Dutch Gold Resources Inc - FORM 10-Q/A

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - Dutch Gold Resources Inc	ex31_2.htm
EX-32.1 - EXHIBIT 32.1 - Dutch Gold Resources Inc	ex32_1.htm
EX-31.1 - EXHIBIT 31.1 - Dutch Gold Resources Inc	ex31_1.htm
EX-32.2 - EXHIBIT 32.2 - Dutch Gold Resources Inc	ex32_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q/A

_____________________

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

For the quarterly period ended September 30, 2010

o 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: 333-72163

DUTCH GOLD RESOURCES, INC.

Nevada	58-2550089
(State of Incorporation)	(I.R.S. Employer Identification No.)

3500 Lenox Road, NE

Suite 1500

Atlanta, Georgia 30326

(Address of principal executive offices)

(404) 419-2440

(Issuer’s telephone number, including area code)

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

Yes o No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No

Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, or a non-accelerated filer. See definition 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 filer o
Non-accelerated filer o	Smaller reporting company x

Transitional Small Business Disclosure Format:

Yes o

No x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Class		Outstanding at September 30, 2010
Common Stock, par value $0.001 per share		192,948,792

Explanatory Note: This 10-Q/A amends our Quarterly Report on Form 10-Q for the period ending September 30, 2010, which was originally filed with the SEC on November 12, 2010.

DUTCH GOLD RESOURCES, INC.

FOR THE QUARTER ENDED SEPTEMBER 30, 2010

TABLE OF CONTENTS

INDEX	Page

PART I - FINANCIAL INFORMATION

ITEM 1 – Financial Statements – Unaudited	3

Consolidated Balance Sheets at September 30, 2010 (unaudited) and December 31, 2009	3

Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009 (unaudited)	4

Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited)	5

Notes to Consolidated Financial Statements (unaudited)	6

ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk	24

ITEM 4 - Controls and Procedures	24

PART II- OTHER INFORMATION

ITEM 1 – Legal Proceedings	26

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds	26

ITEM 3 – Defaults Upon Senior Securities	26

ITEM 4 – Removed and Reserved	26

ITEM 5 – Other information	26

ITEM 6 – Exhibits	26

EXHIBITS	27

SIGNATURES	27

Table of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1. Financial Statements

DUTCH GOLD RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2010			2009
	(unaudited restated)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	3,185		$	24,522
Investments available for sale at fair value		1,237,500			-
Other current assets		58,252			269,919

Total current assets		1,298,937			294,441

LONG-TERM ASSETS:
Mineral properties		2,581,155			-
Property, plant and equipment at cost		2,358,424			2,398,776
Less accumulated depreciation		(1,992,070	)		(1,632,253	)

Net mineral properties and property, plant and equipment		2,947,509			766,523

Other assets		11,600			179,852

TOTAL ASSETS	$	4,258,046		$	1,240,816

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	1,110,375		$	1,312,724
Accounts payable-related parties		998,089			141,391
Notes payable-related parties		2,434,926			-
Loans from shareholders		195,000			360,000
Convertible notes payable		292,500			-
Payroll liabilities		558,686			558,686
Accrued liabilities		223,648			648,856

Total current liabilities		5,813,224			3,021,657

LONG-TERM LIABILITIES:
Long-term notes payable-related parties		-			2,514,926
Warrant liability		2,517,202			2,517,202

Total long-term liabilities		2,517,202			5,032,128

TOTAL LIABILITIES		8,330,426			8,053,785

Commitments and contingencies

STOCKHOLDERS' DEFICIT

Common stock, $.001 par value 500,000,000 shares authorized, 235,981,334 and 115,717,375 issued and outstanding at September 30, 2010 and December 31, 2009		235,981			115,717
Additional paid-in-capital		15,324,580			10,549,581
Stock subscriptions		254,905			69,600
Accumulated deficit		(19,887,846	)		(17,547,867	)

Total stockholders' deficit		(4,072,380	)		(6,812,969	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	4,258,046		$	1,240,816

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

DUTCH GOLD RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended September 30,						Nine months ended September 30,
	2010			2009			2010			2009
	(unaudited restated)			(unaudited)			(unaudited restated)			(unaudited)

Revenue

Sales	$	-		$	-		$	-		$	-
Cost of sales		-			-			-			-

Gross profit		-			-			-			-

Operational Expenses

Selling, general and administrative expenses		393,510			72,574			737,744			855,269
Professional fees		52,175			2,005,896			1,698,063			4,075,331
Rent and repairs and maintenance		2,729			(1,316	)		28,227			903
Depreciation		119,939			119,939			359,817			359,817

Total operating expenses		568,353			2,197,093			2,823,851			5,291,320

Operating loss		(568,353	)		(2,197,093	)		(2,823,851	)		(5,291,320	)

Other income (expense)

Interest expense, net		(3,378	)		(345,798	)		(3,378	)		(1,023,227	)
Financial settlement expense		(25,000	)		-			(61,250	)		-
Gain from debt settlement		-			-			251,277			-
Gain from settlement of accounts payable		-			-			80,046			-
Gain from sale of Aultra investment		-			-			217,177			-

Loss before income taxes		(596,731	)		(2,542,891	)		(2,339,979	)		(6,314,547	)

Provision for income taxes		-			-			-			-

Net loss		(596,731	)		(2,542,891	)		(2,339,979	)		(6,314,547	)

Basic and diluted loss per share	$	(0.00	)	$	(0.03	)	$	(0.01	)	$	(0.08	)
Weighted average shares outstanding		235,981,334			78,056,164			235,981,334			78,056,164

See accompanying Notes to Condensed Consolidated Financial Statements

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DUTCH GOLD RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	None months ended September 30,
	2010			2009
	(unaudited restated)			(unaudited)

Operating activities:

Net loss	$	(2,339,979	)	$	(6,314,547	)
Adjustments to reconcile net loss to cash used by operating activities
Gain from settlement of accounts payable		(80,046	)		-
Gain from reversal of accrued interest		(361,277	)		-
Loss from write-off of other assets		110,000			-
Common stock issued for services		1,384,324			5,309,783
Common stock issued for payment of interest		-			818,656
Common stock issued for other settlements		61,250			-
Depreciation		359,817			359,817
Gain on sale of Aultra Investment		(217,177	)		-
Changes in assets and liabilities					-
Other current assets		-			(1,468,070	)
Accounts payable		(81,951	)		909,819
Accounts payable-related parties		441,294			-
Accrued liabilities		(12,497	)		198,214

Net cash used in operating activities		(736,242	)		(186,328	)

