UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

  Washington, D.C. 20549

 

FORM 10-Q

 

 (Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 31, 2013

 

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

 

For the transition period from __________ to __________

 

COMMISSION FILE NUMBER 333-136663

 

NOVA MINING CORPORATION

 

 (Exact name of registrant as specified in its charter)

NEVADA		45-2753483
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1320 S. Killian Drive Lake Park, Florida 33403		33403
(Address of principal executive offices)		(Zip code)

 

(561) 420-0380

(Registrant's telephone number, including area code)

 

2903 ½ Frank Gay Rd.

Marcellus, New York 13108

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]

 

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

 

Large accelerated filer          [ ]	Accelerated filer                    [ ]
Non-accelerated filer            [ ]	Smaller reporting company   [ X ]
(Do not check if a smaller reporting company)

 

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

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of May 31, 2013, the Issuer had 30,000,000 shares of common stock issued and outstanding.

 

 

 

 

 

 

NOVA MINING CORPORATION
MAY 31, 2013
	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Balance Sheets as of May 31, 2013 and February 28, 2013 (Unaudited)	3
	Statements of Expenses For the three months ended May 31, 2013 and May 31, 2012 (Unaudited) For the cumulative period from December 29, 2005 (Inception) to May 31, 2013 (Unaudited))	4
	Statements of Cash Flows For the three months ended May 31, 2013 and May 31, 2012 (Unaudited) For the cumulative period from December 29, 2005 (Inception) to May 31, 2013 (Unaudited))	5
	Notes to Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis or Plan of Operation	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mining Safety Disclosure	14
Item 5.	Other Information	14
Item 6.	Exhibits	15
	Signatures	16

 

 

 

ITEM 1. FINANCIAL INFORMATION

 

 

 

NOVA MINING CORPORATION
(An Exploration Stage Company)
BALANCE SHEETS
(Unaudited)
			May 31, 2013				February 28, 2013
ASSETS
Cash		$	1,266			$	8,583
Total Current Assets			1,266				8,583
Total Assets		$	1,266			$	8,583
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable		$	6,000			$	—
Interest Payable			140,448				112,470
Accrued Liabilities			1,500				7,000
Advance			40,000				40,000
Notes Payable			720,000				720,000
Total Liabilities			907,948				879,470
Stockholders’ Deficit
Preferred Stock, 100,000,000 shares Authorized; $0.00001 par value 0 shares Issued and Outstanding as of May 31, 2013 and February 28, 2013			—				—
Common Stock, 100,000,000 shares Authorized; $0.00001 par value 30,000,000 shares Issued and Outstanding as of May 31, 2013 and February 28, 2013			300				300
Additional Paid-In Capital			132,750				132,750
Deficit Accumulated During the Exploration Stage			(1,039,732	)			(1,003,937	)
Total Stockholders’ Deficit			(906,682	)			(870,887	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	1,266			$	8,583

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

 

 

NOVA MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF EXPENSES

			For the Three Months Ended				For the Three Months Ended				Cumulative Since December 29, 2005 (Date of Inception) to
			May 31, 2013				May 31, 2012				May 31, 2013
Expenses:
General and administrative expenses		$	7,817			$	69,129			$	711,122
Mining Property Costs			—				—				8,073
Mining Exploration Expense			—				5,000				129,460
Impairment of Loan Receivable			—				—				50,000
Total Operating Expenses			7,817				74,129				898,655
Operating Loss			(7,817	)			(74,129	)			(898,655	)
Other Income (Expense):
Interest Expense			(27,978	)			(12,375	)			(141,077	)
Net Loss		$	(35,795	)		$	(86,504	)		$	(1,039,732	)
Basic & Diluted Loss per Common Share		$	(0.00	)		$	(0.00	)
Weighted Average Common Shares Outstanding			30,000,000				30,000,000

 

 

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

NOVA MINING CORPORATION

(An Exploration Stage Company)

STATEMENT OF CASH FLOWS 

(Unaudited)

 

