DEFENSE TECHNOLOGIES INTERNATIONAL CORP. - FORM 10-Q

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EX-31.1 - EXHIBIT 31.1 - DEFENSE TECHNOLOGIES INTERNATIONAL CORP.	exhibit31-1.htm
EX-32.1 - EXHIBIT 32.1 - DEFENSE TECHNOLOGIES INTERNATIONAL CORP.	exhibit32-1.htm

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 January 31, 2014

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

For the transition period from to

Commission File Number 000-54851

CANYON GOLD CORP.

(Exact name of registrant as specified in its charter)

Delaware	Not Applicable
(State or jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number

101 Convention Center Dr., Suite 700, Las Vegas, Nevada 89109

(Address of principal executive offices)

(888) 788-0986

(Registrant’s telephone number, including area code)

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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

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]

As of March 6, 2014, there were 29,816,702 shares of the registrant’s common stock, $0.0001 par value, outstanding

CANYON GOLD CORP.

FORM 10-Q

FOR THE QUARTER ENDED JANUARY 31, 2014

TABLE OF CONTENTS

	PART I — FINANCIAL INFORMATION	Page
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults upon Senior Securities	18
Item 4.	Mine Safety Disclosure	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
	Signatures	19

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Canyon Gold Corp.

(An Exploration Stage Company)

Condensed Consolidated Balance Sheets

	January 31, 2014			April 30, 2013
ASSETS	(Unaudited)
Current assets:
Cash	$	-		$	503
Prepaid expenses		3,850			2,100

Total current assets		3,850			2,603

Mineral claims		37,820			37,820

Total assets	$	41,670		$	40,423

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	111,908		$	76,767
Accrued interest payable		2,014			888
Accrued interest payable – related parties		49,708			46,107
Convertible notes payable		125,010			125,010
Convertible notes payable – related parties		156,000			156,000
Notes payable – related parties		88,656			32,156
Payables – related parties		546,230			616,948

Total current liabilities		1,079,526			1,053,876

Total liabilities		1,079,526			1,053,876

Stockholders’ deficit:
Preferred stock, $0.0001 par value; 20,000,000 shares authorized, 1,100,000 shares issued and outstanding		110			110
Common stock, $0.0001 par value; 200,000,000 shares authorized, 29,816,702 and 28,116,702 shares issued and outstanding, respectively		2,982			2,812
Additional paid-in capital		109,068			(78,042	)
Deficit accumulated during the exploration stage		(1,150,016	)		(938,333	)

Total stockholders’ deficit		(1,037,856	)		(1,013,453	)

Total liabilities and stockholders’ deficit	$	41,670		$	40,423

See notes to condensed consolidated financial statements

Canyon Gold Corp.

(An Exploration Stage Company)

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended January 31,						Nine Months Ended January 31,						From Inception on June 19, 2008 through January 31, 2014
	2014			2013			2014			2013			From Inception on June 19, 2008 through January 31, 2014


Revenue	$	-		$	-		$	-		$	-		$	-

Expenses:
General and administrative		11,224			63,185			91,970			100,686			358,770
Management and administrative fees		18,000			20,235			39,000			30,126			143,153
Professional fees		16,168			6,801			57,001			63,916			252,051
Directors’ fees		7,500			82,500			22,500			97,500			191,500
Exploration costs		1,650			26,575			12,350			69,686			183,534

Total expenses		54,542			199,296			222,821			361,914			1,129,008

Loss from operations		(54,542	)		(199,296	)		(222,821	)		(361,914	)		(1,129,008	)

Other income (expense):
Interest expense		(8,955	)		(6,585	)		(24,862	)		(18,571	)		(57,008	)
Gain on settlement of debt		1,000			-			36,000			-			36,000

Total other income (expense)		(7,955	)		(6,585	)		11,138			(18,571	)		(21,008	)

Loss before income taxes		(62,497	)		(205,881	)		(211,683	)		(380,485	)		(1,150,016	)

Provision for income taxes		-			-			-			-			-

Net loss	$	(62,497	)	$	(205,881	)	$	(211,683	)	$	(380,485	)	$	(1,150,016	)

Net loss per common share – basic and diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.01	)

Weighted average shares outstanding – basic and diluted		29,816,702			28,116,702			28,732,644			28,116,702

See notes to condensed consolidated financial statements

Canyon Gold Corp.

