Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the quarterly period ended March 31, 2012
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|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the transition period from ____to____
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Commission File Number: 000-52512
(Exact name of registrant as specified in its charter)
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Nevada
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20-5874196
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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5490 Longley Lane, Reno, Nevada 89511
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(Address of principal executive offices) (Zip Code)
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(775) 846-8398
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(Registrant’s Telephone Number, including area code)
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Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. x Yes o No
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). o Yes x No
Indicate by check mark whether the registrant is a large accelerated file, 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.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of May 18, 2012, there were 46,502,120 shares of the issuer's $.001 par value common stock issued and outstanding.
1
TABLE OF CONTENTS
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PART I
FINANCIAL INFORMATION
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||
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Page
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||
PART II
OTHER INFORMATION
2
PART 1 - FINANCIAL INFORMATION
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
ASSETS
|
March 31, 2012
(UNAUDITED)
|
December 31, 2011
|
|||||||
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Current assets
|
||||||||
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Cash
|
$
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29,475
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$
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10,559
|
||||
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Total current assets
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29,475
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10,559
|
||||||
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Property and equipment, net of $2,858 and $2,723
accumulated depreciation, respectively
|
198
|
333
|
||||||
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Unproven mineral properties
|
1,194,910
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1,194,910
|
||||||
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Total assets
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$
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1,224,583
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$
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1,205,802
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||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current liabilities
|
||||||||
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Accounts payable and accrued expenses
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$
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55,931
|
$
|
16,464
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||||
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Notes payable, current
|
150,000
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200,000
|
||||||
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Loans from stockholders
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152,000
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57,000
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||||||
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Total current liabilities
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357,931
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273,464
|
||||||
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Notes payable, long-term (including accrued interest)
|
1,897,452
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1,869,726
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||||||
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Stockholders’ equity (deficit)
|
||||||||
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Preferred stock, $.001 par value; 30,000,000 shares authorized,
-0- shares issued and outstanding
|
-
|
-
|
||||||
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Common stock, $.001 par value; 300,000,000 shares authorized,
46,502,120 shares issued and outstanding
|
1,267
|
1,267
|
||||||
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Additional paid-in capital
|
1,339,783
|
1,339,183
|
||||||
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Accumulated deficit
|
(233,532
|
)
|
(233,532
|
)
|
||||
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Deficit accumulated during the exploration stage
|
(2,138,318
|
)
|
(2,044,306
|
)
|
||||
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Total stockholders’ equity (deficit)
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(1,030,800
|
)
|
(937,388
|
)
|
||||
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Total liabilities and stockholders’ equity (deficit)
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$
|
1,224,583
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$
|
1,205,802
|
3
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
(UNAUDITED)
|
For the Three Months
ended
March 31, 2012
|
For the Three Months
ended
March 31, 2011
|
For the Period
from Inception
(October 31, 2006)
through
March 31, 2012
|
||||||||||
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Revenues
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$
|
-
|
$
|
-
|
$
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-
|
||||||
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Operating expenses
|
||||||||||||
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Exploration costs
|
-
|
157,286
|
431,585
|
|||||||||
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Legal and professional
