IRONCLAD ENCRYPTION (IRNC) 10-Q 2014 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2014

OR

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

For the transition period from                            to                          

Commission file number:    000-53662

BUTTE HIGHLANDS MINING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	81-0409475
(State or other jurisdiction of incorporation  or organization)	(I.R.S. Employer Identification No.)
P.O.   Box 99, Liberty Lake, WA	99019
(Address of principal executive offices)	(Zip Code)

(509) 979-3053

(Issuer's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 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 filings for the past 90 days.  YESx  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¨ Nox

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨(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). Yesx No¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  According to our Transfer Agent, at November 6, 2014, there were 1,327,698 shares of Class A Common Stock and 1,654,191 shares of Class B Common Stock issued and outstanding.

BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

TABLE OF CONTENTS

PART I. FINANCIAL STATEMENTS

ITEM 1.  FINANCIAL STATEMENTS

BUTTE HIGHLANDS MINING COMPANY (A Development Stage Company) BALANCE SHEETS
		September 30		December 31
		2014		2013
		(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	145,812	$	171,951
Prepaid expense		-		327
Total Current Assets		145,812		172,278
TOTAL ASSETS	$	145,812	$	172,278
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	450	$	925
Total Current Liabilities		450		925
COMMITMENTS AND CONTINGENCIES		-		-
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 20,000,000 shares authorized,       none issued and outstanding		-		-
Common stock, Class A, $0.001 par value 500,000,000 shares       authorized; 1,327,698 shares issued and outstanding		1,328		1,328
Common stock, Class B, $0.001 par value 1,707,093 shares       authorized; 1,654,191 shares issued and outstanding		1,654		1,654
Additional paid-in capital		269,469		269,469
Accumulated income prior to development stage		242,106		242,106
Accumulated deficit during development stage		(369,195)		(343,204)
Total Stockholders' Equity		145,362		171,353
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	145,812	$	172,278

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

BUTTE HIGHLANDS MINING COMPANY (A Development Stage Company) STATEMENTS OF OPERATIONS
										Period from
										May 18, 2007
										(Inception of
		Three Months Ended				Nine Months Ended				Development Stage)
		September 30				September 30				to September 30
		2014		2013		2014		2013		2014
		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
REVENUES	$	-	$		$	-	$	-	$	-
OPERATING EXPENSES
Professional fees		5,385		2,590		23,942		26,096		256,704
Depreciation		-		-		-		-		1,295
Officers and directors fees		-		-		-		-		6,000
General and administrative		521		3,932		2,055		22,854		64,174
TOTAL OPERATING EXPENSES		5,906		6,522		25,997		48,950		328,173
LOSS FROM OPERATIONS		(5,906)		(6,522)		(25,997)		(48,950)		(328,173)
OTHER INCOME (EXPENSES)
Interest income		2		2		6		504		10,815
Interest expense		-		-		-		-		(553)
Other income		-		-		-		-		740
Other expense		-		-		-		-		(459)
Other than temporary impairment of investment		-		-		-		-		(165,240)
Gain on sale of investment		-		-		-		-		66,072
TOTAL OTHER INCOME (EXPENSES)		2		2		6		504		(88,625)
LOSS BEFORE TAXES		(5,904)		(6,520)		(25,991)		(48,446)		(416,798)
INCOME TAXES
Income tax benefit		-		-		-		-		50,764
Tax expense		-		-		-		-		(3,161)
TOTAL INCOME TAXES		-		-		-		-		47,603
NET LOSS	$	(5,904)	$	(6,520)	$	(25,991)	$	(48,446)	$	(369,195)
NET LOSS PER COMMON SHARE,   BASIC AND DILUTED	$	(0.00)	$	(0.00)	$	(0.01)	$	(0.02)
WEIGHTED AVERAGE NUMBER OF   COMMON STOCK SHARES OUTSTANDING,   BASIC AND DILUTED		2,981,889		2,981,889		2,981,889		2,981,889

