U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Fiscal Year Ended: January 31, 2009
OR
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________________ to _________________
Commission file number 333-134549
CALIFORNIA GOLD CORP.
(Exact name of small business issuer as specified in its charter)
| Nevada | 83-0483725 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| 6830 Elm Street, McLean, VA | 22101 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number: (703) 403-7529
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes x No o
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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of the “large accelerated filer,” “accelerate filer,” and “smaller reporting company” 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 |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes x No o
As of April 15, 2009, there were 58,313,002 shares of the registrant’s common equity outstanding. The aggregate market value of the common equity on July 31, 2008 held by non-affiliates computed by reference to the closing price of the issuer’s Common Stock on that date, was $981,268 based upon the closing price ($0.05) multiplied by the 19,625,377 shares of the issuer’s Common Stock held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
TABLE OF CONTENTS
| Item Number and Caption | Page | |
| Forward-Looking Statements | 3 | |
PART I | 4 | |
| 1. | Business | 4 |
| 1A. | Risk Factors | 7 |
| 1B. | Unresolved Staff Comments | 7 |
| 2. | Properties | 7 |
| 3. | Legal Proceedings | 7 |
| 4. | Submission Of Matters To A Vote Of Security Holders | 7 |
| PART II | 7 | |
| 5. | Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities | 7 |
| 6. | Selected Financial Data | 9 |
| 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| 8. | Financial Statements and Supplemental Data | 10 |
| 9A.[T] | Controls And Procedures | 10 |
| 9B. | Other Information | 12 |
| PART III | 13 | |
| 10. | Directors, Executive Officers, and Corporate Governance | 13 |
| 11. | Executive Compensation | 15 |
| 12. | Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters | 16 |
| 13. | Certain Relationships And Related Transactions and Director Independence | 18 |
| 14. | Principal Accountant Fees And Services | 19 |
| PART IV | 20 | |
| 15. | Exhibits and Financial Statement Schedules | 20 |
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FORWARD-LOOKING STATEMENTS
Except for historical information, this report contains forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks described in this Annual Report and in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-K to “California Gold,” ” the “Company,” “we,” “us” or “our” are to California Gold Corp.
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PART I
| ITEM 1. | BUSINESS |
We were incorporated on April 19, 2004 as Arbutus Resources Inc. under the laws of the state of Nevada. We are an exploration stage company with no revenues and a limited operating history. We were organized to be engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits we discovered that demonstrated economic feasibility. We acquired a 100% undivided right, title and interest in and to twenty cells, known collectively as the Green Energy Claims, located 61 km southwest of the City of Williams Lake in South Central British Columbia, Canada (the “Green Energy Claims”).
Through the three month period ended April 30, 2007, we had not earned any revenues, and at end of that period, not having enough funds to commence exploration on our claims, we determined to seek a joint venture partner or other business option to continue operating as a viable public company.
On June 15, 2007, we filed Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada pursuant to which we (i) increased our authorized capital stock from 75,000,000 shares of common stock, par value $0.001, to 300,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of preferred stock, par value $0.001, and (ii) changed our name from Arbutus Resources, Inc. to Cromwell Uranium Corp. We changed our name in anticipation of a business combination (the “Merger”) with Cromwell Uranium Holdings, Inc. (“Holdings”), a uranium exploration and mining company, and to more accurately reflect the new focus of our proposed business, post combination.
Also on June 15, 2007, (i) stockholders representing 64.9% of our issued and outstanding capital stock executed written consents in lieu of a meeting and approved the creation of our 2007 Stock Option Plan (the “2007 Plan”), which provides for the issuance of both non-statutory and incentive stock options and other awards to acquire up to 3,000,000 shares of our common stock, and (ii) our Board of Directors declared a 6.35 for 1 forward stock split in the form of a dividend. The record date for the stock dividend was June 29, 2007, and the payment date was July 5, 2007.
To facilitate our negotiations with Holdings with respect to the Merger, we loaned Holdings a total of $595,000 in bridge financing (“Bridge Financing”) in June 2007. We funded the Bridge Financing by the sale of our debentures (“Debentures”) convertible into units (“Units”) of our securities. We intended to conduct a private offering of our Units if we were successful in consummating the Merger. The Units into which the Debentures were to convert consisted of one share of common stock and one common stock purchase warrant (“Warrant”). The Units offered pursuant to the contemplated private placement were to consist of one share of common stock and one half a Warrant. Each whole Warrant would entitle the holder thereof to purchase one share of our common stock, at an exercise price of $0.75 per share, and would be exercisable for a period of five years from the date of issuance.
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We funded the Bridge Financing to enable Holdings to meet specific working capital requirements defined and agreed to between us and it. The Bridge Financing was evidenced by notes from Holdings to us (the “Notes”) bearing interest at 9% per annum, with Holdings required to make monthly payments in arrears of accrued interest commencing 30 days after its issuance. The Note was due (“Maturity Date”) no later than the earlier of (i) October 22, 2007 and (ii) the date of closing of the Merger (the “Merger Date”). The repayment of the Notes was secured by a perfected security interest and first lien on all of the capital stock of the Holdings which was pledged to us and held in escrow. The security for the Bridge Loan was to be released upon the repayment in full of the Notes. The Notes were to be deemed paid in full if we consummated the Merger with Holdings.
We offered and sold the Debentures pursuant to Regulation D and Regulation S of the Securities Act of 1933, as amended, to a limited number of accredited investors and non-U.S. persons. The Debentures were unsecured, bearing interest at the rate of 9% per annum, which began to accrue commencing 120 days from issuance, and were for a term of three years. The Debentures were payable in consecutive installments of principal and interest, commencing 120 days from the date of issuance.
On July 11, 2007, we entered into an Agreement and Plan of Merger and Reorganization (“Merger Agreement”) with Holdings and our wholly owned subsidiary, Cromwell Acquisition Corp. (“Acquisition Corp.”), pursuant to which Acquisition Corp. merged with and into Holdings, which was the surviving entity. As a result of the Merger, Holdings became our wholly-owned subsidiary.
