ARX Gold Corp - FORM 10-Q - March 17, 2011

Attached files

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EX-32.1 - CERTIFICATION - ARX Gold Corp	daulton_10q-ex3201.htm
EX-31.2 - CERTIFICATION - ARX Gold Corp	daulton_10q-ex3102.htm
EX-31.1 - CERTIFICATION - ARX Gold Corp	daulton_10q-ex3101.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended January 31, 2011

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

For the transition period from _______________ to ______________.

DAULTON CAPITAL CORP.

(Exact name of Registrant as specified in its charter)

Nevada		None		30-0459858
(State or other jurisdiction of incorporation)		(Commission File No.)		(IRS Employer Identification No.)

3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169

(Address of principal executive offices, including Zip Code)



Registrant's telephone number, including area code:		(888) 387-1403

N/A

(Former name or former address if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) had been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

	Large accelerated filer o	Accelerated filero

	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act). Yes o No x

Class of Stock	No. Shares Outstanding	Date

Common	59,733,334	January 31, 2011

Daulton Capital Corporation

(A Developmental Stage Company)

Notes to Financial Statements

January 31, 2011

(Unaudited)

		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheet as of January 31, 2011 (unaudited)	1

	Consolidated Statement of Operations for the period ending January 31, 2011 (unaudited)	2

	Consolidated Statement of Cash Flows for the period ending January 31, 2011 (unaudited)	3

	Consolidated Statement of Shareholders’ Deficit for the period ending January 31, 2011 (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

Item 4(T).	Controls and Procedures	16

PART II.	OTHER INFORMATION	17

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	(Removed and Reserved).	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

	Signatures	18

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

DAULTON CAPITAL CORPORATION
(A Development Stage Company)
Balance Sheet

	January 31, 2011			April 30, 2010
	(Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents	$	12,552		$	10,764
Accounts Receivable		-			-
Prepaid Rent		-			-
		12,552			10,764
Other Assets
Oil and Gas Working Interest: Ballarat		25,000			25,000
Oil and Gas Working Interest: Hunker		25,000			25,000
		50,000			50,000

TOTAL ASSETS	$	62,552		$	60,764

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
Subscriptions Received		165,000			89,000
Loans from Officers		45,492			45,490

		210,492			134,490

Commitments and contingencies (Note 5)

Stockholders' Equity
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; none outstanding as at January 31, 2011 and April 30, 2010.
Common Stock, $0.001 par value, 200,000,000 shares authorized, 58,450,000 shares issued and outstanding as at January 31, 2011 57,600,000 shares issued and outstanding as at April 30, 2010		58,450			57,600
Additional paid-in capital		386,551			208,901
Deficit accumulated in the development stage		(592,941	)		(340,229	)

Total Stockholders' Equity		(147,940	)		(73,728	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	62,552		$	60,762

DAULTON CAPITAL CORPORATION
(A Development Stage Company)
Statement of Operations
(Unaudited)

	For the 3 months ended January 31,						For the 9 months ended January 31,						For the period of Inception, from Jan. 8, 2008 through January 31,
	2011			2010			2011			2010			2011

Revenues
Crude Oil Production	$	-		$	-		$	-		$	-		$	17,189
														-
Costs and Expenses														-
Mining Exploration								40,203						40,203
Salary & Wages					45,000			-			45,000			45,000
Consulting					-			178,500			-			187,664
Professional Fees		1,040			17,147			14,890			17,147			84,876
Occupancy Expense					246			1,737			996			12,981
Stock Transfer Fees		1,565			-			3,727			-			10,680
Other General & Administrative		5,843			4,567			13,655			4,567			195,843
														32,883
Total Expenses		8,448			66,960			252,712			67,710			610,130
														-
Operating Loss		(8,448	)		(66,960	)		(252,712	)		(67,710	)		(592,941	)


Net Income (Loss)	$	(8,448	)	$	(66,960	)	$	(252,712	)	$	(67,710	)	$	(592,941	)

Net Income (Loss) per share, basic and diluted	$	(0.000	)	$	(0.001	)	$	(0.004	)	$	(0.001	)

Weighted average number of shares outstanding, basic and diluted		582,450,000			57,600,000			57,820,540			57,600,000