|
47,529
|
98,666
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458,701
|
|||||||||
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Officer compensation
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-
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105,500
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190,500
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|||||||||
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General and administrative
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16,154
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9,963
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207,071
|
|||||||||
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Total operating expenses
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63,683
|
371,415
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1,287,857
|
|||||||||
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Loss from continuing operations
|
(63,683
|
)
|
(371,415)
|
(1,287,857
|
)
|
|||||||
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Other income (expense)
|
||||||||||||
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Forgiveness of accounts and note payable
|
-
|
-
|
75,781
|
|||||||||
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Interest income
|
-
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-
|
1,885
|
|||||||||
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Fair value of warrants
|
-
|
-
|
(172,500
|
)
|
||||||||
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Amortization of debt discount
|
-
|
(600,000)
|
(600,000
|
)
|
||||||||
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Interest expense
|
(30,329
|
)
|
(16,913)
|
(155,627
|
)
|
|||||||
|
Total other income (expense)
|
(30,329
|
)
|
(616,913)
|
(850,461
|
)
|
|||||||
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Loss before discontinued operations and income taxes
|
(94,012
|
)
|
(988,328)
|
(2,138.318
|
)
|
|||||||
|
Loss on discontinued operations
|
-
|
-
|
(233,532
|
)
|
||||||||
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Loss before income taxes
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(94,012
|
)
|
(988,328
|
)
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(2,371,850
|
)
|
||||||
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Provision for income taxes
|
-
|
-
|
-
|
|||||||||
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Net loss
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$
|
(94,012
|
)
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$
|
(988,328
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)
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$
|
(2,371,850
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)
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|||
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Net loss per common share – basic and diluted
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$
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(0.01
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)
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$
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(0.02
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)
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||||||
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Weighted average of common
shares – basic and diluted
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46,502,120
|
46,502,120
|
||||||||||
4
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
FOR THE PERIOD FROM INCEPTION (OCTOBER 31, 2006)
THROUGH MARCH 31, 2012
|
Common Stock*
|
Additional
|
Deficit
Accumulated
During
|
Total Stockholders'
|
|||||||||||||||||||||
|
Number of Shares
|
Amount
|
Paid-In Capital
|
Accumulated Deficit
|
Exploration Stage
|
Equity (Deficit)
|
|||||||||||||||||||
|
Balance, October 31, 2006
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||||
|
Issuance of common stock,
November 1, 2006
|
240,000,000
|
4,000
|
-
|
|
-
|
-
|
4,000
|
|||||||||||||||||
|
Additional paid-in capital in
exchange for facilities
provided by related party
|
-
|
-
|
400
|
-
|
-
|
400
|
||||||||||||||||||
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Net loss
|
-
|
-
|
-
|
(11,014
|
)
|
-
|
(11,014
|
)
|
||||||||||||||||
|
Balance, December 31, 2006
|
240,000,000
|
4,000
|
400
|
|
(11,014
|
)
|
-
|
(6,614
|
)
|
|||||||||||||||
|
Issuance of common stock
for cash, June 30, 2007
|
18,930,000
|
316
|
31,234
|
-
|
-
|
31,550
|
||||||||||||||||||
|
Issuance of common stock
for cash, July 23, 2007
|
12,000,000
|
200
|
19,800
|
-
|
-
|
20,000
|
||||||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
2,400
|
-
|
-
|
2,400
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
(69,026
|
)
|
-
|
(69,026
|
)
|
||||||||||||||||
|
Balance, December 31, 2007
|
270,930,000
|
4,516
|
53,834
|
|
(80,040
|
)
|
-
|
(21,690
|
)
|
|||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
2,400
|
-
|
-
|
2,400
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
(48,345
|
)
|
-
|
(48,345
|
)
|
||||||||||||||||
|
Balance, December 31, 2008
|
270,930,000
|
4,516
|
56,234 |
|
(128,385
|
)
|
-
|
(67,635
|
)
|
|||||||||||||||
* - Retroactively restated for 60:1 forward split
5
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE PERIOD FROM INCEPTION (OCTOBER 31, 2006)
THROUGH MARCH 31, 2012
|
Common Stock *
|
Additional
|
Deficit
Accumulated
During
|
Total Stockholders'
|
|||||||||||||||||||||
|
Number of Shares
|
Amount
|
Paid-In Capital
|
Accumulated Deficit
|
Exploration Stage
|
Equity (Deficit)
|
|||||||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
2,400
|
-
|
-
|
2,400
|
||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
(45,207
|
)
|
-
|
(45,207
|
)
|
||||||||||||||||
|
Balance, December 31, 2009
|
270,930,000
|
4,516
|
58,634
|
|
(173,592
|
)
|
-
|
(110,442
|
)
|
|||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
2,400
|
-
|
-
|
2,400
|
||||||||||||||||||
|
Fair value of warrants
|
-
|
-
|
172,500
|
-
|
-
|
172,500
|
||||||||||||||||||
|
Shares cancelled into treasury and retired
|
(224,927,880
|
)
|
(3,749
|
)
|
3,749
|
-
|
-
|
-
|
||||||||||||||||
