U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended December 31, 2009 | ||
[ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to _____________
MEXUS GOLD US
Nevada | 000-52413 | 20-4092640 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
of Incorporation) | Identification Number) | |||
1805 N. Carson Street, #150 | ||||
Carson City, NV 89701 | ||||
(Address of principal executive offices) | ||||
(916) 776 2166 | ||||
(Issuer’s Telephone Number) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 ___
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-accelerated filer [ ] (Do not check if smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes | [ ] |
No | [X] |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.
Yes | [ ] |
No | [ ] |
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of December 31, 2009, there were 122,541,333 shares of our common stock were issued and outstanding.
PART I
ITEM 1.FINANCIAL STATEMENTS
MEXUS GOLD US | |
Page | |
Condensed Balance Sheets at December 31, 2009 (unaudited) and March 31, 2009 | F-2 |
Condensed and Unaudited Statements of Operations for the nine months ended December 31, 2009 and 2008 and the three months ended December 31, 2009 and 2008 | F-3 |
Condensed and Unaudited Statement of Changes in Shareholders' Deficit for the nine months ended December 31, 2009 | F-4 |
Condensed and Unaudited Statements of Cash Flows for the nine months ended December 31, 2009 and 2008 | F-5 |
Notes to Financial Statements | F-6 |
F-1 |
MEXUS GOLD US | ||||||
CONDENSED BALANCE SHEETS | ||||||
December 31, | March 31, | |||||
2009 | 2009 | |||||
(Unaudited) | (Derived from | |||||
Audited | ||||||
Statements) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash | $ | 10,685 | $ | 3,478 | ||
Due from related party (Note 3) | 0 | 4,347 | ||||
Inventory | 0 | 10,230 | ||||
Total current assets | 10,685 | 18,055 | ||||
Fixed assets: | ||||||
Property and equipment, net of depreciation | 49,570 | 0 | ||||
Total fixed assets | 49,570 | 0 | ||||
Other assets: | ||||||
Idle Equipment (Note 6) | 64,237 | 0 | ||||
Deferred Costs | 81,000 | 0 | ||||
145,237 | 0 | |||||
TOTAL ASSETS | $ | 205,492 | $ | 18,055 | ||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 961 | $ | 750 | ||
Accounts payable to related party (Note 3) | 9,600 | 8,400 | ||||
Sales tax payable | 318 | 288 | ||||
Loans payable to related party (Note 3) | 6,149 | 38,462 | ||||
Note payable | 17,500 | 475,000 | ||||
Capitalized lease-current portion | 24,225 | 0 | ||||
Deferred Gain on equipment sale | 44,640 | 0 | ||||
Total current liabilities | 103,392 | 522,900 | ||||
Longterm liabilities: | ||||||
Capitalized lease obligations- longterm | 25,775 | 0 | ||||
25,775 | ||||||
TOTAL LIABILITIES | $ | 129,168 | 522,900 | |||
STOCKHOLDERS' DEFICIT (Note 4) | ||||||
Preferred stock, 10,000,000 shares authorized, no par value, | ||||||
-0- shares issued and outstanding | — | — | ||||
Common stock, 500,000,000 shares authorized, no par value, | ||||||
136,505,000 shares issued and outstanding as at March 31, 2009 | ||||||
122,541,333 shares issued and outstanding as at December 31, 2009 (Unaudited) | ||||||
Additonal Paid In Capital | 557,355 | 0 | ||||
Retained deficit | (603,572) | (512,280) | ||||
TOTAL STOCKHOLDERS' DEFICIT | 76,324 | (504,845) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 205,492 | $ | 18,055 | ||
See notes to the accompanying condensed, unaudited financial statements | ||||||
F-2 |
MEXUS GOLD US | |||||||||
CONDENSED AND UNAUDITED STATEMENTS OF OPERATIONS | |||||||||
Nine Months ended December 31 | Three Months ended December 31 | ||||||||
2009 | 2008 | 2009 | 2008 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Revenues: | |||||||||
Sales | $ | 10,043 | $ | 17,698 | $ | 0 | $ | 6,210 | |
Total revenues | 10,043 | 17,698 | 0 | 6,210 | |||||
Expenses: | |||||||||
Cost of Goods Sold | 18,199 | 11,929 | 8,493 | 4,060 | |||||
General and administrative | 84,387 | 17,372 | 75,748 | 8,485 | |||||
Compensation expense (Notes 3 and 4) | 109 | 18 | 0 | 6 | |||||
Total operating expenses | 102,695 | 29,319 | 84,241 | 12,551 | |||||
Loss from operations | (92,652) | (11,621) | (84,241) | (6,341) | |||||
Gain on Sale of Equipment | 1,360 | 0 | 1,360 | 0 | |||||
1,360 | 0 | 1,360 | 0 | ||||||
Provision for Income Taxes (Note 5) | - | - | - | - | |||||