(An Exploration Stage Company)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended January 31,						From Inception on June 19, 2008 through January 31, 2014
	2014			2013			From Inception on June 19, 2008 through January 31, 2014

Cash flows from operating activities:
Net loss	$	(211,683	)	$	(380,485	)	$	(1,150,016	)
Adjustments to reconcile net loss to net cash used in operating activities:
Imputed interest on convertible notes payable		17,280			18,360			47,528
Gain on settlement of debt		(36,000	)		-			(36,000	)
Common stock issued for services		-			-			48,165
Change in operating assets and liabilities:
(Increase) decrease in prepaid expenses		(1,750	)		31,086			16,453
Increase in loans receivable		-			-			(15,000	)
Increase in accounts payable		71,141			23,332			135,496
Increase in accrued interest payable		1,126			-			2,014
Increase in accrued interest payable – related parties		3,601			211			4,611
Increase in payables – related parties		99,282			207,677			411,029

Net cash used in operating activities		(57,003	)		(99,819	)		(535,720	)

Cash flows from investing activities:
Cash received from reverse acquisition		-			-			29,973
Purchase of mineral claims		-			-			(19,990	)
Net cash provided by investing activities		-			-			9,983

Cash flows from financing activities:
Proceeds from the sale of common stock		-			-			49,771
Proceeds from notes payable – related parties		56,500			24,656			88,656
Proceeds from convertible notes payable		-			-			25,010
Proceeds from convertible notes payable – related parties		-			25,011			418,300
Payments on convertible debt		-			-			(56,000	)

Net cash provided by financing activities		56,500			49,667			525,737

Net decrease in cash		(503	)		(50,152	)		-

Cash at beginning of period		503			50,434			-

Cash at end of period	$	-		$	282		$	-

See notes to condensed consolidated financial statements

Canyon Gold Corp.

(An Exploration Stage Company)

Notes to Condensed Consolidated Financial Statements

January 31, 2014

(Unaudited)

1. Nature of Operations and Continuation of Business

Canyon Gold Corp. (the "Company ") was incorporated in the State of Delaware on May 27, 1998 as Mayne International Ltd. On September 5, 2000, the Company changed its name to Black Dragon Entertainment, Inc. On July 31, 2002, the Company changed its name to Vita Biotech Corporation. On May 27, 2004, the Company changed its name to August Energy Corp. and, subsequently on April 17, 2011, the Company changed its name to Canyon Gold Corp.

On July 20, 2011, the Company acquired 100% of the issued shares of Long Canyon Gold Resources Corp. (“Long Canyon”), a private British Columbia, Canada Corporation, incorporated on June 19, 2008, in a share for share exchange for a total of 27,998,699 common shares and 500,000 Series B preferred shares to be issued by the Company to the shareholders of Long Canyon. The Share Exchange was accounted for as a reverse acquisition and recapitalization and as a result, the consolidated financial statements of the Company (the legal acquirer) are, in substance, those of Long Canyon Gold Resources Corp. (the accounting acquirer), with the assets and liabilities, and revenue and expenses, of the Company being included effective from the date of the Share Exchange. As the Share Exchange was accounted for as a reverse acquisition and recapitalization, there was no gain or loss recognized on the transaction. The historical financial statements for periods prior to the Share Exchange are those of Long Canyon Gold Resources Corp. except that the equity section and earnings per share have been retroactively restated to reflect the Share Exchange. As a result of the Share Exchange, the Company continues its’ mineral exploration activities.

The Company is an exploration stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities, and the U.S Securities and Exchange Commission Guide for mining and mineral related companies.

Going Concern

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern. Through January 31, 2014, the Company has no revenues, has accumulated losses of $1,150,016 since inception on June 19, 2008 and a working capital deficit of $1,075,676 and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company’s ability to continue as a going concern. Management plans to continue to provide for the Company's capital needs during the year ending April 30, 2014 by issuing debt and equity securities and by the continued support of its related parties (see Note 4). The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. There is no assurance that funding will be available to continue the Company’s business operations.

2. Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year end is April 30. These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Long Canyon. All inter-company transactions and balances have been eliminated.

The interim condensed consolidated financial statements have been prepared without audit in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended April 30, 2013 included in its Annual Report on Form 10-K filed with the SEC.

The interim condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position as of January 31, 2014, the consolidated results of its operations for the three months and nine months ended January 31, 2014 and 2013, and its consolidated cash flows for the nine months ended January 31, 2014 and 2013. The results of operations for the three months and nine months ended January 31, 2014 are not necessarily indicative of the results to be expected for future quarters or the full year ending April 30, 2014.

3. Mineral Claims

On March 12, 2011, the Company’s wholly-owned subsidiary, Long Canyon, acquired a 100% interest in 30 mineral claims located in the State of Nevada for $37,820. This amount has been recorded as mineral claims, a non-current asset in the Company’s condensed consolidated balance sheets.

On March 19, 2011, the Company acquired a 100% interest in 15 of the mineral claims acquired by Long Canyon for $17,830 consisting of $17,770 in cash and a payable of $60. On July 22, 2011, that payable was satisfied with the issuance of 600,000 shares of Series A Preferred Stock at $0.0001 per share issued to a related party of Long Canyon.

In August 2013, the Company paid $6,600 for government and claim fees relating to the 30 mineral claims owned by the Company for the twelve months beginning September 1, 2013, $3,850 of which were recognized as prepaid expenses as of January 31, 2014.

In August 2012, the Company paid $6,300 for government and claim fees relating to the 30 mineral claims owned by the Company for the twelve months beginning September 1, 2012, $2,100 of which were recognized as prepaid expenses as of April 30, 2013.

The Company is committed to pay a 3% Net Smelter Royalty on all the claims acquired by Long Canyon.

4. Related Party Transactions and Balances

Management and administrative services are compensated as per a Service Agreement between the Company and its secretary executed on April 30, 2011, a Service Agreement between the Company and its Chief Executive Officer executed on December 6, 2012, and an Administration Agreement with a related party executed on March 15, 2011, whereby the fee is based on services provided and invoiced by both the secretary and the related party on a monthly basis and the fees are paid in cash when possible or with common stock. The Company also, from time to time, has some of its expenses paid by related parties with the intent to repay. These types of transactions, when incurred, result in payables to related parties in the Company’s consolidated financial statements as a necessary part of funding the Company’s operations.

On May 15, 2011, the Company entered into an agreement with a related party wherein the Company has the option to acquire 100% interest in an additional 275 mineral claims located in the same areas in Nevada as the mineral claims previously acquired. The related party shall hold a 2% Net Smelter Royalty on these claims. As of January 31, 2014, the option had not been exercised. The Company and the related party have from time to time entered into extension agreements and the option has currently been extended to May 31, 2014. Consideration for this acquisition is to be $900,000 cash.

As of January 31, 2014 and April 30, 2013, the Company had payable balances due to related parties totaling $546,230 and $616,948, respectively, which resulted from transactions with significant shareholders.

Convertible notes payable – related parties consisted of the following at:

	January 31, 2014		April 30, 2013
Note payable to related party, no interest, convertible into common stock of the Company at $0.10 per share, imputed interest at 9% per annum	$	101,000	$	101,000
Note payable to related party, no interest, convertible into common stock of the Company at $0.10 per share, imputed interest at 9% per annum		25,000		25,000
Note payable to related party, no interest, convertible into common stock of the Company at $0.10 per share, imputed interest at 9% per annum		30,000		30,000

	$	156,000	$	156,000

All convertible notes payable – related parties are convertible 30 days from the first day the Company’s common shares are qualified for trading on the OTC Bulletin Board, which occurred in November 2012. As of January 31, 2014, neither of these convertible notes had been converted and therefore all are in default.

There is currently no determinable and active market value for the Company’s common stock. Accordingly, no beneficial conversion feature or derivative liabilities are determinable or have been recognized related to the Company’s convertible notes payable – related parties. These convertible features will be evaluated in subsequent periods for fair value determination.