|
Shares issued for cash
|
500,000
|
500
|
499,500
|
-
|
-
|
500,000
|
||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
(59,940
|
)
|
(403,726
|
)
|
(463,666
|
)
|
|||||||||||||||
|
Balance, December 31, 2010
|
46,502,120
|
1,267
|
736,783
|
(233,532
|
)
|
(403,726
|
)
|
100,792
|
||||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
2,400
|
-
|
-
|
2,400
|
||||||||||||||||||
|
Amortization of debt discount
|
-
|
-
|
600,000
|
-
|
-
|
600,000
|
||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
(1,640,580
|
)
|
(1,640,580
|
)
|
||||||||||||||||
|
Balance, December 31, 2011
|
46,502,120
|
$
|
1,267
|
$
|
1,339,183
|
$
|
(233,532
|
)
|
$
|
(2,044,306
|
)
|
$
|
(937,388
|
)
|
||||||||||
* - Retroactively restated for 60:1 forward split
6
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE PERIOD FROM INCEPTION (OCTOBER 31, 2006)
THROUGH MARCH 31, 2012
(UNAUDITED)
|
Common Stock *
|
Additional
|
Deficit
Accumulated
During
|
Total Stockholders'
|
|||||||||||||||||||||
|
Number of Shares
|
Amount
|
Paid-In Capital
|
Accumulated Deficit
|
Exploration Stage
|
Equity (Deficit)
|
|||||||||||||||||||
|
Additional paid-in capital
in exchange for facilities
provided by related party
|
-
|
-
|
600
|
-
|
-
|
600
|
||||||||||||||||||
|
Net loss
|
-
|
-
|
-
|
-
|
(94,012
|
)
|
(94,012
|
)
|
||||||||||||||||
|
Balance, March 31, 2012 (unaudited)
|
46,502,120
|
$ |
1,267
|
$ |
1,339,783
|
$ |
(233,532
|
)
|
$ |
(2,138,318
|
)
|
$ |
(1,030,800
|
)
|
||||||||||
* - Retroactively restated for 60:1 forward split
7
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
(UNAUDITED)
|
For the Three Months
ended
March 31, 2012
|
For the Three Months
ended
March 31, 2011
|
For the Period
from Inception
(October 31, 2006)
through
March 31, 2012
|
||||||||||
|
Cash flows from operating activities
|
||||||||||||
|
Net loss
|
$
|
(94,012
|
)
|
$
|
(988,328
|
)
|
(2,371,850
|
)
|
||||
|
Adjustments to reconcile net loss to net cash used
in operating activities
|
||||||||||||
|
Additional paid-in capital in exchange for facilities
provided by related party
|
600
|
600
|
13,000
|
|||||||||
|
Depreciation
|
135
|
153
|
2,858
|
|||||||||
|
Forgiveness of accounts and note payable
|
-
|
-
|
(75,781
|
)
|
||||||||
|
Amortization of debt discount
|
-
|
600,000
|
600,000
|
|||||||||
|
Fair value of warrants
|
-
|
-
|
172,500
|
|||||||||
|
Changes in operating assets and liabilities
|
||||||||||||
|
(Increase) in prepaid expenses
|
-
|
-
|
-
|
|||||||||
|
Increase in accounts payable and accrued interest
|
67,193
|
29,405
|
279,164
|
|||||||||
|
Net cash used in operating activities
|
(26,084
|
)
|
(358,170
|
)
|
(1,380,109
|
)
|
||||||
|
Cash flows from investing activities
|
||||||||||||
|
Purchase of property and equipment
|
-
|
-
|
(3,056
|
)
|
||||||||
|
Purchase of unproven mineral properties
|
-
|
-
|
(244,910
|
)
|
||||||||
|
Net cash used by investing activities
|
-
|
-
|
(247,966
|
)
|
||||||||
|
Cash flows from financing activities
|
||||||||||||
|
Payments on notes payable
|
(50,000
|
)
|
(50,000
|
)
|
(150,000
|
)
|
||||||
|
Proceeds from issuance of notes payable
|
95,000
|
600,000
|
1,235,000
|
|||||||||
|
Proceeds from issuance of loans
|
-
|
-
|
17,000
|
|||||||||
|
Proceeds from issuance of common stock
|
-
|
-
|
555,550
|
|||||||||
|
Net cash provided by financing activities
|
45,000
|
550,000
|
1,657,550
|
|||||||||
|
Net increase (decrease) in cash
|
18,916
|
191,830
|
29,475
|
|||||||||
|
Cash, beginning of period
|
10,559
|
415,425
|
-
|
|||||||||
|
Cash, end of period
|
$
|
29,475
|
$
|
607,253
|
$
|
29,475
|
||||||
|
Supplemental disclosure of cash flow
information
|
||||||||||||
|
Income taxes paid
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
|
Interest paid
|
$
|
-
|
$
|
-
|
$
|
7,016
|
||||||
|
Non-cash transaction for unproven mineral properties
and assignment of note payable
|
$
|
-
|
$
|
-
|
$
|
950,000
|
||||||
8
COYOTE RESOURCES, INC.
MARCH 31, 2012
(UNAUDITED)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Coyote Resources, Inc. (“the Company”) is currently an exploration stage company engaged in the exploration and development of mineral properties. The Company was incorporated under the laws of the State of Nevada on October 31, 2006. Since inception, the Company has produced minimal revenues and will continue to report as an Exploration stage company until significant revenues are produced.
On August 12, 2010, the Company entered into a Debt Repayment Agreement with KMR Resources, Inc. (“KMR”), pursuant to which the Company acquired all of KMR’s rights to the Tonopah Extension Mine and the Golden Trend Property (“Asset Acquisition”). As a result of the Asset Acquisition, the Company changed management, entered the mining business, and ceased all activity in its former business. The current business is comprised solely of the assets acquired from KMR. By virtue of that acquisition, the Company’s principal activity is the exploration and development of mineral properties which may include gold, silver, platinum, copper, zinc, and other mineral elements or compounds.
Exploration Stage
The Company has not produced significant revenues from its principal business and is in the exploration stage company as defined by ASC 915, Development Stage Entities. The Company is engaged in the acquisition, exploration, development and producing of mineral properties associated with its Asset Acquisition. The Company’s success will depend in large part on its ability to obtain and develop mineral interests within the United States. There can be no assurance that the mineral properties obtained by the Company will produce viable and measurable quantities of minerals or metals and the Company will be subject to local and national laws and regulations which could impact our ability to execute its business plan. As discussed in Note 2, the accompanying financial statements have been prepared assuming the Company will continue as a going concern.
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 reported periods. Actual results could materially differ from those estimates.
Cash and Cash Equivalents
For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of six months or less to be cash equivalents.
