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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 October 31, 2012
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 000-53630

DAKOTA GOLD CORP.
(Exact name of registrant as specified in its charter)

Nevada
20-5859893
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)

701 N. Green Valley Parkway, Suite 200, Henderson, Nevada, 89074
(Address of principal executive offices) (Zip Code)

702-990-3256
(Registrant's telephone number, including area code)

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

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.
[X] Yes [  ] 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).  [x] Yes   [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [  ]
Accelerated filer  [  ]
Non-accelerated filer [  ]
Smaller reporting company  [X]
(Do not check if 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 [   ]  No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 2,345,998 shares of common stock, $0.001 par value, issued and outstanding as of December 12, 2012.

 
1

 

 
TABLE OF CONTENTS

 
Page
   
PART I  - Financial Information
  3
   
Item 1. Financial Statements
  3
Balance Sheets October 31, 2012 (unaudited), and April 30, 2012
  3
Statements of Operations (unaudited) for the three and six-month periods ended
October 31, 2012 and 2011 and for the period from August 1, 2010 (inception of the exploration stage) to October 31, 2012
  4
Statements of Cash Flows (unaudited)  for the six-month periods ended
October 31, 2012 and 2011and for the period from August 1, 2010 (inception of the exploration stage) to October 31, 2012
  5
Notes to the Financial Statements
  7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
  13
Item 3 Quantitative and Qualitative Disclosures About Market Risk
  16
Item 4. Controls and Procedures
  16
   
PART II – Other Information
  16
   
Item 1.  Legal Proceedings
  16
Item 1A.  Risk Factors
  17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  17
Item 3. Defaults Upon Senior Securities
  17
Item 4. Mine Safety Disclosures
  17
Item 5. Other Information
  17
Item 6. Exhibits
  17


 
2

 


Item 1.  Financial Statements

DAKOTA GOLD CORP.
(An Exploration Stage Company)
BALANCE SHEETS

   
(Unaudited)
October 31,
   
April 30,
 
   
2012
   
2012
 
ASSETS
               
Current Assets
               
Cash
 
$
22,913
   
$
36,996
 
Prepaid expenses
   
5,055
     
2,158
 
Total Current Assets
   
27,968
     
39,154
 
 
               
Total Assets
 
$
27,968
   
$
39,154
 
                 
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)
               
Current Liabilities
               
Accounts payable and accrued liabilities
 
$
1,416
   
$
525
 
Bridge loan and accrued interest payable (note 5)
   
109,267
     
86,911
 
Total Current Liabilities
   
110,683
     
87,436
 
                 
Stockholders’ Equity (Deficit)
               
 Common Stock, Par Value $0.001
               
Authorized 100,000,000 shares,
               
Issued 2,345,998 shares at
               
October 31, 2012  and April 30, 2012
   
2,346
     
2,346
 
 Paid-in capital
   
204,704
     
204,704
 
  Accumulated deficit
   
(87,286)
     
(87,286)
 
  Deficit accumulated since inception of exploration stage
   
(202,479
)
   
(168,046)
 
 
               
Total Stockholders’ Equity (Deficit)
   
(82,715)
     
(48,282)
 
                 
Total Liabilities and Stockholders’ Equity
 
$
27,968
   
$
39,154
 

The accompanying notes are an integral part of these financial statements.

 
3

 

DAKOTA GOLD CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
 
               
Cumulative
 
               
Since,
 
   
For the Three Months
   
For the Six Months
   
August 1, 2010,
 
   
Ended
   
Ended
   
Inception o
 
   
October 31,
   
October 31,
   
Exploration
 
   
2012
   
2011
   
2012
   
2011
   
Stage
 
Revenues
  $ -     $ -     $ -     $ -     $ -  
Cost of Revenues
    -       -       -       -       -  
Gross Margin
    -       -       -       -       -  
                                         
Expenses
                                       
Mineral Property Exploration Expenditures
    4,074       17,336       8,178       31,978       48,498  
General and Administrative
    6,147       5,861       18,899       17,287       88,842  
Total Expenses
    10,221       23,197       27,077       49,265       137,340  
                                         
Net Loss from Operations
    (10,221 )     (23,197 )     (27,077 )     (49,265 )     (137,340 )
                                         
