Attached files

file filename
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R28.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R31.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R30.htm
EX-3.5 - CERTIFICATE OF DESIGNATION SERIES B CONVERTIBLE PREFERRED STOCK - CALIFORNIA GOLD CORP.clgl_ex35.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R20.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R27.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R10.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R5.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R26.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R21.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R34.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R16.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R14.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R13.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R15.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R19.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R23.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R11.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R12.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R4.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R18.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R1.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R17.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R3.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R7.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R24.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R36.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R22.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R35.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R6.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R2.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R32.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R8.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R29.htm
EXCEL - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R9.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R37.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R25.htm
XML - IDEA: XBRL DOCUMENT - CALIFORNIA GOLD CORP.R33.htm
EX-32.2 - CERTIFICATIONS - CALIFORNIA GOLD CORP.clgl_ex322.htm
EX-32.1 - CERTIFICATIONS - CALIFORNIA GOLD CORP.clgl_ex321.htm
EX-31.2 - CERTIFICATIONS - CALIFORNIA GOLD CORP.clgl_ex312.htm
EX-31.1 - CERTIFICATIONS - CALIFORNIA GOLD CORP.clgl_ex311.htm
EX-21 - SUBSIDIARIES OF REGISTRANT - CALIFORNIA GOLD CORP.clgl_ex21.htm
EX-10.33 - NONQUALIFIED STOCK OPTION AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1033.htm
EX-10.32 - NONQUALIFIED STOCK OPTION AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1032.htm
EX-10.31 - NONQUALIFIED STOCK OPTION AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1031.htm
EX-10.30 - 2014 EQUITY INCENTIVE PLAN - CALIFORNIA GOLD CORP.clgl_ex1030.htm
EX-10.23 - WARRANT EXCHANGE AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1023.htm
EX-10.21 - SETTLEMENT AND RELEASE AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1021.htm
EX-10.20 - SETTLEMENT AND RELEASE AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1020.htm
EX-10.19 - OPTION SURRENDER AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1019.htm
EX-10.18 - SETTLEMENT AND RELEASE AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1018.htm
EX-10.17 - SETTLEMENT AND RELEASE AGREEMENT - CALIFORNIA GOLD CORP.clgl_ex1017.htm
EX-10.16 - SETTLEMENT AGREEMENT, DATED OCTOBER 9, 2013 - CALIFORNIA GOLD CORP.clgl_ex1016.htm


U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
  þ
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended: January 31, 2014
OR
  o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to                                                                                                

 
Commission file number
                                                      000-54706

CALIFORNIA GOLD CORP.                                                                           
 (Exact name of small business issuer as specified in its charter)
 
Nevada
 
83-0483725
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
     
     
10752 Deerwood Park Blvd.
   
S. Waterview II, Suite 100
   
Jacksonville, FL
 
32256
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number:  (904) 571-5718
 
Securities registered under Section 12(b) of the Act:  None                                                                                                           
 
Securities registered under Section 12(g) of the Act:  Common Stock                                                                                                                                
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o  No þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  Yes þ   No  o
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ   No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company.  See the definitions of the “large accelerated filer,” “accelerate filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   (Check one):
 
Large Accelerated Filer        o                                              Accelerated Filer o
 
Non-Accelerated Filer          o                                          Smaller reporting company  þ
(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 o    No þ
 
As of July 31, 2013, there were 131,101,260 shares of the registrant’s common equity outstanding.  On July 31, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, 109,776,260 shares of its common stock, $0.001 par value per share (its only class of voting or non-voting common equity) were held by non-affiliates of the registrant.  The market value of those shares was $10,977,626, based on the last sale price of $0.10 per share of the common stock on July 30, 2013. Shares of common stock held by each officer and director and by each shareowner affiliated with a director have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of officer or affiliate status is not necessarily a conclusive determination for other purposes.
 
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
 


 
 
 
 
 
 
TABLE OF CONTENTS

                                                                                                                              
Forward Looking Information            3  
PART I
         
Item 1.
Business
   
4
 
Item 1A.
Risk Factors
   
13
 
Item 1B. 
Unresolved Staff Comments
   
24
 
Item 2.
Properties
   
24
 
Item 3.
Legal Proceedings
   
 27
 
Item 4. 
Mine Safety Disclosures
   
27
 
           
PART II
         
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and
   
28
 
 
Issuer Purchases of Equity Securities
       
Item 6.
Selected Financial Data
   
 30
 
Item 7. 
Management’s Discussion and Analysis of Financial Condition and
   
30
 
 
Results of Operation
       
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
   
34
 
Item 8.
Financial Statements and Supplementary Data
   
34
 
Item 9.
Changes and Disagreements With Accountants on Accounting and
   
35
 
 
Financial Disclosure
       
Item 9A.
Controls and Procedures 
   
35
 
Item 9B.
Other Information
   
36
 
           
PART III
         
Item 10.
Directors, Executive Officers and Corporate Governance
   
37
 
Item 11.
Executive Compensation
   
39
 
Item 12.
Security Ownership of Certain Beneficial Owners and Management and
   
43
 
 
Related Stockholder Matters
       
Item 13. 
Certain Relationships and Related Transactions, and Director
   
47
 
 
Independence
       
Item 14.
Principal Accountant Fees and Services
   
49
 
           
PART IV
         
Item 15.
Exhibits, Financial Statement Schedules
   
50
 
           
SIGNATURES
     
55
 
 
 
1

 
 
EXPLANATORY NOTE

On February 10, 2014, we filed with the Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “Form 8-K”), with respect to our consummation of a securities Exchange transaction (the “Securities Exchange”) with the members of MVP Portfolio, LLC, a Florida limited liability company (“MVP”), pursuant to a Share Exchange Agreement by and among the Company, MVP, MV Patents, LLC, a Florida limited liability company (“MV PAT”), and the other holders of all of MVP’s limited liability company membership interests.  As a result of the Securities Exchange, MVP became our wholly owned subsidiary and we acquired the business of MVP (the “MVP Acquisition”), patent licensing and assertion of rights under patents against parties believed to be selling goods or services that rely upon MVP’s patented technology.

On March 6, 2014, MVP changed its form of organization to a Florida corporation from a Florida limited liability company. In connection with the reorganization, MVP also changed its name to Visual Real Estate, Inc.

We have filed a Preliminary Schedule 14A proxy statement with the SEC, amended most recently on April 24, 2014, to begin the process to, among other things, change our name to “MV Portfolios, Inc.”, to better reflect our new line of business.

The financial statements, notes to the financial statements and MD&A discussion, in relevant part, in this Annual Report on Form 10-K for the fiscal year ended January 31, 2014, relate to our business and operations prior to the Securities Exchange and MVP Acquisition.  Where relevant and required under SEC rules, the discussion in this report relates to our business and organizational structure after the date of the Securities Exchange and MVP Acquisition.

On March 10, 2014, we filed an amendment to the Form 8-K in order to include audited financial statements of MV PAT for the fiscal years ended June 30, 2013 and 2012 and unaudited consolidated financial statements of MVP and MV PAT for the six-month periods ended June 30, 2013 and 2012.


 
2

 
 
FORWARD-LOOKING STATEMENTS

Except for historical information, this Report contains forward-looking statements.  Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  You should carefully review the risks described in this Annual Report and in other documents we file from time to time with the SEC.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-K to “California Gold,” ” the “Company,” “we,” “us” or “our” are to California Gold Corp.

 
 
3

 
 
PART I

ITEM 1.                 BUSINESS

Company History

We were incorporated on April 19, 2004, as Arbutus Resources Inc. under the laws of the state of Nevada.  We were organized to be engaged in the acquisition and exploration of mineral properties.  We acquired a 100% undivided right, title and interest in and to twenty cells, known collectively as the Green Energy Claims, located 61 km southwest of the City of Williams Lake in South Central British Columbia, Canada.  By April 30, 2007, we had not earned any revenues, and, not having sufficient funds to commence exploration on our Green Energy Claims, we determined to seek a joint venture partner or other business option to continue operating as a viable public company.

On July 11, 2007, we merged with Cromwell Uranium Holdings, Inc. (“Holdings,” the “Cromwell Merger”), a Uranium exploration mining company, having changed our name on June 15, 2007 to Cromwell Uranium Corp. in anticipation of this merger.  Pursuant to the Cromwell Merger, Holdings became our wholly owned subsidiary.  At the closing of the Cromwell Merger, we transferred the Green Energy Claims to a newly formed subsidiary and sold all of the capital stock of that subsidiary to our former directors.  As a result of developments in the public capital markets as well as conditions in the mining industry, among other factors, effective August 8, 2007, we and the principals of Holdings unwound the  Cromwell Merger and on August 9, 2007, we changed our name to US Uranium Inc.
 
Since that unwinding and until we entered into the AuroTellurio Option Agreement (defined below), we had been searching for an appropriate business opportunity in the precious metals mining sector.  On March 9, 2009, we changed our name to California Gold Corp.

The Mexivada Property Option Agreement and the La Viuda Concessions

On February 11, 2011, we entered into a property option agreement (the “AuroTellurio Option Agreement”) with Mexivada Mining Corp. (“Mexivada”) to acquire up to an 80% interest in Mexivada’s La Viuda and La Viuda-1 concessions comprising its AuroTellurio tellurium-gold-silver property (the “La Viuda Concessions,” the “AuroTellurio Property” or, the “Property”) south of Moctezuma, Sonora, Mexico.

Under the terms of the AuroTellurio Option Agreement, we purchased the option to acquire up to an 80% legal and beneficial ownership interest in the AuroTellurio Property by, in addition to making certain cash payments and share issuances to Mexivada, incurring up to $3,000,000 in cumulative exploration expenditures on the Property over a four year period at an investment rate of at least $750,000 per year.

On August 10, 2012, we made a payment to Mexivada of $40,000 and on August 28, 2012 we issued to Mexivada 250,000 shares of our restricted common stock.  Having met all the required conditions for the vesting of the first 20% interest in the La Viuda Concessions under the AuroTellurio Option Agreement, including the required exploration program expenditure of $750,000, the first 20% interest in the La Viuda Concessions vested in us as of August 28, 2012.  Although the terms of the AuroTellurio Option Agreement required that all conditions for the vesting of the first 20% interest in the AuroTellurio Property were to be met by the one year anniversary of the First Closing, that is, by August 4, 2012, Mexivada agreed to extend this deadline to August 28, 2012.  We made the appropriate filings with the Ministry of Mines in Mexico recording this 20% interest in our name.

 
4

 
 
On October 24, 2013, we entered into an amendment (the “Amendment”) to our AuroTellurio Option Agreement pursuant to which Mexivada agreed to accept a cash payment of $17,500, instead of the $50,000 specified in the original AuroTellurio Option Agreement, as payment in full of the cash payment required to be made to Mexivada in connection with the vesting of the second 20% interest in the La Viuda Concessions. We made that $17,500 payment to Mexivada.  Additionally, according to the Amendment, Mexivada agreed to waive, with respect to the second 20% interest, the requirement set forth in the AuroTellurio Option Agreement that we issue to Mexivada 300,000 shares of our common stock.  The Amendment did not modify the cash payment and stock issuance requirements of the AuroTellurio Option Agreement relating to the two remaining 20% interests.  It did, however, extend payment and issuance dates for each of the third and fourth 20% interest block by one year.

As of the end of our third fiscal quarter, we had expended approximately $770,000 in exploration program costs towards the second 20% interest in the AuroTellurio Property.  Approximately $339,000 of this amount had already been approved by Mexivada as exploration expenses to be counted towards the second 20% interest and we expected that Mexivada would approve the balance of exploration expenses being applied towards the second 20% interest in the La Viuda Concessions, although this has not been approved to date.  If this approval were to be obtained, the second 20% interest would be fully vested and we would be able to exercise our option for the second 20% interest in the AuroTellurio Property.

We completed the majority of Phase 1 of our exploration program on the AuroTellurio Property including mapping, trenching and sampling programs, as well as gravity and magnetic geophysical surveys. Our Phase I exploration activities enabled us to delineate two primary drilling areas on the Property.  Over and above capital we needed for general and administrative operating expenses, we anticipated that we would require approximately $350,000 for our Phase I drilling program at the La Viuda Concessions and we expected to begin exploratory drilling once we raised the required funds.  We filed a registration statement on Form S-1 with the SEC to register for sale 100,000,000 shares of our common stock at a price of $0.005 per share, to raise up to $500,000 to fund our Phase I drilling program and provide working capital.  The registration statement became effective on May 22, 2013, but we were not able to sell any of our shares and, thus, we were not able to fund our Phase I drilling program.

Primarily because we were not able to raise any additional capital to fund our further exploration of the La Viuda Concessions, we determined it would be in the best interests of the Company and its shareholders to explore additional business opportunities and strategic alliances.  As a result of this, we closed the MVP Acquisition on February 7, 2014.  We currently still own and will continue to own our pre-closing assets and liabilities related to our historic AuroTellurio mining business in Mexico, which existed prior to the MVP Acquisition.  Now that we have closed the MVP Acquisition, we have begun to evaluate whether to terminate or split off our mining business (although we are not sure we will be able to complete such a split-off on acceptable terms to us), and pursuant to the terms of the Securities Exchange Agreement, we have acquired and will continue the business of MVP, that is, patent licensing and assertion of rights under patents against parties believed to be selling goods or services that rely upon MVP’s patented technology.  Until such split-off or termination, we continue to incur contractually required and other obligations related to our mining business.  As a result of our ongoing review of our mining business, we determined to terminate our joint venture with Mexivada and on April 28, 2014, we provided the Required Termination Notice to Mexivada under the terms of the AuroTellurio Option Agreement. This action will reduce our mining related costs substantially.

 
5

 
 
The MVP Acquisition 

On February 7, 2014, we entered into a securities exchange agreement (the “Securities Exchange Agreement”) with MVP, MV PAT, and the other members of MVP (MV PAT and such other members, the “Members”). Pursuant to the terms of the Securities Exchange Agreement, the Members sold all of their membership interests in MVP to us in exchange for 9,385,000 shares (the “MVP Exchange Shares”) of our post-Reverse Split (defined below) common stock to be issued following completion of the Reverse Split. As a result of the MVP Acquisition, we have acquired the business of MVP, that is, patent licensing and assertion of rights under patents against parties believed to be selling goods or services that rely upon MVP’s patented technology.

We determined that we should engage in the MVP Acquisition as a means of increasing shareholder value in our common stock.

A summary of the MVP Acquisition and related transactions is discussed below.  For a more detailed discussion of the MVP Acquisition and the related transactions, reference is made to the Company’s Current Report on Form 8-K filed with the SEC on February 10, 2014, as amended.

Pursuant to the Securities Exchange Agreement:

  
At the closing of the MVP Acquisition and pursuant to the terms of the Securities Exchange Agreement, all of the membership interests of MVP issued and outstanding immediately prior to the closing were exchanged (the “Securities Exchange”) for the right to receive 9,385,000 post-Reverse Split shares of our common stock, which shall be delivered to the members of MVP promptly following completion of the Reverse Split.

  
Additionally, at the closing of the MVP Acquisition, we paid MV Patents, LLC, the majority member of MVP, $625,000 in cash consideration, and we agreed to pay to the members of MVP ten (10%) percent of the net proceeds to be received from any Enforcement Activities or Sale Transactions (as such terms are defined in the Securities Exchange Agreement) related to the patents owned or applications pending as of the closing of the MVP Acquisition.
 
  
Upon the closing of the MVP Acquisition, William Meadow was appointed Chief Executive Officer and Chairman of the Board of Directors, Shea Ralph was appointed Chief Financial Officer, Treasurer, Secretary and director and David Rector was appointed Chief Operating Officer (and remains a director of the Company).  James Davidson resigned as Chief Executive Officer and a director of the Company and Michael Baybak resigned as Interim Treasurer, Secretary and a director.
 