		For the Three Months Ended May 31, 2013				For the Three Months Ended May 31, 2012				Cumulative Since December 29, 2005 (Date of Inception) to May 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(35,795	)		$	(86,504	)			(1,039,732	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock Issued for General and Administrative Expenses			—				—				50
Donated Consulting Services and Expenses			—				—				33,000
Changes in operating assets and liabilities:
Prepaid Expenses			—				—				(5,000	)
Accounts Payable			6,000				(1,220	)			36,000
Accounts Payable - Related Party			—				(1,100	)			—
Interest Payable			27,978				12,375				140,448
Accrued Liabilities			(5,500	)			(2,000	)			6,500
Net Cash Provided (Used) in Operating Activities			(7,317	)			(78,449	)			(828,734	)
CASH FLOWS FROM FINANCING :
Proceeds from Issuance of Common Stock			—				—				100,000
Proceeds from Loans - Related Party			—				—				110,000
Payment on Loans			—								(15,821	)
Expenses Paid by Non-Related Party as Advance			—				30,000				10,000
Proceeds from Loan - Other			—				70,000				625,821
Net Cash Provided (Used) by Financing Activities			—				100,000				830,000
Net Increase (Decrease) in Cash			(7,317	)			21,551				1,266
Cash at Beginning of Period			8,583				4,581				—
Cash at End of Period		$	1,266			$	26,132			$	1,266
Non cash disclosures
Reclassification of Loan-Related Party to Loan-Third Party		$	—			$	—			$	110,000
Temporary payment applied to Loan-Related Party until funds were re-deposited			—				—				2,366
Supplemental Disclosures
Interest paid		$	—			$	—			$	629
Income taxes paid			—				—				—

 

 

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

 

 

 

NOVA MINING CORPORATION

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

 

Nature of Business

 

Nova Mining Corporation (the “Company”) was incorporated in the State of Nevada on December 29, 2005. The Company is an Exploration Stage Company, as defined by Statement of ASC 915 “Development Stage Companies’. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its mineral claims contain reserves that are economically recoverable.

 

Basis of Presentation

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

  

NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a “going concern”, which assume that Nova Mining Corp. will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

 

Several conditions and events cast substantial doubt about Nova Mining’s ability to continue as a going concern.  Nova Mining has incurred net losses of approximately $(1,039,732) for the period from (inception), December 29, 2005 to May 31, 2013, has had zero revenues and requires additional financing in order to finance its business activities on an ongoing basis. Nova Mining’s future capital requirements will depend on numerous factors including, but not limited to, executing its existing mining based business plan and the pursuit of business opportunities. Nova Mining is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained.  In the interim, shareholders of Nova Mining have committed to meeting its minimal operating expenses.

 

Management believes that actions presently being taken to revise Nova Mining’s operating and financial requirements provide them with the opportunity to continue as a going concern.

 

These 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.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

 

As of May 31, 2013, $187,300 has been paid in compensation for services rendered by the Company’s officers and directors during their time of service.

 

NOVA MINING CORPORATION

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 4 - ADVANCES

 

As of May 31, 2013, a third party paid company expenses in the amount of $30,000 and loaned the company $10,000. These amounts are a non-interest bearing advance of $40,000 due by the Company.

 

NOTE  5 – NOTES PAYABLE

 

During 2011, 2012 and 2013, a third party loaned the Company $610,000. These loans are unsecured and payable a year from the signed note.  A $200,000 loan is accruing 10% simple interest annually and the remaining $410,000 in loans accrue at15% simple interest annually. Of these notes, $330,000 is in default as of May 31, 2013 and $110,000 of this amount accrues interest at the default interest rate of 25%. As of May 31, 2013, the Company owes $610,000 in principal and $106,106 in interest on these notes.

 

On September 1, 2011, a third party purchased the $110,000 owed to the former President of the Company and this amount was transferred to a promissory note on that date.  This loan is unsecured, accruing 15% simple interest annually and payable on August 31, 2012. This note is now in default as of May 31, 2013 and accruing interest at the default interest rate of 25%. As of May 31, 2013, the Company owes $110,000 in principal and $34,342 in interest on this note.