In connection with the Merger, we issued 31,000,000 shares of our common stock to the pre-Merger stockholder of Holdings. As well, our $595,000 gross principal amount of Notes under the Bridge Financing to Holdings was deemed repaid in full upon the effectiveness of the Merger and the Debentures converted into the Units.
As a condition to the Merger, we transferred all of our assets other than the stock of Acquisition Corp., the Green Energy Claims, to another of our then wholly owned subsidiaries, Arbutus Leaseco, Inc. (“Leaseco”). At the time of the closing of the Merger, we sold all the capital stock of Leaseco to Karen Law and Lyle Smith, our former directors, in exchange for the capital stock of ours that each owned, 44,450,000 shares in the aggregate.
As a result of developments in the public equity and debt markets as well as conditions in the mining industry, among other factors, the parties to the Merger determined to unwind the Merger transactions and return Holdings to its status as a privately held company.
Accordingly, effective August 8, 2007, the parties entered into a reversal agreement (the “Reversal Agreement”) pursuant to which we sold the shares of Holdings back to its former stockholder in exchange for the return to our treasury of the 31,000,000 shares of our common stock issued in the Merger. As additional consideration for the purchase and sale of the shares of Holdings, Holdings agreed to repay to us the entire net principal amount of the Notes it had received in the Bridge Financing, together with certain expenses incurred by us, or an aggregate of $557,927.30.
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Holdings issued us a promissory note (the “Reversal Note” and, together with related documents, the “Loan Documents”) to us in connection with our loan (the “Loan”) of the $557,927.30 principal balance of net funds advanced by us. The Reversal Note was due on November 15, 2007 (the "Due Date"), and bears interest at the rate of 9% per annum. The Reversal Note is secured by a perfected security interest and first priority lien on all of the assets of Holdings, as well as by the deposit into escrow of all of the issued and outstanding shares of Holdings.
According to the terms of the Loan, Holdings was to begin making consecutive monthly interest-only payments on the Reversal Note of accrued interest commencing 30 days from the closing of the Loan through the Due Date, at which time Holdings would be required to repay the unpaid principal amount of the Reversal Note, together with accrued and unpaid interest.
A default by Holdings under the Reversal Note would cause an increase to the interest rate from 9% to 15% per annum, which increased interest rate would continue until the curing of all defaults. In addition, if such default were not cured, we would be entitled to foreclose on our security interest in the collateral provided for under the Loan Documents and to obtain delivery of the escrowed Holdings shares.
As of the date of this report Holdings has not made any interest payments under the Reversal Note, nor did it repay the principal balance of the Reversal Note on the Due Date. We have notified Holdings that it is in default under the Reversal Note. We have not yet foreclosed on our security interest.
As a result of the transactions described above, we experienced a change in control with the consummation of the Merger, and a further change of control following execution of the Reversal Agreement with our pre-Merger stockholders regaining control of us.
On August 9, 2007, we filed Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to change our name from Cromwell Uranium Corp. to US Uranium Inc.
On March 9, 2009, our Board of Directors and holders of a majority of our outstanding common stock approved, and we filed with the Secretary of State of the State of Nevada, a Certificate of Amendment to our Articles of Incorporation, which changed our name from US Uranium Inc. to California Gold Corp.
Research and Development
We have not spent any amounts on research and development activities during either of the last two fiscal years.
Employees
As of March 31, 2009 our only employee was our sole executive officer.
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| ITEM 1A. | RISK FACTORS |
Because we are a “smaller reporting company” as that term is defined by the SEC, we are not required to present risk factors at this time.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
| ITEM 2. | PROPERTIES |
Prior to the Merger, we had acquired the Green Energy Claims which we spun off to Leasco as part of the Merger. We currently own no property.
We currently have no investment policies as they pertain to real estate, real estate interests or real estate mortgages.
| ITEM 3. | LEGAL PROCEEDINGS |
No legal or governmental proceedings are presently pending or, to our knowledge, threatened, to which we are a party.
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report.
PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
Since February 26, 2007 our Common Stock has been listed for quotation on the Over-the-Counter Bulletin Board, originally under the symbol “ARBU”. We changed our symbol to “CWLU” in anticipation of the Merger and following execution of the Reversal Agreement, we changed our symbol to “USUI”. Following our name change to California Gold Corp., our symbol changed to “CLGL.”
The following table sets forth the high and low closing bid prices for our Common Stock for the fiscal quarters indicated as reported on the OTCBB by the Nasdaq Composite Feed or other qualified interdealer quotation medium. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
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| Quarter Ended | High Bid | Low Bid | |||||
| January 31, 2009 | $ 0.02 | $ 0.001 | |||||
| October 31, 2008 | $ 0.05 | $ 0.005 | |||||
| July 31, 2008 | $ 0.16 | $ 0.05 | |||||
| April 30, 2008 | $ 0.20 | $ 0.15 | |||||
Quarter Ended | High Bid | Low Bid | |||||
| January 31, 2008 | $ 0.65 | $ 0.20 | |||||
| October 31, 2007 | $ 1.25 | $ 0.51 | |||||
July 31, 2007 (from July 6, 2007)(1) | $ 1.75 | $ 0.15 | |||||
| July 5, 2007 | $ 0.18 | $ 0.18 | |||||
April 30, 2007(2) | $ 0.18 | $ 0.15 | |||||
| (1) | All quotations from July 6, 2007 reflect the 6.35 for 1 Stock Split which was effected on July 5, 2007. |
| (2) | From February 27, 2007, the first available date during this quarter. |
Holders
As of April 15, 2009, we had 58,313,002 shares of our Common Stock issued and outstanding held by 21 shareholders of record.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
| 1. | we would not be able to pay our debts as they become due in the usual course of business; or |
| 2. | our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
We have not declared any dividends, and we do not plan to declare any dividend in the foreseeable future.
Securities Authorized For Issuance Under Equity Compensation Plans
We adopted our 2007 Stock Option Plan (the “2007 Plan”) on June 15, 2007. The Plan was approved by our Board and a majority of the outstanding shares of our Common Stock and allows for awards of up to an aggregate of 3,000,000 shares of our Common Stock, subject to adjustment under certain circumstances. As of the date hereof, we have not granted any awards under the Plan.
