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EX-5.1 - OPINION OF CLARK WILSON LLP REGARDING THE LEGALITY OF THE SECURITIES BEING REGISTERED - iHookup Social, Inc.exhibit_5-1.htm
EX-23.1 - CONSENT OF MANNING ELLIOTT LLP - iHookup Social, Inc.exhibit_23-1.htm
EX-10.26 - FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT (EQUITY LINE OF CREDIT) - iHookup Social, Inc.exhibit_10-26.htm
EX-10.25 - PAYROLL SERVICES AGREEMENT WITH KRIYAH CONSULTANTS, LLC DATED JUNE 30, 2011 - iHookup Social, Inc.exhibit_10-25.htm
EXCEL - IDEA: XBRL DOCUMENT - iHookup Social, Inc.Financial_Report.xls


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM S-1 /A
AMENDMENT NO. 1 TO
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
Titan Iron Ore Corp.
(Exact name of registrant as specified in its charter)
 
Nevada
(State or other jurisdiction of incorporation or organization)
 
1000
(Primary Standard Industrial Classification Code Number)
 
98-0546715
(I.R.S. Employer Identification Number)
 
3040 North Campbell Ave. #110
Tucson, Arizona 85719
Telephone: (520) 898-0020
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
 
EastBiz.com, Inc.
5348 Vegas Drive
Las Vegas, NV 89108
Telephone: (702) 871-8678
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
 
Copy of Communications To:
Clark Wilson LLP
Suite 800 - 885 West Georgia Street
Vancouver, British Columbia V6C 3H1, Canada
Telephone:  (604) 687-5700
 
From time to time after the effective date of this registration statement.
(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering
 
 
 
i

 

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
  o
Accelerated filer
  o
Non-accelerated filer
  o
Smaller reporting company
  x
(Do not check if a smaller reporting company)
   
 
Calculation of Registration Fee
 
Title of Each Class
of Securities to be
Registered
Amount to be
Registered(1)
Proposed Maximum
Offering Price
Per Share(3),(4)
Proposed Maximum
Aggregate Offering
Price(3),(4)
Amount of
Registration Fee(4)
         
Common Stock
12,906,300(2)
$0.29
$3,742,827
$510.52 (5)
         

(1)
An indeterminate number of additional shares of common stock shall be issuable pursuant to Rule 416 under the Securities Act of 1933 to prevent dilution resulting from stock splits, stock dividends or similar transactions and in such an event the number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416.
   
(2)
Consists of (i) up to 617,661 shares of common stock that may be issued upon conversion of debentures sold to The Marie Baier Foundation, Inc. on October 18, 2012 and up to 326,095 shares of common stock that were issued upon exercise of warrants issued to The Marie Baier Foundation, Inc. on October 25 , 2012 ; (ii) up to 370,596 shares of common stock that may be issued upon conversion of debentures sold to Motivated Minds LLC on October 18, 2012 and up to 191,740  shares of common stock that were issued upon exercise of warrants issued to Motivated Minds LLC on October 26, 2012; and (iii) up to 1,142,858 shares of common stock issued or to be issued to Ascendiant Capital Partners, LLC as commitment shares under a securities purchase agreement dated October 18, 2012, and up to 38,347 shares of common stock that were issued upon exercise of warrants, up to 10,219,003 shares of common stock to be sold to Ascendiant Capital Partners, LLC under a securities purchase agreement dated October 18, 2012 .
   
(3)
Estimated in accordance with Rule 457(c) under the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee.
   
(4)
Based on the average of the high and low prices per share ($0.299 high; $0.27 low) for the registrant’s common stock on November 19, 2012, as reported by Financial Industry Regulatory Authority’s OTC Bulletin Board.
   
(5) Previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 
ii

 



 
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
 
 

 
Subject to Completion, Dated ______________, 2013
 
 
Prospectus
 
12,906,300 Shares

TITAN IRON ORE CORP.

Common Stock
_________________________________
 
The selling stockholders identified in this prospectus may offer and sell up to 12,906,300 shares of our common stock, consisting of (i) up to 617,661 shares of common stock that may be issued upon conversion of debentures sold to The Marie Baier Foundation, Inc. on October 18, 2012 and up to 326,095 shares of common stock that were issued upon exercise of warrants issued to The Marie Baier Foundation, Inc. on October 25, 2012 ; (ii) up to 370,596 shares of common stock that may be issued upon conversion of debentures sold to Motivated Minds LLC on October 18, 2012 and up to 191,740  shares of common stock that were issued upon exercise of warrants issued to Motivated Minds LLC on October 26, 2012; and (iii) up to 1,142,858 shares of common stock issued or to be issued to Ascendiant Capital Partners, LLC as commitment shares under a securities purchase agreement dated October 18, 2012, up to 38,347 shares of common stock that were issued to Ascendiant Capital Partners, LLC upon exercise of warrants, and up to 10,219,003 shares of common stock to be sold to Ascendiant Capital Partners, LLC under a securities purchase agreement dated October 18, 2012 .

The selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices.

We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses applicable to the sale of their shares.

Ascendiant Capital Partners, LLC is an underwriter within the meaning of the Securities Act of 1933 and other selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.

Our common stock is quoted on Financial Industry Regulatory Authority’s OTC Bulletin Board under the symbol “TFER.OB”. On January 8, 2013 , the closing sale price for our common stock as reported by the OTC Bulletin Board was $0.216 per share.
 
Investing in our common stock involves risks. See “Risk Factors” beginning on page 5 .
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The date of this prospectus is _____________, 2013 .
 
 
 
 
1

 


Table of Contents
 
Page Number
   
Prospectus Summary
3
   
Risk Factors
5
   
Forward-Looking Statements
14
   
The Offering
15
   
Use of Proceeds
19
   
Selling Stockholders
19
   
Plan of Distribution
21
   
Description of Securities
22
   
Experts and Counsel
25
   
Interest of Named Experts and Counsel
25
   
Information With Respect to Our Company
26
   
Description of Business
26
   
Description of Property
31
   
Legal Proceedings
35
   
Market Price of and Dividends on Our Common Equity and Related Stockholder Matters
36
   
Financial Statements
38
   
Management’s Discussion and Analysis of Financial Condition  and Results of Operations
39
   
Directors and Executive Officers
47
   
Executive Compensation
51
   
Security Ownership of Certain Beneficial Owners and Management
55
   
Transactions with Related Persons, Promoters and Certain Control Persons and Corporate Governance
55
   
Where You Can Find More Information
56

 
2

 

 
As used in this prospectus, the terms “we”, “us”, “our” and “our company” mean Titan Iron Ore Corp. unless the context clearly indicates otherwise.
 
 
Prospectus Summary

Our Business
 
We were incorporated in the State of Nevada on June 5, 2007. Our plan after our inception on June 5, 2007 was to produce user-friendly software that creates interactive digital yearbook software for schools and allows them to create and burn their own interactive digital yearbooks on CD/DVD. We produced nominal revenues of $4,855 in our early stages as a result of sales efforts undertaken.
 
Effective June 15, 2011, we completed a merger with our subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.”
 
Also effective June 15, 2011, we effected a 37 to one forward stock split of our authorized and issued and outstanding common and preferred stock.  As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 3,700,000,000 shares of common stock with a par value of $0.0001 of which 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, we issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000.
 
On June 30, 2011, we entered into an acquisition agreement for the purchase of the Wyoming Iron Complex (please see “Description of Business – Acquisition Agreement for Wyoming Iron Complex” for additional information on the acquisition.). In addition, effective June 30, 2011 and in connection with the closing of the acquisition agreement, Ohad David, Ruth Navon and Service Merchant Corp. entered into an affiliate stock purchase agreement, whereby, among other things, they surrendered 142,950,000 common shares for cancellation.
 
We are focusing our efforts in the mineral exploration. Our business plan is to proceed with the exploration of the Wyoming Iron Complex consisting of mineral leases on 320 acres and 23 unpatented mining claims aggregating approximately 463 acres located in the county of Albany, Wyoming, USA. The purchase price for the Wyoming Iron Complex was $7,000,000, which was primarily paid through the issuance of a promissory note in the amount of $6,855,000, of which $6,707,500 is still outstanding as of December 20, 2012.
 
We have no operating income yet and, as a result, depend upon funding from various sources to continue operations and to implement our growth strategy. Because of our lack of operating revenues, operating losses since inception and need to raise additional funds, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern in their report on our financial statements for the year ended December 31, 2011.
 
Our principal executive office address is 3040 North Campbell Ave, Suite 110 , Tucson, Arizona 85719.
 
Number of Shares Being Offered
 
This prospectus covers the resale by the selling stockholders named in this prospectus of up to 12,906,300 shares of our common stock, consisting of (i) up to 617,661 shares of common stock that may be issued upon conversion of debentures sold to The Marie Baier Foundation, Inc. on October 18, 2012 and up to 326,095 shares of common stock that were issued upon exercise of warrants issued to The Marie Baier Foundation, Inc. on October 25, 2012; (ii) up to 370,596 shares of common stock that may be issued upon conversion of debentures sold to Motivated Minds LLC on October 18, 2012 and up to 191,740  shares of common stock that were issued upon exercise of warrants issued to Motivated Minds LLC on October 26, 2012; and (iii) up to 1,142,858 shares of common stock issued or to be issued to Ascendiant Capital Partners, LLC as commitment shares under a securities purchase agreement dated October 18, 2012, up to 38,347 shares of common stock that were issued to Ascendiant Capital Partners, LLC upon exercise of warrants, and up to 10,219,003 shares of common stock to be sold to Ascendiant Capital Partners, LLC under a securities purchase agreement dated October 18, 2012.
 
 
 
 
3

 
 
Prospectus Summary - continued
 
Number of Shares Outstanding
 
There were 52,501,110 shares of our common stock issued and outstanding as at January 9, 2013 .
 
Use of Proceeds
 
We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses applicable to the sale of their shares.
 
Summary of Financial Data
 
The following information represents selected audited financial information for our company for the years ended December 31, 2011 and 2010 and selected unaudited financial information for our company for the nine month period ended September 30, 2012. The summarized financial information presented below is derived from and should be read in conjunction with our audited and unaudited financial statements, as applicable, including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 39 of this prospectus.

Statements of Operations Data
Nine Month Period Ended September 30, 2012
Nine month Period Ended September 30, 2011
From June 5, 2007 (Inception) to
September 30, 2012
Total Revenues
Nil
Nil
$4,855
Total Operating Expenses
$2,870,947
$371,483
$3,922,462
Net Loss
2,870,947
$353,852
$3,901,143
Basic Loss Per Share
$(0.06)
$(0.00)
 

Statements of Operations Data
Year Ended
December 31, 2011
Year Ended
December 31, 2010
Total Revenues
Nil
Nil
Total Operating Expenses
$972,308
$8,318
Net Loss
$954,677
$9,485
Basic and Diluted Loss Per Share
$0.01
$0.00
 
 
 
 
 
 
4

 
 
Prospectus Summary - continued
 
Balance Sheets Data
At September 30, 2012
At December 31, 2011
At December 31, 2010
Cash
$275,162
$118,066
Nil
Working Capital
$29,824
$120,962
$(17,569)
Total Assets
$1,526,838
$203,066
Nil
Total Liabilities
$1,238,041
$22,104
$17,569
Total Stockholders’ Equity (Deficit)
$288,797
$180,962
$(17,569)
Total Liabilities and Stockholders’ Equity (Deficit)
$1,526,838
$203,066
Nil
 
Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information provided by the prospectus is accurate as of any date other than the date on the front of this prospectus.
 
 
Risk Factors
 
An investment in our common stock involves a number of very significant risks.  You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and our business before purchasing shares of our common stock.  Our business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks.  You could lose all or part of your investment due to any of these risks. You should invest in our common stock only if you can afford to lose your entire investment.
 
Risks Associated with Mining
 
All of our mineral properties are in the exploration stage. There is no assurance that we can establish the existence of any mineral resource or reserve on any of our properties in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from operations and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral resource in a commercially exploitable quantity, we will not be able to develop our properties .
 
We have not established that our mineral properties contain any mineral reserve, nor can there be any assurance that we will be able to do so. If we do not, we will not be able to develop our properties .
 
A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of the Securities and Exchange Commission’s Industry Guide 7 is extremely remote; in all probability our mineral properties  do not contain any ‘reserve’ and any funds that we spend on exploration will probably be lost.
 
Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
  
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter or processing facilities, power, and water, roads and a point for shipping, available workforce, government regulation, proximity to markets and consumers, and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.
 
 
 
 
5

 
 
Risk Factors - continued
 
Mineral operations are subject to applicable law and government regulation. Even if we discover a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral resource. If we cannot exploit any mineral resource that we might discover on our properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
 
Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits or bonds required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
 
There can be no assurance that we can comply with all material laws and regulations that apply to our activities. Current laws and regulations could be amended and we might not be able to comply with them. Further, there can be no assurance that we will be able to obtain or maintain all permits or bonds necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.
 
Exploration, development and exploitation activities are subject to comprehensive regulation and permitting which may cause substantial delays or require capital outlays in excess of those.
 
Exploration, development and exploitation activities are subject to federal, provincial, state and local laws, regulations and policies, including laws regulating permitting, bonding, and the removal of natural resources from the ground and the discharge of materials into the environment. Exploration, development and exploitation activities are also subject to federal, provincial, state and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment and other operational activities.
 
Environmental and other legal standards imposed by federal, provincial, state or local authorities may be changed and any such changes may prevent us from conducting planned activities or may increase our costs of doing so. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing a material adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages that we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Any laws, regulations or policies of any government body or regulatory agency may be changed, applied or interpreted in a manner which could materially alter and negatively affect our ability to carry on our business.
 