Other Income (Expense)
                                       
Interest
    (1,297 )     (1,048 )     (2,356 )     (2,056 )     (9,267 )
Write-down of Property and Equipment
    -       -       -       -       (872 )
Net Other Income (Expense)
    (1,297 )     (1,048 )     (2,356 )     (2,056 )     (10,139 )
                                         
Write-down of Mineral Property Acquisition Payments
    (5,000 )     (25,000 )     (5,000 )     (25,000 )     (55,000 )
                                         
Net Loss
  $ (16,518 )   $ (49,245 )   $ (34,433 )   $ (76,321 )   $ (202,479 )
                                         
Basic and Diluted
                                       
Loss per Share
  $ (0.01 )   $ (0.03 )   $ (0.01 )   $ (0.08 )        
                                         
Weighted Average Shares
                                       
Outstanding
    2,345,998       1,672,085       2,345,998       1,009,041          




The accompanying notes are an integral part of these financial statements.


 
4

 

DAKOTA GOLD CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
         
Cumulative
 
         
Since
 
         
August 1, 2010,
 
   
For the Six Months Ended October 31
   
Inception of the
 
               
Exploration
 
   
2012
   
2011
   
Stage
 
CASH FLOWS FROM OPERATING ACTIVITIES
                       
Net Loss
 
$
(34,433
)
 
$
 (76,321)
   
$
(202,479)
 
Adjustments to Reconcile Net Loss to Net
                       
Cash Used in Operating Activities
                       
Write-down of Property and Equipment
   
     
     
872
 
Write-down of Mineral Property Acquisition  Costs
   
5,000
     
25,000
     
55,000
 
   Accrued Interest
   
2,356
     
2,056
     
9,267
 
Change in Operating Assets and Liabilities
                       
 (Increase) Decrease in Prepaid Expenses
   
(2,897
)
   
4,050
     
(5,055)
 
Increase (Decrease) in Accounts Payable and      Accrued Liabilities
   
891
     
2,738
     
(9,797)
 
                         
Net Cash Used in Operating Activities
   
(29,083
)
   
(42,477)
     
(152,192)
 
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Mineral Property Acquisition Costs
   
(5,000)
     
(25,000)
     
(55,000)
 
Net Cash Used in Investing Activities
   
(5,000)
     
(25,000)
     
(55,000)
 
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
Proceeds from Bridge Loan Payable
   
20,000
     
     
100,000
 
Proceeds from Sale of Common Stock
   
     
100,000
     
130,000
 
                         
Net Cash Provided by Financing Activities
   
20,000
     
100,000
     
230,000
 
                         
Net (Decrease) Increase in
                       
Cash and Cash Equivalents
   
(14,083)
     
32,523
     
22,808
 
Cash and Cash Equivalents
                       
at Beginning of Period
   
36,996
     
23,270
     
105
 
Cash and Cash Equivalents
                       
at End of Period
 
$
22,913
   
$
55,793
   
$
22,913
 

The accompanying notes are an integral part of these financial statements.


 
5

 

DAKOTA GOLD CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)

               
Cumulative
               
Since
         
August 1, 2010,
   
For the Six Months Ended
   
Inception of
   
October 31,
   
October 31,
   
the Exploration
   
2012
   
2011
   
Stage
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
                 
Interest
  $     $     $  
Income taxes
  $     $     $  
                         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
                         
Settlement of Shareholder Loan Payable by a Contribution from a Shareholder
  $     $     $ 9,400  
 

 

The accompanying notes are an integral part of these financial statements.


 
6

 

DAKOTA GOLD CORP.
 (An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2012 and 2011
 
NOTE 1 – NATURE OF BUSINESS AND OPERATIONS

Organization and Basis of Presentation

Dakota Gold Corp. (an exploration stage company) (the “Company”) was incorporated under the laws of the State of Florida on October 27, 2006 under the name Coastline Corporate Services, Inc.  On August 18, 2010, Mr. Daulat Nijjar, the Company’s former President and CEO, as the holder of 197,500 common shares, or at that time 57.6%, of the issued and outstanding shares of the Company’s common stock, provided the Company with written consent in lieu of a meeting of stockholders authorizing the Company to amend the Company’s Articles of Incorporation for the purpose of changing the name of the Company from Coastline Corporate Services, Inc. to “Dakota Gold Corp.”  In connection with the change of the Company’s name to Dakota Gold Corp. the Company intended to change its business to mineral resource exploration and move its domicile to Nevada.  In order to undertake the name, business and domicile change, the Company incorporated a wholly-owned subsidiary in Nevada named Dakota Gold Corp. and merged Coastline Corporate Services, Inc. with the new subsidiary.  The Company received final regulatory for the name, business, and domicile change on November 26, 2010 and is now a Nevada corporation.

