U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
AMENDMENT NO. 1
(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 (Do not check if a 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 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 $1,181,268 based upon the closing price ($0.05) multiplied by the 23,625,377 shares of the issuer’s Common Stock held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
EXPLANATORY NOTE:
This Form 10-K/A, Amendment No. 1 is being filed by California Gold Corp., formerly known as US Uranium, Inc. (the “Company”), to amend its Annual Report on Form 10-K for the year ended January 31, 2009, filed with the Securities and Exchange Commission on May 15, 2009, (i) to restate its balance sheets, income statements, statements of stockholders’ equity and statement of cash flows and accompanying notes as a result of the improper accounting for a conversion feature of a debenture and freestanding warrant that we issued in June 2007; (ii) to revise Part II, Item 7 titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the changes in the financial statements; and (iii) to revise our conclusion regarding the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.
New certifications of our principal executive and financial officer are included as exhibits to this amendment.
2
PART II
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 $387,922 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 unwinding1.
Our net losses for years ended January 31, 2009 and 2008 were $(582,984) and $(387,922), respectively.
We have generated no revenues and our net operating loss from inception through January 31, 2009 was $(1,021,320).
Liquidity and Capital Resources
Our cash and cash equivalents balance as of January 31, 2009 was $4,113.
1. $235,668 in third party fees incurred and accrued prior to and in connection with the Merger were forgiven when the Merger was reversed and, as of January 31, 2008, these fees were recorded as contributed capital from donated services instead of accounts payable.
3
We are an exploration 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.
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 not effective.
4
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, 2008; 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: |
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.
5
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.
6
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.
| CALIFORNIA GOLD CORP. | |||
| Dated: June 3, 2010 | By: | /s/ James D. Davidson | |
| James D. Davidson, President, Chief | |||
| Executive Officer and Chief Financial Officer | |||
7
PART IV – FINANCIAL INFORMATION
ITEM 15. FINANCIAL STATEMENTS
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
| Report of Registered Independent Auditors | F-2 |
| Financial Statements- | |
| Balance Sheets as of January 31, 2009, and 2008 | F-3 |
Statements of Operations for the Years Ended January 31, 2009, and 2008, and Cumulative from Inception | F-4 |
Statement of Stockholders’ Equity (Deficit) for the Period from Inception Through January 31, 2009 | F-5 |
Statements of Cash Flows for the Years Ended January 31, 2009, and 2008, and Cumulative from Inception | F-6 |
| Notes to Financial Statements January 31, 2009, and 2008 | F-7 |
F-1
REPORT OF REGISTERED INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of California Gold Corp.:
We have audited the accompanying balance sheets of California Gold Corp. (formerly US Uranium, Inc., a Nevada corporation in the exploration stage) as of January 31, 2009, and 2008, and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the two years in the period ended January 31, 2009, and cumulative from inception (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 conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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. as of January 31, 2009, and 2008, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2009, and cumulative from inception (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 2 to the financial statements, the Company is in the development stage, and has not established any source of revenues to cover its operating costs. As such, it has incurred an operating loss since inception. Further, as of January 31, 2009, and 2008, the cash resources of the Company were insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding these matters is also described in Note 2 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 3 to the financial statements, errors in the determination of the beneficial conversion feature of certain convertible debentures and related detachable warrants to purchase common stock, and disclosure of transactions involving common stock of the Company, amounting to $595,000, which resulted in an overstatement of the expenses and net loss for the period ended January 31, 2008, were determined by management of the Company. Accordingly, the financial statements as of and for the period ended January 31, 2008, have been restated to correct the errors.
Respectfully submitted,
/s/ Davis Accounting Group P.C.
Cedar City, Utah,
May 10, 2010.
F-2
| CALIFORNIA GOLD CORP. | ||||||||
| (FORMERLY US URANIUM, INC.) | ||||||||
| (AN EXPLORATION STAGE COMPANY) | ||||||||
| BALANCE SHEETS (NOTES 2 AND 3) (RESTATED) | ||||||||
| AS OF JANUARY 31, 2009, AND 2008 | ||||||||
| ASSETS | ||||||||
| 2009 | 2008 | |||||||
| (Restated) | ||||||||
| Current Assets: | ||||||||
Cash | $ | 4,113 | $ | 2,583 | ||||
Note receivable - Related Party (net of allowance for doubtful | ||||||||
| account of $557,927 and $0 in 2009 and 2008, respectively) | - | 557,927 | ||||||
Total current assets | 4,113 | 560,510 | ||||||
| Total Assets | $ | 4,113 | $ | 560,510 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
Accounts payable - Trade | $ | 7,365 | $ | 797 | ||||
Total current liabilities | 7,365 | 797 | ||||||
Total Liabilities | 7,365 | 797 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Equity (Deficit): | ||||||||
Preferred stock, par value $0.001 per share, | ||||||||
| 10,000,000 shares authorized; no shares issued and outstanding | ||||||||
in 2009 and 2008 | - | - | ||||||
Common stock, par value $0.001 per share, 300,000,000 shares | ||||||||
authorized; 58,313,002 and 56,313,002 shares | ||||||||
issued and outstanding in 2009 and 2008, respectively | 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 to financial statements
are an integral part of these balance sheets.