NET LOSS | $ | (91,292) | $ | (11,621) | $ | (82,881) | $ | (6,341) | |
Basic loss per common share | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | |
Diluted loss per common share | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | |
Weighted average common shares outstanding - Basic | 80,991,778 | 136,494,000 | |||||||
Weighted average common shares outstanding - Diluted | 80,991,778 | 136,494,000 | |||||||
See notes to the accompanying condensed, unaudited financial statements F-3 |
MEXUS GOLD US | ||||||||
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT UNAUDITED | ||||||||
Total | ||||||||
Common Stock | Additonal | Retained | Stockholders' | |||||
Shares | Amount | Paid In Capital | Deficit | Deficit | ||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||
Balance at March 31, 2009 | 136,505,000 | $ | 7,435 | $ | (512,280) | $ | (504,845) | |
Shares issued for convertible note | 42,500,000 | 42,500 | 42,500 | 85,000 | ||||
Shares canceled due to forgiven note | (129,025,000) | 411,102 | 411,102 | |||||
Shares issued for services | 109,000 | 109 | 109 | |||||
Shares issued for equipment purchase | 40,000,000 | 40,000 | 40,000 | |||||
Shares issued for S-8 consulting | 11,000,000 | 11,000 | 11,000 | |||||
Shares issued for cash | 1,202,333 | 1,247 | 103,753 | 105,000 | ||||
Shares issued for options | 20,250,000 | 20,250 | 20,250 | |||||
Net loss for the nine months ended | ||||||||
December 31, 2009 (unaudited) | (91,292) | (91,292) | ||||||
Balance at December 31, 2009 (unaudited) | 122,541,333 | $ | 122,541 | $ | 557,355 | (603,572) | $ | 76,324 |
See notes to the accompanying condensed, unaudited financial statements | ||||||||
F-4 |
MEXUS GOLD US | |||||
CONDENSED AND UNAUDITED STATEMENTS OF CASH FLOWS | |||||
Nine Months Ended December 31 | |||||
2009 | 2008 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net loss | $ | (91,292) | $ | (11,621) | |
Adjustments to reconcile net income to net cash | |||||
provided by (used in) operating activities: | |||||
Depreciation and amortization | 1,790 | 0 | |||
Stock based compensation | 11,109 | 18 | |||
Payments through the issuance of company stock: | |||||
Equipment | 40,000 | 0 | |||
Option to aquire Mexus Gold Ming S.A. de C.V. | |||||
and mining leasehold properties | 20,250 | 0 | |||
Gain on sale of equipment | (46,000) | 0 | |||
Changes in operating assets and liabilities: | |||||
Equipment | 0 | (1,645) | |||
Accounts Receivable | (5,792) | 0 | |||
Inventory | 10,230 | 165 | |||
Accounts payable and accrued expenses | 8,649 | 2,034 | |||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (51,056) | (11,049) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Equipment purchases | (50,000) | (1,645) | |||
Equipment fabrication | (68,237) | 0 | |||
Increase in deferred costs | (81,000) | 0 | |||
NET CASH USED IN INVESTING ACTIVITIES | (199,237) | (1,645) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Proceeds from loan payable to officer | 0 | 12,128 | |||
Proceeds from loan payable | 102,500 | 0 | |||
Proceeds from issuance of common shares for cash | 105,000 | 0 | |||
Proceeds from sale and leaseback of equipment | 50,000 | 0 | |||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 257,500 | 12,128 | |||
NET CHANGE IN CASH | 7,207 | (566) | |||
CASH BALANCES | |||||
Beginning of period | 3,478 | 2,327 | |||
End of period | $ | 10,685 | $ | 1,761 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||
CASH PAID DURING THE PERIOD FOR: | |||||
Interest | $ | 213 | $ | - | |
Income taxes | $ | - | $ | - | |
See notes to the accompanying condensed, unaudited financial statements | |||||
F-5 |
MEXUS GOLD US
Notes to Financial Statements
NOTE 1. BASIS OF PRESENTATION
The accompanying interim financial statements of Mexus Gold US (the “Company”) have been prepared pursuant to the rules of the Securities and Exchange Commission (the "SEC") for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These financial statements and notes herein are unaudited, but in the opinion of management, include all the adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. These financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company’s Form 10-K for the period ended March 31, 2009 as filed with the SEC. Interim operating results are not necessarily indicative of operating results for any future interim period or for the full year.
