Piedmont Mining 10-Q 2009 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2009

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission File No.  001-34075

PIEDMONT MINING COMPANY, INC.

(Exact Name of Registrant as Specified in Its Charter)

North Carolina	56-1378516
(State or Other Jurisdiction Of Incorporation or Organization)	(I.R.S. Employer Identification Number)
18124 Wedge Parkway, Suite 214 Reno, Nevada	89511
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (212) 734-9848

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes x                                No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( § 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-3 of the Exchange Act.  (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	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 ¨                                No x

As of August 6, 2009 there were 70,123,643 outstanding shares of the issuer’s common stock.

PIEDMONT MINING COMPANY, INC.

FORM 10-Q INDEX

	Page Number
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets	1
Consolidated Statements of Loss	2
Consolidated Statements of Cash Flows	3
Notes to Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation	11
Item 3. Quantitative and Qualitative Disclosures About Market Risk	16
Item 4T. Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	17
Item 1A. Risk Factors.	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Submission of Matters to a Vote of Security Holders	17
Item 5. Other Information	17
Item 6. Exhibits	17
Signature Page	18

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PIEDMONT MINING COMPANY, INC. (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS
	June 30,	December 31,
	2009 (unaudited)	2008 (audited)
ASSETS	$	$
CURRENT ASSETS
Cash and cash equivalents	276		582
Prepaid expenses and other	4,424		32,431
	4,700		33,013
MINERAL PROPERTIES (Note 3)	142,500		122,000
RECLAMATION BONDS (Note 3)	27,542		29,339
EQUIPMENT (Note 4)	-		65
Total Assets	174,742		184,417
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES
Accounts payable	433,414		401,438
Due to related parties (Note 5)	373,821		253,929
Total current liabilities	807,235		655,367
STOCKHOLDERS’ EQUITY (DEFICIT)
Capital Stock (Note 6)
Authorized:
50,000,000 Preferred stock $1.00 par value
200,000,000 Common stock no par value
Common stock issued and outstanding:
70,040,310  shares (2008 – 68,615,310)	16,545,145		16,485,145
Additional paid-in capital	865,142		848,659
Deficit accumulated prior to the exploration stage	(12,564,287)		(12,564,287	)
Deficit accumulated during exploration stage	(5,478,493)		(5,240,467	)
Total stockholders’ equity (deficit)	(632,493)		(470,950)
Total liabilities and stockholders’ equity (deficit)	174,742		184,417
The accompanying notes are an integral part of these financial statements.

1

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF LOSS

(unaudited)

	Three months Ended June 30, 2009			Three months Ended June 30, 2008			Six months Ended June 30, 2009			Six months Ended June 30, 2008			For the Period from January 1, 2002 (Date  of Inception  of Exploration Stage) to June 30, 2009
	$			$			$			$			$
EXPENSES
Depreciation		-			216			65			432			146,383
Exploration, geological and geophysical costs		1,449			116,981			29,645			190,942			2,282,011
Finance fees		-			-			-						191,200
General and administrative		15,197			91,829			72,461			128,183			882,012
Impairment of mineral  properties (Note 4)		-			205,500			-			205,500			205,500
Management fees		51,350			94,850			100,484			185,117			923,372
Professional fees		12,992			50,196			55,072			105,936			832,350
		80,988			559,572			257,727			816,110			5,462,828
LOSS BEFORE OTHER ITEMS		(80,988	)		(559,572	)		(257,727	)		(816,110	)		(5,462,828	)
OTHER INCOME		19,700			-			19,700			3,198			30,925
L  LOSS ON OTHER NON-OPERATING ACTIVITIES		-			-			-			-			(46,590	)
NET LOSS		(61,288	)		(559,572	)		(238,027)			(812,912	)		(5,478,493	)
BASIC AND DILUTED     LOSS  PER SHARE		(0.001	)		(0.008	)		(0.003	)		(0.013	)
WEIGHTED AVERAGE COMMON      SHARES OUTSTANDING, BASIC     AND DILUTED		69,765,585			66,816,647			69,305,640			64,295,112