Notes payable – related parties consisted of the following at:

	January 31, 2014		April 30, 2013
Note payable to related party, with interest at 6% per annum, due September 15, 2013	$	24,656	$	24,656
Note payable to related party, with interest at 6% per annum, due March 8, 2014		7,500		7,500
Note payable to related party, with interest at 6% per annum, due December 5, 2013		47,500		-
Note payable to related party, with interest at 6% per annum, due February 1, 2014		9,000		-

	$	88,656	$	32,156

Accrued interest payable – related parties was $49,708 and $46,107 at January 31, 2014 and April 30, 2013, respectively.

5. Convertible Notes Payable

Convertible notes payable consisted of the following at:

	January 31, 2014		April 30, 2013
Note payable, no interest, convertible into common stock of the Company at $0.125 per share, imputed interest at 9% per annum	$	100,000	$	100,000
Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.10 per share		25,010		25,010

	$	125,010	$	125,010

All convertible notes payable are convertible 30 days from the first day the Company’s common shares are qualified for trading on the OTC Bulletin Board, which occurred in November 2012. As of January 31, 2014, neither of these convertible notes had been converted and therefore all are in default.

There is currently no determinable and active market value for the Company’s common stock. Accordingly, no beneficial conversion feature or derivative liabilities are determinable or have been recognized related to the Company’s convertible notes payable. These convertible features will be evaluated in subsequent periods for fair value determination.

Accrued interest payable was $2,014 and $888 at January 31, 2014 and April 30, 2013, respectively.

6. Stockholders’ Deficit

The Company has 20,000,000 shares of $0.0001 par value preferred stock and 200,000,000 shares of $0.001 par value common stock authorized.

In October 2013, the Company issued a total of 1,700,000 shares of its common stock in payment of payables – related parties of $170,000, or $0.10 per share. In accordance with ASC Topic 505-50, Equity-Based Payments to Non-Employees, the Company recorded the fair value of the common shares issued based on the fair value of the services rendered. Since there is currently no determinable and active market for the Company’s common stock, the Company determined the value of the services rendered, which services were generally provided pursuant to written agreements with related parties, was more reliably measurable.

During the year ended April 30, 2012, the Company issued 600,000 shares of Series A convertible preferred stock to a related party in payment of an outstanding debt. The Series A convertible preferred shares are convertible into ten common voting shares and carry voting rights on the basis of 100 votes per share with rights and preferences being decided by the Board of Directors of the Company.

During the year ended April 30, 2012, the Company issued 500,000 shares of Series B convertible preferred stock in the acquisition of Long Canyon (see Note 1). The Series B convertible preferred shares are convertible into ten common voting shares and carry no voting rights.

7. Contingencies and Commitments

(a)	Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company. The Company is currently not aware of any such legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

(b)	Indemnities and Guarantees

During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. The Company indemnifies its directors, officers, employees and agents to the maximum extent permitted under the laws of the State of Nevada. These indemnities include certain agreements with the Company's officers under which the Company may be required to indemnify such person for liabilities arising out of their employment relationship. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets.

(c)	Commitments

The Company has the following commitments as of January 31, 2014:

a)	Administration Agreement with EMAC Handels AG, signed on April 20, 2011, for a three year term. From April 2011 to April 2012, the Company paid EMAC a monthly fee of $2,750 for administration services, office rent and telephone expenses. Commencing May 1, 2012, the monthly fee is $ 3,750. Extraordinary expenses are invoiced by EMAC on a quarterly basis. The fee may be paid in cash and or with common stock.

b)	Service Agreement with Delbert G. Blewett signed on April 30, 2011. The Company pays Blewett a Director’s fee of $2,500 per month. The fees may be paid in cash and or with common stock.

c)	Service Agreement with Stephen M. Studdert signed on December 6, 2012. The Company pays Studdert a fee based on quarterly invoices submitted by Studdert and approved by the Board of Dierectors. The fees may be paid in cash and or with common stock.

d)	In May 2012, the Company agreed to compensate the following for future services: Delbert G. Blewett, then President of Canyon Gold, Harold Schneider then President of Long Canyon and Alex Burton, Vice-President of the Advisory and Exploration Committee, whereby each shall receive 250,000 common voting shares of the Company. These shares shall be issued within 30 days from the first day of trading of the Company’s shares on the OTC Bulletin Board.