If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to develop the property into a producing mine. If we cannot raise this additional capital, we will not be able to exploit the resource .
 
If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to explore and fully establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
 
 
 
6

 
 
Risk Factors - continued
 
Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources.
 
Mineral exploration, development and production involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the geological, technical and operating hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.
 
Mineral prices are subject to dramatic and unpredictable fluctuations.
 
We expect to derive revenues, if any, either from the sale of our mineral resource properties or from the extraction and sale of iron ore and associated byproducts. The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.
 
The mining industry is highly competitive and there is no assurance that we will be successful in acquiring additional mineral claims or selling all of the products that we produce. If we cannot acquire properties to explore for mineral resources, or successfully sell our mineral products , our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
 
The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we may also compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets for the sale of mineral products do not always exist for all mineral commodities Therefore, we may not be able to sell all of the mineral products that we identify and produce.
 
In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical capabilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.
 
Our competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than us. As a result of this competition, we may have to compete for financing and may be unable to acquire financing on terms we consider acceptable. We may also have to compete with the other mining companies for the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended, which may cause us to cease operations as a company.
 
If our costs of exploration are greater than anticipated, then we may not be able to complete the exploration program for our Wyoming Iron Complex without additional financing, of which there is no assurance that we would be able to obtain.
 
We are proceeding with the initial stages of exploration on our Wyoming Iron Complex. Our exploration program outlines a budget for completion of the program. However, there is no assurance that our actual costs will not exceed the budgeted costs. Factors that could cause actual costs to exceed budgeted costs include increased prices due to competition for personnel and supplies during the exploration season, unanticipated problems in completing the exploration program and delays due to weather or other factors experienced in completing the exploration program. Increases in exploration costs could result in our not being able to carry out our exploration program without additional financing. There is no assurance that we would be able to obtain additional financing in this event.
 
 
 
7

 
 
Risk Factors - continued
 
Because of the speculative nature of exploration of mining properties, there is substantial risk that no commercially exploitable minerals will be found.
 
We have only commenced the initial stage of exploration of our mineral property, and have no way to evaluate the likelihood that we will be successful in establishing commercially exploitable reserves of iron ore or other valuable minerals on our Wyoming Iron Complex. The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of iron ore or other valuable minerals in our mineral property. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us on our exploration program may not result in the discovery of commercial quantities of ore. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. Problems such as unusual or unexpected geologic 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.
 
Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
 
The search for valuable minerals involves numerous hazards. In the course of carrying out exploration of our Wyoming Iron Complex, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. We currently have no such insurance nor do we expect to get such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all of our assets, resulting in the loss of your entire investment in this offering.
 
We may have difficulty accessing our property.
 
Access to the mineral property may be restricted during the period between October and April of each year because the period between these months can typically feature heavy snow cover, extreme cold and high winds which makes it difficult if not impossible to carry out exploration and other activities at the Wyoming Iron Complex.  We can attempt to visit, test or explore our mineral property only when weather permits such activities. These limitations can result in significant delays in exploration efforts, as well as in mining and production in the event that commercial amounts of minerals are found. Such delays may prevent us from exploring and developing the Wyoming Iron Complex property.

On December 7, 2012, we filed suit in state court in Albany County, Wyoming against DSS Holdings LLC and Douglas Samuelson (“Samuelson”) to regain access to the Wyoming Iron Complex. The road used by us to access the Wyoming Iron Complex crosses Samuelson’s property. Samuelson has locked the gate across the road and denied our repeated requests for access. The suit was filed in the District Court of the Second Judicial District in Wyoming, after negotiations between the parties were unsuccessful. If we cannot gain access to our property, we may not be able to conduct studies and collect samples of iron ore from the existing Iron Mountain pit and stockpile in order to evaluate the suitability of these materials to meet the specifications of potential customers.
 
Because our Chief Executive Officer has other business interests, he may not be able or willing to devote a sufficient amount of time to our business operation, causing our business to fail.
 
Our President and Chief Executive Officer will devote approximately 50% of his working time on providing management services to us. If the demands on our executive officer from his other obligations increase, he may no longer be able to devote sufficient time to the management of our business. This could negatively impact our business development.
 
 
 
 
8

 
 
Risk Factors - continued
 
We may have to pay severance to our Chief Executive Officer.

If we terminate Mr. Brodkey’s employment prior to the end of his employment period for any reason other than cause or disability or if Mr. Brodkey terminates his employment for good reason, Mr. Brodkey shall be entitled to one (1) month’s severance pay for each one month of service up to a maximum of two (2) year’s wages, and we shall maintain all employee benefit plans and programs for the number of years remaining in the term of his employment in which he was entitled to immediately prior to the date of termination.

Mr. Brodkey’s employment contract defines "cause" to mean (i) following delivery to Mr. Brodkey of a written demand for performance from us, which describes the basis for our belief that Mr. Brodkey has not substantially performed his duties, Mr. Brodkey’s continued willful violation of his obligations to us, which are demonstrably willful and deliberate on his part for a period of thirty (30) days after written notice thereof, (ii) Mr. Brodkey being convicted of a felony involving moral turpitude, (iii) Mr. Brodkey willfully breaching any material term of his employment agreement or any other agreement with us, which continues uncured for a period of thirty (30) days after written notice, or (iv) without the consent of us, or as otherwise provided for herein, his commencement of employment with another employer while he is an employee of our company.

Mr. Brodkey’s employment with our company may be regarded as having been constructively terminated by us, and Mr. Brodkey may therefore terminate his employment for “good reasons” if, before the end of his employment period, one or more of the following events shall occur: (i) the relocation of him to a facility or a location more than 50 miles from his then present employment location, without his express written consent; or (ii) the failure of our company to obtain the unqualified assumption of his employment agreement by any successor upon a change of control.

As of January 9, 2013, we would have to pay our Chief Executive Officer $270,000 in severance and the maximum amount we would have to pay is $360,000.  In the event we are required to make these severance payments, it could have a material adverse effect on our results of operations for the fiscal period in which such payments are made.
  
Risks Related to Our Company
 
If we are unable to pay the promissory note when obligations become due, Wyomex LLC may take proceedings to liquidate our holdings.

In connection with the acquisition of the Wyoming Iron Ore Complex, we issued a promissory note to Wyomex LLC. The promissory note has a principal amount of US$6,855,000 and is interest-free. As of December 20, 2012, there was $6,707,500 outstanding under the promissory note. The promissory note is secured by a purchase money mortgage of $7.8 million. The obligations under the promissory note are significantly greater than our current financial resources and we may not have the ability to pay the obligations under the promissory note. If we default on the promissory note and Wyomex LLC forecloses on the  promissory note, Wyomex LLC could potentially liquidate the holdings of our company.

Our disclosure controls and procedures and internal control over financial reporting are not effective, which may cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management evaluated our disclosure controls and procedures as of December 31, 2011 and as of September 30, 2012 and concluded that as of those dates, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to (i) inadequate segregation of duties and ineffective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

As of the date of this prospectus, we believe that these material weaknesses continue to exist and our disclosure controls and procedures and internal control over financial reporting are not effective. If such material weakness and ineffective controls are not promptly corrected in the future, our ability to report quarterly and annual financial results or other information required to be disclosed on a timely and accurate basis may be adversely affected. Also such material weakness and ineffective controls could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.
 
 
 
9

 
 
Risk Factors - continued
 
We have a limited operating history on which to base an evaluation of our business and prospects.
 
We have been in the business of exploring mineral resource properties only since June 2011 and we have not yet located or identified any mineral reserves. As a result, we have never had any revenues from our mining operations. In addition, our operating history has been restricted to the acquisition and exploration of our mineral properties and this does not provide a meaningful basis for an evaluation of our prospects if we ever determine that we have a mineral reserve and commence the construction and operation of a mine. We have no way to evaluate the likelihood of whether our mineral properties contain any mineral reserve or, if they do that we will be able to build or operate a mine successfully. We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are exploring our properties. We therefore expect to continue to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from mining operations and any dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition. There is no history upon which to base any assumption as to the likelihood that we will prove successful and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
 
The fact that we have not earned any significant operating revenues since our incorporation raises substantial doubt about our ability to continue to explore our mineral properties as a going concern.
 
We have not generated any significant revenue from operations since our incorporation and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and we build and operate a mine. At September 30, 2012, we had working capital of $29,824. We incurred a net loss of $882,912 for the three months ended September 30, 2012, and $3,901,143 since inception. We will require additional financing to sustain our business operations if we are not successful in earning revenues once exploration is complete. If our exploration programs are successful in discovering reserves of commercial tonnage and grade, we will require significant additional funds in order to place the Wyoming Iron Complex into commercial production. Should the results of our planned exploration require us to increase our current operating budget, we may have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months. As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity and debt securities, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these were to occur , our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
 
These circumstances lead our independent registered public accounting firm, in their report dated April 12, 2012, to comment about our company’s ability to continue as a going concern. When an auditor issues a going concern opinion, the auditor has substantial doubt that our company will continue to operate indefinitely and not go out of business and liquidate its assets. These conditions raise substantial doubt about our company’s ability to continue as a going concern. 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 our company cannot continue in existence. We continue to experience net operating losses.
 
Risks Associated with Our Common Stock
 
If we issue additional shares in the future, it will result in the dilution of our existing shareholders.
 
Our articles of incorporation authorize the issuance of up to 3,700,000,000 shares of common stock with a par value of $0.0001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating requirements. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.
  
 
 
 
10

 
 
Risk Factors - continued
 
Our common stock is illiquid and the price of our common stock may be negatively impacted by factors which are unrelated to our operations.
 
The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
 
We do not intend to pay cash dividends on any investment in the shares of stock of our company.
 
We have never paid any cash dividends and currently do not intend to pay any cash dividends for the foreseeable future. Because we do not intend to declare cash dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

Trading of our stock is restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our common stock.
 
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
 
 
11

 
 
Risk Factors - continued
 
Risks Relating to the Early Stage of our Company and Ability to Raise Capital
 
We are at a very early stage and our success is subject to the substantial risks inherent in the establishment of a new business venture.
 
The implementation of our business strategy is in a very early stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and prospective operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, many of which are beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.
 
We have no operating history and our business plan is unproven and may not be successful.
 
We have no commercial operations. None of our projects have proven or provable reserves, are built, or are in production. We have not licensed or sold any mineral products commercially and do not have any definitive agreements to do so. We have not proven that our business model will allow us to generate a profit.
 
We expect to suffer continued operating losses and we may not be able to achieve profitability.
 
We expect to continue to incur significant discovery and development expenses in the foreseeable future related to exploration and the completion of feasibility, development and commercialization of our projects. As a result, we will be sustaining substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability.
 
We may have difficulty raising additional capital, which could deprive us of necessary resources.
 
We expect to continue to devote significant capital resources to fund exploration and development of our properties. In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock, the market price for commodities, and the development or prospects for development of competitive technology or competitive projects by others. Because our common stock is not listed on a major stock market, many investors may not be willing or allowed to purchase our common shares or may demand steep discounts. Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.
 
As of January 11, 2012, closed a private placement financing in the gross amount of $1,000,500, and on October 18, 2012, we closed a private placement financing in the gross amount of $200,000, and received a commitment for up to $10 million through a securities purchase agreement/equity line financing. However, we do not have any firm commitments for funding beyond this recent placement as the ability to receive funding through the securities purchase agreement/equity line is dependent upon a number of conditions, which may or may not be satisfied. If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities. If we are successful raising additional capital through the issuance of additional equity, our investor’s interests will be diluted.
 
There are substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value.
 
Our ability to become a profitable operating company is dependent upon our ability to generate revenues and/or obtain financing adequate to explore and develop our properties. Achieving a level of revenues adequate to support our cost structure has raised substantial doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by issuing shares covered and, if necessary through one or more private placement or public offerings, and via the securities purchase agreement/equity line financing. However, the doubts raised relating to our ability to continue as a going concern may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital.
 
 
 
12

 
 
Risk Factors - continued
 
Failure to effectively manage our growth could place additional strains on our managerial, operational and financial resources and could adversely affect our business and prospective operating results.
 
Our anticipated growth is expected to continue to place a strain on our managerial, operational and financial resources. Further, as we acquire interests in more properties or subsidiaries and other entities, we will be required to manage multiple relationships. Any further growth by us, or an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and prospective operations and the value of an investment in our company.
 
Risks Related to the Offering

The selling stockholders are offering for resale of a maximum of 12,906,300 shares of our common stock, 11,400,208 shares of our common stock of which have been issued or may be issued to Ascendiant Capital Partners, LLC under the equity line or as commitment shares or upon exercise of warrants. The resale of such shares by Ascendiant Capital Partners, LLC could depress the market price of our common stock.

The selling stockholders are offering for the resale of a maximum of 12,906,300 shares of our common stock under this prospectus. The sale of these shares into the public market by Ascendiant Capital Partners, LLC could depress the market price of our common shares. As of January 9, 2013 , there were 52,501,110 shares of our common stock issued and outstanding. In total, we may issue up to $10,000,000 of shares of our common stock to Ascendiant Capital Partners, LLC pursuant to the equity line, meaning that we are obligated to file one or more registration statements covering the remaining common shares not covered by the registration statement of which this prospectus forms a part. The sale of those additional common shares into the public market by Ascendiant Capital Partners, LLC could further depress the market price of our common stock.

Existing stockholders could experience substantial dilution upon the issuance of common stock pursuant to the equity line.

Our equity line with Ascendiant Capital Partners, LLC contemplates our issuance of up to $10,000,000 of shares of our common stock to Ascendiant Capital Partners, LLC, subject to certain restrictions and obligations. If the terms and conditions of the equity line are satisfied, and we choose to exercise our put rights to the fullest extent permitted and sell $10,000,000 of shares of our common stock to Ascendiant Capital Partners, LLC, our existing stockholders' ownership will be diluted by such sales.

