UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

(Mark one)

x

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

For the quarterly period ended March 31, 2012

q

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

For the transition period from ______ to ______

GOLD CREST MINES, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (509) 893-0171

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 xNO  q

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 q   No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a 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 q  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:  

At May 10, 2012, 89,205,828 shares of the registrant’s common stock were outstanding.

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GOLD CREST MINES, INC.

FORM 10-Q

For the Quarter Ended March 31, 2012

TABLE OF CONTENTS

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Gold Crest Mines, Inc.

(An Exploration Stage Company)

Notes to Unaudited Consolidated Financial Statements

NOTE 1.  Basis of Presentation

Gold Crest Mines, Inc. and its subsidiaries (“Gold Crest” and “the Company”) is a Nevada corporation originally incorporated on August 20, 1968, as Silver Crest Mines, Inc., an Idaho corporation.  

On August 1, 2006, Gold Crest acquired 100% of the issued and outstanding shares of Niagara Mining and Development Co., (“Niagara”), an Idaho corporation formed on January 11, 2005, and its wholly-owned subsidiary, Kisa Gold Mining, Inc. (“Kisa”), an Alaskan corporation formed on July 28, 2006.  Gold Crest’s sole asset on the merger date was cash of $7,456, which was accounted for as being acquired by Niagara in exchange for 14,600,100 common shares of Niagara.    Niagara’s sole asset on the merger date was cash of $150,000.   Neither company had liabilities on the date of the merger.  This transaction has been treated as a reverse merger, effectively as if Niagara had issued shares for consideration equal to the net monetary assets of Gold Crest. Under reverse acquisition accounting, the consolidated financial statements of the entity are considered a continuation of the financial statements of Niagara, the accounting acquirer.  On June 20, 2008, 100% of the issued and outstanding shares of Kisa were transferred from Niagara to the Company.

The Company is in the business of exploration, development, and if warranted the mining of properties containing valuable mineral deposits. The focus of the Company’s exploration programs is directed at precious metals, primarily gold.

The interim Consolidated Financial Statements of the Company and its subsidiaries are unaudited.  In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included.  All such adjustments are, in the opinion of management, of a normal recurring nature.  The results reported in these interim Consolidated Financial Statements are not necessarily indicative of the results that may be reported for the entire year and that the results at March 31, 2012 may not be indicative of December 31, 2012.  These interim Consolidated Financial Statements should be read in conjunction with the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2011.

NOTE 2.  Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Consolidation of Subsidiaries

The consolidated financial statements include the Company’s accounts and the accounts of wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Fair Values of Financial Instruments

The carrying amounts of financial instruments including cash and cash equivalents approximated their fair values as of March 31, 2012 and December 31, 2011.

Fair Value Accounting

Accounting guidance has established a hierarchy of assets that are measured at fair value on a recurring basis. The three levels included in the hierarchy are:

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

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Level 2: significant other observable inputs

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Level 3: significant unobservable inputs

At March 31, 2012 and December 31, 2011, the Company has no assets or liabilities that are recorded at fair value on a recurring basis.

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Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted net loss per share for the Company is the same as basic net loss per share, as the inclusion of common stock equivalents would be anti-dilutive. At March 31, 2012 and December 31, 2011, the common stock equivalents consisted of 5,280,000 options exercisable at prices ranging from $0.28 to $0.53 per share.

NOTE 3. Going Concern

As shown in the accompanying financial statements, the Company has had no revenues and incurred an accumulated deficit of $9,668,506 through March 31, 2012.  Another factor is that the Company has a negative current ratio of 0.003: 1 at March 31, 2012.  The current ratio is a measurement of the degree to which current assets cover current liabilities (current assets/ current liabilities).  A high ratio indicates a good probability the enterprise can retire current debts.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to seek additional capital from new equity securities offerings and joint venture agreements that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Should the Company be unable to raise capital through future private placements, its business, and, as a result, its financial position, results of operations and cash flow will likely be materially adversely impacted. As such, substantial doubt as to the Company’s ability to continue as a going concern remains as of the date of these financial statements.

The Company believes it will only need an estimated $150,000 to $200,000 to continue operations through the next twelve months. The timing and amount of capital requirements will depend on a number of factors, including the Company’s ability to successfully maintain a joint venture on our Alaska properties and the Company’s future personnel requirements.