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

2

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended June 30,						For the Period  from January 1,  2002 (Date of Inception of  Exploration Stage) to June 30,
	2009			2008			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period		(238,027	)		(812,912	)		(5,478,493	)
Adjustments to reconcile net loss to net cash from operating activities:
Stock issued as finance fees		-			-			100,000
Warrants issued as finance fees		-			-			92,100
Mineral property impairments		-			205,500			205,500
Stock based compensation		16,484			102,517			401,968
Depreciation		65			432			146,383
Gain (loss) on other non-operating activities		-			-			(21,000	)
Changes in operating assets and liabilities:
Prepaid expenses and other		28,007			(223,547	)		(1,475	)
Due to related parties		119,892			3,932			276,808
Accounts payable		38,976			(20,654	)		483,965
NET CASH FLOWS USED IN    OPERATING ACTIVITIES		(34,603	)		(744,732	)		(3,794,244	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares for cash, net of issuance costs		35,000			650,450			3,704,174
Convertible notes		-			-			291,145
NET CASH FLOWS FROM    FINANCING ACTIVITIES		35,000			650,450			3,995,319
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-						(5,579	)
Proceeds from non-operating activities		-			-			97,125
Reclamation bonds refund		1,797			(29,339	)		1,797
Mineral property costs		(2,500	)		(30,000	)		(294,839	)
NET CASH FLOWS USED IN    INVESTING ACTIVITIES		(703	)		(59,339	)		(219,496	)
DECREASE IN CASH		(306	)		(153,621	)		(421	)
CASH, BEGINNING		582			165,877			697
CASH, ENDING		276			12,256			276
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES (Note 7)

The accompanying notes are an integral part of these financial statements

3

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

NOTE 1:                      NATURE OF OPERATIONS

Piedmont Mining Company, Inc. (the “Company”) was formed in 1983 under the laws of the State of North Carolina, USA, and is currently in the exploration stage. The Company is primarily involved in the examination and exploration of mineral properties. Under Statement of Financial Accounting Standards No. 7 (SFAS) Accounting and Reporting by Development Stage Enterprises, the Company re-established itself as an exploration stage company in 2002 and began reporting under exploration stage guidelines.

The Company’s focus for the foreseeable future will be on the exploration of its properties.  Since April 2005, the Company has entered into agreements, directly and under options, for the purpose of exploring for economic deposits of gold and silver in the State of Nevada.  

Going Concern

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America with the on-going assumption applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

The Company is in the exploration stage and to date has not yet generated any net revenues or cash flow from its activities. The Company has a history of losses and has a working capital deficit of $802,535 and an accumulated deficit of $18,042,780 at June 30, 2009.  The Company is dependent on raising further capital to fund ongoing losses and expenditures for its exploration programs. In the current market conditions there is uncertainty that the necessary funding will be obtained as needed, raising substantial doubt as to the ability of the Company to continue operating as a going concern. These financial statements do not reflect any adjustments to the carrying values of assets that might result from the outcome of this uncertainty.

The Company plans to fund its ongoing operations by way of private placements of its securities.  Management believes continued  efforts to sell stock and warrants as well as advances from management will contribute toward funding the Company’s activities until appropriate levels of funding can be arranged and/or revenue can be earned from the properties either through production or sale.  The global financial situation in 2008 and 2009 and the ensuing downturn in the economy and in the mineral exploration industry have severely restricted the ability of junior resource companies to raise capital. These conditions cast significant doubt on the Company’s ability to continue its exploration activities, particularly if current market conditions continue for a sustained period. If the Company is unsuccessful in raising adequate financing, exploration activity will be postponed until market conditions improve.

Unaudited Interim Financial Statements

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statement disclosure. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2008, included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2009. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

4

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

 NOTE 2:                      RECENT ACCOUNTING PRONOUNCEMENTS

In April 2009, the FASB issued FSP SFAS 157-4 which provides additional guidance for estimating fair value in accordance with SFAS 157, “Fair Value Measure In April 2009, the FASB issued FSP SFAS 157-4 which provides additional guidance for estimating fair value in accordance with SFAS 157, “Fair Value Measurements”, when the volume and level of activity for the asset or liability have significantly decreased. FSP SFAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP SFAS 157-4 requires the disclosure of the inputs and valuation technique(s) used to measurements”, when the volume and level of activity for the asset or liability have significantly decreased. FSP SFAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP SFAS 157-4 requires the disclosure of the inputs and valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques and related inputs, if any, during the period. The adoption of this statement did not have a material impact on the Company’s results of operations and financial position.

