Gunpowder Gold Corp - FORM 10-Q

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EX-31.1 - Gunpowder Gold Corp	v228570_ex31-1.htm
EX-32.1 - Gunpowder Gold Corp	v228570_ex32-1.htm
EXCEL - IDEA: XBRL DOCUMENT - Gunpowder Gold Corp	Financial_Report.xls

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended May 31, 2011

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

For the transition period from __________ to __________

Commission File No. 001-34976

GUNPOWDER GOLD CORPORATION

(Exact name of small business issuer as specified in its charter)

Nevada		26-3751595
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10th Floor

3 Hardman Street

Manchester M3 3HF

United Kingdom

(Address of Principal Executive Offices)

011-44-161-932-1446

(Issuer’s telephone number)

None

(Former name, address and fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

¨ Large accelerated filer	¨ Accelerated filer

¨ Non-accelerated filer	x Smaller reporting company

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

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1943 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

State the number of shares outstanding of each of the issuer’s classes of common stock, as of July 5, 2011: 90,501,961 shares of common stock.

PART I – FINANCIAL INFORMATION			2

	Item 1.	Financial Statements	2

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	4

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6

	Item 4.	Control and Procedures	7

PART II – OTHER INFORMATION			8

	Item 1.	Legal Proceedings	8

	Item 1A.	Risk Factors	8

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8

	Item 3.	Defaults Upon Senior Securities	8

	Item 4.	Removed and Reserved	8

	Item 5.	Other Information	8

	Item 6.	Exhibits	8

SIGNATURE			9

PART I – FINANCIAL INFORMATION

Item 1. Financial Information

BASIS OF PRESENTATION

The accompanying reviewed financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results from year end (August 31, 2010) and three months ended May 31, 2011, are not necessarily indicative of results that may be expected for the year ending August 31, 2011. The financial statements are presented on the accrual basis.

CONDENSED FINANCIAL STATEMENTS

GUNPOWDER GOLD CORPORATION

(fka Spartan Business Services)

Table of Contents

		PAGE

CONDENSED BALANCE SHEETS		F-1

CONDENSED STATEMENTS OF OPERATIONS		F-2

CONDENSED STATEMENTS OF CASH FLOWS		F-3

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS		F-4

GUNPOWDER GOLD CORP.

(Formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

CONDENSED FINANCIAL STATEMENTS

May 31, 2011

GUNPOWDER GOLD CORP.
(formerly: Spartan Business Services Corp.)
(An Exploration Stage Company)
Unaudited Interim Condensed Balance Sheets



ASSETS	May 31, 2011			August 31, 2010

Current assets:
Cash and cash equivalents	$	184,861		$	160
Prepaid expense		4,699			-
Total current assets	$	189,560		$	160


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable and accrued liabilities	$	95,745		$	1,478
Accounts payable to related-party		3,500			-
Note payable to related-party		76,860			40,700
Total current liabilities		176,105			42,178


Stockholders' equity
Preferred stock; $.001 par value, 5,000,000 shares
authorized, zero shares issued and outstanding		-			-
Common stock; $.001 par value, 300,000,000 shares authorized;
90,501,961 and 90,000,000 shares issued and outstanding
at May 31, 2011 and August 31, 2010, respectively		90,502			90,000
Additional paid-in-capital		363,971			(35,527	)
Deficit accumulated during exploration stage		(441,018	)		(96,491	)
Total stockholders' equity (deficit)		13,455			(42,018	)

Total liabilities and stockholders' equity (deficit)	$	189,560		$	160

The accompanying notes are an integral part of the financial statements

F-1

GUNPOWDER GOLD CORP.
(formerly: Spartan Business Services Corp.)
(An Exploration Stage Company)
Unaudited Interim Condensed Statements of Operations

													November 19, 2008
	For the three			For the three			For the nine			For the nine			(Inception)
	months ended			months ended			months ended			months ended			through
	May 31, 2011			May 31, 2010			May 31, 2011			May 31, 2010			May 31, 2011


Revenues	$	-		$	-		$	-		$	-		$	-

Operating expenses
General and administrative		62,708			6,432			191,373			30,240			291,364
Consulting fee - related-party		15,000			-			36,000			-			36,000
Advertising and marketing		6,545			-			19,505			-			19,505
Impairment loss on mineral claim		20,000			-			20,000			-			20,000
Exploration cost		77,649			-			77,649			-			77,649
		181,902			6,432			344,527			30,240			444,518

Loss from operations		(181,902	)		(6,432	)		(344,527	)		(30,240	)		(444,518	)

Other income (expense)

Other income		-			-			-			-			3,500
Interest expense		-			-			-			-			-
Loss before income taxes		(181,902	)		(6,432	)		(344,527	)		(30,240	)		(441,018	)

Income tax expense		-			-			-			-			-
Net loss	$	(181,902	)	$	(6,432	)	$	(344,527	)	$	(30,240	)	$	(441,018	)




Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Basic and diluted weighted average
common shares outstanding		90,402,217			140,000,000			90,139,453			140,000,000

The accompanying notes are an integral part of the financial statements

F-2

GUNPOWDER GOLD CORP.

(formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

Unaudited Interim Condensed Statements of Cash Flows


							November 19, 2008
	For the nine			For the nine			(Inception)
	months ended			months ended			through
	May 31, 2011			May 31, 2010			May 31, 2011

Operating activities:
Net loss	$	(344,527	)	$	(30,240	)	$	(441,018	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization expense					7,507			10,000
Stock issued for services		-			-			2,500
Impairment loss on mineral claim		20,000			-			20,000
Expenses paid by shareholder/officer		36,160			-			76,860
Changes in operating assets and liabilities:
(Increase) in prepaid expense		(4,699	)		-			(14,699	)
Increase in accounts payable to related-party		3,500			-			3,500
Increase (decrease) in accounts payable		94,267			(10,012	)		95,745
Net cash (used in) operating activities		(195,299	)		(32,745	)		(247,112	)

Cash flows from investing activities:
Purchase of mineral claims		(20,000	)		-			(20,000	)
Net cash (used in) investing activities		(20,000	)		-			(20,000	)

Financing activities:
Capital contribution		-			6,000			6,000
Proceeds from issuance of common stock		400,000			-			445,973
Net cash provided by financing activities		400,000			6,000			451,973

Net change in cash		184,701			(26,745	)		184,861
Cash, beginning of period		160			26,905			-
Cash, ending of period	$	184,861		$	160		$	184,861



Supplemental cash flow disclosures
Cash paid for:
Interest expense	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-
Non-cash activities:
Issuance of common stock for services	$	-		$	-		$	2,500

The accompanying notes are an integral part of the financial statements

F-3

GUNPOWDER GOLD CORP.

(fka Spartan Business Services Corp)

(An Exploration Stage Company)

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

May 31, 2011

Note 1. Condensed Financial Statements

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at May 31, 2011, and for all periods presented herein, have been made. The Company's fiscal year end is August 31.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s August 31, 2010 audited financial statements. The results of operations for the periods ended May 31, 2011 and 2010 are not necessarily indicative of the operating results for the full years.

Note 2. Nature of Business

Gunpowder Gold Corp. (the “Company”), formerly named Spartan Business Services Corp., was incorporated in the State of Nevada on November 19, 2008. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and ASC Topic 915-10 “Development Stage Entities”. The Company has entered into an agreement to acquire a mineral property located in the La Paz County, Arizona, and has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of property expenditures will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreement and upon future profitable production or proceeds from the sale thereof.

Note 3. Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles 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 incurred a net operating loss of $441,048 through May 31, 2011, and has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. 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 operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-4

GUNPOWDER GOLD CORP.

(fka Spartan Business Services Corp)

(An Exploration Stage Company)

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

May 31, 2011

Note 4. Significant accounting policies

Revenue recognition

The Company has no revenues to date from its operations. Once revenues are generated, management will establish a revenue recognition policy.

Advertising costs

Advertising costs are generally expensed as incurred and are included in advertising and marketing expenses in the accompanying statement of operations.

Mineral Rights and Exploration Costs

Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with FASB Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Various factors could impact our ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models from exploration stage mineral interests. This, however, involves further risks in addition to those factors applicable to mineral interests where proven and proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

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 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 these estimates.

Environmental expenditures

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

Impairment of Long-Lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

F-5

GUNPOWDER GOLD CORP.

(fka Spartan Business Services Corp)

(An Exploration Stage Company)

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

May 31, 2011

Basic and diluted net loss per share

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period.

In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

Concentrations of credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts payable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

Risks and uncertainties

The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

Note 5. Mineral Property

Pursuant to a mineral property purchase option agreement dated January 21, 2011 and amended on March 9th, 2011, the Company plans to acquired a 100% undivided right, title and interest in a mineral claim, located in the La Paz County, Arizona, known as the Dome Rock Property. Agreed to consideration consisted of the following:

Scheduled option agreement payments as defined below:

$20,000 to be paid within 30 days of the effective date of the amended agreement.