NOTE 2. GOING CONCERN
The accompanying 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 shown in the accompanying financial statements, the Company has a limited operating history and limited funds. These factors, among others, may indicate that the Company will be unable to continue as a going concern.
The Company is dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plans to raise necessary funds via a private placement of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to raise necessary funds, or that if it is successful in raising the necessary funds, that the Company will successfully operate its business plan.
The financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should the Company be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to meet our obligations on a timely basis, and, ultimately to attain profitability.
NOTE 3. | RELATED PARTY TRANSACTIONS |
On September 4, 2009, the Company entered into a six month Rental Agreement with Mexus Gold International, Inc., a Nevada corporation, to lease a Komatsu P38D Dozer and a PC440 core drill at a rate of $3,850 per month, payable in advance by the 5th day of each month. Payment can be made in cash or in restricted shares of common stock of the Company valued at $.08 per share. Mr. Paul D. Thompson, our sole officer and director, owns a majority interest in Mexus Gold International, Inc.
On December 21, 2009, the Company issued 40 million restricted shares of its common stock to Mexus Gold International, Inc. as payment for the following pieces of mining equipment:
Equipment | Serial Number | # Shares | ||
Komatsu Dozer Drill | 2NKCLL9X7FM327785 | 4,000,000 | ||
Cone | CONEP282S11709 | 22,000,000 | ||
Jaw Crusher | JAW P12X361209 | 8,000,000 | ||
Serge Tank | PSTF96144 | 3,000,000 | ||
Hydraulic Drum | HYDS12YD | 3,000,000 |
The equipment was valued at $40,000.00, or par value of $0.001 per share.
Loans Payable to Related Party
On March 31, 2008, the Company made a two year zero interest promissory note payable to Phillip E. Koehnke, APC, our majority shareholder, in the amount of $17,687.70.
On September 2, 2009, Phillip E. Koehnke agreed to forgive all but $17,685.70 of notes due to him and cancel 129,025,000 shares of common stock held by him in exchange for a payment of $85,000. The forgiveness of the debt resulted in a $411,102 gain, which has been recorded as additional paid-in capital because the transaction occurred with a related party.
Effective September 30, 2009, the Company entered into an asset purchase agreement with Phillip E. Koehnke, whereby the Company sold its retail sports apparel sales assets, as presented on its balance sheet for the period ended September 30, 2009, in exchange for cancelation of the $17,687.70 two year promissory note held by Mr. Koehnke.
On August 21, 2009, the Company made a one year zero interest convertible promissory note payable to Taurus Gold, Inc. in the amount of $85,000. The note was convertible into restricted shares of the Company’s common stock at any time up to the maturity date at a conversion rate of $.002 (see Note 4).
On September 30, 2009, the Company made a two year zero interest promissory note payable to Phillip E. Koehnke, APC, our former majority shareholder in the amount $6,038. This is the only remaining note balance to this related party since the Asset Purchase Agreement was executed.
On October 15, 2009 the company made a Demand Note Agreement with Paul Thompson Sr. in the amount of $10,000.00 with an interest rate of 8%.
Issuances of Securities
On or about September 30, 2009 the Company issued 109,000 restricted shares of its common stock to Susie Johnson, the Company’s President, as payment for services.
On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, S.A. de C.V. pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The option price was 20 million restricted shares of the Company’s common stock and the exercise price is 20 million restricted shares of the Company’s common stock.
