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EX-31.02 - Discovery Gold Corpex31-02.htm
EX-32.02 - Discovery Gold Corpex32-02.htm
EX-32.01 - Discovery Gold Corpex32-01.htm
EX-31.01 - Discovery Gold Corpex31-01.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 


FORM 10-Q/A
(Amendment No. 1)
 


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

For the quarterly period ended January 31, 2012

o   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to _______

Commission File Number 333-167284
 
NORMAN CAY DEVELOPMENT, INC.

 (Name of small business issuer in its charter)
 
     
Nevada
 
27-2616571
(State of incorporation)
  
(I.R.S. Employer Identification No.)

2817 NE 32 Street, #201
Fort Lauderdale, FL  33306
(Address of principal executive offices)
 
(954) 683-3766
(Registrant’s telephone number)

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  x 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  x No o (Not required)

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" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

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

As of March 12, 2012, there were 48,200,000 shares of the registrant’s $0.001 par value common stock issued and outstanding.
 

 
NORMAN CAY DEVELOPMENT, INC.

     
TABLE OF CONTENTS
Page
   
PART I. FINANCIAL INFORMATION
 
  
 
ITEM 2.
4
  
 
PART II. OTHER INFORMATION
 
  
 
ITEM 6.
10
 

 
Explanatory Note

This Amendment No. 1 to our Quarterly Report on Form 10-Q/A (“Amendment No. 1”) is being filed to amend our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 14, 2012 (“Original Filing”) to add certain disclosure in the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section. Specifically, the following disclosures have been added in this Amendment No. 1.

·  
A detailed and quantified discussion of the Company’s plan of operation;
·  
Discussion concerning the impact of the Company’s liquidity and capital resources of the consulting agreements that the Company has recently entered into; and
·  
Discussion on related party loans.

Except to the extent required to reflect the above-referenced revisions, this Amendment No. 1 continues to describe the Company as of the date of the Original Filing, and does not update disclosures to reflect events that occurred after the date of the Original Filing. Accordingly, this Amendment No.1 should be read in conjunction with the Original Filing and with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Filing, including any amendments to those filings.
 
 
Special Note Regarding Forward-Looking Statements
 
Information included in this Amendment No. 1 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norman Cay Development, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, except as otherwise indicated by the context, references in this report to “Company”, “NCDL”, “we”, “us” and “our” are references to Norman Cay Development, Inc.   


 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Plan of Operation

Under the current prospecting license, we plan to commence the first phase (“Phase I”) of the exploration program on the Property in the third quarter of 2012. Phase I work will be headed by Ralph Shearing, senior geologist and a member of Board of Director of the Company.  He has completed a work scope and has submitted it to three reputable geological consulting firms for quotation to conduct exploration activities on the Property, including: geological mapping, geological and geochemical prospecting, assaying and information review. Geological mapping involves plotting previous exploration data relating to a property area on a map in order to determine the best property locations to conduct subsequent exploration work. Geological and geochemical prospecting involves analyzing soils and bedrocks on the property surface in order to discover indications of potential mineralization. All samples gathered will be sent to a laboratory where they are crushed and analyzed for mineral content. Assaying is the chemical analysis of a substance to determine its components. We expect Phase I to take approximately 60 days to complete and an additional month for the consulting geologist to receive the lab results from these activities and prepare an analytic report. We have estimated the cost of Phase I to be approximately $100,000.

If Phase I proves successful in identifying geochemical anomalies and their bedrock source  and we have sufficient funds to continue, we intend to proceed with the second phase (“Phase II”) of the program as soon as practicable upon completion of Phase I. In Phase II, we will retain such third-parties consultants and/or contractors necessary to begin trenching, surveying localized soils, and detailed sampling of historic zones. Trenching is the process of turning over land to uncover underlying material. Soil surveying is the systematic examination, description, classification, and mapping of soils in an area. The objective of sampling in mineral processing is to estimate grades and contents of sample soils, rocks, and other discovered materials. The estimated cost of Phase II is between $30,000 and $50,000, depending on the level of our activities during this phase and the funds available. It will take approximately 50 days to complete Phase II and at least an additional month for the consulting geologist to receive the lab results from these activities (depending on lab availability and amount of work to be done) and prepare an analytic report.
 
 
 
After all surveys and initial samples have been collected and positive results have been obtained from such activities, we expect to begin the third phase (“Phase III”) of the program around the fourth calendar quarter of 2012, assuming we have adequate funds to continue our operations. Phase III will consist of retaining a drilling contractor and geologic consultants (including Ralph Shearing) to conduct diamond core drilling and core sampling and analysis of resultant core samples. Diamond Drill core sampling is the process of drilling holes to a depth of up to 500 feet in order to extract a sample of bedrock. Depending on the availability of funds, we intend to drill a minimum of 15 holes to an average depth of 400 feet each (totaling 6,000 feet) and a maximum of 30 holes to an average depth of 400 feet each (totaling 12,000 feet). We anticipate that it will take between one to two months to drill 15 to 30 holes. Our estimated cost for drilling is approximately $70.00 per foot; thus the cost to drill 15 holes is estimated to be approximately $840,000 and the cost to drill 30 holes is estimated to be approximately $750,000. We anticipate that we will need to pay a consultant(s) up to a maximum of $15,000 per month for his or her services during Phase III. Based on our anticipation that it will take between one to two months to conduct Phase III, we will pay the consultant(s) a minimum of $15,000 and a maximum of $30,000 in total.
 