$20,000 on or before the first anniversary of the Agreement;

$30,000 on or before the first anniversary of the Agreement;

$40,000 on or before the first anniversary of the Agreement;

$50,000 on or before the first anniversary of the Agreement;

$60,000 on or before the fifth, sixth and seventh anniversary of the Agreement;

Paying any amounts to keep the property in good standing

Scheduled option agreement payments as defined below:

Exploration expenditures on the property of $750,000 on or before the first and second anniversary of the Agreement;

Exploration expenditures on the property of $500,000 on or before the third anniversary of the Agreement;

During the nine months ended May 31, 2011, the Company recorded $20,000 in acquisition cost for mineral claims. The acquisitions costs have been impaired and expensed during the current period because there have not been any reserves established and we could not project any future cash flows or salvage value and the acquisition costs were not recoverable. Consequently, we have recorded an impairment loss for the full amount of $20,000 for the period ended May 31, 2011. Please see ASC Topic 360 for Plant, Property, and Equipment and management analysis of Impairment.

F-6

GUNPOWDER GOLD CORP.

(fka Spartan Business Services Corp)

(An Exploration Stage Company)

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

May 31, 2011

During the nine months ended May 31, 2011 and 2010, the Company has incurred exploration cost of $77,649 and $-0-, respectively.

Note 6. Recent accounting pronouncements

The Company has evaluated the recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

Note 7. Related party transactions

During the nine months ended May 31, 2011 and 2010, a shareholder paid $36,160 and $-0-, respectively, of expenses on behalf of the Company from his personal account. These amounts are reflected as unsecured and non-interest bearing advances with no maturity date. As of May 31, 2011 and August 31, 2010, the balance of these amounts was $76,860 and $40,700, respectively. During the nine months ended May 31, 2011 and 2010, the Company paid consulting expenses payable to a shareholder/officer of the Company in the amount of $34,000 and $-0-, respectively.

Note 8. Stockholders’ equity and warrants

In November 2010, the Company revised and restated its articles of incorporation to increase the amount of authorized capital to 305,000,000 shares, consisting of 5,000,000 preferred shares and 300,000,000 shares of Common stock, and the Company had a 10:1 forward stock split. All references in the accompanying financial statements have been retroactively stated to reflect these changes.

The Company closed a private placement in February 2011, for the sale of 266,667 Units at $0.75 per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $0.90 per share during a term of two years, expiring on March 1, 2013. No warrants have been exercised as of February 28, 2011. The subscription raised $200,000 in proceeds from one investor.

The Company calculated the fair value of these warrants of $163,734 using the Black Scholes model. The Company used the following assumptions: stock price of $1.04, an exercise price of $0.90, expected term of 24 months (using the simplified method), volatility of 108%, and discount rate of 0.69%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

On April 8, 2011, the Company closed the private placement of 235,294 Units at .85 per unit per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $1.00 per share during a term expiring on April 15, 2013. No warrants have been exercised as of May 31, 2011. The subscription raised $200,000 in proceeds from one investor.

The Company calculated the fair value of these warrants of $40,235 using the Black Scholes model. The Company used the following assumptions: stock price of $0.53, an exercise price of $1.00, expected term of 24 months (using the simplified method), volatility of 94%, and discount rate of 0.45%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

F-7

GUNPOWDER GOLD CORP.

(fka Spartan Business Services Corp)

(An Exploration Stage Company)

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

May 31, 2011

The following is a summary of the status of all of the Company’s stock warrants as of May 31, 2011.

	Number Of Warrants		Weighted-Average Exercise Price
Outstanding at September 1, 2010		-	$	0.00
Granted		501,961	$	0.95
Exercised		-	$	0.00
Cancelled		-	$	0.00
Outstanding at May 31, 2011		501,961	$	0.95
Warrants exercisable at May 31, 2011		501,961	$	0.95

The following tables summarize information about stock warrants outstanding and exercisable at May 31, 2011:

STOCK WARRANTS OUTSTANDING AND EXERCISABLE
Number of Warrants Outstanding		Weighted-Average Remaining Contractual Life in Years		Weighted- Average Exercise Price
	501,961		1.82	$	0.95
	501,961		1.82	$	0.95

Note 9. Subsequent events

The Company has evaluated subsequent events through the date that the financial statements were issued. There were no significant subsequent events that need to be disclosed.