Financing activities:
Proceeds from sale of common stock, net		69,600			147,500
Proceeds from stock subscriptions		185,305			-
Proceeds from notes payable-related parties		150,000			-
Proceeds from loans from shareholders		-			40,561
Proceeds from convertible notes payable		310,000			-

Net cash provided by financing activities		714,905			188,061

Net increase (decrease)/increase in cash and cash equivalents		(21,337	)		1,733

Cash and cash equivalents at beginning of period		24,522			(1,063	)

Cash and cash equivalents at end of period	$	3,185		$	670

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during year for interest	$	-		$	-

Non-cash Transactions:
Common shares issued to settle debt	$	612,500		$	525,000
Common shares issued to settle accrued expenses		51,434			-
Common shares issued for acquisition		2,716,155			-

	$	3,380,089		$	525,000

See accompanying Notes to Condensed Consolidated Financial Statements

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS OF PRESENTATION

The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and should be read in conjunction with the Company's consolidated audited financial statements and notes thereto for the year ended December 31, 2009, included in the 2009 Annual Report on Form 10-K/A. All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company’s 2009 Annual Report on Form 10-K/A filed on May 24, 2011. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results of the interim periods presented have been included. The 2009 year-end balance sheet data was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the nine months ended September 30, 2010 are not necessarily indicative of the results expected for the full year.

The Company is restating its historical financial statements for the quarter ended September 30, 2010. The restatement primarily relates to certain errors in processing transactions resulting in expenses being recorded in the incorrect period and for the incorrect value and the reclassification of the statement of operations to properly reflect expenses by function. Accordingly, the Company’s financial statements for the nine months ended September 30, 2010 have been restated to correct for these errors and are included in the accompanying condensed consolidated financial statements. For the nine months ended September 30, 2010, these corrections in the aggregate reduced the Company’s previously reported net loss by $1,043,379, or $0.02 per share. Note 14 provides the effect of the restatement on the September 30, 2010 condensed consolidated financial statements.

NATURE OF OPERATIONS

Dutch Gold Resources, Inc. is engaged in the acquisition and exploration of gold mining projects in the Americas. The Company is focused on developing its existing mining properties in North America and acquiring and developing new mines with the expectation that the properties can enter production within 12 to 24 months. The Company operates in one reporting segment.

PRINCIPLES OF CONSOLIDATION

We generally act as a sole proprietor, but may enter joint agreements with other companies in an effort to achieve our stated operating objectives. Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and include our accounts and our wholly-owned subsidiaries’ accounts (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior year presentations have been reclassified to conform with the current year presentation.

USE OF ESTIMATES AND PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Table of Contents

DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – ACQUISITION AND DISPOSITION OF AULTRA GOLD

Stock Purchase Agreement – Aultra Gold

Pursuant to a Stock Purchase Agreement by and among the Company, Rauno Perttu, Strategic Minerals Inc., a Nevada corporation, and Aultra Gold Capital Inc., a Turks and Caicos corporation, the Company acquired a 67% controlling interest of Aultra Gold, Inc. (“Aultra” or “Aultra Gold”) by acquiring 6,442,500 of Aultra’s existing common shares for a purchase price of one million newly-issued shares of the Company’s common stock, par value $0.001 per share. The transaction closed on January 6, 2010. The total value of the one million shares issued based on the Dutch Gold Resources, Inc. common share closing price of $0.135 per share was $135,000.

In addition, in accordance with the Stock Purchase Agreement, in 2010 the Company forgave $269,919 in advances that the Company previously made to Aultra Gold which were secured by a promissory note and recorded as an Other Current Asset by the Company as of December 31, 2009. As the forgiveness of the advances occurred resulting from the execution of the Stock Purchase Agreement, management determined that the amount forgiven should be included in the overall value of the controlling interest acquired; therefore, the Company determined that the fair value of the Aultra controlling interest was $404,919.

Asset Purchase Agreement – Aultra Gold

On January 6, 2010, Dutch Gold Resources, Inc. entered into an Asset Purchase Agreement with DGRI ADGI Acquisition Corporation (the “Purchaser” and a Dutch Gold Resources, Inc. wholly owned subsidiary) and Aultra Gold, Inc. Pursuant to the agreement, the Company acquired all of Aultra Gold’s assets, which primarily consisted of the mining rights to a project in Montana and a project in Nevada. As consideration for these assets, the Company issued 9,614,667 shares of its common stock, par value $0.001 per share, to Aultra Gold for a total value of $1,297,980 based on the $0.135 per share market price of Dutch Gold’s common stock. In addition, in connection with the Asset Purchase Agreement, the Company issued a Dutch Gold Resources, Inc. executive and an Aultra Gold executive collectively 9,505,000 Dutch Gold common shares for a total value of $1,283,175 based on the $0.135 per share market price of Dutch Gold’s common stock. The purpose for issuing these shares was to incentivize these executives that were instrumental in the transaction and to ensure that these key executives would continue to be involved with the acquired projects. Based on these transactions, the Company determined that the consideration paid resulting from the Asset Purchase Agreement was $2,581,155 and has accounted for the transaction using the acquisition method of accounting with the purchase price assigned to the net assets acquired based on the fair value of such assets at the date of acquisition.

In accordance with the transaction, the Company acquired substantially all of the assets related to Aultra Gold’s gold and mineral business. Management determined that the value of the assets obtained primarily relate to the mineral rights associated with the property in Basin Gulch, Montana. Dutch Gold was granted an assignment of the Basin Gulch Mine lease between Aultra Gold and Strategic Minerals as a result of the acquisition.

In order to fair value the mineral rights acquired, management utilized a compilation and review report prepared by a third-party which documented the estimated proven and probable reserves related to the Basin Gulch Mine property. Based on these findings, management estimated the value beyond proven and probable reserves (VBPP) and the Company determined that the fair value of the total consideration paid of $2,581,155 resulting from the Asset Purchase Agreement should be allocated to the mineral rights acquired. The Company has recorded the acquired mineral rights fair value as Mineral properties on the condensed consolidated balance sheets as a separate component of property, plant and equipment. As the mineral rights represent a tangible asset, the assigned fair value should be amortized over the useful life of the mineral right based on the units of production method. Management will begin the amortization of the asset once development of the site commences in accordance with the units of production method.

Summary of Stock Purchase Agreement and Asset Purchase Agreement – Aultra Gold

As a result of the Stock Purchase Agreement and Asset Purchase Agreement dated January 6, 2010, Dutch Gold Resources, Inc. owned 67% of the common shares of publicly traded Aultra and the assets of Aultra Gold which primarily related to mineral rights. Subsequent to these transactions, Aultra was basically a public shell consisting of liabilities that were not assumed by the Company and a deficit.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – ACQUISITION AND DISPOSITION OF AULTRA GOLD (CONTINUED)

Aultra Gold is engaged in the business of acquiring and exploring gold and mineral properties with proven and probable reserves, with the objective of identifying gold and mineralized deposits economically worthy of continued production and/or subsequent development, mining or sale.

