UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2005
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 000-32919
PATRIOT GOLD CORP.
(Exact name of registrant as specified in its charter)
Nevada 86-0947048
(State or other jurisdiction ----------
of incorporation or organization) (I.R.S. Employer Identification No.)
501-1775 Bellevue Avenue, West Vancouver B.C. V7V 1A9, Canada
(Address of principal executive offices) (Zip Code)
(604) 925-5257
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act 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. [X] Yes [ ] No
Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 29,279,400 shares of common stock,
$0.001 par value, issued and outstanding as of January 13, 2006.
Transitional Small Business Disclosure Format (elect one) [ ] Yes [X] No
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
PART I - Financial Information 3
Item 1. Financial Statements 3
Balance Sheets November 30, 2005, and May 31, 2005 (audited) 3
Statements of Operations for the three and six-month periods 4
ended November 30, 2005 and 2004, and for the period from
inception on June 1, 2000 to November 30, 2005.
Statements of Cash Flows for the six-month periods ended 5
November 30, 2005 and 2004, and for the period from inception
on June 1, 2000 to November 30, 2005.
Notes to the Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 12
Item 3 Controls and Procedures 19
PART II - Other Information 20
Item 1. Legal Proceedings 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits 20
2
ITEM 1. FINANCIAL STATEMENTS.
PATRIOT GOLD CORP.
(An Exploration State Company)
BALANCE SHEETS
(UNAUDITED)
NOVEMBER 30, MAY 31,
2005 2005
------------------ ------------------
ASSETS:
Current Assets:
Cash............................................................. $ 3,311,453 $ 3,543,748
GST Receivable................................................... 1,135 --
Prepaid Expenses................................................. 35,000 35,000
---------------- -----------------
Total Current Assets 3,347,588 3,578,748
Office Equipment, Net 3,844 --
---------------- -----------------
Total Assets........................................................ $ 3,351,432 $ 3,578,748
================ =================
LIABILITIES & STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable................................................. $ 24,104 $ 46,044
---------------- -----------------
Total Liabilities................................................... 24,104 46,044
---------------- -----------------
Stockholders' Equity:
Preferred Stock, Par Value $.001
Authorized 20,000,000 shares,
No shares issued at November 30, 2005 and May 31, 2005.......... -- --
Common Stock, Par Value $.001
Authorized 100,000,000 shares,
Issued 29,279,400 shares at
November 30, 2005 and May 31, 2005............................... 29,279 29,279
Paid-In Capital................................................... 26,376,487 26,376,487
Subscription Receivable............................................ (79,000) (79,000)
Currency Translation Adjustment................................... (16,361) (16,361)
Deficit Accumulated Since Inception of Exploration State........... (22,941,995) (22,736,619)
Retained Deficit.................................................. (41,082) (41,082)
---------------- -----------------
Total Stockholders' Equity....................................... 3,327,328 3,532,704
---------------- -----------------
Total Liabilities and Stockholders' Equity....................... $ 3,351,432 $ 3,578,748
================ =================
The accompanying notes are an integral part of these financial statements.
3
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF OPERATIONS
(Unaudited)
CUMULATIVE
SINCE
FOR THE THREE MONTHS FOR THE SIX MONTHS JUNE 1, 2000
ENDED ENDED INCEPTION OF
NOVEMBER 30, NOVEMBER 30, EXPLORATION
2005 2004 2005 2004 STATE
---------------- ------------- -------------- -------------- ---------------
Revenues........... $ -- $ -- $ -- $ -- $ --
Cost of Revenues -- -- -- -- --
-------------- ------------ ------------- ------------ --------------
Gross Margin....... -- -- -- -- --
Expenses:
Mining Costs..... 46,634 107,393 178,552 522,839 1,557,270
General &
Administrative..... 33,245 46,656 70,461 76,751 21,475,330
-------------- ------------ ------------- ------------ --------------
Net Loss from
Operations......... (79,879) (154,049) (249,013) (599,590) (23,032,600)
Other Income
(Expense)
Interest, Net 22,521 2,419 46,100 2,419 113,220
Currency
Exchange 5 -- (2,463) -- (22,615)
-------------- ------------ ------------- ------------ --------------
Net Loss........ $ (57,353) $ (151,630) $ (205,376) $ (597,171) $ (22,941,995)
============== ============ ============= ============ ==============
Basic & Diluted
loss per Share $ (0.00) $ (0.01) $ (0.01) $ (0.02)
============== ============ ============= ============
Weighed Average
Shares
Outstanding 29,279,400 29,279,400 29,279,400 29,279,400
============== ============ ============= ============
The accompanying notes are an integral part of these financial statements.
4
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
CUMULATIVE
SINCE
JUNE 1, 2000
FOR THE SIX MONTHS ENDED INCEPTION OF
NOVEMBER 30, EXPLORATION
2005 2004 STATE
----------------- ---------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss....................................... $ (205,376) $ (597,171) $ (22,941,995)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Compensation Expense of Stock Options........ -- -- 4,892,401
Common Stock Issued for Services............. -- -- 16,267,500
Depreciation............................... 349 -- 349
Change in Operating Assets and Liabilities:
(Increase) Decrease in GST Receivable....... (1,135) (602) (1,135)
(Increase) Decrease in Prepaid Expenses..... -- (79) (35,000)
Increase (Decrease) in Accounts Payable...... (21,940) 6,463 17,861
--------------- --------------- ---------------
Net Cash Used in Operating Activities......... (228,102) (591,389) (1,800,019)
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Office Equipment (4,193) -- (4,193)
--------------- --------------- ---------------
Net Cash Used in Investing Activities......... (4,193) -- (4,193)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock............. -- 1,597,500 5,105,825
Proceeds from Contributed Capital.............. -- -- 9,840
--------------- --------------- ---------------
Net Cash Provided by Financing Activities..... -- 1,597,500 5,115,665
--------------- --------------- ---------------
Net (Decrease) Increase in
Cash and Cash Equivalents.................... (232,295) 1,006,111 3,311,453
Cash and Cash Equivalents
at Beginning of Period........................ 3,543,748 3,049,991 --
--------------- --------------- ---------------
Cash and Cash Equivalents
at End of Period.............................. $ 3,311,453 $ 4,056,102 $ 3,311,453
=============== =============== ===============
5
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
CUMULATIVE
SINCE
JUNE 1, 2000
FOR THE SIX MONTHS ENDED INCEPTION OF
NOVEMBER 30, EXPLORATION
2005 2004 STATE
----------------- ---------------- -----------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................... $ -- $ -- $ --
Income taxes.................................. $ -- $ -- $ --
SUPPLEMENTAL DISCLOSURE OF
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
During the year ended May 31, 2004, the Company granted 5,290,000 stock
options to various directors and consultants for an exercise price ranging from
$0.05 to $1.50 per share. Consulting expense of $4,892,401was recorded.