F-8

Item 2. Management’s Discussion and Analysis or Plan of Operation

Caution Regarding Forward-Looking Statements

The following information may contain certain forward-looking statements that are not historical facts. These statements represent our expectations or beliefs, including but not limited to, statements concerning future acquisitions, future operating results, statements concerning industry performance, capital expenditures, financings, as well as assumptions related to the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “shall,” “will,” “could,” “expect,” “estimate,” “anticipate,” “predict,” “should,” “continue” or similar terms, variations of those terms or the negative of those terms. Forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or view expressed herein. Our financial performance and the forward-looking statements contained in this report are further qualified by other risks including those set forth from time to time in documents filed by us with the U.S. Securities and Exchange Commission (“SEC”).

The following information has not been audited. You should read this information in conjunction with the unaudited financial statements and related notes to the financial statements included in this report.

Plan of Operation

On April 9, 2009, the Securities and Exchange Commission declared our Registration Statement on Form S-1 effective. We registered 4,000,000 shares of our Common Stock at an offering price of $.01 per share in order to raise $40,000 as our initial capital. The Company then filed an application with FINRA on Form 211 to have its Common Stock be listed for public trading.

The Company is a natural resource exploration company with an objective of acquiring, exploring, and if warranted and feasible, exploiting natural resource properties. We do not anticipate going into production ourselves but instead anticipate optioning or selling any ore bodies that we may discover to a major mining company. Most major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies such as the Company. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By optioning or selling a deposit found by us to these major mining companies, it would provide an immediate return to our shareholders without the long time frame and cost of putting a mine into operation ourselves, and it would also provide future capital for the Company to continue operations.

The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have contain commercially exploitable reserves. Exploration for natural resource reserves is a speculative venture involving substantial risks. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected geological formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan and any money spent on exploration would be lost. To date, we have one mining property under option.

Mineral Exploration Property – Dome Rock

On January 21, 2011, the Company entered into an Option Agreement (the "Agreement") with Horizon Exploration Inc. ("Horizon"), whereby Horizon granted the Company the sole and exclusive right and option to acquire an undivided 100% right, title and interest in and to the Dome Rock Property which contains 62 unpatented mineral claims and subject only to a royalty, being located in La Paz County, Arizona (the "Property").

Under the terms of the Agreement, Horizon has granted the Company the sole and exclusive option to acquire a 100% undivided interest in and to the Property by making cash payments to Horizon of $67,448.53 within 31 days of signing the Agreement, which was amended to 31 days from March 9, 2011, $20,000 on or before January 21, 2012, $30,000 US on or before January 21, 2013, $40,000 on or before the January 21, 2014, $50,000 on or before January 21st, 2015, $60,000 on or before January 21, 2016, $60,000 on or before January 21st, 2017. The Company shall also be responsible for making all necessary property payments to keep the Property in good standing which includes all annual maintenance fees, exploration and other permits, property taxes, levies, insurance, and other assessments.

The Company shall complete the following exploration expenditures on the Property as follows: (i) $750,000 on or before the first anniversary of the signing of the Agreement (ii) $750,000 on or before the second anniversary of the signing of the Agreement; and (iii) $500,000 on or before the third anniversary of the signing of the Agreement.

The Company may terminate the Agreement at any time by giving 30 days notice of such termination of the Agreement.

In the event that the company spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the exploration expenditures to be incurred in the succeeding period for no more than three consecutive years. In the event the exploration expenditures are not completed during the required time frame, any deficits will be paid in cash to Horizon immediately after the end of the anniversary in which it occurs.

The Company has the right to accelerate all payments due under this Agreement in order to exercise the Option at an earlier date.

If and when the Option has been exercised, a 100% right, title and interest in and to the Property will vest in the Company free and clear of all charges, encumbrances and claims, save and except for the royalty. At such time, the Company shall be entitled to record such transfers at its own cost with the appropriate government office to effect legal transfer of such interest in the Property into the name of the Company

Upon the commencement of commercial production, the Company shall pay to Horizon an amount equal to a 3.0% Net Smelter Return on the Property (Royalty), on the terms and conditions as set out in the agreement.

If the Company is in default of the Agreement, Horizon may terminate the Agreement but only if:

Horizon has first given the Company notice of the default containing particulars of the obligations which the Company has not performed or the warranty breached and the Company has not, within 30 days following delivery of such notice of default, cured such default or commenced proceedings to cure such default by appropriate payment or performance, the Company hereby agreeing that should it so commence to cure any default it will prosecute the same to completion without undue delay. In the event the Company is forced to cure the defect to preserve the status of the Property, the cure of the defect by the Company will include a 10% overhead fee to Horizon.