Dutch Gold pursued the transactions with Aultra as the Company’s mission is to become a recognized gold producer within two years with a key to this objective being the acquisition of late state exploration and development projects that can be quickly advanced to production. Based on the assets that Aultra controlled, specifically the rights to the Basin Gulch Mine property, the Company determined that the acquisition met its strategic objectives and that management believes that it has the financial resources to produce and realize the mineral rights related to the property.

Except as noted in the preceding paragraphs and as disclosed in the Stock Purchase Agreement and Asset Purchase Agreement, there were no material relationships among the Company and Aultra or any of their respective affiliates. It is the policy of the Company to segregate each of its mining projects into separate, wholly owned special purpose vehicles, for the purposes of risk mitigation and financing. The acquisition of the controlling interest in Aultra Gold was made as an investment to be held either for a spin-off or other value creation event. The Asset Purchase Agreement was executed as the Company believes that it has the resources to develop the mineral rights related to the projects acquired.

Shamika Transaction

On March 26, 2010, Aultra Gold, Inc., which had been a 67% owned subsidiary of Dutch Gold since the January 6th transactions discussed previously, entered into an Agreement and Plan of Share Exchange with Shamika2Gold Inc., a Nevada Corporation (“Shamika”). In general terms, Aultra was a public shell with limited assets and Shamika was a private company that acquired the Aultra public shell in a reverse acquisition allowing Shamika, after the transaction, to be a registrant.

Pursuant to the agreement, Aultra acquired all of the outstanding shares (the “Shamika Shares”) from the Shamika Holders in exchange for an aggregate of 25,500,000 newly issues shares of Aultra’s common stock, par value $0.001 per share (the “Exchange”). As a result of the acquisition and other concurrent transactions in Aultra’s shares, Aultra Gold, Inc. (now publically traded as Shamika 2 Gold) had 50,000,000 million shares outstanding with 967,467 pertaining to the reversed Aultra shell. Accordingly, the Exchange represented a change in control.

For financial accounting purposes, the acquisition was a reverse acquisition of Aultra by Shamika, under the purchase method of accounting, and was treated as a recapitalization with Shamika as the acquirer. Upon consummation of the Exchange, Aultra adopted the business plan of Shamika.

The business purpose of this transaction was that Shamika wanted to be a publicly traded company in order to have access to the capital markets which would provide access to funding for mining development opportunities. As Aultra had no operations subsequent to the Asset Purchase agreement noted above, issuing shares that would result in Shamika having a controlling interest allowed Aultra (and Dutch Gold) to retain shares in a company that had the financial resources to pursue and develop new mining opportunities.

In connection with the Reverse Acquisition and on the same date, Shamika issued 23,546,067 shares of its common stock in order to satisfy certain liabilities in the amount of $301,512. As part of this transaction Dutch Gold Resources, Inc. was issued 4,950,000 shares (9.9%) of Shamika Gold Inc. The Company determined the fair value of the 4,950,000 common shares received as $1,237,500 which approximated the value of the shares on the first day that Shamika’s common shares were publicly traded. As a result of the reverse acquisition by Shamika, Dutch Gold retained the remaining Aultra liabilities not acquired of $616,154 which represents amounts owed to a former officer of Aultra (now a Dutch Gold executive), Rauno Perttu. Dutch Gold issued 10,000,000 shares to Rauno Perttu in July 2010 which reduced this liability by $200,000 ($200,000 represented the fair value of the shares on the date of issuance). Therefore, the Company has remaining a $416,154 liability which is recorded in our consolidated balance sheet as of September 30, 2010 within the Accounts payable-related parties account line.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – ACQUISITION AND DISPOSITION OF AULTRA GOLD (CONTINUED)

At March 26, 2010, resulting from the Shamika transaction, the Aultra Board of Directors and Officers was reconstituted by the resignation of: Rauno Perttu from his role as President, Secretary and Director, Daniel Hollis from his role as Chief Executive Officer and Director, Lance Rosmarin from his role as Director, and the appointment of Robert Vivian as President and Chief Executive Officer and Terence Orstlan as Secretary and Director. The Company owns less than 10% of the issued and outstanding shares of Shamika as of September 30, 2010. Subsequent to the transaction date, the Company utilizes the cost method to account for its investment in Shamika Gold as Dutch Gold no longer has a controlling interest in Aultra nor does management have the ability to exercise significant influence over Shamika’s operating and financial policies. The Company has classified the fair value of its investment in Shamika as an available-for-sale security. Refer to Note 4 for additional discussion on this investment.

Management viewed its initial controlling interest in Aultra as substantive during the period from January 6, 2010 through March 26, 2010 as the Company’s involvement and expertise was needed in order to execute an agreement with Shamika. In addition, during this interim period Aultra’s board of directors consisted of two directors from Dutch Gold. These directors were instrumental in the Shamika transaction. Although the controlling interest was obtained on January 6, 2010 and subsequently sold on March 26, 2010, the Company did not consolidated the financial results of Aultra for this interim period as Aultra’s results were not material to the consolidated financial statements of the Company. In addition, pro-forma financials related to Aultra’s operations have not been provided as we deem this information not to be beneficial to our shareholders as Aultra’s operating activity was minimal and would not have a material effect on our operations.

We recorded our $404,169 investment in Aultra resulting from the Stock Purchase Agreement under the equity method. As stated above, we effectively sold Aultra through a reverse acquisition by Shamika on March 26, 2010. A gain on the disposition of the controlling interest of Aultra resulted from the sale to Shamika. Management determined that the gain recorded would be the difference in our initial fair value investment in Aultra ($404,169) less the $621,346 fair value of the consideration received from the Shamika transaction ($621,346 calculated as the fair value of the Shamika shares received of $1,237,500 less Aultra debt assumed of $616,154). Thus, the Company recorded in our statement of operations a $217,177 gain on sale of our Aultra investment for the period ended September 30, 2010.

NOTE 3—FAIR VALUE MEASUREMENT

The Company measures its investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of asset or liability and their characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

•

Level 1—Quoted prices in active markets for identical instruments.

•

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company categorizes its investments as either trading, available for sale, or held to maturity. The Company does not hold any securities for trading purposes or that we believe would be considered held to maturity. The Company’s investments are comprised of available-for-sale securities and are carried at fair value with unrealized gains and losses, net of applicable income taxes, recorded within accumulated other comprehensive income. The Company reviews its investments quarterly for declines in market value that are other than temporary in addition to re-evaluating the investment classification.