On June 11, 2003, the Company issued 13,500,000 shares of preferred
stock to its president for services rendered. Consulting expense of $13,500 was
recorded.
On July 25, 2003, the Company issued 350,000 Class A warrants, 350,000
Class B warrants, 350,000 Class C warrants, and 350,000 Class D warrants. Each
warrant is exercisable, commencing October 25, 2003, for a period of three years
at a price of $1.40, $1.45, $1.50 and $1.55, respectively, for one share of
common stock.
On November 27, 2003, the Company issued 864,000 Class A warrants,
864,000 Class B warrants, 864,000 Class C warrants, and 864,000 Class D
warrants. The Class A warrants became exercisable on November 27, 2004 for a
period of five years at an exercise price of $1.40 per share of common stock;
the Class B warrants are exercisable starting on November 27, 2005 for a period
of four years at an exercise price of $1.45; the Class C warrants are
exercisable starting on November 27, 2006 an at exercise price of $1.50; and the
Class D warrants are exercisable starting on November 27, 2007 at an exercise
price of $1.55. The Company has the right, in its sole discretion, to accelerate
the exercise date of the warrants, to decrease the exercise price of the
warrants and/or extend the expiration date of the warrants.
On January 24, 2004, Mr. Johnstone transferred 3,000,000 common shares
to each of the three directors. Compensation expense of $16,254,000 was record
in connection with the transfer.
The accompanying notes are an integral part of these
financial statements.
6
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Patriot Gold Corp. (An Exploration State
Company) is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
INTERIM REPORTING
The unaudited financial information furnished herein reflects all adjustments,
which in the opinion of management are necessary to fairly state the financial
position of Patriot Gold Corp. (the "Company") and the results of its operations
for the periods presented. This report on Form 10-QSB should be read in
conjunction with the Company's financial statements and notes thereto included
in the Company's Form 10-KSB for the fiscal year ended May 31, 2005. The Company
assumes that the users of the interim financial information herein have read or
have access to the audited financial statements for the preceding fiscal year
and that the adequacy of additional disclosure needed for a fair presentation
may be determined in that context. Accordingly, footnote disclosure, which would
substantially duplicate the disclosure contained in the Company's Form 10-KSB
for the fiscal year ended May 31, 2005 has been omitted. The results of
operations for the three and six month period ended November 30, 2005 are not
necessary indicative of results for the entire year ending May 31, 2006.
NATURE OF OPERATIONS
The Company has no products or services as of November 30, 2005. The Company
operated from November 30, 1998 through approximately May 31, 2000 in the
production of ostrich meat. On June 1, 2000, the Company ceased operations.
In June 2003, Management decided to change the direction of the Company and
became a natural resource exploration company and will continue to seek
opportunities in this field. The Company is currently engaging in the
acquisition, exploration, and if warranted and feasible, development of natural
resource properties. Since June 1, 2000, the Company is in the exploration
state.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred a
net loss of $22,941,995 for the period from June 1, 2000 (inception) to November
30, 2005, and has no sales. The future of the Company is dependent upon its
ability to obtain future financing and upon future profitable operations from
the development of its mineral properties. Management is not currently seeking
additional capital but will be required to do so in order to continue to operate
in the future. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts of
and classification of liabilities that might be necessary in the event the
Company cannot continue in existence.
If the Company were unable to continue as a "going concern", then substantial
adjustments would be necessary to the carrying values of assets, the reported
amounts of its liabilities, the reported expenses, and the balance sheet
classifications used.
7
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the State of Nevada on November
30, 1998. On June 11, 2003, the Company changed its name to Patriot Gold Corp.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents to the extent the funds are not being held for investment
purposes.
OFFICE EQUIPMENT
Office equipment is recorded at cost and is depreciated using the straight-line
method over its expected useful life, which is estimated at three years. $349 of
depreciation expense has been charged to general and administrative expenses
during the quarter ended November 30, 2005.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles required 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.
FOREIGN CURRENCY
Prior to the quarter ending August 31, 2003, the Company's primary functional
currency was the Canadian dollar. During, the quarter ended August 31, 2003, the
Company underwent some significant changes in its operations. Prior to May 31,
2000, the company was in the business of producing ostrich meat in Canada.
Subsequently on June 1, 2000, the Company ceased operations and remained dormant
until June 2003, when the Company decided to enter the mining industry in the
United States. Due to the change in direction the Company was headed, the
majority of its operations and transactions would be located in the United
States and the majority of the transaction would be in U.S. dollars. This was
considered "a significant change in economic facts and circumstances" per SFAS
52, Appendix A and thus the Company changed its functional currency from the
Canadian dollar to the U.S. dollar.