Fair Value of Financial Instruments
Pursuant to ASC No. 825, Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheet. The carrying value of cash, accounts payable and accrued expenses approximate their fair value due to the short period to maturity of these instruments.
9
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Property and equipment, if any, are stated at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are changed to expense as incurred.
Mineral Properties
Realization of the Company's investment in and expenditures on mineral properties is dependent upon the establishment of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal.
Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history characteristics of many mineral properties. To the best of its knowledge the Company believes all of its unproved mineral interests are in good standing and that it has title to all of these mineral interests. The Company classifies its mineral rights as tangible assets and accordingly acquisition costs are capitalized as mineral property costs.
Long Lived Assets
Long-lived assets are to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company is to estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets.
The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effects of obsolescence, demand, competition, and other economic factors. For the three months ended March 31, 2012, the Company has not incurred an impairment loss on its long-lived assets.
Asset Retirement Obligations
The Company records the fair value of an asset retirement obligation as a liability, if any, in the period in which it incurs an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until the Company settles the obligation. To date the Company has not incurred any measurable asset retirement obligations.
10
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
Revenue and royalty from the sale of minerals is to be recognized when (a) persuasive evidence of a sale with a customer exists, (b) services are rendered, (c) fee is fixed or determinable, and (d) collection of the fee is reasonably assured.
Basic and Diluted Income (Loss) Per Share
In accordance with ASC No. 260, Earnings Per Share, basic income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed similar to basic income per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
As of March 31, 2012, the Company had $1,100,000 of secured convertible debt that could be converted into 2,200,000 shares of the Company’s common stock. As of March 31, 2012, the Company also had 1,600,000 outstanding warrants to purchase 1,600,000 shares of the Company’s common stock.
Recent Accounting Pronouncements
There were various accounting updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
2. GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred a net loss of ($2,371,850) from inception (October 31, 2006) through March 31, 2012. The Company is subject to those risks associated with exploration stage companies. The Company has sustained losses since inception and additional debt and equity financing will be required by the Company to fund its development activities and to support operations. However, there is no assurance that the Company will be able to obtain additional financing. Furthermore, the Company's existence is dependent upon management's ability to develop profitable operations. These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern.
Management is currently devoting substantially all of its efforts to develop its existing mineral property leases. The Company also continues to search for additional productive properties. There can be no assurance that the Company's efforts will be successful, or that those efforts will translate in a beneficial manner to the Company. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
11
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
3. UNPROVEN MINERAL PROPERTIES
On April 23, 2010, the Company loaned $200,000 to KMR Resources, Inc. a Nevada corporation (“KMR”) in order for KMR to fund certain of its operations. In exchange for the funds, KMR executed a promissory note in that amount, which was payable on demand by the Company including interest of 8% per annum. On August 12, 2010, the Company and KMR entered into a Debt Repayment Agreement (“Debt Repayment Agreement”), pursuant to which KMR agreed to repay the Company the amount due under the promissory note dated April 23, 2010, by assigning all of KMR’s rights to certain mineral claims as further described below. The amount of the note receivable repayment, including interest, was $204,910.
On August 12, 2010, pursuant to the Debt Repayment Agreement with KMR, the Company was assigned KMR’s rights to the following:
|
(i)
|
a mineral lease and option to purchase agreement between KMR and Cliff ZZ L.L.C., which provides that Cliff ZZ L.L.C shall lease certain patented mining claims located in Esmeralda and Nye Counties, Nevada, including the Tonopah Extension Mine, to KMR, and that KMR shall have the option to acquire ownership of those claims (the “Tonopah Extension Mine”), and
|
|
a mining lease between KMR and Rubicon Resources, Inc., which provides that KMR shall own the exclusive rights to explore, develop and mine certain unpatented mining claims located in Eureka County, Nevada (“Golden Trend Property”).
|
In addition, on August 12, 2010, the Company was assigned the rights to a Mining Lease for certain unpatented mining claims in Eureka County, Nevada. The lease term is ten (10) years and is subject to a net smelter return royalty on production at the rate of 3.0% of net smelter returns (NSR’s). An initial Advanced Minimum Royalty (AMR) of $45,000 was paid upon signing and additional AMR’s of $15,000 shall be paid at 6-month intervals. All AMR’s shall be recaptured before any NSR’s are paid from production. There is no annual work commitment.
On August 12, 2010, the Company was assigned the rights a Mining Lease and Option to Purchase Agreement for certain patented mineral claims in Esmeralda and Nye Counties of Nevada. This lease is for five (5) years with the option to purchase for a total of $1,000,000 to be paid over a period of 5 years, beginning with a $10,000.00 initial payment made by KMR on June 30, 2010. A 4% net smelter royalty is reserved. The Company has made four (4) required minimum payments in the aggregate of $190,000 through March 31, 2012, as discussed in Note 5.
4. COMPENSATED ABSENCES
The Company currently does not have any employees other than its officer and founder. The majority of development costs and services have been provided to the Company by the founders and outside, third-party vendors. As such, there is no accrual for wages or compensated absences as of March 31, 2012.
