by the previous conversion price, is recorded as additional debt discount and amortized over the remaining life of the debt.
Stock Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation which requires that the fair value compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the employee’s requisite service period, which is generally the vesting period. The fair value of the Company’s stock options is estimated using a Black-Scholes option valuation model. There were no stock options granted during the three months ended March 31, 2018 or 2017.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
NOTE 2 – MINERAL RIGHTS
Graysill Claims
On March 17th, 2018, the company sold the Graysill claims to an unrelated third party for $60,000 in Canadian funds or $45,842 US, and a 2% net smelter royalty with the purchaser having the option to purchase 1% of the 2% net smelter royalty for $1,000,000 CDN. The Company has assigned 25% of its rights under the net smelter agreement to a third party finder for this purchase. The Company used the funds to reduce a related party expenses and pay management salaries in the amounts of $23,963 and $21,879 respectively.
7
Pilot Mountain Resources Royalty
On November 22, 2017, the Company executed an Agreement with Pilot Metals Inc. to sell its remaining royalty interest in Project W for $125,000.
Black Rock Canyon Mine
The Company holds a royalty on gold produced from the Black Rock Canyon Mine, located in Crescent Valley, NV, at a rate of 4% of net gold sales.
NOTE 3 – SHAREHOLDER NOTE PAYABLE/RELATED PARTY TRANSACTIONS
As of March 31, 2018, Pacific Gold owes $1,318,151 in principal and $163,539 in accrued interest to a company owned by the Chief Executive Officer. The amount due is represented by a promissory note accruing interest at 10% per year with a maturity date of June 30, 2019 and is convertible into shares of common stock of Pacific Gold at $0.0001 per share. As of December 31, 2017, the balance on the note was $1,325,951 in principal and $170,391 in accrued interest.
As of March 31, 2018, Pacific Gold owes a total of $1,125,893 in principal and $197,022 in accrued interest to a related party of our Chief Executive Officer. The amount due is represented by promissory notes accruing interest at 10% per year with a maturity date of June 30, 2019 and is convertible into shares of common stock of Pacific Gold at $0.01 per share. As of December 31, 2017, the balance on the note was $1,125,893 in principal and $168,876 in accrued interest.
Compensation for Robert Landau’s services as CEO is Paid to Leveljump Inc., a company that Mr. Landau controls.
As of March 31, 2018, Pacific gold owes $105,587 to its CEO for accrued and unpaid services as CEO, which is included in “Accrued Expenses” in the accompanying balance sheet.
An officer of the Company has provided office space to the Company without charge. There is no obligation for the officer to continue this arrangement.
NOTE 4 – PROMISSORY NOTE
The note accrues interest at a rate of 10% per annum with a maturity date of June 30, 2019. As of March 31, 2018, there was a principal balance of $319,840 and $55,965 in accrued interest and is convertible into shares of common stock of Pacific Gold at $0.01 per share.
NOTE 5 – COMMON STOCK AND PREFERRED STOCK
On August 7, 2017, 1,500,000,000 shares of common stock were issued in exchange for $150,000 of interest on a related party convertible note.
On August 7, 2017, 2,975,000,000 shares of common stock were issued in exchange for 297,500 shares of preferred stock.
During the year ended December 31, 2016, 200,000,000 shares of common stock were issued in exchange for $20,000 of principal on a related party convertible promissory note.
NOTE 6 – OPERATING LEASES
The Company currently has no future operating lease commitments.
NOTE 7 – LEGAL PROCEEDINGS
From time to time, the Company may become involved in minor trade, employment and other operational disputes, none of which have or are expected to have a material impact on the current or future consolidated financial statements or operations.
8
NOTE 8 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2018, the Company had an accumulated deficit of $48,588,522, negative working capital of $619,086, and negative operating cash flows from the year ended December 31, 2017 of $38,053 raising substantial doubt about its ability to continue as a going concern. During the quarter ended March 31, 2018, the Company financed its operations through the sale of its Pilot Mountain Royalty.
Management’s plan to address the Company’s ability to continue as a going concern includes obtaining additional funding from the sale of the Company’s securities and establishing revenues. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. Should we be unsuccessful, the Company may need to discontinue its operations.
NOTE 9 – SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the consolidated financial statements were issued.
9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the SEC. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements". Such statements are qualified in their entirety by reference to and are accompanied by the above discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.
Management is currently unaware of any trends or conditions other than those previously mentioned in this management's discussion and analysis that could have a material adverse effect on our consolidated financial position, future results of operations, or liquidity. However, investors should also be aware of factors that could have a negative impact on our prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources. These include: (i) variations in revenue, (ii) possible inability to attract investors for its equity securities or otherwise raise adequate funds from any source should the company seek to do so, (iii) increased governmental regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving the company or to which the company may become a party in the future and, (vi) a very competitive and rapidly changing operating environment.