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

BUTTE HIGHLANDS MINING COMPANY (A Development Stage Company) STATEMENTS OF CASH FLOWS
							Period from
							May 18, 2007
							(Inception of
		Nine Months Ended				Development Stage)
		September 30				to September 30
	2014		2013			2014
	(unaudited)		(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(25,991)	$	(48,446)	$		(369,195)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation		-		-			1,295
Gain on sale of investments		-		-			(66,072)
Other than temporary impairment of investment		-		-			165,240
Changes in assets and liabilities:
Decrease (increase) in prepaid expense		327		-			961
Decrease (increase) in deferred tax asset				-			50,830
Decrease (increase) in refund receivable				-			3,198
Increase (decrease) in accounts payable		(475)		126			450
Increase (decrease) in income tax payable							(237,798)
Net cash used by operating activities		(26,139)		(48,320)			(451,091)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for equipment purchased		-		-			(543)
Cash received for mining claims		-		-			405,000
Cash received for sale of investment		-		-			116,832
Net cash provided by investing activities		-		-			521,289
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from sale of common stock		-		-			35,000
Net cash provided by financing activities		-		-			35,000
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS		(26,139)		(48,320)			105,198
Cash, beginning of period		171,951		232,720			40,614
Cash, end of period	$	145,812	$	184,400	$		145,812
		-
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-	$	-
Income taxes paid	$	-	$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Investment received for mining claims	$	-	$	-	$		216,000

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

BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

June 30, 2014

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Butte Highlands Mining Company (hereinafter “Butte” or “the Company”) was incorporated in May 1929 under the laws of the State of Delaware for the purpose of exploring and mining the Butte Highland’s (Only Chance) Mine, south of Butte, Montana.  The Company was reorganized in October 1996 for the purpose of acquiring and developing mineral properties.  As of the date of reorganization, stockholders representing approximately 76% of the outstanding capital stock could not be located.  In order to obtain the quorum necessary for the special meetings, the Company obtained an order from the Superior Court of Spokane County, Washington appointing a trustee for the benefit of those stockholders which could not be located.  

As of May 17, 2007 the Company had disposed of all of its historical mineral properties or claims, and has reentered the development stage.  The Board of Directors intends to seek out an appropriate business opportunity and has not limited its search to any particular industry. Management believes it can identify opportunities in several sectors and will proceed with the appropriate diligence to create value for the shareholders. Operations are primarily conducted from the Company headquarters in Spokane, Washington.

The Company had entered into negotiations with a possible acquirer.  The deal is no longer going through due to lack of financing.

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013.  In the opinion of management, the unaudited interim financial statements furnished herein includes all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.  Operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Butte Highlands Mining Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

Fair Value of Financial Instruments

The Company's financial instruments as defined by ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses.  All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2014.

The standards under ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements.  FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

June 30, 2014

Level 1.  Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3.  Unobservable inputs in which there is little of no market data, which require the reporting entity to develop its own assumptions.

The Company did not have any assets measured at fair value at September 30, 2014.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25Income Taxes – Recognition.  Under the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. See Note 4.

New Accounting Pronouncements

On June 10, 2014 the FASB issued authoritative guidance which eliminates the concept of a development stage entity.  The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company is evaluating the effect of this standard on its financial reporting and expects to adopt the transitional changes in the appropriate quarter.

NOTE 3 – RELATED PARTY TRANSACTIONS

The Company utilized office facilities provided by its president.  The value of the office facilities provided by the Company’s president is nominal and immaterial to the financial statements.

NOTE 4 – INCOME TAXES

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25Income Taxes – Recognition.  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.

BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

June 30, 2014

Significant components of the deferred tax assets at an anticipated tax rate of 35% for the periods ended September 30, 2014 and December 31, 2013 are as follows:

	September 30, 2014	December 31, 2013
Net operating loss carryforwards	129,000	103,000
Deferred tax asset	45,150	36,050
Valuation allowance for deferred asset	(45,150)	(36,050)
Net deferred tax asset	-	-

At September 30, 2014, the Company has net operating loss carryforwards of approximately $129,000 which will begin to expire in the year 2031. The change in the allowance account from December 31, 2013 to September 30, 2014 was $9,100.

NOTE 5 – SUBSEQUENT EVENTS

For the period ended September 30, 2014, there were no recognizable subsequent events. Subsequent events have been evaluated through the date the financial statements were issued.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement

Some sections of this management’s discussion and analysis of our financial condition and results of operations may contain forward-looking statements.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions that are not statements of historical facts.  This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance.  The words “believe,” “expect,” “anticipate,” “intends,” “estimates,” “forecast,” “project” and similar expressions identify forward-looking statements.  The forward-looking statements in this document are based upon various assumptions, and although we believe that these assumptions were reasonable when made, these statements are not guarantees of future performance and are subject to certain risks and uncertainties, some of which are beyond our control, and are difficult to predict.  Actual results could differ materially from those expressed in forward-looking statements.   Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s view only as of the date of this report.

