The accompanying notes are an integral part of these financial statements.
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Gold Standard Mining Corp.
A Development Stage Company
Notes to Condensed Consolidated Financial Statements
Note 1 – Organization and Basis of Presentation
Organization and Business
Gold Standard Mining Corp. was incorporated in Nevada on December 11, 2007. The plan of operations is to acquire at mining rights, including primarily gold mining rights, for a number of properties, to explore such properties for ore reserves, and to develop those properties where such development would appear to be commercially viable. These properties may be anywhere in the world, but at least initially the plan is to focus our efforts in Russia and the former Soviet states due to the potential for high yields. The Company will seek to acquire rights primarily in properties where there is no or low upfront cash payment required, but will instead provide the property owner a royalty or other interest in the revenues from the sale of ores mined from the property.
Basis of Presentation and Going Concern
These statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2010. The operating results for the period ended September 30, 2011 are not necessarily indicative of the results that will be achieved for the full fiscal year ending December 31, 2011 or for future periods.
The accompanying condensed consolidated financial statements have been prepared without audit and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management's estimates and assumptions. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such SEC rules and regulations.
The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
The Company is in the development stage and has had no revenues since inception. Since inception, it has incurred significant losses, and as ofSeptember30, 2011, has an accumulated deficit of approximately $7,250,000. The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.
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Note 2 – Condensed Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the financial statements of Gold Standard Mining Corp. and its wholly owned subsidiary, GS Wyoming. All significant inter-company balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic and Diluted Income (Loss) per Share
Basic income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed similar to basic income per common 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. As of September 30, 2011, there were outstanding options to purchase 50,000 shares of common stock at $5.00 per share and options to purchase 20,000 shares of common stock at $1.50 per share. These shares are not included in the computation of diluted income (loss) per share as the effect would be anti-dilutive.
Recent Accounting Pronouncements
In April 2010, the FASB issued ASU 2010-13, Compensation—Stock Compensation Topic 718, “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades.” ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. This adoption of this pronouncement did not have a material impact on its consolidated financial statements.
There were no other recent pronouncements that would have an impact on the Company’s consolidated financial statements.
Note 3 – Related Party Transactions
Pantelis Zachos, an executive officer, director and a principal shareholder, has periodically made loans to the Company to fund its operations. These loans are non-interest bearing, and are due on demand. Loan balances at September 30, 2011 and December 31, 2010 were $423,336 and $228,983, respectively. During the nine months ending September 30, 2011, the Company borrowed $194,353 from Mr. Zachos.
Note 4 – Loans
The Company received loans of $50,000 and $6,000 during the quarter ended September 30, 2011. These loans are non-interest bearing, and are due on demand.
Note 5 – Commitments and Contingencies
Beginning in 2011, the Company’s executive offices are provided by a shareholder on a month-to-month basis at no cost. The estimated value of this space is recorded as contributed capital at $2,300 per month. Total rent expense for the nine months ended September 30, 2011 amounted to $20,700. Rent expense in the same period in 2010 was negligible.
The Company is unaware of any legal claims against it.
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Item 2.
Management’s Discussion and Analysis of Financial Condition, Results of Operations and Management’s Plans
The following discussion and analysis, which should be read in connection with our financial statements and accompanying footnotes, contains forward-looking statements that involve risks and uncertainties. Important factors that could cause actual results to differ materially from our expectations are set forth in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors That May Affect Our Future Operating Results and Risks of Investing in our Common Stock” in our Form 10-K for the year ended December 31, 2010 as well as those discussed elsewhere in this Form 10-Q. Those forward-looking statements may relate to, among other things, our plans and strategies.
Overview and Plan of Operations
We are a shell company with no active business. We have had no revenues since inception.
Our plan of operations is to acquire at mining rights, including primarily gold mining rights, for a number of properties, to explore such properties for ore reserves, and to develop those properties where such development would appear to be commercially viable. These properties may be anywhere in the world, but at least initially the plan is to focus our efforts in Russia and the former Soviet states due to the potential for high yields. We will seek to acquire rights primarily in properties where there is no or low upfront cash payment required, but will instead provide the property owner a royalty or other interest in the revenues from the sale of ores mined from the property.