Accounts Payable
The Company had a payable balance due to G.K.’s Gym, Inc., a related party owned by the parents of Phillip E. Koehnke, as of December 31, 2009. At December 31, 2009, the Company owed $9,600 to G.K.’s Gym, Inc. for rent.
Equipment Lease
On December 9, 2009 the Company entered into a 24 month lease agreement with Francis and Alice Stadelman, Trustees of the Stadelman Revocable Living Trust, for equipment. The equipment is one Komatsu Dozer Driller with serial number 2NKCLL9X7FM327785.
Future minimum lease payments required under the arrangement are as follows:
Amount | ||
For the year ended March 31, 2010, minimum lease payments: | $ | 0 |
For the year ended March 31, 2011, minimum lease payments: | $ | 37,500 |
For the year ended March 31, 2012 minimum lease payments: | 12,500 | |
Total future minimum lease payments: | $ | 50,000 |
Legal Services
Legal counsel to the Company is a firm controlled by our former majority shareholder. |
NOTE 4. | STOCKHOLDERS’ DEFICIT |
The stockholders’ equity section of the Company contains the following classes of capital stock as of December 31, 2009:
Preferred stock, no par value; 10,000,000 shares authorized, zero (0) shares issued and outstanding.
Common stock, no par value; 500,000,000 shares authorized: 122,541,333 shares issued and outstanding.
Common Stock Transactions
On or about September 30, 2009 the Company issued 109,000 restricted shares of its common stock to Susie Johnson, the Company’s President, as payment for services rendered during the three months ended September 30, 2009. The transaction was recorded at par value, or $109.
On October 16, 2009, the Company acquired an eight (8) month option, with a six (6) month extension, to purchase certain patented and unpatented mining claims situated in Esmeralda County, Nevada, United States. The option price was 250,000 restricted shares of the Company’s common stock. The exercise price of the option is five million dollars ($5,000,000) payable in installments of both cash and restricted shares of the Company’s common stock
On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, S.A. de C.V. pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The option price was 20 million restricted shares of the Company’s common stock and the exercise price is 20 million restricted shares of the Company’s common stock. The agreement is conditioned upon Mexus Gold Mining, S.A. de C.V. obtaining an audit of its financial records by public accountants acceptable to the standards required for financial reporting purposes in the United States of America. On February 11, 2010, the Company issued 20 million restricted shares of the Company’s common stock as the exercise price of the option.
On November 11, 2009, the Company issued 416,667 restricted shares of common stock to an accredited investor for $25,000.00, or $ 0.06 per share.
On December 9, 2009 the company issued shares in exchange for cash in the amount of 833,333 shares for $50,000.00, or $0.06 per share.
On December 14, 2009 the company issued 11,000,000 shares of S8 stock for consulting with a value of $.001 per share.
On December 21, 2009, the Company issued 375,000 restricted shares of common stock to an accredited investor for $30,000.00, or $0.08 per share.
The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act of 1933 and Regulation D as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.
The Company intends to use the proceeds from sale of the securities for the purchase of equipment for mining operations, mining machinery, supplies and payroll for operations, professional fees, and working capital.
There were no underwritten offerings employed in connection with any of the transactions set forth above.
Preferred Stock Transactions
None
NOTE 5. | INCOME TAXES |
The Company records its income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”. The Company incurred net operating losses during all periods presented through December 31, 2009 resulting in a deferred tax asset, which was fully allowed for; therefore, the net benefit and expense resulted in $-0- income taxes.
NOTE 6. | IDLE EQUIPMENT |
The following mining equipment is currently being fabricated and modified by the Company and is not presently in use. |
Cone 1709 | |
Crusher | |
Hopper | |
Hydraulic Drum 12YD | |
Jaw Crusher 1209 | |
Serge Tank 6144 |
NOTE 7. OTHER EVENTS |
On October 1, 2009, the Company changed its name to Mexus Gold US, re-domiciled to the State of Nevada and changed the par value of its common stock to $0.001.
Effective September 30, 2009, the Company discontinued its retail sports apparel sales business and began its mining operations as follows:
On October 16, 2009, the Company acquired an eight (8) month option, with a six (6) month extension, to purchase certain patented and unpatented mining claims situated in Esmeralda County, Nevada, United States. The option price was 250,000 restricted shares of the Company’s common stock. The exercise price of the option is five million dollars ($5,000,000) payable in installments of both cash and restricted shares of the Company’s common stock.