 

 

NOTE 6 – SUBSEQUENT EVENTS

 

Change of Control:

 

On June 20, 2013, a change of control of the Company occurred when Biodynamic Molecular Technologies, LLC a privately held company organized in the State of Florida acquired from Clarent Services Corp. the former majority stockholder of the Company in a private transaction 25,000,000 restricted shares of common stock, par value $0.00001 per share of the Company.

 

The Company is not aware of any arrangements, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company.

 

 

 

 

 

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

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained in this Quarterly Report constitute "forward-looking statements." These statements, identified by words such as "plan," "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II - Item 1A. Risk Factors" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and our Current Reports, we file from time to time with the Securities and Exchange Commission (the "SEC").

 

As used in this Quarterly Report, the terms "we," "us," "our," "Nova," and the "Company" refer to Nova Mining Corporation unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.

 

INTRODUCTION

 

We were incorporated on December 29, 2005 under the laws of the State of Nevada.  From our inception until February 2009 we were engaged in the exploration of a claim knows as the Columbia VI Claim.  In February of 2009, based on a report from our consulting geologist, we abandoned the Columbia Claim.

 

In February 2009, we engaged Consulting Geologist, D. Bain, B.Sc., P.Geo. of DUNCAN BAIN CONSULTING LTD. (“BAIN”), to select an area in Saskatchewan considered favorable for hosting diamondiferous kimberlite pipes. That site was staked by the Mr. Bain and registered with the province of Saskatchewan on March 18, 2009.

 

Duncan J. Bain, P.Geo. is an independent Qualified Person in accordance with Canadian securities National Instrument 43-101 and as defined in the CIM (Canadian Institute of Mining and Metallurgy) Standards on Mineral Resources and Reserves.

 

The Bittern Lake Project (“Claim”) consists of one claim of 256 hectares. This claim was registered on March 18, 2009 in the name of Duncan Bain, 49 Midale Crescent, London, Ontario, Canada N5X 3C2. Title to the Claim was subsequently transferred to Nova in April 2009.

 

The Claim is located in the east-central part of the province of Saskatchewan, in the NW corner of N.T.S. map sheet 73H/13, centered at Latitude 53o 59' North, Longitude 105o 53' West and UTM co-ordinates 5983000 N, 442000 E, Zone 13, using NAD 27 datum. The Claim covers an area of 256 hectares.

 

The Claim is located within the surveyed (southern) portion of Saskatchewan and is described in terms of legal sections and subdivisions.  To maintain the property in good standing, Saskatchewan Energy and Resources (SER) require proof of exploration expenditures, or cash payment in lieu, of $12 per hectare per year (after the first year). These assessment requirements amount to approximately $3,200 for the property. On March 31, 2011, the Company paid the assessment to Saskatchewan Energy and Resources in lieu of work filed.

 

 

RECENT CORPORATE DEVELOPMENTS

 

Effective May 21, 2012, a change of control took place and Clarent Services Corp. acquired from Half Moon Bay Holdings, LLC, 25,000,000 shares of common stock of the Registrant, representing all of Half Moon Bay’s holdings of the Registrant.  The shares constitute in the approximately 83.33% of the thirty million (30,000,000) issued and outstanding shares of common stock of the Company. There are no arrangements or understandings among members of the former and new control groups and their associates with respect to election of directors or other matters.

 

Effective May 21, 2012, Mr. Duncan Bain resigned as our President, Chief Executive Officer, and Chief Financial Officer and was appointed as our Vice President. There were no disagreements between Mr. Bain and us regarding any matter relating to our operations, policies or practices. Mr. Carmen Joseph Carbona was appointed as President, Chief Executive Officer, and Chief Financial Officer in place of Mr. Bain.