Ascendiant Capital Partners, LLC will pay less than the then-prevailing market price for our common stock under the equity line.

The common stock to be issued to Ascendiant Capital Partners, LLC pursuant to the equity line will be purchased at a 10% discount to the daily volume weighted average price of our common stock on the day we issue the common stock to Ascendiant Capital Partners, LLC, subject to certain exceptions. In addition, each time we receive at least $1,000,000 or $2,000,000 in aggregate upon drawdowns, we are required to issue a number of shares of our common stock equal to $50,000 divided by 95% of the daily volume weighted average price of our common stock during the 10 trading days as commitment shares. Accordingly, the discount received by Ascendiant Capital Partners, LLC will be greater than 10% if we received at least $1,000,000 or $2,000,000 in aggregate upon drawdowns. Therefore, Ascendiant Capital Partners, LLC has a financial incentive to sell our common stock upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Ascendiant Capital Partners, LLC sells the shares, the price of our common stock could decrease.
 
 
 
13

 
 
Risk Factors - continued
 
We may not be able to access sufficient funds under the equity line when needed.

Our ability to put shares to Ascendiant Capital Partners, LLC and obtain funds under the equity line is limited by the terms and conditions in the securities purchase agreement dated October 18, 2012, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Ascendiant Capital Partners, LLC at any one time, which is determined in part by the trading volume of our common stock, and a limitation on our ability to put shares to Ascendiant Capital Partners, LLC to the extent that it would exceed $250,000 or cause Ascendiant Capital Partners, LLC to beneficially own more than 9.99% of our outstanding common stock. In addition, we do not expect the equity line to satisfy all of our funding needs, even if we are able and choose to take full advantage of the equity line.

The lower our stock price, the lower the fluctuating, below market price conversion rate for the convertible debentures will be and the greater number of shares of our common stock we will have to issue upon conversion of the convertible debentures.

The conversion price of the convertible debentures is based upon the trading prices of our common stock at the time of such conversion, and the conversion prices cannot be higher than $0.27 during the six months following October 18, 2012, and $0.35 thereafter. If the trading  prices of the common stock are low when the  conversion  price of the convertible debentures is determined, we would be  required  to issue a higher  number of shares  of  our common  stock,  which  could  cause  substantial dilution  to  our stockholders.  In addition, if the debenture holders converts their debentures and sell our common stock, this could result in an imbalance of supply and demand for our common stock and reduce our stock price. The further our stock price declines, the further the adjustment of the conversion price will fall and the greater the number of shares we will have to issue upon conversion.

In addition, the number of shares issuable upon conversion of the convertible debentures is potentially limitless. While the overall ownership by each of the holders of the convertible debentures at any one moment is limited to 9.9% of the outstanding shares of our common stock, such holders are free to sell any shares into the market, which have been issued to them, thereby enabling them to convert the remaining convertible debentures. In addition, while there are monthly limits on amounts of the convertible debentures that can be converted if the price of our common stock is below certain level, such holders can simply wait until the monthly limits no longer apply.

On December 31, 2012, the conversion price of the debentures would have been $0.147 and we would have been required to issue 1,600,680 shares upon conversion.  The following table shows the resulting fall of the conversion price and the number of shares that would be required to be issued if all of the shares were converted based upon a 50% and 75% fall in the price of our common stock as of December 31, 2012.

Percentage Decline
Conversion Price of Debentures
Shares Issuable Upon Conversion of Debentures
50%
$0.074
3,201,361
75%
$0.037
6,402,721

 
Forward-Looking Statements
 
This prospectus contains forward-looking statements.  Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for future operations.  In some cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology.  Examples of forward-looking statements made in this prospectus include statements about:
 
 
·
Our future exploration programs and results;
 
·
Our future capital expenditures; and
 
·
Our future investments in and acquisitions of mineral resource properties.
 
 
 
 
14

 
 
Forward-Looking Statements - continued
 
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:
 
 
·
risks and uncertainties relating to the interpretation of sampling results, the geology, grade and continuity of mineral deposits;
 
·
risks and uncertainties that results of initial sampling and mapping will not be consistent with our expectations;
 
·
risks and uncertainties that the mineral deposits will never constitute proven and probable reserves which can be developed and mined economically;
 
·
mining and development risks, including risks related to accidents, weather, equipment breakdowns, labor disputes, permitting, or other unanticipated difficulties with or interruptions  and delays in development and production;
 
·
the potential for delays in exploration activities; risks related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses in exploration, development and production which are beyond the capacity of our company to manage;
 
·
risks related to commodity price fluctuations;
 
·
the uncertainty of an unproven business plan and lack of revenue generation and profitability based upon our limited history;
 
·
substantial risks inherent in the establishment of a new business venture since our company is at a very early stage;
 
·
risks and uncertainties inherent in mineral exploration ventures which by their very nature face a high risk of business failure;
 
·
risks related to intense competition in the mineral exploration and exploitation industry which causes our company to have to compete with our company’s competitors for financing and for qualified managerial and technical employees;
 
·
risks related to the engagement of our company’s directors and officers in other business activities whereby they may not have sufficient time to attend to our company’s business affairs;
 
·
risks related to failure to obtain adequate financing and additional capital on a timely basis and on acceptable terms for our planned exploration and development;
 
·
risks related to environmental regulation and liability, and the ability to secure bonds, permits, and governmental consents and approvals;
 
·
risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
 
·
risks related to tax assessments;
 
·
political and regulatory risks associated with mining exploration, development and production; and
 
·
the risks in the section entitled “Risk Factors”.
 
Any of these risks could cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus.
 
While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
 
The Offering
 
This prospectus covers the resale by the selling stockholders named in this prospectus of up to 12,906,300 shares of our common stock, consisting of (i) up to 617,661 shares of common stock that may be issued upon conversion of debentures sold to The Marie Baier Foundation, Inc. on October 18, 2012 and up to 326,095 shares of common stock that were issued upon exercise of warrants issued to The Marie Baier Foundation, Inc. on October 25, 2012; (ii) up to 370,596 shares of common stock that may be issued upon conversion of debentures sold to Motivated Minds LLC on October 18, 2012 and up to 191,740  shares of common stock that were issued upon exercise of warrants issued to Motivated Minds LLC on October 26, 2012; and (iii) up to 1,142,858 shares of common stock issued or to be issued to Ascendiant Capital Partners, LLC as commitment shares under a securities purchase agreement dated October 18, 2012, up to 38,347 shares of common stock that were issued to Ascendiant Capital Partners, LLC upon exercise of warrants, and up to 10,219,003 shares of common stock to be sold to Ascendiant Capital Partners, LLC under a securities purchase agreement dated October 18, 2012 .
 
 
 
 
15

 
 
The Offering - continued
 
Securities Purchase Agreement with Ascendiant Capital Partners, LLC (Equity Line of Credit)
 
On October 18, 2012, we entered into a securities purchase agreement (the “Equity Line of Credit Agreement”) with Ascendiant Capital Partners, LLC, which was amended on January 9, 2013 , pursuant to which we may sell and issue to Ascendiant Capital Partners, LLC, and Ascendiant Capital Partners, LLC is obligated to purchase from us, up to $10,000,000 worth of shares of our common stock from time to time over a 36-month period, provided that certain conditions are met. The financing arrangement entered into by us and Ascendiant Capital Partners, LLC is commonly referred to as an “equity line of credit” or an “equity drawdown facility.”
 
In connection with the Equity Line of Credit Agreement, on October 18, 2012, we entered into a registration rights agreement with Ascendiant Capital Partners, LLC. Pursuant to the registration rights agreement, we agreed to use our commercially reasonable efforts to prepare and file a registration statement with the Securities and Exchange Commission (the “SEC”) on or prior to November 16, 2012 and to have the registration statement declared effective by the SEC by February 14, 2013. The registration statement is to register shares of common stock to be purchased under the Equity Line of Credit Agreement and the shares of common stock to be issued to Ascendiant Capital Partners, LLC as the Commitment Shares (as defined below).
 
Pursuant to the Equity Line of Credit Agreement, we may, in our sole discretion, issue and exercise drawdowns against $10,000,000 over a 36-month period (the “Commitment Period”) commencing on the seventh trading date following the date that the initial registration statement to be filed pursuant to the registration rights agreement is first declared effective. Before we can exercise a drawdown, we must have caused a sufficient number of shares of our common stock to be registered to cover the resale of the shares to be issued pursuant to a drawdown and the daily volume weighted average price of our common stock (the “VWAP”) must be greater than $0.01 per share on the trading day immediately prior to each drawdown.
 
We may request a drawdown once every eight trading days and there must be a minimum of three trading days between each drawn down request.
 
The maximum amount we can draw down at any one time is an amount equal to (i) 20% of the average daily trading volume of our common stock during the 10 trading days prior to the date of the drawdown request, multiplied by (ii) the average of the VWAPs of our common stock during such 10 trading day period. Notwithstanding the foregoing, no drawdown can exceed $250,000 or such amount that would otherwise cause Ascendiant Capital Partners, LLC to exceed a beneficial ownership of 9.99% of our outstanding common stock.
 
On the day following the delivery of the drawdown notice, a valuation period of five trading days will start. On each of the five trading days during the valuation period, the number of shares to be sold to Ascendiant Capital Partners, LLC will be determined by dividing 1/5th of the drawdown amount by the purchase price on each trading day. The purchase price will be the lesser of (i) 90% of the VWAP of our common stock on that day and (ii) the price that is $0.01 below the VWAP on that date.
 
If the purchase price on any trading day during the five trading day calculation period is below the minimum price specified by us, then Ascendiant Capital Partners, LLC will not purchase any shares on that day, and the drawdown amount will be reduced by 1/5th for each such trading day withdrawn.
 
The term of the Equity Line of Credit Agreement will end 36 months from the date the initial registration statement filed by us pursuant to the registration rights agreement is first declared effective by the SEC, unless otherwise terminated earlier. The Equity Line of Credit Agreement will terminate if (i) our common stock is no longer quoted on the OTC Bulletin Board unless the cessation of quotation is in connection with a subsequent listing of our common stock on the Nasdaq Capital Market, NYSE Amex, the New York Stock Exchange, the Nasdaq National Market, the BX Venture Market, the OTCQB or the OTCQX, (ii) we file for protection from creditors under any applicable law or (iii) the registration statement is not declared effective by the SEC on or before July 12, 2013. In addition, we may terminate the Equity Line of Credit Agreement upon five trading days’ notice.
 
 
 
 
16

 
 
The Offering - continued
 
In consideration for agreeing to the terms of the Equity Line of Credit Agreement, we agreed to issue the following shares of our common stock (the “Commitment Shares”):   ·
 
 
·
150,015 shares of our common stock no later than 30 days following the initial closing date (issued on October 22, 2012);
 
·
on the trading day (the “Second Payment Date”) which is 30 calendar days following the initial closing date, 173,913 shares of our common stock, being equal to 0.5% of $10,000,000 divided by 95% of the average VWAP during the 10 trading days prior to the Second Payment Date (issued on November 19, 2012);
 
·
on the trading day (the “Third Payment Date”) which is 30 calendar days following the initial closing date , a number of shares of our common stock equal to 1% of $10,000,000 divided by $0.175 , provided that, if the number of Commitment Shares to be delivered to Ascendiant Capital Partners, LLC on the Third Payment Date causes Ascendiant Capital Partners, LLC to receive an aggregate number of Commitment Shares (as of the Third Payment Date) of less than 2% of $10,000,000, then additional Commitment Shares are to be issued to Ascendiant Capital Partners, LLC on the Third Payment Date so that it has received an aggregate number of Commitment Shares (as of the Third Payment Date) of at least 2% of $10,000,000. The parties agreed that the number of shares to be issued pursuant to this is 818,930 shares of our common stock;
 
·
on the trading day (the “Fourth Payment Date”) in which we have received at least $1,000,000 in aggregate upon drawdowns, a number of shares of our common stock equal to 0.5% of $10,000,000 divided by 95% of the average VWAP during the 10 trading days prior to the Fourth Payment Date;  and
 
·
on the trading day (the “Fifth Payment Date”) in which we have received at least $2,000,000 in aggregate upon drawdowns, a number of shares of our common stock equal to 0.5% of $10,000,000 divided by 95% of the average VWAP during the 10 trading days prior to the Fifth Payment Date.
 
We issued and intend to issue the Commitment Shares and shares of our common stock upon drawdowns in reliance upon the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated under the Securities Act of 1933.
 
In addition, we reimbursed Ascendiant Capital Partners, LLC $5,000 and have agreed to reimburse them for up to $7,500 for its actual legal fees and expenses incurred in connection with this transaction.
 
Securities Purchase Agreements (Debentures)
 
On October 18, 2012, we entered into securities purchase agreements (the “Debenture Purchase Agreements”) with two investors (the “Investors”), pursuant to which we sold an aggregate of $235,300 face value in principal amount of 5% convertible debentures due October 18, 2013 (the “Debentures”). In addition to the Debentures, we issued an aggregate of 705,901 common stock purchase warrants (the “Warrants”) with each Warrant entitling the holder to acquire one share of our common stock at a price of $0.25 per share for three years. The Investors paid us the aggregate subscription amount of $200,000 for the Debentures and the Warrants, which subscription amount was at a 15% discount from the principal amount of the Debentures.
 
Interest accrues daily on the outstanding principal amount of the Debenture at a rate per annum equal to 5% on the basis of a 365-day year. On the maturity date of October 18, 2013, we must pay the holder of the Debenture any accrued but unpaid interest on the aggregate unconverted and then outstanding principal amount of the Debenture, and on each date the conversion of the principal amount and, if applicable, interests under the Debenture, we must pay to a holder of the Debenture any accrued but unpaid interest on that portion of the principal amount then being converted, which amount may be added to and included in the principal amount being so converted on such date by the holder.
 