Effective as of August 31, 2011 the Board of Directors of the Company elected Mr. Bobby Nijjar President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, Secretary, and Director of the Company.  Also effective as of August 31, 2011 Mr. Daulat Nijjar resigned as President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, Secretary, and Director of the Company.  Mr. Bobby Nijjar is the son of Mr. Daulat Nijjar.

Effective as of August 1, 2012 the Board of Directors of the Company elected Mr. Herb Duerr President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, and Director of the Company.  Mr. Bobby Nijjar has remained as the Company’s Secretary and Director.  Also, effective as of August 2, 2012, James Poulter resigned as a Director of the Company.

The accompanying financial statements have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States on a going concern basis.

Nature of Operations

The Company is in the development stage and has no products or services as of October 31, 2012.  We are currently a development stage company as defined by the U.S. Securities and Exchange Commission (“SEC”) and we are in the business of exploring and if warranted, advancing certain unpatented Nevada mineral claims to the discovery point where we believe maximum shareholder returns can be realized.  We currently have one mineral property under option in Nevada.

Interim Reporting

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the financial position of Dakota Gold Corp. and the results of its operations for the periods presented.  This report on Form 10-Q should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended April 30, 2012.  The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.  Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the fiscal year ended April 30, 2012 has been omitted.  The results of operations for the three and six month periods ended October 31, 2012 are not necessary indicative of results for the entire year ending April 30, 2013.


 
7

 

NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  As shown in the accompanying financial statements, the Company has incurred a net loss of $202,479 for the period from August 1, 2010 (inception of the exploration stage) to October 31, 2012.  The future of the Company is dependent upon its ability to obtain future financing and upon future profitable operations from the development of its future mineral properties. On August 27, 2012 the Company received an additional $20,000 in proceeds from a bridge loan and on September 1, 2011 the Company received $100,000 from a private placement. The funds from these financings are not sufficient to fund the Company’s expected operational requirements of approximately $330,000 for the next twelve months.  Management may seek additional capital that will be required in order to continue to operate in the future.  However, management’s efforts to raise additional funding may not be successful.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

If the Company were unable to continue as a going concern then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported expenses, and the balance sheet classifications used.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the amounts reported in these financial statements and notes. Significant areas requiring the use of estimates relate to accrued liabilities and the impairment of long-lived assets.  Management believes the estimates utilized in preparing these financial statements are reasonable and prudent and are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could differ significantly from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Foreign Currency

The Company’s functional currency is the U.S. dollar and to date has undertaken the majority of its transactions in U.S. dollars. Any transaction gains and losses that may take place will be included in the statement of operations as they occur.

Concentration of Credit Risk

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains all of its cash balances with one financial institution in the form of a demand deposit.

Loss per Share

Net income (loss) per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. As of October 31, 2012 the company does not have any outstanding common stock options or warrants.


 
8

 

Comprehensive Income

The Company has adopted FASB ASC 220, “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company has disclosed this information on its Statement of Operations. Comprehensive income is comprised of net income (loss) and all changes to capital deficit except those resulting from investments by owners and distribution to owners.

Property Holding Costs

Holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees payments, and environmental monitoring and reporting costs.

Exploration and Development Costs

Mineral property interests include optioned and acquired mineral development and exploration stage properties. The amount capitalized related to a mineral property interest represents its fair value at the time it was optioned or acquired, either as an individual asset or as a part of a business combination. The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Exploration costs are expensed as incurred and development costs are capitalized if proven and probable reserves exist and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mineral interests costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

Income Taxes

The Company adopted FASB ASC 740, Income Taxes, at its inception deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. 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. No deferred tax assets or liabilities were recognized as of October 31, 2012.