In June 2009, the FASB issued FAS No. 165 “Subsequent Events” (“FAS 165”). FAS 165 requires companies to recognize in the financial statements the effects of subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. An entity shall disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued.  Companies are not permitted to recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued. Some non recognized subsequent events must be disclosed to keep the financial statements from being misleading.  For such events a company must disclose the nature of the event, an estimate of its financial effect, or a statement that such an estimate cannot be made. This Statement applies prospectively for interim or annual financial periods ending after June 15, 2009. The adoption of FAS 165 is not expected to have a material impact on the Company’s results of operations and financial position.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (“SFAS 168”). Upon its adoption, the FASB Accounting Standards Codification (the “Codification”) will become the source of authoritative GAAP recognized by the FASB to be applied to nongovernmental entities. On the effective dateof SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. Following SFAS 168, the FASB will not issue new accounting standards in the form of FASB Statements, FASB Staff Positions, or Emerging Issues Task Force abstracts. SFAS 168will also modify the existing hierarchy of GAAP to include only two levels — authoritative and non-authoritative. SFAS 168 will be effective for financial statements issued for interim and annual periods ending after September 15, 2009, and early adoption is not permitted. The Company does not believe that the adoption of this standard will have a material impact on its financial position, results of operations or cash flows.

 NOTE 3:                      MINERAL PROPERTIES

The Company has entered into various property agreements. A summary of capitalized costs is as follows:

	Balance as at December 31, 2008	Transactions during the period	Balance as at June  30, 2009
	$	$	$
Argentite Gold		2,500	2,500
Bullion Mountain	27,000	8,000	35,000
Dutch Flat	35,000	-	35,000
Pasco Canyon	10,000	-	10,000
PPM Gold	25,000	-	25,000
Trinity Silver	10,000	-	10,000
Willow Creek	15,000	10,000	25,000
	122,000	20,500	142,500

5

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

 NOTE 3:                      MINERAL PROPERTIES (continued)

	Balance as at December 31, 2008	Transactions during the period	Balance as at June  30, 2009
Reclamation Bonds:
PPM Gold	11,566	-	11,566
Willow Creek	17,773	(1,797)	15,976
	29,339	(1,797)	27,542

Argentite Gold Project

On March 10, 2009, upon paying $2,500, the Company signed a Letter of Intent to enter into an Exploration Agreement with Option to form Joint Venture on the Argentite gold property in western Nevada once the gold price exceeds $1,000 per ounce for more than 25 consecutive business days or after 90 days from the date of signing the Letter of Intent.  On signing the formal agreement, the Company would pay $8,000 and then undertake a work commitment of $750,000 over a five year period to earn a 51% interest in the property and the project, or up to a 70% interest upon completion of a bankable feasibility study.  In addition, the Company would make annual payments of $10,000 by the first anniversary of the agreement, $15,000 on the second anniversary, $20,000 by the third anniversary and $25,000 by the fourth anniversary, all of which would be creditable against the work commitment.

 NOTE 4                       EQUIPMENT

	June 30, 2009			December 31, 2008
Computer Equipment	$	5,579		$	5,579
Less: accumulated depreciation		(5,579	)		(5,514	)
	$	0		$	65

 NOTE 5:                      DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The Board of Directors has authorized a monthly management fee of $14,000 to the Company’s President and CEO. The unpaid portion of the monthly management fees at June 30, 2009 and December 31, 2008 was $231,250 and $147,250, respectively.  Unreimbursed administrative expenses incurred by the President and CEO at June 30, 2009 and December 31, 2008 were $33,655 and $19,066, respectively. The Company reimburses the President for office rent, which totaled $9,600 for the six months ended June 30, 2009 and 2008

The President had advanced funds to the Company totaling $32,890 as of June 30, 2009, which remain unpaid and have accrued interest at 5% of $830, in accordance with Company policy.