The Company's primary functional currency is the U.S. dollar. However, the
Company still has a few transactions with Canadian suppliers. Transaction gains
and losses are included in income. For the period ended November 30, 2005 the
Company recognized a transaction loss of $2,463.
CONCENTRATION OF CREDIT RISK
The Company has no significant off-balance-sheet concentrations of credit risk
such as foreign exchange contracts, options contracts or other foreign hedging
arrangements. The Company maintains the majority of its cash balances with one
financial institution, in the form of demand deposits.
LOSS PER SHARE
Net income (loss) per share is computed by dividing the net income by the
weighted average number of shares outstanding during the period. The effect of
the Company's common stock equivalents would be anti-dilutive for November 30,
2005 and 2004 and are thus not presented.
COMPREHENSIVE INCOME
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income", which
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. The Company is disclosing this information
on its Statement of Operations. Comprehensive income is comprised of net income
(loss) and all changes to capital deficit except those resulting from
investments by owners and distribution to owners.
8
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
STOCK OPTIONS
The Company has adopted SFAS No. 123, "Stock Option and Purchase Plans", which
establishes standards for reporting compensation expense for stock options that
have been issued. The fair value of each stock option granted is estimated using
the Black-Scholes option-pricing model.
EXPLORATION AND DEVELOPMENT COSTS
On June 1, 2000, the Company ceased operations and until June 2003 conducted
minimal administrative activities. The Company has been in the exploration state
since that time and has not yet realized any revenue from its planned
operations. It is primarily engaged in the acquisition, exploration and
development of mining properties. Mineral exploration costs and payments related
to the acquisition of the mineral rights are expensed as incurred. When it has
been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves, the costs incurred to
acquire and develop such property will be capitalized. Such costs will be
amortized using the units-of-production method over the estimated life of the
probable reserve.
ADVERTISING COSTS
Advertising costs are expensed as incurred. There was no advertising expense for
the periods ended November 30, 2005 and 2004.
NOTE 2 - INCOME TAXES
As of May 31, 2005, the Company had a net operating loss carryforward for income
tax reporting purposes of approximately $5,280,000 that may be offset against
future taxable income through 2025. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.
NOTE 3 - EXPLORATION STATE COMPANY/ GOING CONCERN
The Company has not begun principal operations and as is common with a company
in the exploration state, the Company has had recurring losses. Continuation of
the Company as a going concern is dependent upon obtaining the additional
working capital necessary to be successful in its planned activity, and the
management of the Company has developed a strategy, which it believes will
accomplish this objective through additional equity funding and long term
financing, which will enable the Company to operate for the coming year.
NOTE 4 - RELATED PARTY TRANSACTIONS
As of November 30, 2005, all activities of the Company have been conducted by
corporate officers from either their homes or business offices. There are no
commitments for future use of the facilities.
9
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5 - STOCK OPTIONS
Pursuant to the 2003 and 2005 Stock Option Plans, grants of shares can be made
to employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 ("Code") or as non-qualified stock options. The
Plans are administered by the Option Committee of the Board of Directors (the
"Committee"), which has, subject to specified limitations, the full authority to
grant options and establish the terms and conditions for vesting and exercise
thereof. Currently the entire Board functions as the Committee.
In order to exercise an option granted under the Plan, the optionee must pay the
full exercise price of the shares being purchased. Payment may be made either:
(i) in cash; or (ii) at the discretion of the Committee, by delivering shares of
common stock already owned by the optionee that have a fair market value equal
to the applicable exercise price; or (iii) with the approval of the Committee
and except for our officers, with monies borrowed from us.
Subject to the foregoing, the Committee has broad discretion to describe the
terms and conditions applicable to options granted under the Plan. The Committee
may at any time discontinue granting options under the Plan or otherwise
suspend, amend or terminate the Plan and may, with the consent of an optionee,
make such modification of the terms and conditions of such optionee's option as
the Committee shall deem advisable.
On May 26, 2003, the Board of Directors approved a stock option plan whereby
2,546,000 common shares have been set aside for employees and consultants to be
distributed at the discretion of the Board of Directors. On September 22, 2003,
the Board of Directors amended the stock option plan to allow 3,000,000
additional options. As of November 30, 2005, 5,290,000 stock options had been
granted to various directors and consultants for an exercise price ranging from
$.05 to $1.50 per share. On November 18, 2005, the Board of Directors approved
the 2005 stock option plan whereby 2,000,000 common shares have been set aside
under the plan. As at November 30, 2005, no stock options have been granted
under the 2005 Plan.
The following table sets forth the options outstanding under the 2003 Plan as of
November 30, 2005:
OPTIONS OUTSTANDING WEIGHTED AVERAGE
EXERCISE PRICE
-------------------- ---------------------
Balance, May 31, 2005 635,000 $ 0.16
Options granted - -
Options forfeited (200,000) $ 0.05
Options exercised - -
-------------------- ---------------------
Balance, November 30, 2005 435,000 $ 0.24
-------------------- ---------------------
The following table summarizes information concerning outstanding and
exercisable common stock options under the 2003 Plan at November 30, 2005:
Remaining Weighted Number of Weighted
Contractual Average Options Average
Options Life Exercise Currently Exercise
Exercise Prices Outstanding (in years) Price Exercisable Price
- --------------------- --------------- -------------- ------------ --------------- --------------
$ 0.05 350,000 7.58 $ 0.05 350,000 $ 0.05
$ 0.80 5,000 7.67 $ 0.80 5,000 $ 0.80
$ 1.03 80,000 7.67 $ 1.03 80,000 $ 1.03
--------------- ---------------
435,000 $ 0.24 435,000 $ 0.24
- --------------------- --------------- -------------- ------------ --------------- --------------
10
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6 - WARRANTS
The following table sets forth common share purchase warrants
outstanding as of November 30, 2005:
Warrants
Outstanding
----------------
Balance, May 31, 2005 4,856,000
Warrants granted -
----------------
Balance, November 30, 2005 4,856,000
----------------
The following table lists the common share warrants outstanding at
November 30, 2005. Each warrant is exchangeable for one common share.