The Company’s financial instruments consist of cash and cash equivalents, investments, accounts payable, notes payables, loans from shareholders and accrued expenses. The Company considers the carrying values of its financial instruments in the financial statements to approximate their fair value due to the short term nature of such items. The fair values of the Company's debt instruments are calculated based on debt with similar maturities, credit quality and current market rates of interest. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest risks arising from these financial instruments.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4—INVESTMENTS AVAILABLE FOR SALE

As disclosed in Note 2, resulting from the Shamika Gold transaction, in 2010 the Company acquired 4,950,000 shares of common stock of Shamika 2 Gold with an investment value of $1,237,500. Securities to be held for indefinite periods of time, but not necessarily to be held to maturity or on a long-term basis, are classified as available for sale and carried at fair value with unrealized gains or losses reported as a separate component of shareholders' deficit in accumulated other comprehensive (loss) income in the condensed consolidated balance sheets. Based on management’s current intent of holding the majority of the shares in Shamika 2 Gold equity security, the investment is classified as a short term investment in available for sale securities. The common stock of Shamika 2 Gold is quoted on the Over-the-Counter Bulletin Board under the symbol “SHMX” and is, therefore, considered a Level 1 investment in the fair value hierarchy.

NOTE 5—OTHER CURRENT ASSETS

Other current assets are comprised of:

	September 30,		December 31,
	2010		2009
Deposits	$	33,252	$	-
Performance Bond		25,000		-
Advances to Aultra Gold, Inc.		-		269,919

Total other current assets	$	58,252	$	269,919

Prior to 2010, Dutch Gold Resources, Inc. advanced monies to Aultra via a secured promissory note. The promissory note in the amount of $269,919 was secured by the underlying claims which were being paid by Aultra to both Bureau of Land Management (BLM) and the lessor of the Basin Gulch project. As part of the consideration paid which allowed the Company to acquire a controlling interest in Aultra in accordance with a Stock Purchase Agreement that closed on January 6, 2010 as discussed in Note 2, the Company forgave the advances that were made to Aultra. This amount forgiven was considered in the Company’s valuation of its controlling interest equity investment in Aultra.

NOTE 6—MINERAL PROPERTIES AND PROPERTIES, PLANT AND EQUIPMENT

	September 30,		December 30,
	2010		2009

Mine and Mill Equipment	$	2,358,424	$	2,398,776
Mineral Properties		2,581,155		-
	$	4,939,579	$	2,398,776
Less: accumulated depreciation, depletion and amortization		1,992,070		1,632,253
Net carrying value	$	2,947,509	$	766,523

There was $359,817 and $359,817 charged to operations for depreciation expense for the nine months ended September 30, 2010 and September 30, 2009, respectively.

The Internal Revenue Service has a Federal lien on the Company’s subsidiary Dutch Mining, LLC’s equipment, real property and leases in the amount of $567,062. The State of Oregon Department of Revenue has a lien on the Company’s subsidiary Dutch Mining, LLC’s personal and real property in the amount of $91,050. These liens arose from unpaid Federal and state payroll taxes from the closed Benton Mine operation in Oregon. Dutch Gold Resources, Inc. has not accrued for penalties and interest associated with these liens as it is more likely than not that the Company will not be liable for such amounts.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7—CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable is comprised of:

	September 30,		December 31,
	2010		2009
Convertible promissory notes	$	292,500	$	-

Total convertible notes payable	$	292,500	$	-

The Company had convertible promissory notes outstanding at September 30, 2010 and December 31, 2009 in the amount of $292,500 and $0 respectively. The notes bear interest at rates ranging from 8% to 21% per annum and mature within the next twelve months. Under the convertibility terms of the convertible promissory notes, the principal, plus accrued interest can be converted immediately, at the option of the holder, either in whole, or in part, into fully paid common shares of the Company.

NOTE 8—CAPITAL STOCK

Common Stock

As of September 30, 2010, the Company had 235,981,334 shares of its $0.001 par value common stock issued and outstanding. Common Stock was issued during the nine months ended September 30, 2010, to retire various debt and payable obligations of the Company based upon the actual balance and any accrued interest. The consideration for settlement amounts for payments from the Company’s common shares was arrived at by utilizing the market value (the price of the last reported trade) of the DGRI stock on the date of issue.

Warrants

As of September 30, 2010 the Company had the following warrants for the purchase of shares of common stock issued and outstanding:

	Warrants Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value

Outstanding, December 31, 2010		7,777,500	$	0.56		-
Granted		-		-		-
Forfeited/Expired		-		-		-
Exercised		-		-		-
Outstanding, September 30, 2010		7,777,500	$	0.56	$	0

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8—CAPITAL STOCK (CONTINUED)

No Share Purchase Warrants were issued for the period ending September 30, 2010. These common share purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model as of the issuance date. Some of the warrants provide that in the event the Company is unable to issue registered shares upon exercise, the warrant holders are entitled, under securities laws, to receive freely tradable shares pursuant to a "cashless exercise" provision. However, based on interpretation of ASC 815, there is a required presumption of net cash settlement.

We determined that these warrants issued create a related liability in accordance with ASC 480-10-55-29 & 30 due to the fact that some of the warrants could be settled for cash. In our estimation of the value of this liability, we interpreted and applied the concept of "Fair Value" from ASC 820. We took into account the remote probability of the occurrence of a fundamental transaction triggering a right to cash settlement as a probability factor in applying a Black-Scholes valuation of the warrants. The warrants have been recorded at their relative fair values at issuance and will continue to be recorded at fair value each subsequent balance sheet date. Any change in value between reporting periods is recorded as Other Income (expense) each reporting date. The warrants are reported as a liability rather than as equity. As of September 30, 2010, the Company did not adjust the $2,517,202 liability of the fair value of the warrants recorded when compared to December 31, 2009, as the fair value of the warrants did not materially change for the nine month period ended September 30, 2010.

As of September 30, 2010, the following share purchase warrants were outstanding:

Warrants Outstanding	Exercise Price		Expiration Date
500,000	$	1.15	January 5, 2013
250,000		1.15	January 5, 2013
41,667		0.60	February 27, 2010
100,000		0.97	February 27, 2010
12,500		0.95	April 14, 2013
12,500		0.95	April 14, 2013
833,333		1.00	September 4, 2010
166,667		1.00	September 4, 2010
3,333,333		0.50	March 12, 2011
62,500		0.50	June 9, 2012
437,500		0.50	June 9, 2012
125,000		0.30	October 5, 2012
50,000		0.30	October 21, 2012
62,500		0.30	November 16, 2012
500,000		0.30	November 18, 2012
100,000		0.30	November 18, 2012
75,000		0.30	November 24, 2012
75,000		0.30	November 29, 2012
125,000		0.30	December 4, 2012
625,000		0.30	December 9, 2014
90,000		0.30	December 9, 2012
100,000		0.30	December 16, 2012
50,000		0.30	December 16, 2012
50,000		0.50	December 16, 2012

7,777,500

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9—PER SHARE DATA

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, convertible notes and convertible preferred stock.