 

Concurrently with the change of our President, we moved our principal executive offices to:

2903 ½ Frank Gay Road

Marcellus, NY 13108

 

Our new telephone number is: (315) 558-3702

 

This location is the office of our new President Mr. Carmen Joseph Carbona.

 

PLAN OF OPERATION

 

In February 2009, we engaged Consulting Geologist, D. Bain, B.Sc., P.Geo. of DUNCAN BAIN CONSULTING LTD. (“BAIN”), to select an area in Saskatchewan considered favorable for hosting diamondiferous kimberlite pipes. That site was staked by the Mr. Bain and registered with the province of Saskatchewan on March 18, 2009.

 

Duncan J. Bain, P.Geo. is an independent Qualified Person in accordance with Canadian securities National Instrument 43-101 and as defined in the CIM (Canadian Institute of Mining and Metallurgy) Standards on Mineral Resources and Reserves.

 

The Bittern Lake Project (“Claim”) consists of one claim of 256 hectares. This claim was registered on March 18, 2009 in the name of Duncan Bain, 49 Midale Crescent, London, Ontario, Canada N5X 3C2. Title to the Claim was subsequently transferred to Nova in April 2009.

  

The Claim is located in the east-central part of the province of Saskatchewan, in the NW corner of N.T.S. map sheet 73H/13, centered at Latitude 53o 59' North, Longitude 105o 53' West and UTM co-ordinates 5983000 N, 442000 E, Zone 13, using NAD 27 datum. The Claim covers an area of 256 hectares.

 

The Claim is located within the surveyed (southern) portion of Saskatchewan and is described in terms of legal sections and subdivisions.  To maintain the property in good standing, Saskatchewan Energy and Resources (SER) require proof of exploration expenditures, or cash payment in lieu, of $12 per hectare per year (after the first year). These assessment requirements amount to approximately $3,200 for the property.  On March 31, 2011, the Company paid the assessment to Saskatchewan Energy and Resources in lieu of work filed.

 

On March 29, 2011 the Company re-engaged the services of BAIN to direct a Phase 1 Exploration Program on the Claim.  The Company has agreed to pay to BAIN approximately $20,000 for the exploration and subsequent report. The Company anticipates the Phase 1 report will include positive findings and form the basis for further exploration of the Claim.

 

On February 15, 2012 we, entered into an option agreement with Natural Resources Recovery Guyana (NRRG), an affiliated company of CFG, LLC. NRRG is in the business of gold, diamond, and timber harvesting. The option agreement is for a period of sixty (60) days beginning from the date of the agreement. Nova Mining Corp. paid $5,000 for this option right. The assets for placement are five (5) concessions of gold, diamond, and timber harvesting interest which equates to 6,000 acres of land with the licenses and permits rights in the country of Guyana.

 

As of May 31, 2013, we had cash assets of $1,266 and a working capital deficit of $(906,682) and an accumulated deficit of $(1,039,732). As such, we anticipate that we will require substantial financing in the near future in order to meet our current obligations and to continue our operations. In addition, in the event that we are successful in identifying suitable alternative business opportunities, of which there is no assurance, we anticipate that we will need to obtain additional financing in order to pursue those opportunities.

 

Currently, we do not have any financing arrangements in place and there are no assurances that we will be able to obtain sufficient financing on terms acceptable to us, if at all. Due to the lack of our operating history and our present inability to generate revenues, our auditors have stated in their audit report included in our audited financial statements for the year ended February 28, 2013 that there currently exists substantial doubt about our ability to continue as a going concern.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

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

 

CRITICAL ACCOUNTING POLICIES

 

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

 

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operation.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

FINANCING REQUIREMENTS

 

From December 29, 2005 (Inception) to May 31, 2013, we have suffered cumulative losses in the amount of $(1,039,732). We expect to continue to incur substantial losses as we continue the development of our business. Since our inception, we have funded operations through common stock issuances, related party loans, and the support of creditors in order to meet our strategic objectives. Our management believes that sufficient funding will be available to meet our business objectives, including anticipated cash needs for working capital, and are currently evaluating several financing options, including a public offering of securities. However, we do not have any financing arrangements currently in place and there can be no assurance that we will be able to obtain sufficient financing when needed. As a result of the foregoing, our independent auditors believe there exists substantial doubt about our ability to continue as a going concern.