As part of Phase III, after core sampling, the consultant(s) will have independent geochemical laboratories analyze the samples collected from the core drilling. The total estimated cost for analyzing the core samples is $40,000, and we estimate this process will take approximately 30 days. The core samples will be tested to determine if mineralized material is located on the Property. We intend to take our core samples to analytical chemists, geochemists and registered assayers located in the western United States. We have not selected any of the foregoing persons as of the date of this Report. Based upon the tests of the core samples, we will determine if we will terminate operations, proceed with additional exploration of the Property, or develop the Property. If we do not find mineralized material or we cannot remove mineralized material, either because we do not have the funds or because it is not economically feasible to proceed, we will cease operations in relation to the Property.

Total maximum expenditures for the exploration of the Property over the next 12 months are expected to range from approximately $450,000 to $1,240,000, depending largely on the number of holes drilled. If Phase I proves to be successful and sufficient funds are available after completion of such Phase, we will continue with Phase II and so on until funds are no longer available. In the event we have enough money to begin but not to complete one of the Phases, we will be forced to suspend operations until we raise the funds necessary to continue our exploration. If we cannot, or do not, raise sufficient money to complete one or more Phases, or if our exploration activities are not successful, we will discontinue exploration of the Property and any funds spent on exploration will likely be lost.

Set forth below is a summary of the exploration activities, anticipated time frame and estimated costs associated with each of the Phases.
 
Phase
Exploration Activities
Anticipated Timeframe
 Estimated Cost
Phase 1
Retention of consultant(s) to conduct: Geological Mapping, Geological and Geochemical Prospecting, Assaying and Information Review.
Expected to begin during the third calendar quarter of 2012 (dependent on funding).
$100,000
Phase II
Retention of consultant(s) to conduct: Trenching, Surveying of Localized Soil, and Detailed Sampling and Mapping of Historic Zones.
Expected to begin between the fourth calendar quarter of 2012 (depending on funding and the results of Phase I activities).
$300,000 – $350,000
Phase III
Retention of consultant(s) to conduct: Core sampling and analysis of samples derived from Diamond Drilling.
Expected to begin in the fourth calendar quarter of 2012 (depending on funding and the results of Phase I and Phase II activities).
$420,000 - $840,000
(depending on the number of holes drilled and the duration of consultant’s services)
TOTAL
   
$820,000 – $1,240,000
 
 
RESULTS OF OPERATIONS

Working Capital

  
 
January 31, 2012
$
   
April 30, 2011
$
 
Current Assets
    9,337       71,160  
Current Liabilities
    297,211       102,479  
Working Capital (Deficit)
    (287,874 )     (31,319 )

Cash Flows

  
 
Nine months ended
 January 31, 2012
$
   
Nine months ended
January 31, 2011
$
 
Cash Flows from (used in) Operating Activities
    (87,853 )     (57,668 )
Cash Flows from (used in) Investing Activities
    (100,000 )     -  
Cash Flows from (used in) Financing Activities
    126,030       130,488  
Net Increase (decrease) in Cash During Period
    (61,823 )     72,820  

Operating Revenues

During the periods ended January 31, 2012 and 2011, the Company did not earn any operating revenues.  

Operating Expenses and Net Loss

During the nine months ended January 31, 2012, the Company incurred operating expenses of $650,228 compared with $76,926 for the nine months ended January 31, 2011.  The increase in operating expenses was attributed to consulting fees of $444,987 relating to the issuance of common shares for services, and an increase of $124,615 for general and administrative expenses relating to due diligence and acquisition costs of the Edum Banso property.  Overall, general and administrative expenses were consistent to prior year.  

For the nine months ended January 31, 2012, the Company recorded a net loss of $659,555 compared with a net loss of $80,589 for the nine months ended January 31, 2011.  In addition to operating expenses, the Company incurred interest expense of $9,327 during the nine months ended January 31, 2012 compared with $3,663 during the nine months ended January 31, 2011 relating to interest on its note payable.  The increase in interest expense was due to the fact that the current year accounted for the full term of the $65,416 note payable whereas the prior year only incorporated a partial term of the note, as well as interest expense on an additional $100,000 note payable in September 2011 that bears interest at 10% per annum.  
 
 
Liquidity and Capital Resources

At January 31, 2012, the Company had cash of $9,337 and total assets of $4,659,337 compared with cash and total assets of $71,160 at April 30, 2011.  The decrease in cash is attributed to the fact that the Company incurred operating expenses with minimal financing from debt sources and the increase in total assets was attributed to $4,800,000 acquisition cost of the Edum Banso property in August 2011 less recovery of $150,000 from option payments received during the period.    