The Company has excluded all common equivalent shares outstanding for warrants and convertible notes to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented.

NOTE 10—RELATED PARTY TRANSACTIONS

Notes Payable-related parties

The Company assumed a note that was issued by Dutch Mining, LLC in the amount of $1,214,926 to Embassy International, LLC, a Florida limited liability company controlled by the family of the former Chairman of the Board, Ewald Dienhart. This is a demand note with $900,000 secured by the mill equipment with a 0% interest rate. The balance outstanding at September 30, 2010 and December 31, 2009 was $1,134,926 and $1,214,926, respectively. During the nine months ended September 30, 2010, the balance was partially settled through the issuance of stock.

The Company assumed a note that was issued by Dutch Mining, LLC in the amount of $250,000 to Gabriela Dienhart-Engel, who is the daughter of the former Chairman of the Board, Ewald Dienhart. The note is dated July 31, 2006 and carries an interest rate of 6.0%. The note is partially secured by the title to the Gold Bug mine. The balance outstanding at September 30, 2010 and December 31, 2009 was $250,000.

The Company assumed a note that was issued by Dutch Mining, LLC in the amount of $100,000 to Caruso-Dienhart TBE Family Trust, LLC., a Company related to the former Chairman of the Board, Ewald Dienhart. The note is dated July 31, 2006 and carries an interest rate of 6.0%. The note is partially secured by the Gold Bug mine and certain equipment used by the Company. The balance outstanding at September 30, 2010 and December 31, 2009 was $100,000.

The Company assumed a note that was issued by Dutch Mining LLC in the amount of $950,000 to Josef Bauer for working capital. The note is guaranteed by Ewald Dienhart and carries an interest rate of 8.0%. The balance outstanding at September 30, 2010 and December 31, 2010 was $950,000.

All notes listed above are due on demand.

Accounts Payable-related parties

Daniel W. Hollis, CEO of Dutch Gold Resources, Inc. has advanced a total of $397,585 and $141,391 as of September 30, 2010 and December 31, 2009, respectively. The cash was used for general corporate purposes by the Company.

Rauno Perttu, COO of Dutch Gold Resources, Inc. has a balance owing to him of $600,504 and $0 at September 30, 2010 and December 31, 2009, respectively. In 2010, Dutch Gold retained the remaining Aultra liabilities not acquired of $616,154 which represents amounts owed to the now former officer of Aultra, Rauno Perttu. Dutch Gold issued 10,000,000 shares to Rauno Perttu in July, 2010 which reduced this liability by $200,000 ($200,000 represented the fair value of the shares on the date of issuance). Therefore, the Company has remaining a $416,154 liability related to the Aultra transaction which is included in the balance owed as of September 30, 2010.

NOTE 11—FINANCIAL CONDITION AND GOING CONCERN

As of September 30, 2010, the Company had cash on hand of $3,185, investments available for sale of $1,237,500, a working capital deficit of approximately $4.5 million and has incurred a loss from operations for the nine months ended September 30, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company's continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered into discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.

The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to secure the necessary capital and continue as a going concern.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12—COMMITMENTS AND CONTINGENCIES

The Company leases office space in Atlanta, Georgia under a one-year renewable contract presently at approximately $2,500 per month.

NOTE 13 – MINING LEASE AND OPTION TO PURCHASE

BASIN GULCH

Dutch Gold Resources, Inc. was granted an assignment of the Basin Gulch Mine lease between Aultra Gold, Inc. and Strategic Minerals, Inc. in 2010 as a result of the Asset Purchase agreement with Aultra as discussed in Note 2.

On May 31, 2006, AGDI entered into a Mining Lease Agreement with Strategic Minerals, Inc. (“Strategic”) whereby Strategic granted AGDI the exclusive right to explore, evaluate, develop, and mine the Basin Gulch Property, Montana. The advanced exploration and test mining project consists of eleven patented mineral claims, surrounded by the Deer Lodge National Forest, totaling about 217.9 acres. The claims are all located at the head of Basin Gulch, on the northern slopes of the West Fork Buttes, within the Sapphire Range of the Western Montana Rocky Mountains.

The three-stage Mining Lease Agreement for Basin Gulch is structured as follows:

Stage 1 initial payment:

ADGI paid its initial cash payment of $10,000 and prior to July 30, 2006 satisfied its reporting obligations to Strategic regarding all the exploration and studies conducted on the premises of Basin Gulch Property. This initial payment was expensed when paid.

Stage 2 advance production royalties:

To further evaluate and develop the minerals, AGDI fulfilled the following obligations:

i) By June 10, 2006, it paid a cash payment of $15,000 directly to the underlying property owner;

ii) By September 10, 2006 made cash payment of $25,000 directly to the underlying property owner, and at the end of each following

six month period to date.

iii) Since 2008, Dutch Gold Resources, Inc. made such payments under an agreement with Aultra Gold, which granted a security interest in all the claims to the AGDI. Since 2008, DGRI has made semi- annual cash payments of $25,000 to the underlying land owner. No further payments have been or will be made to Strategic based on subsequent agreements between Strategic and the Company.

Stage 3 production royalties:

Upon commencement of production, the Company must pay the greater of:

i) A twice annual cash payment of $25,000 due on March 10 and September 10 of each year; or

ii) 3% of the gross sales receipts of the gold and silver sold, due semi-annually on March 10 and September 10 of each year;

Should production be suspended for a period of 6 months or longer, the twice annual advance production royalty of $25,000 listed above resumes. Upon the completion of payments totaling $8,000,000, the Company will have purchased the mineral rights to this property. As of September 30, 2010, production had not commenced and, therefore, the Stage 3 related production royalties were not owed.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNGO

On June 1, 2007, the Company entered into a formal binding Agreement of Purchase and Sale (the "Agreement") with W.R. Hansen, an individual (the “Seller”), pursuant to which the Company acquired from the Seller certain mining claims together with all improvements and all equipment owned by the Seller located thereon, located in Humboldt County, State of Nevada (the “Property”). In consideration of the purchase of the Property, the Company agreed to: (i) reimburse the Seller for all staking and filing costs related to the Property, (ii) issue to the Seller 50,000 restricted shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), valued at $0.50 per share, (iii) upon its sole determination of sufficient mineralization to place the Property in production, to further issue to the Seller an additional 50,000 restricted shares of the Company’s Common Stock, such that the Company shall make such a determination not later than 30 days following the acquisition of the data contemplated by paragraph 3.3 of the Agreement, (iv) not later than 10 days following the date the Property is placed into development for production of metals, to issue to the Seller an additional 100,000 restricted shares of the Company’s Common Stock, and (v) as further consideration after the Property is placed in production, to direct to the Seller a monthly Net Smelter Royalty of 2% upon all gold, silver, copper, or other metals (the “Metals”) produced and sold from the Property (each royalty payment shall be paid not later than 30 days following the last day of the month in which the metals were produced and sold). Closing of the sale and purchase of the Property occurred on the same date, as under the Agreement both the Company and the Seller have performed their mutual obligations under paragraph 2.2 and Section 4 thereof. As of September 30, 2011, the Jungo property was not in production.

NOTE 14 –RESTAMENT OF FINANCIAL STATEMENTS

The restatement effect on the condensed consolidated statement of operations for the nine months ended September 30, 2010 is reflected below.

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 –RESTAMENT OF FINANCIAL STATEMENTS (CONTINUED)

Consolidated Balance Sheet

DUTCH GOLD RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

As at SEPTEMBER 30, 2010 (unaudited) and SEPTEMBER 30, 2010 (unaudited)

	As of September 30, 2010
	As reported			Adjustment			As Restated


ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	3,184		$	1		$	3,185
Investments available for sale		140,000			1,097,500			1,237,500
Other current assets		5,250			53,002			58,252

Total current assets		148,434			1,150,503			1,298,937

Property, plant and equipment
Mineral properties		1,394,053			1,187,102			2,581,155
Property, plant and equipment at cost		2,369,424			(11,000	)		2,358,424
Less accumulated depreciation		(1,992,070	)		-			(1,992,070	)

Net property, plant and equipment		1,771,407			1,176,102			2,947,509

Other Assets		94,852			(83,252	)		11,600

TOTAL ASSETS	$	2,014,693		$	2,243,353		$	4,258,046

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	1,126,541		$	(16,166	)	$	1,110,375
Accounts payable-related parties		367,237			630,852			998,089
Notes payable - related parties		-			2,434,926			2,434,926
Loans from shareholders		-			195,000			195,000
Convertible notes payable, net		373,005			(80,505	)		292,500
Payroll liabilities		558,686			-			558,686
Accrued liabilities		724,662			(501,014	)		223,648

Total current liabilities		3,150,131			2,663,093			5,813,224

LONG-TERM LIABILITIES:
Long-term notes payable-related parties		2,901,926			(2,901,926	)		-
Warrant liability		-			2,517,202			2,517,202

Total long-term liabilities		2,901,926			(384,724	)		2,517,202

TOTAL LIABILITIES		6,052,057			2,278,369			8,330,426

Commitments and contingencies

STOCKHOLDERS' DEFICIT
Common stock		192,949			43,032			235,981
Additional paid-in-capital		15,786,033			(461,453	)		15,324,580
Stock subscriptions		-			254,905			254,905
Accumulated deficit		(20,016,346	)		128,500			(19,887,846	)

Total stockholders' deficit		(4,037,364	)		(35,016	)		(4,072,380	)

TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT	$	2,014,693		$	2,243,353		$	4,258,046

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 –RESTAMENT OF FINANCIAL STATEMENTS (CONTINUED)

Consolidated Statement of Operations

	Three months ended September 30,									Nine months ended September 30,
	As reported			Adjustment			As Restated			As reported			Adjustment			As Restated

Revenue

Sales	$	-		$	-		$	-		$	-		$	-		$	-
Cost of sales					-			-			-			-			-

Gross profit		-			-			-			-			-			-

Operational Expenses

Selling, general and administrative expenses		845,480			(451,970	)		393,510			2,774,880			(2,037,136	)		737,744
Professional fees		-			52,175			52,175			-			1,698,063			1,698,063
Rent and repairs and maintenance		-			2,729			2,729			-			28,227			28,227
Depreciation		119,939			-			119,939			359,817			-			359,817

Total operating expenses		965,419			(397,066	)		568,353			3,134,697			(310,846	)		2,823,851

Operating loss		(965,419	)		397,066			(568,353	)		(3,134,697	)		310,846			(2,823,851	)

Other income (expense)

Interest expense, net		(23,319	)		19,941			(3,378	)		(248,661	)		245,283			(3,378	)
Financial settlement expense		-			(25,000	)		(25,000	)		-			(61,250	)		(61,250	)
Gain from debt settlement		-			-			-			-			251,277			251,277
Gain from settlement of accounts payable		-			-			-			-			80,046			80,046
Gain from sale of Aultra investment		-			-			-			-			217,177			217,177
		-
Loss before income taxes		(988,738	)		392,007			(596,731	)		(3,383,358	)		1,043,379			(2,339,979	)

Provision for income taxes		-			-			-			-			-			-

Net loss		(988,738	)		392,007			(596,731	)		(3,383,358	)		1,043,379			(2,339,979	)

Basic and diluted loss per share	$	(0.01	)	$	0.01		$	(0.00	)	$	(0.02	)	$	0.02		$	(0.01	)
Weighted average shares outstanding		192,948,792			43,032,542			235,981,334			192,948,792			43,032,542			235,981,334

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 –RESTAMENT OF FINANCIAL STATEMENTS (CONTINUED)

Consolidated Statement of Cash Flows

	Nine months ended September 30, 2010
	As reported			Adjustment			As Restated

Operating activities:

Net loss	$	(3,383,358	)	$	1,043,379		$	(2,339,979	)
Adjustments to reconcile net loss to cash used by operating activities
Gain from settlement of accounts payable		-			(80,046	)		(80,046	)
Gain from reversal of accrued interest		-			(361,277	)		(361,277	)
Loss from write-off of other assets		-			110,000			110,000
Common stock issued for services		1,277,881			106,443			1,384,324
Common stock issued for other settlements		-			61,250			61,250
Depreciation		359,817			-			359,817
Gain on sale of Aultra Investment		-			(217,177	)		(217,177	)
Changes in assets and liabilities
Other current assets		349,669			(349,669	)		-
Accounts payable		(185,636	)		103,685			(81,951	)
Accounts payable-related parties		225,846			215,448			441,294
Accrued liabilities		75,807			(88,304	)		(12,497	)

Net cash provided by (used in) operating activities		(1,279,974	)		543,732			(736,242	)