NOTE 4.  Mineral Properties

In August 2006, the Company acquired exploration properties in southwest Alaska approximately 90 miles east of the village of Bethel covering approximately 22,520 acres of State of Alaska-owned lands in 6 claim groups known as the Kisa, Gold Lake, Ako, Little Swift, Gold Creek and Gossan Valley within the Kuskokwim Mineral Belt known as the Company’s Southwest Kuskokwim Project. Based on field work completed in late 2006 and summer of 2007, airborne geophysical surveys completed in the fall of 2006 and spring of 2007 and results of data compilations conducted over the winter months, the Company identified additional ground for acquisition. Approximately 8,000 acres in the Southwest Kuskokwim Project area known as the Luna claim group and approximately 50,560 acres, known as the Buckstock Project claim groups located approximately 30-80 miles south of the Donlin Creek deposit and north of the Company’s other claim groups were acquired based on the results.

On September 1, 2008, the Company elected to abandon approximately 43,520 of the Buckstock acres leaving only the Chilly claim group covering 7,040 acres for lack of interest in joint ventures and due to the financial situation of the Company. During the 2008 season, an additional 4,720 acres were staked as part of the Kisa and Gold Lake claim groups bringing the total acres in the Southwest Kuskokwim Project area to 35,240.

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The following is a summary of the Company’s mineral properties in Alaska.

In Alaska, the lands are held under and are subject to the State’s mining laws and regulations. The Company is required to perform certain work commitments and pay annual assessments to the States of Alaska to hold these claims in good standing. The annual work commitment and annual fees were fulfilled and all necessary fees and filings have been made for the season ending September 30, 2011. The commitments and annual assessments for 2012 will be due no later than November 30, 2012. See “Note 7. Commitments and Contingencies”.

North Fork Option Master Earn-in Agreement

On January 27, 2010, the Company, through its wholly owned subsidiaries, Kisa Gold Mining, Inc., and Golden Lynx, LLC signed an option agreement with North Fork Resources Pty Ltd (“North Fork”) which grants North Fork an exclusive option to purchase and/or earn an interest in the Company’s Southwest Kuskokwim Project area. The Southwest Kuskokwim Project area consists of exploration properties in southwest Alaska approximately 90 miles east of the village of Bethel covering approximately 35,240 acres of State of Alaska-owned lands in 7 claim groups known as the Kisa, Luna, AKO, Gold Lake, Little Swift, Gold Creek and Gossan Valley (“The Projects”) within the Kuskokwim Mineral Belt.

Under the terms of the option, North Fork made a payment to the Company in the amount of $20,000 which was received on February 16, 2010 which was recorded as a deposit on option agreement, for the exclusive right to explore the claims up until October 31, 2010. During the option period, North Fork agreed to meet the minimum annual expenditure requirements on the claims for the period up to September 1, 2010. Following the expiration of the option on October 31, 2010, North Fork had 30 days to notify the Company of its decision to exercise its option to purchase and/or earn into any or all of the claim groups.

On August 18, 2010, the Company amended the option agreement to include an additional claim group known as our Chilly claims, which became part of The Projects. As consideration for this new claim group, North Fork made an additional payment to the Company of $10,000 on August 24, 2010 which was also recorded as a deposit on option agreement. As part of this new amendment, North Fork agreed to only meet the minimum annual expenditure requirements on the claims for the period up to September 1, 2010 that did not have enough labor carry-over to fulfill the state’s annual labor requirements. North Fork completed the required labor by the due date of September 1, 2010 and on October 18, 2010 formally notified the Company of their intent to exercise the option over the Alaska properties.

The total of the two payments of $30,000 received from North Fork was recognized as income during the year ended December 31, 2010.

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On March 28, 2011 the Master Earn-In agreement (“the Agreement”) with North Fork was executed which maintained the same terms as the originals terms.

The following is a breakdown of the proposed earn-in terms, as amended:

1.

The initial interest at the time North Fork exercises its option to earn into The Projects will be as follows:

a.

Gold Crest Mines, Inc. – 100%

b.

North Fork – 0%

2.

North Fork can earn a 51% interest in The Projects by the expenditure of $3,000,000 on The Projects by October 31, 2013.

3.

If North Fork withdraws from the Joint Venture prior to earning a 51% interest in The Projects, it will have no further interest in The Projects.

4.

North Fork can earn an additional 24% interest in The Projects, taking its total interest to 75% by the expenditure of an additional $3,000,000 by October 31, 2016.

5.

North Fork can earn a total interest of 90% in any of The Projects claim blocks by the completion of a Bankable Feasibility Study.

6.

Gold Crest Mines, Inc. will retain a free carried 10% interest in The Projects up to a Decision to Mine at which point it can elect to contribute at 10% or dilute to a 2% Net Smelter Royalty.

7.

North Fork is obliged to keep The Projects in good standing.

8.

North Fork is the sole manager of The Projects and will make all decisions in regards to the exploration programs.