e)	On May 15, 2011, the Company executed an option agreement wherein the Company has the option to acquire 100% interest in 275 mineral claims located in the same areas in Nevada for consideration of $900,000 cash, and in addition, the Company shall be obligated to pay the related party a 2% Net Smelter Royalty on these claims. The option agreement stated the option must be exercised by May 31, 2012. As of January 31, 2014, the option had not been exercised. The Company and the related party have from time to time entered into extension agreements and the option has currently been extended to May 31, 2014. There was no additional cost or consideration related to the extension of this option.

On June 10, 2013, the Company entered into a Consulting Contract (“Contract”) to retain Worldwide PR News, a New York based consulting and public relations firm (“Worldwide PR”). Under the terms of the Contract, the Company was to pay Worldwide PR a total of $150,000 for a six-month consulting program. On November 7, 2013, the parties entered into a Settlement Agreement and Mutual Release to cancel the Contract. Prior to the cancellation, the Company paid $25,000 to Worldwide PR. As a result of the cancelation of the Contract, the Company recorded a gain on settlement of debt of $35,000 for nine months ended January 31, 2014.

8. Recent Accounting Pronouncements

There were no new accounting pronouncements issued during quarter ended January 31, 2014 and through the date these condensed consolidated financial statements were available to be issued that the Company believes are applicable to or would have a material impact on the condensed consolidated financial statements of the Company.

9. Supplemental Statement of Cash Flows Information

During the nine months ended January 31, 2014 and 2013, the Company paid no amounts for interest or income taxes.

During the nine months ended January 31, 2014, the Company increased common stock by $170, increased additional paid-in capital by $169,830 and decreased payables – related parties by $170,000.

During the nine months ended January 31, 2013, the Company had no non-cash investing or financing activities.

10. Subsequent Events

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events to determine events occurring after January 31, 2013 which would have a material impact on the Company’s financial results or require disclosure.

On February 5, 2014, the Company received proceeds of $25,000 from a Convertible Loan Agreement. The loan is interest free, and the Company and the lender agreed that the loan would be converted into a total of 500,000 common shares of the Company on or before July 31, 2014.

On February 13, 2014, the Company entered into a Convertible Promissory Note with an institutional investor (“investor”) for $42,500, which bears interest at an annual rate of 8% and matures on November 18, 2014. The investor has the right, after the first 180 days of the note, to convert the note and accrued interest in whole or in part into shares of the common stock of the Company at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest three trading prices for the Company’s common stock during the ten trading day period ending one trading day prior to the date of the conversion notice. At any time for the period beginning on the date of the note and ending on the date which is 30 days following the date of the note, the Company may prepay the note upon payment of an amount equal to the outstanding principal multiplied by 120%, together with accrued and unpaid interest. The amount of the prepayment increases every subsequent 30 days to 125%, 130%, 135%, 140% and 145% of the outstanding principal together with accrued and unpaid interest. After the expiration of 180 days following the date of the note, the Company will have no right of prepayment.

A majority of shareholders of the Company holding 82.95% of the Company’s voting stock approved a 20:1 reverse stock split on February 20, 2014. On March 3, 2014, a request was filed with the Financial Industry Regulatory Authority (FINRA) to approve the reverse split effective April 4, 2014. On March 10, 2014, FINRA confirmed the effective date of the reverse split as the opening of business on April 4, 2014.

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

Overview

The following information should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q.

Canyon Gold Corp. (“Canyon Gold” or the “Company”) was incorporated in the State of Delaware on May 27, 1998. Our present holdings of mining claims and leases are located in the State of Nevada. According to SEC Industry Guide No. 7, we are classified or considered an exploration stage mining company, which is defined as a company engaged in the search for mineral deposits or reserves of precious and base metal targets, which are not in either the development or production stage.

In July 2011, we acquired 100% of the outstanding capital stock of Long Canyon Gold Resources Corp. of North Vancouver BC, Canada (“Long Canyon”), whereby Long Canyon became our wholly owned subsidiary. The acquisition of Long Canyon was accounted for as a reverse acquisition and recapitalization, with Canyon Gold being the legal acquirer and Long Canyon being the accounting acquirer.