DAULTON CAPITAL CORPORATION
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)

	For the 3 months ended January 31,						For the 9 months ended January 31,						For the period of Inception, from Jan. 8, 2008 through January 31,
	2011			2010			2011			2010			2011

Cash Flows From Operating Activities
Net Income (Loss)	$	(8,448	)	$	(66,960	)	$	(252,712	)	$	(67,710	)	$	(592,941	)
Adjustments to reconcile net loss to net cash used by operating activities:											.
Non cash issue of stock for services								178,500						178,500
Change in operating assets and liabilities:
Accounts receivable
Accounts Payable
Prepaids											750
Subscriptions Received		10,000			10,164			76,000			10,164			165,000
Net Cash provided by (used by) operating activities		1,552			(56,796	)		1,788			(56,796	)		(249,441	)

Cash Flows From Investing activities
Purchase working interest in wells														(240,000	)
Net Cash (used by) Investing Activities		-			-			-			-			(50,000	)

Cash Flows From Financing Activities
Proceeds from the sale of Stock														254,055
Proceeds of loans from officers					45,292						45,292			45,492
Contribution of capital					12,446						12,446			12,446
Net Cash provided by Financing Activities		-			57,738			-			57,738			311,993

Net Increase (Decrease) in Cash		1,552			942			1,788			942			12,552

Cash at beginning of period		11,000			-			10,764			-			-

Cash at end of period	$	12,552		$	942		$	12,552		$	942		$	12,552

Cash Paid For:
Interest	$	-		$	-		$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-		$	-		$	-

DAULTON CAPITAL CORPORATION
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
For the period from Inception, January 8, 2008, to January 31, 2011
(Unaudited)

	Common Stock				Additional Paid-in			Accumulated Deficit During Development
	Shares		Amount		Capital			Stage			Total

Balances at Inception, Jan. 8, 2008		-	$	-	$	-		$	-		$	-
Common stock issued for cash on January 14, 2008 at $0.098 per share		28,800,000		28,800		(11,223	)					17,577
Common stock issued for cash on February 21, 2008 at $0.0977 per share		24,000,000		24,000		122,477						146,477
Net loss, period ended April 30, 2008									(11,594	)		(11,594	)

Balances at April 30, 2008		52,800,000	$	52,800	$	111,254		$	(11,594	)	$	152,460

Common stock issued for purchase of a working interest in wells at $0.30 per share October 16, 2008		4,800,000		4,800		85,200						90,000
Net loss, year ended April 30, 2009									(51,710	)		(51,710	)

Balances at April 30, 2009		57,600,000	$	57,600	$	196,454		$	(63,304	)	$	190,750

Capital contributed						12,447						12,447
Net loss, year ended April 30, 2010									(276,925	)		(276,925	)

Balances at April 30, 2010		57,600,000	$	57,600	$	208,901		$	(340,229	)	$	(73,728	)

Common stock issued for services September 14, 2010 at $0.21 per sh.		850,000		850		177,650						178,500
Net loss, 9 months ended Jan. 31, 2011									(252,712	)		(252,712	)

Balances at January 31, 2011		58,450,000	$	58,450	$	386,551		$	(592,941	)	$	(147,940	)

Daulton Capital Corporation

(A Developmental Stage Company)

Notes to Financial Statements

January 31, 2011

1. Basis of Presentation and Nature of Operations

These unaudited interim financial statements as of and for the nine months ended January 31, 2011 reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end April 30, 2010 report. 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 period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine month period ended January 31, 2011 are not necessarily indicative of results for the entire year ending April 30, 2011.

Organization

Daulton Capital Corporation (the “Company”) was incorporated under the laws of the State of Nevada January 8, 2008. The Company was organized for the purpose of engaging in any activity or business not in conflict with the laws of the State of Nevada or of the United States of America. The company became engaged in the oil and gas industry.

Current Business of the Company

In February, 2008 the Company purchased a 20% working interest /16% Net Revenue Interest in a producing oil well known at Mayberry No. 1, located in an oil and gas leasehold estate in Creek County, Oklahoma. In June, 2008 Semcrude, Inc., the collector of the oil produced by the well, reported bankruptcy under Chapter 11 of the Bankruptcy Code. Payments to the Company for oil sold were suspended. The wells were shut in pending the resolution of issues that arose during bankruptcy proceedings.