Business of Butte Highlands Mining Company

Butte Highlands Mining Company (hereinafter “Butte,” “We” or “the Company”) was incorporated in May 1929 under the laws of the State of Delaware for the purpose of exploring and mining the Butte Highland’s (Only Chance) Mine, south of Butte, Montana. The Company is inactive, having sold the last of its mining claims in 2007.

We intend to acquire an interest in a business seeking the perceived advantages of a publicly registered corporation.  We have not and will not restrict our search to any specific business or industry. We may participate in a business venture of virtually any kind or nature. The Company may seek a business opportunity with an entity which has recently commenced operations, wishes to utilize the public marketplace in order to raise additional capital to expand into new products or markets, develop a new product or service, or for other corporate purposes.  The Company may acquire assets and/or establish subsidiaries in various businesses, or acquire existing businesses as subsidiaries.  Business opportunities may be available in many different industries at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

Management of the Company, while not experienced in matters relating to the new direction of the Company, will rely primarily upon their own efforts to accomplish the business purposes. The Company does not anticipate a significant change in the number of employees during the next 12 months. It is not anticipated that any outside consultants or advisors, other than the Company's accountants and legal counsel, will be utilized to effectuate its business purposes described herein. During the next twelve months, the Company expects to be able to satisfy its cash requirements, and does not foresee the need to raise additional capital during this period.

Effective July 6, 2009 the Company’s Class A Common Stock was registered under the Securities Exchange Act of 1934.  Effective April 29, 2010, our Class A Common Stock was listed for quotation on the OTC Bulletin Board.  Our trading symbol is “BTHI”

Result of Operations for period ended September30, 2014 compared to the period ended September 30, 20132

During the three and nine month periods ended September 30, 2014, the Company had a net loss of $5,904 and $25,991 respectively compared to a net loss of $6,520 and $48,446 during the three month and six month periods ended September 30, 2013.  This represents a decrease in net loss in the amount of $616 and $22,455 over the respective three and six month periods ended September 30, 2013. This change is due primarily to decreased general and administrative expenses as well as a decrease in professional fees.

Total operating expenses decreased to $5,906 during the three month period ended September 30, 2014 from $6,522, for the comparable period ended September 30, 2013.  This decrease in loss is due to decreased general and administrative expenses.

Liquidity and Capital Resources

The Company’s working capital at September 30, 2014 was $145,362 compared to working capital of $171,353 at December 31, 2013. Working capital decreased primarily due to continuing operating expenses with no income.

Net cash used in operating activities was $26,139 during the nine month period ended September 30, 2014 compared with $48,320 during the nine month period ended September 30, 2013.

Cash flow from investing activities was $0 during the nine month period ended September 30, 2014 compared to $0 during the nine month period ended December 30, 2013.

Cash flow from financing activities was $0 during the nine month period ended September 30, 2013 compared with $0 during the nine month period ended September 30, 2012.

As a result, cash decreased by $26,139 during the nine month period ended September 30, 2014. The Company had cash of $145,812 as of September 30, 2014. It will not be necessary for the Company to raise additional capital to continue its business activities in 2014.

Off-Balance Sheet Arrangements

There are no preliminary agreements or understandings between the Company and its officers and directors or affiliates or lending institutions with respect to any loan agreements.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Smaller reporting companies are not required to provide this information.

ITEM 4.  CONTROLS AND PROCEDURES

a)           Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

b)           Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2014 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS (filed with this report)

Exhibit 31.1:	Certification required by Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 31.2:	Certification required by Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 32.1:	Certification Required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
Exhibit 32.2:	Certification Required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101.INS:	XBRL Instance Document
101.SCH:	XBRL Taxonomy Extension Schema Document
101.CAL:	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF:	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB:	XBRL Taxonomy Extension Label Linkbase Document
101.PRE:	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BUTTE HIGHLANDS MINING COMPANY

By:      /s/ Paul Hatfield                                        

Paul Hatfield, President and Director

Date:  November 10, 2014  

By         /s/Paul Hatfield                                       

Paul Hatfield, Principal Accounting Officer

Date:  November 10, 2014