 

There is no assurance that we will be able to obtain additional financing if and when required. We anticipate that additional financing may come in the form of sales of additional shares of our common stock which may result in dilution to our current shareholders.

 

GOING CONCERN QUALIFICATION

 

Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern.  The Company has incurred net losses of approximately $(1,039,732) for the period from December 29, 2005 to May 31, 2013, has no revenues and requires additional financing in order to finance its business activities on an ongoing basis.  The Company’s future capital requirements will depend on numerous factors including, but not limited to, executing the company’s mining based business plan and the pursuit of other business opportunities. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained.  In the interim, shareholders of the Company have committed to meeting its minimal operating expenses.  Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide them with the opportunity to continue as a going concern. 

 

At May 31, 2013, we had $1,266 in cash assets, $907,948 in liabilities, and a deficit accumulated during the development stage of $(1,039,732).  See “Liquidity and Capital Resources.”

 

LIQUIDITY AND CAPITAL RESOURCES

 

It is the intent of our management, stockholders, and specifically the majority Shareholder, Clarent Services Corp. and our President, Carmen Joseph Carbona to provide sufficient working capital necessary to support and preserve the integrity of our Company as a corporate entity.  However, there is no legal obligation for either the majority Shareholder or Mr. Carbona to provide additional future funding. If our management and/or Mr. Carbona ceases to provide us the needed financing and we fail to identify any alternative sources of funding, there will be substantial doubt about our ability to continue as a “going concern”.

 

We have no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities.  As a result, there can be no assurance that sufficient funds will be available to us to enable us to pay the expenses related to such activities.

 

Regardless of whether or not our cash assets prove to be adequate to meet our operational needs, we may have to compensate providers of services by issuances of our common stock in lieu of cash.

 

At May 31, 2013, we had $1,266 in cash assets $907,948 in liabilities, and a deficit accumulated during the development stage of $(1,039,732). Our primary source of liquidity has been from loans from a majority shareholder and loans from outside parties.  As of May 31, 2013, the Company owed $720,000 in notes and $40,000 in advances, loaned to the company.

  

Net cash used in operating activities was $7,317 during the quarter ended May 31, 2013.  

 

Net cash provided/used by financing activities was $0 during the quarter ended May 31, 2013.  

 

Our expenses to date are largely due to professional fees that include accounting and legal fees.

 

To date, we have had zero revenues and require additional financing in order to finance our business activities on an ongoing basis.  Our future capital requirements will depend on numerous factors, including, but not limited to, executing our mining based business plan and the ability to pursue other business opportunities. We are actively pursuing alternative financing and have had discussions with various third parties, although no firm commitments have been obtained to date.  In the interim, shareholders of the Company have agreed to meet our minimal operating expenses.  We believe that actions presently being taken to revise our operating and financial requirements provide the Company with the opportunity to continue as a “going concern,” although no assurances can be given.

 

NET LOSS FROM OPERATIONS

 

The Company had a net loss of $(1,039,732) for the period from inception through May 31, 2013. The Company had net loss of $(35,795) for the three months ended May 31, 2013 as compared to a net loss of $(86,504) for the three months ended May 31, 2012.

 

CASH FLOW

 

Our primary source of liquidity has been cash from shareholder loans, loans from outside parties and advances.

  

WORKING CAPITAL

 

As of May 31, 2013, the Company had total current assets of $1,266 and total current liabilities of $907,948, resulting in working capital deficit of $(906,682) for the previous year end. As of February 28, 2013, the Company had total current assets of $8,583 and total current liabilities of $879,470, resulting in working capital deficit of $(870,887) for the current year end.