Uncertain Tax Positions
 
The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, Accounting for Uncertainty in Income Taxes. The Company had no material unrecognized income tax assets or liabilities for the year ended April 30, 2012 or for the year ended April 30, 2011. The Company’s policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the year ended April 30, 2012 and 2011, there were no income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. The Company files income tax returns in the U.S. federal jurisdiction.  Tax years 2007 to present remain open to U.S. Federal income tax examination.  The Company is not currently involved in any income tax examinations.
 


 
9

 

Fair Value of Financial Instruments

The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

 
Level one — inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
Level two — inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals; and
 
Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
 
 
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.

New Accounting Pronouncements

The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to October 31, 2012 through the date these financial statements were issued.

NOTE 4 – MINERAL PROPERTY INTERESTS

Crescent Fault Property

On August 17, 2012 the Company executed a property option agreement (the “Agreement”) with MinQuest, Inc. (“MinQuest”) granting the Company the right to acquire 100% of the mining interests of a Nevada mineral exploration property currently controlled by MinQuest.  The property known as the Crescent Fault Property is located in Eureka County, Nevada and currently consists of 33 unpatented claims (the “Property”).  Annual option payments and minimum annual exploration expenditures under the Agreement are as noted below:

   
Property
   
Work
 
   
Payments
   
Expenditures
 
             
Upon Execution of the Agreement
  $ 5,000     $ -  
By August 17, 2013
    60,000       300,000  
By August 17, 2014
    45,000       200,000  
By August 17, 2015
    60,000       250,000  
By August 17, 2016
    70,000       250,000  
By August 17, 2017
    80,000       300,000  
By August 17, 2018
    90,000       300,000  
By August 17, 2019
    100,000       350,000  
By August 17, 2020
    100,000       400,000  
By August 17, 2021
    250,000       750,000  
    $ 860,000     $ 3,100,000  


 
10

 

Since our payment obligations are non-refundable, if we do not make any payments under the Agreement we will lose any payments made and all our rights to the Property. If all said payments under the Agreement are made, then we will acquire all mining interests in the Property.  If the Company fails to make any payment when due the Agreement gives the Company a 60-day grace period to pay the amount of the deficiency.  On August 17, 2012 the Company paid MinQuest $5,000 upon execution of the Agreement.  As a result of the property containing no known reserves or resources, the property option payment has been written down in the Statement of Operations at October 31, 2012.

MinQuest retained a 3% royalty (the “NSR”) of the aggregate proceeds received by the Company from any smelter or other sales of any ores, concentrates, metals or other material of commercial value produced from the Property, minus the cost of transportation of the ores, concentrates or metals, including related insurance, and smelting and refining charges, including penalties.  The Company has the one time right exercisable for 90 days following completion of a bankable feasibility study to buy up to one half (50.0%) of MinQuest’s NSR interest (i.e. an amount equal to 1.5% of the 3% NSR interest) for USD $3,000,000. The right to purchase the said NSR interest shall be exercised by the Company providing MinQuest with notice of the purchase accompanied by payment in the amount of USD $3,000,000.

The Company may use MinQuest for its mineral exploration expertise on the Property. Furthermore, both the Company and MinQuest have the right to assign, sell, mortgage or pledge their rights in the Agreement or on the Property. In addition, any mineral interests staked, located, granted or acquired by either the Company or MinQuest which are located within a 1 mile radius of the Property will be included in the option granted to the Company.

The Agreement will terminate if the Company fails to comply with any of its obligations in the Agreement and fails to cure such alleged breach.  The Company also has the right to terminate the Agreement by giving notice to MinQuest.

The Company’s principal executive officer is also a Vice President of MinQuest.

Caldera Property

On August 17, 2012, the Company gave notice of termination to Zsolt Rosta, Jennifer Oliver and Genesis Gold Corporation, (collectively the “Property Owners”) pursuant to the terms of the Caldera Property Agreement (the “Caldera Agreement”) dated September 10, 2010. The Caldera Agreement, which was filed as an exhibit to the Company's Form 8-K filed on September 13, 2010, had granted the Company the right to acquire 100% of the mining interests of a Nevada mineral exploration property known as the Caldera Property controlled by the Property Owners.  The Company has determined that the Caldera Property no longer fits with its business parameters.