 
 
 
 
17

 
 
The Offering - continued
 
If we fail to pay any accrued and unpaid interest payable within three trading days following notice of late payment from a holder of the Debenture, then such overdue amount will entail a late fee at an interest rate equal to the lesser of 24% per annum or the maximum rate permitted by applicable law which will accrue daily from the date such interest was originally due through and including the date of actual payment in full.
 
The principal amount owing under the Debentures together with any interest accrued under the Debenture, are convertible into shares of our common stock at the option of the holders of the Debentures. The conversion price is equal to the lesser of (i) $0.27 during the six months following October 18, 2012, and $0.35 thereafter and (ii) 70% of the average daily VWAPs for our common stock during the 10 consecutive trading days immediately preceding applicable conversion date. The holder must not convert more than 30% of the initial principal sum into shares of our common stock at a price below $0.15 during any calendar month and must not convert more than 20% of the original principal sum into shares of our common stock at a price below $0.11 during any calendar month.
 
If at any time prior to the maturity date of October 18, 2013, our common stock has for any 20 consecutive trading day period (i) an average daily VWAP price of $1.00 per share or greater, and (ii) an average daily trading volume of 100,000 shares or greater, we have the right (but not obligation) to convert the Debentures at the then applicable conversion price.
 
We must not affect any conversion of the Debentures and the holders of the Debentures do not have the right to convert the Debentures, to the extent that the holder (together with the holder’s affiliates) would beneficially own in excess of the beneficial ownership limitation (currently 9.99% of our outstanding common stock).
 
In connection with the Debenture Purchase Agreement, on October 18, 2012, we entered into a piggyback registration rights agreement with the Investor, pursuant to which we agreed to register shares of our common stock issued on exercise of the Warrants or issuable to the Investor pursuant to the Debenture, together with any interest thereon accrued but unpaid, if we determine to proceed with the preparation and filing with the SEC of a registration statement relating to an offering for our own account or the account of others under the Securities Act of 1933.
 
In the event that there is no effective registration statement which registers the resale by the warrant holder of the shares underlying the Warrants, the Warrants may be exercised by means of a cashless exercise.
 
We must not affect any exercise of the Warrants and the holder of the Warrants does not have the right to exercise the Warrants, to the extent that the holder (together with the holder’s affiliates) would beneficially own in excess of the beneficial ownership limitation (currently 4.99% of our outstanding common stock).
 
We issued the Debenture and Warrants in reliance upon the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated under the Securities Act of 1933
 
We paid Ascendiant Capital Partners, LLC $5,000, and have agreed to pay up to $7,500 for its actual legal fees and expenses. We also paid $11,250 and issued common stock purchase warrants to purchase up to 52,943 shares of our common stock to Ascendiant Capital Partners, LLC as placement agent fees and granted piggyback registration rights for the warrants.
 
On October 25 and 26, 2012, Ascendiant Capital Partners, LLC and the Investors collectively exercised their full allotment of warrants on a cashless basis and received a total of 556,182 restricted shares of our common stock. We issued these shares of our common stock in reliance upon the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated under the Securities Act of 1933.
 
 
 
 
 
18

 
 
Use of Proceeds
 
We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. All proceeds from the sale of such shares will be for the account of the selling stockholders. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses applicable to the sale of their shares.
 
 
Selling Stockholders
 
The selling stockholders may offer and sell, from time to time, all, some, or none of up to 12,906,300 shares of our common stock, consisting of (i) up to 617,661 shares of common stock that may be issued upon conversion of debentures sold to The Marie Baier Foundation, Inc. on October 18, 2012 and up to 326,095 shares of common stock that were issued upon exercise of warrants issued to The Marie Baier Foundation, Inc. on October 25, 2012; (ii) up to 370,596 shares of common stock that may be issued upon conversion of debentures sold to Motivated Minds LLC on October 18, 2012 and up to 191,740  shares of common stock that were issued upon exercise of warrants issued to Motivated Minds LLC on October 26, 2012; and (iii) up to 1,142,858 shares of common stock issued or to be issued to Ascendiant Capital Partners, LLC as commitment shares under a securities purchase agreement dated October 18, 2012, up to 38,347 shares of common stock that were issued to Ascendiant Capital Partners, LLC upon exercise of warrants, and up to 10,219,003 shares of common stock to be sold to Ascendiant Capital Partners, LLC under a securities purchase agreement dated October 18, 2012 .
 
None of the selling stockholders had or have any position or office, or other material relationship with us or any of our affiliates over the past three years. Ascendiant Capital Partners, LLC is an affiliate of a broker-dealer. Other than Ascendiant Capital Partners, LLC, none of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer.
 
We may require the selling stockholders to suspend the sales of the shares of our common stock being offered pursuant to this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in those documents in order to make statements in those documents not misleading.
 
The following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholders as of January 9, 2013 and the number of shares of our common stock being offered pursuant to this prospectus. Except as otherwise described below, we believe that the selling stockholders have sole voting and investment powers over their shares.
 
Name of Selling
Stockholder
Shares Owned
by the Selling
Stockholder
before the
Offering(1)
Total Shares
Offered in the
Offering
Number of Shares to Be Owned
by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares(1)
# of
Shares(2)
% of
Class(2)
The Marie Baier Foundation, Inc.(3)
1,259,179 (4)
943,756(5)
-
-
Motivated Minds LLC(6)
751,590 (7)
562,336(8)
-
-
Ascendiant Capital Partners, LLC(9)
362,276(10)
11,400,208(11)
-
-
Totals
1,751,589
12,906,300
-
-
 
 
 
 
19

 
 
Selling Stockholders - continued
 
Notes
(1)
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment power with respect to shares of common stock. Shares of common stock subject to options, warrants and convertible debentures currently exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding. The actual number of shares of common stock issuable upon the conversion of the convertible debentures is subject to adjustment depending on, among other factors, the future market price of our common stock, and could be materially less or more than the number estimated in the table.
   
(2)
Because the selling stockholders may offer and sell all or only some portion of the 12,906,300 shares of our common stock being offered pursuant to this prospectus and may acquire additional shares of our common stock in the future, we cannot provide an estimate of the number and percentage of shares of our common stock that any of the selling stockholders will hold upon termination of the offering.
   
(3)
John F. Baier exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by The Marie Baier Foundation, Inc.
   
(4)
Consists of 933,084 shares of our common stock issuable upon conversion of the principal amount of convertible debentures and interests accrued as of January 2, 2012 at a conversion price as of January 2, 2013 of $0.1593 per share and 326,095 shares of our common stock issued upon exercise of warrants.
   
(5)
Consists of 617,661 shares of our common stock issuable upon conversion of convertible debentures and 326,095 shares of our common stock issued upon exercise of warrants.
   
(6)
Ira Gaines exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Motivated Minds LLC.
   
(7)
Consists of 559,850 shares of our common stock issuable upon conversion of the principal amount of convertible debentures and interests accrued as of January 2, 2012 at a conversion price as of January 2, 2013 of $0.1593 per share and 191,740 shares of our common stock issued upon exercise of warrants.
   
(8)
Consists of 370,596 shares of our common stock issuable upon conversion of convertible debentures and 191,740 shares of our common stock issued upon exercise of warrants.
   
(9)
Bradley J. Wilhite or Mark A. Bergendahl exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Ascendiant Capital Partners, LLC. They are equal owners of Ascendiant Capital Partners, LLC, and each holds one of the two positions on the board of directors. Therefore, any actions to be taken by Ascendiant Capital Partners, LLC must be approved by both of them.
   
(10)
Consists of 323,928 shares of our common stock and 38,347 shares of our common stock issued upon exercise of warrants.
   
(11)
Consists of 1,142,858 shares of our common stock issued or to be as commitment shares, 38,347 shares of common stock that were issued upon exercise of warrants and 10,219,003 shares of our common stock to be sold under a securities purchase agreement dated October 18, 2012.
   
 
 
 
 

 
20

 

 
Plan of Distribution

Each of the selling stockholders named above and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the Financial Industry Regulatory Authority’s OTC Bulletin Board or any other stock exchange, market or trading facility on which the shares of our common stock are traded or in private transactions. These sales may be at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 
·
privately negotiated transactions;

 
·
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 
·
a combination of any such methods of sale; or

 
·
any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

Ascendiant Capital Partners, LLC is an underwriter within the meaning of the Securities Act of 1933 and other selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. Except for an arrangement between Ascendiant Capital Partners, LLC and Mike Cole, the selling stockholders have informed us that they do not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock of our company. We have been informed that approximately 45,000 shares of our common stock issued to Ascendiant Capital Partners, LLC are due to Mike Cole under his arrangement while he was still with Ascendiant Capital Partners, LLC. Pursuant to a requirement by the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount to be received by any FINRA member or independent broker/dealer may not be greater than 8% of the gross proceeds received by us for the sale of any securities being registered pursuant to Rule 415 promulgated under the Securities Act of 1933.

Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholders. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act of 1933.
 
 
 
 
21

 
 
Plan of Distribution - continued
 
We are required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus.  We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933.  We estimate that the expenses of the offering to be borne by us will be approximately $50,000.  We will not receive any proceeds from the resale of any of the shares of our common stock by the selling stockholders.  We may, however, receive proceeds from the sale of our common stock under the security purchase agreement with Ascendiant Capital Partners, LLC or exercise of warrants by the selling stockholders. Neither the securities purchase agreement with Ascendiant Capital Partners, LLC nor any rights of the parties under the securities purchase agreement with Ascendiant Capital Partners, LLC may be assigned or delegated to any other person.

Because Ascendiant Capital Partners, LLC is, and other selling stockholders may be, an “underwriter” within the meaning of the Securities Act of 1933, they will be subject to the prospectus delivery requirements of the Securities Act of 1933 including Rule 172 thereunder. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

We agreed with Ascendiant Capital Partners, LLC to keep this prospectus effective until all shares of our common stock covered by a registration statement of which this prospectus forms a part (i) have been sold, thereunder or pursuant to Rule 144, or (ii) (A) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and (B) (I) may be sold without the requirement for us to be in compliance with the current public information requirement under Rule 144 or (II) we are in compliance with the current public information requirement under Rule 144, or (iii) the commitment period under the securities purchase agreement with Ascendiant Capital Partners, LLC has expired and no registrable securities are then held of record by Ascendiant Capital Partners, LLC that are subject to any resale restriction under Rule 144, as determined by our counsel in a written opinion letter to such effect, addressed and acceptable to the transfer agent and the affected Ascendiant Capital Partners, LLC.

The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person.  We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
 
 
Description of Securities
 
General
 
Effective June 15, 2011, we effected a 37 to one forward stock split of our authorized and issued and outstanding common and preferred stock.  As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 3,700,000,000 shares of common stock with a par value of $0.0001. The authorized shares of our common stock are available for issuance without further action or approval by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded.
 
As of January 9, 2013 , there were 52,501,110 shares of our common stock issued and outstanding held by 20 holders of record of our common stock.
 
 
 
 
22

 
 
Description of Securities - continued
 
Voting Rights
 
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the stockholders including the election of directors. Except as otherwise required by law the holders of our common stock possess all voting power. According to our bylaws, in general, each director is to be elected by a majority of the votes cast with respect to the directors at any meeting of our stockholders for the election of directors at which a quorum is present. According to our bylaws, in general, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on any matter (which shares voting affirmatively also constitute at least a majority of the required quorum), except for the election of directors, is to be the act of our stockholders. Our bylaws provide that stockholders holding at least 10% of the shares entitled to vote, represented in person or by proxy, constitute a quorum at the meeting of our stockholders. Our bylaws also provide that any action which may be taken at any annual or special meeting of our stockholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
 
Our articles of incorporation and bylaws do not provide for cumulative voting in the election of directors. Because the holders of our common stock do not have cumulative voting rights and directors are generally to be elected by a majority of the votes casts with respect to the directors at any meeting of our stockholders for the election of directors, holders of more than fifty percent, and in some cases less than 50%, of the issued and outstanding shares of our common stock can elect all of our directors.
 
Dividend Rights
 
The holders of our common stock are entitled to receive the dividends as may be declared by our board of directors out of funds legally available for dividends. Our board of directors is not obligated to declare a dividend. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, future earnings, the operating and financial condition of our company, its capital requirements, general business conditions and other pertinent factors. We have not paid any dividends since our inception and we do not anticipate that dividends will be paid in the foreseeable future.
 
Miscellaneous Rights and Provisions
 
In the event of our liquidation or dissolution, whether voluntary or involuntary, each share of our common stock is entitled to share ratably in any assets available for distribution to holders of our common stock after satisfaction of all liabilities.
 
Our common stock is not convertible or redeemable and has no preemptive, subscription or conversion rights. There are no conversions, redemption, sinking fund or similar provisions regarding our common stock.
 
Our common stock, after the fixed consideration thereof has been paid or performed, are not subject to assessment, and the holders of our commons tock are not individually liable for the debts and liabilities of our company.
 
Our bylaws provide that our board of directors may amend our bylaws by a majority vote of our board of directors including any bylaws adopted by our stockholders, but our stockholders may from time to time specify particular provisions of these bylaws, which must not be amended by our board of directors. Our current bylaws were adopted by our board of directors. Therefore, our board of directors can amend our bylaws to make changes to the provisions relating to the quorum requirement and votes requirements to the extent permitted by the Nevada Revised Statutes.
 
Anti-Takeover Provisions
 
Some features of the Nevada Revised Statutes, which are further described below, may have the effect of deterring third parties from making takeover bids for control of our company or may be used to hinder or delay a takeover bid. This would decrease the chance that our stockholders would realize a premium over market price for their shares of common stock as a result of a takeover bid.
 