F-3
| CALIFORNIA GOLD CORP. | ||||||||||||
| (FORMERLY US URANIUM, INC.) | ||||||||||||
| (AN EXPLORATION STAGE COMPANY) | ||||||||||||
| STATEMENTS OF OPERATIONS (NOTES 2 AND 3) (RESTATED) | ||||||||||||
| FOR THE YEARS ENDED JANUARY 31, 2009, AND 2008, AND | ||||||||||||
| CUMULATIVE FROM INCEPTION (APRIL 19, 2004 ) | ||||||||||||
| THROUGH JANUARY 31, 2009 | ||||||||||||
| Cumulative | ||||||||||||
| From | ||||||||||||
| 2009 | 2008 | Inception | ||||||||||
| (Restated) | (Restated) | |||||||||||
| Sales, net | $ | - | $ | - | $ | - | ||||||
| Cost of Goods Sold | - | - | - | |||||||||
| Gross Margin | - | - | - | |||||||||
| Expenses: | ||||||||||||
General and administrative- | ||||||||||||
Mineral property | - | 1,556 | 27,206 | |||||||||
Bad debt | 557,927 | - | 557,927 | |||||||||
General and administrative | 25,057 | 386,366 | 436,206 | |||||||||
Total Operating Expenses | 582,984 | 387,922 | 1,021,339 | |||||||||
| (Loss) from Operations | (582,984 | ) | (387,922 | ) | (1,021,339 | ) | ||||||
| Other Income (Expense): | ||||||||||||
Interest income | 19 | - | 19 | |||||||||
| (Loss) Before Income Taxes | (582,965 | ) | (387,922 | ) | (1,021,320 | ) | ||||||
| Provision for Income Taxes | - | - | - | |||||||||
| Net (Loss) | $ | (582,965 | ) | $ | (387,922 | ) | $ | (1,021,320 | ) | |||
| (Loss) Per Common Share: | ||||||||||||
| (Loss) per common share- Basic and Diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||||||
| Weighted Average Number of Common Shares | ||||||||||||
Outstanding- Basic and Diluted | 55,753,892 | 56,033,002 | ||||||||||
The accompanying notes to financial statements are
an integral part of these statements.
F-4
| CALIFORNIA GOLD CORP. | ||||||||||||||||||||||||
| (FORMERLY US URANIUM, INC.) | ||||||||||||||||||||||||
| (AN EXPLORATION STAGE COMPANY) | ||||||||||||||||||||||||
| STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (NOTES 2 AND 3) (RESTATED) | ||||||||||||||||||||||||
| FOR THE PERIOD FROM INCEPTION (APRIL 19, 2004) THROUGH JANUARY 31, 2009 | ||||||||||||||||||||||||
| (Deficit) | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | During the | |||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Exploration | |||||||||||||||||||||
| Shares | Amount | Capital | Stock | Stage | Total | |||||||||||||||||||
| Balance - April 19, 2004 | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
| (Net ) Loss for the period | - | - | - | - | - | - | ||||||||||||||||||
| Balance - January 31, 2005 | - | - | - | - | - | - | ||||||||||||||||||
| Common stock issued for cash | 46,990,000 | 46,990 | (39,590 | ) | - | - | 7,400 | |||||||||||||||||
| Common stock issued for cash | 6,985,000 | 6,985 | 4,015 | - | - | 11,000 | ||||||||||||||||||
| Common stock issued for cash | 1,778,000 | 1,778 | 54,222 | - | - | 56,000 | ||||||||||||||||||
| (Net ) Loss for the period | - | - | - | - | (29,275 | ) | (29,275 | ) | ||||||||||||||||
| Balance - January 31, 2006 | 55,753,000 | 55,753 | 18,647 | - | (29,275 | ) | 45,125 | |||||||||||||||||
| (Net ) Loss for the period | - | - | - | - | (21,158 | ) | (21,158 | ) | ||||||||||||||||
| Balance - January 31, 2007 | 55,753,000 | 55,753 | 18,647 | - | (50,433 | ) | 23,967 | |||||||||||||||||
| Common stock issued for services | 12,700,000 | 12,700 | (10,700 | ) | - | - | 2,000 | |||||||||||||||||
| Cancellation of common stock related to merger agreement | (44,450,000 | ) | (44,450 | ) | 44,450 | - | - | - | ||||||||||||||||
| Issuance of common stock for merger agreement | 31,000,000 | 31,000 | - | - | - | 31,000 | ||||||||||||||||||
| Cancellation of common stock for reversal of merger agreement | (31,000,000 | ) | - | - | (31,000 | ) | - | (31,000 | ) | |||||||||||||||
| Common stock issued to officer for advances and expenses | 31,000,000 | - | - | 31,000 | - | 31,000 | ||||||||||||||||||
| Rounding of common stock issued | 2 | - | - | - | - | - | ||||||||||||||||||
| Detachable warrants issued with convertible | ||||||||||||||||||||||||
| debentures - 1,190,000 warrants to purchase common stock | - | - | 35,464 | - | - | 35,464 | ||||||||||||||||||
| Common stock issued upon conversion of | ||||||||||||||||||||||||
| convertible debentures | 1,190,000 | 1,190 | 558,346 | - | - | 559,536 | ||||||||||||||||||
| Contributed capital from donated services | - | - | 235,668 | - | - | 235,668 | ||||||||||||||||||
| Common stock issued for cash | 120,000 | 120 | 59,880 | - | - | 60,000 | ||||||||||||||||||
| (Net ) Loss for the period | - | - | - | - | (387,922 | ) | (387,922 | ) | ||||||||||||||||