Weighted
Average Number
Number Outstanding Exercise Contractual Currently Exercise
Price Remaining Exercisable Price
Life (years)
- ----------------------- -------------------- --------------- --------------- -------------------------
1,214,000 $ 1.40 3.11 1,214,000 $ 1.40
1,214,000 $ 1.45 3.11 1,214,000 $ 1.45
1,214,000 $ 1.50 3.11 350,000 $ 1.50
1,214,000 $ 1.55 3.11 350,000 $ 1.55
- ----------------------- -------------------- --------------- --------------- -------------------------
4,856,000 3,128,000
- ----------------------- -------------------- --------------- --------------- -------------------------
NOTE 7 - STOCK SPLIT
On June 17, 2003, the Company approved a forward split at a rate of one for
seven and six-tenths so that each share of common stock will be equal to 7.6
shares. All references to shares in the accompanying financial statements have
been adjusted for the stock split.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
FORWARD LOOKING STATEMENTS
The following discussion should be read in conjunction with the financial
statements of Patriot Gold Corp. (the "Company"), which are included elsewhere
in this Form 10-QSB. Certain statements contained in this report, including
statements regarding the anticipated development and expansion of the Company's
business, the intent, belief or current expectations of the Company, its
directors or its officers, primarily with respect to the future operating
performance of the Company and the products it expects to offer and other
statements contained herein regarding matters that are not historical facts, are
"forward-looking" statements. Future filings with the Securities and Exchange
Commission, future press releases and future oral or written statements made by
or with the approval of the Company, which are not statements of historical
fact, may contain forward-looking statements. Because such statements include
risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. For a more detailed
listing of some of the risks and uncertainties facing the Company, please see
the Form 10-KSB for the year ended May 31, 2005 filed by the Company with the
Securities and Exchange Commission.
All forward-looking statements speak only as of the date on which they are made.
The Company undertakes no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
General
The Company was incorporated under the laws of the State of Nevada on November
30, 1998. The Company operated from incorporation through approximately May 31,
2000 in the production of ostrich meat. On June 1, 2000, the Company ceased
operations. On June 11, 2003, the Company changed its name to Patriot Gold Corp.
and become a natural resource exploration company and will seek opportunities in
this field. The Company is currently engaged in the acquisition, exploration,
and if warranted and feasible, development of natural resource properties. Since
June 1, 2000, the Company has been in the exploration state. Upon location of a
commercial minable reserve, the Company expects to actively prepare the site for
its extraction and enter a development stage.
FINANCING OVER THE NEXT TWELVE MONTHS
Over the next twelve months, the Company intends to explore various properties
to determine whether there are commercially exploitable reserves of gold and
silver or other metals. The Company does not intend to hire any employees nor to
make any purchases of equipment over the next twelve months, as it intends to
rely upon outside consultants to provide all the tools needed for the
exploratory work being conducted.
Current cash on hand is sufficient for all of the Company's commitments for the
next 12 months. We anticipate that the additional funding that we require in the
future will be in the form of equity financing from the sale of our common
stock. However, we cannot provide investors with any assurance that we will be
able to raise sufficient funding from the sale of our common stock to fund
additional phases of the exploration program, should we decide to proceed. We
believe that debt financing will not be an alternative for funding any further
phases in our exploration program. The risky nature of this enterprise and lack
of tangible assets places debt financing beyond the credit-worthiness required
by most banks or typical investors of corporate debt until such time as an
economically viable mine can be demonstrated. We do not have any arrangements in
place for any future equity financing
Notwithstanding, we cannot be certain that any required additional financing
will be available on terms favorable to us. If additional funds are raised by
the issuance of our equity securities, such as through the issuance and exercise
of warrants, then existing stockholders will experience dilution of their
ownership interest. If additional funds are raised by the issuance of debt or
other equity instruments, we may be subject to certain limitations in our
operations, and issuance of such securities may have rights senior to those of
the then existing holders of common stock. If adequate funds are not available
or not available on acceptable terms, we may be unable to fund expansion,
develop or enhance services or respond to competitive pressures.
12
OVERVIEW
We are a natural resource exploration company with an objective of acquiring,
exploring, and if warranted and feasible, developing natural resource
properties. Our primary focus in the natural resource sector is gold. We do not
consider ourselves a "blank check" company required to comply with Rule 419 of
the Securities and Exchange Commission, because we were not organized for the
purpose of effecting, and our business plan is not to effect, a merger with or
acquisition of an unidentified company or companies, or other entity or person.
We do not intend to merge with or acquire another company in the next 12 months.
Though we have the expertise on our board of directors to take a resource
property that hosts a viable ore deposit into mining production, the costs and
time frame for doing so are considerable, and the subsequent return on
investment for our shareholders would be very long term indeed. We therefore
anticipate selling any ore bodies that we may discover to a major mining
company. Most major mining companies obtain their ore reserves through the
purchase of ore bodies found by junior exploration companies. Although these
major mining companies do some exploration work themselves, many of them rely on
the junior resource exploration companies to provide them with future deposits
for them to mine. By selling a deposit found by us to these major mining
companies, it would provide an immediate return to our shareholders without the
long time frame and cost of putting a mine into operation ourselves, and it
would also provide future capital for the company to continue operations.