On July 30, 2008 the Company purchased a 5% working interest / 4% net revenue interest in six oil wells known as the Glencoe Wells located in an oil and gas leasehold estate in Pawnee County, Oklahoma. The purchase was paid in restricted common stock.

Volumetric calculations of the wells were not performed.

Property Acquisition Costs:


	Unproved
Mayberry No. 1 well	$	100,000
Glencoe Wells		90,000
	$	190,000

Impairment of these long lived assets was considered under FASB ASC Topic 360. Future cash flows from and beyond probable reserves was considered to be zero. The wells were considered 100% impaired in April, 2010 and written down accordingly.

Options on Mineral Claims

In February 2010 the Company entered into two option agreements with an individual, Shawn Ryan of Dawson City, Yukon Territory, Canada for the purchase of two groups of mineral claims in the Yukon Territory known as the Ballarat Property and the Hunker Project. The Ballarat Property consists of 38 mineral claims covering 1900 acres and the Hunker Project consists of 121 mineral claims covering 6,000 acres in known gold producing areas. The options require certain payments on or before February 15, 2014:

- staged cash payments to Mr. Ryan totaling $400,000

- staged issue of 1,250,000 common shares to Mr. Ryan

- staged expenditures for work on the properties totaling $1,260,000

The first payments of $25,000 due for each option were paid.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates made by management are, among others, reliability of long-lived assets, deferred taxes and stock option valuation.

Cash and equivalents

Cash and equivalents include investments with initial maturities of three months or less.

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

- Level 1: Quoted prices in active markets for identical assets or liabilities

- Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of April 30, 2010, reflect

- Cash: Level One measurement based on bank reporting.

- Subscriptions Received: Level 2 based on contract.

- Loans from Officers: Level 3 based on promissory notes.

Income Taxes

The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company generated a deferred tax credit through net operating loss carryforward. However, a valuation allowance of 100% has been established, as the realization of the deferred tax credits is not reasonably certain, based on going concern considerations outlined in the following.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU No. 2010-01, amending SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles.” This Standard codified in ASC 105 is being modified to include the authoritative and non-authoritative levels of GAAP. This amendment is effective for financial statements issued for interim and annual periods ending after September 15, 2009. ASU No. 2010-01 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In January 2010, the FASB issued ASU No. 2010-08, “Technical Corrections to various Topics.” This Standard is being updated to eliminate outdated or inconsistent GAAP standards and to clarify the Boards original intent mainly with regards to derivatives and hedging. This is effective for the first reporting period (including interim periods) beginning after issuance. ASU No. 2010-08 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” related to ASC Topic 820-10. This update requires new disclosures to; transfers in or out of Levels 1 and 2, activity in Level 3fair value measurements, Level of disaggregation, and disclosures about inputs and valuation techniques. This amendment will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU No. 2010-06 has no impact on the Company’s results of operations, financial condition or cash flows.

In January, 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The standard amends ASC Topic 820, Fair Value Measurements and Disclosures to require additional disclosures related to transfers between levels in the hierarchy of fair value measurement. The standard does not change how fair values are measured. The standard is effective for interim and annual reporting periods beginning after December 15, 2009. As a result, it is effective for the Company in the first quarter of fiscal year 2010. The Company does not believe that the adoption of ASU 2010-06 will have a material impact on its financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events (ASC Topic 855), Amendments to Certain Recognition and Disclosure Requirements.” This Standard update requires a SEC Filer to (1) evaluate subsequent events through the date that the financial statements are issued or available to be issued, (2) defines “SEC Filer” as an entity that is required to file or furnish its financial statements with either the SEC or, with respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section, (3) not be bound to disclosing the date through which subsequent events have been evaluated, (4) note the definition of public entity is not longer defined nor necessary for Topic 855, (5) note the scope of the reissuance disclosure requirements is refined to include revised financial statements only. These Updates are effective for interim or annual periods ending after June 15, 2010. ASU No. 2010-09 has no effect on the Company’s financial position, statement of operations, or cash flows at this time.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The company experienced a loss of $252,712 in the nine months ended January 31, 2011 and $592,941 since inception January 8, 2008. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plans to generate revenue from its mining leases. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classifications or liabilities or other adjustments that might be necessary should the Company be unable to continue as a going concern.