| Balance - January 31, 2008 | 56,313,002 | 56,313 | 941,755 | - | (438,355 | ) | 559,713 | |||||||||||||||||
| Cancellation of common stock | (2,000,000 | ) | (2,000 | ) | 2,000 | - | - | - | ||||||||||||||||
| Common stock issued for cash | 4,000,000 | 4,000 | 16,000 | - | - | 20,000 | ||||||||||||||||||
| (Net ) Loss for the period | - | - | - | - | (582,965 | ) | (582,965 | ) | ||||||||||||||||
| Balance - January 31, 2009 | 58,313,002 | $ | 58,313 | $ | 959,755 | $ | - | $ | (1,021,320 | ) | $ | (3,252 | ) | |||||||||||
The accompanying notes to financial statements are
an integral part of this statement.
F-5
| CALIFORNIA GOLD CORP. | |||||||||||
| (FORMERLY US URANIUM, INC.) | |||||||||||
| (AN EXPLORATION STAGE COMPANY) | |||||||||||
| STATEMENTS OF CASH FLOWS (NOTES 2 AND 3) (RESTATED) | |||||||||||
| FOR THE YEARS ENDED JANUARY 31, 2009, AND 2008, AND | |||||||||||
| CUMULATIVE FROM INCEPTION (APRIL 19, 2004) | |||||||||||
| THROUGH JANUARY 31, 2009 | |||||||||||
| Cumulative | ||||||||||||
| From | ||||||||||||
| 2009 | 2008 | Inception | ||||||||||
| (Restated) | (Restated) | |||||||||||
| Operating Activities: | ||||||||||||
| Net (loss) | $ | (582,965 | ) | $ | (387,922 | ) | $ | (1,021,320 | ) | |||
| Adjustments to reconcile net (loss) to net cash | ||||||||||||
| (used in) operating activities: | ||||||||||||
| Contributed capital from debt forgiveness | - | 235,668 | 235,668 | |||||||||
| Common stock issued for services | - | 33,000 | 33,000 | |||||||||
| Allowance for doubtful account | 557,927 | - | 557,927 | |||||||||
| Changes in Other Current Assets and Liabilities- | ||||||||||||
| Accounts payable - Trade | 6,568 | 797 | 7,365 | |||||||||
| Net Cash (Used in) Operating Activities | (18,470 | ) | (118,457 | ) | (187,360 | ) | ||||||
| Investing Activities: | ||||||||||||
| Note Receivable - Related Party | - | (557,927 | ) | (557,927 | ) | |||||||
| Net Cash (Used in) Investing Activities | - | (557,927 | ) | (557,927 | ) | |||||||
| Financing Activities: | ||||||||||||
| Proceeds from the issuance of convertible debentures and warrants | - | 595,000 | 595,000 | |||||||||
| Proceeds from the issuance of common stock | 20,000 | 60,000 | 154,400 | |||||||||
| Net Cash Provided by Financing Activities | 20,000 | 655,000 | 749,400 | |||||||||
| Net Increase (Decrease) in Cash | 1,530 | (21,384 | ) | 4,113 | ||||||||
| Cash- Beginning of Period | 2,583 | 23,967 | - | |||||||||
| Cash- End of Period | $ | 4,113 | $ | 2,583 | $ | 4,113 | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||||||
| Cash paid during the period for : | ||||||||||||
| Interest | $ | - | $ | - | $ | - | ||||||
| Income Taxes | $ | - | $ | - | $ | - | ||||||
| Supplemental Information of Noncash Investing and Financing Activities: | |||||||||||
| On May 29, 2007, the Company issued 12,700,000 shares of commons stock (post forward stock split) to its former officers for services rendered. This transaction was valued at $2,000. | |||||||||||
| For the period ended January 31, 2008, the Company recognized a total of $235,668 for donated consulting services. The consulting services were performed by third parties in connection with the acquisition of Holdings, and with the reversal of the acquisition of Holdings. The third parties made the determination to forgive the Company’s liability. The forgiveness of debt was recorded as a donated capital, and was an addition to additional paid-in capital in the accompanying financial statements for the year ended January 31, 2008. | |||||||||||
| On June July 11, 2007, the Company entered into an Agreement and Plan of Merger and Reorganization with Cromwell Uranium Holdings, Inc. In connection with the agreement, 31,000,000 shares of common stock were issued related to the merger, and 1,190,000 shares of common stock, and 1,190,000 warrants to purchase a like number of shares of common stock were issued by the Company related to the conversion of convertible debentures at a value of $0.50 per debenture unit, which consisted of one share of common stock and one warrant to purchase a like number of shares of common stock at $0.75 per share over a period of five years. The 31,000,000 shares of common stock related to the merger were subsequently cancelled and re-issued to an officer and Director of the Company, as described below. | |||||||||||
On June 12, 2009, the Company issued 31,000,000 shares of common stock to its President and CEO for expenses and advances incurred on behalf of the Company. This transaction was valued at $31,000. | |||||||||||
The accompanying notes to financial statements are an integral part of these statements.