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We were planning to issue options to purchase 100,000 shares of our Common Stock to David Rector in connection with the Merger, but those options were not and will not be issued.
We have not maintained any other equity compensation plans since our inception.
| ITEM 6. | SELECTED FINANCIAL DATA |
Not applicable.
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
The following discussion and analysis of the Company’s financial condition and results of operations are based on the preparation of our financial statements in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Results of Operations
Fiscal year Ended January 31, 2009 and 2008
We are still in our exploration stage and have generated no revenues to date.
We incurred total operating expenses of $582,984 and $386,366 for the years ended January 31, 2009 and 2008, respectively. These expenses increased in the fiscal year ended January 31, 2009 primarily as a result of the write off of the entire $557,927 balance of the Loan. General and administrative expenses decreased to $25,057 in the fiscal year ended January 31, 2009 from $386,366 in the fiscal year ended January 31, 2008. These expenses in the fiscal year ended January 31, 2009 consisted primarily of accounting and legal costs relating to the preparation and filing of our periodic reports, while in the fiscal year ended January 31, 2008, they related to the completion of the Merger and its subsequent unwinding.
Our net losses for years ended January 31, 2009 and 2008 were $(582,965) and $(387,922), respectively.
We have generated no revenues and our net operating loss from inception through January 31, 2009 was $(1,021,320).
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Liquidity and Capital Resources
Our cash and cash equivalents balance as of January 31, 2009 was $4,113.
We are a development stage company and currently have no operations.
We do not have sufficient funds on hand to pursue our business objectives for the near future or to commence operations without seeking additional funding. We currently do not have a specific plan of how we will obtain such funding.
We have minimal operating costs and expenses at the present time due to our limited business activities. We will, however, be required to raise additional capital over the next twelve months to meet our current administrative expenses, and, additionally, we may do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of our equity or debt securities or loans from our sole officer or directors. There is no assurance that additional financing will be available, or, if available, that it will be on terms favorable to us.
Our auditors have included an explanatory paragraph in their report on our consolidated financial statements relating to the uncertainty of our business as a going concern, due to our limited operating history, our lack of historical profitability, and our limited funds. We believe that we will be able to raise the required funds for operations and to achieve our business plan.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA |
Our audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.
| ITEM 9A.[T] | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Under the supervision and with the participation of our management, including our Chief Executive Officer and interim Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures were effective.
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Management’s Annual Report on Internal Control over Financial Reporting
The management of California Gold Corp. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Under the supervision and with the participation of our senior management, consisting of James D. Davidson, our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, our sole officer concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of January 31, 2009; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:
| 1. | We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures. |
| 2. | We did not maintain proper segregation of duties for the preparation of our financial statements. We currently only have one officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies: |
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This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission (the “SEC”) that permit us to provide only management’s report in this annual report
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the year ended January 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Officers’ Certifications
Appearing as exhibits to this Annual Report are “Certifications” of our Chief Executive Officer and Interim Chief Financial Officer. The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
| ITEM 9B. | OTHER INFORMATION |
Not applicable.
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PART III
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
The following table sets forth certain information, as of April 30, 2009, with respect to our directors and executive officers.
Directors serve until the next annual meeting of the stockholders; until their successors are elected or appointed and qualified, or until their prior resignation or removal. Officers serve for such terms as determined by our board of directors. Each officer holds office until such officer’s successor is elected or appointed and qualified or until such officer’s earlier resignation or removal. No family relationships exist between any of our present directors and officers.
| Name | Positions Held | Age | Date of Election or Appointment as Director |
James D. Davidson | President, Chief Executive Officer, Chief Financial Officer Treasurer, Secretary and director | 62 | November 12, 2007 |
David Rector | Director | 62 | June 15, 2007 |
The following is a brief account of the business experience during the past five years or more of each of our director and executive officer.
Mr. Davidson is a private investor and that has been his main occupation for more than five years. Currently, Mr. Davidson is a director of Anatolia Minerals Development Limited, a Canadian public company whose common stock trades on the Toronto Stock Exchange, and a director of Cell Power Technologies, Inc., a U.S. publicly-held company.
Mr. Rector joined our board of directors on June 15, 2007. Mr. Rector served as the Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and Director of Nevada Gold Holdings, Inc. (formerly known as Nano Holdings International, Inc.) from April 19, 2004 through December 31, 2008. He has served as the Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and Director of Standard Drilling, Inc. since November 2007, and of NanoDynamics Holdings, Inc. (formerly known as Mystica Candle Corporation) since June 6, 2008. Mr. Rector previously served as President, Chief Executive Officer and Chief Operating Officer of Nanoscience from June 2004 to December 2006, when he resigned as an officer and Director of Nanoscience. Since June 1985, Mr. Rector has been the principal of the David Stephen Group, which provides enterprise consulting services to emerging and developing companies in a variety of industries. From January 1995 until June 1995, Mr. Rector served as the General Manager of the Consumer Products Division of Bemis-Jason Corporation. Mr. Rector was employed by Sunset Designs Inc., a manufacturer and marketer of consumer product craft kits from June 1980 until June 1985. From June 1983 until June 1985, Mr. Rector served as President and General Manager of Sunset, from August 1981 until May 1985, Mr. Rector served as an Administrative and International Director of Sunset, and from June 1980 until August 1981, Mr. Rector served as Group Product Manager for Sunset.
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Additionally, Mr. Rector currently serves on the Board of Directors of the following public companies:
| Name | Director Since | |
| Senesco Technologies, Inc. (AMEX:SNT) | February 2002 | |
| Dallas Gold & Silver Exchange (AMEX:DSG) | May 2003 | |
| Standard Drilling, Inc.(STDR.PK) | November 2007 | |
| NanoDynamics Holdings, Inc. OTCBB:NNDY) | June 2008 |
As a result, the amount of time that Mr. Rector has to devote to our activities may be limited.
Mr. Rector obtained his Bachelor’s Degree in Business Administration from Murray State University in 1969.
Board Committees
The Company currently has not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our two directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.”
Shareholder Communications
Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations.