Financing activities:
Proceeds from sale of common stock, net		25,946			43,654			69,600
Proceeds from sale of debentures		387,000			(387,000	)		-
Common stock issued to retire debt		831,362			(831,362	)		-
Proceeds from stock subscriptions		-			185,305			185,305
Proceeds from notes payable-related parties		-			150,000			150,000
Proceeds from convertible notes payable		13,005			296,995			310,000

Net cash provided by (used in) financing activities		1,257,313			(542,408	)		714,905

Net increase (decrease)/increase in cash and cash equivalents		(22,661	)		1,324			(21,337	)

Cash and cash equivalents at beginning of period		25,845			(1,323	)		24,522

Cash and cash equivalents at end of period	$	3,184		$	1		$	3,185

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during year for interest	$	-		$	-		$	-

Non-cash Transactions:
Common shares issued to settle debt	$	106,525		$	505,975		$	612,500
Common shares issued to settle accrued expenses		-			51,434			51,434
Common shares issued for acquisition		-			2716155			2,716,155

	$	106,525		$	3,273,564		$	3,380,089

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DUTCH GOLD RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – SUBSEQUENT EVENTS

None.

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

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

•

unexpected changes in business and economic conditions;

•

significant increases or decreases in gold prices;

•

unanticipated grade changes;

•

metallurgy, processing, access, availability of materials, equipment, supplies and water;

•

determination of reserves;

•

results of current and future exploration activities;

•

results of pending and future feasibility studies;

•

joint venture relationships;

•

local and community impacts and issues;

•

timing of receipt of government approvals;

•

accidents and labor disputes;

•

environmental costs and risks;

•

competitive factors, including competition for property acquisitions; and

•

availability of external financing at reasonable rates or at all.

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of the Business” and “Management’s Discussion and Analysis” in our 2010 Form 10-K. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

Stockholders and other users of this Quarterly Report on Form 10-Q are urged to carefully consider these factors in connection with the forward-looking statements. We do not intend to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

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Overview and Results of Operations

Our objective is to increase the value of our shares through the exploration, development and extraction of gold, silver and other valuable minerals. We generally conduct our business as sole operator, but we may enter into arrangements with other companies through joint venture or similar agreements in an effort to achieve our strategic objectives. We own or lease our mineral interests and properties and operate our business through various subsidiary companies, each of which is owned entirely, directly or indirectly, by us.

We own a leasehold interest in a property near Philipsburg, Montana which is of 217 acres of patented land and approximately 900 acres of Bureau of Land Management (BLM) land, referred to as Basin Gulch. We acquired the property in 2010 and commenced a regional exploration program in 2010. Over the next two years, we estimate we will spend approximately $4 million on exploration and development at the Basin Gulch Project, which will mainly consist of drilling and test mining.

The Jungo gold exploration project is located approximately 50 miles northwest of the town of Winnemucca in Humboldt County, Nevada. The property is situated on the eastern margin of the Jackson Mountains.

The property is on BLM land and is held by 95 unpatented lode mining claims. Twenty five of the claims have a two percent net smelter return royalty to William (Bill) Hansen. The other 70 claims are owned by DGRI.

The property was acquired by DGRI by the transaction with Aultra Gold in January 2010. Mr. Hansen originally showed the property to Aultra Gold, which acquired it and staked additional claims.

Principal Executive Offices

Our principal executive office is located at 3500 Lenox Road, Suite 1500, Atlanta, Georgia 30326. Our phone number is 404-419-2440. Our website is www.DutchGold.com. We currently lease office space for our corporate office and operations under a one-year renewable contract with monthly rental charges approximately $2,500 per month. We believe that these offices adequately meet the current needs of the Company. We make available periodic reports and press releases on our website. Our common shares trade on the Over the Counter market under the symbol "DGRI."

General Government Regulations

United States

Mining in the State of Nevada and in the State of Montana is subject to Federal, state and local law. Three types of laws are of particular importance to our U.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.

Land Ownership and Mining Rights

The Jungo Project in Nevada is situated on lands owned by the United States (Federal Lands). On Federal Lands, mining rights are governed by the General Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the General Mining Law and Nevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, we have the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable Federal, state, and local laws, regulations and ordinances.

Mining Operations

The exploration of mining properties and development and operation of mines is governed by both Federal and state laws. The Jungo property is administered by the United States Department of the Interior, Bureau of Land Management, which we refer to as the BLM. In general, the Federal laws that govern mining claim location and maintenance and mining operations on Federal Lands, including the Tonkin Springs property, are administered by the BLM. Additional Federal laws, such as those governing the purchase, transport or storage of explosives and those governing mine safety and health, also apply.

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Mining Operations (Continued)

The State of Nevada, likewise, requires various permits and approvals before mining operations can begin, although the state and Federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs.

The bond is used to ensure that proper reclamation takes place, and the bond will not be released until this is completed. The Nevada Department of Environmental Protection, which we refer to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on our Nevada property. Local jurisdictions (such as Humboldt County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

Environmental Law

The development, operation, closure and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered. We are currently operating under various permits for activities connected to mineral exploration, reclamation and environmental considerations. Unless and until a mineral resource is proved, it is unlikely our operations will move beyond the exploration stage. If in the future we decide to proceed beyond exploration, there will be numerous notifications, permit applications and other decisions to be addressed at that time.

The State of Montana likewise requires various permits and approvals before mining operations can begin, although the state and Federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until this is completed. The Montana Department of Environmental Quality, which we refer to as the MDEQ, is the state agency that administers the reclamation permits, mine permits and related closure plans on our Montana property. Local jurisdictions (such as Humboldt County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

Gold Uses

Gold is generally used for fabrication or investment. Fabricated gold has a variety of end uses including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins and jewelry.

Gold Supply

A combination of current mine production and draw-down of existing gold stocks held by governments, financial institutions, industrial organizations and private individuals make up the annual gold supply. Based on public information available for the years 2008 through 2010, on average, current mine production has accounted for approximately 61% of the annual gold supply.

Gold Price History

The price of gold is volatile and is affected by numerous factors all of which are beyond our control such as the sale or purchase of gold by various central banks and financial institutions, inflation, recession, fluctuation in the relative values of the US dollar and foreign currencies, changes in global and regional gold demand, and the political and economic conditions of major gold-producing countries throughout the world.