F-6
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
(1) Summary of Significant Accounting Policies
(a) General Organization and Business
California Gold Corp. (“California Gold” or the “Company” and formerly US Uranium, Inc.) is a Nevada corporation in the exploration stage. The Company was incorporated under the laws of the State of Nevada on April 19, 2004, under the name of Arbutus Resources Inc. The business plan of the Company is the acquisition and exploration of mineral properties. Because the Company was not successful in implementing its business plan due to a lack of funds, the management of the Company determined to seek a joint venture partner or various business options in order to operate as a viable public company.
On June 15, 2007, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada, pursuant to which, the Company (i) increased its authorized capital stock from 75,000,000 shares of common stock, par value $0.001 per share, to 300,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share, and (ii) changed the Company name from Arbutus Resources Inc. to Cromwell Uranium Corp. in anticipation of a merger transaction with Cromwell Uranium Holdings, Inc. (“Holdings”), a uranium exploration and mining company, and to more accurately reflect the new focus of the Company’s proposed business. On July 11, 2007, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Holdings. After the merger, Holdings became a wholly owned subsidiary of the Company.
As a result of adverse developments in the public equity and debt markets, as well as conditions in the mining industry, among other factors, the parties to the Merger Agreement subsequently determined to cancel and unwind the Merger Agreement transaction. Effective August 8, 2007, the parties entered into a reversal agreement (the “Reversal Agreement”). (See Note 9 for additional information). On August 9, 2007, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to change its name to US Uranium, Inc. Subsequently, on March 9, 2009, the Company filed with the Secretary of State of the State of Nevada to change its name to California Gold Corp.
The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid investments instruments purchased with a maturity of three months or less to be cash and cash equivalents.
F-7
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
Revenue Recognition
The Company is in the exploration stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred, provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
Mineral Exploration and Development Costs
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.
Loss per Common Share
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the years ended January 31, 2009, and 2008.
F-8
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the periods presented.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts The Company could realize in a current market exchange. As of January 31, 2009, and 2008, the carrying value of financial instruments approximated fair value due to the short-term nature and maturity of these instruments.
Concentration of Risk
As of January 31, 2009, and 2008, the Company maintained its cash account at one commercial bank. The account was subject to FDIC coverage.
Stock-Based Compensation
The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation - Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
F-9
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
The Company also adopts FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of January 31, 2009, and 2008, and expenses for the years ended January 31, 2009, and 2008, and cumulative from inception. Actual results could differ from those estimates made by management.
(2) Exploration Stage Activities and Going Concern
The Company is currently in the exploration stage and has engaged in limited operations. The Company’s activities through January 31, 2009, have been supported primarily by equity financing. It has sustained losses in all previous reporting periods with a cumulative loss from inception of $1,021,320 as of January 31, 2009. While management of the Company believes that it will be successful in its planned capital formation and operating activities, there can be no assurance that the Company will be successful in the development of its planned objectives and generate sufficient revenues to earn a profit or sustain the operations of the Company. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger, or other acquisition in the event such transaction is deemed by management to be in the best interests of the stockholders.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception and its cash resources are insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
F-10
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
(3) Restatement of Financial Statements
Subsequent to January 31, 2008, management of the Company determined that errors had occurred in (i) the determination of the beneficial conversion feature of certain convertible debentures and related detachable warrants to purchase common stock, and (ii) the comprehensive disclosure of all transactions involving common stock of the Company during the fiscal year ended January 31, 2008. The Company corrected the errors by (i) eliminating the amount of interest expense related to the discount on convertible debentures of $595,000 from the statement of operations, and recorded the convertible debentures and related detachable warrants at their fair values; and (ii) included a comprehensive itemization and discussion of all common stock transactions that occurred during the year ended January 31, 2008, in the restated balance sheet, the statements of stockholders’ equity (deficit) and cash flows, and the notes to financial statements . The impact of the corrections decreased the interest expense and net loss for the period ended January 31, 2008, by $595,000. Net loss per share – basic and diluted decreased from $(0.02) per share to $(0.01) per share for the period ended January 31, 2008.