NOTE 5.  Common Stock and Common Stock Warrants

Common Stock

The Company is authorized to issue 500,000,000 shares of its common stock.  All shares of common stock are equal to each other with respect to voting, liquidation, dividend, and other rights.  Owners of shares are entitled to one vote for each share owned at any Shareholders’ meeting.  The common stock of the Company does not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of the shares voting in an election of directors may elect all of the directors if they choose to do so.

During the three months ended March 31, 2012 the Company did not have any issuances of common stock.

During the three months ended March 31, 2011 the Company had the following issuances of common stock:

On February 22, 2011 the Company began a private placement offering up to a maximum of 2,500,000 shares at $0.01 per share for a maximum of $25,000 in proceeds. The private placement closed on June 30, 2011 and at such time the Company issued 900,000 shares raising a total of $9,000. The shares were being offered and sold by officers and directors of the Company who received no remuneration for the sale of the shares.

NOTE 6.  Advances from Gold Crown

On September 7, 2011, the Company executed a non-binding letter of intent to enter into a business combination transaction with Gold Crown, Inc (“Gold Crown”). Although the original letter of intent has expired, we continue to negotiate with Gold Crown in good faith.  Currently, the Company is awaiting word from Gold Crown as to their financing activities and all due diligence is on hold. On October 17, 2011, in connection with the proposed business combination, affiliates of Gold Crown made a non-refundable $117,659 advance to the Company. The funds were used for the following:

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to settle outstanding accounts payable for past services that totaled $63,019 for a settlement amount of only $13,500 resulting in a gain on the settlement of accounts payable in the amount of $49,519

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engage professionals to conduct due diligence

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and initiate procedures and actions with a view toward entering into a definitive business combination agreement.

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The Company recorded the advances as a current liability as management believes that while no explicit agreement exists requiring the Company to return the advances if a business combination does not take place, there may be an implied obligation for the Company to perform certain actions and activities in connection with the ultimate determination of whether or not a business combination will take place. In the event that a business combination does not take place with Gold Crown, the Company will recognize the advances in its statement of operations.

NOTE 7.  Commitments and Contingencies

Alaska Mineral Property Rent and Assessment Work Commitments

In Alaska, land holdings consist of state mining claims and prospecting sites totaling 42,280 acres of land. Annual rental payments in the amount of $65,975 for these claims are due by November 30, 2012. If these rental payments are not paid by the due date, the claims will be considered abandoned. The annual rental payments that were due on November 30, 2011 were paid in full by the Company’s joint venture partner.

The Alaska Department of Natural Resources, Division of Mining, Land & Water requires that upon the prospecting, and the discovery of a locatable mineral and the staking of mineral location, annual labor must be performed on the location each labor year in further development of the locatable mineral so that it can be mined. The labor year for the claims begins on September 1 and ends the following September 1. The Company or its joint venture partner, if applicable, will be required to perform qualified labor in the amount of $105,700 by September 1, 2012 with the possibility, depending on any qualified carry-over amounts that can be applied to the labor year ending September 1, 2012 on certain claim groups, will need to be performed by the September 1, 2012 deadline. If these labor requirements are not met by the due date, the claims will be considered abandoned. The annual work commitments and annual fees were fulfilled and all necessary fees and filings were made by the Company’s joint venture partner for the season ending September 30, 2011. The commitments and annual assessments for 2012 will be due no later than November 30, 2012.

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

This Form 10-Q, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, includes forward-looking statements. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Gold Crest Mines, Inc. or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.  Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock.  As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under Section 21E are unavailable to us.

The following discussion should be read in conjunction with the unaudited consolidated financial statements included elsewhere in this report, as well as the audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2011.

Overview and Plan of Operation

As discussed in “Note 3. Going Concern” to our consolidated financial statements, the Company has had no revenues and incurred an accumulated deficit of $9,668,506 through March 31, 2012.  Another factor is that the Company has a negative current ratio of 0.003: 1 at March 31, 2012.  The current ratio is a measurement of the degree to which current assets cover current liabilities (current assets/ current liabilities). A high ratio indicates a good probability the enterprise can retire current debts. Although the Company was able to increase its current ratio from 0.15: 1 at December 31, 2010 to 0.17: 1 at December 31, 2011, the Company feels that these factors raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to seek additional capital from new equity securities offerings and joint venture agreements that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.

We are in the business of exploration, development, and if warranted the mining of properties containing valuable mineral deposits. We are traded on the over the counter market in the United States and, as is typical with such companies, losses are incurred in the stages of exploration and development, which typically need to be funded through equity or debt financing.