6

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

 NOTE 5:                      DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS(continued)

The unpaid portion of exploration costs incurred by the Company’s Vice-President at June 30, 2009 and December 31, 2008 were $22,567 and $28,270, respectively, which includes his compensation of $24,940 and $21,880, respectively, for services relating to the various exploration projects and research and development. The Vice-President had incurred expenses on behalf of the Company totaling $9,232 as of June 30, 2009, which remain unpaid.

The directors receive a fee of $200 per meeting for participating in Board meetings and Compensation and Audit Committee meetings. The Chairmen of these Committeesreceive $300 per meeting. The unpaid portion of these fees at June 30, 2009 and December 31, 2008 were $1,400.

From time to time, the Company’s officers and directors advance monies to the Company. These loans bear interest at 5% per annum. These loans are unsecured and have no fixed repayment terms. The unpaid balances including interest related to these advances at June 30, 2009 and December 31, 2008 were $75,717 and $17,724, respectively.

No stock options were granted to its officers or directors by the Company for the six months ended June 30, 2009.

All related party transactions involving the provision of services or transfer of tangible assets in the normal course of business were recorded at the exchange amount, which is the value established and agreed to by the related parties reflecting arms length consideration payable for similar services or transfers.  (Other related party transactions are disclosed in Note 6.)

 NOTE 6:                      CAPITAL STOCK

Share Capital

The Company’s capitalization is 50,000,000 authorized preferred shares with a par value of $1.00 per share and 200,000,000 common shares with no par value.

Common Share Transactions

During the six months ended June 30, 2009, the Company completed the following equity transactions:

In January, 2009, the Company completed a private placement offering of 125,000 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.04 per Unit for proceeds of $5,000.  The Warrants are exercisable for a period of two years and entitle the holder to purchase one share of Common Stock for $0.10 per Share.

In March, 2009, the Company completed a private placement offering of 100,000 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.05 per Unit for proceeds of $5,000.  The Warrants are exercisable for a period of two years and entitle the holder to purchase one share of Common Stock for $0.15 per Share.

In March, 2009, the Company completed a private placement offering of 200,000 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.05 per Unit for proceeds of $10,000.  The Warrants are exercisable for a period of two years and entitle the holder to purchase one share of Common Stock for $0.10 per Share

7

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

 NOTE 6:                      CAPITAL STOCK (continued)

Common Share Transactions (continued)

In March, 2009, the Company issued 500,000 shares of Common Stock with a fair value of $0.05 per share or $25,000, pursuant to a letter agreement, as partial satisfaction of outstanding debt.

In May, 2009, the Company completed a private placement offering of 500,000 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.03 per Unit for proceeds of $15,000.  The Warrants are exercisable for a period of three years and entitle the holder to purchase one share of Common Stock for $0.05 per Share.

Stock-Based Compensation and Other Equity Transactions

The Company does not have a stock-based compensation plan.  The Company’s Compensation Committee makes recommendations to the Board of Directors for the granting of awards of stock options to its officers and directors on a case-by-case basis.

Total compensation expense for the six months ended June 30, 2009 was $16,484, which corresponds to the vesting schedule of two to three years.  As of June 30, 2009, the total compensation expense related to non-vested awards to be recognized in future periods is $7,500.  This expense will be recognized ratably during 2009. Below is a summary of the stock option activity for the six months ended June 30, 2009:

				Weighted
	Number of			Average
	Options			Exercise Price
Total Options				$
Outstanding, December 31, 2007		5,975,000			0.235
Cancelled March 4, 2008		(400,000	)		0.200
Granted April 9, 2008		150,000			0.280
Outstanding, December 31, 2008		5,725,000			0.239
Expired		-			-
Granted		-			-
Outstanding, June 30, 2009		5,725,000			0.239
Nonvested Options				$
Nonvested options, December 31, 2007		1,150,000			0.11
Granted April 9, 2008		150,000			0.12
Vested		(1,075,000	)		0.11
Nonvested options December 31, 2008		225,000			0.11
Vested		(158,333	)		0.11
Nonvested options June 30, 2009		66,667			0.25

The following tables summarize information and terms of the options outstanding and exercisable:

Options Outstanding at June 30, 2009				Options Exercisable at June 30, 2009
		Weighted			Weighted
		Average			Average
		Remaining	Weighted		Remaining	Weighted
Range of	Number	Contractual	Average	Number	Contractual	Average
Exercise Prices	of Shares	Life (in years)	Exercise Price	of Shares	Life (in years)	Exercise Price
$ 0.20 – 0.28	5,725,000	1.73	$      0.239	5,658,333	1.72	$     0.236

8

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

NOTE 6:                      CAPITAL STOCK (continued)

Stock-Based Compensation and Other Equity Transactions (continued)

Options Outstanding at December 31, 2008				Options Exercisable at December 31, 2008
		Weighted			Weighted
		Average			Average
Range of		Remaining	Weighted		Remaining	Weighted
Exercise	Number	Contractual	Average	Number	Contractual	Average
Prices	Of Shares	Life (in years)	Exercise Price	of Shares	Life (in years)	Exercise Price
$ 0.20 – 0.28	5,725,000	2.23	$      0.239	5,500,000	2.135	$     0.238

The outstanding and exercisable stock options had no intrinsic value at June 30, 2009.

Common Stock Purchase Warrants

Total outstanding warrants at June 30, 2009 were 8,591,535.  The exercise prices on all warrants range from $0.05 to $0.60 per share. The warrants are exercisable immediately upon issuance and the expiration dates range between two years and five years after the date of issuance.

During the six months ended June 30, 2009, the Company issued warrants relating to unit private placements granting holders the right to purchase 925,000 shares of common stock.  The exercise prices on these warrants range from $0.05 to $0.15 per share. The warrants were exercisable immediately upon issuance and the expiration dates are two and three years after issuance.  The Company estimated the total fair market value of these warrants to be $13,900 at the date of grant, using the BSM pricing model using an expected life of one year, a risk-free interest rate of 4.45% and an expected volatility of 109%.  The fair value of the warrants has been included in capital stock.

The warrants exercisable at June 30, 2009 had no intrinsic value.

A summary of the Company’s stock purchase warrants as of June 30, 2009  is presented below:

	Number of Warrants	Weighted average exercise price	Weighted average remaining life (years)
		$
Balance, December 31, 2008	10,479,035	0.320	1.09
Exercised	-
Expired	(2,812,500)
Issued	925,000	0.078	1.96
Balance, June 30, 2009	8,591,535	0.333	0.76

 NOTE 7:                      SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES

In March, 2009, the Company issued 500,000 shares of Common Stock with a fair value of $0.05 per share or $25,000, pursuant to a letter agreement as partial satisfaction of outstanding debt.

	Six months ended June 30, 2009	Six months ended June 30, 2008
	$	$
Interest paid	-	-
Income taxes paid	-	-

9

PIEDMONT MINING COMPANY, INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009

(unaudited)

 NOTE 8:                      SUBSEQUENT EVENTS:

In July, 2009, the Company completed a private placement offering of 83,333 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.06 per Unit for proceeds of $5,000.  The Warrants are exercisable for a period of two years and entitle the holder to purchase one share of Common Stock for $0.10 per Share.

In July, 2009, the Company was granted a 10.5% undivided working interest in an oil well in Tennessee.

10

Item 2. Management’s Discussion And Analysis Or Plan Of Operations

Forward-Looking Statements and Associated Risks.

Except for statements of historical facts, this report contains forward-looking statements involving risks and uncertainties. You can identify these statements by forward-looking words including “believes,” “considers,” “intends,”  “expects,” “may,” “will,” “should,” “forecast, “ or “anticipates,” or the equivalents of those words or comparable terminology, and by discussions of strategies that involve risks and uncertainties. Forward-looking statements are not guarantees of our future performance or results, and our actual results could differ materially from those anticipated in these forward-looking statements. We wish to caution readers to consider the important factors, among others, that in some cases have affected, and in the future could affect our actual results and could cause actual consolidated results for future fiscal years to differ materially from those expressed in any forward-looking statements made by us or on our behalf. These factors include without limitation, our ability to obtain capital and other financing in the amounts and at the times needed, identification of suitable exploration properties for acquisition, the successful discovery of gold, silver or other precious metals in quantities economically feasible for profitable production, changes in gold and silver prices, changes in the political climate for gold and silver exploration, and other risk factors listed from time to time in our Securities and Exchange Commission reports, including in particular the factors and discussions under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2008  that was filed with the Securities and Exchange Commission on March 31, 2009.