(4) Note Receivable
As of January 31, 2008, the Company recorded $557,927 of a note receivable – related party in the amount of $557,927, as a result of the Merger, and the subsequent merger reversal transaction. (See Note 9 for additional information).
Pursuant to the Reversal Agreement, Holdings agreed to repay the $535,500 bridge loan principal, plus certain expenses of $22,427.30, which the Company incurred in the Merger transaction, for a total amount of $557,927.30, to the Company, by delivering a promissory note (the “Reversal Note”) in the principal amount of $557,927.30. The Reversal Note was due on November 15, 2007, and bore interest of 9% per annum. The Reversal 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 Holdings.
According to the terms of the Reversal Note, Holdings was to begin making consecutive monthly interest only payments 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.
As of January 31, 2008, Holdings had not made any interest payments on the Reversal Note, nor did it repay the principal amount on the Due Date.
The Company has been pursuing the collection of the Reversal Note. The Company evaluated the financial position of Holdings and believed that as of January 31, 2008, it had the ability and intention to pay the amount due. As of January 31, 2009, the Company determined that Holdings did not intend to pay the Reversal Note and accrued interest, and the Company recorded an allowance for doubtful account for the full amount of the Note. The Company intends to pursue its collections efforts, but the uncertainty as to the collectability of the Reversal Note and accrued interest is sufficient to require an allowance for the receivable as of January 31, 2009.
F-11
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
(5) Convertible Debentures and Warrants
On June 22, 2007, and June 28, 2007, the Company issued a series of convertible debentures (the “Debentures”) with a value of $559,536. The principal amount of the Debentures, together with accrued interest, was due on June 22, 2010. Interest accrued on the unpaid principal balance of the Debentures at the rate of nine percent per annum commencing 120 days from the original issue date of the Debentures through the maturity date. Considering the date of the Merger Agreement of July 11, 2007, described below, no interest was accrued on the Debentures. From and after October 30, 2007, or the date of closing of a merger transaction, whichever date was earlier, the Debentures could be converted into debenture units at a conversion price of $0.50 for one debenture unit. The debenture units consisted of one share common stock and one detachable common stock purchase warrant. Each detachable common stock purchase warrant is exercisable to purchase one share of common stock of the Company at $0.75 per share for a period of five years.
On July 11, 2007, the Company effected the Merger transaction, and simultaneously with the closing of the Merger, the Debentures automatically converted into debenture units. The Company analyzed the conversion feature and detachable warrants related to the Debentures, and determined that such elements of conversion and option did not qualify as derivative instruments. Further, considering the fair market value of the common stock of the Company on the date of Merger, there was no beneficial conversion feature associated with the Debentures or detachable warrants. The Company accounted for the Debentures and warrants as convertible debt with detachable warrants, and the proceeds from the sale of the Debentures and related warrants were allocated between the debt obligations and additional paid-in capital based on the relative fair values of the related instruments, which amounted to $559,536, and $35,464, respectively.
The fair value of each warrant granted has been estimated on the date of grant using the Black-Scholes pricing model, under the following assumptions:
| 2007 | ||||
| Five Year Risk Free Interest Rate | 5.30 | % | ||
| Dividend Yeild | 0.00 | % | ||
| Volatility | 281.34 | % | ||
| Average Expected Term (Years to Exercise) | 3 | |||
F-12
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
A summary of the status of warrants granted as of January 31, 2009, and 2008, is as follows:
| For the Periods Ended | ||||||||
| January 31, 2009, and 2008 | ||||||||
| Weighted | ||||||||
| Average | ||||||||
| Exercise | ||||||||
| Description | Shares | Price | ||||||
| Outstanding at February 1, 2007 | - | - | ||||||
| Granted | 1,190,000 | $ | 0.75 | |||||
| Exercised | - | - | ||||||
| Forfeited | - | - | ||||||
| Expired | - | - | ||||||
| Outstanding at January 31, 2008 | 1,190,000 | $ | 0.75 | |||||
| Granted | - | - | ||||||
| Exercised | - | - | ||||||
| Forfeited | - | - | ||||||
| Expired | - | - | ||||||
| Outstanding at January 31, 2009 | 1,190,000 | $ | 0.75 | |||||
A summary of the status of warrants outstanding as of January 31, 2009, is presented below:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||
| Weighted | Weighted | Weighted | ||||||||||||||
| Range of | Average | Average | Average | |||||||||||||
| Exercise | Number | Remaining | Exercise | Number | Exercise | |||||||||||
| Prices | Outstanding | Life Years | Price | Exercisable | Price | |||||||||||
| $ | 0.75 | 1,190,000 | 3.46 | $ | 0.75 | 1,190,000 | $ | 0.75 | ||||||||
The weighted average grant date fair value of warrants granted during the year ended January 31, 2008, was $0.03 per share for a total value of $35,464. The fair value of warrants vested during the year ended January 31, 2008, was $35,464.