Development-Stage Company

The Company is considered a development-stage company, with limited operating revenues during the periods presented, as defined by FASB Accounting Standards Codification ASC 915. ACS 915 requires companies to report their operations, shareholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations, among other things. Management has defined inception as January 8, 2008. Since inception, the Company has incurred an operating loss of $592,941. The Company’s working capital has been generated through the sales of common stock and limited revenue from crude oil production. Management has provided financial data since January 8, 2008 in the financial statements, as a means to provide readers of the Company’s financial information to make informed investment decisions.

Basic and Diluted Net Loss Per Share

Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

The Company has no potentially dilutive securities outstanding as of January 31, 2011.

The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the nine months ended January 31, 2011 and 2010, respectively.

Numerator:

	January 31,
Basic and diluted net loss per share:	2011			2010

Net Loss	$	( 252,712	)	$	(67,710	)

Denominator

Basic and diluted weighted average number of shares outstanding	57,820,540			57,600,000

Basic and Diluted Net Loss Per Share	$	(0.00	)	$	(0.00	)

Accounting for Oil and Gas Producing Activities

The Company utilizes the full-cost method of accounting for extractive properties, per FASB ACS 939. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of mineral reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of mining of productive and non-productive mines into the full cost pool on a country by country basis.

All capitalized costs of proven reserves, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made the Company assesses annually whether impairment has occurred, and impairment is expensed in the year of determination.

The Costs of unproved properties are generally combined and impaired over a period that is based on the average holding period for such properties and the company’s experience of successful operations. Write-downs will be recorded when the carrying value is not supportable.

3. Capital Structure

On October 17, 2008 the Company effected a four-to-one forward stock split of common stock. There was no effect on stockholders’ equity. Par value of $001 per share remained unchanged.

On August 7, 2009 the stockholders by a majority vote approved a 4-for-1 forward split of the Company’s common stock. There was no effect on stockholders’ equity and par value of $0.001 per share remained unchanged.

On September 14, 2010, 850,000 shares of common stock were issued for services. The issue was priced at the prevailing market price of the stock, 21 cents per share, and an expense of $178,500 was recorded.

As at January 31, 2011, the Company was authorized to issue 200,000,000 shares of $0.001 par value common stock, of which 58,450,000 shares were issued and outstanding. 5,000,000 shares of $0.001 preferred stock were authorized, of which none was issued and outstanding.

4. Change in Management

On August 6, 2009 Terry Fields and Michael R. Mulberry were appointed directors. On September 11, 2009, Ryan Beamin resigned as President, Secretary and Treasurer of the Company. He was succeeded by Terry R. Fields, who assumed the offices of President, Chief Executive Officer, Secretary and Treasurer. Michael R. Mulberry was appointed Vice President and General Manager of Operations. On June 3, 2010 Peter Streicher was appointed a director. On December 15, 2010, Michael R. Mulberry resigned at Vice President and General Manager of Operations, and as a director.

5. Related Party Transactions

On April 19, 2010, the Board of Directors authorized 600,000 common shares to be issued to the President, Terry Fields and 250,000 common shares to Michael Mulberry, Vice President for services rendered. The shares were issued September 14, 2010.

6. Commitments and Contingencies

There were no commitments or contingencies in the nine months ended January 31, 2011.

7. Legal Proceedings

A complaint was filed for attorney’s fees in Superior Court, and judgment obtained on February 2, 2010 for $12,737.43, including costs of $292. The judgment was pledged by certain stockholders, subsequently paid, and the judgment satisfied.

There were no other legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation other than as creditors in the Syncrude bankruptcy proceeding, or is involved either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors

8. Subsequent Events

Events subsequent to January 31, 2011 have been evaluated through March 3, 2011, the date these statements were available to be issued, to determine whether they should be disclosed to keep the financial statements from being misleading. Management found no subsequent events to be disclosed.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References in this Quarterly Report on Form 10-Q (this "Quarterly Report") to "we", "us", "our", "Registrant", "Issuer", "Company", "Daulton", mean Daulton Capital Corp., a Nevada Corporation, unless the context otherwise requires.