12
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
5. NOTES PAYABLE
Note Payable
On August 12, 2010, in connection with the assignment of the rights a Mining Lease and Option to Purchase Agreement for certain patented mineral claims in Esmeralda and Nye Counties of Nevada, the Company assumed the balance of the purchase option of $990,000. The Company has made four (4) required payments in the aggregate amount of $190,000 as of March 31, 2012. The balance of the purchase option was $800,000 at March 31, 2012. The aggregate maturities of the note is as follows:
|
Period ending March 31
|
Amount
|
||||
|
2012
|
$
|
150,000
|
|||
|
2013
|
200,000
|
||||
|
2014
|
250,000
|
||||
|
2015
|
200,000
|
||||
|
800,000
|
|||||
|
Less: current portion
|
(150,000
|
)
|
|||
|
Long Term
|
$
|
650,000
|
|||
Convertible Notes Payable
On August 13, 2010, the Company entered into a Note and Warrant Purchase Agreement with one investor pursuant to which the investor agreed to lend up to Two Million Dollars ($2,000,000) to the Company in multiple installments in exchange for a senior secured convertible promissory note (“Note”) with a conversion price of $0.50 per share and five-year warrants to acquire shares of common stock at an exercise price of $0.75 per share (the “Warrants”) in the amount of each installment. The first installment of Five Hundred Thousand Dollars ($500,000) (“First Installment”) was delivered on the Closing Date and the Company issued 500,000 Warrants to the investor in connection with the First Installment. Included in the First Installment was the repayment of the April 22, 2010 $200,000 note payable. As of March 31, 2012, the Company owed $1,100,000 of principal and $147,452 of interest under this Note and Warrant Purchase Agreement. The fair value of the 500,000 warrants issued was estimated at $172,500 using the Black-Scholes option pricing model. The principal amount of the note is due, together with interest at 10% per annum, on August 13, 2013.
On January 19, 2011, the Company received $100,000 in exchange for a convertible note. The convertible note can be converted into 200,000 shares at a conversion price of $0.50. Attached to the convertible note are 100,000 warrants with the option to purchase up to 100,000 shares of the Company’s stock at an exercise price of $0.75 each. The fair value of the warrants was estimated at $29,199 using the Black-Scholes option pricing model. The principal amount of the note is due, together with interest at 10% per annum, on August 13, 2013.
On March 17, 2011, the Company received $500,000 in exchange for a convertible note. The convertible note can be converted into 1,000,000 shares at a conversion price of $0.50. Attached to the convertible note are 500,000 warrants with the option to purchase up to 500,000 shares of the Company’s stock at an exercise price of $0.75 each. The fair value of the warrants was estimated at $128,540 using the Black-Scholes option pricing model. The principal amount of the note is due, together with interest at 10% per annum, on August 13, 2013.
13
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
5. NOTES PAYABLE (Continued)
Pursuant to ASC 470-20 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, the Company determined that a beneficial conversion feature is present for the convertible notes issued during the year ended December 31, 2011 using the intrinsic value in the convertible notes adjusted for amounts allocated to the warrant valuation. The intrinsic value of the convertible notes amounted to $2,090,000 based on the fair market value of common stock on the respective dates of issuance.
Since the combined value of the warrants ($157,739) plus the intrinsic value of the convertible notes ($2,090,000) exceeds the fair value of the proceeds received from the issuance of the debt ($600,000), the Company is limited to the amount of the proceeds when recording the beneficial conversion feature as debt discount. Using a pro rata contribution, the Company allocated the proceeds first to the warrant valuation in the amount of approximately $42,100 and the remainder to the beneficial conversion feature in the amount of $557,900. The Company immediately amortized the debt discount of $600,000 for the year ended December 31, 2011 since the debt was convertible upon issuance.
The assumptions used in the Black-Scholes option pricing model for the Warrants were as follows:
|
Risk-free interest rate
|
0.25% to 0.41%
|
||
|
Expected volatility of common stock
|
100.0%
|
||
|
Dividend yield
|
0.00%
|
||
|
Expected life of warrants and conversion feature
|
5 years
|
6. LOANS FROM STOCKHOLDERS
On April 20, 2009, the Company entered into a note payable with a stockholder in the amount of $6,000. Per the terms of the note, this loan is due upon demand and accrues interest at the rate of 10% per annum. The loan funds are to be used for working capital purposes.
On July 13, 2009, the Company entered into a note payable with a stockholder in the amount of $5,000. Per the terms of the note, this loan is due upon demand and accrues interest at the rate of 10% per annum. The loan funds are to be used for working capital purposes.
On November 14, 2009, the Company entered into a note payable with a stockholder in the amount of $2,000. Per the terms of the note, this loan is due upon demand and accrues interest at the rate of 10% per annum. The loan funds are to be used for working capital purposes.
On March 8, 2010, the Company entered into a note payable with a stockholder in the amount of $4,000. Per the terms of the note, this loan is due upon demand and accrues interest at the rate of 10% per annum. The loan funds are to be used for working capital purposes.