(6) Common Stock
During July 2005, the Company issued 46,990,000 shares (post forward stock split) of its common stock to founders for $7,400 in cash.
During July 2005, the Company issued 6,985,000 shares (post forward stock split) of its common stock for $11,000 in cash.
F-13
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
During August 2005, the Company issued 1,778,000 shares (post forward stock split) of its common stock for $56,000 in cash.
On May 29, 2007, the Company issued 12,700,000 shares (post forward stock split) of its common stock to former officers. The common stock was valued $2,000.
On July 5, 2007, the Company effected a forward split of its common stock on the basis of 6.35 shares for each share issued and outstanding. The accompanying financial statements have been adjusted on a retroactive basis to reflect the impact of this forward stock split.
Pursuant to Merger Agreement, the Company canceled 44,450,000 shares (post forward stock split) of its common stock and issued 31,000,000 shares (post forward stock split) of its common stock to the Holding company’s stockholder. As a result of cancelling and unwinding the merger, the Holding company returned 31,000,000 shares of common stock to the Company’s treasury. (See Note 8 for additional information).
In connection with the terms of the Merger, and cancellation & reversal of the Merger, an officer and Director of the Company made advances to, and incurred expenses on behalf of the Company amounting to approximately $31,000. The advances and expenses were not represented by a promissory note, did not bear interest, and were due on demand. The Company agreed with the officer and Director that, in lieu of a cash repayment of the amount incurred, the Company would reimburse the obligation by issuing 31,000,000 shares (post forward stock split) of its common stock from treasury stock at the par value of $0.001 per share.
In August 2007, the Company issued 1,190,000 shares (post forward stock split) of common stock as a result of the conversion of certain Debentures, in the amount of $559,536.
For the period ended January 31, 2008, the Company recognized a total of $235,668 for donated consulting services. The consulting services were performed by third parties in connection with the acquisition of Holdings, and with the reversal of the acquisition of Holdings, the third parties made the determination to forgive the Company’s liability. The forgiveness of debt was recorded as a donated capital, and was an addition to additional paid-in capital in the accompanying financial statements for the year ended January 31, 2008.
During January 2008, the Company issued 120,000 shares (post forward stock split) of its common stock for $60,000 in cash.
During the year ended January 31, 2009, the Company cancelled 2,000,000 shares (post forward stock split) of its common stock.
On September 18, 2008, the Company issued 4,000,000 shares (post forward stock split) of its common stock for $20,000 in cash.
F-14
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
(7) Income Taxes
The provision (benefit) for income taxes for the years ended January 31, 2009, and 2008, were as follows (assuming a 15 percent effective income tax rate):
| 2009 | 2008 | |||||||
| Current Tax Provision: | ||||||||
Federal- | ||||||||
Taxable income | $ | - | $ | - | ||||
| Total current tax provision | $ | - | $ | - | ||||
| Deferred Tax Provision: | ||||||||
Federal- | ||||||||
Loss carryforwards | $ | 87,445 | $ | 58,188 | ||||
Change in valuation allowance | (87,445 | ) | (58,188 | ) | ||||
| Total deferred tax provision | $ | - | $ | - | ||||
The Company had deferred income tax assets as of January 31, 2009, and 2008, as follows:
| 2009 | 2008 | |||||||
| Loss carryforwards | $ | 153,197 | $ | 65,752 | ||||
| Less - Valuation allowance | (153,197 | ) | (65,752 | ) | ||||
| Total net deferred tax assets | $ | - | $ | - | ||||
The Company had net operating loss carryforwards for income tax reporting purposes of $1,021,320 and $438,355 as of January 31, 2009, and 2008, respectively that may be offset against future taxable income. The net operating loss carryforwards will begin to expire in the year 2026. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs or a change in the nature of the business. Therefore, the amount available to offset future taxable income may be limited.
No tax benefit has been reported in the financial statements for the realization of loss carryforwards, as the Company believes there is high probability that the carryforwards will not be utilized in the foreseeable future. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount.