Forward-Looking Statements

This following information specifies certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may” “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict, and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

Forward-looking statements include, but are not limited to, statements relating to our future business and financial performance, our competitive position and other material future developments that you may take into consideration.

We believe it is important to communicate our expectations to our shareholders. However, there may be events in the future that we are not able to accurately predict or over which we have no control.

You are cautioned not to place undue reliance on these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results; accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

The following discussion of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to the consolidated financial statements, which are included elsewhere in this report.

Organizational History

We were incorporated in Nevada on January 8, 2008 with the intention of pursuing oil and gas exploration and development opportunities.

On February 15, 2008, we filed a Certificate of Amendment to increase our authorized stock into 50,000,000 shares of common stock, $0.001 par value and 5,000,000 shares of preferred stock, $0.001 par value.

On October 17, 2008, we filed a Certificate of Change with the Nevada Secretary of State effecting a four-for-one forward stock split of our common stock and increasing the our authorized capitalization to 200,000,000 shares of common stock.

On August 7, 2009, we filed a Certificate of Amendment to affect a four-for-one forward split of our common stock.

Operational History

We acquired a 20% working interest (16% net revenue interest) in an oil well located in Creek County, Oklahoma (“Creek Well”). As of April 30, 2010, the Creek Well was shut in and not producing.

On July 30, 2008, we acquired a 5% working interest (4% net revenue interest) in six wells located in Pawnee County, Oklahoma (“Pawnee Wells”). In consideration for assignment of the working interest in the Pawnee Wells, we issued 300,000 restricted shares of the Company’s common stock to the former owner of the working interest. As of April 30, 2010, the Pawnee Wells were shut in and not producing.

In June 2008, Semcrude, Inc., the purchaser of the oil produced by the Creek Well and Pawnee Wells, filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code. As a result, payments to the Company for oil sold have been suspended.

On April 25, 2009, we signed an agreement to acquire approximately 90% of the outstanding shares of Energy Solutions People Inc. in exchange for 7,234,034 restricted shares of the Company’s common stock. Energy Solutions was incorporated in Nevada in September 2007. Shortly after its formation, Energy Solutions acquired the rights to various renewable energy products, the most significant of which are wind turbines and solar powered electrical generators. This agreement was subsequently terminated.

On February 22, 2010, we entered into an option agreement with Shawn Ryan to purchase an undivided interest of mining claims of a property described as “Ballarat Property.” In addition, on February 25, 2010, we entered into an option agreement with Shawn Ryan to purchase an undivided interest of mining claims of a property described as “Hunker Project.”

We plan to generate profits through the excavation of mining prospects. However, we will need to raise the funds required for excavation from third parties. We may also attempt to raise needed capital through the private sale of our securities or by borrowing from third parties. However, we may not be successful in raising the capital needed for future excavation of our mining interests. In addition, any future excavations may not be productive of any minerals or ores. The inability to generate profits may force us to curtail or cease operations.

Our future plans will be dependent upon the amount of capital we are able to raise. We do not have any commitments or arrangements from any person to provide us with any additional capital.

General Overview of Business

As of April 30, 2010, we abandoned all of our oil and gas prospects. We plan to evaluate mining prospects and participate in mining activities on those prospects, which in the opinion of management are favorable. If, through our review, a geographical area indicates geological and economic potential, we may attempt to acquire leases or other interests in the area. We may then attempt to sell portions of its leasehold interests in a prospect to unrelated third parties, thus sharing the risks and rewards of the exploration and development of the prospect with the joint owners.

We may also:

	●	Acquire a working interest in one or more prospects from others and participate with the other working interest owners in mining, or

	●	Purchase producing mining properties.

Our activities will primarily be dependent upon available equity and debt financing.