The above identified risks are not all inclusive. New risk factors emerge from time to time and it is not possible for management to predict all of such risk factors, nor can it assess the impact of all such risk factors on the company's business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.
The financial information set forth in the following discussion should be read with the consolidated financial statements of Pacific Gold included elsewhere herein.
Introduction
Pacific Gold Corp. (“Pacific Gold” or “the Company”) is engaged in the identification, acquisition, and development of mining prospects believed to have known gold, tungsten or uranium/vanadium mineral deposits. The main objective is to identify and develop commercially viable mineral deposits on prospects over which the company has rights that could produce revenues. Development of commercially viable mineral deposits of any metal includes a high degree of risk which careful evaluation, experience and factual knowledge may not eliminate, and therefore, we may never produce any significant revenues.
Projects and Royalties
Black Rock Canyon Mine (formerly Nevada Rae Gold, Inc.)
The Company holds a royalty on the Black Rock Canyon Mine for 4% on all Nevada Rae Gold, Inc. gold sales up to a maximum of $720,000.
Project W (formerly Pilot Mountain Resources Inc.)
On November 22, 2017, the Company executed an Agreement with Pilot Metals Inc. to sell its remaining royalty interest in Project W for $125,000.
Graysill Vanadium/Uranium Mining Claims
On March 17th, 2018, the company sold the Graysill claims to an unrelated third party for $60,000 CDN and a 2% net smelter royalty with the purchaser having the option to purchase 1% of the 2% net smelter royalty for $1,000,000 CDN. The Company has assigned 25% of its rights under the net smelter agreement to a third-party finder for this purchase.
Financial Condition and Changes in Financial Condition
The Company had no revenue from any royalties for the three months ended March 31, 2018.
10
Operating expenses for the three months ended March 31, 2018, totaled $14,605. The Company incurred primarily administrative expenses at its head office. Interest expense totaled $69,290. The remaining expenses relate to general administrative expenses.
The Company had no revenue from the sale of gold in the three months ended March 31, 2017.
Operating expenses for the three months ended March 31, 2017, totaled $16,742. Interest expense totaled $72,854. The remaining expenses relate to general administrative expenses.
Liquidity and Capital Resources
Since inception to March 31, 2018, we have funded our operations from the sale of securities, issuance of debt and loans from a shareholder.
As of March 31, 2018, our assets totaled $(2), which consisted primarily of cash. Our total liabilities were $3,799,494 which primarily consisted of related parties’ notes payable and accrued interest of $2,444,044, accounts payable and accrued expenses of $619,084, and promissory notes with accrued interest of $319,840. We had an accumulated deficit of $48,588,522 and a working capital deficit of $619,086 at March 31, 2018.
Our independent auditors, in their report on the consolidated financial statements, have indicated that the Company has experienced recurring losses from operations and may not have enough cash and working capital to fund its operations beyond the very near term, which raises substantial doubt about our ability to continue as a going concern. Management has made a similar note in the consolidated financial statements. As indicated herein, we need capital for the implementation of our business plan, and we will need additional capital for continuing our operations. We do not have sufficient revenues to pay our expenses of operations. Unless the company is able to raise working capital, it is likely that the Company either will have to cease operations or substantially change its methods of operations or change its business plan.
New Accounting Pronouncements
Pacific Gold does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company, or any of its subsidiaries’ operating results, financial position, or cash flow.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, the Certifying Officers carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2018. Their evaluation was carried out with the participation of other members of the Company’s management. Based on an evaluation conducted by management, of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(e) management concluded that our disclosure controls and procedures were ineffective as of March 31, 2018. Our disclosure controls and procedures did not ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act was (i) recorded, processed, summarized and reported within the time periods specified by the SEC rules, and (ii) the necessary information was not accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure as specified by the SEC rules and forms.
11
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that:
(a) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and
(c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce this risk.
Based on its assessment, management has concluded that the Company's disclosure controls and procedures and internal control over financial reporting are ineffective, based in part on the absence of separation of duties with respect to internal financial controls of the Company.
The Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. Notwithstanding this commitment, given the limited operations and consequently the limited revenues and capital resources, the Board of Directors and management are not now able to engage additional personnel to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Therefore, there is not specific timing for the remediation procedures. Additionally, the Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.
12
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company is involved in minor trade, employment and other operational disputes, none of which have or are expected to have a material impact on the current or future consolidated financial statements or operations.
ITEM 1A. RISK FACTORS
N/A
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
31.1
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. *
* Filed herewith
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
(Registrant) | | PACIFIC GOLD & ROYALTY CORP. |
| | |
By: | | /s/ Robert Landau |
| | Robert Landau, President |
| | (Chief Executive Officer) |
| | |
Date: | | July 24, 2018 |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | |
Signatures | | Title | | Date |
| | | | |
/s/ Robert Landau | | Chief Executive Officer, Chief Financial Officer and Director | | July 24, 2018 |
Robert Landau | | | | |
| | | | |
14