F-15
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
(8) Related Party Transactions
In connection with the transactions contemplated by the Merger with Cromwell Uranium Holdings, Inc. (which merger, as previously described, was subsequently reversed), an officer and Director of the Company made advances to, and incurred expenses on behalf of the Company in the amount of approximately $31,000. The advances and expenses were not represented by a promissory note, did not bear interest, and were repayable on demand. The Company agreed with the officer and Director that, in lieu of a cash repayment of the amount owed, the Company would repay the obligation by the issuance of 31,000,000 shares of its common stock from the Company’s treasury.
The 31,000,000 shares of common stock were issued to the officer and Director pursuant to a Restricted Stock Purchase Agreement. The agreement provides for a purchase price of par value, or $31,000, which amount was paid to the Company by the cancellation of the indebtedness that the Company owed to the officer and Director. The Company has an option, but not the obligation, to repurchase the shares of common stock, subject to certain limitations, in the event of termination of the officer and Director, at the original purchase price. One-third of the shares (10,333,333 shares) were released from the Company’s right to repurchase on December 31, 2008, and, an additional one-third of the shares were released from the Company’s right to repurchase on December 31, 2009. The remaining restricted shares (10,333,334 shares) will be released from the Company’s right to repurchase on December 31, 2010. The Agreement requires that the stock certificates evidencing the shares be held in escrow until the Company’s right to repurchase lapses.
(9) Merger and Subsequent Merger Reversal Transaction
Effective July 11, 2007, the Company entered into an Agreement and Plan of Merger and Reorganization (“Merger”) with Cromwell Uranium Holdings, Inc (“Holdings”). In order to facilitate the negotiation with Holdings with respect to the Merger, the Company loaned Holdings a total of $535,000 in bridge financing (the “Bridge Financing”) in June 2007. The Company funded the bridge financing by the sale of Debentures convertible into units of the Company’s securities. On June 22, 2007, the Company sold $545,000 of Debentures, and on June 28, 2007, the Company sold an additional $50,000 of Debentures. The Debentures converted into Debenture units at a conversion price of $0.50 in principal amount to one Debenture unit. The Debenture units consist of one share of common stock and one warrant to purchase a like number of shares of common stock. The underlying warrants are exercisable at $ 0.75 per share, over a term of five years.
The Bridge Financing was evidenced by a promissory note (the “Note”) from Holdings to the Company, bearing interest at 9 percent per annum. The Note was due no later than the earlier of (i) October 22, 2007, or (ii) the date of closing of the Merger.
F-16
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
In connection with the Merger, the Company issued 31,000,000 shares of common stock to the pre-merger stockholder of Holdings. As well, $535,000 of gross principal under the Note related to the Bridge Financing to Holdings was deemed repaid in full upon the effect date of the Merger. Also on the closing of the Merger, each $0.50 of Debenture principal, in an aggregate principal amount of $559,536, automatically converted into debenture units. An aggregate of 1,190,000 shares of common stock and 1,190,000 warrants to purchase common stock were issued upon conversion of the Debentures.
Effective August 8, 2007, the parties to the Merger decided to cancel and unwind the Merger by entering into a Reversal Agreement pursuant to which the Company sold the shares of Holdings back to its former stockholder in exchange for the return to the Company and subsequent cancellation of the 31,000,000 shares of common stock issued by the Company in the Merger. As additional consideration for the purchase and sale of the shares of Holdings, Holdings agreed to repay the entire net principal amount of the Note it had received in the Bridge Financing, together with certain expenses incurred by the Company, which in the aggregate, amounted to $557,927.30.
Holdings issued to the Company a Reversal Note. The Reversal Note was due on November 15, 2007, and carried an interest rate of 9 percent per annum. (See Note 4 for additional information).
As a result of the transaction described above, the Company experienced a change in control with the consummation of the Merger, and a further change of control following execution of the Reversal Agreement with the pre-Merger stockholders regaining control of the Company.
(10) Recent Accounting Pronouncements
In March 2008, the FASB issued FASB Statement No. 161, (FASB ASC 815) “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement 133.” SFAS No. 161 (FASB ASC 815) enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB No. 133, “Accounting for Derivative Instruments and Hedging Activities”; and (c) derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Specifically, SFAS No. 161 (FASB ASC 815) requires:
| · | disclosure of the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation; |
| · | disclosure of the fair values of derivative instruments and their gains and losses in a tabular format; |
| · | disclosure of information about credit-risk-related contingent features; |
| · | and cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed. |
F-17
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
SFAS No. 161 (FASB ASC 815) is effective for fiscal years and interim periods beginning after November 15, 2008. Earlier application is encouraged. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.
On May 9, 2008, the FASB issued FASB Statement No. 162, (FASB ASC 105) “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 (FASB ASC 105) is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (“GAAP”) for nongovernmental entities.
Prior to the issuance of SFAS No. 162 (FASB ASC 105), GAAP hierarchy was defined in the American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly in Conformity with Generally Accept Accounting Principles.” SAS No. 69 has been criticized because it is directed to the auditor rather than the entity. SFAS No. 162 (FASB ASC 105) addresses these issues by establishing that the GAAP hierarchy should be directed to entities because it is the entity (not the auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP.