Code of Ethics
On July 11, 2007 we adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics will be provided to any person requesting same without charge. To request a copy of our Code of Ethics please make written request to our President c/o US Uranium Inc. at 6830 Elm Street, McLean, VA 22101.
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Compliance with Section 16(a) of the Exchange Act
Our common stock is not registered pursuant to Section 12 of the Exchange Act. Accordingly, our officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
| ITEM 11. | EXECUTIVE COMPENSATION |
The following table sets forth information concerning the total compensation paid or accrued by us during the last two fiscal years ended January 31, 2009 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended January 31, 2009; (ii) all individuals that served as our principal financial officer or acted in a similar capacity for us at any time during the fiscal year ended January 31, 2009; and (iii) all individuals that served as executive officers of ours at any time during the fiscal year ended January 31, 2009 that received annual compensation during the fiscal year ended January 31, 2009 in excess of $100,000.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compen-sation ($) | Change in Pension Value and Non-qualified Deferred Compen-sation Earnings ($) | All Other Compensation ($) | Total ($) |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Karen Law, Chief Executive Officer (1) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| David Rector, Chief Executive Officer (2) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Robert McIntosh, Chief Executive Officer (3) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| James D. Davidson, | 2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Chief Executive Officer (4) | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
__________________
| (1) | Effective June 15, 2007, Ms. Law resigned as our President, Chief Executive Officer, Chief Financial Officer and Treasurer. |
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On May 29, 2007, we issued 1,000,000 shares of our common stock, $0.001 par value per share, to Ms. Law in exchange for her services rendered to us. We relied on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 as amended for this issuance.
| (2) | Mr. Rector was appointed our President, Chief Executive Officer, Chief Financial Officer and Treasurer effective June 15, 2007. Mr. Rector resigned from these positions effective July 11, 2007 in connection with the Merger and resumed those positions effective August 8, 2007 following the reversal of the Merger. Effective November 12, 2007, Mr. Rector resigned as our President, Chief Executive Officer, Chief Financial Officer and Treasurer. |
| (3) | Mr. McIntosh was appointed our President and Chief Executive Officer on July 11, 2007, the effective date of the Merger. Effective August 8, 2007 as contemplated by the Reversal Agreement, Mr. McIntosh resigned from these positions. |
| (4) | Mr. Davidson was appointed our President, Chief Executive Officer, Chief Financial Officer and Treasurer effective November 12, 2007. |
We have not issued any stock options or maintained any stock option or other incentive plans other than our 2007 Plan. (See “Item 5. Market for Common Equity and Related Stockholder Matters – Securities Authorized for Issuance Under Equity Compensation Plans” above.) We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans. Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in a named executive officer’s responsibilities following a change in control.
Compensation of Directors
None of our directors receives any compensation for serving as such, for serving on committees (if any) of the board of directors or for special assignments. During the fiscal years ended January 31, 2009 and 2008 there were no other arrangements between us and our directors that resulted in our making payments to any of our directors for any services provided to us by them as directors.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth information with respect to the beneficial ownership of our common stock known by us as of April 15, 2009 by
| · | each person or entity known by us to be the beneficial owner of more than 5% of our common stock, |
| · | each of our directors, |
16
| · | each of our executive officers, and |
| · | all of our directors and executive officers as a group. |
The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on such date and all shares of our common stock issuable to such holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by such person at said date which are exercisable within 60 days of such date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse.
Name and Address of Beneficial Owner | Title of Class | Amount and Nature of Beneficial Ownership | Percent of Class (1) |
James D. Davidson (2) 6830 Elm Street McLean, VA 22101 | Common Stock | 35,727,625 | 61.3% |
David Rector | Common Stock | - 0 - | - 0 - |
All directors and executive officers as a group (2 persons) | Common Stock | 35,727,625 | 61.3% |
Michael Bayback 4515 Oceanview Blvd. La Canada, CA 91011 | Common Stock | 5,050,000 | 8.66% |
Gottbetter Capital Group, Inc. 488 Madison Avenue, 12th Floor New York, NY 10022 | Common Stock | 5,493,250 | 9.4% |
Barry Honig 3269 Harrington Drive Boca Raton, FL 33496 | Common Stock | 4,450,000 | 7.9% |
Lucius Capital Corporation 200-204 Lambert Street Whitehorse YT Y1A 3T2 | Common Stock | 3,073,377 | 5.3% |
__________________
| (1) | Based upon 58,313,002 shares issued and outstanding as at April 15, 2009. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our Common Stock. |
| (2) | Mr. Davidson is our President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. |
17
Changes in Control
Not Applicable.
Securities Authorized for Issuance Under Equity Compensation Plans
See Part II, Item 5 above.
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Prior to the Merger, our executive offices were located in the home of Karen Law, a former Chief Executive Officer and director, at no cost to us.
In connection with the transactions contemplated by the Merger, Mr. Davidson made advances to, and incurred expenses on behalf of, us. We agreed with Mr. Davidson that these advances and expenses aggregate approximately $31,000. These advances and expenses were not represented by a promissory note, did not bear interest and were repayable on demand. We agreed with Mr. Davidson that, in lieu of a cash repayment of these amounts, we would repay these obligations by issuing 31,000,000 shares of our common stock to Mr. Davidson from our treasury.
These shares have been issued to Mr. Davidson pursuant to a Restricted Stock Purchase Agreement. The agreement provides for a purchase price of par value, or $31,000, which amount was paid by cancellation of the indebtedness we owed to Mr. Davidson. We have an option, but not the obligation, to repurchase the shares, subject to certain limitations, in the event of termination of Mr. Davidson’s services to us, at Mr. Davidson’s original purchase price. One-third of the shares (10,333,333 shares) were released from our right to repurchase on December 31, 2008, an additional one-third of the shares will be released from our right to repurchase on December 31, 2009 and the remaining shares will be released from our right to repurchase on December 31, 2010. The Agreement requires that the certificate evidencing the shares be held in escrow until our right to repurchase lapses.
The issuance of these shares to Mr. Davidson was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) of the Act as a transaction not involving a public offering. The certificate evidencing the shares bears a legend restricting its transfer.