 
 
23

 
 
Description of Securities - continued
 
Acquisition of Controlling Interest
 
The Nevada Revised Statutes contain provisions governing acquisition of controlling interest of a Nevada corporation. These provisions provide generally that any person or entity that acquires certain percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights with respect to the acquired shares, unless the holders of a majority of the voting power of the corporation, excluding shares as to which any of such acquiring person or entity, an officer or a director of the corporation, and an employee of the corporation exercises voting rights, elect to restore such voting rights in whole or in part. These provisions apply whenever a person or entity acquires shares that, but for the operation of these provisions, would bring voting power of such person or entity in the election of directors within any of the following three ranges:
 
 
·
20% or more but less than 33 1/3%;
 
·
33 1/3% or more but less than or equal to 50%; or
 
·
more than 50%.
 
The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from these provisions through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from these provisions.
 
These provisions are applicable only to a Nevada corporation, which:
 
 
·
has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation; and
 
·
does business in Nevada directly or through an affiliated corporation.
 
At this time, we do not have 100 stockholders of record who have addresses in Nevada appearing on the stock ledger of our company nor do we believe that we do business in Nevada directly or through an affiliated corporation. Therefore, we believe that these provisions do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, these provisions may discourage companies or persons interested in acquiring a significant interest in or control of our company, regardless of whether such acquisition may be in the interest of our stockholders.
 
Combination with Interested Stockholder
 
The Nevada Revised Statutes contain provisions governing combination of a Nevada corporation that has 200 or more stockholders of record with an interested stockholder. As of January 9, 2013 , we had 20 stockholders of record. Therefore we believe that these provisions do not apply to us. If we obtain over 200 stockholders of record, these provisions may also have effect of delaying or making it more difficult to effect a change in control of our company.
 
A corporation affected by these provisions may not engage in a combination within three years after the interested stockholder acquires his, her or its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors before the person became an interested stockholder or a majority of the voting power held by disinterested stockholders, or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:
 
 
 
24

 
 
Description of Securities - continued
 
 
·
the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became an interested stockholder, whichever is higher;
 
 
·
the market value per share on the date of announcement of the combination or the date the person became an interested stockholder, whichever is higher; or
 
 
·
if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.
 
Generally, these provisions define an interested stockholder as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding voting shares of a corporation. Generally, these provisions define combination to include any merger or consolidation with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an interested stockholder of assets of the corporation having:
 
 
·
an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;
 
 
·
an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or
 
 
·
representing 10% or more of the earning power or net income of the corporation.
 
Articles of Incorporation and Bylaws
 
There are no provisions in our articles of incorporation or our bylaws that would delay, defer or prevent a change in control of our company and that would operate only with respect to an extraordinary corporate transaction involving our company or any of our subsidiaries, such as merger, reorganization, tender offer, sale or transfer of substantially all of its assets, or liquidation.
 
 
Experts and Counsel
 
The financial statements of our company included in this prospectus have been audited by Manning Elliott LLP, to the extent and for the period set forth in their report (which contains an explanatory paragraph regarding our ability to continue as a going concern) appearing elsewhere in the prospectus, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
Clark Wilson LLP, of Suite 800 – 885 West Georgia Street, Vancouver, British Columbia, Canada has provided an opinion on the validity of the shares of our common stock being offered pursuant to this prospectus.
 
 
Interest of Named Experts and Counsel
 
No expert named in the registration statement of which this prospectus forms a part as having prepared or certified any part thereof (or is named as having prepared or certified a report or valuation for use in connection with such registration statement) or counsel named in this prospectus as having given an opinion upon the validity of the securities being offered pursuant to this prospectus or upon other legal matters in connection with the registration or offering such securities was employed for such purpose on a contingency basis. Also at the time of such preparation, certification or opinion or at any time thereafter, through the date of effectiveness of such registration statement or that part of such registration statement to which such preparation, certification or opinion relates, no such person had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in our company or any of its parents or subsidiaries.  Nor was any such person connected with our company or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
 
 
 
 
25

 
 
 
Information with respect to Our Company
 
Description of Business
 
Corporate Overview
 
We were incorporated in the State of Nevada on June 5, 2007. Our plan after our inception on June 5, 2007 was to produce user-friendly software that creates interactive digital yearbook software for schools and allows them to create and burn their own interactive digital yearbooks on CD/DVD.
 
Effective June 15, 2011, we completed a merger with our subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.”
 
Also effective June 15, 2011, we effected a 37 to one forward stock split of our authorized and issued and outstanding common and preferred stock.  As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 3,700,000,000 shares of common stock with a par value of $0.0001 of which 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, we issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000.
 
Effective June 30, 2011 and in connection with the closing of the Acquisition Agreement, as defined below under the heading “Acquisition Agreement”, Ohad David, Ruth Navon and Service Merchant Corp. (the “Vendors”), entered into an affiliate stock purchase agreement, whereby, among other things, the Vendors surrendered 142,950,000 common shares for cancellation.
 
On October 18, 2012 we entered into agreements to secure up to $10 million in equity line financing. Separately, we also received $200,000 in funding from convertible debentures.
 
Acquisition Agreement for Wyoming Iron Complex
 
Effective June 30, 2011 and in connection with the entry into an agreement (the “Acquisition Agreement”) with J2 Mining Ventures Ltd. (“J2 Mining”) dated June 13, 2011 and attached as Exhibit 10.1 to our Current Report on Form 8-K filed June 16, 2011, we completed the acquisition of a 100% right, title and interest in and to a properties option agreement (the “Option Agreement”) from J2 Mining with respect to iron ore mineral properties located in Albany County, Wyoming, by way of entering an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the “Assignment Agreement”), whereby our company was assigned 100% of the right, title and interest in and to the Option Agreement from J2 Mining.
 
The Option Agreement assigned to us from J2 Mining on September 30, 2011 was entered into on May 26, 2011 between J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC, as optionor, granted to J2 Mining, as optionee, an exclusive right and option to acquire 100% undivided legal and beneficial interests in and to certain unpatented lode mining claims, fee lands, leased lands, and other interests in real property situated in Albany County, Wyoming (the “Wyoming Iron Complex”). Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights and interests in the property and the Option Agreement, and transfer all of its obligations under the Option Agreement, to our company, and our company accepted and agreed to be bound by the terms of the Option Agreement.
 
The term of the option commenced on May 26, 2011 and was extended for a total of six successive one-month periods, up through and including December 26, 2011, by providing notice to Wyomex LLC and payment of $5,000 for each of the first three additional months and $15,000 for the last three additional months (for a total payment of $60,000). Our company elected to exercise the option on December 21, 2011 by giving Wyomex LLC written notice of such election.
 
 
 
 
26

 
 
Description of Business - continued
 
On April 10, 2012, we entered into and closed an asset purchase agreement (the “Asset Purchase Agreement”) with Wyomex LLC whereby we purchased the Wyoming Iron Complex mineral project located in Albany County, Wyoming.
 
The purchase price for the Wyoming Iron Complex is $7,000,000 payable as follows:

 
·
Acknowledgement by Wyomex and credit to us of the sum of US$60,000, previously received by Wyomex for expenses and option payments related to the Wyoming Iron Complex.

 
·
Immediate payment by us to Wyomex of US$85,000, which payment was received by Wyomex on April 1, 2012.

 
·
A promissory note (the “Note”) in the principal amount of US$6,855,000 was executed by us and delivered to Wyomex on April 10, 2012. The Note is interest-free. All Advance Production Payments and Production Payments (defined below) paid to Wyomex will be credited against any outstanding balance of or amounts due under the Note. The Note is secured by a purchase money mortgage (the “Mortgage”).

 
·
Commencing six months from the date of closing and every six months thereafter, we will pay Wyomex, as an advance production payment, the initial amount of $62,500 (the “Advance Production Payment”), as adjusted for inflation, until Commencement of Commercial Production from the Property, which is defined as the first quarter of production in which 4.5 percent of the metal values or gross proceeds from the sales of mineral materials derived from the Wyoming Iron Complex exceeds the amount of the Advance Production Payment.

 
·
We assumed all liabilities of Wyomex to make all lease or other payments required following the closing under the mineral lease agreement between Wyomex and Chugwater Iron Company (the “Mineral Lease Agreement”) relating to certain leased real property (the “Leased Real Property”), including payment of real property taxes and payment of the sum of $1,000 per month to be paid as an advance production payment under the Mineral Lease Agreement. We also assumed the responsibility of Wyomex to make the payments to maintain the federal unpatented lode mining claims described below, in the approximate yearly amount of $3,200.

 
·
At the Commencement of Commercial Production, the Advance Production Payment is converted to a 4.5% gross metal value payment (“GMP”) on iron ore, concentrates, and/or other mineral materials produced and sold from the Wyoming Iron Complex by us to unrelated third parties (the “Production Payment”), provided, that for the Leased Real Property, the GMP payable to Wyomex is reduced by 50% such that Wyomex receives a 2.25% GMP on production from such lands, and the owner of the Leased Real Property shall receive the balance or a 2.25% GMP. Except for events of force majeure (including non-operation of the facilities after startup) in no event shall the total Production Payment paid by us to Wyomex and the owner of the Leased Real Property be less than US$150,000 in any given calendar year. All Advance Production Payments and Production Payments, as they relate to Leased Real Property, shall be reduced to Wyomex by the amounts of such payments that must be transmitted to the lessor of the Leased Real Property in accordance with the terms and obligations of the Mineral Lease for the Leased Real Property.
 
Subsequent to the payment by us of the full amount of $7 million, the Purchase Price is deemed to be satisfied, and the Production Payment is reduced such that we pay to Wyomex, and the owner of the Leased Real Property, a total GMP royalty of 1.5% for all iron product and/or other mineral materials produced and sold from the Wyoming Iron Complex during the previous month.  The Production Payments due to Wyomex and the owner of Leased Real Property shall be similarly reduced, as provided above, such that Wyomex receives a 0.75% GMP on such assets, and the owner of Leased Real Property shall receive a 0.75% GMP.
 
The Wyoming Iron Complex consist of certain unpatented lode mining claims situated in an unorganized mining district, Albany County, Wyoming, in Sections 14 and 24, Township 19 North, Range 72 West, 6th Principal Meridian, the names of which and the place of record of the location notices thereof in the official records of the county recorder and the authorized office of the Bureau of Land Management.
 
 
 
27

 
 
Description of Business - continued
 
Our Current Business
 
With the entry into the Asset Purchase Agreement with respect to the Wyoming Iron Complex, we abandoned our efforts as an interactive software developer, and we are focusing our efforts in the mineral exploration. Our business plan is to proceed with the exploration of the Wyoming Iron Complex consisting of mineral leases on 320 acres and 23 unpatented mining claims aggregating approximately 463 acres located in the county of Albany, Wyoming, USA.
 
Proposed Initial Work Program
 
The initial two phases lasted six to seven months and entailed expenditures of approximately $258,000.
 
The initial phase lasted three months and included:

 
·
Compilation of all existing geological data into one comprehensive data base for each of  the Strong Creek and Iron Mountain Deposits; and

 
·
Development of an additional work program for the properties.

The second phase took a further three to four months. The specific work undertaken included confirmation drilling of existing drill targets to validate historic data (2000 feet).
 
The third phase will involve expansion and infill drilling to expand the resource on the Strong Creek deposit to upgrade and enhance the quality of the resource data base, bulk testing of Iron Mountain Ores to confirm the validity of the Krupp Renn or other pyrometallurgical process as applied to Strong Creek and Iron Mountain ores, bench scale tests on the Strong Creek ores to validate the Hazen /USBM separation  results, and the initiation of a prefeasibility study based on historic and current data. This work program, subject to the receipt of adequate funding, is expected to take at least one year and entail an aggregate expenditure of up to $8 million.
 
Once we complete each phase of exploration, we will make a decision as to whether or not and how we proceed with each successive phase based upon the analysis of the results of that program.
 
Progress
 
On October 13, 2011, we announced a targeted first phase drilling program of 1700 feet at the Strong Creek Property in the Wyoming Iron Complex.  A total of three HQ (2.5 inch diameter) diamond drill holes were completed to duplicate and verify drilling results obtained by Union Pacific Resources [c.1955], the State of Wyoming [1995], and Radar Acquisitions Limited (2005).  One hole was extended to a depth of 700 feet to explore the vertical potential of the mineralized zone.  All work during this phase was done on the Strong Creek Project, the larger of our two projects within the Wyoming Iron Complex.  All samples were collected by drill crews with on site supervision and placed in standard core boxes then transported to the facilities of Wyoming Analytical Laboratories Inc. in Laramie Wyoming, where the core samples were cut in half lengthwise and then logged as to rock type, mineralization and structure.  Samples were then taken consisting of one half of the cut core over a five foot interval, bagged and transported to the staff of the laboratory.  There, samples were catalogued in the laboratory’s management system and then taken to their preparation lab where they were crushed, screened and split to obtain a representative sample for analysis. These representative samples were then sent to Wyoming Analytical Laboratories’ satellite lab in Golden Colorado where they were analyzed using X-Ray Fluorescence [XRF] methodology for Iron, Titanium, and Vanadium. The results of the Phase 1 drilling program are summarized as follows:
 
 
 
28

 
 
Description of Business - continued
 
Hole SC - 2011 - 01
From
To
Interval
     
 
Feet
feet
feet
Fe2O3
TiO2
V2O5
Total weighted average
0
700
700
19.719%
6.129%
0.117%
 Including  430 ft
70
500
430
19.950%
6.225%
0.119%
 Which itself included 5 ft
350
355
5
26.720%
12.560%
0.155%
Including an additional 196 ft
504
700
196
19.617%
6.110%
0.114%
Hole SC - 2011 - 02
From
To
Interval
     
 
Feet
feet
feet
Fe2O3
TiO2
V2O5
Total weighted average
0
652
652
16.184%
5.049%
0.090%
 Including  410 ft
0
410
410
17.511%
5.606%
0.433%
 Which itself included
0
258
258
17.839%
5.925%
0.107%
And 65 ft of
340
405
65
18.945%
5.822%
0.118%
Including an additional 30 feet of
550
580
30
21.408%
6.490%
0.104%
Hole SC - 2011 - 03
From
To
Interval
     
 
Feet
feet
feet
Fe2O3
TiO2
V2O5
Total weighted average
22
597
575
16.947%
4.690%
0.111%
 Including  137 ft of Lower grade
22
137
115
13.559%
2.098%
0.074%
 Including  460 ft Higher Grade
137
597
460
17.745%
5.335%
0.120%
 
All three holes were collared in iron-titanium-vanadium mineralization and were terminated in iron mineralization higher than hole averages, which suggests that mineralization extends to greater depth.  Holes 1 and 2 were in higher grade material from the surface to the bottom of the hole.  Hole 3 encountered weaker iron grades near the surface but strengthened for the last 3/4 of the hole.   All values expressed here are weighted average grades over the core length specified.
 