On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, S.A. de C.V. pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The option price is 20 million restricted shares of the Company’s common stock and the exercise price is 20 million restricted shares of the Company’s common stock. The agreement is conditioned upon Mexus Gold Mining, S.A. de C.V. obtaining an audit of its financial records by public accountants acceptable to the standards required for financial reporting purposes in the United States of America. The term of the option may be extended by the Company for such reasonable time as is required by Mexus Gold Mining, S.A. de C.V. to complete its audit.
Mexus Gold Mining, S.A. de C.V. represents that it owns or has claim to certain lands which are either patented land ownership or concession agreements in the State of Sonora, Mexico. In addition, Mexus Gold Mining, S.A. de C.V. owns equipment suitable for exploring for precious mineral deposits or extracting and processing mineral ores for the purpose of sale of such refined product, and has agreed to maintain the equipment in good working order and free of any lien, assessment or claim of indebtedness of any kind or nature.
F-6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ORPLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included in this report. The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.
Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.
The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.
The Company
Mexus Gold US is a development stage mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States. Mexus Gold US is dedicated to protect the environment, provide employment and education opportunities for the communities that it operates in.
Our President and CEO, Paul Thompson, brings over 40 years experience in mining and mining development to Mexus Gold US. Mr. Thompson is currently recruiting additional management personnel for its Mexico, Nevada, and submarine Cable Recovery operations to assist in growing the company.
Our executive offices are located at, 1805 N. Carson Street, #150, Carson City, Nevada 89701. Our telephone number is (916) 776 2166.
We were originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc. On October 28, 2005, we changed our name to Action Fashions, Ltd. On October 28, 2009, we changed our domicile to Nevada and changed our name to Mexus Gold US to better reflect our new business operations. Our fiscal year end is March 31st.
Business Strategy
The Company has the following mining operations:
On September 4, 2009, the Company entered into a six month Rental Agreement with Mexus Gold International, Inc., a Nevada corporation, to lease a Komatsu P38D Doyer and a PC440 core drill at a rate of $3,850 per month, payable in advance by the 5th day of each month. Payment can be made in cash or in restricted shares of common stock of the Company valued at $.08 per share.
On September 21, 2009, the Company acquired an eight (8) month option, with a six (6) month extension, to purchase certain patented and unpatented mining claims situated in Esmeralda County, Nevada, United States. The option price was 250,000 restricted shares of the Company’s common stock. The exercise price of the option is five million dollars ($5,000,000) payable in installments of both cash and restricted shares of the Company’s common stock.
On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, S.A. de C.V. pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The option price is 20 million restricted shares of the Company’s common stock and the exercise price is 20 million restricted shares of the Company’s common stock. The agreement was conditioned upon Mexus Gold Mining, S.A. de C.V. obtaining an audit of its financial records by public accountants acceptable to the standards required for financial reporting purposes in the United States of America. On February 1, 2010, Mexus Gold Mining, S.A. de C.V. reported that it had obtained the audit of its financial records and on February 11, 2010, the Company issued 20 million restricted shares of the Company’s common stock as the exercise price of the option.
Mexus Gold Mining, S.A. de C.V. represents that it owns or has claim to certain lands which are either patented land ownership or concession agreements in the State of Sonora, Mexico. In addition, Mexus Gold Mining, S.A. de C.V. owns equipment suitable for exploring for precious mineral deposits or extracting and processing mineral ores for the purpose of sale of such refined product, and has agreed to maintain the equipment in good working order and free of any lien, assessment or claim of indebtedness of any kind or nature.
The current projects of the Company are summarized as follows:
Ocho Hermanos
The main feature is a sulfide zone composed primarily of galena with some pyrite and arsenopyrite. Above this zone there is an oxide zone composed of iron and lead oxides. Recent grab samples taken indicate that values over 5,000 grams per ton of silver were encountered. These samples may not reflect the average grade. However, grab sample results indicate silver values over 3,000 grams per ton appear to be not unusual. Gold in the samples ranged from 1 gram per ton to over 5 grams per ton.