 

THREE MONTHS ENDED MAY 31, 2013 COMPARED TO THE THREE MONTHS ENDED MAY 31, 2012 THREE MONTHS

 

LACK OF REVENUES

 

We are an exploration stage company with limited operations since our inception on December 29, 2005 to May 31, 2013.  We have not generated any revenues.  As of May 31, 2013, we have an accumulated deficit of 1,039,732.  At this time, our ability to generate any significant revenues continues to be uncertain.  Our financial statements contain an additional explanatory paragraph in Note 1, which identifies issues that raise substantial doubt about our ability to continue as a going concern.  Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.

  

NET LOSS

 

We incurred a net loss of $35,795 for the three months ended May 31, 2013, compared to a net loss of $86,504 for three months ended May 31, 2012.  From inception on December 29, 2005 to May 31, 2013, we have incurred a net loss of $1,039,732.  Our basic and diluted loss per share was $(0.00) for the three months ended May 31, 2013, and $(0.00) for the three months ended May 31, 2012. 

 

OPERATION AND ADMINISTRATIVE EXPENSES

 

Operating expenses decreased by $66,312 from $74,129 in the three months ended May 31, 2012, to $7,817 in the three months ended May 31, 2013.  Operating expenses for the three months comparison primarily consist of General and Administrative expenses (G&A). G&A expenses are made up primarily of accounting and consulting expenses and officer and director compensation for services. Such fees are paid throughout the year for performing various tasks.  

 

 

 

COMMON STOCK AND PREFERRED STOCK

 

We are authorized by our Amended and Restated Articles of Incorporation and our Additional Articles of Incorporation to issue an aggregate of 200,000,000 shares of capital stock, of which 100,000,000 are shares of common stock, par value $0.00001 per share (the “Common Stock”) and 100,000,000 are shares of preferred stock (the “Preferred Stock”), par value $0.00001 per share.  As of May 31, 2013, 30,000,000 shares of Common Stock were issued and outstanding and there were 18 shareholders of our Common Stock and 0 shares of Preferred Stock were issued and outstanding.

 

On October 27, 2011 the Company declared a stock dividend of five common shares for each common share on record. The total number of shares to be distributed is 24,000,000. Since the total number of shares to be issued exceed 25% of the common shares outstanding, the transaction is recorded as a stock split and offset to additional paid in capital at par value and the effect of the issuance is applied retroactively to all periods presented.

 

All outstanding shares of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of stockholders of the Company. All stockholders are entitled to share equally in dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available. In the event of liquidation, the holders of our Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities. The stockholders do not have cumulative or preemptive rights. We have not paid any dividends to date, and have no plans to do so in the near future.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

For purposes of this Item 4., the term disclosure controls and procedures means controls and other procedures of the Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a  et seq. and hereinafter the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii)  include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures do not comply with the requirements in (i) and (ii) above and is not effective.  

 

On May 31, 2013, our Chief Executive Officer and Chief Financial Officer Carmen Joseph Carbona, has reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by the report and has concluded that (i) the Company’s disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  

 

The material weakness identified relates to the lack of proper segregation of duties. The Company believes that the lack of proper segregation of duties is due to the Company’s limited resources.

 

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

 

There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the first fiscal quarter ended May 31, 2013 as covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

 

The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

  

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

 

WE HAVE LIMITED BUSINESS OPERATIONS AND A SINGLE MINING CLAIM. WE HAVE NOT IDENTIFIED ANY ALTERNATIVE BUSINESS OPPORTUNITIES. OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS WILL CONSIST OF EXECUTING OUR BUSINESS PLAN AND RESEARCHING NEW OPPORTUNITIES.

 

Our sole asset is our Bittern Lake Project.  The Bittern Lake Project (“Claim”) consists of one claim of 256 hectares. This claim was registered on March 18, 2009 in the name of Duncan Bain, 49 Midale Crescent, London, Ontario, Canada N5X 3C2. Title to the Claim was subsequently transferred to Nova in April 2009.  We have no experience in mining operations and it is not guaranteed that we will be able to locate diamonds in our claim, or that we will have the resources to capitalize on the Claim should we find commercially viable deposits.