In the case of the Strong Creek Property the prospect is without known reservesand our program of work has been and remains exploratory in nature.  There are no existing facilities or historic mining or mineral processing facilities on this site.
 
Quality assurance and control (QA/QC) measures consisted of the analysis of duplicate samples which were taken at 50 foot intervals and tested in the same manner and a random series of samples from rejects were sent to SGS Lakefield Laboratories in Lakefield Ontario, Canada which acted as an umpire laboratory.  SGS also performed Davis tube tests on selected random samples as a preliminary test for magnetic iron recovery.
 
All sample rejects were retained for a period of 90 days in the event any retesting was considered necessary.  All remaining core was retained for future reference and analysis and sent to a secure and locked storage facility. .
 
All work conducted during this program is under the direct control the independent consulting geologist who managed the activities of the drilling contractor, civil contractor, and laboratory personnel.  Water for drilling was provided by the rancher who holds the surface and water rights.  All other supplies, fuel and power were provided by the drilling contractor.
 
All permits were obtained through the Land Division of the Wyoming Department of Environmental Quality, (WDEQ), the lead agency in Wyoming for permitting and reclamation matters. All holes were abandoned and reclaimed in accordance with the policies and procedures of WDEQ and included capping of the holes, re-contouring the surface and reseeding with an approved seed mix vegetation.  In November 2012 the drill sites were re-contoured and reseeded to the satisfaction of the surface rights owner.
 
Titan also has the Iron Mountain property under lease.  This is an historic mining operation that has an existing open pit and ore stockpile on the property. This project is situated on private property and the lease held by Titan includes all surface, mineral, and water rights on the 160 acre parcel.  When this property was operating it was served by a dedicated power line connecting to the grid which can be reconnected should the project be reactivated. There are no existing facilities on this site. Some 100 drill holes were drilled on this property defining a mining reserve which underpinned production and internal feasibility work undertaken by previous operators.  We are planning to twin several of the historic drill holes to confirm these resources.  Currently our work at Iron Mountain remains exploratory in nature. At this time we maintain an environmental bond with the WDEQ covering historic liabilities at Iron Mountain.
 
 
29

 
 
Description of Business - continued
 
On September 20, 2012, we announced that we were changing our immediate corporate development focus to the Iron Mountain deposit at the Wyoming Iron Complex, as we believe this will provide an opportunity for nearer-term production and cash flow opportunities. The Iron Mountain deposit has an existing open pit with past production, information from approximately 100 historical drillholes, and we believe it may results in a considerably shorter timeframe to complete feasibility-level work and a much quicker path to production than Strong Creek. An ore stockpile at Iron Mountain contains run of mine ("ROM") grade material. An independent sample analysis substantiated iron and titanium grades at 52% and 15% respectively. We are investigating arrangements to sell this material, which if successful, could potentially provide for short-term cash flow opportunities to help support future exploration and development on the site. We are also currently evaluating the potential customer and marketing base for which Iron Mountain ROM material may be suitable. This includes the area cement industry and domestic primary steel producers.
 
Our technical plan for the winter of 2012 is to conduct metallurgical studies on Iron Mountain ore, including the engagement of a laboratory for compression and crush testing. During 2013, we intend to evaluate and design a laboratory-scale test program for the production of high value-added semi-steel and titanium products, replicating the historical studies from the 1960's completed by the Natural Resources Division of the Union Pacific Railroad Company. We further anticipate that during 2013, we plan to implement an additional drill and exploration program at Iron Mountain, designed to upgrade the technical nature of the deposit. Also during 2013, we hope to initiate work towards completing a feasibility-level report for the development of Iron Mountain.
 
Option Agreement with Globex Mining
 
On July 19, 2011, we entered into an option agreement with Globex Mining Enterprises Inc. ("Globex") effective July 12, 2011 (the "Globex Agreement"), pursuant to which Globex granted us the right (the "Option") for a period of 90 days from July 12, 2011 to acquire an undivided 100% interest in and to 202 mining claims (the "Property") located in the Labrador trough area in the Province of Quebec, Canada.
 
In September 2011, we initiated a geological reconnaissance survey of a magnetic geophysical anomaly located on the Labrador Trough iron property.  This survey determined that the anomaly was not of sufficient mineral type, grade or size to merit further exploration costs.  Accordingly, we have determined to drop the option on the Labrador Trough iron property and on October 12, 2011 notified the owner of the property that we will not be exercising its option to acquire the property.
 
Competition
 
We are a mineral resource exploration company. We compete with other mineral resource exploration companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to achieve the financing necessary for us to conduct further exploration of our mineral properties.
 
We also compete with other mineral resource exploration companies for financing from a limited number of investors that are prepared to make investments in mineral resource exploration companies. The presence of competing mineral resource exploration companies may impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. We also compete with other mineral resource exploration companies for available resources, including, but not limited to, professional geologists, camp staff, helicopter or float planes, mineral exploration supplies and drill rigs.
 
 
 
30

 
 
Description of Business - continued
 
Compliance with Environmental Laws

Our business plan calls for exploration activities and future mining operations. These activities are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. We expect to make in the future, significant    expenditures to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on our financial    condition or results of operations. In the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with compliance with these laws and regulations could stop us from proceeding with a project or the operation or further improvement of a mine or increase the costs of improvement or production.

Government Regulation

Mining operations and exploration activities are subject to various federal, state, provincial and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.In the United States, the Federal government owns public lands that are administered by the Bureau of Land Management or the United States Forest Service. Ownership of the subsurface mineral estate can be acquired by staking a twenty (20) acre mining claim granted under the General Mining Law of 1872, as amended (the "General Mining Law").  Unless it has been conveyed, the Federal government still owns the surface estate even though the subsurface can be controlled with a right to extract through claim staking.

Employees and Key Consultants
 
Our company has one full time employee and 5 part time consultants.
  
Intellectual Property
 
We do not own, either legally or beneficially, any patents or trademarks.
 
 
Description of Property
Principal Office
 
Our executive offices consist of 800 square feet are located at 3040 North Campbell Ave, Suite 110 Tucson, Arizona 85719. The office lease costs $2,100 per month, which, along with utilities and related expenses, is allocated proportionally among our company and several other junior mining companies which are administered by Kriyah Consultants LLC out of the same location. We believe that our office space and facilities are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.
 
Our registered agent is located at Eastbiz.com, Inc., 5348 Vegas Drive, Las Vegas, NV  89108.
 
Mineral Properties
 
Pursuant to the Asset Purchase Agreement, we have acquired a 100% interest in the Wyoming Iron Complex properties. The mineral concessions and rights that form the Wyoming Iron Complex property consist of 23 unpatented US mining claims (Strong Creek Claims) located under the Mining Law of 1872, comprising approximately 463 acres, and a  mineral leases (Iron Mountain Lease) totalling approximately 320 acres with Chugwater Mining Company. The mining claims were originally staked by John Simons, an individual, then conveyed to Wyomex Resources Inc, and then assigned to Wyomex LLC, a duly incorporated limited liability company under the laws of Wyoming., and are registered with the Office of the Registrar Albany County, Wyoming and with the US Bureau of Land Management located in Cheyenne Wyoming and registered in the name of Wyomex LLC in accordance with the requirements of the Mining Law of 1872.  Costs of maintaining the unpatented mining claims in 2010 were $140 per claim payable annually by August 31st. Wyomex LLC is also the lessee under the  aforementioned mineral lease, covering the fee estate for the SE¼ of Section 22, T.19N., R. 71W., 6th P.M., Albany County, Wyoming.
 
 
 
 
31

 
 
Description of Property - continued
 
The unpatented lode mining claims are situated in an unorganized mining district, Albany County, Wyoming, in Sections 14 and 24, Township 19 North, Range 72 West, 6th Principal Meridian, the names of which and the place of record of the location notices thereof in the official records of the county recorder and the authorized office of the Bureau of Land Management are as follows
 
       
County Records
 
BLM Serial #
Claim Name
 
Location Date
 
Book
   
Page
 
WMC & Location
                   
VAN NO. 1
 
10/12/1976
   
256
     
946
 
127756 SW¼ Sec. 24
VAN NO. 2
 
10/12/1976
   
256
     
947
 
127757 SW¼ Sec. 24
VAN NO. 3
 
10/12/1976
   
256
     
948
 
127758 SW¼ Sec. 24
VAN NO. 4
 
10/12/1976
   
256
     
949
 
127759 SW¼ Sec. 24
VAN NO. 5
 
10/12/1976
   
256
     
950
 
127760 SW¼ Sec. 24
VAN NO. 6
 
10/12/1976
   
256
     
951
 
127761 SW¼ Sec. 24
VAN NO. 7
 
10/12/1976
   
256
     
952
 
127762 SW¼ Sec. 24
VAN NO. 8
 
10/12/1976
   
256
     
953
 
127763 SW¼ Sec. 24
VAN NO. 9
 
10/12/1976
   
256
     
954
 
127764 SW¼ Sec. 24
VAN NO. 10
 
10/12/1976
   
256
     
955
 
127765 SW¼ Sec. 24
VAN NO. 11
 
10/12/1976
   
256
     
956
 
127766 SW¼ Sec. 24
VAN NO. 12
 
10/12/1976
   
256
     
957
 
127767 SE¼ Sec. 24
                       
TI NO. 15
 
10/12/1976
   
256
     
993
 
127744 NW¼ Sec 14
TI NO. 16
 
10/12/1976
   
256
     
993
 
127745 NE¼ Sec. 14
 
     
Document Number
           
VAN 13
7/17/2005
 
2005-6333
 
268116 SE¼ Sec. 24
VAN 14
7/17/2005
 
2005-6334
 
268117 SE¼ Sec. 24
VAN 15
7/17/2005
 
2005-6335
 
268118 E½ Sec. 24
VAN 16
7/17/2005
 
2005-6336
 
268119 E½ Sec. 24
VAN 17
7/17/2005
 
2005-6337
 
268120 NW¼ Sec 24
VAN 18
7/17/2005
 
2005-6338
 
268121 NW¼ Sec 24
VAN 19
7/17/2005
 
2005-6339
 
268122 NW¼ Sec 24
VAN 20
7/17/2005
 
2005-6340
 
268123 SW¼ Sec. 24
VAN 21
7/17/2005
 
2005-6341
 
268124 NW¼ Sec 24
VAN 22
7/17/2005
 
2005-6342
 
268125 NE¼ Sec. 24
VAN 23
7/17/2005
 
2005-6343
 
268126 NE¼ Sec. 24
VAN 24
7/17/2005
 
2005-6344
 
268127 NE¼ Sec. 24

Note:  The VAN Nos. 1-12 are included within Mineral Survey No. 605.
 
Technical Reports
 
All reports completed prior to January 2002 are considered to be “historic in nature” and are not compliant with National Instrument 43-101 or SEC Guide 7, and therefore cannot be relied upon.  In August 2005, a due diligence program was undertaken by Radar Acquisitions Corp. in which 10 rotary air blast drill holes were completed on a selected area of the Strong Creek portion of the property that exhibited higher grade titanium grades.  A technical report compliant with National Instrument 43-101 was produced for this area but its content is not considered to be applicable to our planned work program.
 
 
32

 
 
Description of Property - continued
 
Description of Property, Location, Means and Access
 
The Wyoming Iron Complex is located approximately 30 miles north-northeast of the city Laramie in southeastern Wyoming, (See Figure 1 below). The Strong Creek Claims are located in the central portion of the Laramie Anorthosite Complex (LAC), approximately a one hour drive north from Laramie, along Hwy 287 to 34 and then secondary roads from the Greaser Ranch.  The Iron Mountain Leases are located approximately 6 miles to the east of Strong Creek and are accessible by secondary roads.  The Strong Creek portion of the Wyoming Iron Complex also lies 9 miles to the east of the main rail line of the Union Pacific. Power and water are available at the property.

On December 7, 2012, we filed suit in state court in Albany County, Wyoming against DSS Holdings LLC and Douglas Samuelson (“Samuelson”) to regain access to the Wyoming Iron Complex. The road used by us to access the Wyoming Iron Complex crosses Samuelson’s property. Samuelson has locked the gate across the road and denied our repeated requests for access. The suit was filed in the District Court of the Second Judicial District in Wyoming, after negotiations between the parties were unsuccessful. Under Wyoming Statute§ 1-26-507, we hope to gain access to our property in order to conduct studies and collect samples of iron ore from the existing Iron Mountain pit and stockpile in order to evaluate the suitability of these materials to meet the specifications of potential customers.
 