370 Area
This zone is composed of a sedimentary sequence (limestone, quartzite, shale) intruded by dacite and diorite as well as rhyolite. The docite exhibits argillic alterations as well as silicification (quartz veins). The entire area is well oxidized on the surface. This is an area of classic disseminated low grade gold and silver mineralization. Surface grab sample assays show 0.14 grams per ton to as high as 29.490 grams per ton gold. This area is an important area for potentially defining an open pit heap leach project.
El Scorpion Project Area
This area has several shear zones and veins which show copper and gold mineralization’s. Recent assays of a 84’ drill hole shows 2,887 grams per ton to 1,139 grams per ton of copper and 3.971 grams per ton to 0.072 grams per ton of gold. Another assay of rock sample from the area shows greater than 10,000 grams per ton copper. This land form distribution appears to be snonymous to the ideal porphyry deposit at Baja La Alumbrera, Argentina.
Los Laureles
Los Laureles is a vein type deposit mainly gold with some silver and copper. Recent assays from grab samples show gold values of 67.730 grams per ton gold, 38.4 grams per ton silver, 2,800 grams per ton copper.
Nevada Property
Mexus Gold US controls Nevada Pacific Rim’s silver and gold property. The Pacific Rim property is located in Esmeralda County, Nevada. Consisting of approximately 150 acres of patented mining claims with water rights and 22 unpatented lode claims and two mill site claims. Management believes this is a strong exploration target. To date, 51 holes have been drilled on the patented lands. However, Mexus has not verified the authenticity of any of these representations at this time.
Cable Salvage
Mexus Gold US Cable Salvage. Operations are expected to be concentrated from San Diego, CA to Alaska. It’s reported, but not yet verified by Mexus to date, to contain in excess of 400,000,000 pounds of salvageable copper.
Results of Operations
For the nine months ended December 31, 2009, we had revenues of $10,043 compared to $17,698 for the nine months ended December 31, 2008. For the three months ended December 31, 2009, we had revenues of zero ($0) compared to revenues of $6,210 for the three months ended December 31, 2008. The $10,043 in revenues for the nine months ended December 31, 2009, is related to our prior business of retail apparel sales. We did not have any revenues for the three months ended December 31, 2009. Our decrease in revenues for the three months ended December 31, 2009, is due to the cessation of our retail apparel business and the beginning of our mining operations.
For the three months ended December 31, 2009, we had total operating expenses of $84,241 and an operating loss of ($84,241) compared to total operating expenses of $12,551 and a loss from operations of ($6,341) for the three months ended December 31, 2008. Our loss from operations increased greatly for this quarter due to the costs general and administrative expenses associated with our new mining business. We anticipate this loss from operations will continue until such time as we start to receive revenues from mining operations.
Because we have discontinued our retail apparel sales, and we have not received revenues from mining operations, we have reported zero ($0) revenues for the for the three months ended December 31, 2009. We do not expect to have any revenues until we begin mining operations which we anticipate will begin within the next nine months.
We believe that we have sufficient available cash and available loans from our sole officer and director to satisfy our working capital and capital expenditure requirements during the next 12 months. There can be no assurance, however, that cash and cash from loans will be sufficient to satisfy our working capital and capital requirements for the next 12 months or beyond.
Liquidity and Capital Resources
At December 31, 2009, we had cash of $10,685 compared to $3,478 at March 31, 2009.
As of December 31, 2009, our inventory decreased to $0 as a result of discontinuing our apparel sales operations.
Our fixed assets increased from zero ($0) from the previous quarter to $49,570 due to our acquisition of mining equipment for the period ended December 31, 2009.
Our other assets increased from zero ($0) from the previous quarter to $145,237 due to our acquisition of mining properties.
Our current liabilities decreased significantly from $522,900 as of March 31, 2009, to $103,392, at December 31, 2009, due to forgiveness of debt by a related party.
Future Goals
During this quarter, we have met our goals and acquired mining properties and minting equipment. We are currently in the process of transporting equipment and setting up mining operations in Mexico. We have also begun the process of obtaining the necessary permits to begin our cable salvage operations. In the next 12 months, our goal is to begin mining operations in Mexico and to obtain the necessary permits to begin our cable salvage operations. We intend to initially focus our mining efforts in the State of Sonora Mexico.