 
 
6

 
 
  
Following the closing of the MVP Acquisition, we expect to evaluate whether to terminate or split off our mining business (although we are not sure we will be able to complete such a split-off on acceptable terms to us), and pursuant to the terms of the Securities Exchange Agreement, we have acquired and will continue the business of MVP, that is, patent licensing and assertion of rights under patents against parties believed to be selling goods or services that rely upon MVP’s patented technology.

  
Concurrently with the closing of the MVP Acquisition, we sold to each of David Rector and William Meadow, ten thousand (10,000) shares, for an aggregate of twenty thousand (20,000) shares, of our to-be-authorized and designated Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at a post-Reverse Split price of $0.10 per share.  The Series D Preferred Stock will be equivalent in all respects to our common stock, except that each share of Series D Preferred Stock will be entitled to cast 1,000 votes per share and will have a liquidation preference equal to $0.10 per share.  The sale of the Series D Preferred Stock is further discussed below.

The Securities Exchange Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions.  Breaches of the representations and warranties will be subject to customary indemnification provisions, subject to specified aggregate limits of liability.

For financial reporting purposes, the MVP Acquisition is being accounted for as a “reverse merger” rather than a business combination, because the managing member of MV PAT, the majority member of MVP, effectively controlled the Company immediately following the closing of the MVP Acquisition. As such, MVP is deemed to be the accounting acquirer in the transaction and, consequently, the transaction is being treated as a reverse acquisition of the Company by MVP.  Accordingly, the assets and liabilities and the historical operations that will be reflected in the Company’s ongoing financial statements will be those of MVP.  For periods prior to the formation of MVP (July 26, 2013), MV PAT would be deemed the accounting acquirer.  

The parties have taken all actions with respect to the Securities Exchange intending that it be treated as a tax-free exchange under Section 351 of the Internal Revenue Code of 1986, as amended. It is expected that the $625,000 in cash consideration paid to MV PAT will be treated as taxable income to MV PAT.

The issuance of shares of our common stock to the members of MVP in connection with the Securities Exchange was not, and will not be, registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering, and Regulation D promulgated by the SEC under that section.  These securities may not be offered or sold absent registration or an applicable exemption from the registration requirement, and are subject to further contractual restrictions on transfer as described below.

 
7

 
 
2014 10% Convertible Notes Private Placement Offering

Also on February 7, 2014, we completed a first closing of a related private placement offering (the “2014 Notes Offering”) of $2,942,495 in principal amount of our 10% convertible promissory notes (the “2014 Notes”).  The 2014 Notes sold in the first closing will automatically convert into 5,884,990 shares of the Company’s to-be-authorized, designated and issued Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), at a post-Reverse Split conversion price of $0.50 per share, upon the Company’s filing of a Certificate of Designation of Series C Convertible Preferred Stock (the “Certificate of Series C Designation”) with the Secretary of State of the State of Nevada following completion of the proposed Authorized Capital Increase (defined below) and the related filing of the Articles Amendments (defined below).

On March 3, 2014, we completed a second closing of the 2014 Notes Offering for gross proceeds of $1,017,500 (before deducting placement agent fees and expenses of the offering).  The 2014 Notes sold in the March 3rd closing will automatically convert into 2,035,000 shares of the Company’s to-be-authorized, designated and issued Series C Preferred Stock.

Each share of Series C Preferred Stock will be entitled to a liquidation preference equal to $0.001 per share.  Otherwise, the Series C Preferred Stock will be equivalent in all respects to the Company’s common stock, with each share of Series C Preferred stock entitled to one vote and the holders of the Series C Preferred Stock voting together with the holders of the Company’s common stock. The Series C Preferred Stock will be convertible on a one-for-one basis into shares of our common stock at the option of the holders, subject to a 9.99% blocker.

In connection with the 2014 Notes Offering, we agreed to pay the placement agent, Cavu Securities, LLC (“Cavu”), a cash commission of between 4% and 10% of the gross funds raised from Investors in the 2014 Notes Offering introduced by the placement agent, for a total of $295,150, and to issue to Cavu 250,000 post-Reverse Split shares of our common stock as a retainer fee (the “Retainer Shares”) and warrants (the “Broker Warrants”) to purchase 590,300 shares of our post-Reverse Split common stock. The Broker Warrants have a post-Reverse Split exercise price of $0.50 per share and expire three years after the date of issuance.

Now that the MVP Acquisition has closed, the Company will provide the net proceeds from the 2014 Notes Offering to MVP to finance MVP’s business relating to the enforcement of its intellectual property rights through litigation against, and/or licensing with, any companies that are believed to be infringing certain of the patents owned by MVP. MVP expects to use the net proceeds from the 2014 Notes Offering to pay legal fees and costs relating to these planned litigations and licensing arrangements.
 
The Series D Preferred Stock
 
Concurrently with the closing of the Securities Exchange, we sold to each of David Rector and William Meadow, ten thousand (10,000) shares at a price of $0.10 per share (calculated on a post-Reverse Split basis) of our to be authorized and designated Series D Convertible Preferred Stock (the “Series D Preferred Stock”).  The Series D Preferred Stock will be equivalent in all respects to the Common Stock, other than each share of Series D Preferred Stock will be entitled to cast 1,000 votes per share and will have a liquidation preference equal to $0.10 per share.  Each share of Series D Preferred Stock will automatically convert into One (1) share of Common Stock on the earlier of: (i) the listing the Company’s securities on a national securities exchange and (ii) a change of control of the Company.  Mr. Meadow delivered an irrevocable voting proxy to David Rector covering the shares of Series D Preferred Stock held by Meadow.

 
8

 
 
The Reverse Stock Split and Related Matters
 
On December 24, 2013, we filed a preliminary proxy statement, subsequently amended and to be further amended, on Schedule 14A with the SEC relating to a proposed shareholder vote to approve an amendment to our Articles of Incorporation to effect a reverse stock split (the “Reverse Split”) of our issued and outstanding common stock on a one for one hundred basis (1:100), to increase our authorized preferred stock to 50,000,000 shares from 22,000,000 shares (the “authorized Capital Increase”), to approve a new 2014 equity incentive plan and to approve our name change to MVP Portfolios, Inc.  We expect to file a definitive proxy statement with the SEC on or about May 10, 2014 and then to mail the proxy statement to our shareholders.  We expect to have collected a sufficient number of proxies to approve our shareholder actions by June 15, 2014, following which time we will file a certificate of amendment to our Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada in order to effect the Name Change, the Reverse Split and the Authorized Capital Increase (the “Articles Amendments”).  The Name Change and the Reverse Split will be effective for our principal market, the OTC Markets, Inc. QB Tier, upon approval by the Financial Industry Regulatory Authority (FINRA) at which time a new trading symbol will also become effective.
 
Following the completion of the shareholder vote, we will also file the Certificate of Series C Designation and the Certificate of Designation and Preferences of Series D Convertible Preferred Stock with the Nevada Secretary of State.  At that time, the 2014 Notes will automatically convert into shares of Series C Preferred Stock.

Description of MVP’s Business
 
MVP is engaged in the business of patent licensing and assertion of rights under patents against parties believed to be selling goods or services that rely upon our patented technology.  The Company owns a patent portfolio we refer to as “Video Drive-by” and online mapping, which has previously been used by MVP’s predecessors and licensees commercially.  We currently own (through MVP) a patent portfolio consisting of 8 issued and 11 pending patents.  The patents disclose systems and methods for providing video drive-by data to enable a street level view of a neighborhood surrounding a geographic location.  The systems include, generally, a video and data server farm incorporating at least one video storage server that stores video image files containing video drive-by data corresponding to a geographic location, a data base server that processes a data query received from a user over the internet and an image processing server.  Now that the Transactions have closed, MVP expects to enforce its intellectual property rights through litigation against, and/or licensing with, any companies that are believed to be infringing certain of the patents owned by MVP. MVP expects to use net proceeds from the Private Placement to pay legal fees and costs relating to these planned litigations.

We intend to attempt to maximize the economic benefits of our intellectual property portfolio, add significant talent in technological innovation, and potentially enhance our opportunities for revenue generation through the monetization of our assets, including patents owned by MVP.  Acquisitions typically involve the ongoing relationship of the original innovator(s) and owners to help in the continued development of the portfolio to maximize value.

We intend to expand our intellectual property portfolio through both internal development and acquisition.  We believe that our experience and ability to offer shares of our stock to inventors and others will enable us to expand our intellectual property portfolio as well as create additional intellectually property internally.

We continue to actively seek to broaden our intellectual property portfolio.   Our philosophy is to seek and acquire intellectual property and technology.  We are reviewing portfolio opportunities with a view toward acquiring those which we believe have potential for monetization through licensing opportunities or enforcement which may be related or unrelated to the Video Drive-by and online mapping patents.  We are actively engaged in due diligence with respect to a number of patent and intellectual property portfolios and are in discussions as to the acquisition of several such portfolios.  We will likely need to raise additional capital to make any such acquisition.  There is no assurance that we will succeed in acquiring any such portfolios, as to the terms of any such acquisition or that we will successfully monetize any portfolio that we acquire.

 
9

 
 
Key Elements of Business Strategy

Our intellectual property acquisition, development and licensing business strategy will include the following key elements:
 
 
·  Identify Emerging Growth Areas where Patented Technologies will Play a Vital Role

Certain technologies become core technologies in the way products and services are manufactured, sold and delivered by companies across a wide array of industries.  In conjunction with our partners, patent attorneys, and other patent sourcing professionals, we will identify core, patented technologies that have been or are anticipated to be widely adopted by third parties in connection with the manufacture or sale of products and services.
 
 
·  Contact and Form Alliances with Owners of Core, Patented Technologies

Often individual inventors and small companies have limited resources and/or expertise and are unable to effectively address the unauthorized use of their patented technologies.  We will seek to enter into business agreements with owners of intellectual property that do not have experience or expertise in the areas of intellectual property licensing and enforcement, or that do not possess the in-house resources to devote to intellectual property licensing and enforcement activities, or that, for any number of strategic business reasons, desire to more efficiently and effectively outsource their intellectual property licensing and enforcement activities.

 
·  Effectively  and   Efficiently  Evaluate  Patented  Technologies  for   Acquisition,  Licensing  and Enforcement

Subtleties in the language of a patent, recorded interactions with the patent office, and the evaluation of prior art can make a significant difference in the potential licensing and enforcement revenue derived from a patent or patent portfolio.  It is important to identify potential problem areas, if any, and determine whether potential problem areas can be overcome, prior to acquiring a patent portfolio or launching an effective licensing program.

 
·  Purchase or Acquire the Rights to Patented Technologies

After evaluation, we may elect to purchase the patented technology, or acquire the exclusive right to license the patented technology in all or in specific fields of use.  The original owner of the patent or patent rights will typically receive an upfront acquisition payment or shares of common stock in the Company, or retain the right to a portion of the gross revenues generated from a patent portfolio’s licensing and enforcement program, or a combination of the two.

 
·  Successfully License and Enforce Patents with Significant Royalty Potential

As part of the patent evaluation process, significant consideration is also given to the identification of potential licenses, customers, infringers, industries within which the potential infringers exist, longevity of the patented technology, and a variety of other factors that directly impact the magnitude and potential success of a licensing, development and enforcement program.  We are seeking to hire individuals trained in commercialization and in evaluating potentially infringing technologies and in presenting the claims of our patents and demonstrating how they apply to companies we believe are using our technologies in their products or services.  These presentations can take place in a non-adversarial business setting, but can also occur through the litigation process, if necessary.  Ultimately, we will execute patent licensing arrangements with users of our patented technologies through licensing negotiations, without the filing of patent infringement litigation, or through the negotiation of license and settlement arrangements in connection with the filing of patent infringement litigation.

 
10

 
 
Business Update

On March 17, 2014, Visual Real Estate, Inc., our wholly-owned subsidiary and successor to MVP as a result of a corporate reorganization, filed a patent infringement lawsuit against Google Inc. in the United States District Court for the Middle District of Florida. The lawsuit claims infringement of three of Visual Real Estate’s patents: U.S. Patent number 7,389,181, entitled “Apparatus and Method for Producing Video Drive-By Data Corresponding to a Geographic Location”; U.S. Patent number 7,929,800, entitled “Methods and Apparatus for Generating a Continuum of Image Data”; and U.S. Patent number 8,078,396, entitled “Methods for and Apparatus for Generating a Continuum of Three Dimensional Image Data.” Among other things, the complaint identifies Google Street View and Google Earth as infringing Visual Real Estate’s patents. The case number is 3:14-cv-00274-TJC-PDB.
 
Competition

We expect to encounter significant competition in our new line of business from others seeking to commercialize, acquire, license and develop their intellectual property assets.   Most of our competitors have much longer operating histories, and significantly greater financial and human resources, than we do.   Entities such as Document Security Systems, Inc. (NYSE:DSS), Vringo, Inc. (NYSE:VRNG), VirnetX Holding Corp. (NYSE:VHC), Acacia Research Corporation (NASDAQ:ACTG), Allied Security Trust, Altitude Capital Partners, Augme Technologies Inc. (OTCBB:AUGT) Intellectual Ventures, Ocean Tomo, RPX Corporation (NASDAQ:RPXC), Rembrandt IP Management and others presently market themselves as being in the business of creating, acquiring, licensing or leveraging the value of intellectual property assets.   We expect others to enter the market.   In addition, competitors may seek to acquire the same or similar patents and technologies that we may seek to acquire, making it more difficult for us to realize the value of our assets which may be the result of the inability or unwillingness of third parties to also grant licenses to parties without the cooperation of the owners of other infringed rights.

Research and Development Expenditures
 
We have incurred no research and development expenditures over the last fiscal year and do not anticipate significant future research and development expenditures.
 
Employees
 
We currently have three employees, our Chief Executive Officer, William D. Meadow, our Chief Financial Officer, Shea Ralph, and an Executive Administrator and one consultant.  Our Chief Operating Officer, David Rector, provides his services to us on an independent contractor basis.
 
Offices

Effective August 31, 2013, we terminated our services agreement with Incorporated Communications Services (“ICS”), to reduce our corporate overhead relating to certain administrative costs.  Under this agreement, ICS had provided, among other things, our corporate headquarter offices at 4515 Ocean View Blvd, La Canada, CA.  From that date until the closing of the MVP Acquisition, we utilized the offices of our legal counsel, Gottbetter & Partners, LLP, 488 Madison Avenue, 12th Floor, New York, NY 10022, as our corporate headquarters address.  Effective as of the date of the Securities Exchange, our principal offices are located at 10752 Deerwood Park Blvd., S. Waterview II, Suite 100, Jacksonville, FL 32256, phone (904)-586-8673.  Our website address is still www.californiagoldcorp.com; our new website address is www.mvportfolios.com.

Subsidiaries

We currently have two subsidiaries, CalGold de Mexico, S. de R.L. de C.V., through which we hold our interests in the La Viuda Concessions, and, as of the date of the Securities Exchange, Visual Real Estate, Inc., our patent holding entity.
 
 
11

 
 
Intellectual Property and Patent Rights
 
Our intellectual property will primarily be comprised of trade secrets, patented know-how, issued and pending patents, copyrights and technological innovation.
 
As a result of closing the Securities Exchange, we own a portfolio comprised of approximately 8 patents in the United States and 16 pending patent applications.
 
We have included a list of our U.S. patents below. Each patent below is publicly accessible on the Internet website of the U.S. Patent and Trademark Office at www.uspto.gov.
 