As a result of such termination, the Caldera Property has been returned to the Property Owners and the Company is responsible to pay all claim fees, payments and expenses in order to maintain the property in good standing until August 2013. It is estimated that such fees and expenses will not exceed an aggregate of approximately $7,000.

NOTE 5 – BRIDGE LOAN PAYABLE

On August 20, 2010, the Company closed a Bridge Loan Agreement (the “Loan”) for $80,000.  The Loan bears interest at 5% per year and is due on August 20, 2011.  The Loan may be repaid in its entirety including the outstanding interest earlier than the due date by the Company advising the lender of such intent to repay 15 days prior to the anticipated date of repayment.

On August 20, 2011, the bridge loan in the original principal amount of $80,000 accruing interest at 5% per year was extended by the holder.  The original bridge loan which was due August 20, 2011 was renewed into a new loan of $84,000 bearing interest at 5% per year and being due on August 20, 2012.  The unsecured loan may be repaid in its entirety including the outstanding interest earlier than August 20, 2012 as long as the Company advises the lender of such intent to repay 15 days in advance.


 
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On August 20, 2012, the bridge loan in the principal amount of $84,000 accruing interest at 5% per year was extended by the holder.  The previous bridge loan which was due August 20, 2012 was renewed into a new loan of $88,200 plus an additional $20,000 for a total loan amount of $108,200 bearing interest at 5% per year and being due on August 20, 2013.  The unsecured loan may be repaid in its entirety including the outstanding interest earlier than August 20, 2013 as long as the Company advises the lender of such intent to repay 15 days in advance.

Total interest expense of $2,356 (2011 - $2,056) has been accrued for the six-months ended October 31, 2012.

NOTE 6 – RELATED PARTY TRANSACTIONS

On August 17, 2012 the Company entered into a property option agreement with MinQuest (note 4).  The Company’s principal executive officer is also a Vice President of MinQuest.  The Company anticipates that a significant portion of the exploration program will be carried out either directly by the Company’s principal executive officer or under his supervision.

For the six-months ended October 31, 2012, the Company paid two of its directors $500 per month to serve on its Board of Directors.  The total amount paid for the six months ended October 31, 2012 was $4,500 (2011- $3,000).  Effective August 2, 2012 one of the Company’s directors resigned and as a result the agreement between the director and the Company was terminated.


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

The following discussion should be read in conjunction with the financial statements of Dakota Gold Corp. (an exploration stage company) (the “Company”), which are included elsewhere in this Form 10-Q.  Certain statements contained in this report, including statements regarding the anticipated development and expansion of the Company's business, the intent, belief or current expectations of the Company, its directors or its officers, primarily with respect to the future operating performance of the Company and the products it expects to offer and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements.  Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by or with the approval of the Company, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. For a more detailed listing of some of the risks and uncertainties facing the Company, please see the Form 10-K for the year ended April 30, 2012 filed by the Company with the Securities and Exchange Commission.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Business Operations

During the next twelve months our objective is to explore the property subject to our mineral claims.  We continue to run our operations with the use of contract operators and as such do not anticipate a change to our company staffing levels. We remain focused on keeping a minimal staff level, which currently consists of our two directors, one of which is also our principal executive officer, to conserve capital. The Company anticipates that a significant portion of the exploration program will be carried out either directly by the Company’s principal executive officer or under his supervision.  We believe the outsourcing of some of the necessary operations continues to be the most cost effective and efficient manner of conducting the business of the Company.

We are a natural resource exploration company with an objective of acquiring, exploring, and if warranted and feasible, exploiting natural resource properties. Our primary focus in the natural resource sector is gold. We do not consider ourselves a “blank check” company required to comply with Rule 419 of the Securities and Exchange Commission, because we were not organized for the purpose of effecting, and our business plan is not to effect, a merger with or acquisition of an unidentified company or companies, or other entity or person. We do not intend to merge with or acquire another company in the next 12 months.