Overview of Business

We are a North Carolina corporation formed in 1983. From our inception until 1992, we were engaged in the exploration for, and production of, gold and other precious metals and the evaluation of gold properties in North Carolina and South Carolina. From 1983 we were engaged in exploration and from early 1985 until May 1992, we were also engaged in the mining and production of gold and silver at our Haile Mine Property near Kershaw, South Carolina. In May 1992, we entered into a joint venture at our Haile Mine Property with AGI. Our operations ceased at the Haile Mine Property in 1994. We did not again become engaged in exploration activities until 2004, when we relocated our principal place of business to Reno, Nevada. Since October 2003, we have been an exploration stage company engaged in the acquisition and exploration of mineral properties. We have now entered into seven option and earn-in agreements on seven different exploration properties in the state of Nevada. Our plan is to conduct exploration for gold and silver at each of these properties and at other properties we may enter into agreements on to assess whether they possess economic deposits of gold and/or silver, which can be recovered at a profit. We do not intend to build an exploration staff, but rather to work with competent exploration groups who can manage the exploration activities with our funding, although in some cases we may conduct exploration on our own using contractors. We do not know whether a commercially viable ore body will be located on any of our mineral claims or leased properties. Our current plans are limited to research and exploration in the state of Nevada.

Going Concern

The report of our independent auditors in our December 31, 2008 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses from operations, an accumulated deficit of $17,804,754 and a working capital deficit of $622,354 at December 31, 2008. Our ability to continue as a going concern will be determined by our ability to raise adequate funds and conduct one or more successful exploration programs. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make a wide variety of estimates and assumptions that affect: (1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgments become even more subjective and complex. We have identified certain accounting policies that are most important to the portrayal of our current financial condition and results of operations.

Results of Operations

Discussion of Revenues

We have no revenues at this time and have not had any revenues in recent years, because we are an exploration company. We do not anticipate that significant revenues will be achieved until we

either:

·  locate one or more economic mineral deposits which could then be put into production, from which we would then be able to extract gold or silver at a profit; or

·    enter into a joint venture arrangement on one or more of our leased properties; or 

There is no guarantee that our exploration activities will locate viable gold and/or silver reserves, or if an economic mineral deposit were discovered that we would be able to commence commercial production, or that if we do locate viable mineralization that we would be able to secure the funding necessary to proceed with the mining and production of the ore.

Expenses for the Six Month Period ending June 30, 2009 vs. June 30, 2008

Expenses for the Three Month Period ending June 30, 2009 vs. June 30, 2008

Exploration, geological and geophysical costs decreased by $115,532, or (98.76%) to $1,449 for the three months ended June 30, 2009 as compared to $116,981 for the three months ended June 30, 2008.  The principal reason for this decrease was due to a decrease in exploration activity due to a lack of funding. 

Exploration, geological and geophysical costs decreased by $161,297, or (84.47%) to $29,645 for the six months ended June 30, 2009 as compared to $190,942 for the six months ended June 30, 2008.  The principal reason for this decrease was due to a decrease in exploration activity due to a lack of funding. 

Management fees decreased by $43,500, or (45.86%), to $51,350 for the three months ended June 30, 2009 as compared to $94,850 for the three months ended June 30, 2008.  The principal reason for this change for the three month period was due to a decrease of $40,400 in recording the expense of vested options and a decrease of $2,100 in directors’ fees.

Management fees decreased by $84,633, or (45.72%), to $100,484 for the six months ended June 30, 2009 as compared to $185,117 for the six months ended June 30, 2008.  The principal reason for this change for the six month period was due to a decrease of $86,033 in recording the expense of vested options, a decrease of $2,600 in directors’ fees and an increase of $4,000 in the monthly fees paid to the president.

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For the three months ended June 30, 2009, professional fees decreased $37,204, or (74.12%),  to $12,992 as compared to $50,196 for the three months ended June 30, 2008.  This change for the three month period is due to a decrease in legal fees of $34,475 as the Company had not finalized any new agreements for the quarter and a decrease in accounting fees of $2,729 due to increased efficiencies ..