On October 27, 2011, the Company issued a promissory note to a stockholder in exchange for $40,000. Per the terms of the note, the principal was due, together with interest at 12% per annum, on January 17, 2012 and the Company is currently negotiating an extension with the stockholder as discussed in Note 12.
14
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
6. LOANS FROM STOCKHOLDERS (Continued)
On February 7, 2012, the Company issued a promissory note to a stockholder in exchange for $20,000. Per the terms of the note, the principal was due, together with interest at 12% per annum, on May 7, 2012 and the Company is currently negotiating an extension with the stockholder as discussed in Note 12.
On March 6, 2012, the Company issued a promissory note to a stockholder in exchange for $50,000. Per the terms of the note, the principal is due, together with interest at 12% per annum, on June 6, 2012.
On March 30, 2012, the Company issued a promissory note to a stockholder in exchange for $25,000. Per the terms of the note, the principal is due, together with interest at 12% per annum, on June 6, 2012.
As of March 31, 2012, $152,000 of principal and $7,489 of interest was due to various stockholders per the above notes.
7. WARRANTS
Warrant Activity
A summary of warrant activity for the three months ended March 31, 2012 is presented below:
|
Number of
Warrants
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contract Term
|
|||||||||
|
Outstanding December 31, 2011
|
1,600,000
|
$
|
0.71
|
3.6 years
|
|||||||
|
Issued
|
-
|
-
|
|||||||||
|
Exercised
|
-
|
-
|
|||||||||
|
Outstanding March 31, 2012
|
1,600,000
|
$
|
0.71
|
3.3 years
|
|||||||
|
Exercisable, March 31, 2012
|
1,600,000
|
$
|
0.71
|
3.3 years
|
|||||||
Shares Reserved for Future Issuance
The Company has reserved shares for future issuance upon conversion of convertible notes payable and warrants as follows:
|
Conversion of notes payable
|
2,200,000
|
||
|
Warrants
|
1,600,000
|
||
|
Reserved shares at March 31, 2012
|
3,800,000
|
15
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
8. STOCKHOLDERS’ EQUITY
On July 21, 2011, the Company filed with the Nevada Secretary of State the Amended and Restated Articles of Incorporation, as corrected by a Certificate of Correction filed on July 22, 2011, amending the amount of authorized common stock to 300,000,000 shares, $.001 par value per share, creating a class of preferred stock in the amount of 30,000,000 shares, $.001 par value per share, and including limitation liability provisions for the Company's officers and directors.
On November 8, 2010 the Company entered into a subscription agreement with an unrelated party and received $500,000 in exchange for 500,000 shares of the Company’s common stock and 500,000 warrants to purchase 500,000 shares of the Company’s common stock at $0.50 each.
On August 18, 2010 the Board of Directors authorized a 60 for 1 forward stock split of the Company’s issued and outstanding common stock. The record date for the forward stock split was August 30, 2010. These financial statements and all references to common stock reflect the forward stock split as if it occurred on the first date of these financial statements.
On November 1, 2006, the Company issued 240,000,000 shares of its common stock to its officers for cash of $4,000 which was considered a reasonable estimate of fair value.
On June 30, 2007, the Company issued 18,930,000 shares of its common stock to unrelated investors for cash of $31,550 pursuant to the Company’s Registration Statement.
On July 23, 2007, the Company issued 12,000,000 shares of its common stock to unrelated investors for cash of $20,000 pursuant to the Company’s Registration Statement.
On August 13, 2010, in connection with the Cancellation Agreement a stockholder agreed to cancel 224,927,880 shares of common stock. These shares are reported as held in treasury at their original value until retired.
9. PROVISION FOR INCOME TAXES
Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
As of December 31, 2011, the Company had federal net operating loss carryforwards of approximately ($2,330,000), which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2030. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.
16
COYOTE RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2012
(UNAUDITED)
9. PROVISION FOR INCOME TAXES (Continued)
A summary of the Company’s deferred tax assets as of March 31, 2012 are as follows:
|
2012
|
|||||
|
Federal net operating loss (@ 34%)
|
$
|
790,000
|
|||
|
Less: valuation allowance
|
(790,000
|
)
|
|||
|
Net deferred tax asset
|
$
|
---
|
|||
The valuation allowance increased $28,000 during the three months ended March 31, 2012.
10. RELATED PARTY TRANSACTIONS
From the Company’s inception (October 31, 2006) through March 31, 2012, the Company utilized office space of an officer and stockholder at no charge. The Company treated the usage of the office space as additional paid-in capital and charged the estimated fair value rent of $200 per month to operations. For the three months ended March 31, 2012 and 2011, the Company recorded rent expense of $600 and $600, respectively.
11. DISCONTINUED OPERATIONS
On August 12, 2010, in connection with the Company’s Debt Repayment Agreement with KMR, pursuant to which the Company acquired all of KMR’s rights to certain mineral claims, the Company changed management, entered the mining business, and ceased all activity in its former business of video production and media relations. Accordingly, the Company’s results from its former business are shown in the statements of operations under the caption, “Loss on Discontinued Operations” and its cumulative deficit under the caption, “Accumulated Deficit” on the balance sheet.