Patent
Number
Application Number
Title
Issue Date
Filing Date
 
11/216,465
APPARATUS AND METHOD
06/17/2008
08/31/2005
7,389,181
 
FOR PRODUCING VIDEO
   
   
DRIVE-BY DATA
   
   
CORRESPONDING TO A
   
   
GEOGRAPHIC LOCATION
   
7,929,800
11/702,708
METHODS AND
04/19/2011
02/06/2007
   
APPARATUS FOR
   
   
GENERATING A
   
   
CONTINUUM OF IMAGE
   
   
DATA
   
8,078,396
12/035,423
METHODS FOR AND
12/13/2011
02/21/2008
   
APPARATUS FOR
   
   
GENERATING A
   
   
CONTINUUM OF THREE
   
   
DIMENSIONAL IMAGE
   
   
DATA
   
8,090,633
12/344,021
METHOD AND APPARATUS
01/03/2012
12/24/2008
   
FOR IMAGE DATA BASED
   
   
VALUATION
   
8,207,964
12/036,197
METHODS AND
   
   
APPARATUS FOR
   
   
GENERATING
   
   
THREE-DIMENSIONAL
   
   
IMAGE DATA MODELS
   
     8,213,743                    13/025,819                         METHODS AND         07/03/2012        02/11/2011
   
                     APPARATUS FOR
       GENERATING A CONTINUUM OF
                       IMAGE DATA
   
8,558,848
13/791,961
                         WIRELESS
                 INTERNET-ACCESSIBLE
10/15/2013
03/09/2013
   
DRIVE-BY STREET VIEW
   
   
SYSTEM AND METHOD
   
8,554,015
13/481,852
METHODS AND
10/08/2013
05/27/2012
   
APPARATUS FOR
   
   
GENERATING A
   
   
    CONTINUUM OF IMAGE
   
   
DATA
   
 
 
 
12

 

 
ITEM 1A.      RISK FACTORS

An investment in shares of our common stock is highly speculative and involves a high degree of risk.  We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict.  Before investing in our common stock you should carefully consider the following risks, together with the financial and other information contained in this Report.  If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be materially adversely affected.  In that case, the trading price of our common stock would likely decline and our stockholders may lose all or a portion of their investments in us.  Only those investors who can bear the risk of loss of their entire investment should consider investing in our common stock.

The risk factors set forth below relate to our new business focus following the closing of the MVP Acquisition.

RISKS RELATED TO OUR BUSINESS AND FINANCIAL CONDITION

The Company has changed the focus of its business to commercializing, developing and monetizing intellectual property, including through licensing and enforcement. The Company may not be able to successfully monetize the patents, which it acquires and thus it may fail to realize all of the anticipated benefits of such acquisition.
 
There is no assurance that the Company will be able to successfully commercialize, acquire, develop or monetize the patent portfolios that it acquired from MVP.  The acquisition of the patents could fail to produce anticipated benefits, or could have other adverse effects that the Company does not currently foresee.  Failure to successfully monetize these patent assets may have a material adverse effect on the Company’s business, financial condition and results of operations.
 
In addition, the acquisition of the patent portfolios is subject to a number of risks, including the fact that there is a significant time lag between acquiring a patent portfolio and recognizing revenue from those patent assets.  During that time lag, material costs are likely to be incurred that would have a negative effect on the Company’s results of operations, cash flows and financial position.
 
Therefore, there is no assurance that the monetization of the patent portfolios acquired will generate enough revenue to recoup the Company’s investment or outlays.
 
The Companys operating history makes it difficult to evaluate its current business and future prospects.
 
The Company has, prior to the acquisition of MVP, been involved in businesses primarily as a junior mining exploration company.  The Company not only has no operating history in executing its additional new business which includes, among other things, creating, commercializing, prosecuting, licensing, litigating or otherwise monetizing patent assets, but the Company’s lack of operating history in this sector makes it difficult to evaluate its additional new business model and future prospects.
 
 
13

 
 
The Company will be initially reliant primarily on the patent assets it acquired from MVP.  If the Company is unable to commercialize, license or otherwise monetize such assets and generate revenue and profit through those assets or by other means, there is a significant risk that the Companys business would fail.
 
Upon closing of the Securities Exchange, the Company acquired a portfolio of patent assets from MVP that it plans to commercialize, license or otherwise monetize.  If the Company’s efforts to generate revenue from such assets fail, the Company will have incurred significant losses and may be unable to acquire additional assets.  If this occurs, the Company’s business would likely fail.
 
Upon closing of the Securities Exchange and commencement of its additional new line of business, the Company expects to commence legal proceedings against one or more defendants, and the Company expects such litigation to be time-consuming and costly, which may adversely affect its financial condition and its ability to operate its business.

As described above, we expect to institute patent litigation.  The Company’s viability could be highly dependent on the outcome of this litigation, the willingness of defendants to engage in settlement discussions, changes in the law and regulatory environment and as a result there is a risk that the Company may be unable to achieve the results it desires from such litigation, which failure would harm the Company’s business to a great degree.  In addition, the defendants in this litigation are likely to be much larger than the Company and have substantially more resources than the Company does, which could make the Company’s litigation efforts more difficult and costly. The Company anticipates that its legal proceedings may continue for several years and may require significant expenditures including the costs of experts and other expenses.  Disputes regarding the assertion of patents and other intellectual property rights are highly complex and technical.  Once initiated, the Company may be forced to litigate against others to enforce or defend its intellectual property rights or to determine the validity and scope of other parties’ proprietary rights.  The defendants or other third parties involved in the lawsuits in which the Company is involved may allege defenses and/or file counterclaims in an effort to avoid or limit liability and damages for patent infringement.  If such defenses or counterclaims are successful, they may preclude the Company’s ability to derive licensing revenue from the patents.  Third parties may sue us for patent or other intellectual property infringement. A negative outcome of any such litigation, or one or more claims contained within any such litigation, could materially and adversely impact the Company’s business and the value of the patents.  Additionally, the Company anticipates that its legal fees and other expenses could be material and could negatively impact the Company’s financial condition and results of operations and may result in its inability to continue its business.
 
The Company may seek to internally develop additional new inventions and intellectual property, which would take time and be costly. Moreover, the failure to obtain or maintain intellectual property rights for such inventions would lead to the loss of the Companys investments in such activities.

Part of the Company’s new additional business focus may include the internal development of new inventions or intellectual property that the Company will seek to monetize.  However, this aspect of the Company’s business would likely require significant capital and would take time to achieve.  There is also the risk that the Company’s initiatives in this regard would not yield any viable new inventions or technology, which would lead to a loss of the Company’s investments in time and resources in such activities.

 
 
14

 
 
In addition, even if the Company is able to internally develop new inventions, in order for those inventions to be viable and to compete effectively, the Company would need to develop and maintain, and it would heavily rely on, a proprietary position with respect to such inventions and intellectual property.  However, there are significant risks associated with any such intellectual property the Company may develop principally including the following:
 
 
 
  patent applications the Company may file may not result in issued patents or may take longer than the Company expects to result in issued patents;
 
 
  the Company may be subject to interference proceedings;
 
 
  the Company may be subject to opposition proceedings in the U.S. or foreign countries;

 
  any patents that are issued to the Company may not provide meaningful protection;

 
  the Company may not be able to develop additional proprietary technologies that are patentable;

 
  other companies may challenge patents issued to the Company;
 
 
   other companies may have independently developed and/or patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate the Company’s technologies;

 
   other companies may design around technologies the Company has developed; and
 
 
   enforcement of the Company’s patents would be complex, uncertain and very expensive.

The Company cannot be certain that patents will be issued as a result of any future applications, or that any of the Company’s patents, once issued, will provide the Company with adequate protection from competing products.  For example, issued patents may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope.  In addition, since publication of discoveries in scientific or patent literature often lags behind actual discoveries, the Company cannot be certain that it will be the first to make its additional new inventions or to file patent applications covering those inventions.  It is also possible that others may have or may obtain issued patents that could prevent the Company from commercializing the Company’s products or require the Company to obtain licenses requiring the payment of significant fees or royalties in order to enable the Company to conduct its business.  As to those patents that the Company may license or otherwise monetize, the Company’s rights will depend on maintaining its obligations to the licensor under the applicable license agreement, and the Company may be unable to do so.  The Company’s failure to obtain or maintain intellectual property rights for the Company’s inventions would lead to the loss the Company’s investments in such activities, which would have a material and adverse effect on the Company’s company.
 
Moreover, patent application delays could cause delays in recognizing revenue from the Company’s internally generated patents and could cause the Company to miss opportunities to license patents before other competing technologies are developed or introduced into the market.
 
 
15

 
 
New legislation, regulations or court rulings related to enforcing patents could harm the Company’s new line of business and operating results.

If Congress, the United States Patent and Trademark Office or courts implement new legislation, regulations or rulings that impact the patent enforcement process or the rights of patent holders, these changes could negatively affect the Company’s new business model.  For example, limitations on the ability to bring patent enforcement claims, limitations on potential liability for patent infringement, lower evidentiary standards for invalidating patents, increases in the cost to resolve patent disputes and other similar developments could negatively affect the Company’s ability to assert its patent or other intellectual property rights.
 
In addition, on September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), was signed into law.  The Leahy-Smith Act includes a number of significant changes to United States patent law.  These changes include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.  The U.S. Patent Office is currently developing regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act recently became effective.  Accordingly, it is too early to tell what, if any, impact the Leahy-Smith Act will have on the operation of the Company’s business.  However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of the Company’s issued patents, all of which could have a material adverse effect on the Company’s business and financial condition.
 
On February 27, 2013, US Representatives DeFazio and Chaffetz introduced HR845.  In general, the bill known as the SHIELD Act (“Saving High-tech Innovators from Egregious Legal Disputes”), seeks to assess legal fee liability to plaintiffs in patent infringement actions for defendants costs.  In the event that the bill becomes law, the potential obligation to pay the legal fees of defendants in patent disputes could have a material adverse effect on the Company’s business or financial condition.
 
On June 4, 2013, the Obama Administration issued executive actions and legislative recommendations.  The legislative measures recommended by the Obama Administration include requiring patentees and patent applicants to disclose the “Real Party-in-Interest”, giving district courts more discretion to award attorney’s fees to the prevailing party, requiring public filing of demand letters such that they are accessible to the public, and protecting consumers against liability for a product being used off -the shelf and solely for its intended use.
 
The executive actions includes ordering the USPTO to make rules to require the disclosure of the Real Party-in-Interest by requiring patent applicants and owners to regularly update ownership information when they are involved in proceedings before the USPTO (e.g. specifying the “ultimate parent entity”) and requiring the USPTO to train its examiners to better scrutinize functional claims to prevent allowing overly broad claims.
 
On October 23, 2013, Representative Bob Goodlatte with bipartisan support introduced a new set of proposed patent reforms titled the “Innovation Act.”  The Innovation Act has a number of major proposed changes.  Some of the proposed changes include a heightened pleading requirement for the filing of patent infringement claims.  The proposed changes require a particularized statement with detailed specificity regarding how each asserted claim term corresponds to the functionality of each accused instrumentality.  The Innovation Act also includes a provision that allows prevailing defendants to collect attorney fees from non-plaintiffs who have substantial interest in the asserted patent.  Moreover, a patentee who gives a covenant not to sue to a defendant will be deemed a non-prevailing party, and therefore, subject to attorney fees.
 
The Innovation Act also calls for discovery to be limited until after claim construction. The patent infringement plaintiff must also disclose anyone with a financial interest in either the asserted patent or the patentee and must disclose the ultimate parent entity.  When a manufacturer and its customers are sued at the same time, the suit against the customer would be stayed as long as the customer agrees to be bound by the results of the case.
 
It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become enacted as laws.   Compliance with any new or existing laws or regulations could be difficult and expensive, affect the manner in which the Company conducts its business and negatively impact the Company’s business, prospects, financial condition and results of operations.
 

 
16

 
 
The Companys acquisitions of patent assets may be time consuming, complex and costly, which could adversely affect the Companys operating results.
 
Acquisitions of patent or other intellectual property assets, which are and will be critical to the Company’s business plan, are often time consuming, complex and costly to consummate.  The Company may utilize many different transaction structures in its acquisitions and the terms of such acquisition agreements tend to be heavily negotiated.  As a result, the Company expects to incur significant operating expenses and will likely be required to raise capital during the negotiations even if the acquisition is ultimately not consummated.  Even if the Company is able to acquire particular patent assets, there is no guarantee that the Company will generate sufficient revenue related to those patent assets to offset the acquisition costs.  While the Company will seek to conduct confirmatory due diligence on the patent assets the Company is considering for acquisition, the Company may acquire patent assets from a seller who does not have proper title to those assets.  In those cases, the Company may be required to spend significant resources to defend the Company’s interest in the patent assets and, if the Company is not successful, its acquisition may be invalid, in which case the Company could lose part or all of its investment in the assets.
 
The Company may also identify patent or other intellectual property assets that cost more than the Company is prepared to spend with its own capital resources.  The Company may incur significant costs to organize and negotiate a structured acquisition that does not ultimately result in an acquisition of any patent assets or, if consummated, proves to be unprofitable for the Company.  These higher costs could adversely affect the Company’s operating results, and if the Company incurs losses, the value of its securities will decline.
 
In addition, the Company may acquire patents and technologies that are in the early stages of adoption in the commercial, industrial and consumer markets.  Demand for some of these technologies will likely be untested and may be subject to fluctuation based upon the rate at which the Company’s licensees will adopt its patents and technologies in their products and services.  As a result, there can be no assurance as to whether technologies the Company acquires or develops will have value that it can monetize.
 
In certain acquisitions of patent assets, the Company may seek to defer payment or finance a portion of the acquisition price. This approach may put the Company at a competitive disadvantage and could result in harm to the Companys business.
 
The Company has limited capital and may seek to negotiate acquisitions of patent or other intellectual property assets where the Company can defer payments or finance a portion of the acquisition price.  These types of debt financing or deferred payment arrangements may not be as attractive to sellers of patent assets as receiving the full purchase price for those assets in cash at the closing of the acquisition.  As a result, the Company might not compete effectively against other companies in the market for acquiring patent assets, many of whom have greater cash resources than the Company has.  In addition, any failure to satisfy the Company’s debt repayment obligations may result in adverse consequences to its operating results.
 
Any failure to maintain or protect the Companys patent assets or other intellectual property rights could significantly impair its return on investment from such assets and harm the Companys brand, its business and its operating results.

The Company’s ability to operate its new line of business and compete in the intellectual property market largely depends on the superiority, uniqueness and value of the Company’s acquired patent assets and other intellectual property.  To protect the Company’s proprietary rights, the Company will rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with its employees and third parties, and protective contractual provisions.  No assurances can be given that any of the measures the Company undertakes to protect and maintain its assets will have any measure of success.
 
Following the acquisition of patent assets, the Company will likely be required to spend significant time and resources to maintain the effectiveness of those assets by paying maintenance fees and making filings with the United States Patent and Trademark Office.  The Company may acquire patent assets, including patent applications, which require the Company to spend resources to prosecute the applications with the United States Patent and Trademark Office.  Further, there is a material risk that patent related claims (such as, for example, infringement claims (and/or claims for indemnification resulting therefrom), unenforceability claims, or invalidity claims) will be asserted or prosecuted against the Company, and such assertions or prosecutions could materially and adversely affect the Company’s business.   Regardless of whether any such claims are valid or can be successfully asserted, defending such claims could cause the Company to incur significant costs and could divert resources away from the Company’s other activities.
 