For the six months ended June 30, 2009, professional fees decreased $50,864, or (48.01%),  to $55,072 as compared to $105,936 for the six months ended June 30, 2008.  This change for the six month period is due to a decrease in legal fees of $48,955 as the Company had not finalized any new agreements for the quarter and a decrease in accounting fees of $1,909 due to increased efficiencies.

Depreciation expense decreased by $216, or (100%), to $0 for the three months ended June 30, 2009 as compared to $216 for the three months ended June 30, 2008.  The principal reason for this change is attributable to equipment becoming fully depreciated.

Depreciation expense decreased by $367, or (84.95%), to $65 for the six months ended June 30, 2009 as compared to $432 for the six months ended June 30, 2008.  The principal reason for this change is attributable to equipment becoming fully depreciated

Liquidity and Financial Condition  

Cash and Working Capital

We had an accumulated deficit of ($17,804,754) from our inception in 1983 to December 31, 2008, and an accumulated deficit of ($18,042,780) at June 30, 2009.  We had a working capital deficit of $802,535 at June 30, 2009.  We have no contingencies or long-term obligations except for our work commitments described under our seven (7) property agreements on our leased properties. All of these agreements can be terminated by us upon either 30 or 60 days notice.

We had a cash balance of $582 on December 31, 2008 and a cash balance of $276 on June 30, 2009.  For the six months period ending June 30, 2009, we had net cash outflows of $306.

The cash flows used in operations for the six month period ended June 30, 2009 were $34,603 compared with $744,732 for the same period in 2008.  Cash flows used in operations for the six month period ended June 30, 2009 consisted primarily of a net loss of $238,027 including stock based compensation of  $16,484, with changes in working capital assets and liabilities consisting of a net decrease in prepaid expenses of $28,007, an  increase in accounts payable and accrued liabilities of $38,976 and an increase of $119,892 to accrued expenses for amounts unpaid to related parties..

Net cash flows provided by equity financing activities were $35,000 versus $650,450 during the same period in 2008.  

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Internal and External Sources of Liquidity

During the forthcoming 12 month period, we plan to fund our operations through issuances of Common Stock or Common Stock with warrants, by advances from management and from cash flow provided by interests in oil and gas wells.  However, there is no guarantee or assurance that this will be achieved. In the event, we are unable to raise additional capital, we may not be able to meet our obligations and may be required to curtail or terminate some of our planned exploration programs

Contractual Obligations

We have no commitments for capital expenditures.

We do not engage in hedging transactions and we have no hedged mineral resources.

At June 30, 2009 we are committed to making certain exploration work expenditures, lease and option payments, and claims maintenance payments on properties as follows.

Bullion Mountain Gold Project:

· Required work expenditure by November 11, 2006:  $20,000 of which $27,305 has already been expended.  In September, 2007, this agreement was amended and the time for completing the remaining work obligation was extended indefinitely.

· Claims maintenance: $8,651 has been paid through August 31, 2008. $2,940 to be paid by September 1, 2009

· Annual payments:  $15,000 has been accrued, of which $3,000 has been paid. An additional $15,000 will be due on November 1, 2009.

Trinity Silver Project:

· Required work expenditure: $800,000, of which $629,408 was expended through June 30, 2009.  The remaining approximately $370,000 to be completed by September 2009.  Further work will depend upon the timing and receipt of additional funds.  

· Claims maintenance:  $21,579 has been paid through August 31, 2008.  $8,260 due by September 30, 2009.

· Annual payments:  $0.

Pasco Canyon Gold Project:

· Required work expenditure:  $57,355 has already been completed. Further work postponed pending receipt of drill permit from U.S. Forest Service, and the receipt of additional funds.

· Claims maintenance: $9,416 has been paid through August 31, 2008.  $3,360 due by September 1, 2009.

· Annual payments; $0.

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Dutch Flat Gold Project:

· Required work expenditure:  $500,000 by March 31, 2009, of which $543,516 was expended as of June 30, 2009.  Further work will depend upon the timing and receipt of additional funds.

· Claims maintenance; $15,451 has been paid through August 31, 2008.  $15,960 due by August 20, 2009.

· Annual payments; $0.