Should the Company fail to comply with the provisions in the last paragraph, Horizon may thereafter terminate this Agreement by giving notice thereof to the Company, always provided that the default in question has not been cured or substantially cured at the time of Horizon giving such notice of termination.

The Agreement contains an arbitration clause and is governed by the laws of the State of Nevada.

Results of Operation

The Company did not have any operating income from inception (November 19, 2008) through May 31, 2011. For the period from inception, November 19, 2008 through the quarter ended May 31, 2011, the Company recognized a net loss of $441,018

Comparison of Three Months Ended May 31, 2011 and 2010

During the three months ended May 31, 2011, the Company incurred general and administrative expenses of $62,708 compared to expenses of $6,432 during the three month period ended May 31, 2010, an increase of 90%. The Company realized an increase in general and administrative expenses as a result of an increase in legal fees, accounting fees, and consulting services.

During the three months ended May 31, 2011, the Company incurred a consulting fee of $15,000 payable to a related party for services compared to no related party consulting fees during the three months ended May 31, 2010.

During the three months ended May 31, 2011, the Company incurred $6,545 in advertising and marketing fees compared to no marketing or advertising fees during the three months ended May 31, 2010.

During the three months ended May 31, 2011, the Company realized a net loss of $181,902 compared to a net loss of $6,432 during the three month period ended May 31, 2010, an increase of 96%. The increase in net loss was attributable primarily to the increases in its general administrative expenses, consulting fees, and advertising and marketing costs.

During the three months ended May 31, 2011, the Company incurred $77,649 in exploration costs compared to no exploration costs during the three months ended May 31, 2010.

Comparison of Nine Months Ended May 31, 2011 and 2010

During the nine months ended May 31, 2011, the Company incurred general and administrative expenses of $191,373 compared to $30,240 during the nine month period ended May 31, 2010, an increase of 84%. The Company realized an increase in general and administrative expenses as a result of an increase in legal fees, accounting fees, and consulting services.

During the nine months ended May 31, 2011, the Company incurred consulting fees of $36,000 payable to a related party for services compared to no related party consulting fees during the nine months ended May 31, 2010.

During the nine months ended May 31, 2011, the Company incurred $19,505 in advertising and marketing fees compared to no marketing or advertising fees during the nine months ended May 31, 2010.

During the nine months ended May 31, 2011, the Company realized a net loss of $344,527 compared to a net loss of $30,240 during the six month period ended May 31, 2010, an increase of 91%. The increase in net loss was attributable primarily to the increases in its general administrative expenses, consulting fees, and advertising and marketing costs.

During the nine months ended May 31, 2011, the Company incurred $77,649 in exploration costs compared to no exploration costs during the nine months ended May 31, 2010.

Liquidity and Capital Resource

At May 31, 2011, the Company had limited capital resources and will rely upon the issuance of Common Stock and additional capital contributions from shareholders to fund administrative expenses pending full implementation of the Company’s business model. On April 8, 2011, the Company realized $200,000 from the sale of its common stock in a private placement. However, the Company anticipates that additional capital will be necessary to complete its business plans for fiscal 2011.

Critical Accounting Policies

Gunpowder Gold Corporation’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting Company as defined by Rule 12b-2 under the Securities Exchange Act of 1934, and are not required to provide the information required under this item.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management evaluated the effectiveness of our disclosure controls and procedures as of the end of our fiscal quarter ended May 31, 2011. This evaluation was conducted by Neil Jason Pestell, our President, Chief Executive Officer and principal accounting officer.

Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported.

Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met.

Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Conclusion

Based upon his evaluation of our controls, our Chief Executive Officer and principal accounting officer has concluded that, subject to the limitations noted above, the disclosure controls are not effective in providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared. There were no changes in our internal controls and internal controls over financial reporting that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

N/A

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

On April 8, 2011, the Company closed a private placement of 235,294 Units at .85 per unit per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $1.00 per share during a term expiring on April 15, 2013. No warrants have been exercised as of July 5, 2011. The subscription raised $200,000 in proceeds from one investor.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Removed and Reserved.

Item 5. Other Information.

None

Item 6. Exhibits.

(a)

Exhibits

10.1

Warrant Agreement dated April 8, 2011, with NRG Enterprises Ltd. Is incorporated herein by reference to Exhibit 10.1 to the Form 8-K current report of the Company dated April 14, 2011.

31.1

Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1

Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GUNPOWDER GOLD CORPORATION

Date: July 18, 2011

/s/ Neil Jason Pestell
Neil Jason Pestell
President, Chief Executive Officer,
Secretary, Chief Financial Officer,
Director

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