The sources of accounting principles that are generally accepted are categorized in descending order as follows:
| a. | FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB. |
| b. | FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position. |
| c. | AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics). |
| d. | Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry. |
F-18
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
SFAS No. 162 (FASB ASC 105) is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendment to its authoritative literature. It is only effective for nongovernmental entities; therefore, the GAAP hierarchy will remain in SAS 69 for state and local governmental entities and federal governmental entities. The management of the Company does not believe the adoption of this pronouncement to have a material impact on its financial statements.
On May 26, 2008, the FASB issued FASB Statement No. 163, (FASB ASC 944) “Accounting for Financial Guarantee Insurance Contracts.” SFAS No. 163 (FASB ASC 944) clarifies how FASB Statement No. 60, “Accounting and Reporting by Insurance Enterprises” (“SFAS No. 60”), applies to financial guarantee insurance contracts issued by insurance enterprises, including the recognition and measurement of premium revenue and claim liabilities. It also requires expanded disclosures about financial guarantee insurance contracts.
The accounting and disclosure requirements of SFAS No. 163 (FASB ASC 944) are intended to improve the comparability and quality of information provided to users of financial statements by creating consistency. Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under SFAS No. 60, “Accounting and Reporting by Insurance Enterprises.” That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, “Accounting for Contingencies” (“SFAS No. 5”). SFAS No. 163 (FASB ASC 944) requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations and (b) the insurance enterprise’s surveillance or watch list.
SFAS No. 163 (FASB ASC 944) is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for disclosures about the insurance enterprise’s risk-management activities. Disclosures about the insurance enterprise’s risk-management activities are effective the first period beginning after issuance of SFAS No. 163 (FASB ASC 944). Except for those disclosures, earlier application is not permitted. The management of the Company does not believe the adoption of this pronouncement to have material impact on its financial statements.
On May 22, 2009, the FASB issued FASB Statement No. 164, (FASB ASC 958) “Not-for-Profit Entities: Mergers and Acquisitions”. SFAS No. 164 (FASB ASC 958) is intended to improve the relevance, representational faithfulness, and comparability of the information that a not-for-profit entity provides in its financial reports about a combination with one or more other not-for-profit entities, businesses, or nonprofit activities. To accomplish that, this Statement establishes principles and requirements for how a not-for-profit entity:
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CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
| a. | Determines whether a combination is a merger or an acquisition. |
| b. | Applies the carryover method in accounting for a merger. |
| c. | Applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is the acquirer. |
| d. | Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger or an acquisition. |
This Statement also improves the information a not-for-profit entity provides about goodwill and other intangible assets after an acquisition by amending FASB Statement No. 142, Goodwill and Other Intangible Assets, to make it fully applicable to not-for-profit entities.
SFAS No. 164 (FASB ASC 958) is effective for mergers occurring on or after December 15, 2009, and acquisitions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2009. Early application is prohibited. The management of the Company does not expect the adoption of this pronouncement to have material impact on its financial statements.
On May 28, 2009, the FASB issued FASB Statement No. 165, (FASB ASC 855) “Subsequent Events.” SFAS No. 165 (FASB ASC 855) establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, Statement 165 (FASB ASC 855) provides:
| 1. | The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements. |
| 2. | The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements. |
| 3. | The disclosures that an entity should make about events or transactions that occurred after the balance sheet date. |
In accordance with this Statement, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009. The management of the Company does not expect the adoption of this pronouncement to have material impact on its financial
In June 2009, the FASB issued FASB Statement No. 166, (FASB ASC 860) “Accounting for Transfers of Financial Assets- an amendment of FASB Statement No, 140.” SFAS No. 166 (FASB ASC 860) is a revision to SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities” and will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures.
F-20
CALIFORNIA GOLD CORP.
(FORMERLY US URANIUM, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (RESTATED)
JANUARY 31, 2009, AND 2008
This statement is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year that begins after November 15, 2009. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.
In June 2009, the FASB issued FASB Statement No. 167, (FASB ASC 810) "Amendments to FASB Interpretation No. 46(R).” SFAS No. 167 (FASB ASC 810) amends certain requirements of FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities” and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance.
This statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.
In June 2009, the FASB issued FASB Statement No. 168, (FASB ASC 105) "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162.” SFAS No. 168 (FASB ASC 105) establishes the FASB Accounting Standards Codification (the "Codification") to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (“GAAP”). The Codification did not change GAAP but reorganizes the literature.
SFAS No. 168 (FASB ASC 105) is effective for interim and annual periods ending after September 15, 2009. The management of the Company does not expect the adoption of this pronouncement to have a material impact on its financial statements.
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