Off-balance Sheet Arrangements
We maintain no significant off-balance sheet arrangements
Foreign Currency Transactions
None.
Number of total employees and number of full time employees.
We currently have six (6) full time employees. We expect to increase the number of employees as we ramp up our mining operations within the next 12 months. Mr. Paul D. Thompson is our sole officer and director.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We currently do not utilize sensitive instruments subject market risk in our operations.
ITEM 4. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”) we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2008, being the date of our most recently completed fiscal quarter. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer. Based upon that evaluation, our sole officer has concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to them to allow timely decisions regarding required disclosure. There were not any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
None.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 16, 2009, the Company issued 250,000 restricted shares of common stock as the purchase price of an eight (8) month option, with a six (6) month extension, to purchase certain patented and unpatented mining claims situated in Esmeralda County, Nevada, United States.
On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, S.A. de C.V. pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The Company issued 20 million restricted shares as the purchase price of the option.
On November 11, 2009, the Company issued 416,667 restricted shares of common stock to an accredited investor in exchange for cash.
On December 9, 2009 the Company issued 833,333 restricted shares of common stock to an accredited investor in exchange for cash.
On December 21, 2009, the Company issued 40 million restricted shares of its common stock to Mexus Gold International, Inc. as payment for the following pieces of mining equipment:
Equipment | Serial Number | # Shares | ||
Komatsu Dozer Drill | 2NKCLL9X7FM327785 | 4,000,000 | ||
Cone | CONEP282S11709 | 22,000,000 | ||
Jaw Crusher | JAW P12X361209 | 8,000,000 | ||
Serge Tank | PSTF96144 | 3,000,000 | ||
Hydraulic Drum | HYDS12YD | 3,000,000 |
On December 23, 2009, the Company issued 375,000 restricted shares of common stock to an accredited investor in exchange for cash.
The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act of 1933 and Regulation D as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.
The Company intends to use the proceeds from sale of the securities for the purchase of equipment for mining operations, mining machinery, supplies and payroll for operations, professional fees, and working capital.
There were no underwritten offerings employed in connection with any of the transactions set forth above.
ITEM 3.DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit # | Description | |
3.1 | Articles of Incorporation filed with the Secretary of State of Colorado on June 22, 1990 (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
3.2 | Articles of Amendment to the Articles of Incorporation filed with the Secretary of State of Colorado on October 17, 2006 (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
3.3 | Articles of Amendment to Articles of Incorporation filed with the Secretary of State of the State of Colorado on January 25, 2007 (Filed as an exhibit to our annual report on Form 10-KSB filed on June 29, 2007). | |
3.3 | Amended and Restated Bylaws dated December 30, 2005 (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
4.1 | June 1, 2005, Promissory Note in the amount of $19,000 made by the Company to G.K.’s Gym, Inc. as payment for assets (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
4.2 | December 6, 2003, Convertible Promissory Note in the amount of $480,000 made by the Company to Phillip E. Koehnke as payment under the terms of Mr. Koehnke’s employment agreement with the Company (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
10.1 | Employment agreement dated December 6, 2003, between the Company and Phillip E. Koehnke (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
10.2 | June 1, 2005, Asset Purchase Agreement by and between the Company and G.K.’s Gymnastics, Inc. (Filed as an exhibit to our registration statement on Form 10-SB filed on January 24, 2007). | |
10.3 | September 21, 2009, option agreement by and between the Company and Nevada Pacific Rim (Filed as an exhibit to our quarterly report filed on form 10-Q A-1 filed on January 12, 2010). | |
10.4 | October 20, 2009, option agreement by and between the Company and Mexus Gold Mining S.A. de C.V. (Filed as an exhibit to our quarterly report filed on form 10-Q A-1 filed on January 12, 2010). | |
14.1 | Code of Ethics (Filed as an exhibit to our annual report on Form 10-KSB filed on June 29, 2007). | |
31.1 | Certification pursuant to Rule 13a-14(a) (Attached hereto). | |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Attached hereto). |
Signatures |
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
March 19, 2010 |
/s/ Paul D. Thompson |
Paul D. Thompson |
Chief Executive Officer Chief Financial Officer Principal Accounting Officer Director |