PPM Gold Project:

· Required work expenditure for first year; $175,000, of which $142,702 has been expended.  The difference is expected to be expended in the near future.  The timing and amount of additional work will depend upon the timing and amount of funding received.  Both parties wish to continue with the planned exploration program for the property.

· Claims maintenance:  $28,781 has been paid through August 31, 2008.  $6,860 due by September 1, 2009.

· Annual payments; $0.

Willow Creek Gold Project:

· Option and Earn-in Agreement was signed. Initial signing fee of $10,000 was paid in December, 2007.  A cash advance of $300,000 was deposited for the first year’s exploration costs. In addition, 100,000 common shares were issued in July, 2008 valued at $15,000 in accordance with the Option and Earn-in Agreement. As at June 30, 2009, the cash on deposit was $2,424, and $297,576 of those funds had been expended along with an additional $12,584 for a total expenditure of $308,363, including a refund of $1,797 on the reclamation bond, to complete the first year work commitment.  Additional work will depend upon the amount and timing of the receipt of additional funds.

·  Claims Maintenance:  $22,120 will be due by September 1, 2009, of which $5,460 has been paid.

· Annual Payments:  $10,000 on each anniversary of the agreement of which $10,000 was due in June, 2009, and has been accrued.

Morgan Pass Gold Project:

· On May 20, 2008, a Letter of Intent was signed on the Morgan Pass Project.  The option and earn in agreement will not be prepared and signed until the property is released into ‘multiple use’ classification by the Bureau of Land Management. Funds of $14,351 have been expended to date.   Claims maintenance fees of $3,080 due by September 1, 2009.

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Argentite Gold Project:

· On March 10, 2009, upon paying $2,500, the Company signed a Letter of Intent to enter into an Exploration Agreement with Option to form Joint Venture on the Argentite gold property in western Nevada once the gold price exceeds $1,000 per ounce for more than 25 consecutive business days or after 90 days from the date of signing the Letter of Intent.  On signing the formal agreement, the Company will pay $8,000 and will then undertake a work commitment of $750,000 over a five year period to earn a 51% interest in the property and the project, or up to a 70% interest upon completion of a bankable feasibility study.  In addition, the Company would make annual payments of $10,000 by the first anniversary of the agreement, $15,000 on the second anniversary, $20,000 by the third anniversary and $25,000 by the fourth anniversary, all of which would be creditable against the work commitment. The Option and Earn-in Agreement has not yet been prepared or signed.  Claims maintenance fees of $1,120 due by September 1, 2009.

All of these property agreements can be terminated on 30 to 60 days advance notice

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

We do not engage in hedging transactions and we have no hedged resources.

Item 3. Quantitative and Qualitative Disclosure About Market Risks

Not Applicable.

Item 4T. Controls And Procedures

(A)          Evaluation of Disclosure Controls and Procedures

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

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon and as of the date of that evaluation, our principal executive officer and financial officers concluded that there were material weaknesses in our internal controls, including those which relate to the review, approval and reconciliation of accounting data and entries. Accordingly, we believe that our disclosure controls and procedures were ineffective as of the end of the period covered by this quarterly report.  We are addressing these issues by reviewing and revising our internal accounting policies and procedures.

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(B)           Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except that we continue to look for ways to improve our internal controls.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

To the best knowledge of management, there are no material legal proceedings pending against the Company.

Item 1A. Risk factors

Not Applicable.

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

In May, 2009, the Company completed a private placement offering of 500,000 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant at a price of $0.03 per Unit for proceeds of $15,000.  The Warrants are exercisable for a period of three years and entitle the holder to purchase one share of Common Stock for $0.05 per Share.

The issuances of Common Stock was made by us in reliance upon the exemptions from registration provided under Section 4(2) and 4(6) of the Securities Act and Rule 506 of Regulation D, promulgated by the SEC under federal securities laws and comparable exemptions for sales to “accredited” investors under state securities laws.  

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission Of Matters To A Vote Of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
33131.1	Certification Pursuant to Section 302*
33232.1	Certification Pursuant to 18 U.S.C. Section 1350*

________________

*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PIEDMONT MINING COMPANY, INC., a North Carolina Corporation
Dated: August 13, 2009	/s/ Robert M. Shields, Jr.
	By:  Robert M. Shields, Jr. Its:  Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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