Though we have the expertise on our board of directors to take a resource property that hosts a viable ore deposit into mining production, the costs and time frame for doing so are considerable, and the subsequent return on investment for our shareholders would be very long term indeed. We therefore anticipate optioning or selling any ore bodies that we may discover to a major mining company. Most major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By optioning or selling a deposit found by us to these major mining companies, it would provide an immediate return to our shareholders without the long time frame and cost of putting a mine into operation ourselves, and it would also provide future capital for the company to continue operations.

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


 
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Natural resource exploration and development requires significant capital and our assets and resources are limited. Therefore, we anticipate participating in the natural resource industry through the purchase or option of early stage property.   To date we have one property under option. There has been no indication as yet that any mineral deposits exist on the property, and there is no assurance that a commercially viable mineral deposit exists on our property. Further exploration will be required before a final evaluation as to the economic and legal feasibility is determined.

In the following discussion, there are references to “unpatented” mining claims. An unpatented mining claim on U.S. government lands establishes a claim to the locatable minerals (also referred to as stakeable minerals) on the land and the right of possession solely for mining purposes. No title to the land passes to the claimant. If a proven economic mineral deposit is developed, provisions of federal mining laws permit owners of unpatented mining claims to patent (to obtain title to) the claim. If you purchase an unpatented mining claim that is later declared invalid by the U.S. government, you could be evicted.

Crescent Fault Property

On August 17, 2012 the Company executed a property option agreement with MinQuest granting the Company the right to acquire 100% of the mining interests of a Nevada mineral exploration property known as the Crescent Fault Property.  The Crescent Fault Property is located in Eureka County, Nevada and currently consists of 33 unpatented claims.  The Company has not yet started its exploration program but the program is expected to include angle drill holes utilizing reverse-circulation-rotary (RC) drilling. This program will attempt to confirm and enhance known mineralization in previous drill holes with infill drilling between previous mineralized holes.  A portion of this drilling will also attempt to extend known mineralized zones along strike and beyond historic drilling. The geologist dedicated to the drilling program will attempt to add detail, especially any structural framework which could be used to target deeper mineralization.

A draft budget in the amount of $274,000 has been submitted to the Company’s Board of Directors but it is yet to be formally approved.

Caldera Property

On August 17, 2012, the Company gave notice of termination to Zsolt Rosta, Jennifer Oliver and Genesis Gold Corporation, (collectively the “Property Owners”) pursuant to the terms of the Caldera Property Agreement (the “Caldera Agreement”) dated September 10, 2010. The Caldera Agreement, which was filed as an exhibit to the Company's Form 8-K filed on September 13, 2010, had granted the Company the right to acquire 100% of the mining interests of a Nevada mineral exploration property known as the Caldera Property controlled by the Property Owners.  The Company has determined that the Caldera Property no longer fits with its business parameters.  As a result of such termination, the Caldera Property has been returned to the Property Owners and the Company is responsible to pay all claim fees, payments and expenses in order to maintain the property in good standing until August 2013. It is estimated that such fees and expenses will not exceed an aggregate of approximately $7,000.

Results of Operations

We did not earn any revenues during the three or six months ended October 31, 2012 or 2011.  We will be in the exploration stage of our business for an extended period of time and as a result do not anticipate earning revenues until we have developed an exploration property.  We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our property, or if such resources are discovered, that we will enter into commercial production of our mineral property.


 
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For the three months ended October 31, 2012 we had a net loss of $16,518 compared to a net loss of $49,245 for the three months ended October 31, 2011.  The decrease in the net loss was largely a reduction in property acquisition costs as in the current quarter the Company paid $5,000 to MinQuest upon execution of the Crescent Fault Property Option Agreement while in the prior quarter the Company paid $25,000 under the Caldera Property Option Agreement.  The Company has since terminated the Caldera Property Option Agreement.  Additionally, the Company incurred $4,074 in mineral property exploration expenditures for the three-months ended October 31, 2012 compared to $17,336 for the three month period ended October 31, 2011.  In 2012 the Company did not perform any significant exploration on the Crescent Fault or Caldera properties while in 2011 the Company began planning its exploration program on the Caldera Property.  General and administrative expenses were consistent between 2012 and 2011.