On May 29, 2007, we issued 1,000,000 shares of our common stock, $0.001 par value per share, to each of Karen Law, our then President, Chief Executive Officer, Chief Financial Officer, Treasurer and director, and Lyle Smith, our then Secretary and director. Law and Smith had served as our officers from inception, April 19, 2004, without monetary compensation and this stock was issued to them in exchange for their services rendered to us. We are relying on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933 as amended.
18
The issuances of these shares to Ms. Law and Mr. Smith were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) of the Act as a transaction not involving a public offering. The certificates evidencing these shares bore a legend restricting their transfer.
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Audit Fees.
The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended January 31, 2009 and 2008 are set forth in the table below:
| Fee Category | Fiscal year ended January 31, 2009 | Fiscal year ended January 31, 2008 |
| Audit fees (1) | $3,500 | $6,125 |
| Audit-related fees (2) | ||
| Tax fees (3) | ||
| All other fees (4) | ||
| Total fees | $3,500 | $6,125 |
| (1) | Audit fees consists of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-QSB and for services that are normally provided in connection with statutory or regulatory filings or engagements. |
| (2) | Audit-related fees consists of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.” |
| (3) | Tax fees consists of fees billed for professional services relating to tax compliance, tax planning, and tax advice. |
| (4) | All other fees consists of fees billed for all other services. |
Audit Committee’s Pre-Approval Practice.
We do not have an audit committee. Our board of directors performs the function of an audit committee. Section 10A(i) of the Securities Exchange Act of 1934, as amended, prohibits our auditors from performing audit services for us as well as any services not considered to be audit services unless such services are pre-approved by our audit committee or, in cases where no such committee exists, by our board of directors (in lieu of an audit committee) or unless the services meet certain de minimis standards.
19
PART IV
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Financial Statement Schedules
The consolidated financial statements of Loreto Resources Corporation are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.
Exhibits
The following Exhibits are being filed with this Annual Report on Form 10-K:
Exhibit No. | SEC Report Reference Number | Description | ||
2.1 | 2.1 | Agreement and Plan of Merger and Reorganization, dated July 11, 2007, among the Registrant, Cromwell Uranium Holdings, Inc. and Cromwell Acquisition Corp.(1) | ||
3.1 | 3.1 | Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on August 29, 2007 (2) | ||
3.2 | 3.2 | By-Laws of Registrant (3) | ||
3.3 | 3.1 | Certificate of Amendment to Articles of Incorporation of Registrant (7) | ||
10.1 | 10.1 | Registrant’s 2007 Stock Option Plan adopted June 15, 2007 (1) | ||
10.2 | 10.1 | Securities Purchase Agreement, dated as of June 22, 2007, among the Registrant, certain purchasers and Gottbetter & Partners, LLP as escrow agent (4) | ||
10.3 | 10.2 | Form of Debenture, dated June 22, 2007 (4) | ||
10.4 | 10.3 | Bridge Loan And Control Share Pledge And Security Agreement, dated as of June 22, 2007, among and the Registrant and Cromwell Uranium Holdings, Inc. (4) | ||
10.5 | 10.4 | Bridge Loan Promissory Note, dated June 22, 2007 (4) | ||
10.6 | 10.5 | Pledge and Escrow Agreement, dated as of June 22, 2007, among the Registrant, Cromwell Uranium Holdings, Inc. and Gottbetter & Partners, LLP as escrow agent (4) | ||
10.7 | 10.2 | Monmouth Agreement, dated June 12, 2007, between the Registrant and Yvon Gagne (1) |
20
Exhibit No. | SEC Report Reference Number | Description | ||
10.8 | 10.3 | Elliot Lake South Project Agreement, dated June 12, 2007, between the Registrant and 2060014 Ontario, Ltd. (1) | ||
10.9 | 10.4 | Longlac Project Agreement, dated June 12, 2007, between the Registrant and 2060014 Ontario, Ltd. (1) | ||
10.10 | 10.10 | Employment Agreement, dated July 11, 2007, between the Registrant and Robert McIntosh(1) | ||
10.11 | 10.11 | Employment Agreement, dated July 11, 2007, between the Registrant and David Naylor(1) | ||
10.12 | 10.12 | Employment Agreement, dated July 11, 2007, between the Registrant and Graeme Scott (1) | ||
10.13 | 10.13 | Escrow Agreement, dated July 11, 2007, among the Registrant, Robert McIntosh and Gottbetter & Partners, LLP, as escrow agent(1) | ||
10.14 | 10.14 | Split-Off Agreement, dated July 11, 2007, among the Registrant, Arbutus Leaseco Inc., Karen Law and Lyle Smith (1) | ||
10.15 | 10.15 | General Release Agreement, dated July 11, 2007, among the Registrant, Karen Law, Lyle Smith, Arbutus Leaseco, Inc., and Cromwell Uranium Holdings, Inc. (1) | ||
10.16 | 10.16 | Form of Lockup Letter, dated July 11, 2007 (1) | ||
10.17 | 10.17 | Form of Investor Warrant, dated July 11, 2007 (1) | ||
10.18 | 10.18 | Form of Option Agreement (1) | ||
10.19 | 10.1 | Reversal Agreement between the Registrant, Robert McIntosh and Cromwell Uranium Holdings, Inc. (5) | ||
10.20 | 10.2 | Reversal Loan and Control Share Pledge and Security Agreement between the Registrant, Robert McIntosh and Cromwell Uranium Holdings, Inc. (5) | ||
10.21 | 10.3 | Form of Reversal Loan Promissory Note(5) | ||
10.22 | 10.4 | Security Agreement between the Registrant, Robert McIntosh and Cromwell Uranium Holdings, Inc. (5) |
21
Exhibit No. | SEC Report Reference Number | Description | ||
10.23 | 10.5 | Pledge and Escrow Agreement between the Registrant, Robert McIntosh, Cromwell Uranium Holdings, Inc. and Gottbetter & Partners, LLP, as escrow agent(5) | ||
10.24 | 10.1 | Restricted Stock Purchase Agreement between the Registrant and James D. Davidson (6) | ||
10.25 | 10.1 | Form of Subscription Agreement (8) | ||
14.1 | 14.1 | Code of Ethics (1) | ||
16.1 | 16.1 | Letter on Change in Certifying Accountant, dated July 13, 2007 from Dale Matheson Carr-Hilton Labonte Chartered | ||
21 | * | List of Subsidiaries | ||
31.1/31.2 | * | Rule 13(a) – 14(a)/15(d) – 14(a) Certification of Principal Executive and Financial Officer | ||
32.1/32.2 | * | Rule 1350 Certification of Chief Executive and Financial Officer |
_________________
| (1) | Filed with the Securities and Exchange Commission on July 13, 2007 as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference |
| (2) | Filed with the Securities and Exchange Commission on August 9, 2007 as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference. |
| (3) | Filed with the Securities and Exchange Commission on May 30, 2006 as an exhibit, numbered as indicated above, to the Registrant’s registration statement (SEC File No. 333-134549) on Form SB-2, which exhibit is incorporated herein by reference. |
| (4) | Filed with the Securities and Exchange Commission on June 25, 2007 as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference. |
| (5) | Filed with the Securities and Exchange Commission on August 9, 2007 as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference. |
| (6) | Filed with the Securities and Exchange Commission on November 13, 2007 as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference. |
22
| (7) | Filed with the Securities and Exchange Commission on March 11, 2009 as an exhibit, numbered as indicated above, to the Registrant’s quarterly report (SEC File No. 333-134549) on Form 10-Q, which exhibit is incorporated herein by reference. |
| (8) | Filed with the Securities and Exchange Commission on December 15, 2008 as an exhibit, numbered as indicated above, to the Registrant’s quarterly report (SEC File No. 333-134549) on Form 10-Q, which exhibit is incorporated herein by reference. |
____________________
* Filed herewith.
** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
In reviewing the agreements included as exhibits and incorporated by reference to this Annual Report on Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
| • | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| • | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| • | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
| • | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LORETO RESOURCES CORPORATION | |
| Dated: May 15, 2009 | By: /s/ James D. Davidson |
| James D. Davidson, President, Chief Executive Officer and Chief Financial Officer |
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.
SIGNATURE | TITLE | DATE | ||
/s/ James D. Davidson James D. Davidson | Director | May 15, 2009 | ||
/s/ David Rector David Rector | Director | May 15, 2009 | ||
24
PART IV – FINANCIAL INFORMATION
| ITEM 15. | FINANCIAL STATEMENTS |
0;Page
| Reports of Independent Registered Public Accounting Firm | F-2 |
| Consolidated Balance Sheets as of January 31, 2009 and 2008 | F-3 |
| Consolidated Statements of Operations for the years ended January 31, 2009 and 2008 and for the Period from April 19, 2004 (inception) through January 31, 2009 | F-4 |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the period from April 19, 2004 (inception) to January 31, 2009 | F-5 |
| Consolidated Statements of Cash Flows for the years ended January 31, 2009 and 2008 and for the Period from April 19, 2004 (inception) through January 31, 2009 | F-6 |
| Notes to Consolidated Financial Statements | F-7 – F-14 |
F-1
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
California Gold Corp. (f.k.a. US Uranium, Inc.)
(An Exploration Stage Company)
We have audited the accompanying balance sheets of California Gold Corp. (f.k.a. US Uranium, Inc.) (An Exploration Stage Company) as of January 31, 2009 and January 31, 2008, and the related statements of operations, stockholders’ equity and cash flows for the years ended January 31, 2009 and January 31, 2008 and since inception on April 19, 2004 through January 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of California Gold Corp. (f.k.a. US Uranium, Inc.) (An Exploration Stage Company) as of January 31, 2009 and January 31, 2008, and the related statements of operations, stockholders’ equity and cash flows for the years ended January 31, 2009 and January 31, 2008 and since inception on April 19, 2004 through January 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has an accumulated deficit of $1,021,320, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
Moore & Associates, Chartered
Las Vegas, Nevada
May 14, 2009
6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
F-2
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
Balance Sheets
| January 31, | January 31, | |||||||
| 2009 | 2008 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 4,113 | $ | 2,583 | ||||
| Note receivable, net | - | 557,927 | ||||||
| Total Current Assets | 4,113 | 560,510 | ||||||
| TOTAL ASSETS | $ | 4,113 | $ | 560,510 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 7,365 | $ | 797 | ||||
| Total Current Liabilities | 7,365 | 797 | ||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Preferred stock, 10,000,000 shares authorized at of $0.001, no shares issued and outstanding | - | - | ||||||
Common stock, 300,000,000 shares authorized at par value of $0.001, 58,313,002 and 56,313,002 shares issued and outstanding | 58,313 | 56,313 | ||||||
| Additional paid-in capital | 959,755 | 941,755 | ||||||
| Deficit accumulated during the exploration stage | (1,021,320 | ) | (438,355 | ) | ||||
| Total Stockholders' Equity (Deficit) | (3,252 | ) | 559,713 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 4,113 | $ | 560,510 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
Statements of Operations
For the Years Ended January 31, 2009 and 2008 and
For the Period from April 19, 2004 (Inception) through January 31, 2009
For the Year Ended January 31, 2009 | For the Year Ended January 31, 2008 | From Inception on April 19, 2004 Through January 31, 2009 | ||||||||||
| REVENUES | $ | - | $ | - | $ | - | ||||||
| COST OF SALES | - | - | - | |||||||||
| GROSS MARGIN | - | - | - | |||||||||
| OPERATING EXPENSES | ||||||||||||
| Mineral property expenses | - | 1,556 | 27,206 | |||||||||
| Bad debt expense | 557,927 | - | 557,927 | |||||||||
| General and administrative | 25,057 | 386,366 | 436,206 | |||||||||
Total Operating Expenses | 582,984 | 387,922 | 1,021,339 | |||||||||
INCOME (LOSS) FROM OPERATIONS | (582,984 | ) | - | (1,021,339 | ) | |||||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Interest income | 19 | - | 19 | |||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (582,965 | ) | (387,922 | ) | (1,021,320 | ) | ||||||
| INCOME TAX EXPENSE | - | - | - | |||||||||
| NET LOSS | $ | (582,965 | ) | $ | (387,922 | ) | $ | (1,021,320 | ) | |||