 
17

 
 
Despite the Company’s efforts to protect its intellectual property rights, any of the following or similar occurrences may reduce the value of the Company’s intellectual property:
 
 
  the Company’s applications for patents, trademarks and copyrights may not be granted and, if granted, may be challenged or invalidated;
 
 
  issued trademarks, copyrights, or patents may not provide the Company with any competitive advantages when compared to potentially infringing other properties;
 
 
  the Company’s efforts to protect its intellectual property rights may not be effective in preventing misappropriation of the Company’s technology; or
 
 
  the Company’s efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior to those the Company acquires and/or prosecutes.
 
  Moreover, the Company may not be able to effectively protect its intellectual property rights in certain foreign countries where the Company may do business in the future or from which competitors may operate.  If the Company fails to maintain, defend or prosecute its patent assets properly, the value of those assets would be reduced or eliminated, and the Company’s business would be harmed.
 
Weak global economic conditions may cause infringing parties to delay entering into licensing agreements, which could prolong the Companys litigation and adversely affect its financial condition and operating results.
 
The Company’s new additional business plan depends significantly on worldwide economic conditions, and the United States and world economies have recently experienced weak economic conditions.  Uncertainty about global economic conditions poses a risk as businesses may postpone spending in response to tighter credit, negative financial news and declines in income or asset value s.  This response could have a material negative effect on the willingness of parties infringing on the Company’s assets to enter into licensing or other revenue generating agreements voluntarily.  Entering into such agreements is critical to the Company’s business plan, and the Company’s failure to do so could cause material harm to its business.
 
If the Company is unable to adequately protect its intellectual property, the Company may not be able to compete effectively.
 
The Company’s ability to compete depends in part upon the strength of the Company’s proprietary rights that it will own as a result of the Securities Exchange or may hereafter acquire in its technologies, brands and content.  The Company intends to rely on a combination of U.S. and foreign patents, copyrights, trademark, trade secret laws and license agreements to establish and protect its intellectual property and proprietary rights.  The efforts the Company takes to protect its intellectual property and proprietary rights may not be sufficient or effective at stopping unauthorized use of its intellectual property and proprietary rights.  In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which the Company’s services are made available. There may be instances where the Company is not able to fully protect or utilize its intellectual property in a manner that maximizes competitive advantage.  If the Company is unable to protect its intellectual property and proprietary rights from unauthorized use, the value of the Company’s products may be reduced, which could negatively impact the Company’s new business.  The Company’s inability to obtain appropriate protections for its intellectual property may also allow competitors to enter the Company’s markets and produce or sell the same or similar products.  In addition, protecting the Company’s intellectual property and other proprietary rights is expensive and diverts critical managerial resources.  If any of the foregoing were to occur, or if the Company is otherwise unable to protect its intellectual property and proprietary rights, the Company’s business and financial results could be adversely affected.
 
 
18

 
 
If the Company is forced to resort to legal proceedings to enforce its intellectual property rights, the proceedings could be burdensome and expensive.  In addition, the Company’s proprietary rights could be at risk if the Company is unsuccessful in, or cannot afford to pursue, those proceedings.  The Company will also rely on trade secrets and contract law to protect some of its proprietary technology. The Company will enter into confidentiality and invention agreements with its employees and consultants.  Nevertheless, these agreements may not be honored and they may not effectively protect the Company’s right to its un-patented trade secrets and know-how. Moreover, others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the Company’s trade secrets and know-how.

Being a public company has increased our expenses and administrative workload.

As a public company, we must comply with various laws and regulations, including the Sarbanes-Oxley Act of 2002 and related rules of the SEC.  Complying with these laws and regulations requires the time and attention of our board of directors and management, and increases our expenses.  Among other things, we must:

  
maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

  
maintain policies relating to disclosure controls and procedures;

  
prepare and distribute periodic reports in compliance with our obligations under federal securities laws;

  
institute a more comprehensive compliance function, including with respect to corporate governance; and

  
involve to a greater degree our outside legal counsel and accountants in the above activities.

In addition, being a public company has made it more expensive for us to obtain director and officer liability insurance.  In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.  These factors could also make it more difficult for us to attract and retain qualified executives and members of our board of directors, particularly directors willing to serve on an audit committee which we expect to establish.

RISKS RELATED TO OUR COMMON STOCK

There is not now, and there may not ever be, an active market for our common stock.

There currently is a limited public market for our common stock.  Further, although our common stock is currently quoted on the OTC Markets, trading of our common stock may be extremely sporadic.  For example, several days may pass before any shares may be traded.  As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations of the price of, our common stock.  Accordingly, investors must assume they may have to bear the economic risk of an investment in our common stock for an indefinite period of time.  There can be no assurance that a more active market for our common stock will develop, or if one should develop, there is no assurance that it will be sustained.  This severely limits the liquidity of our common stock, and would likely have a material adverse effect on the market price of our common stock and on our ability to raise additional capital.

 
19

 
 
We cannot assure you that our common stock will become liquid or that it will be listed on a securities exchange.

Until our common stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq National Market, we expect our common stock to remain eligible for quotation on the OTC Markets, or on another over-the-counter quotation system.  In those venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of our common stock.  In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors.  Consequently, such regulations may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity of our common stock.  This would also make it more difficult for us to raise capital.

Our common stock is subject to the “penny stock” rules of the SEC and FINRA’s sales practice requirements, and the trading market in our common stock is limited, which makes transactions in our common stock cumbersome and may reduce the value of an investment in the stock.

The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  For any transaction involving a penny stock, unless exempt, the rules require:

  
that a broker or dealer approve a person’s account for transactions in penny stocks; and

  
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
 
  
obtain financial information and investment experience objectives of the person; and
 
  
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth:

  
the basis on which the broker or dealer made the suitability determination; and

  
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of common stock and cause a decline in the market value of stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.  Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information.  Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.  FINRA’s requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

 
20

 
 
The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.

The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as:
 
  
actual or anticipated variations in our operating results;

  
announcements of developments by us, our strategic partners or our competitors;

  
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

  
adoption of new accounting standards affecting our industry;

  
additions or departures of key personnel;

  
sales of our common stock or other securities in the open market; and
 
  
other events or factors, many of which are beyond our control.

The stock market is subject to significant price and volume fluctuations.  In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such company.  Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and resources, which could harm our business and financial condition.

Compliance with U.S. securities laws, including the Sarbanes-Oxley Act, will be costly and time-consuming.

We are a reporting company under U.S. securities laws and are obliged to comply with the provisions of applicable U.S. laws and regulations, including the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002 and the related rules of the SEC, and the rules and regulations of the relevant U.S. market, in each case, as amended from time to time.  Preparing and filing annual and quarterly reports and other information with the SEC, furnishing audited reports to shareholders and other compliance with these rules and regulations will involve a material increase in regulatory, legal and accounting expenses and the attention of management, and there can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all.

We do not anticipate dividends to be paid on our common stock, and investors may lose the entire amount of their investment.

Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future.  We expect to use future earnings, if any, to fund business growth.  Therefore, shareholders will not receive any funds absent a sale of their shares.  We cannot assure shareholders of a positive return on their investment when they sell their shares, nor can we assure that shareholders will not lose the entire amount of their investment.

If securities analysts do not initiate coverage or continue to cover our common stock or publish unfavorable research or reports about our business, this may have a negative impact on the market price of our common stock.

The trading market for our common stock may be affected by, among other things, the research and reports that securities analysts publish about our business and the Company.  We do not have any control over these analysts.  There is no guarantee that securities analysts will cover our common stock.  If securities analysts do not cover our common stock, the lack of research coverage may adversely affect its market price.  If we are covered by securities analysts, and our stock is the subject of an unfavorable report, our stock price and trading volume would likely decline.  If one or more of these analysts ceases to cover the Company or fails to publish regular reports on the Company, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

 
21

 
 
State Blue Sky registration – potential limitations on resale of the shares.

The holders of the shares of our common stock and persons, who desire to purchase the shares in any trading market that might develop in the future, should be aware that there may be significant state law restrictions upon the ability of investors to resell the securities.  Accordingly, investors should consider the secondary market for our securities to be a limited one.  It is the intention of our management to seek coverage and publication of information regarding the Company in an accepted publication which permits a “manuals exemption.”  This manuals exemption permits a security to be sold by shareholders in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by that state.  The listing entry must contain (i) the names of issuers, officers, and directors, (ii) an issuer’s balance sheet, and (iii) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  The principal accepted manuals are those published by Standard and Poor’s, and Mergent, Inc.  Many states expressly recognize these manuals.  A smaller number of states declare that they recognize securities manuals, but do not specify the recognized manuals.  Among others, the following states do not have any provisions and, therefore, do not expressly recognize the manuals exemption:  Alabama, California, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common stock.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present shareholders and the purchasers of our common stock offered hereby.  We are currently authorized to issue an aggregate of 322,000,000 shares of capital stock, par value $0.001 per share, consisting of 300,000,000 shares of common stock and 22,000,000 shares of preferred stock, with the preferences and rights determined by our Board of Directors.  As of April __, 2014, there were 131,201,260 shares of our common stock and 16,000,000 shares of our preferred stock outstanding.  As April __, 2014, there were 16,000,000 shares our common stock reserved for issuance upon conversion of our Non-Voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”), and 38,739,129 shares reserved for issuance upon the exercise of warrants issued from December 2010 through July 2011 (the “2010/2011 Warrants”).  Assuming the effectiveness of our proposed Reverse Split and Authorized Capital Increase, upon effectiveness of the Reverse Split and Authorized Capital Increase we will have 1,312,013 shares of our common stock outstanding in the hands of our currently existing shareholders; 9,385,000 shares of our common stock issuable in connection with the MVP Acquisition; 160,000 shares of our Series A Preferred Stock outstanding; 3,329,530 shares of our Series B Preferred Stock (defined below), 7,920,000 shares of our Series C Preferred Stock (defined below) and 20,000 shares of our Series D Preferred Stock (defined below) issuable in connection with the MVP Acquisition; and approximately 387,391 shares of our common stock issuable upon exercise of our outstanding 2010/2011 Warrants and 590,300 shares of our common stock issuable upon exercise of the Broker Warrants.

Any future issuance of our equity or equity-backed securities may dilute then-current shareholders’ ownership percentages and could also result in a decrease in the fair market value of our equity securities, because our assets would be owned by a larger pool of outstanding equity.  As described above, we may need to raise additional capital through public or private offerings of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.  We may also issue such securities in connection with hiring or retaining employees and consultants (including stock options issued under our equity incentive plans), as payment to providers of goods and services, in connection with future acquisitions or for other business purposes.  Our Board of Directors may at any time authorize the issuance of additional common or preferred stock without common shareholder approval, subject only to the total number of authorized common and preferred shares set forth in our certificate of incorporation.  The terms of equity securities issued by us in future transactions may be more favorable to new investors, and may include dividend and/or liquidation preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect.  Also, the future issuance of any such additional shares of common or preferred stock or other securities may create downward pressure on the trading price of the common stock.  There can be no assurance that any such future issuances will not be at a price (or exercise prices) below the price at which shares of the common stock are then traded.

 
22

 
 
We may obtain additional capital through the issuance of preferred stock, which may limit your rights as a holder of our common stock.

If and when our Authorized Capital Increase is approved by our shareholders and we file the Articles Amendments with the Nevada Secretary of State, we will have a total of 50 million shares of preferred stock authorized for issuance, with 16,730,470 of such shares available for future issuances.  Without any further shareholder vote or action, our Board of Directors may designate and approve for issuance additional shares of our preferred stock out of that number.  The terms of any such preferred stock may include priority claims to assets and dividends and special voting rights which could limit the rights of the holders of our common stock.  The designation and issuance of additional preferred stock favorable to current management or shareholders could make any possible takeover of the Company or the removal of our management more difficult.

If the Reverse Split and Authorized Capital Increase are not approved by our shareholders, we may have to repay outstanding debt and renegotiate the terms of the MVP Acquisition.
 
Our Board of Directors believes that we will have more than the required majority of shareholder votes to approve our proposed Reverse Split and Authorized Capital Increase.  If, however, we do not obtain sufficient votes to approve the Reverse Split and/or the Authorized Capital Increase, we would not be able to issue the MVP Exchange Shares, the Series B Preferred Stock upon conversion of the 2013 Notes, the Exchange Shares (defined below), the Series C Preferred Stock upon conversion of the 2014 Notes or the Series D Preferred Stock.  In this situation, we would be required to repay the 2013 Notes (November 15, 2015 maturity date) and the 2014 Notes (May 2014 maturity dates with a possible 90 day extension at the option of the Company) and we would have to renegotiate the terms of the MVP Acquisition. There can be no assurance that we would have the required funds at the required times to repay the 2013 Notes and the 2014 Notes or that we would be able to successfully renegotiate the terms of the MVP Acquisition.  Although we expect to be able to collect the required votes to approve the Reverse Split and Authorized Capital Increase, there can be no assurance that we will be successful in this matter.  Failure to receive shareholder approval of the Reverse Split or the Authorized Capital Increase could have deleterious effects on our business and future financial prospects.

Any failure to maintain effective internal control over our financial reporting could materially adversely affect us.

Section 404 of the Sarbanes-Oxley Act of 2002 will require us to include in our annual reports on Form 10-K, an assessment by management of the effectiveness of our internal control over financial reporting.  While we intend to diligently and thoroughly document, review, test and improve our internal control over financial reporting in order to ensure compliance with Section 404, management may not be able to conclude that our internal control over financial reporting is effective.  This could result in a loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the price of our common stock.

In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404.  Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts.  We currently do not have an internal audit group, and we will need to retain the services of additional accounting and financial staff or consultants with appropriate public company experience and technical accounting knowledge to satisfy the ongoing requirements of Section 404.  We intend to review the effectiveness of our internal controls and procedures and make any changes management determines appropriate, including to achieve compliance with Section 404 by the date on which we are required to so comply.

Any significant deficiencies in our control systems may affect our ability to comply with SEC reporting requirements and any applicable listing standards or cause our financial statements to contain material misstatements, which could negatively affect the market price and trading liquidity of our common stock and cause investors to lose confidence in our reported financial information, as well as subject us to civil or criminal investigations and penalties.

 
23

 
 
ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

General

The information set forth below relates to the properties in Mexico where we hold rights under our legacy mining business.  We do not hold any physical properties relating to our post-MVP Acquisition business.

The La Viuda Concessions

Property Mineral Rights

On February 11, 2011, we entered into the AuroTellurio Option Agreement with Mexivada to acquire up to an 80% interest in Mexivada’s La Viuda Concessions south of Moctezuma, Sonora, Mexico.  The first 20% interest in the La Viuda Concessions vested in us as of August 28, 2012.

The La Viuda Concessions comprise two exploration concessions granted by the Mexican government to Compania Minera Mexivada, S.A. de C.V., a wholly owned subsidiary of Mexivada.  The La Viuda Concessions, details of which are set forth below, cover approximately 7,624 hectares, or 18,839.31 acres.
 
Concession
Status
File No.
Legal Title #
Title Grant Date
Title Expiry Date
Surface Area (Ha.)
La Viuda
Granted
082/323550
232498
August 18, 2008
August 18, 2058
44
La Viuda 1
Granted
082/32407
232859
October 29, 2008
October 29, 2058
7,580.79
 
 
24

 

 
Property Location

The La Viuda Concessions are located in the northeastern portion of the State of Sonora, Mexico, near the Chihuahua border and just south of the town of Moctezuma.  The property is approximately 280 miles southeast of Tucson, Arizona.  The following map shows the approximate location of the concessions:
 
 
 
 

 
Figure 1 – Location map of the La Viuda Concessions in Sonora, Mexico.
 