The leases relating to the Wyoming Iron Complex, as amended by instrument dated February 1, 2012, continues in perpetuity until commercial production provided that a $1,000 per month advance royalty is paid (as adjusted for inflation). At the commencement of commercial production, the royalty is paid as a function of gross metal values on products produced and sold.
 
The closest major town to the Wyoming Iron Complex is Laramie, Wyoming, a city of approximately 25,000 people. It has an elevation of 7,200 feet, resulting in a varied, but semi-arid climate. Laramie is located along the I-80 corridor and is on the main rail line of the Union Pacific. Laramie is a full-service city which hosts all amenities, and is the home of the University of Wyoming.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33

 
 
Description of Property - continued
 
 

Climate, Local Resources, Infrastructure and Physiography
 
Albany County, population 27,204 (US Census Bureau, 2003), is located in the high plains region of south-eastern Wyoming. Most of the county is located in a cool and arid basin (<12 inches of precipitation annually) containing the Laramie River watershed, a major tributary to the North Platte River system. The county is flanked on the west by the Medicine Bow Mountains and on the east by the Laramie Range.
 
Due to its elevation, Wyoming has a relatively cool climate. Above the 6,000 foot level, the temperature rarely exceeds 100 F. Summer nights are usually cool, though daytime readings may be quite high. Away from the mountains, low July temperatures range from 50 to 60 F. A typical winter would see freezing temperatures from December through March with most accumulation of snow occurring in March.
 
History of Exploration
 
Since the earliest geological investigations of the area by Stansbury in 1851, and Hayden in 1871, Fe-Ti oxide deposits have been known in Albany County. There have been numerous economic evaluations of these deposits by Ball, 1907; Singewald, 1913; Frey, 1946 and Hild, 1953.
 
From the completion of the railway until 1975 the property was owned by Union Pacific Resources (“UPR”) a wholly owned subsidiary of Union Pacific. From the mid 1950’s through 1972 the properties were drilled and evaluated which produced a resource estimate (non-compliant with SEC Guide 7 or Canadian NI 43-101) for contained iron, titanium dioxide and vanadium.
 
 
 
34

 
 
Description of Property - continued
 
UPR conducted a comprehensive drilling program on both of the properties and which included bulk sampling and a 30,000 ton pilot plant test based on the Krupp Renn pyrometallurgical recovery process.  This was part of a study produced in 1968 later revisited in 1972 for the processing of Fe and Ti ore  which concluded that Iron  can be recovered  using the Iron Mountain ores and that the Strong Creek concentrates may also be  amenable to the Krupp Renn process.  The iron material produced from this process  is referred to as Luppen – a semi-steel product containing 98.5%) iron, considered to be a superior feed stock for electric arc furnaces as it contains none of the contaminants found in scrap or Pig Iron.  This test also confirmed that a portion of the Vanadium could be recovered as Vanadium Pentoxide.
 
In 1995, the State of Wyoming drilled 27 large bore rotary drill holes on the Strong Creek Property to obtain a bulk sample for testing by the laboratories US Bureau of Mines of Salt Lake City,  Utah and by Hazen Research Inc. of Golden, Colorado.  These tests demonstrated that the ore can be concentrated using a coarsely ground product (-20 + 40 mesh), followed by spiral concentration, magnetic separation, and electrostatic concentration to produce two distinct concentrates of Titanium Dioxide  and Magnetite – Vanadium .
 
To date, our activities have been limited to organizational matters, obtaining a geology report on the Strong Creek claims and planning and carrying out our initial, 2000 foot, 3-hole exploration program on the Strong Creek claims.
 
Geological Setting and Mineralization
 
The Laramie Anorthosite Complex (LAC), hosting the Strong Creek Fe-Ti deposits, is a 1.4 Billion year old intrusion that was emplaced into the Cheyenne suture between the Archean Wyoming Province and Early Proterozoic island-arc assemblages of the south-western United States. The LAC is comprised of older, layered anorthositic and gabbroic rocks and younger syenitic to monzonitic rocks.
 
The oxide-bearing gabbro-noritic and anothorositic rocks at Strong Creek host layered, late stage cumulate horizons of disseminated oxide mineralization. These rocks are unaltered and only show weak alteration along late fractures. A north-south, doubly plunging antiform produces local geology that has a core complex of anorthosite grading into progressively more differentiated leuco-gabbro-norite and syenite outer rims.
 
The economic model proposed for the Wyoming Iron Complex is an example of a Magmatic Ti­Fe-V Oxide Deposit, which is described in “Magmatic Ti-Fe±V Oxide Deposits, in Geological Fieldwork 1997, British Columbia Ministry of Employment and Investment” by Gross, G.A., Gower, C.F., and Lefebure, D. V., as follows:
 
 
·
Geologic Setting: Deposits occur in intrusive complexes which typically are emplaced at deeper levels in the crust. Progressive differentiation of liquids residual from anorthosite-nodte magmas leads to late stage intrusions enriched in Fe and Ti oxides and apatite. Some of the iron-titanium deposits occur at continental margins related to island arc magmatism, followed by an episode of orogenic compression.
 
 
·
Age of Mineralization: Mainly Mid proterozoic (1.65 to 0.90 Bn Years old) for the ilmenite deposits, but this may be a consequence of a particular combination of tectonic circumstances, rather than any a prior temporal control. The Fe-Ti deposits with titaniferous magnetite do not appear to be restricted in time.
 
 
·
Host/Associated Rocks: Hosted by massive, layered or zoned intrusive complexes - anorthosite, norite, gabbro, diorite, diabase, quartz monzonite and hornblende pyroxenite. The anorthosites are commonly emplaced in granitoid gneiss, granulite, schist, amphibolite and quartzite. Some deposits associated with lower grade rocks.
 
Legal Proceedings
 
On December 7, 2012, we filed suit in state court in Albany County, Wyoming against DSS Holdings LLC and Douglas Samuelson (“Samuelson”) to regain access to our Iron Mountain holdings. This road crosses Samuelson’s property. Samuelson has locked the gate across the road providing access to the Iron Mountain holdings and denied our repeated requests for access. The suit was filed in the District Court of the Second Judicial District in Wyoming, after negotiations between the parties were unsuccessful. Under Wyoming Statute§ 1-26-507, we hope to gain access to our property in order to conduct studies and collect samples of iron ore from the existing Iron Mountain pit and stockpile in order to evaluate the suitability of these materials to meet the specifications of potential customers.
 
 
 
 
35

 
 
Legal Proceedings - continued
 
Other than the suit against DSS Holdings LLC and Samuelson, we know of no material pending legal proceedings to which our company or any of our subsidiaries is a party or of which any of our properties, or the properties of any of our subsidiaries, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
 
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or any of our subsidiaries or has a material interest adverse to our company or any of our subsidiaries.
 
 
Market Price of and Dividends on Our Common Equity
and Related Stockholder Matters
 
Market information
 
Our common stock is quoted on the OTC Bulletin Board of Financial Industry Regulatory Authority under the symbol “TFER”.
 
Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
 
Quarter Ended
High Bid
Low Bid
September 30, 2012
0.53
0.20
June 30, 2012
1.23
0.17
March 31, 2012
$1.81
$0.90
December 31, 2011
$1.10
$0.40
September 30, 2011(1)
$1.01
$0.98
 
(1)   The first trade of the shares of our common stock on the OTC Bulletin Board was July 12, 2011.
 
On January 8, 2013 , the closing price for our common stock as reported by the OTC Bulletin Board was $0.216 per share.
 
Transfer Agent
 
Our shares of common stock are issued in registered form.  Our transfer agent is Computershare, Inc., 350 Indiana Street, Suite 750, Golden CO 80401, phone (303) 262.0678. 
 
Holders of Common Stock
 
As of January 9 2013 , there were 20 registered holders of record of our common stock. As of such date, 52,501,110 shares of our common stock were issued and outstanding.
 
 
 
36

 
 
Market Price of and Dividends on Our Common Equity and Related Stockholder Matters - continued
 
Dividends
 
The payment of dividends, if any, in the future, rests within the sole discretion of our board of directors. The payment of dividends will depend upon our earnings, our capital requirements and our financial condition, as well as other relevant factors.  We have not declared any cash dividends since our inception and have no present intention of paying any cash dividends on our common stock in the foreseeable future.
 
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
 
 
1.
We would not be able to pay our debts as they become due in the usual course of business; or
     
 
2.
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
37

 


 
Financial Statements

 
   Page
Financial Statements For the Years Ended December 31, 2010 and 2011
 
   
Report of Independent Registered Public Accounting Firm
 F-1
   
Balance Sheets as of December 31, 2011 and December 31, 2010
 F-2
   
Statements of Operations for the year ended December 31, 2011 and 2010, and for the period from June 5, 2007 (inception) to December 31, 2011
 F-3
   
Statement of Stockholders’ Equity (Deficit) for the year ended December 31, 2011 and 2010, and for the period from June 5, 2007 (inception) to December 31, 2011
 F-4
   
Statements of Cash Flows for the year ended December 31, 2011 and 2010, and for the period from June 5, 2007 (inception) to December 31, 2011
 F-5
   
Notes to the Financial Statements
 F-6 - F-25
   
Financial Statements for the Three and Nine Month Periods Ended September 30, 2012 and 2011
 
   
Balance Sheets as of September 30, 2012 and December 31, 2011
 F-16
   
Statements of Comprehensive Loss for the three and nine months ended September 30, 2012 and 2011, and for the period from June 5, 2007 (inception) to September 30, 2012
 F-17
   
Statement of Stockholders’ Equity for the nine months ended September 30, 2012, and for the period from June 5, 2007 (inception) to September 30, 2012
 F-18
   
Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and for the period from June 5, 2007 (inception) to September 30, 2012
 F-19
   
Notes to the Financial Statements
 F-20 - F-29
 
 
 
38

 
 
 
 
Report of Independent Registered Public Accounting Firm


To the Board of Directors and Stockholders of
Titan Iron Ore Corp.
(An Exploration Stage Company)


We have audited the accompanying balance sheets of Titan Iron Ore Corp. (An Exploration Stage Company) (formerly Digital Yearbook Inc.) as of December 31, 2011 and 2010 and the related statements of operations, cash flows and stockholders’ deficit for the years then ended and for the period from June 5, 2007 (date of inception) through to December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Titan Iron Ore Corp. (An Exploration Stage Company) (formerly Digital Yearbook Inc.) as of December 31, 2011 and 2010, and the results of its operations, cash flows and stockholders’ deficit for the years then ended and for the period from June 5, 2007 (date of inception) through December 31, 2011 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has accumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ “Manning Elliott LLP”

CHARTERED ACCOUNTANTS
 
Vancouver, Canada
 
April 12, 2012


 
F-1

 

TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
(Expressed in US dollars)

 
 
             
ASSETS
 
December 31,
2011
   
December 31,
2010
 
             
Current Assets
           
Cash
 
$
118,066
   
$
-
 
Prepaid expenses (Note 8)
   
25,000
         
Total current assets
   
143,066
     
-
 
                 
Mineral property options (Note 3)
   
60,000
     
-
 
                 
TOTAL ASSETS
 
$
203,066
   
$
-
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
LIABILITIES
               
Current Liabilities
               
Accounts payable
 
$
21,457
   
$
7,491
 
Accrued expenses - related party (Note 8)
   
647
     
10,078
 
Total Current Liabilities
   
22,104
     
17,569
 
                 
Total Liabilities
   
22,104
     
17,569
 
                 
Commitments and Contingencies (Notes 1 and 7)
               
Subsequent Events (Note 12)
               
                 
STOCKHOLDERS' EQUITY (DEFICIT)
               
Preferred stock, 50,000,000 shares authorized at par value of $0.0001, no shares issued and outstanding
   
-
     
-
 
Common stock, 3,700,000,000 shares authorized at par value of $0.0001, 49,737,000 (December 31, 2010 – 190,587,000) shares issued and outstanding (Note 4)
   
4,974
     
19,059
 
Additional paid-in capital
   
1,206,184
     
38,891
 
Deficit accumulated during the exploration stage
   
(1,030,196
)
   
(75,519
)
Total Stockholders' Equity (Deficit)
   
180,962
     
(17,569
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
$
203,066
   
$
-
 

 

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

 
 
F-2

 
 


TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Expressed in US dollars)
 
 
   
Year ended 
December 30,
   
Year ended 
December 30,
   
Accumulated from June 5, 2007 (Inception) to December 31,
 
   
2011
   
2010
   
2011
 
                   
REVENUES
  $ -     $ -     $ 4,855  
                         
OPERATING EXPENSES
                       
                         
Advertising
    22,732               22,732  
    General and administrative (Note 8)
    345,928       2,333       392,063  
Impairment of mineral property acquisition costs (Note 3)
    50,124               50,124  
Investor relations
    22,046               22,046  
Professional fees
    93,056       5,985       126,128  
Mineral property exploration costs  (Note 10)
    329,107               329,107  
Stock-based compensation (Note 6)
    107,772       -       107,772  
Travel
    1,543               1,543  
                         
TOTAL OPERATING EXPENSES
    972,308       8,318       1,051,515  
                         
LOSS FROM OPERATIONS
    (972,308       (8,318       (1,046,660  
                         
OTHER INCOME (EXPENSES)
                       
Gain on debt settlement
    17,631       -       17,631  
Other income (expenses)
    -       (1,167       (1,167  
                         
NET LOSS
  $ (954,677     $ (9,485     $ (1,030,196  
                         
BASIC LOSS PER SHARE
    (0.01     $ (0.00          
                         
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
    121,990,562       190,587,000          
 
 

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

 
 
F-3

 
 


TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 2011
(Expressed in US dollars)
 
   
Common # Stock
(Note 4)
   
Common Stock Amount
   
Additional Paid-in Capital
   
Deficit Accumulated During the Development Stage
   
Total
 
Balance, June 5, 2007 (Inception)
   