12. SUBSEQUENT EVENTS
On January 17, 2012, a promissory note that we issued to a shareholder on October 27, 2011 became due. Per the terms of the note, the principal of $40,000 was due, together with interest at 12% per annum. As of the date of this report, we have not paid the balance owed pursuant to the note, and the note is in default. We are currently in negotiations with the stockholder to extend the due date of the note.
On May 7, 2012, a promissory note that we issued to a shareholder on February 7, 2012 became due. Per the terms of the note, the principal of $20,000 was due, together with interest at 12% per annum. As of the date of this report, we have not paid the balance owed and the note is in default. We are currently in negotiations with the stockholders to extend the due date of the note.
On May 18, 2012, the Company borrowed $30,000 from an investor and issued a promissory note to the investor in the amount of $30,000. The note is due on August 18, 2012 and bears interest at the annual rate of 12%.
17
This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “shall,” “could,” “expect,” “estimate,” “anticipate,” “predict,” “probable,” “possible,” “should,” “continue,” or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Critical Accounting Policy and Estimates. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Quarterly Report on Form 10-Q for the period ended March 31, 2012.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the period ended March 31, 2012, together with notes thereto, which are included in this report.
For the three months ended March 31, 2012, as compared to the three months ended March 31, 2011.
Results of Operations.
Revenues. We had no revenues for the three months ended March 31, 2012 and March 31, 2011.
Operating Expenses. For the three months ended March 31, 2012, our total operating expenses were $63,683, as compared to total operating expenses of $371,415 for the three months ended March 31, 2011. For the three months ended March 31, 2012, our total operating expenses consisted of legal and professional fees of $47,529 and general and administrative expenses of $16,154. In comparison, for the three months ended March 31, 2011, our total operating expenses consisted of exploration costs of $157,286, legal and professional fees of $98,666, officer compensation of $105,500, and general and administrative fees of $9,963. The significant decrease in total operating expenses from 2011 to 2012 is primarily due to the fact that we incurred significantly less exploration costs and officer compensation during the three months ended March 31, 2012. We expect that we will not incur any significant exploration costs until we are able to raise additional capital. We also expect that we will continue to incur significant legal and accounting expenses related to being a public company.
18
Other Expense. For the three months ended March 31, 2012, our other expense consisted of interest expense in the amount of $30,329. In comparison, for the three months ended March 31, 2011, our other expense consisted of interest expense of $16,913 and amortization of debt discount of $600,000, which resulted in total other expense of $616,913 related to our issuance of convertible notes payable during the prior year.
Net Loss. For the three months ended March 31, 2012, our net loss was $94,012, as compared to the three months ended March 31, 2011, in which our net loss was $988,328. We expect to continue to incur net losses for the foreseeable future.
Liquidity and Capital Resources. As of March 31, 2012, we had cash of $29,475, property and equipment of $198, net of $2,858 accumulated depreciation, and unproven mineral properties of $1,194,910 as of March 31, 2012, making our total assets $1,224,583.
Our unproven mineral properties of $1,194,910 as of March 31, 2012 consist of our rights to the Tonopah Extension Mine and the Golden Trend Property in Nevada.
Our total current liabilities were $357,931 as of March 31, 2012, which was represented by accounts payable and accrued expenses of $55,931, current portion of notes payable of $150,000, and loans from stockholders of $152,000. Long-term notes payable as of March 31, 2012 were $1,897,452.
As of March 31, 2012, our long term notes payable of $1,897,452 consists of (i) convertible note payables totaling $1,100,000 of principal and $147,452 of accrued interest pursuant to a Note and Warrant Purchase Agreement (the “Financing Agreement”) we entered into with Socially Responsible Wealth Management Ltd. (“SRWM”) in August 2010 and (ii) $650,000 which is owed to Cliff ZZ L.L.C. pursuant to the Mining Lease and Option to Purchase Agreement between us and Cliff ZZ L.L.C. (the “Tonopah Agreement”).
Pursuant to the Financing Agreement, SRWM agreed to lend up to $2,000,000 to us in multiple installments in exchange for senior secured convertible promissory notes with a conversion price of $0.50 per share and five-year warrants to acquire shares of common stock at an exercise price of $0.75 per share in the amount of each installment. The first installment of $500,000 was delivered on August 12, 2010, and we issued 500,000 warrants to the investor in connection with the first installment. Included in the First Installment was the repayment of the April 22, 2010 note payable of $200,000 that was due to SRWM. This note is due, together with interest at the rate of 10% per annum on August 13, 2013.
On January 19, 2011, we borrowed an additional $100,000 from SRWM pursuant to the Financing Agreement. We issued a senior secured convertible promissory note to SRWM in the amount of $100,000. The note is due on August 13, 2013, or upon default, whichever is earlier, and bears interest at the annual rate of 10%. The note has an optional conversion feature by which SRWM can convert the principal and accrued interest into shares of our common stock at a conversion price of $0.50 per share. In connection with the note, SRWM also received warrants to purchase 100,000 shares of our common stock at a purchase price of $0.75 per share. The warrants expire five years from the date of the investment.