The La Viuda and La Viuda 1 concessions, shown on the map below, are the two concessions making up the Property.  The La Viuda concession is approximately 47 hectares in size (116.14 acres), and is located to the south and southeast of a concession owned by Minera Teloro, S.A. de C.V., a Mexican company affiliated with First Solar.  The La Viuda 1 is a large concession that covers an area of approximately 9 by 9 kilometers, encompassing about 7,574 hectares (18715.76 acres), and surrounds the La Viuda and other third party concessions.  The La Viuda Concessions are located approximately 15 miles south of Moctezuma and 7.5 miles due west of the town of Terapa.
 
 
 
 
25

 
 
 
Figure 2 – Location of the La Viuda and La Viuda 1 concessions (outlined in green).

Regional Geology

The La Viuda concessions are situated within the Sierra Madre Occidental (SMO) geologic-physiographic province.  The dominant rocks are volcanics of Tertiary age which host a number of world-class precious metal mines and deposits.  In the Moctezuma region, which is where the property is located, the dominant rock types are of Lower Cretaceous age, and they consist mostly of calcareous, argillaceous and detrital rocks.  These units, in turn, are intruded by an igneous body of batholitic dimensions of Early Cretaceous to Early Tertiary age. The composition of this extensive batholith is in the granitic to granodioritic range.

The rocks of Tertiary age in this region are represented by a volcanic package that contains one or two of horizons of limestone (host rocks for base metal mineralization in the Oposura district near Moctezuma), and by a sequence of volcanic rocks consisting of pyroclastic units, whose composition varies from mafic to felsic (e.g. dacites). A plutonic intrusive body of Tertiary age, as well as hypabyssal rocks and dikes, also occurs in the district. Silicification occurs associated with some mineralized zones; this alteration-mineralization event post-dates the volcanic/intrusive sequence in the Moctezuma District.

Overlying the Tertiary rock sequence are continental clastic deposits capped by younger basalt flows. Lastly, alluvial and slope deposits of Quaternary age fill the valley floors and side slopes.

Local Geology

The main rock types in the district correspond to volcanic rocks of rhyolitic composition, and younger, possibly post-ore, andesites.  The Arenillas formation, which has been widely studied by various entities, is of greater importance than other rock units for mineralization at the Bambolla concession. This formation consists of a package of volcaniclastic rocks that contains one or two limestone layers, which are host rocks for mineralization.  The rocks present in the La Viuda Concessions are Tertiary calc-alkaline volcanics and dikes.

Plutonic rocks and dikes are also present. Tertiary sedimentary rock units, including sandstones, conglomerates, mudstones and basalts, are also evident.

 
26

 
 
Mineralization

The mineral deposits in the Oposura sector of the Moctezuma District basically consist of replacement-style, zinc-lead base metal deposits.  Precious metal mineralization occurs in structurally-controlled veins, with the majority of these occurrences consisting of epithermal quartz- and quartz-carbonate veins with anomalous values of gold, silver and tellurium. A second type of structure-controlled vein type deposits occurring in the area contains base metal massive sulfides.

Structure

The La Viuda gold-mineralized structure is a WNW trending fault-controlled vein system with local exposures on the surface north of the La Viuda concession. These veins are, on the average, 0.5 to 1.0 meter in width. The vein is comprised of visible oxide minerals, mainly manganese oxides.  Immediately south of La Viuda there is another vein system trending E-W to WNW and projecting to the east just south of the La Viuda concession. In this vein there is moderate sulfide mineralization along a fracture system, where stains of scorodite, an ion arsenate mineral, were observed thus suggesting that this structure could be a gold carrier.

It appears that from La Bambolla and further to the south the mineralized structures are oriented more E-W rather than NW. The main structures at the Bambolla Mine project east and west, toward the eastern Property boundaries of La Viuda 1.

Grades
 
The important minerals present in the property, as documented by the Consejo de Recursos Minerales, are principally gold, silver and tellurium.  However, limited surface geologic mapping and sampling work have been conducted to date to document the extent and average grades of the structures evident in the property.

ITEM 3.     LEGAL PROCEEDINGS

No legal or governmental proceedings are presently pending or, to our knowledge, threatened, to which we are a party.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

 
27

 
 
PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Since August 2009, when we changed our name to California Gold Corp., our trading symbol changed to “CLGL.”  We expect that our ticker symbol will change again, once our proposed name change to MV Portfolios, Inc. is approved by FINRA.

The following table sets forth the high and low closing bid prices for our common stock for the fiscal quarters indicated as reported on the OTC Markets, Inc. QB Tier. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.  Historically, our common stock has been thinly traded and, thus, current pricing of our common stock on the OTC Markets, Inc. QB Tier may not necessarily represent its fair market value.

 Period
High
 
Low
 
         
Fiscal Year Ending January 31, 2013
       
First Quarter
  $ .12     $ .02  
Second Quarter
    .033       .011  
Third Quarter
    .05       .009  
Fourth Quarter
    .017       .0014  
                 
Fiscal Year Ending January 31, 2014
               
First Quarter
  $ .011       .005  
Second Quarter
    .01       .005  
Third Quarter
    .0068       .003  
Fourth Quarter
    .025       .0035  
                 
 
Dividends
 
We have never declared any cash dividends with respect to our common stock.  Future payment of dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial condition and other relevant factors.  Other than provisions of the Nevada Revised Statutes requiring post-dividend solvency according to certain measures, there are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock.  Nonetheless, we presently intend to retain future earnings, if any, for use in our business and have no present intention to pay cash dividends on our common stock.
 
Securities Authorized For Issuance Under Equity Compensation Plans

In June 2007, we adopted our 2007 Plan.   The 2007 Plan was approved by our Board of Directors and the holders of a majority of the outstanding shares of our common stock.  In December 2010, the number of shares reserved for issuance under the 2007 Plan was increased by the Board from 3,000,000 shares to 16,000,000 shares of common stock, subject to adjustment under certain circumstances. This increase was approved by our then majority stockholder. 

 
28

 
 
Because the 2007 Plan had already been in existence for seven years, effective as of February 7, 2014 our Board of Directors terminated the 2007 Plan and adopted a new plan, the 2014 Equity Incentive Plan, with 6,150,564 post-Reverse Split shares of our common stock available for grant under the 2014 Plan.  Our Board of Directors has recommended that the holders of shares of our outstanding common stock approve the 2014 Plan.

We have not maintained any other equity compensation plans since our inception.

The following table provides information as of January 31, 2014, with respect to the shares of common stock that were available for issuance under our existing equity compensation plan at that time, the 2007 Plan:

Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
   
Weighted-average exercise price of outstanding options, warrants and rights
   
Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a))(2)
 
   
(a)
   
(b)
   
(c)
 
   Equity compensation plans approved by security holders (1)
                16,000,000  
   Equity compensation plans not approved by security holders
                 
                                               Total
                 
 
(1)  
 2007 Equity Incentive Plan, terminated as of February 7, 2014.

Recent Sales of Unregistered Securities
 
Except as previously disclosed in Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we have filed, or otherwise set forth immediately below, during the period covered by this Report we have not sold any of our equity securities that were not registered under the Securities Act.

On November 15, 2013, we closed a private placement offering (the “2013 Notes Offering”) of $325,000 in principal amount of its 10% convertible promissory notes (the “2013 Notes”) and warrants (the “the 2013 Warrants”).  The 2013 Notes will automatically convert into an aggregate of 3,250,000 shares of the our to-be-authorized, designated and issued Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), at a post-Reverse Split conversion price of $0.10 per share, upon the our filing of a Certificate of Designation of Series B Convertible Preferred Stock (the “Certificate of Series B Designation”) with the Secretary of State of the State of Nevada following completion of the proposed Authorized Capital Increase and the related filing of the Articles Amendments.  The Series B Preferred Stock will be convertible on a one-for-one basis into shares of our common stock at the option of the holders, subject to a 9.99% blocker.

 
29

 
 
The 2013 Warrants were issued as 10 year warrants exercisable for an aggregate of 3,250,000 shares of our post-Reverse Split common stock with a post-Reverse Split exercise price of $0.10 per share.  Pursuant to the terms of exchange agreements dated February 6, 2014 (the “Warrant Exchange Agreement”) between us and each of the holders of the 2013 Warrants following effectiveness of the Reverse Split, the 2013 Warrants will be exchanged by us for an aggregate of 4,000,000 shares (the “Exchange Shares”) of our post-Reverse Split common stock.

The 2013 Notes Offering, and the issuance of the 2013 Notes and 2013 Warrants, were, and the issuance of the Exchange Shares will be, exempt from registration under Section 4(a)(2) of the Securities Act, in reliance upon the exemptions provided by Rule 506 of Regulation D promulgated by the SEC thereunder.  The 2013 Notes and 2013 Warrants were sold to “accredited investors,” as defined in Regulation D, and the 2013 Notes Offering was conducted on a “best efforts” basis.

Holders

On May 5, 2014, we had 131,101,260 shares of our common stock issued and outstanding held by 49 shareholders of record, and 16,000,000 shares of our Series A Preferred Stock held by 2 shareholders.
 
ITEM 6.   SELECTED FINANCIAL DATA

Not applicable.
 
ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations are based on the preparation of our financial statements in accordance with U.S. generally accepted accounting principles, highlight the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described and should be read in conjunction with the financial information included elsewhere in this Annual Report, including our audited financial statements for the years ended January 31, 2014 and 2013 and the related notes. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “California Gold,” “us,” “we,” “our,” and similar terms refer to California Gold Corp., a Nevada corporation. This discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

Historical information presented relates to our business prior to the closing of the MVP Acquisition.  Where relevant and applicable we have presented information relating to our financial condition following the closing of the MVP Acquisition.
 
We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. See “Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed in “Risk Factors” and elsewhere in this Annual Report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

 
30

 
 
Background and Recent Developments 

On February 11, 2011, we entered into the AuroTellurio Option Agreement with Mexivada to acquire up to an 80% interest in Mexivada’s La Viuda Concessions south of Moctezuma, Sonora, Mexico.  On August 10, 2012, we made a payment to Mexivada of $40,000 and on August 28, 2012 we issued to Mexivada 250,000 shares of our restricted common stock.  Having met all the required conditions for the vesting of the first 20% interest in the La Viuda Concessions under the AuroTellurio Option Agreement, including the required exploration program expenditure of $750,000, the first 20% interest in the La Viuda Concessions vested in us as of August 28, 2012.

On October 24, 2013, amended our AuroTellurio Option Agreement whereby Mexivada agreed to accept a cash payment of $17,500, instead of the $50,000 specified in the original AuroTellurio Option Agreement, as payment in full of the cash payment required to be made to Mexivada in connection with the vesting of the second 20% interest in the La Viuda Concessions. We made that $17,500 payment to Mexivada.  Additionally, Mexivada agreed to waive, with respect to the second 20% interest, the requirement that we issue to Mexivada 300,000 shares of our common stock.

We completed the majority of Phase 1 of our exploration program on the AuroTellurio Property but were not able to raise the minimum of $350,000 required to fund our Phase I drilling program on the AuroTellurio Property.  As a result we have not been able to continue with our mining project with Mexivada in Mexico.  We determined it would be in the best interests of the Company and its shareholders to explore additional business opportunities and strategic alliances and, as a result of this, we closed the MVP Acquisition on February 7, 2014. Additionally, we terminated our participation in the Auro Tellurio Option Agreement and our joint venture with Mexivada on April 28, 2014.

Results of Operations

This results of operations discussion relates to our historical mining operations prior to the MVP Acquisition.

Fiscal Years Ended January 31, 2014 and 2013

We are still in our exploration stage and have generated no revenues to date.
 
Our operating expenses totaled $617,994 and $1,302,303 for the years ended January 31, 2014 and 2013, respectively. General and administrative expenses decreased from $1,066,824 in the fiscal year ended January 31, 2013 to $568,071 in the fiscal year ended January 31, 2014, or 47%, primarily due to stock-based compensation expense attributable to option awards granted to purchase 11,000,000 shares of the Company’s common stock to its employees and outside consultants in the year of 2013.

We recorded a non-operating expense of $35,846 in the year ended January 31, 2014, compared to a non-operating income of $1,591,772 in the year ended January 31, 2013. The significant change over the prior year was primarily due to an decrease in unrealized gain on derivative instruments related to the issuance of the 2010 and 2011 warrants as a result of the private placement offerings completed in December 2010 and January, April, June and July 2011, and the accrual for acquisition related expenses. For the year ended January 31, 2014, we recorded a $3,019 unrealized gain on derivative instruments relating to the issuance of the 2010 and 2011 warrants as a result of the private placement offerings completed in December 2010 and January 2011.

We had net loss of $653,840 for year ended January 31, 2014 and a net income of $289,469 for the year ended January 31, 2013.
 
We have generated no revenues, and our net operating loss from inception through January 31, 2014 was $3,486,292.
 
 
31

 
 
Liquidity and Capital Resources

Our cash and cash equivalents balance as of January 31, 2014 was $209,392 compared to $259,200 as of January 31, 2013.
 
In July 2011, we completed the final closing of a 2010/2011 private placement, in which we sold an aggregate of 77,478,258 units of our securities for gross proceeds of $1,936,956, at an offering price of $0.025 per Unit.  On March 16, 2012, we completed the closing of a private placement offering pursuant to which we sold to various accredited investors and non-U.S. persons 4,250,000 units of our securities for gross proceeds of $170,000, at an offering price of $0.04 per unit. We raised these funds for general working capital purposes and to finance our first and most of the second year exploration program commitments under the AuroTellurio Agreement.

Due to our brief history and historical operating losses, our operations have not been a source of liquidity, and our sources of liquidity primarily have been from the sale of debt and proceeds from the sale of units in our 2010/2011 and 2012 private placements. Although we had begun the acquisition and exploration of the AuroTellurio Property, we were not able to raise sufficient funds to continue the development and acquisition of that property.
 
We had determined to proceed with the exploration of the AuroTellurio Property into the second year, for the second 20% interest in the La Viuda Concessions and we needed to raise at least $350,000 to begin and fund a Phase I drilling program.  We filed a registration statement with the SEC to register for sale 100,000,000 shares of our common stock at an offering price of $0.005 per share, which became effective on May 22, 2013.  We were not able to raise any funds under that registration statement and we were not able to begin our Phase I drilling program.

November 2013 Private Placement

On November 15, 2013, we closed the 2013 Notes Offering for $325,000 in principal amount of our 10% convertible promissory notes.  Proceeds of the 2013 Notes Offering have been utilized by us for ongoing working capital purposes, including to cover costs relating to our status as a publicly traded company.

2014 10% Convertible Notes Private Placement Offering

On February 7, 2014, concurrently with the closing of the MVP Acquisition, we completed a first closing of the 2014 Notes Offering of $2,942,495 in principal amount of our 2014 Notes.  On March 3, 2014, we completed a second closing of the 2014 Notes Offering for additional gross proceeds of $1,017,500 (before deducting placement agent fees and expenses of the offering).  We will use these funds to finance the operations of our new MVP related business.

In the future, we expect to seek to raise additional capital through additional sales of our equity or debt securities. There can be no assurance, however, that such financing will be available to us or, if it is available, that it will be available on terms acceptable to us and that it will be sufficient to fund our expected needs. If we are unable to obtain sufficient financing, we may not be able to proceed with our new business plan or meet our ongoing operational working capital needs.

 
32

 
 
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. See Note “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” in the accompanying Notes to our consolidated financial statements, for further descriptions of our major accounting policies and for information related to the impact of the implementation of new accounting pronouncements on our results of operations and financial position.
 
In preparing our consolidated financial statements, we make estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methods. In some cases, these estimates are particularly difficult to determine and we must exercise significant judgment. We periodically evaluate our estimates and judgments that are most critical in nature. We believe that the following discussion of critical accounting policies address all important accounting areas where the nature of accounting estimates or assumptions is material due to the levels of subjectivity and judgment. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.
 