In July 2011 we entered into an agreement with 000 GPK Umlekan, Ltd. and its wholly owned subsidiary Umlekan MC Ltd. (collectively, “Umlekan”) for the exploration of gold, copper and other mineral deposits on 184 square kilometers in Eastern Umlekan Ore Node in the Zeya zone in the Amur region of Russia. Umlekan has the exclusive license to geologically study, survey and extract these mineral deposits on this property until December 12, 2033, subject to early termination under certain circumstances. Under the agreement, we have the exclusive right to conduct at our expense further exploration and development work on the property, with the objective of defining a reserve and producing a “bankable feasibility study” (“BFS”). We will carry out the BFS in collaboration with a to-be-selected well-recognized engineering firm that specializes in mining. We presently do not have the funds, or a commitment for funds, to conduct a BFS on the property or for the conduct of mining operations on the property. No assurance can be given that we will be able to raise such funds or that we can obtain funds on terms favorable to our stockholders.
Results of Operations
Three Months Ended September 30, 2011 and 2010
We incurred operating expenses of $182,967 in the quarter ended September 30, 2011, compared to $50,035 in the quarter ended September 30, 2010. Operating expenses include accounting and legal expenses associated with our reporting responsibilities under the Securities Exchange Act of 1934. These expenses amounted to approximately $79,000 in the third quarter of 2011, which were higher than normal primarily due to expenses related to the restatements of our Form 10-Q for the nine months ended September 30, 2010 and our Form 10-K for the year ended December 31, 2009, and the rescission of our acquisition of Rosszoloto Co. Ltd., a Russian mining company, in May 2011. Rent expense (contributed by a shareholder) amounted to $6,900 in the third quarter of 2011. During the quarter, the Company received assistance from its employees and a consultant in developing its plan of operations. The estimated value of services and consulting fees rendered to the Company totaled $57,065 and $12,000, respectively, in the quarter and have been contributed to the Company. The remaining expenses consist of recurring operation expenses.
As a result, we incurred net losses of $182,967 and $50,035 in the third quarters of 2011 and 2010, respectively.
Nine Months Ended September 30, 2011 and 2010
We incurred operating expenses of $424,514 in the nine months ended September 30, 2011, compared to $6,026,508 in the nine months ended September 30, 2010. Operating expenses related to accounting and legal expenses associated with our reporting responsibilities under the Securities Exchange Act of 1934 amounted to approximately $281,000 in the nine months ended September 30, 2011, which were higher than normal for the reasons discussed above. In the nine months ended September 30, 2011, marketing and public relations expenses totaled approximately $27,000 and rent expense (contributed by a shareholder) amounted to $20,700. Operating expenses in the nine months ended 2010 included of $6,001,500 from the issuance of common stock for services to an officer of the Company, with the remaining expenses consisting of recurring operation expenses.
As a result, we incurred net losses of $424,514 and $6,026,508 in the nine months of 2011 and 2010, respectively.
Financial Condition, Liquidity and Capital Resources
We have funded our operations principally through the issuance of stock for services, the issuance of stock for cash, and loans from Pantelis Zachos, an executive officer, director and a principal shareholder. For the nine months ended September 30, 2011, we funded our operating expenses with approximately $194,000 of loans from Mr. Zachos and $56,000 in loans from individuals. These loans are non-interest bearing and due on demand, and totaled approximately $479,000 at September 30, 2011.
Until we commence mining operations, our expenses will be principally legal, accounting and audit expenses in connection with our reporting obligations under the Securities Exchange Act of 1934. We anticipate funding these expenses through stock sales in private transactions or additional shareholder loans. We do not have a commitment from anyone to provide funds for our operating expenses. If we do not obtain funds for these expenses, we may have to cease operations.
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Item 3, Quantitative and Qualitative Disclosures About Market Risk
Because we have no operations, we are not currently subject to market risk.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide reasonable assurance only of achieving the desired control objectives, and management necessarily is required to apply its judgment in weighing the costs and benefits of possible new or different controls and procedures. Limitations are inherent in all control systems, so no evaluation of controls can provide absolute assurance that all control issues and any fraud within the company have been detected.
As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer (the same person has both titles), evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, management concluded that our disclosure controls and procedures were still not effective as of that date due primarily to a lack of employees sufficiently knowledgeable in SEC accounting and reporting.
There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings
Nothing to report.
Item 1A.
Risk Factors
Nothing to report.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Nothing to report
Item 3.
Defaults upon Senior Securities
Nothing to report.
Item 4.
(Removed and Reserved)
Item 5.
Other Information
Nothing to report.
Item 6.
Exhibits
See Exhibit Index attached
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: November 10, 2011 | GOLD STANDARD MINING CORP. By: /s/ Pantelis Zachos
Pantelis Zachos Chief Executive Officer Chief Financial Officer |
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