 

WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING.

 

For the year ended, February 28, 2013, we had cash on hand of $8,583 and a working capital deficit of $(870,887).

 

For the three months ended, May 31, 2013, we had cash on hand of $1,266 and a working capital deficit of $(906,682).

 

Currently, we are a development stage enterprise; as such, our ability to obtain additional financing may be substantially limited. If sufficient financing is not available or obtainable as and when needed, we may not be able to continue as a going concern and investors may lose a substantial portion or all of their investment. We currently do not have any financing arrangements in place and there are no assurances that we will be able to acquire financing on acceptable terms or at all.

 

WE HAVE LIMITED OFFICERS AND DIRECTORS

 

Because management consists of only three persons, while seeking a business combination, Carmen Joseph Carbona, President, CEO, CFO Duncan Bain, Vice President and Carmen Joseph Carbona, Non-Executive Chairman of the Board of Directors, will be the only individuals responsible in conducting the day-to-day operations of the Company.  We do not benefit from having access to multiple judgments that a greater number of directors or officers would provide, and we will rely completely on the judgment of our two officers when selecting a target company.  Mr. Dilger, Mr. Bain and Mr. Carbona anticipate devoting only a limited amount of time per month to the business of the Company.  Mr. Dilger, Mr. Bain and Mr. Carbona all have written employment agreements with the Company, however we do not anticipate obtaining key man life insurance on Mr. Dilger, Mr. Bain and Mr. Carbona. The loss of the services of Mr. Dilger, Mr. Bain and Mr. Carbona would adversely affect development of our business and our likelihood of continuing operations.

 

WE DEPEND ON MANAGEMENT AND MANAGEMENT’S PARTICIPATION IS LIMITED

 

We will be entirely dependent upon the experience of our officers and directors in seeking, investigating, and acquiring a business and in making decisions regarding our operations.  It is possible that, from time to time, the inability of such persons to devote their full time attention to the Company will cause the Company to lose an opportunity.

 

WE MAY CONDUCT FURTHER OFFERINGS IN THE FUTURE IN WHICH CASE INVESTORS' SHAREHOLDINGS WILL BE DILUTED.

 

We may conduct equity offerings in the future to finance any future business projects that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, investors' percentage interest in us will be diluted. The result of this could reduce the value of their stock.

  

BECAUSE OUR STOCK IS A PENNY STOCK, STOCKHOLDERS WILL BE MORE LIMITED IN THEIR ABILITY TO SELL THEIR STOCK.

 

The shares of our common stock constitute "penny stocks" under the Exchange Act. The shares will remain classified as a penny stock for the foreseeable future. The classification as a penny stock makes it more difficult for a broker/dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker/dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.

 

The "penny stock" rules adopted by the SEC under the Exchange Act subjects the sale of the shares of our common stock to certain regulations which impose sales practice requirements on broker/dealers. For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities.

 

Legal remedies, which may be available to an investor in "penny stocks," are as follows:

 

(a) if "penny stock" is sold to an investor in violation of his or her rights listed above, or other federal or states securities laws, the investor may be able to cancel his or her purchase and get his or her money back.

 

(b) if the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages.

 

(c) if the investor has signed an arbitration agreement, however, he or she may have to pursue his or her claim through arbitration.

 

If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker/dealer, the broker/dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker/dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the SEC's rules may limit the number of potential purchasers of the shares of our common stock.

 

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINING SAFTEY DISCLOSURE

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 

 

ITEM 6. EXHIBITS

 

EXHIBIT 31 Section 302 Certification of Chief Executive Officer and Chief Financial Officer

 

EXHIBIT 32 Section 906 Certification of Chief Executive Officer and Chief Financial Officer

 

 

SIGNATURES

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

 

	NOVA MINING CORPORATION
Date: July 15, 2013
	/s/ Manpreet Singh Manpreet Singh President and Director (Principal Executive Officer)