The search for valuable natural resources as a business is extremely risky. We
can provide investors with no assurance that the property we have optioned in
Nevada contains commercially exploitable reserves. Exploration for natural
reserves is a speculative venture involving substantial risk. Few properties
that are explored are ultimately developed into producing commercially feasible
reserves. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. In such a case, we would be unable to complete our business plan and
any money spent on exploration would be lost.
Natural resource exploration and development requires significant capital and
our assets and resources are limited. Therefore, we anticipate participating in
the natural resource industry through the purchase of small interests in
producing properties, the purchase of property where feasibility studies already
exist or by the optioning of natural resource exploration and development
projects. To date we have acquired several properties and we have several
properties under option. We have already conducted various kinds of exploration
on these properties, including mapping, sampling, surveying and drilling, we
expect to conduct further exploration of these properties. There has been no
indication as yet that any mineral deposits exist on these properties, and there
is no assurance that a commercially viable mineral deposit exists on any of our
properties. Further exploration will be required before a final evaluation as to
the economic and legal feasibility is determined.
In the following discussion, there are references to "patented" mining claims
and "unpatented" mining claims. A patented mining claim is one for which the
U.S. government has passed its title to the claimant, giving that person title
to the land as well as the minerals and other resources above and below the
surface. The patented claim is then treated like any other private land and is
subject to local property taxes. An unpatented mining claim on U.S. government
lands establishes a claim to the locatable minerals (also referred to as
stakeable minerals) on the land and the right of possession solely for mining
purposes. No title to the land passes to the claimant. If a proven economic
mineral deposit is developed, provisions of federal mining laws permit owners of
unpatented mining claims to patent (to obtain title to) the claim. If you
purchase an unpatented mining claim that is later declared invalid by the U.S.
government, you could be evicted.
13
Exploration Programs
Pursuant to a Property Option Agreement with MinQuest, we have the option to
earn a 100% interest in the two Nevada mineral exploration properties that we
are currently exploring. An overview of our activities and obligations with
respect to these properties are set forth below.
BRUNER PROJECT
The property is located approximately 130 miles east-southeast of Reno, Nevada
at the northern end of the Paradise Range. Access from Fallon, the closest town
of any size, is by 50 miles of paved highway and 16 miles of gravel roads.
We hold the property via 16 unpatented mining claims (320 acres). We have an
option on the property with MinQuest, Inc., a Nevada Corporation, which
terminates if, prior to July 25, 2008, we fail to make any payments when due to
MinQuest, Inc. or complete property expenditures as required by the option. The
option will have been fully exercised, and we can earn a 100 percent interest in
these claims if we make payments to MinQuest of $70,000 and spend $275,000 in
exploration over a five year period ending on July 25, 2008. On July 25, 2003,
we paid MinQuest $10,000 with respect to the Bruner property, and we owe an
additional $60,000 which is due in four equal annual installments commencing on
July 25, 2004. With the approval of MinQuest, we paid the first installment on
August 27, 2004 and we paid the second installment on September 20, 2005. By
July 25, 2005, we were to have spent $100,000 on exploration, and by that date
we had spent $243,800 on exploration of the Bruner property. The $143,800 in
excess of our required expenditures will be applied to our future exploration
commitments. We are obligated to spend another $175,000 over the next three
years as follows: $50,000 by each of July 25, 2006 and 2007 and $75,000 by July
25, 2008. MinQuest retains a three percent NSR production royalty.
Our exploration program to date at Bruner has included:
o geologic mapping (producing a plan map of the rock types,
structure and alteration),
o rock chip geochemical sampling (sample of soil, rock, silt,
water or vegetation analyzed to detect the presence of
valuable metals or other metals which may accompany them
(e.g., Arsenic may indicate the presence of gold),
o a ground magnetic survey, and
o a Controlled Source Magneto Telluric survey (recording
variations in a generated electrical field using sophisticated
survey methods).
In October 2004, we received the approval of a Notice of Intent for Exploration
Drilling, and an environmental bond filed with the Nevada office of the Bureau
of Land Management. A total of 18 drill sites have been located to target both
extensions of the gold intercepts in previous drilling and geophysical anomalies
found by a CSMT survey. A CSMT survey is an electromagnetic method used to map
the variation of the Earth's resistance to conduct electricity by measuring
naturally occurring electric and magnetic fields at the Earth's surface. With
the proper approvals in place, we began drilling on the Bruner property on
December 20, 2004. This drilling program was completed in March 2005 at a total
cost of approximately $153,811, with a total of 3,200 feet of reverse
circulation (RC) drilling in 7 holes. The depths of the holes ranged from 300 to
750 feet. We have received assays for all holes, and the results are encouraging
enough that additional drilling is planned for later in 2005 (as described
below).
Because of the favorable drilling results from the drilling program we began on
December 20, 2004, we have decided to conduct additional drill testing on the
Bruner property, including both reverse circulation and core drilling. In April
2005, we filed an amended drilling plan with the Bureau of Land Management that
allows three fences of drill holes with the fences spaced 400 feet apart along
the apparent trend of the mineralization. The initial holes of the second phase
program will be RC; but if we continue to get good results, we will then follow
with core drilling. The RC rig would drill until reaching mineralized veins and
then coring of the veins would occur. This program was completed in the fall of
2005 with 11 holes totaling 4,205 feet being drilled. Evaluation of the results
is currently ongoing. If the second phase drilling program fails to intersect
high-grade gold values (0.30 ounces per ton or above) the Bruner property will
be dropped via termination of the option agreement.
14
VERNAL PROJECT
The property is located approximately 140 miles east-southeast of Reno, Nevada
on the west side of the Shoshone Mountains. Access from Fallon, the closest town
of any size, is by 50 miles of paved highway and 30 miles of gravel roads.