Canyon Gold and Long Canyon own and control a 100% interest in approximately 640 acres of mineral lease properties and/or approximately 30 BLM mineral lease claims, situated in the west section of the new Long Canyon Gold Trend area of east central Nevada. The properties, located in Range 64E., Township 33N., Meridian MDB&M, are held for the purpose of exploration for gold and silver mineralization deposits and are located near existing exploration projects by other mining companies.

Additionally, in May 2011 Long Canyon entered into an option agreement with EMAC Handels AG (“EMAC”) of Pfaeffikon, Switzerland. Upon exercise of the option, Long Canyon will acquire a 100% interest in approximately 6,250 acres of mineral lease properties and/or 275 BLM mineral lease claims, located adjacent to Canyon Gold and Long Canyon’s 30 claims. The option agreement stated the option must be exercised by May 31, 2012. As of January 31, 2014, the option had not been exercised. The Company and EMAC have from time to time entered into extension agreements and the option has currently been extended to May 31, 2014. There was no additional cost or consideration related to the extension of this option.

We have engaged the services of Development Resources LLC of American Fork, Utah (“DRLLC”) to conduct preliminary studies of claims. We intend to conduct exploration activities on the properties in phases. We plan to explore for gold, silver and other minerals on the property covering an area of approximately 6,890 acres, which includes the acres subject to the option. There can be no assurance that a commercially viable mineral deposit exists on our property. Extensive exploration will be required before we can make a final evaluation as to the economic and legal feasibility of any potential deposit.

Our principal executive office is located at 101 Convention Center Dr., Suite 700 Las Vegas, Nevada 89109, telephone 1-(888) 788-0986. Additional office space is subleased from EMAC at 641 West 3rd Street, North Vancouver BC, Canada. The office of DRLLC that is responsible for management of exploration program is located at 125 East Main Street # 307, American Fork, Utah 84003.

Our website address is http://www.canyongoldexploration.com

Information on or accessed through our website is not incorporated into this Quarterly Report on Form 10-Q and is not a part of this Form 10-Q.

Industry Segments

We consider our operations to be conducted in one industry segment, the exploration and development of mineral lease claims.

Forward Looking and Cautionary Statements

This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. 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.

Going Concern

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern. At January 31, 2014, the Company has no revenues to date, has accumulated losses of $1,150,016 since inception on June 19, 2008 and a working capital deficit of $1,075,676, and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company’s ability to continue as a going concern. Management plans to continue to provide for the Company's capital needs during the year ending April 30, 2014 by issuing debt and equity securities and by the continued support of its related parties. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence. There is no assurance that funding will be available to continue the Company’s business operations.

Results of Operations

For the three months and nine months ended January 31, 2014 compared to the three months and nine months ended January 31, 2013.

We currently have no sources of operating revenues. Accordingly, no revenues were recorded for either the three months or nine months ended January 31, 2014 or 2013.

Our total operating expenses decreased from $199,296 in the three months ended January 31, 2013 to $54,542 in the three months ended January 31, 2014, and decreased from $361,914 in the nine months ended January 31, 2013 to $222,821 in the nine months ended January 31, 2014. The decreases were due primarily to decreases in directors’ fees, general and administrative expenses and exploration costs.

Our other expense, comprised of interest expense, increased from $6,585 in the three months ended January 31, 2013 to $8,955 in the three months ended January 31, 2014, and increased from $18,571 in the nine months ended January 31, 2013 to $24,862 in the nine months ended January 31, 2014. The increase in interest expense is due primarily to new debt issued during the latter part of last year and in the current year. A substantial portion of our interest expense is incurred to related parties.

Our other income, comprised of the gain on settlement of debt was $1,000 for the three months ended January 31, 2014 and $36,000 for the nine months ended January 31, 2014. Of the $36,000 gain on settlement of debt for the nine months ended January 31, 2014, $35,000 resulted from the cancelation of a contract for consulting and public relations services.