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                         
Common Stock issued for cash
                                       
at $0.0001 per share
   
148,000,000
     
14,800
     
(14,400
)
   
-
     
400
 
                                         
Common Stock issued for cash
                                       
at $0.05 per share
   
29,637,000
     
2,964
     
37,086
     
-
     
40,050
 
                                         
Net loss for the period ended
                                       
December 31, 2007
   
-
     
-
     
-
     
(21,874
)
   
(21,874
)
                                         
Balance, December 31, 2007
   
177,637,000
     
17,764
     
22,686
     
(21,874
)
   
18,576
 
                                         
Common Stock issued for creditors
                                       
at $0.05 per share
   
12,950,000
     
1,295
     
16,205
     
-
     
17,500
 
                                         
Net loss 2008
   
-
     
-
     
-
     
(34,675
)
   
(34,675
)
                                         
Balance, December 31, 2008
   
190,587,000
     
19,059
     
38,891
     
(56,549
)
   
1,401
 
                                         
Net loss 2009
   
-
     
-
     
-
     
(9,485
)
   
(9,485
)
                                         
Balance, December 31, 2009
   
190,587,000
     
19,059
     
38,891
     
(66,034
)
   
(8,084
)
                                         
Net loss 2010
   
-
     
-
     
-
     
(9,485
)
   
(9,485
)
                                         
Balance, December 31, 2010
   
190,587,000
     
19,059
     
38,891
     
(75,519
)
   
(17,569
)
                                         
Common Stock issued for cash
                                       
at $0.50 per share
   
2,100,000
     
210
     
1,049,790
     
-
     
1,050,000
 
                                         
Share issuance costs
   
-
     
-
     
(4,564
)
   
-
     
(4,564
)
                                         
Shares cancelled
   
(142,950,000
)
   
(14,295
)
   
14,295
     
-
     
-
 
                                         
Stock-based compensation
   
-
     
-
     
107,772
     
-
     
107,772
 
                                         
Net loss 2011
   
-
     
-
     
-
     
(954,677
)
   
(954,677
)
                                         
Balance, December 31, 2011
   
49,737,000
   
$
4,974
   
$
1,206,184
   
$
(1,030,196
)
 
$
180,962
 

 

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

 
 
F-4

 
 


TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Expressed in US dollars)


   
Year ended December 31, 2011
   
Year ended December 31, 2010
   
Period from June 5, 2007 (Inception) to December 31, 2011
 
Cash Flows from Operating Activities:
                 
Net loss
 
$
(954,677
)
 
$
(9,485
)
 
$
(1,030,196
)
                         
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
                       
Depreciation expense
   
-
     
2,333
     
5,833
 
Stock-based compensation
   
107,772
     
-
     
107,772
 
Loss on disposal of assets
   
-
     
1,167
     
1,167
 
Impairment of mineral property
   
50,124
     
-
     
50,124
 
Shares issued for services
   
-
     
-
     
17,500
 
Gain on debt settlement
   
(17,631
)
   
-
     
(17,631
)
Changes in Assets and Liabilities
                       
Decrease (increase) in prepaid expenses
   
(25,000
)
   
-
     
(25,000
)
Increase (decrease) in accounts payable
   
21,519
     
785
     
29,010
 
Increase in accrued expenses – related party
   
647
     
5,200
     
10,725
 
Net Cash Provided by (Used in) Operating Activities
   
(817,246
)
   
-
     
(850,696
)
                         
Cash Flows used in Investing Activities:
                       
Acquisition of property and equipment
   
-
     
-
     
(7,000
)
Payment on mineral property options
   
(110,124
)
   
-
     
(110,124
)
Net Cash Used in Investing Activities
   
(110,124
)
   
-
     
(117,124
)
                         
Cash Flows from Financing Activities:
                       
Common stock issued for cash
   
1,045,436
     
-
     
1,085,886
 
Net Cash Provided by Financing Activities
   
1,045,436
     
-
     
1,085,886
 
                         
Net Increase in Cash and Cash Equivalents
   
118,066
     
-
     
118,066
 
                         
Cash and Cash Equivalents – Beginning
   
-
     
-
     
-
 
                         
Cash and Cash Equivalents – Ending
 
$
118,066
   
$
-
   
$
118,066
 
                         
Supplemental Cash Flow Information:
                       
Cash paid for interest
 
$
-
   
$
-
   
$
-
 
Cash paid for income taxes
 
$
-
   
$
-
   
$
-
 
 



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

 
 
F-5

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


1.  NATURE OF BUSINESS

Titan Iron Ore Corp. (the Company) (formerly Digital Yearbook, Inc.) was incorporated in the State of Nevada on June 5, 2007. At its inception, the Company was engaged in developing and offering software products for the creation of interactive digital yearbook software for high schools.

Effective June 15, 2011, the Company completed a merger with its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.” effective becoming an exploration stage company. The Company’s principal business includes the acquisition, and exploration of mineral properties.
 
Also effective June 15, 2011, the Company effected a 37 to one forward stock split of our authorized and issued and outstanding common stock.  As a result, 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, the Company issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000. Effective June 30, 2011 and in connection with the acquisition of an option to purchase a mineral property, certain shareholders surrendered 142,950,000 common shares of the Company. As a result of the Company’s cancellation of these shares, the Company’s outstanding shares of common stock decreased to 49,737,000.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As at December 31, 2011, the Company has accumulated losses of $1,030,196 since inception and its operations continue to be funded primarily from sales of its stock. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern, including completion of the acquisition, exploration and development of its mineral properties is dependent on the Company’s ability to obtain the necessary financing from sales of its stock financings. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31, 2011.

Use of Estimates
The preparation of these statements in accordance with United States generally accepted accounting principles 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 revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, deferred income tax asset valuations, asset retirement obligations, financial instrument valuations, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 

Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
 
Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred.




 
 
 
F-6

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Stock-based compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

Mineral Property Costs
The Company is in the exploration stage and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized.  The Company assesses the carrying costs for impairment, whenever events or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Asset Retirement Obligations
The Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at December 31, 2011, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property option.

Comprehensive Loss
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at December 31, 2011 and December 31, 2010, the Company has no items that represent other comprehensive loss and, therefore, has not included a schedule of other comprehensive loss in the financial statements.


 
 
 
F-7

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of cash, accounts payable, and due to related parties approximate fair values because of the short-term maturity of these instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share.  ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Shares underlying these securities totaled approximately 5,000,000 as of December 31, 2011.

Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Recent Accounting Pronouncements

Comprehensive Income
In June 2011, ASC guidance was issued related to comprehensive income. Under the updated guidance, an entity will have the option to present the total of comprehensive income either in a single continued statement of comprehensive income or in two separate but consecutive statements. In addition, the update requires certain disclosure requirements when reporting other comprehensive income. The update does not change the items reported in other comprehensive income or when an item of other comprehensive income must be reclassified to income. The update is effective for the Company’s fiscal year beginning January 1, 2012. The Company does not expect the updated guidance to have an impact on the balance sheets, results of operations or cash flows.

Fair Value Accounting
In May 2011, ASC guidance was issued related to disclosures around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity and disclosing quantitative information about the unobservable inputs used in fair value measurements that are categorized in Level 3 of the fair value hierarchy. The update is effective for the Company’s fiscal year beginning January 1, 2012. The Company does not expect the updated guidance to have a significant impact on the balance sheets, results of operations or cash flows.

The Company has implemented all other new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.



 
 
 
F-8

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


3.  MINERAL PROPERTY OPTIONS

Strong Creek and Iron Mountain Properties
Effective June 30, 2011 and in connection with the entry into an agreement (the “Acquisition Agreement”) with J2 Mining Ventures Ltd. (“J2 Mining”) dated June 13, 2011, the Company completed the acquisition of a 100% right, title and interest in and to a properties (Strong Creek and Iron Mountain) option agreement (the “Option Agreement”) from J2 Mining with respect to an iron ore mineral property located in Albany County, Wyoming by entering into an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the “Assignment Agreement”), whereby the Company was assigned the 100% right, title and interest in and the Option Agreement from J2 Mining.

The Option Agreement assigned to the Company from J2 Mining on June 30, 2011, was originally entered into on May 26, 2011 between J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC (“Optionor”), granted to J2 Mining, as optionee, an exclusive right and option to acquire 100% undivided legal and beneficial interests in and to certain unpatented lode mining claims, fee lands, leased lands, and other interests in real property situated in Albany County, Wyoming (the “Wyoming Iron Complex”). Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights and interests in the property and the Option Agreement, and transfer all of its obligations under the Option Agreement, to the Company.

The term of the option commenced on May 26, 2011 and could be extended for a maximum of six successive one-month periods, at the sole election of the Company, through notice to Wyomex LLC and tender of $5,000 from the Company to Wyomex LLC for each of the first three additional months and $15,000 for each additional month for months four through six. As at December 31, 2011, total payments of $60,000 had been made.

Prior to December 31, 2010, the Company provided written notice to the Optionor of its intent to exercise its option. Subsequent to the balance sheet date, on April 10, 2012, the Company executed an asset purchase agreement (see Note 12) to exercise its option for consideration of $7,000,000, consisting of the following:

 
a)
A cash payment at closing of $85,000 as an initial payment (paid);
 
b)
$60,000 of consideration previously paid and received by the Optionor (see above);
 
c)
A $6,855,000 promissory note (issued), non-interest bearing, secured by the Strong Creek and Iron Mountain properties. The note is repayable through advance minimum royalty payments of $62,500 commencing six months from the date of closing and after receipt of the initial payment, and every six months thereafter, until the commencement of commercial production from the property. At the commencement of commercial production from the properties, the semi-annual advance minimum royalty shall convert to a 4.5% gross metal value royalty on iron ore and/or other mineral materials produced and sold from the property and, except for events of force majeure, in no event shall the production royalty paid to the Optionor be less than $150,000 in any given calendar year. Repayment of the promissory note may be demanded by the Optionor upon an event of default as defined in the agreement.

Upon full settlement of the promissory note, the production royalty shall be reduced, and the Company shall pay the optionor a gross metal value royalty of 1.5% for all iron product and/or other mineral materials mined and sold from the property.

Labrador Trough Property
On July 19, 2011, the Company entered into an option agreement with Globex Mining Enterprises Inc. ("Globex") effective July 12, 2011 (the "Agreement"), pursuant to which Globex granted the Company the right (the "Option") for a period of 90 days from July 12, 2011 to acquire an undivided 100% interest in and to 144 mining claims (the "Property") located in the Labrador trough area in the Province of Quebec, Canada.

On October 12, 2011, the Company notified the owner of the Labrador Trough iron ore property that the Company would not be exercising the option to acquire the property. The Company recorded an impairment of mineral property charge of $50,124 during the year ended December 31, 2011.



 
 
 
F-9

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


4.  COMMON STOCK

Effective June 15, 2011 the Company effected a 37 to 1 forward stock split of the Company’s authorized and outstanding commons stock. As a result, the 5,151,000 shares outstanding increased to 190,587,000.  All share amounts have been retroactively adjusted for all periods presented.

On June 20, 2011, the Company closed a private placement for 2,100,000 units at a price of $0.50 per units for net proceeds of $1,045,436 after share issue costs. Each unit consists of one share of our common stock and one-half of one share purchase warrant. Each whole share purchase warrant entitles the holder to purchase one share of our common stock at a purchase price of $0.75 for a period of three years.

Effective June 30, 2011 and in connection with the acquisition of an option to purchase a mineral property, certain shareholders surrendered 142,950,000 common shares of the Company. As a result of the Company’s cancellation of these shares, the Company’s outstanding shares of common stock decreased to 49,737,000.


5.  SHARE PURCHASE WARRANTS

         
Weighted Average
 
   
Number of
   
Exercise
 
   
Warrants
   
Price
 
 Balance, December 31, 2010 and 2009
 
-
   
-
 
 Warrants granted with private placement
   
1,050,000
   
$
0.75
 
                 
 Balance, December 31, 2011   
   
1,050,000
   
$
0.75
 

Details of share purchase warrants outstanding as of December 31, 2011 are:

Number of Warrants Outstanding and Exercisable
  Exercise Price
2011
   
per Share
 
Expiry Date
           
  1,050,000    
$
0.75
 
June 20, 2014

 
 
 
F-10

 
TITAN IRON ORE CORP.
(FORMERLY DIGITAL YEARBOOK, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
(Expressed in US dollars)
 


6. STOCK BASED COMPENSATION

On November 22, 2011, the Board of Directors approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company.   The aggregate number of options authorized by the plan shall not exceed 9,947,400 common shares of the Company. 
 
During the year ended December 31, 2011, the Company granted 3,450,000 and 500,000 stock options at an exercise price of $0.84 per share for 10 years and 3 years respectively.  During the year ended December 31, 2011, the Company recorded stock-based compensation of $107,772.
 
The weighted average grant date fair value of stock options granted during the year ended December 31, 2011 was $0.80.

The weighted average assumptions used for each of the years ended December 31, are as follows:
 
   
2011
 
Expected dividend yield
    0 %
Risk-free interest rate
    1.64 %
Expected volatility
    115 %
Expected option life (in years)
    8.41  

The following table summarizes the options outstanding as at December 31, 2011:

   
Option Price
   
Number of shares
 
Expiry Date
 
Per Share
   
2011
   
2010
 
December 21, 2021
  0.84       3,450,000       -  
December 21, 2014
  0.84       500,000       -  

The following table summarizes the continuity of the Company’s stock options:
 
   
Number of Options
   
Weighted Average Exercise Price
   
Weighted-Average Remaining Contractual Term (years)
   
Aggregate Intrinsic Value
 
                $       $    
                             
Outstanding, December 31, 2010 and 2009
    -       -                  
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