For the six months ended October 31, 2012 we had a net loss of $34,433 compared to a net loss of $76,321 for the six months ended October 31, 2011.  The decrease in the net loss was largely a reduction in property acquisition costs as in the current quarter the Company paid $5,000 to MinQuest upon execution of the Crescent Fault Property Option Agreement while in the prior quarter the Company paid $25,000 under the Caldera Property Option Agreement.  The Company has since terminated the Caldera Property Option Agreement.  Additionally, the Company incurred $8,178 in mineral property exploration expenditures for the six-months ended October 31, 2012 compared to $31,978 for the six month period ended October 31, 2011.  In 2012 the Company did not perform any significant exploration on the Crescent Fault or Caldera properties while in 2011 the Company began planning its exploration program on the Caldera Property.  General and administrative expenses were consistent between 2012 and 2011.

Liquidity and Capital Resources

We had cash of $22,913 and negative working capital of $82,715 as of October 31, 2012. We anticipate that we will incur the following expenses over the next twelve months:

·  
$274,000 in property option payments, annual claim filing fees, and exploration expenditures on the Company’s Crescent Fault property;

·  
$56,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934.

Net cash used in operating activities during the six-months ended October 31, 2012 was $29,083compared to $42,477 during the six months ended October 31, 2011.  A significant portion of the decrease was due to a decrease in the net loss to $34,433 for the six months ended October 31, 2012 from $76,321 for the six-months ended October 31, 2011.  Partially offsetting the impact of the decreased loss was the impact of the write-down of property acquisition costs.  For the six months ended October 31, 2012 the Company paid $5,000 to MinQuest upon execution of the Crescent Fault Property Option Agreement while in the six months ended October 31, 2011 the Company paid $25,000 under the Caldera Property Option Agreement.  The write-downs have been reclassified to investing activities on the statement of cash flows.  Changes in working capital included an outflow of $2,897 from changes in prepaid expenses for the six months ended October 31, 2012 while in the six months ended October 31, 2011 there was an inflow of $4,050.  Investing activities in both periods relate to the write-down of property acquisition costs.  Investing activities for the six months ended October 31, 2012 consisted of $20,000 received from the proceeds of a loan while in the six months ended October 31, 2011 investing activities were the result of $100,000 received in proceeds from a private placement.

The future of the Company is dependent upon its ability to obtain future financing and upon future profitable operations from the development of its mineral property.  On August 27, 2012 the Company received an additional $20,000 in proceeds from a bridge loan and on September 1, 2011 the Company received $100,000 from a private placement.  The proceeds from these financings are not sufficient for all of the Company’s commitments for the next 12 months. The Company expects that it will need approximately $330,000 to fund its operations through October 31, 2013.  We anticipate that in the future we will need additional funding and that such funding will be in the form of equity financing from the sale of our common stock.  However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program, should we decide to proceed.  We do not have any arrangements in place for any future equity financing.


 
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Going Concern Consideration

As shown in the accompanying financial statements, the Company has incurred a net loss of $202,479 for the period from August 1, 2010 (inception of the exploration stage) to October 31, 2012, and has had no sales.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral property.  Management may seek to raise additional capital in the future through the sale of equity. There are no present plans to do so and there can be no assurances that any such plans will be realized.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
 
There is substantial doubt about the Company’s ability to continue as a going concern. Accordingly, its independent auditors included an explanatory paragraph in their report on the April 30, 2012 financial statements regarding concerns about the Company’s ability to continue as a going concern. The Company’s financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by its independent auditors.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

Smaller reporting companies are not required to provide the information required by this Item.

Item 4.  Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the Company conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of October 31, 2012. Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the Company’s disclosure and controls are designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  The Company’s property is not the subject of any pending legal proceedings.


 
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Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this Item 1A.

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

None

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

The Company does not currently have any mining operations.

Item 5. Other information

None.

Item 6. Exhibits

Exhibit 31 - Certification of Principal Executive and Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 – Certification of Principal Executive and Financial Officer Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS **
 
XBRL Instance Document
101.SCH **
 
XBRL Taxonomy Extension Schema Document
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 
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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.

 
Date:   December 12, 2012
 
DAKOTA GOLD CORP.
 
By:   /s/ Herb Duerr
       Herb Duerr
       President, Chief Executive Officer, Treasurer, and Director
       (Principal Executive, Financial, and Accounting Officer)
 
 

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