Mineral Rights, Exploration and Development Costs

Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Such costs are carried as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations.

Under U.S. GAAP, all mineral exploration expenditures associated with efforts to search for and establish mineral reserves are expensed as incurred. Costs to acquire properties are capitalized. Mine development costs incurred to construct the infrastructure necessary to extract the reserves and prepare the mine for production are also capitalized once proven and probable reserves exist, and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.
 
Derivative Financial Instruments
 
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For warrants and convertible derivative financial instruments, the Company uses the Black-Scholes model to value the derivative instruments at inception and subsequent valuation dates.  The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period, in accordance with FASB ASC Topic 815, Derivatives and Hedging.  Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
 
 
33

 
 
Stock-Based Compensation
 
The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718,  Compensation - Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
 
The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services.  Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.
 
Recent Accounting Pronouncements
 
For information regarding recent accounting pronouncements, see Note “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” in the Notes to our accompanying consolidated financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Our audited financial statements are included beginning immediately following the signature page to this report.  See Item 15 for a list of the financial statements included herein.
 
 
 
34

 
 
ITEM 9.    CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon 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, regardless of how remote.  Under the supervision and with the participation of our management, including William D Meadow, our Chief Executive Officer and Shea Ralph, our Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective.

Management’s Annual Report on Internal Control over Financial Reporting

The management of California Gold Corp. is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  Under the supervision and with the participation of our former senior management, consisting of James D. Davidson, our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation 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 Exchange Act as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were not effective because of the identification of what might be deemed a material weakness in our internal control over financial reporting which is identified below.
 
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.  In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.  Based on this evaluation, our sole officer concluded that, during the period covered by this annual report, our internal controls over financial reporting were not operating effectively. Management did not identify any material weaknesses in our internal control over financial reporting as of January 31, 2013; however, it has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of that date:
 
1.  
We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures.
 
2.  
We did not maintain proper segregation of duties for the preparation of our financial statements. For the fiscal year ended January 31, 2014, we had only one officer overseeing all transactions. This has resulted in several deficiencies including the lack of control over preparation of financial statements, and proper application of accounting policies.
 
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission (the “SEC”) that permit us to provide only management’s report in this annual report.

 
35

 
 
Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the year ended January 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of the closing of the MVP Acquisition on February 7, 2014, however, the Company has two executive officers, a Chief Executive Officer and a Chief Financial Officer.

Officers’ Certifications

Appearing as exhibits to this Annual Report are “Certifications” of our Chief Executive Officer and Chief Financial Officer.  The Certifications are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”).  This section of the Annual Report contains information concerning the Controls Evaluation referred to in the Section 302 Certification.  This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

ITEM 9B.  OTHER INFORMATION

Not applicable.

 
36

 
 
PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Executive Officers and Directors
 
As of February 7, 2014, in connection with the closing of the MVP Acquisition, James Davidson resigned as our President, Chief Executive Officer and Chief Financial Officer, and as a member of our Board of Directors, and Michael Baybak resigned as our Interim Treasurer and Secretary, and as a member of our Board of Directors.  Mr. Davidson had served in his capacities since November 2007, and Mr. Baybak had served in his capacities since November 25, 2013.

The following table sets forth certain information, with respect to our current directors and executive officers.
 
Directors serve until the next annual meeting of the shareholders; until their successors are elected or appointed and qualified, or until their prior resignation or removal.  Officers serve for such terms as determined by our Board of Directors.  Each officer holds office until such officer’s successor is elected or appointed and qualified or until such officer’s earlier resignation or removal.  No family relationships exist between any of our present directors and officers.
 
Name
Position(s) Held
Age
Date of Election or Appointment as Officer/Director
William D. Meadow
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
  53
   
February 7, 2014
 
Shea Ralph
Treasurer, Secretary, Chief Financial Officer and Director
   53
February 7, 2014
David Rector
Chief Operating Officer and Director
   67
January 15, 2014

The following is a brief account of the business experience during the past five years or more of each of our directors and executive officers.
 
William Meadow, 53, is the founder and has been the Chief Executive Officer of MV Patents LLC since 2011.   Mr. Meadow was the founder and Chief Executive Officer of ControlCam LLC from 2009 through 2012,  and was the founder and has been the Chief Executive Officer of Visre, Inc./3vTV LLC from 2004 to the present. He was the Co-Founder and Chairman of Real Mortgage Systems, Inc. from 2005 to 2009.  From 1996 to 2000, Mr. Meadow worked on behalf of Columbia University by marketing and licensing patents via 4D Technology, Inc.  He was founder of Payformance Corporation, now called PaySpan, and worked with that company from 1984 to 2003, providing payment technologies for Fortune 500 clients.  Mr. Meadow served as VP of Corporate Development for BBN Corporation from 1995 to 1996, a company he joined after selling Network One, a voice over IP company, in 1995.

Mr. Meadow received his B.S. in Marketing from Florida State University.  He has patent development and licensing experience across multiple industries, and knowledge of the patent monetization industry, in general, as well as his position as founder of MV Patents, LLC, provides him with valuable expertise which the Board believes qualifies him to serve as a director of the Company.
 
Shea Ralph, 53, has worked as an independent consultant and strategic advisor of business development and corporate strategy from 2007 to the present. Mr. Shea was chosen to be a director of the Company based on his expertise in business development and corporate governance.

David Rector, 66, previously served as our President, Chief Executive Officer, Chief Financial Officer and Treasurer from June 15, 2007 to July 11, 2007 and again from August 8, 2007 to November 12, 2007.  He previously served as a member of our Board of Directors from June 15, 2007 through May 4, 2012.

Mr. Rector has been a director of Senesco Technologies, Inc., a publicly traded company, since February 2002.  Mr. Rector also serves as a director and member of the compensation and audit committee of DGSE Companies, Inc. (formerly the Dallas Gold and Silver Exchange Inc.), a publicly traded company.

Since 1985, Mr. Rector has been the Principal of The David Stephen Group, which provides enterprise consulting services to emerging and developing companies in a variety of industries. From November 2012 through January 28, 2014, Mr. Rector has served as the CEO, President and a director of Vaporin, Inc. (formerly known as Valor Gold Corp.).  From February 2012 through December 31, 2012, Mr. Rector served as the VP Finance & Administration of Pershing Gold Corp. From May 2011 through February 2012, Mr. Rector served as the President of Sagebrush Gold, Ltd. From October 2009 through August 2011, Mr. Rector had served as President and CEO of Li3 Energy, Inc. From July 2009 through May 2011, Mr. Rector had served as President and CEO of Nevada Gold Holdings, Inc. From September 2008 through November 2010, Mr. Rector served as President and CEO Universal Gold Mining Corp. From October 2007 through February 13, 2013, Mr. Rector served as President and CEO of Standard Drilling, Inc. From May 2004 through December 2006, Mr. Rector had served in senior management positions with Nanoscience Technologies, Inc., a development stage company engaged in the development of DNA Nanotechnology. From 1983 until 1985, Mr. Rector served as President and General Manager of Sunset Designs, Inc., a domestic and international manufacturer and marketer of consumer product craft kits, and a wholly-owned subsidiary of Reckitt & Coleman N.A. From 1980 until 1983, Mr. Rector served as the Director of Marketing of Sunset Designs. From 1971 until 1980, Mr. Rector served in progressive roles in the financial and product marketing departments of Crown Zellerbach Corporation, a multi-billion dollar pulp and paper industry corporation.  Mr. Rector was chosen as a director based on his knowledge of public company management, corporate governance and the mining industry in general.
 
 
37

 

Neither Mr. Meadow, Mr. Ralph nor Mr. Rector has any family relationship with any other executive officers or directors of the Company.   There are no arrangements or understandings between either Mr. Meadow or Mr. Ralph and any other person pursuant to which such person was appointed as an officer or director of the Company. There have been no related party transactions in the past two years in which the Company or any of its subsidiaries was or is to be a party, in which either Mr. Meadow, Mr. Ralph or Mr. Rector has, or will have, a direct or indirect material interest.

Board Committees

We have not yet established any committees of our Board of Directors.  Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future.  We do not have a nominating committee or a nominating committee charter.  The entire Board of Directors performs all functions that would otherwise be performed by committees.  Given the present size of our Board, we do not believe that it is practical for us to have committees.  If we are able to grow our business and increase our operations, we intend to expand the size of our Board and allocate responsibilities accordingly.

Audit Committee Financial Expert

We have no separate audit committee at this time.  The entire Board of Directors oversees our audits and auditing procedures. Neither of the current members of our Board of Directors is an “audit committee financial expert,” as that term is defined in Item 407 of Regulation S-K under the Securities Act.
 
Shareholder Communications
 
We do not have a policy with regard to the consideration of any director candidates recommended by security holders.  To date, no security holders have made any such recommendations.
 
Code of Ethics
 
We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.  A copy of our Code of Ethics will be provided to any person requesting same without charge.  To request a copy of our Code of Ethics please make written request to our President at 10752 Deerwood Park Blvd., S. Waterview II, Suite 100, Jacksonville, FL 32256.  We believe our Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

Compliance with Section 16(a) of the Exchange Act

We registered our common stock pursuant to Section 12 of the Exchange Act by filing a Form 8-A with the SEC on May 10, 2012. Accordingly, our officers, directors and principal shareholders are subject, as of May 10, 2012, to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.  Mr. Baybak, our Interim Treasurer during part of our fiscal year ended January 31, 2014 failed to file a report required by Section 16 and Mr. Rector, our Chief Operating Officer and a Director as of January 15, 2014, failed to timely file one form under Section 16.

 
38

 
 
ITEM 11.   EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation paid or accrued by us during the last two fiscal years ended January 31, 2014, to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended January 31, 2014; (ii) all individuals that served as our principal financial officer or acted in a similar capacity for us at any time during the fiscal year ended January 31, 2014; and (iii) all individuals that served as executive officers of ours at any time during the fiscal year ended January 31, 2014, that received annual compensation during the fiscal year ended January 31, 2014, in excess of $100,000.

Summary Compensation Table
 
Name and
Principal Position
 
Year
   
Salary
($)
   
Bonus
($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-
Equity
Incentive
Plan
Compensation
($)
   
Change
in
Pension
Value
and
Non-
qualified
Deferred
Compensation
Earnings ($)
   
All Other
Compensation
($)
   
Total ($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
                                                       
                                                                         
James D. Davidson, III (1),
   
2014
     
22,000
     
-
     
-
     
-
     
-
     
-
     
-
     
22,000
 
Chief Executive Officer
   
2013
     
24,000
     
-
     
-
     
-
     
-
     
-
     
-
     
24,000
 
                                                                         
George Duggan (2),
   
2014
     
27,500
             
-
     
-
     
-
     
-
     
-
     
27,500
 
Chief Operating Officer
   
2013
     
30,000
     
-
     
-
     
-
     
-
     
-
     
-
     
30,000
 
                                                                         

(1) Mr. Davidson served as our Chief Executive and Chief Financial Officer on an independent contractor basis until his resignation on February 7, 2014. Although Mr. Davidson did not have an employment agreement with us, we paid Mr. Davidson a monthly fee of $2,000 per month for his services to us as our Chief Executive Officer pursuant to a consulting agreement described below. Additionally, Mr. Davidson received a grant of options to purchase 1,000,000 shares of our common stock under the 2007 Plan, which he subsequently surrendered to us for cancellation.
 
(2) Mr. Duggan served as our Chief Operating Officer on an independent contractor basis until his resignation on December 18, 2013. Mr. Duggan does not have an employment agreement with us, although we paid Mr. Duggan a fee of $2,500 per month for his services to us as our Chief Operating Officer pursuant to a consulting agreement described below. Additionally, Mr. Duggan received a grant of options to purchase 1,000,000 shares of our common stock under the 2007 Plan, which he subsequently surrendered to us for cancellation.
 
 
39

 
 
Outstanding Equity Awards at Fiscal Year-End

Prior to the MVP Acquisition, we did not issue any stock options or maintain any stock option or other incentive plans other than our 2007 Plan. (See “Market for Common Equity and Related Stockholder Matters – Securities Authorized for Issuance under Equity Compensation Plans,” above).  The following table sets forth information regarding stock options held by the Company’s Named Executive Officers and Directors at January 31, 2014.

Option Awards
 
Name
 
Number of
securities
underlying
unexercised
options
exercisable
(#)
   
Number of securities underlying unexercised options unexercisable
(#)
   
Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
   
Option
plan
exercise
price
($)
   
Option
expiration
date
 
James D. Davidson (1)
   
0
     
0
     
0
     
-
     
-
 
                                         
George Duggan (1)
   
0
     
0
     
0
     
-
     
-
 

(1)  
Each of Messrs. Davidson and Duggan received a grant of options to purchase one million (1,000,000) shares of our common stock  under the 2007 Plan, with an exercise price of $0.09 per share and a term of 10 years.   Those options were surrendered to us for cancellation pursuant to written agreements.

We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.  Similarly, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or a change in a named executive officer’s responsibilities following a change in control.

Employment Agreements or Arrangements with our Former Executive Officers

We did not have employment agreements with either of our former executive officers, James Davidson or George Duggan.  However, we entered into independent contractor agreements with each of our former Chief Executive Officer and our Chief Operating Officer, as discussed below, pursuant to which they were compensated for their services to us.

Consulting Agreements with our Chief Executive Officer and Chief Operating officer

Effective February 1, 2011, we entered into an independent contractor consulting agreement with James Davidson pursuant to which we agreed to pay to Mr. Davidson $5,000 per month for 12 months beginning February 1, 2011 for his services rendered to us as our Chief Executive Officer.  That agreement was amended effective June 1, 2011, reducing Mr. Davidson’s compensation to $2,000 per month.  It was renewed for an additional 12 months beginning February 1, 2012 and February 1, 2013.  On October 9, 2013, we entered into a settlement and release agreement with Mr. Davidson pursuant to which we issued to Mr. Davidson 3,600,000 restricted shares of our common stock as settlement in full for all outstanding obligations and fees owed to Mr. Davidson by the Company, totaling $36,000, under his consulting agreement.

 
40

 
 
Effective January 17, 2011, we entered into an independent contractor consulting agreement with George Duggan pursuant to which we agreed to pay to Mr. Duggan $2,500 per month for 12 months beginning January 17, 2011 for his services rendered to us as our Chief Operating Officer.  This agreement was renewed for an additional 12 months beginning January 17, 2012, 2012 and January 17, 2013.  On October 9, 2013, we entered into a settlement and release agreement with Mr. Duggan pursuant to which we issued to Mr. Davidson 4,500,000 restricted shares of our common stock as settlement in full for all outstanding obligations and fees owed to Mr. Davidson by the Company, totaling $45,000, under his consulting agreement.

Compensation of Directors
 
Our directors do not receive any cash compensation for serving as such, for serving on committees (if any) of the Board of Directors or for special assignments.  As of the date hereof, there were no other arrangements between us and our directors that resulted in our making payments to any of our directors for any services provided to us by them as Directors.
 
The following table sets forth information regarding compensation accrued to our directors for the year ended January 31, 2014.

Director Compensation
 
Name
 
Fees earned or paid in cash
($)
   
Stock awards
($)
   
Option awards
(1)($)
   
Non-equity incentive plan compensation
($)
   
Nonqualified deferred compensation earnings
($)
   
All other compensation
($)
   
Total
($)
 
                                           
      -       -       -       -       -       -       -  
____________
(1)
Option awards expense as reported here and in our financial statements has been recorded in accordance with the FASB ASC Codification.