At January 31, 2012, the Company had total liabilities of $297,211 compared with $102,479 at April 30, 2011.  The increase in total liabilities was attributed to an additional $100,000 note payable issued in September 2011 that is unsecured, bears interest at 10% per annum, and is due on demand, and an increase of $78,703 in accounts payable and accrued liabilities.

The Company had a working capital deficit of $287,874 at January 31, 2012 compared with $31,319 at April 30, 2011.  The increase in working capital deficit was attributed to expenditures incurred during the period for operating costs that were not replaced with financing, and also with respect to the issuance of a $100,000 note payable and $125,000 accounts payable relating to the original acquisition cost of the Edum Banso property as well as additional financing of $25,000 from related parties that were used as part of the acquisition cost.  

Cashflow from Operating Activities

During the nine months ended January 31, 2012, the Company used cash flows of $87,853 in operating activities compared with $57,668 of cash flows during the nine months ended January 31, 2011.  Overall, cash flows used for operating activities were consistent with prior year, and the slight increase is due to the availability of cash to settle outstanding obligations.   

Cashflow from Investing Activities

During the nine months ended January 31, 2012, the Company used $100,000 of cash for investing activities relating to the acquisition of the Edum Banso mineral property.  During the nine months ended January 31, 2011, the Company did not have any investing activities.  

Cashflow from Financing Activities

During the nine months ended January 31, 2012, the Company received $126,030 in proceeds from financing activities comprised of $101,030 from a notes payable that are unsecured, bears interest at 10% per annum, and is due on demand and proceeds of $25,000 from a related party that is non-interest bearing.  During the nine months ended January 31, 2011, the Company received proceeds of $130,488 comprised of $55,488 from the issuance of a 10% note payable and $75,000 from the issuance of common shares.  
 
 
The Company plans to finance its consulting agreements based on the proceeds received from the earn-in agreement dated January 25, 2012, between the Company and North Springs Resources Corp. The Company sold 10% of the Edum Banso Option to North Springs Resources Corp. for $1.25 million of which $250,000 has been received and the remaining two payments of $500,000 each are due to the Company on July 1 and December 31, 2012. The Company also seeks debt or equity financing on an as-needed basis to meet its cash obligation under the consulting contracts.

The Company entered into related party loans as a cost effective way to obtain short-term financing to cover the Company’s start-up costs and expenses in connection with initial mineral property acquisitions.  As it moves forward, the Company will consider all forms of financing whether it’d be debt financing or equity financing, and use the source that provides the best terms and flexibility to meet the Company’s current needs and future operational goals.

Quarterly Developments

On January 23, 2012, the Company, through its wholly-owned subsidiary, Discovery Gold Ghana Limited (“DGG”), made a final payment of one hundred thirty five thousand dollars ($135,000) to Xtra-Gold Resources to acquire a 100% right, title and interest in and to that certain mineral property known as the Edum Banso Concession located in Ghana in the South Western Region of West Africa.

On January 25, 2012, the Company, through its wholly-owned subsidiary, DGG, entered into that certain Earn-In Agreement (the “Earn In Agreement”) by and between DGG and North Springs Resources Corp., a Nevada corporation (“NSRS”). Pursuant to the Agreement, NSRS shall acquire a working interest (the “Working Interest”) in DGG’s interest (“DGG’s Interest”) in that certain mineral concession located in the Edum Banso Region of the Western Region of Ghana (the “Property”), per the terms of the Earn In Agreement, a copy of which was previously filed with the Form 8-K filed by the Company on January 27, 2012 and is incorporated herein by this reference.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
 
 
Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
 
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-11 (“ASU No. 2010-11”), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company’s adoption of provisions of ASU No. 2010-11 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In February 2010, the FASB issued ASU 2010-10 (“ASU No. 2010-10”), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU No. 2010-10 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In February 2010, the FASB issued ASU 2010-09 (“ASU No. 2010-09”), “Subsequent Events (ASC Topic 855): Amendments to Certain Recognition and Disclosure Requirements.”  ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The Company’s adoption of provisions of ASU No. 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.
 

 
In January 2010, the FASB issued ASU 2010-06 (“ASU No. 2010-06”), “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The Company’s adoption of provisions of ASU No. 2010-06 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued an amendment to ASC Topic 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The Company’s adoption of the amendment to ASC Topic 505 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued an amendment to ASC Topic 820, “Fair Value Measurements and Disclosure”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The Company’s adoption of the amendment to ASC Topic 820 did not have a material effect on the financial position, results of operations or cash flows of the Company.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
ITEM 6. EXHIBITS

 

 

 
SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

     
     
 
  
 
 
  
NORMAN CAY DEVELOPMENT, INC.  
   
  
Dated: May 11, 2012
 
/s/ Stephen E. Flechner            
  
  
By:  Stephen E. Flechner
  
  
Its: Chief Executive Officer
  
  
 
     
   
  
Dated: May 11, 2012
 
/s/ Dean Huge                       
  
  
By:  Dean Huge
  
  
Its: Chief Financial Officer