We hold the property via 12 unpatented mining claims (240 acres). We have an
option on the property with MinQuest, Inc., a Nevada Corporation, which
terminates if, prior to July 25, 2008, we fail to make any payments when due to
MinQuest, Inc. or complete property expenditures as required by the option. The
option will have been fully exercised, and we can earn a 100 percent interest in
these claims, if we make payments to MinQuest of $22,500 and spend $250,000 in
exploration over a five year period ending July 25, 2008. On July 25, 2003, we
paid MinQuest $2,500 with respect to the Vernal property, and we owe an
additional $20,000 which is due in four equal annual installments commencing on
July 25, 2004. With MinQuest's approval, we paid the first installment of $5,000
on August 27, 2004 and we made the second installment on September 20, 2005.
MinQuest has consented to this delayed payment. By July 25, 2004 we were
required to spend $20,000 on exploration, and we had already spent $21,500 on
exploration of the Vernal property. The $1,500 excess of our required
expenditure was applied towards our exploration commitment due by July 25, 2005.
In March 2005 we initiated the process to secure the proper permits for
trenching and geochemical sampling from the U.S. Forest Service. Provided we
receive the permits for trenching and geochemical sampling by January 2006, we
expect to spend an estimated $75,000 on trenching and additional geochemical
sampling, which would begin in January 2006 and end by May 2006. However, for
the twelve-month period ended July 25, 2005, we have only spent approximately
$11,542 on the exploration of the Vernal property, not including the credit of
$1,500 from excess exploration expenditures for the period ended July 25, 2004.
Because we are waiting the permits for the $75,000 trenching and geochemical
sampling program, MinQuest has waived the remaining amount of our exploration
obligations for the period ending July 25, 2005. As a result of this waiver, the
$75,000 trenching and geochemical sampling program will be applied towards our
obligation for exploration expenditures for the Vernal property due by July 25,
2006. MinQuest retains a three percent NSR production royalty.
If this trenching process proves up samples with significant gold values (0.10
ounces per ton or above) then a five to ten hole reverse circulation drill
program totaling 5,000 feet and costing approximately $90,000 would be
considered for the second half of 2006. This drilling could be completed by the
end of 2006, provided that there are no environmental permitting delays.
Our exploration of the Vernal property to date has consisted of geologic mapping
and rock chip geochemical sampling. Trenching and additional geochemical
sampling is now planned for January 2006 after we secure trenching permits from
the U.S. Forest Service. Trenching is a cost effective way of examining the
structure and nature of mineral ores just beneath the surface. It involves
digging long usually shallow trenches in carefully selected areas to expose
unweathered rock and allow sampling. We currently have no plans for any drilling
of the Vernal property, but if the trenching process proves up samples with
significant gold values (0.10 ounces per ton or above) then a five to ten hole
reverse circulation drill program totaling 5,000 feet and costing approximately
$90,000 would be considered. As discussed above, this drilling could be
completed by the end of 2006 pending no environmental permitting delays.
MINQUEST PROPERTY AT MOSS MINE: The project area is 10 miles east of Bullhead
City, Arizona and approximately 70 miles southeast of Las Vegas, Nevada. Access
is via gravel roads from Bullhead City.
We hold the property in the Moss Mine region via 65 unpatented mining claims and
7 patented claims (1300 total acres). The unpatented claims are held under a
lease/purchase agreement with MinQuest, Inc., a Nevada Corporation. On March 4,
2004, we signed the agreement that earned us a 100 percent interest in these
claims by paying MinQuest a one time lease fee of $50,000. The fee of $50,000
was paid on July 7, 2004. A three percent NSR production royalty is retained by
MinQuest. The patented claims are held collectively by numerous owners within
the extended Williams family, and we have the right to purchase these patented
claims from these owners under the terms of a letter of intent which is
discussed in the subsequent section titled "Letter of Intent for the Williams
Property at the Moss Mine Property".
15
The Moss Mine was the first gold discovery made in the Oatman district.
Discovered in 1864, the mine was worked discontinuously through the 1930's.
Production records are very poor, with past writers listing production equal to
or greater than $250,000. The mine lay idle until the early 1980's when a number
of mining companies explored the district. These companies included Billiton
Minerals, Magma Copper, Golconda Resources and Addwest Minerals.
Our exploration of the MinQuest property has consisted of geologic mapping, vein
geochemical sampling and drill testing of the identified veins. Drilling is in
progress. Total project exploration cost is estimated to be $500,000.
Phase 1 drilling has been completed at the MinQuest property. A total of 36
holes were drilled totaling 2,471 meters (8,107 feet). Thirty holes were drilled
on the Moss property, and six holes were drilled on one of the adjacent parcels
of land.
A study of all drilling results at the Moss Mine indicates a tendency for total
gold content to increase with intercept depth. Roughly 60% of the deeper holes
have better intercepts than shallow holes. An example from the Patriot drilling
tests the vein over a vertical extent of 300 feet. In this example the gold
content nearly doubles between AR-5 and AR-23.
The most significant mining at Moss Mine occurred on narrow veins that trend
sub-parallel to the Moss Mine vein and dip steeply northerly. These veins should
intersect the Moss Mine vein at depth. The deepest vein intercepts at Moss are
less than 400 feet. The Ruth vein should intersect the Moss Mine vein at 800-900
feet below the surface. If the Moss Mine vein is the feeder for the Ruth vein it
must contain similar gold values at that level. The Moss Mine vein needs drill
testing to a depth of 900 feet to determine its potential to contain high grade
gold mineralization.
An expanded program of drilling began in April 2005, and was expected to be
completed by May 2006. Approximately 12,000 feet of reverse circulation (RC)
drilling was planned to be done to test for possible high-grade (0.30 ounces per
ton or above) down-dip extensions of the Moss vein. We planned to drill 10 to 15
holes. The depths of these holes was to have ranged from 500 to 1,300 feet. The
program budget, which includes significant contingency expenditures, is
$643,700.