Equity Compensation Plan Information

Our Board of Directors adopted our 2007 Plan on or about June 15, 2007.  The total number of shares of common stock reserved for issuance under the 2007 was set at 16,000,000.  Because following the proposed Reverse Split, the number of shares of common stock reserved under the 2007 Plan would have been reduced to 160,000 shares and because the 2007 Plan had already been in existence for seven years, effective as of February 7, 2014, our Board of Directors terminated the 2007 Plan and adopted a new plan, the 2014 Equity Incentive Plan (the “2014 Plan”), with 6,150,564 post-Reverse Split shares of our common stock available for grant under the 2014 Plan.

In addition, the number of shares of Common Stock subject to the 2014 Plan, any number of shares subject to any numerical limit in the 2014 Plan, and the number of shares and terms of any incentive award are expected to be adjusted in the event of any change in our outstanding common stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction.

 
41

 
 
Description of the 2014 Plan
 
Administration
 
The 2014 Plan is currently administered by our Board of Directors.  It is expected that the Compensation Committee of our Board of Directors, once established, will administer the 2014 Plan.  Subject to the terms of the 2014 Plan, the Compensation Committee would have complete authority and discretion to determine the terms of awards under the 2014 Plan.
  
Eligible Recipients
 
Any officer or other employee of the Company or its affiliates, or an individual that the Company or an affiliate has engaged to become an officer or employee, or a consultant or advisor who provides services to the Company or its affiliates, including a non-employee director of the Board, is eligible to receive awards under the 2014 Plan.
 
Grants
 
The 2014 Plan authorizes the grant to eligible recipients of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code (as amended, the “Code”) and stock appreciation rights, as described below:
 
 
·
Options granted under the 2014 Plan entitle the grantee, upon exercise, to purchase a specified number of shares from us at a specified exercise price per share. The exercise price for shares of our common stock covered by an option cannot be less than the fair market value of the common stock on the date of grant unless agreed to otherwise at the time of the grant.
 
 
 
·
Restricted stock awards and restricted stock units may be awarded on terms and conditions established by the compensation committee, which may include performance conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.
 
 
 
·
The compensation committee may make performance grants, each of which will contain performance goals for the award, including the performance criteria, the target and maximum amounts payable, and other terms and conditions.
 
 
 
·
The 2014 Plan authorizes the granting of stock awards. The compensation committee will establish the number of shares of our common stock to be awarded and the terms applicable to each award, including performance restrictions.
 
 
 
·
Stock appreciation rights (“SARs”) entitle the participant to receive a distribution in an amount not to exceed the number of shares of our common stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of common stock on the date of exercise of the SAR and the market price of a share of common stock on the date of grant of the SAR.
 
The exercise price for Incentive Stock Options granted under the 2014 Plan may not be less than the fair market value of our common stock on the date the option is granted, except for options granted to 10% stockholders which must have an exercise price of not less than 110% of the fair market value of our common stock on the date the option is granted.  The exercise price for Non-statutory Stock Options is determined by the administrator of the 2014 Plan.  Incentive Stock Options granted under the 2014 Plan have a maximum term of ten years, unless issued to an employee who is also a 10% stockholder, in which case the maximum term is five years.  The term of Non-statutory Stock Options is determined by the administrator of the 2014 Plan at the time of grant and may not exceed ten years.  Options granted under the Plan are not transferable, except by will and the laws of descent and distribution.

 
42

 
 
Duration, Amendment and Termination
 
The Board of Directors of the Company has the power to amend, suspend or terminate the 2014 Plan without stockholder approval or ratification at any time or from time to time.  No change may be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year. Unless sooner terminated, the 2014 Plan would terminate ten years after its adoption.

Outstanding Equity Awards at Fiscal Year Ended January 31, 2014
 
On July 27, 2011, the Company granted options to purchase 11,000,000 shares of its common stock to certain of its officers, consultants and its outside director. These options had a 10-year term and were granted with an exercise price of $0.09, the fair market value of our common stock on the date of grant, as determined by our Board of Directors, based on the closing price of the Common Stock on the OTB Bulletin Board on the date of grant. One third of these options, or 3,666,667, vested on the date of the grant, with the remaining two thirds vesting on the first and second anniversaries of the date of grant.  No additional options were granted under the 2007 Plan and all of the options granted under the 2007 Plan have been surrendered to us for cancellation pursuant to written agreements with the former option holders.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial ownership of our common stock known by us as of May 5, 2014 on a pre-Reverse Split basis (except as otherwise may be indicated in the notes to the table):
 
  
each person or entity known by us to be the beneficial owner of more than 5% of our common stock;
 
  
each of our directors;
 
  
each of our executive officers; and
 
  
all of our directors and executive officers as a group.
 
Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent such power may be shared with a spouse. Information given with respect to beneficial owners who are not officers or directors of ours is to the best of our knowledge.
 
Unless otherwise indicated in the following table, the address for each person named in the table is c/o California Gold Corp., 10752 Deerwood Park Blvd., S. Waterview II, Suite 100, Jacksonville, FL 32256.

 
43

 
 
Title of Class:  Common Stock

 
Name and Address of Beneficial Owner
 
Title of
 Class
 
Amount and Nature
 of Beneficial Ownership(a)
Percent of Class(b)
William D. Meadow
Common Stock
0(1)
-
       
Shea Ralph
Common Stock
0(2)
-
       
David Rector
Common Stock
0(3)
-
       
All directors and executive officers  as a group (3 persons)
Common Stock
0
-
       
Sandor Capital Master Fund LP
2828 Routh Street, Suite 500
Dallas, TX 75201
Common Stock
13,958,333 (4)
9.9%
       
James D. Davidson III
3501 Lago De Talavera
Wellington, FL  33467
Common Stock
13,247,625
10.1%
       
Michael Baybak
2110 Drew Street, Suite 200
Clearwater, Florida 33765
Common Stock
13,463,333 (5)
9.9%
       
Barry Honig
4400 Biscayne Blvd., #850
Miami, FL 33137
Common Stock
11,932,000 (6)
8.9%
       
Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, NY 10022
Common Stock
13,493,333 (7)
9.4%
       
Michael and Betsy Brauser TBE
3164 NE 31st Avenue,
 Lighthouse Point, FL 33064
Common Stock
8,791,667 (9)
6.6%
       
Guy-Philippe Bertin
28 Place des Vosges, 75003 Paris, France
Common Stock
8,002,208 (10)
6.0%
__________________________________________
a.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes having or sharing voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of May 5, 2014, are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.  Shares beneficially owned have not been adjusted to reflect the planned Reverse Split.  Shares that will issue after the planned Reverse Split are not shown in the above table; however, some of the post-reverse split shares are referenced in the notes below

b. 
Percentages are based on 131,101,260 pre-Reverse Split shares of our common stock issued and outstanding as of May 5, 2014
 
 
44

 
 
(1)
Excludes (i) 10,000 shares of Series D Convertible Preferred Stock that Mr. Meadow is entitled to receive which shall be issued upon our obtaining shareholder approval for, and the filing of an amendment to, our charter to increase the number of authorized shares of blank check Preferred Stock; (ii) options to purchase 2,460,226 shares of post-Reverse split common stock, which vest in 12 equal quarterly installments beginning on May 7, 2014, provided that Mr. Meadow remains continuously engaged as a director or officer through the applicable vesting date; (iii) 820,075 options to purchase post-Reverse split common stock which vest upon our achieving revenues of at least $20,000,000; and (iv) 7,885,000 shares of post-Reverse split common stock, to be issued upon our obtaining shareholder approval for, and the filing of an amendment to, our Charter, held by MV Patents, LLC. Mr Meadow is the managing member and beneficial owner of MV Patents, and, in such capacity, has voting and dispositive power over MV Patent's Shares.  Following the effectiveness of the Reverse Split and issuance of the 7,885,000 shares, Mr. Meadow will beneficially own approximately 57% of the then to-be-issued and outstanding shares of our common stock.

(2)
Does not include 1,230,113 post-Reverse Split shares of our common stock issuable upon the exercise of options under our 2014 Plan, which vest in 12 equal quarterly installments beginning on May 7, 2014, provided that Mr. Ralph remains continuously engaged as a director or officer through the applicable vesting date.  Also excludes 410,038 options to purchase post-reverse split common stock which vest upon our achieving revenues of at least $20,000,000.

(3) 
Does not include (i) 1,000,000 post-Reverse Split shares of our common stock issuable upon the exercise of options under our 2014 Plan, which vest in 12 equal quarterly installments beginning on March 7, 2014, provided that Mr. Rector remains continuously engaged as a director or officer of the Issuer through the applicable vesting date. Also excludes 10,000 shares of Series D Convertible Preferred Stock, issuable upon our obtaining approval for, and the filing of, an amendment to our Charter to increase the number of authorized shares of blank check preferred stock.

 (4) 
Includes 4,083,333 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days.  John S. Lemak has the power to vote and dispose of the shares owned by Sandor Capital Master Fund, L.P.  Does not include 500,000 post-Reverse Split shares of our common stock issuable upon conversion of the to-be-authorized, designated and issued shares of Series C Preferred Stock to be issued upon a mandatory conversion of 2014 Notes following effectiveness of the Articles Amendments and the filing of the Certificate of Series C Designation.

(5)
Includes 4,083,333 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days held by Baybak Family Partners, Ltd., a Colorado family limited partnership (“BFP”) as well as 950,000 shares of common stock issuable upon the conversion of 950,000 shares of our Series A Preferred Stock. Does not include 7,050,000 shares of our common stock issuable upon the conversion of 7,050,000 shares of our Series A Preferred Stock held by BFP, which preferred shares also contain a 9.9% blocker and, thus, are not convertible within 60 days. As general partner of BFP, Michael Baybak has voting and investment power with respect to the shares owned by BFP. Does not include 250,000 post-Reverse Split shares of our common stock to be issued upon conversion of the to-be-authorized, designated and issued Series B Preferred Stock to be issued upon a mandatory conversion of the 2013 Notes, which preferred stock also contain a 9.9% blocker, and 307,692 shares of our post-Reverse Split common stock to be issued upon effectiveness of the Reverse Split under the terms of the Warrant Exchange Agreement.
 
 
45

 

 
(6) 
Includes 3,062,500 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days held by GRQ Consultants, Inc. 401K (“GRQ”). Barry Honig has voting and investment power with respect to the shares owned by GRQ. Does not include 500,000 post-Reverse Split shares to be issued to GRQ following effectiveness of the Reverse Split pursuant to the terms of the Securities Exchange Agreement.

(7) 
Includes 1,300,000 shares of our common stock held by Gottbetter Capital Group, Inc. Adam Gottbetter has voting and investment power with respect to the shares owned by Gottbetter Capital Group, Inc. and by Gottbetter & Partners, LLP (“G&P”). Includes (a) 4,183,333 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days held by G&P and (b) 8,000,000 shares of our common stock issuable upon the conversion of shares of our Series A Preferred Stock held by G&P. Does not include 79,530 post-Reverse Split shares of our common stock to be issued upon conversion of the to-be-authorized, designated and issued Series B Settlement Shares, which preferred shares also contain a 9.9% blocker.

(8)
Includes 2,041,667 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days and 2,000,000 shares held by Grander Holdings, Inc., over which Michael Brauser holds voting and dispositive power.  Does not include 750,000 post-Reverse Split shares of our common stock to be issued upon conversion of the to-be-authorized, designated and issued Series B Preferred Stock to be issued upon conversion of the 2013 Notes, which preferred stock also contain a 9.9% blocker, and 923,077 shares of our post-Reverse Split common stock to be issued upon effectiveness of the Reverse Split under the terms of the Warrant Exchange Agreement.

(9)
Includes 2,702,208 shares of our common stock issuable upon the exercise of warrants that are exercisable within 60 days.

Changes in Control
 
Not Applicable.
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
See Part II, Item 5 above.

 
46

 
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Securities Exchange Agreement relating to the MVP Acquisition

At the closing of the MVP Acquisition and pursuant to the terms of the Securities Exchange Agreement, all of the membership interests of MVP issued and outstanding immediately prior to the closing were exchanged for the right to receive 9,385,000 post-Reverse Split shares of Common Stock, which shall be delivered to the Members promptly following completion of the Reverse Split. William D. Meadow will be the recipient and beneficial owner of 7,885,000 shares of our post-Reverse Split common stock to be issued following effectiveness of the Reverse Split to MV PAT, the sole member of MVP.
 
Additionally, at the closing of the MVP Acquisition, we paid MV PAT $625,000 in cash consideration under the terms of the Securities Exchange Agreement.  Mr. Meadow is the majority member of MV PAT.

Compensation of Former Officers and Directors

James Davidson, who resigned as our Chief Executive Officer on February 7, 2014, was paid a fee of $2,000 per month for his services to the Company pursuant to an independent contractor consulting agreement which was renewed most recently on January 28, 2013.  We incurred $24,000 in costs under this agreement for the years ended January 31, 2014 and January 31, 2013. On October 9, 2013, we entered into a settlement and release agreement with Mr. Davidson pursuant to which we issued to Mr. Davidson 3,600,000 restricted shares of our common stock as settlement in full for all outstanding obligations and fees owed to Mr. Davidson by the Company, totaling $36,000, under his consulting agreement.  As of January 31, 2014, the outstanding payable to Mr. Davidson was $0.
 
George Duggan, who resigned as our Chief Operating Officer on December 18, 2013, was paid a fee of $2,500 per month for his services to the Company pursuant to an independent contractor consulting agreement which was renewed most recently on January 17, 2013.  We incurred $27,097 in costs under this agreement for the year ended January 31, 2014 and $30,000 for the year ended January 31, 2013. On October 9, 2013, we entered into a settlement and release agreement with Mr. Duggan pursuant to which we issued to Mr. Davidson 4,500,000 restricted shares of our common stock as settlement in full for all outstanding obligations and fees owed to Mr. Davidson by the Company, totaling $45,000, under his consulting agreement.  As of January 31, 2014, the outstanding payable to Mr. Davidson was $0.

Michael Baybak, who resigned as our Interim Treasurer and Secretary on February 7, 2014, was paid a fee of $6,000 per month for his services to the Company pursuant to a two-year independent contractor consulting agreement dated January 6, 2011. We incurred $36,000 and $72,000 in consulting fees related to this agreement for the year ended January 31, 2014 and January 1, 2013, respectively.  On October 9, 2013, we entered into a settlement and release agreement with Mr. Baybak pursuant to which Mr. Baybak agreed to forego and cancel a $6,000 obligation owed to him for outstanding fees payable.  As of January 31, 2014, the outstanding payable to Mr. Baybak was $0.

Compensation of Current Officers and Directors

On February 7, 2014, we entered into an employment agreement with William Meadow (the “Meadow Employment Agreement”), whereby Mr. Meadow agreed to serve as our Chief Executive Officer for a period of three (3) years, subject to renewal, in consideration for an annual salary of $250,000. Additionally, under the terms of the Meadow Employment Agreement, Mr. Meadow shall be eligible for an annual bonus if the Company meets certain criteria, as established by the Board of Directors.  In the event Mr. Meadow’s employment is terminated without Cause or by Mr. Meadow without Good Reason following a Change in Control (as such terms are defined in the Meadow Employment Agreement), Mr. Meadow shall be entitled to a lump sum payment equal to Mr. Meadow’s salary for the prior 15 months in consideration for which Mr. Meadow shall devote 400 hours of time per year for three years to support the enforcement of the Video DriveBy and on-line mapping intellectual property assets (as described further below).  Additionally, pursuant to the terms of the Meadow Employment Agreement, the Company has agreed to reimburse Mr. Meadow’s costs relating to maintaining his term life insurance policy up to a maximum of $250 per month.
 