As a result, our net loss decreased from $205,881 in the three months ended January 31, 2013 to $62,497 in the three months ended January 31, 2014, and decreased from $380,485 in the nine months ended January 31, 2013 to $211,683 in the nine months ended January 31, 2014.

We have no firm commitments for capital expenditures other than to complete the acquisition of the optioned properties and to explore our properties as funds permit. In the process of carrying out our business plan, we may determine that we cannot raise sufficient capital to support our business on acceptable terms, or at all.

Liquidity and Capital Resources

At January 31, 2014, we had total current assets of $3,850 (cash of $0) and total current liabilities of $1,079,526, resulting in a working capital deficiency of $1,075,676. A significant portion of our current liabilities is comprised of amounts due to related parties: accrued interest payable – related parties of $49,708; convertible notes payable – related parties of $156,000; notes payable – related parties of $88,656; and payables – related parties of $546,230. We anticipate that in the short-term, operating funds will continue to be provided by related parties and other lenders.

On February 5, 2014, we received proceeds of $25,000 from a Convertible Loan Agreement. The loan is interest free, and the Company and the lender agreed that the loan would be converted into a total of 500,000 common shares of the Company on or before July 31, 2014.

On February 13, 2014, we entered into a Convertible Promissory Note with an institutional investor (“investor”) for $42,500, which bears interest at an annual rate of 8% and matures on November 18, 2014. The investor has the right, after the first 180 days of the note, to convert the note and accrued interest in whole or in part into shares of our common stock at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest three trading prices for our common stock during the ten trading day period ending one trading day prior to the date of the conversion notice. At any time for the period beginning on the date of the note and ending on the date which is 30 days following the date of the note, we may prepay the note upon payment of an amount equal to the outstanding principal multiplied by 120%, together with accrued and unpaid interest. The amount of the prepayment increases every subsequent 30 days to 125%, 130%, 135%, 140% and 145% of the outstanding principal together with accrued and unpaid interest. After the expiration of 180 days following the date of the note, we will have no right of prepayment.

On March 15, 2011, a note payable for $101,000 and accrued interest of $45,097 was sold to a related party. At the date of the transaction, the note was amended to be interest free and convertible into common stock of the Company at a price of $0.10 per share. As of January 31, 2014, the convertible note payable due to a related party had a principal balance of $101,000. We have calculated imputed interest on this note at an annual rate of 9%.

As of January 31, 2014, we had an additional $55,000 of convertible notes payable due to related parties. These convertible notes bear no interest and are convertible at a price of $0.10 per share. We have calculated imputed interest on these notes at an annual rate of 9%.

As of January 31, 2014, we had four notes payable to related parties totaling $88,656, $9,000 of which was received in August 2013. The notes bear interest at an annual rate of 6% and mature in September 2013, December 2013, February 2014 and March 2014.

As of January 31, 2014, we had a convertible note payable to a non-related party in the amount of $100,000, bearing no interest. The note is only convertible into our common stock at a price of $0.125 per share. We have calculated imputed interest on this note at an annual rate of 9%.

As of January 31, 2014, we had a convertible note payable to a non-related party in the amount of $25,010, bearing interest at an annual rate of 6%. The note is convertible into 250,000 shares of our common stock at a price of $0.10 per share.

All convertible notes payable are convertible 30 days from the first day the Company’s common shares are qualified for trading on the OTC Bulletin Board, which occurred in November 2012. As of January 31, 2014, none of the convertible notes payable have been converted and, therefore, are in default.

There is currently no determinable and active market value for our common stock. Accordingly, no beneficial conversion feature or derivative liabilities are determinable or have been recognized related to our convertible notes payable. These convertible features will be evaluated in subsequent periods for fair value determination.

During the nine months ended January 31, 2014, we used net cash in operating activities of $57,003, as a result of our net loss of $211,683, gain on settlement of debt of $36,000 and an increase in prepaid expenses of $1,750, partially offset by imputed interest on convertible notes payable of $17,280, and increases in accounts payable of $71,141, accrued interest payable of $1,126, accrued interest payable – related parties of $3,601, and payables – related parties of $99,282.