Oil and Gas Prospects

We have abandoned all of our oil and gas prospects, which included the 20% working interest (16% net revenue interest) in the Creek Well and the 5% working interest (4% net revenue interest) in Pawnee Wells. Impairment of these long-lived assets was considered under FASB ASC Topic 360. Future cash flows from and beyond probable reserves was considered to be zero. The Creek well and Pawnee Wells were considered 100% impaired in April of 2010 and written down accordingly.

Mining Interests

We are currently engaged in the business of exploration of precious metals with a focus on the exploration and development of quartz deposits in North America. As of the date of this Quarterly Report, the Company’s mineral interests consist mainly of option agreements on exploration stage properties. We have not established any proven or probable reserves on our mineral property interests.

Ballarat

On February 22, 2010, the Company and Shawn Ryan, an individual (“Ryan”), entered into the “Ballarat Option Agreement” that granted the Company the right to purchase from Ryan an undivided interest in the mining claims on a property described as the “Ballarat Property.” The Ballarat Option Agreement provided the Company with the option to acquire a 100% interest in the Ballarat Property from Ryan by making staged cash payments and issuing a total of 1,250,000 shares of common shares of stock of the Company on or before February 15, 2014.

Pursuant to the Ballarat Option Agreement, Ryan retained a 2% net smelter return interest that requires an advance royalty payment for $30,000 starting Aug 20, 2014. At the option of the Company, the net smelter return interest may be reduced to 1% upon making a $2 million dollar payment to Ryan. The Company’s exploration plans for the Ballarat Property is to establish a soil and ground magnetic survey. The soil-sampling program will be followed up with a portable excavator-trenching program that the Company believes will generate numerous quality drill targets.

Pursuant to the Ballarat Option Agreement, the first payment of $25,000 was due to Ryan on or about March 15, 2010. However, the Company and Ryan entered into the “Ballarat Extension Agreement” to extend such payment by 10 days.

On March 31, 2010, the Company entered into an “Amendment to Ballarat Option Agreement” which amended the Ballarat Option Agreement as follows: (a) the Ballarat Property shall consist of 94 Yukon Quartz Mining Claims located in the Dawson Mining District, Yukon Territory, Canada and (b) the claim block shall cover approximately 19 square kilometers and straddle Ballarat Creek.

The Company has since paid Ryan the first payment of $25,000. The Company also issued 250,000 shares of restricted common stock to Ryan which was exempt from registration under Sections 4(2) and 4(6), including Regulation D promulgated thereunder, of the Securities Act of 1933, as amended. However, the Company is not current with any other obligations under the Ballarat Option Agreement and amendment thereto.

Hunker

On February 25, 2010, the Company and Ryan entered into the “Hunker Option Agreement” for the Company to acquire from Ryan an undivided interest in the mining claims of a property described as the “Hunker Project.” The Hunker Option Agreement granted the Company the option to earn 100% interest in the Hunker Project from Ryan by making staged cash payments and issuing a total of 1,000,000 shares of common stock of the Company to Ryan on or before February 15, 2014. Ryan shall retain a 2% net smelter return interest that requires an advance royalty payment for $30,000. At the option of the Company, the net smelter return interest of Ryan may be reduced to 1% upon making a $2 million dollar payment to Ryan. The Company has paid Ryan the first payment of $25,000.

The Hunker Project consists of 121 Yukon Quartz Mining Claims located in the Dawson Mining District, Yukon Territory Canada. The claim block is situated 15 miles southeast of Dawson City and now stands at 6,000 acres or 24 square kilometers and straddles Hunker Creek.

The Company has since paid Ryan the first payment of $25,000. The Company has also issued 1,000,000 shares of restricted common stock to Ryan which was exempt from registration under Sections 4(2) and 4(6), including Regulation D promulgated thereunder, of the Securities Act of 1933, as amended. However, the Company is not current with any other obligations under the Hunker Option Agreement and amendment thereto.

Results of Operations for the Three Months Ended January 31, 2011

During the three month period ended January 31, 2011, the Company incurred an operating loss of $8,448.

Our activities have been financed from proceeds of shareholders, related or third party subscriptions and/or loans. We do not anticipate earning revenues until such time as we have entered into commercial production of any mineral claims. We are presently in the pre-exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on any properties, or if such resources are discovered, that we will enter into commercial production of any mineral claims.