In the Kisaralik Lake area of southwest Alaska, the Company’s wholly owned subsidiary Kisa Gold Mining, Inc. (KGMI) controls or has interests in claim blocks consisting of 274 State of Alaska mining claims covering approximately 42,420 acres. The Company calls the claim blocks the Southwest Kuskokwim Project and the Buckstock Project and the individual names of each claim block are Kisa, Gold Lake, Luna, AKO, Chilly, Gold Creek, Gossan Valley and Little Swift.

On March 28, 2011 the Company, through its wholly owned subsidiary, Kisa Gold Mining, Inc. (“Kisa”), executed a Master Earn-In agreement (“the Agreement”) with North Fork LLC, (“North Fork”) an Alaska limited liability company.

This agreement calls for North Fork to explore for gold deposits on Kisa’s claim blocks in the Southwest Kuskokwim Project area and Buckstock Project area (“Projects”). The Projects consist of the Company’s exploration properties mentioned above. See “Note 4. Mineral Properties – North Fork Option Master Earn-in Agreement” to our consolidated financial statements for further details.

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On September 6, 2011, the Company executed a non-binding letter of intent to enter into a business combination transaction with Gold Crown, Inc.  Although the original letter of intent has expired, we continue to negotiate with Gold Crown in good faith.  Currently, the Company is awaiting word from Gold Crown as to their financing activities and all due diligence is on hold.   On October 17, 2011, in connection with the proposed business combination, affiliates of Gold Crown made a non-refundable $117,659 advance to the Company. The contributed funds were used to discharge Company debt, engage professionals to conduct "due diligence" and initiate procedures and actions with a view toward entering into a definitive business combination agreement.

Liquidity and Capital Resources

We have limited capital resources and thus have had to rely upon the sale of equity securities for the cash required for exploration and development purposes, for acquisitions and to fund our administration. Since we do not expect to generate any revenues in the near future, we must continue to rely upon the sale of our equity securities to raise capital. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any period or, if available, that it can be obtained on terms satisfactory to us.

Our cash balance at March 31, 2012 was $516 versus $24,167 at December 31, 2011. This decrease is primarily due to the fact that during the last quarter of 2011, in connection with the proposed business combination, affiliates of Gold Crown made a non-refundable $117,659 advance to the Company. We have not yet received any new funds since that time and continued to pay liabilities.

Future Outlook

Based on the current market environment and our low share price it is not likely we will be able to raise enough money through a private placement of our common stock to fully implement our business plan.

We continue to proceed with our joint venture partner, North Fork, who continues to expend funds under the master earn-in agreement and just completed another season of exploration in the Company’s Southwest Kuskokwim Project area.

We have currently put our due diligence on hold as part of the non-binding letter of intent to enter into a business combination transaction with Gold Crown, Inc.  Although the original letter of intent has expired, we continue to negotiate with Gold Crown in good faith.  On October 17, 2011, in connection with the proposed business combination, affiliates of Gold Crown made a non-refundable $117,659 advance to the Company. Currently, the Company is awaiting word from Gold Crown as to their financing activities and we will continue to try and negotiate further advances to help maintain current operations while the due diligence is on hold.  

Results of Operations

Comparison of the Three Months Ended March 31, 2012 and March 31, 2011:

The following table sets forth certain information regarding the components of our Consolidated Statements of Operations for the three months ended March 31, 2012 compared with the three months ended March 31, 2011. The table is provided to assist in assessing differences in our overall performance:

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Overview of Operating Results

Operating Expenses

The increase of $26,489 in operating expenses during the three months ended March 31, 2012 compared to the three months ended March 31, 2011 was a result of increased payroll expenses for increased work load for the three months ended March 31, 2012 and primarily due to the increased audit fees due to the due diligence associated with the possible business combination transaction with Gold Crown, Inc. See “Note 6. Advances from Gold Crown” to our consolidated financial statements for further details.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not Applicable

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report.  Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures, including controls and procedures designed to ensure that information required to be disclosed by us is accumulated and communicated to our management (including our CEO and CFO), were effective as of March 31, 2012, in ensuring them in a timely manner that material information required to be disclosed in this report has been properly recorded, processed, summarized and reported.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 5.  OTHER INFORMATION.

None.  

ITEM 6.  EXHIBITS

(1)

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

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SIGNATURES

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

GOLD CREST MINES, INC.

Date:  May 14, 2012

By:  /s/ John P. Ryan

John P. Ryan

CEO

(Principal Executive Officer)

Date:  May 14, 2012

By:  /s/ Matt J. Colbert

Matt J. Colbert

CFO

(Principal Financial Officer)

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