During the nine months ended January 31, 2013, we used net cash in operating activities of $99,819, as a result of our net loss of $380,485, partially offset by imputed interest on convertible notes payable of $18,360, a decrease in prepaid expenses of $31,086, and increases in accounts payable of $23,332, accrued interest payable – related parties of $211, and payables – related parties of $207,677.

During the nine months ended January 31, 2014 and 2013, we had no cash provided by or used in investing activities.

During the nine months ended January 31, 2014, net cash provided by financing activities was $56,500, comprised of proceeds from notes payable – related parties. During the nine months ended January 31, 2013, net cash provided by financing activities was $49,667, comprised of proceeds from notes payable – related parties of $24,656 and proceeds from convertible notes payable – related parties of $25,011.

We have not realized any revenues since inception and paid expenses and costs with proceeds from the issuance of securities as well as by loans from directors and other stockholders.

We believe a related party will provide sufficient funds to carry on general operations in the near term. We expect that we will need to raise additional funds, most likely from the sale of securities or from stockholder loans, to be able to complete our exploration program. We may not be successful in our efforts to obtain equity financing to carry out our business plan and there is doubt regarding our ability to complete our planned exploration program.

As of January 31, 2014, we did not have sufficient cash to fund our operations for the next twelve months.

Inflation

In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations following a successful acquisition or merger.

Critical Accounting Policies

Exploration Costs

Since we are deemed to be in the exploration stage, all sampling, metallurgical, engineering, contractor costs, and efforts to obtain mineral rights have been charged to expense as incurred.

Use of Estimates

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

Basic and Diluted Loss per Common Share

Basic loss per share is calculated by dividing the company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding for the three months and nine months ended January 31, 2014 and 2013.

Non-Monetary Transactions

All issuances of our common stock for non-cash consideration have been assigned a dollar amount equaling either the market value of the shares issued or the value of consideration received whichever is more readily determinable. The majority of the non-cash consideration received pertains to services rendered by consultants and others and has been valued at the market value of the shares issued.

Our accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505, Equity Based Payments to Non Employees, where the equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Comprehensive Loss

We have no component of other comprehensive income. Accordingly, net loss equals comprehensive loss for the three months and nine months ended January 31, 2014 and 2013.

Cash and Cash Equivalents

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

Income Taxes

We provide for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Our predecessor operated as entity exempt from federal and state income taxes.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Impairment of Long-Lived Assets

We continually monitor 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, we assess 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, we recognize 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.

Accounting Basis

Our condensed consolidated financial statements are prepared using the accrual method of accounting and accounting principles generally accepted in the United States of America. We have adopted an April 30 fiscal year end.

Revenue Recognition

Revenues from the sale of products will be recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Revenues from service contracts will be recognized when performance of the service is complete or over the term of the contract.

Recent Accounting Pronouncements

There were no new accounting pronouncements issued during the three months ended January 31, 2014 and through the date our condensed consolidated financial statements were available to be issued that we believe are applicable to or would have a material impact on our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

We have no 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

This item is not required for a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) (“Exchange Act”). Based on this evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, in a manner that allows timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

Item 1A.

Risk Factors

This item is not required for a smaller reporting company.

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

During the three months ended January 31, 2014, we issued no unregistered shares of our common stock.

Item 3. Defaults Upon Senior Securities

This item is not applicable.

Item 4. Mine Safety Disclosure

This item is not applicable.

Item 5. Other Information

Item 6. Exhibits

The following exhibits are filed as part of this report:

Exhibit No.	Description of Exhibit
31.1	Section 302 Certification of Chief Executive Officer and Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101 INS*	XBRL Instance Document
101SCH*	XBRL Taxonomy Extension Schema
101 CAL*	XBRL Taxonomy Extension Calculation Linkbase
101 DEF*	XBRL Taxonomy Extension Definition Linkbase
101 LAB*	XBRL Taxonomy Extension Label Linkbase
101 PRE*	XBRL Taxonomy Extension Presentation Linkbase

* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Exchange Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURES

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

CANYON GOLD CORP.

Date: March 12, 2014	By: /S/ Stephen M. Studdert
	Stephen M. Studdert
	Chief Executive Officer
	Acting Chief Financial Officer

Attached files

DEFENSE TECHNOLOGIES INTERNATIONAL CORP. Reports

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