The following table presents the high, low and average afternoon fixed prices in U.S. dollars for gold per ounce on the London Bullion Market over the past nine years:

Year	High		Low		Average
2002		349		278		310
2003		416		320		363
2004		454		375		410
2005		537		411		445
2006		725		525		603
2007		841		608		695
2008		1,011		713		872
2009		1,146		810		978

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Competition

We compete with major mining companies and other natural mineral resource companies in the acquisition, exploration, financing and development of new projects. Many of these companies have greater resources and are better capitalized than the Company. There is significant competition for the limited number of gold acquisition and exploration opportunities. Our competitive position depends upon our ability to successfully and economically explore, acquire and develop new and existing mineral prospects. Factors that allow producers to remain competitive over the long-term include the quality and size of ore bodies, costs of operation, and the acquisition and retention of qualified employees. The Company competes with mining companies for skilled mining engineers, mine and processing plant operators and mechanics, geologists, geophysicists and other technical personnel. This competition could result in higher employee turnover and may result in higher labor costs.

Seasonality

Seasonality is not a material factor to the Company for its projects. Certain surface exploration work may need to be conducted when there is no snow but it is not a significant issue for the Company.

Employees

As of September 30, 2010, we had 5 employees. Our employees in the U.S. include geologists, environmentalists, information technologists and office administrators. The Company believes we have good relations with our employees. We also engage independent contractors in connection with the exploration of our properties, such as drillers, geophysicists, geologists and other technical disciplines.

Results of Operations

Three months ended September 30, 2010 and 2009

During the three-month period ended September 30, 2010, the Company incurred operating expenses of $568,353 as compared to operating expenses of $2,197,093 for the period ended September 30, 2009. The Company's net loss during the three-month period ended September 30, 2010 was $596,731, as compared to a net loss of $2,542,891 during the three-month period ended September 30, 2009.

A substantial portion of the improvement in operating expenses is related to a reduction in professional fees by $1,953,721 for 2010. The 2009 professional fees were related to stock issued to financial consultants in connection with assisting the Company in raising funds and pursuing possible acquisitions. In 2010, as the Company still incurred related expenditures, management was able to rely less on outside consultants and raise additional funds internally through previously established relationships.

The net loss for the three months ended September 30, 2010 was $596,731 as compared to $2,542,891 for the three month period ended September 30, 2009, representing a decreased loss of $1,946,160. The aforementioned reduction in professional fees is the primarily reason for the decrease in the net loss for 2010 when compared to the same period in 2009. Loss per share for the three months ended September 30, 2010 was ($.00) based on fully diluted weighted average shares of 235,981,334 as compared to a loss per share for the three months ended September 30, 2009 of ($.03) based on fully diluted weighted average shares of 78,056,164. The decrease in the loss per share results from an increase in the number of shares outstanding at September 30, 2010.

Twelve-Month Business Outlook

In order to act upon our operating plan discussed herein, we must be able to raise sufficient funds from (i) debt financing; or, (ii) new investments from private investors.

Operating Expenses and Capital Expenditures

Operating Expenses

Assuming that the Company is successful raising funds, we anticipate incurring operating expenses of approximately $2.4 million during the next twelve months to fund the costs relating to the development of our properties and the identification of new acquisitions.

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Source of Revenue

When produced, the Company sells gold concentrates and ore to brokers and/or refineries. The Company has not produced any revenue since 2008.

Liquidity and Capital Resources

We currently have limited sources of capital, including the public and private placement of equity securities and the possibility of debt. With limited liquid assets and depreciating fixed assets, the availability of funds from traditional sources of debt will be limited and we cannot assure that there will be a source of funds in the future. The Company will take sufficient action to raise additional debt and or equity as the markets will allow.

As of September 30, 2010, we had a cash balance of $3,185. We estimate that, based upon our current business, we will require up to $5 million over the next two years. However, the Company cannot properly anticipate the capital expenditures and working capital needed in connection with its operations and development. Although not certain or guaranteed, the Company believes it has access to sufficient funding for the next twelve months.

Critical Accounting Policies and Estimates

In the third quarter of 2010, there were no significant changes to our critical accounting policies and estimates from those disclosed in the section “Management’s Discussion and Analysis of Plan of Operation and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2009.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Based upon an evaluation of the effectiveness of disclosure controls and procedures, our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As reported in our Annual Report on Form 10-K for the year ended December 31, 2009, based upon an evaluation of the effectiveness of disclosure controls and procedures, the Company’s chief executive and chief financial officer has determined that there are material weaknesses in our disclosure controls and procedures. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote

The material weaknesses in our disclosure control procedures are as follows:

1. Lack of formal policies and procedures necessary to adequately review significant accounting transactions. The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions.

2. Audit Committee and Financial Expert. The Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process. We intend to initiate measures to remediate the identified material weaknesses including, but not necessarily limited to, the following:

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- Establishing a formal review process of significant accounting transactions including the appropriate segregation of duties that includes participation of the Chief Executive Officer, the Chief Financial Officer and the Company’s corporate legal counsel.

- Form an Audit Committee that will establish policies and procedures that will provide the Board of Directors a formal review process that will, among other things, assure that management controls and procedures are in place and being maintained consistently.

(b) Changes in Internal Control over Financial Reporting

As reported in our Annual Report on Form 10-K for the year ended December 31, 2009, management is aware that there are material weaknesses in our internal control over financial reporting and therefore has concluded that the Company’s internal controls over financial reporting were not effective as of December 31, 2009. The significant deficiency relates to a lack of segregation of duties due to the small number of employees involvement with general administrative and financial matters. The material weakness relates to a lack of formal policies and procedures necessary to adequately review significant accounting transactions. There have not been any changes in the Company's internal control over financial reporting during the quarter ended September 30, 2010, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may be involved in litigation in the normal course of business, the results of which could have a material impact on our properties, results of operation or financial condition. To the best of our knowledge, none of our officers or directors are involved in any legal proceedings in which we are an adverse party. Management currently believes that resolving any such claims against us will not have a material adverse impact on our business, financial position or results of operations. These matters are subject to inherent uncertainties and management’s view of these matters may change in the future. We are not aware of any other pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A. Risk Factors

Not required for smaller reporting companies.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

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Exhibits.

Exhibit		Description of Exhibit
31.1		Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Board and Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Reports on Form 8-K. During the fiscal quarter ended September 30, 2010, the Company filed the following Current Reports on Form 8-K:

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DUTCH GOLD RESOURCES, INC.

	By:	/s/Daniel W. Hollis
		Daniel W. Hollis, Chief Executive Officer, Director
		(principal executive officer)

	By:	/s/ Tom Leahey
		Tom Leahey, Chief Financial Officer
		(principal accounting officer)

	By:	/s/ Lance Rosemarin
		Lance Rosemarin, Director

Date: May 26, 2011

Dutch Gold Resources Inc - FORM 10-Q/A - May 27, 2011

Attached files

Dutch Gold Resources Inc Reports