| BASIC LOSS PER COMMON SHARE | (0.01 | ) | (0.01 | ) | ||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 55,753,892 | 56,033,002 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
Statements of Stockholders’ Equity
From June 28, 2006 (Inception) through January 31, 2009
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Additional | During the | |||||||||||||||||||
| Common Stock | Paid-in | Development | ||||||||||||||||||
| Shares | Amount | Capital | Stage | Total | ||||||||||||||||
| Balance, April 19, 2004 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common stock issued for cash at $0.0001 per share | 46,990,000 | 46,990 | (39,590 | ) | - | 7,400 | ||||||||||||||
Common stock issued for cash at $0.001 per share | 6,985,000 | 6,985 | 4,015 | - | 11,000 | |||||||||||||||
Common stock issued for cash at $0.03 per share | 1,778,000 | 1,778 | 54,222 | - | 56,000 | |||||||||||||||
Loss from inception through January 31, 2006 | - | - | - | (29,275 | ) | (29,275 | ) | |||||||||||||
| Balance, January 31, 2006 | 55,753,000 | 55,753 | 18,647 | (29,275 | ) | 45,125 | ||||||||||||||
Loss for the year ended January 31, 2007 | - | - | - | (21,158 | ) | (21,158 | ) | |||||||||||||
| Balance, January 31, 2007 | 55,753,000 | 55,753 | 18,647 | (50,433 | ) | 23,967 | ||||||||||||||
Common stock issued for cash at $1.35 per share | 440,002 | 440 | 594,560 | - | 595,000 | |||||||||||||||
| Contributed capital | - | - | 268,668 | - | 268,668 | |||||||||||||||
Common stock issued for cash at $0.03 per share | 120,000 | 120 | 59,880 | - | 60,000 | |||||||||||||||
Loss for the year ended January 31, 2008 | - | - | - | (387,922 | ) | (387,922 | ) | |||||||||||||
| Balance, January 31, 2009 | 56,313,002 | 56,313 | 941,755 | (438,355 | ) | 559,713 | ||||||||||||||
| Canceled shares | (2,000,000 | ) | (2,000 | ) | 2,000 | - | - | |||||||||||||
Common stock issued for cash at $0.005 per share | 4,000,000 | 4,000 | 16,000 | - | 20,000 | |||||||||||||||
Loss for the year ended January 31, 2009 | - | - | - | (582,965 | ) | (582,965 | ) | |||||||||||||
| Balance, January 31, 2009 | 58,313,002 | $ | 58,313 | $ | 959,755 | $ | (1,021,320 | ) | $ | (3,252 | ) | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
Statements of Cash Flow
For the Years Ended January 31, 2009 and 2008 and
For the Period from April 19, 2004 (Inception) through January 31, 2009
| From Inception | ||||||||||||
| For the Year | For the Year | on April 19, | ||||||||||
| Ended | Ended | 2004 Through | ||||||||||
| January 31, | January 31, | January 31, | ||||||||||
| 2008 | 2007 | 2008 | ||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net loss | $ | (582,965 | ) | $ | (387,922 | ) | $ | (1,021,320 | ) | |||
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||||||
| Contributed capital | - | 268,668 | 268,668 | |||||||||
| Allowance for bad debts | 557,927 | - | 557,927 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Increase (decrease) in accounts payable | 6,568 | 797 | 7,365 | |||||||||
| Net Cash Used in Operating Activities | (18,470 | ) | (118,457 | ) | (187,360 | ) | ||||||
| INVESTING ACTIVITIES | ||||||||||||
| Increase in note receivable - related party | - | (557,927 | ) | (557,927 | ) | |||||||
| Net Cash Used in Investing Activities | - | (557,927 | ) | (557,927 | ) | |||||||
| FINANCING ACTIVITIES | ||||||||||||
| Proceeds from common stock issued | 20,000 | 655,000 | 749,400 | |||||||||
| Net Cash Provided by Financing Activities | 20,000 | 655,000 | 749,400 | |||||||||
| NET DECREASE IN CASH | 1,530 | (21,384 | ) | 4,113 | ||||||||
| CASH AT BEGINNING OF PERIOD | 2,583 | 23,967 | - | |||||||||
| CASH AT END OF PERIOD | $ | 4,113 | $ | 2,583 | $ | 4,113 | ||||||
| SUPPLEMENTAL DISCLOSURES OF | ||||||||||||
CASH FLOW INFORMATION | ||||||||||||
| CASH PAID FOR: | ||||||||||||
| Interest | $ | - | $ | - | $ | - | ||||||
| Income Taxes | $ | - | $ | - | $ | - | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 1- ORGANIZATION AND BUSINESS OPERATIONS
a. Nature of Business
California Gold Corp. (the Company) was incorporated in the State of Nevada on April 19, 2004. The Company’s name was changed from US Uranium, Inc. on March 9, 2009.The Company is engaged in the business of acquiring, developing and holding mineral properties. The Company’s management is also authorized to pursue any other business opportunities believed to hold a potential for profit.
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES
a. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
b. Basic (Loss) per Common Share
Basic (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of January 31, 2009.
For the Year Ended January 31, 2009 | For the Year Ended January 31, 2008 | |||||||
| Loss (numerator) | $ | (582,965 | ) | $ | (387,922 | ) | ||
| Shares (denominator) | 55,753,892. | 56,033,002. | ||||||
| Per share amount | $ | (0.01 | ) | $ | (0.01 | ) | ||
c. Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.