On March 17, 2011, we borrowed an additional $500,000 from SRWM pursuant to the Financing Agreement. We issued a senior secured convertible promissory note to SRWM in the amount of $500,000. The note is due on August 13, 2013, or upon default, whichever is earlier, and bears interest at the annual rate of 10%. The note has an optional conversion feature by which SRWM can convert the principal and accrued interest into shares of our common stock at a conversion price of $0.50 per share. In connection with the note, SRWM also received warrants to purchase 100,000 shares of our common stock at a purchase price of $0.75 per share. The warrants expire five years from the date of the investment.
As of March 31, 2012, we owed $1,100,000 of principal and $147,452 of interest pursuant to the Financing Agreement.
In connection with the assignment of the rights to the Tonopah Agreement, we assumed the balance of the purchase option of $990,000. We have made four required payments in the aggregate amount of $190,000 to Cliff ZZ L.L.C. The balance of the purchase option was $800,000 at March 31, 2012. Our required minimum payments vary per year with final payment due on March 15, 2015.
19
On October 27, 2011, we issued a promissory note to a shareholder in exchange for $40,000. Per the terms of the note, the principal was due, together with interest at 12% per annum, on January 17, 2012. As of the date of this report, we have not paid the balance owed pursuant to the note, and the note is in default. We are currently in negotiations with the investor to extend the due date of the note.
On February 7, 2012, we issued a promissory note to the same shareholder in exchange for $20,000. Per the terms of the note, the principal was due, together with interest at 12% per annum, on May 7, 2012. As of the date of this report, we have not paid the balance owed pursuant to the note, and the note is in default. We are currently in negotiations with the stockholder to extend the due date of the note.
On March 6, 2012, we issued a promissory note to the same shareholder in exchange for $50,000. Per the terms of the note, the principal is due, together with interest at 12% per annum, on June 6, 2012.
On March 30, 2012, we issued a promissory note to the same shareholder in exchange for $25,000. Per the terms of the note, the principal is due, together with interest at 12% per annum, on June 6, 2012.
We had no other liabilities and no other long term commitments or contingencies as of March 31, 2012.
As of March 31, 2012, we had cash of $29,475. In the opinion of management, available funds will not satisfy our working capital requirements to operate for the next twelve months. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors.
Over the last six months we have been funding our operations through loans from a stockholder which we have used for working capital purposes.
During 2012, we expect that the following will continue to impact our liquidity: (i) legal and accounting costs of being a public company; (ii) future payments to Cliff ZZ L.L.C. for the balance of the purchase option for the Tonopah Agreement and lease payments on the Golden Trend Property; (iii) expected expenses related to the development of the Golden Trend Property and the Tonopah Extensions Mine; (iv) anticipated increases in overhead and the use of independent contractors for services to be provided to us; and (v) expected payments to notes payable to the investor. We will need to obtain funds to pay those expenses. Other than those items specified above, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.
In order to implement our business plan in the manner we envision, we need to raise additional capital. We cannot guaranty that we will be able to raise additional funds. Moreover, in the event that we can raise additional funds, we cannot guaranty that additional funding will be available on favorable terms.
We are not currently conducting any research and development activities. We do not anticipate conducting such activities in the near future. We intend to use independent contractors for certain services related to the Golden Trend Property and the Tonopah Extension Mine. We anticipate that we may need to purchase or lease additional equipment in order to conduct certain of our operations. However, as of the date of this report, we do not have any specific plans to purchase or lease additional equipment.
Off-Balance Sheet Arrangements.
We have no off-balance sheet arrangements.
Not applicable.
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Evaluation of disclosure controls and procedures. We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective.
Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
None.
Not applicable.
None.
None.
Not applicable.
The information set forth below is included herewith for the purpose of providing the disclosures required under “Item 2.03 - Creation of a Direct Financial Obligation” of Form 8-K.
On May 18, 2012, we borrowed $30,000 from an investor and issued a promissory note to the investor in the amount of $30,000 (“Note”). The Note is due on August 18, 2012, or upon default, whichever is earlier, and bears interest at the annual rate of 12%.
The Note was issued in a transaction which we believe satisfies the requirements of that exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Regulation S promulgated pursuant to that act by the Securities and Exchange Commission.
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Item 6. Exhibits.
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101.ins
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Instant Document
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101.sch
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XBRL Taxonomy Schema Document
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101.cal
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XBRL Taxonomy Calculation Linkbase Document
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101.def
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XBRL Taxonomy Definition Linkbase Document
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101.lab
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XBRL Taxonomy Label Linkbase Document
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101.pre
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XBRL Taxonomy Presentation Linkbase Document
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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.
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Coyote Resources, Inc.,
a Nevada corporation
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Date: May 21, 2012
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By:
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/s/ Earl Abbott
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Earl Abbott
President, Secretary and Treasurer
(Principal Executive, Financial and Accounting Officer)
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