The first phase of this expanded drilling program was expected to be completed
by the fall of 2005. However, after eight holes were attempted, drilling was
halted because of difficulty in drilling through the granite, because the
drilling rig that we contracted to use was too light to penetrate the rock. We
had sought to contract a heavier rig to continue the program, which we had
expected to happen by December 2005. This follow-up drilling has not yet been
completed. Currently, the company is evaluating whether to proceed with the
completion of this expanded phase of drilling.
Encouraging drilling results from earlier programs warrant an initial Scoping
Study level investigation, which is the determination of the indicated size and
grade of the deposit and possible methods of mining and recovering the gold and
silver. Tonnage and grade will be determined by outlining the mineralization on
sections constructed every 100 feet across the deposit and using the average
grade of the drilling intersections. An open pit is then designed that would
allow extraction of the deposit. The option of underground mining is also
considered. Tests are conducted to determine the best method of extracting the
gold and silver. These tests would include the amenability of Oheap leachingO.
Heap leaching is the piling of ore on an impermeable liner, circulating
gold/silver-dissolving solutions (normally cyanide) through the pile or OheapO
and recovering the gold/silver from the circulating solution using carbon.
Another method that would be tested is OmillingO to recover the gold and silver.
Milling involves crushing and grinding the ore into tiny particles that allow
the gold/silver to be removed by simple gravity or by using chemicals in
solution. Determination of the best methods of mining and recovery of the
precious metals then allows production costs to be calculated. With this
Oscoping studyO done we can then make an initial determination of whether the
project is economically feasible. Planned to run concurrently with the expanded
drilling program described above, this study will cost about $50,000 and is
dependent on whether or not the Company decides to proceed with the completion
of the expanded drilling program.
16
Letter of Intent for Williams Property at the Moss Mine
In November 2003 we executed a letter of intent to purchase a 100% interest in
the Moss Mine property owned by an extended family and which is located in the
historic Oatman gold mining district. This property is unrelated to and separate
from the MinQuest property also located in the Moss Mine region. Work already
completed on this property includes a pre-feasibility study as well as 36,000
feet of primarily reverse circulation drilling which was done over twenty years
ago. Reverse circulation drilling is a less expensive form of drilling that does
not allow for the recovery of a tube or core of rock, in which the material is
brought up from depth as a series of small chips of rock that are then bagged
and sent in for analysis. Though this is a quicker and cheaper method of
drilling, reverse circulation drilling does not necessarily give as much
information about the underlying rocks.
The property is comprised of six patented claims, which as a group, we call the
Williams property. These claims are held collectively by as many as 23 owners
within an extended family who are represented by Barbara Williams, a realtor,
and a member of this extended family, who put together the letter of intent and
arranged for the signing of the agreement by the numerous owners. None of these
owners, including Barbara Williams, has or has had any relationship or
affiliation with us prior to the agreement for the Williams property.
The letter of intent granted us an exclusive right to close on the purchase of
the Williams property for six months from the date the contract is executed.
On February 19, 2004, we executed a formal agreement to purchase the Williams
property for $350,000. On February 27, 2004 we deposited $25,000 with the title
company, which was acting as escrow agent, and three months after signing, on
June 14, 2004, we deposited an additional $25,000. When the title company,
acting as escrow agent, received the signature pages from the various sellers,
the initial $25,000 deposit was to be delivered to the sellers. On the
three-month anniversary from when we signed the definitive agreement, the second
$25,000 was to be delivered to the sellers. By mid July, 2004, the escrow agent
had received 19 of the 23 signatures, which under Arizona law was enough to
complete the transaction, and on July 24, 2004, the first and second deposits of
$25,000 each were released to the sellers. On or before the 6-month anniversary
from when we signed the definitive agreement, the balance of $300,000 was due to
the sellers. As a result of our due diligence, we decided to complete the
purchase of the Williams property. On August 27, 2004 we paid the final $300,000
to the escrow agent for the closing of the sale. The escrow agent will release
the $300,000 to the sellers at the closing of the sale. Upon the closing of the
sale, we will own 100% interest in the Williams property.
Seller has delivered to us all information in their possession regarding the
property. During the six month period after the signing of the definitive
agreement we had the right to conduct our due diligence on the property and if
we decided not to proceed we had to give the sellers and escrow agent notice no
less than 10 days prior to the six-month anniversary of our intention not to
close. During this period we could not perform mining or remove any ore from the
property. We were responsible for all costs and expenses associates with the
purchase of the property, including escrow fees, cost of feasibility study,
charges resulting from any tests, environmental assessments reports or surveys,
and any exploration activity costs. Once we had concluded our analysis and had
determined that it is feasible to close on the purchase of the property, doing
so would give us full rights to begin mining operations.
Due Diligence Performed on the Williams Property
In October 2003, our director Robert Sibthorpe (who is a geologist by training)
evaluated a proposal for the purchase of the Moss mine in Arizona. His
recommendation was to visit the site, and if the visual inspection supported the
information presented in the proposal, then an offer to purchase should be drawn
up. At the recommendation of Mr. Sibthorpe, on January, 2004, Mr. Robert Coale
(P.Eng.), another one of our directors visited the site to see the overall
geological setting and occurrence of mineralization and evaluate the drilling
17
program proposed by MinQuest, the company that we would contract to co-ordinate
any work programs undertaken. At this time, the recent metallurgical data and
reports that had been collected from the sellers were reviewed for study. Mr.