F-7
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (CONTINUED)
d. Comprehensive Income
The Company has no component of other comprehensive income. Accordingly, net income equals comprehensive income for the years ended January 31, 2009 and 2008.
e. Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred. The Company had not incurred any advertising expense during the years ended of January 31, 2009 and 2008.
f. Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
g. Income Taxes
The Company provides for income taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. SFAS No. 109 Requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to the net loss before provision for income taxes for the following reasons:
| January 31, | ||||||||
| 2009 | 2008 | |||||||
| Income tax expense at statutory rate | $ | (227,356 | ) | $ | (151,290 | ) | ||
| Valuation allowance | 227,356 | 151,290 | ||||||
| Income tax expense per books | $ | -0- | $ | -0- | ||||
F-8
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (CONTINUED)
g. Income Taxes (Continued)
Net deferred tax assets consist of the following components as of:
| January 31, | ||||||||
| 2008 | 2007 | |||||||
| NOL Carryover | $ | 398,315 | $ | 170,959 | ||||
| Valuation allowance | (398,315 | ) | (170,959 | ) | ||||
| Net deferred tax asset | $ | -0- | $ | -0- | ||||
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $1,021,320 for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
h. Impairment of Long-Lived Assets- Mineral Properties
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
i. Accounting Basis
The basis is accounting principles generally accepted in the United States of America. The Company has adopted a January 31 fiscal year end.
| j. | Stock-based compensation |
As of January 31, 2008, the Company has not issued any share-based payments to its employees.
The Company adopted SFAS No. 123-R effective January 1, 2007 using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2007, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R.
F-9
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (CONTINUED)
k. Recent Accounting Pronouncements
In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly. Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. This FSP is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation.
In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS 157-3”), which clarifies application of SFAS 157 in a market that is not active. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of FSP FAS 157-3 had no impact on the Company’s results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The Company adopted this FSP effective January 1, 2009. The adoption of the FSP had no impact on the Company’s results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires additional fair value disclosures about employers’ pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157. Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation.
In September 2008, the FASB issued exposure drafts that eliminate qualifying special purpose entities from the guidance of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,”
F-10
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (CONTINUED)
k. Recent Accounting Pronouncements (Continued)
and FASB Interpretation 46 (revised December 2003), “Consolidation of Variable Interest Entities − an interpretation of ARB No. 51,” as well as other modifications. While the proposed revised pronouncements have not been finalized and the proposals are subject to further public comment, the Company anticipates the changes will not have a significant impact on the Company’s financial statements. The changes would be effective March 1, 2010, on a prospective basis.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
F-11
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 2- SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (CONTINUED)
k. Recent Accounting Pronouncements (Continued)
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
F-12
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 3 - COMMON STOCK
During July 2005, the Company issued 46,990,000 shares of its common stock to its founders for $7,400 in cash. During July 2005, the Company issued 6,985,000 shares of its common stock for $11,000 in cash. During August 2005, the Company issued 1,778,000 shares of its common stock for $56,000 in cash.
During August 2007, the Company issued 440,002 shares of its common stock for $595,000 in cash. During January 2008, the Company issued 120,000 shares of its common stock for $60,000 in cash.
During November 2007, the Company’s common stock was forward split on a 6.35 shares of 1 share basis. The accompanying financial statements reflect the forward stock split on a retroactive basis.
During the year ended January 31, 2009, the Company cancelled 2,000,000 share of its common stock. On September 18, 2008, the Company issued 4,000,000 shares of its common stock for $20,000 cash.
Note 4- RELATED PARTY TRANSACTIONS
Effective August 8, 2007, the Company entered into a Reversal Agreement pursuant to which it sold the shares of its subsidiary back to its former stockholder in exchange for the return to treasury of the 31,000,000 shares of its common stock issued in the Merger. As additional consideration for the purchase and sale of the shares of the subsidiary, the former shareholder agreed to repay to the entire net principal amount of the subsidiary had received, together with certain expenses incurred by the Company, or an aggregate of $557,927.
The former shareholder issued to the Company a promissory note for the $557,927 principal balance of net funds advanced. The Note was due on November 15, 2007 , and bore interest at the rate of 9% per annum. The Note was secured by a perfected security interest and first priority lien on all of the
assets of the former subsidiary, as well as by the deposit into escrow of all of the issued and outstanding shares of the former subsidiary. The former subsidiary was to begin making consecutive monthly interest-only payments on the Note of accrued interest commencing 30 days from the closing of the Loan through the due date, at which time the former subsidiary was required to repay the unpaid principal amount of the Note, together with accrued and unpaid interest.
A default by former subsidiary under the Note caused an increase to the interest rate from 9% to 15% per annum, which increased interest rate will continue until all defaults are cured. In addition, if such default is not cured, the Company is entitled to foreclose on its security interest in the collateral provided for under the Loan Documents and to obtain delivery of the escrowed shares. During the year ended January 31, 2009, the Company recorded an allowance for doubtful accounts of $557,927 with respect to the Note.
F-13
CALIFORNIA GOLD CORP.
(fka US Uranium, Inc., fka Arbutus Resources, Inc.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2009 AND 2008
NOTE 5- SIGNIFICANT EVENTS
In connection with the transactions contemplated by the prior merger with Cromwell Uranium Holdings, Inc. (which merger, as previously reported, was subsequently reversed), Mr. Davidson made advances to, and incurred expenses on behalf of, us. The parties have agreed that these advances and expenses aggregate approximately $31,000. These advances and expenses are not represented by a promissory note, do not bear interest and are repayable on demand. The Company has agreed with Mr. Davidson that, in lieu of a cash repayment of these amounts, we will repay these obligations by issuing 31,000,000 shares of our common stock to Mr. Davidson from our treasury.
These shares have been issued to Mr. Davidson pursuant to a Restricted Stock Purchase Agreement. The agreement provides for a purchase price of par value, or $31,000, which amount was paid by cancellation of the indebtedness the Company owed to Mr. Davidson. The Company has an option, but not the obligation, to repurchase the shares, subject to certain limitations, in the event of termination of Mr. Davidson’s services, at Mr. Davidson’s original purchase price. One-third of the shares (10,333,333 shares) will be released from the Company’s right to repurchase on December 31, 2008, an additional one-third of the shares will be released from its right to repurchase on December 31, 2009 and the remaining shares will be released from its right to repurchase on December 31, 2010. The Agreement requires that the certificate evidencing the shares be held in escrow until our right to repurchase lapses.
NOTE 6 - GOING CONCERN
These financial statements have been prepared on a going concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $1,021,320 at January 31, 2009 and further losses are anticipated in the development of its business raising substantial doubt about the Company's ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
Management has plans to seek additional financing through private placements of its common stock and/or loans from directors. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
F-14