Net Loss for the Three Month Period Ended January 31, 2011

For the three month period ended January 31, 2011, we recorded an operating loss of $8,448, compared to a loss of $66,960 for the comparative three month period of the prior year. The loss consists of: mining and exploration $-0- (2009 - $nil); salary & wages $-0- (2009 - $45,000); consulting fees $-0- (2009 - $nil); professional fees $1,040 (2009 - $17,147); occupancy expenses $-0- (2009 - $246); stock transfer fees $1,565 (2009 - $nil); and other general and administrative fees $5,843 (2009 - $4,567).

Cumulative Loss to January 31, 2011

We have generated $17,189 in revenues from our operations since our incorporation through January 31, 2011. We have incurred a cumulative loss of $592,941 since inception, January 8, 2008. Thus, there can be no assurance that we will ever achieve profitability or that revenues will be generated and sustained in the future. We are dependent upon obtaining additional and future financing to pursue our exploration and excavation activities.

Liquidity and Further Capital Resources

At January 31, 2011, we had assets of $62,552, consisting of cash and cash equivalents and oil and gas interests. Total stockholders’ deficit was $147,940 at January 31, 2011. We are a pre-exploration stage company and, since inception, have experienced significant changes in liquidity, capital resources and shareholders’ equity.

To finance the Company’s operations the Company has relied upon cash on hand, sources internally generated from management, advances from shareholders and financing via loans and debt financing.

The Company has raised $66,000 from a private offering since the fiscal year ended April 30, 2010.

Off-Balance Sheet Arrangements

As of January 31, 2011, the Company did not have any off-balance sheet arrangements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

ITEM 4. Controls and Procedures.

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as required by Sarbanes-Oxley (SOX) Section 404.A. The Company's internal control over financial reporting is a process designed under the supervision of its Chief Executive and Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its financial statements for external purposes in accordance with Generally Accepted Accounting Principles.

The Company’s management have evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report, and in their opinion the Company’s disclosure controls and procedures are effective at the reasonable assurance level to ensure that information is adequately disclosed.

There were no changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter ended January 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s Principal Executive Officer and Principal Financial Officer, Terry Fields, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report; and in his opinion the Company’s disclosure controls and procedures were effective.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings.

A complaint was filed for attorney’s fees in Superior Court, and judgment obtained on February 2, 2010 for $12,737.43, including costs of $292. The judgment was pledged by stockholders, the judgment subsequently paid, and thus the judgment was satisfied.

ITEM 1A. Risk Factors.

Smaller reporting companies are not required to provide the information required by this Item 1A.

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

Since the fiscal year ended April 30, 2010, the Company initiated a private offering of up to 1,400,000 units at $0.30 per unit, which is compromised of one share of common stock and one warrant to purchase the Company’s common stock for the next 2 years at $0.60 per share. The Company has raised a total of $66,000 from two accredited investors. The shares of common stock and the warrants have not been issued by the Company.

The restricted shares of common stock of the Company to be issued rely upon exemptions provided for under Regulation S of the Securities Act of 1933, as amended, or Sections 4(2) and 4(6), including Regulation D promulgated thereunder, of the Securities Act of 1933, as amended, based on the accredited investors knowledge of our operations and financial condition and experience in financial and business matters that allowed them to evaluate the merits and risk of receipt of these securities.

As of the quarter ended January 31, 2011, 33,000 shares and warrants have been issued pursuant to the aforementioned raise.

ITEM 3. Defaults Upon Senior Securities.

Pursuant to the Ballarat Option Agreement, and amendment thereto, the Company is in default to Ryan for the February 15, 2011 stock issuance of 250,000 shares of common stock of the Company and a payment of $50,000.

Pursuant to the Hunker Option Agreement, and amendment thereto, the Company is in default to Ryan for the February 15, 2011 payment for $75,000.

ITEM 4. (Removed and Reserved).

ITEM 5. Other Information.

None.

ITEM 6. Exhibits.

Number		Exhibit

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbans-Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbans-Oxley Act of 2002
32.1		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

	DAULTON CAPITAL CORP.

Date: March 17, 2011	By:	/s/ Terry Fields
		Terry Fields, President and Principal Financial and
		Accounting Officer

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