Coale's analysis revealed that reagent (liquid chemicals used for leaching)
consumptions are acceptable and deleterious compounds (things present in the ore
that would be difficult to work with) are not apparent. He recommended bulk
sampling at a selected location in the future once the definition of the ore
body is further advanced through drilling. On January 31, 2004 Robert Sibthorpe
wrote a report with a summery of the property, and reviewing the Draft Budget
supplied by Richard Kern, our work program contractor, that was laid out for the
drilling program planned for the property. The drilling was conducted throughout
the spring and early summer of 2004, and in June, 2004, Mr. Sibthorpe wrote a
report incorporating the results of the drilling program which encouraged us to
pursue the project. Also in June 2004, Mr. Kern sent a Memo to the Company
regarding the potential at the Williams property. Mr. Kern's recommendation was
that we should proceed with the purchase of the Williams property.
Based on the information gathered in this due diligence process, and on the
recommendation of our board members and consultants, the decision to proceed
with the purchase of the Williams property was made. On August 27, 2004, the
final payment of $300,000 was paid to the escrow agent for the closing of the
sale. On November 11, 2004, the escrow agent released the $300,000 to the
sellers for the closing of the sale, and, as a result, we now own 100% interest
in the Williams property.
We currently have no exploration programs planned for the Williams property and
we do not expect to conduct any exploration programs on this property prior to
May 31, 2006.
We did not earn any revenues during the three or six months ended November 30,
2005 or 2004. We do not anticipate earning revenues until such time as we have
entered into commercial production of our mineral properties. We are presently
in the exploration stage of our business and we can provide no assurance that we
will discover commercially exploitable levels of mineral resources on our
properties, or if such resources are discovered, that we will enter into
commercial production of our mineral properties.
The Company had no selling and marketing expenses from continuing operations for
either of the three or six months ended November 30, 2005 and 2004. During the
six months ended November 30, 2005, we incurred a net loss of $205,376 compared
to a net loss of $597,171 for the comparative period in 2004. Our year to date
net loss for 2005 has decreased over 2004 largely due to higher property
acquisition payments in 2004 compared to 2005. In 2004, the Company completed
the purchases of the Williams Property at the Moss Mine ($325,000) and the
MinQuest Property at the Moss Mine ($50,000) while in 2005 no Moss Mine property
purchase or option payments were made. Offsetting the reduction in property
purchase payments was a slight increase in exploration expenses. During the six
months ended November 30, 2005, drilling was undertaken at both the Bruner and
Moss properties while no drilling was performed during the corresponding period
in 2004. General and administrative costs were consistent between periods with
costs of $70,461 in 2005 from $76,751 in 2004.
Mining Costs were $46,634 for the current quarter and $107,393 for the
corresponding period in 2004. The expense in 2005 and 2004 both include $20,000
in aggregate property payments for the Bruner and Vernal properties. The balance
of the 2005 quarterly expenses relate to reclamation and clean-up at Bruner
while in 2004 they relate to initial costs on the Moss Property. General and
administrative expenses for the second quarter ended November 30 were $33,245 in
2005 and $46,656 in 2004. The decrease in general and administrative expenses
from 2005 to 2004 is largely attributable to the fact that the company completed
its SB-2 filing in July 2005 and did not incur costs related to this item in the
second quarter. The SB-2 was initially filed in February 2004 and as a result,
the second quarter in 2004 included costs related to this filing.
18
Liquidity and Capital Resources
We had cash of $3,311,453 as of November 30, 2005. We anticipate that we will
incur the following through the next twelve months:
o $20,000 in connection with property option payments for the Bruner and
Vernal properties and $200,000 in exploration expenditures of the
Company's properties;
o $110,000 for operating expenses, including working capital and general,
legal, accounting and administrative expenses associated with reporting
requirements under the Securities Exchange Act of 1934.
Net cash used in operating activities during the six months ended November 30,
2005 was $228,102 compared to $591,389 during the six months ended November 30,
2004. The decrease in cash used in the current period was largely due to a
decrease in the net loss in 2005 ($205,376) compared to 2004 ($597,171).
Partially offsetting the decreased loss was a reduction in accounts payable of
$21,940 in 2005 while there was a net increase in accounts payable of 6,463 in
2004. For the six months ended November 30, 2004, cash of $1,597,500 was
received from the exercise of stock options. No financing activity took place
during the corresponding period in 2005. During the six months ended November
30, 2005, the Company purchased $4,193 of office equipment.
Going Concern Consideration
As shown in the accompanying financial statements, the Company has incurred a
net loss of $22,941,995 for the period from June 1, 2000 (inception) to November
30, 2005, and has no sales. The future of the Company is dependent upon its
ability to obtain financing and upon future profitable operations from the
development of its mineral properties. Management has plans to seek additional
capital through a private placement and public offering of its common stock. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
There is substantial doubt about our ability to continue as a going concern.
Accordingly, our independent auditors included an explanatory paragraph in their
report on the May 31, 2005 financial statements regarding concerns about our
ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 3. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit 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 United States Securities
and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer
have reviewed the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) as
of the end of the period covered by this report and have concluded that the
disclosure controls and procedures are effective to ensure that material
information relating to the Company is recorded, processed, summarized, and
reported in a timely manner. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the last day they were evaluated by our Chief Executive Officer
and Chief Financial Officer.
19
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company's internal control over financial
reporting during the last quarterly period covered by this report that have
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.
No legal proceedings are pending against the Company or any of its officers or
directors, and the Company has no knowledge that any such proceedings are
threatened.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
The Company does not have any procedures by which security holders can recommend
nominees to the Board of Directors.
ITEM 6. EXHIBITS.
(a) Exhibits.
Exhibit 31.1 - Certification of Principal Executive and Financial
Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as
amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 - Certification of Principal Executive and Financial
Officer Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K. None.
20
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
act of 1934, as amended, the Registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized.
Date: January 13, 2006
PATRIOT GOLD CORP.
By: /s/ Robert Coale
Robert Coale
President, Chief Executive
Officer, Secretary and Treasurer
21