In connection with his employment with the Company, the Company granted Mr. Meadow a five -year non-qualified stock option under the 2014 Plan to purchase, on a post-Reverse Split basis, up to 2,460,226 shares of the Company’s common stock at an exercise price of $0.50 per share (the “Meadow Options”), which option shall vest in twelve (12) equal quarterly installments, beginning on the three (3) month anniversary of the date of issuance and every three (3) months thereafter, provided Mr. Meadow remains continuously engaged as a director or officer of the Company through the applicable vesting date.   In the event that Mr. Meadow is removed as a director, officer or employee by the Company at any time other than for “Cause” or resigns as a director, officer or employee for “Good Reason” the Meadow Options shall immediately vest in full. The foregoing is a summary description of Mr. Meadow’s Employment Agreement and does not purport to be complete and is qualified in its entirety by reference to the Meadow Employment Agreement, which is filed as an Exhibit hereto and incorporated by reference herein.
 

 
47

 
 
On February 7, 2014, we entered into an employment agreement with Shea Ralph (the “Ralph Employment Agreement”), whereby Mr. Ralph agreed to serve as our Executive Vice President for a period of three (3) years, subject to renewal, in consideration for an annual salary of $180,000. Additionally, under the terms of the Ralph Employment Agreement, Mr. Ralph shall be eligible for an annual bonus if the Company meets certain criteria, as established by the Board of Directors.  In the event Mr. Ralph’s employment is terminated without Cause or by Mr. Ralph without Good Reason following a Change in Control (as such terms are defined in the Ralph Employment Agreement), Mr. Ralph shall be entitled to a lump sum payment equal to Mr. Ralph’s salary for the prior nine (9) months.
 
In connection with his employment with the Company, the Company granted Mr. Ralph a five-year non-qualified stock option under the 2014 Plan to purchase, on a post-Reverse Split basis, up to 1,230,113 shares of the Companys common stock at an exercise price of $0.50 per share (the Ralph Options), which option shall vest in twelve (12) equal quarterly installments, beginning on the three (3) month anniversary of the date of issuance and every three (3) months thereafter, provided Mr. Ralph remains continuously engaged as a director or officer of the Company through the applicable vesting date. In the event that Mr. Ralph is removed as a director, officer or employee by the Company at any time other than for Cause or resigns as a director, officer or employee for Good Reason the Ralph Options shall immediately vest in full. The foregoing is a summary description of Mr. Ralphs Employment Agreement and does not purport to be complete and is qualified i n its entirety by reference to the Ralph Employment Agreement, which is filed as an Exhibit hereto and incorporated by reference herein.
 
Additionally, promptly following the closing of the Securities Exchange, the Company will issue to Meadow and Ralph five-year options to purchase an additional five percent (5%) of the outstanding Parent common stock on a fully-diluted, post-Reverse Split basis as of the Closing, pro rata to the option grants issued at Closing, exercisable at the Private Placement price, i.e., $0.50 per share.  These options shall vest and not be subject to forfeiture only upon the Company’s achieving revenues of $20 million.

On February 7, 2014, David Rector, then a director of the Company, was appointed as the Company’s Chief Operating Officer. On February 7, 2014, we entered into an consulting agreement with Mr. Rector (the “Rector Consulting Agreement”), whereby Mr. Rector agreed to serve as our Chief Operating Officer for a period of one (1) year, subject to renewal, in consideration for an annual fee of $120,000.
 
In connection with his engagement with the Company, the Company granted Mr. Rector a five-year non-qualified stock option under the 2014 Plan to purchase, on a post-Reverse Split basis, up to 1,000,000 shares of the Companys common stock at an exercise price of $0.50 per share (the Rector Options), which option shall vest in twelve (12) equal monthly installments, beginning on the one (1) month anniversary of the date of issuance, provided Mr. Rector remains continuously engaged as a director or officer of the Company through the applicable vesting date. In the event that Mr. Rector is removed as a director, officer or employee by the Company at any time other than for Cause or resigns as a director, officer or employee for Good Reason the Rector Options shall immediately vest in full. The foregoing is a summary description of the. Rector Consulting Agreement and does not purport to be complete and is qualified i n its entirety by reference to the Rector Consulting Agreement, which is filed as an Exhibit hereto and incorporated by reference herein.
 
Legal, Consulting and Other Professional Fees

Effective December 1, 2010, we entered into a 12 month retainer agreement with Gottbetter & Partners, LLP, a beneficial holder of more than 5% of our outstanding common stock, pursuant to which we paid Gottbetter & Partners, LLP a monthly fee of $5,500 for providing to us legal services relating to SEC regulatory compliance and reporting requirements. After the agreement expired in November 2011, the stockholder continued to provide these legal services at $6,000 per month. We also paid Gottbetter & Partners, LLP a flat fee of $50,000 upon SEC effectiveness of our registration statement on Form S-1 for the preparation and filing of the resale registration statement covering the shares of our common stock contained in the units and We also paid Gottbetter & Partners, LLP a flat fee of $50,000 upon SEC effectiveness of our registration statement on Form S-1 for the preparation and filing of the resale registration statement covering the shares of our common stock contained in the units and underlying the warrants contained in the units sold in our 2010/2011 private placement and registered herein. 
 
For the years ended January 31, 2014 and 2013, our total professional legal fees paid to Gottbetter & Partners, LLP were $74,581 and $180,343, respectively.  The legal fees primarily related to SEC filings and other general corporate matters and were included as a component of general and administrative expenses and acquisition-related costs in our consolidated statements of expenses. Gottbetter & Partners, LLP continued to provide these legal services at $5,500 per month in the year 2014.

On January 9, 2014, we entered into a settlement agreement with Gottbetter & Partners, LLP pursuant to which Gottbetter & Partners, LLP agreed to receive for payment in full of open invoices totaling $79,529.54, 79,739 shares of our post-Reverse Split common stock.

 
48

 
 
In January 2011, we entered into an administrative services agreement with Incorporated Communications Services (“ICS”), a California corporation. George Duggan, our Chief Operations Officer, is the Vice President of ICS. We paid ICS a monthly fee of $6,000 for these services. Our agreement with ICS was extended by the parties for an additional 12 months beginning January 1, 2012 and January 1, 2013.  Pursuant to a settlement agreement with ICS dated December 18, 2013, we paid ICS the sum of $6,234.64 to settle all outstanding balances with ICS.  We incurred $48,000 and $72,000 in management fees for the years ended January 31, 2014 and 2013, respectively, which were included as a component of our general and administrative expenses. Additionally, we reimbursed ICS for the expenses related to the services provided of $1,149 and $11,816 for the years ended January 31, 2014 and 2013, respectively. As of January 31, 2014 and 2013, the outstanding payable to ICS was $0 and $0, respectively.  Other than Mr. Duggan who is the Vice President of ICS but owns no stock in ICS, none of our shareholders is affiliated with ICS.

Other than as disclosed immediately above, there have been no transactions since the beginning of our last fiscal year, and there are no currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years, and in which any of our directors, executive officers or beneficial holders of more than 5% of our outstanding common stock, or any of their respective immediate family members, has had or will have any direct or material indirect interest. 

Director Independence

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board of Directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.”

Our Board of Directors has considered the independence of its Directors in reference to the definition of “Independent Director” established by the Nasdaq Marketplace Rule 5605(a)(2).  In doing so, the Board of Directors has reviewed all commercial and other relationships of each director in making its determination as to the independence of its Directors.  After such review, the Board of Directors has determined none of our directors qualifies as independent under the requirements of the Nasdaq listing standards.

ITEM 14.                      PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.
 
The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended January 31, 2014 and 2013, are set forth in the table below:

Fee Category
 
Fiscal year ended January 31, 2014
   
Fiscal year ended January 31, 2013
 
Audit fees (1)
  $ 21,020     $ 28,000  
Audit-related fees (2)
    -       -  
Tax fees (3)
    -       -  
All other fees (4)
    -       -  
Total fees
  $ 21,020     $ 28,000  

(1)  
Audit fees consist of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

(2)  
Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”

(3)  
Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.

(4)  
All other fees consist of fees billed for all other services.

Audit Committee’s Pre-Approval Practice.
 
We do not have an audit committee.  Our Board of Directors performs the function of an audit committee.  Section 10A(i) of the Exchange Act prohibits our auditors from performing audit services for us as well as any services not considered to be audit services unless such services are pre-approved by our audit committee or, in cases where no such committee exists, by our Board of Directors (in lieu of an audit committee) or unless the services meet certain de minimis standards.
 
 
49

 
PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules

The consolidated financial statements of California Gold Corp. are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.

Exhibits

The following Exhibits are being filed with this Annual Report on Form 10-K:
 
Exhibit No.
SEC Report Reference Number
Description
2.1
2.1
Agreement and Plan of Merger and Reorganization dated July 11, 2007, among the Registrant, Cromwell Uranium Holdings, Inc. and Cromwell Acquisition Corp. (1)
 
2.2
10.1
Securities Exchange Agreement dated February 7, 2014 by and among the Registrant, MVP Portfolio, LLC, MV Patents, LLC and others (2)
 
3.1
3.1
Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on August 29, 2007 (3)
3.2
3.1
Certificate of Amendment to Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on March 9, 2009 (4)
 
3.3
10.3
Certificate of Designation of Series A  Convertible Preferred Stock as filed with the Nevada Secretary of State on December 23, 2010 (5)
 
3.4
10.4
Certificate of Amendment to Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on December 30, 2010 (6)
 
3.5
*
Form of Certificate of Designation of Series B Convertible Preferred Stock
 
3.6
3.1
Form of Certificate of Designation of Series C Convertible Preferred Stock (2)
 
3.7
3.2
Form of Certificate of Designation of Series D Convertible Preferred Stock (2)
     
3.8
3.2
By-Laws of Registrant (7)
 
 
 
 
50

 
 
 
Exhibit No.
SEC Report Reference Number
 
Description
4.1
10.3
Reversal Loan Promissory Note dated August 8, 2007 between the Registrant and Cromwell Uranium Holdings, Inc. (8)
 
4.2
4.7
Form of Investor Warrant Dated December, 2010 for purchase of Registrant’s common stock, with Schedule of Investors (9)
 
4.3
10.2
Form of November 2013 10% Convertible Promissory Note (10)
 
4.4
10.3
Form of November 2013 Warrant to Purchase Common Stock (10)
 
4.5
4.1
Form of February 2014 10% Convertible Promissory Note (2)
 
4.6
4.2
Form of February 2014 Broker Warrant to Purchase Common Stock (2)
     
10.1
10.1
Registrant’s 2007 Stock Option Plan adopted June 15, 2007, as amended  December 21, 2010 (11)
 
10.2
10.1
Reversal Agreement dated August 8, 2007 between the Registrant, Robert McIntosh and Cromwell Uranium Holdings, Inc. (4)
 
10.3
10.2
Reversal Loan and Control Share Pledge and Security Agreement dated August 8, 2007 between the Registrant, Robert McIntosh and Cromwell Uranium Holdings, Inc. (4)
 
10.4
10.12
Form of Subscription Agreement among the Registrant, Gottbetter & Partners, as Escrow Agent, and Purchasers of Registrant’s common stock, with Schedule of Purchasers (9)
 
10.5
10.13
Form of Subscription Agreement among the Registrant, Gottbetter & Partners, as Escrow Agent, and Purchasers of Registrant’s Series A preferred Stock, with Schedule of Purchasers (9)
 
10.6
10.5
Subscription Agreement Addendum of the Registrant dated December 22, 2010 (4)
 
10.7
10.18
Administrative Services Agreement dated January 1, 2011 between the Registrant and Incorporated Communications Services (11)
 
10.8
10.19
Consulting Agreement dated January 17, 2011 between the Registrant and George Duggan (11)
 
10.9
10.21
Consulting Agreement dated January 28, 2011 between the Registrant and James D. Davidson (11)
 
10.10
10.22
Property Option Agreement dated February 11, 2011 among the Registrant, Mexivada Mining Corp. and the other parties named therein (11)
 
10.11
10.22
Binding Offer Letter Agreement between the Registrant and Mexivada Mining Corp. dated October 5, 2010, as amended November 21, 2010 (Schedule B to Exhibit 10.22) (11)
     
10.12
10.23
Surface Rights Agreement dated May 2011 (English translation) (12)
     
10.13
10.24
Amendment dated June 6, 2011 to Consulting Agreement dated January 28, 2011 between the Registrant and James D. Davidson (13)
 
10.14
10.25
Consulting Agreement dated June 6, 2011 between the Registrant and Michael Baybak (13)
 
10.15
10.28
Form of March 2012 Unit Subscription Agreement among the Registrant, Gottbetter & Partners, as Escrow Agent, and Purchasers, with Schedule of Purchasers (9)
 
10.16
 
       *
Settlement and Release Agreement between the Registrant and Michael Baybak dated October 9, 2013
10.17
*
Settlement and Release Agreement between the Registrant and James Davidson dated October 9, 2013
 
10.18
*
Settlement and Release Agreement between the Registrant and George Duggan dated October 9, 2013
 
10.19
*
Form of the Registrant’s Option Surrender Agreement dated November _, 2013 and related Schedule of Parties
 
10.20
*
Settlement and Release Agreement between the Registrant and Incorporated Communications Service dated December 18, 2013
 
10.21
*
Settlement and Release Agreement between the Registrant and Gottbetter & Partners, LLP dated December 16, 2013
 
 
 
 
51

 
  
Exhibit No.
SEC Report Reference Number
 
Description
10.22
10.1   
Form of November 2013 10% Convertible Promissory Note Securities Purchase Agreement (10)
 
10.23
     *
Form of Amendment  to November 2013 10% Convertible Promissory Note Securities Purchase Agreement and Warrant Exchange Agreement
 
10.24
10.2
Form of February 2014 10% Convertible Promissory Note Securities Purchase Agreement (2)
 
10.25
10.3
Employment Agreement dated February 7,2014 between the Registrant and William Meadow (2)
 
10.26
10.4
Employment Agreement dated February 7,2014 between the Registrant and Shea Ralph (2)
 
10.27
10.5
Consulting Agreement dated February 7,2014 between the Registrant and David Rector (2)
 
10.28
10.6
Form of February 2014 Lockup Agreement (2)
 
10.29
10.7
Form of February 2014 Series D Preferred Stock Subscription Agreement (2)
 
10.30
*
Registrant’s 2014 Equity Incentive Plan adopted February 7, 2014
 
10.31
*
William Meadow NonQualified Stock Option Agreement
 
10.32
*
Shea Ralph NonQualified Stock Option Agreement
 
10.33
*
David Rector NonQualified Stock Option Agreement
 
14.1
14.1
Code of Ethics (1)
 
16.1
16.1
Letter from Davis Accounting Group, P.C., dated July 8, 2010 to the SEC regarding statements included in Form 8-K (14)
21        * List of Subsidiaries 
31.1          *
Certification of Principal Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
*
Certification of Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
32.1
*
Certification of Chief Executive and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
 
32.2
*
Certification of Chief Executive and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
 
99.1
3.1
Articles of Incorporation of Visual Real Estate, Inc. (formerly MVP Portfolio, LLC) (15)
 
99.2
99.1
Audited Financial Statements of MV Patents, LLC as of June 30, 2013 and 2012 (15)
 
99.3
99.2
Unaudited Consolidated Six-Month Financial Statements as of December 31, 2013 of PV Patents, LLC and MVP Portfolio, LLC (15)
_____________
*   Filed herewith.
 
** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

** This XBRL exhibit is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

 
52

 

(1)
Filed with the SEC on July 13, 2007, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

(2)
Filed with the SEC on February 10, 2014, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 000-54706) on Form 8-K, which exhibit is incorporated herein by reference.

(3)
Filed with the SEC on August 9, 2007, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

(4)
Filed with the SEC on March 11, 2009, as an exhibit, numbered as indicated above, to the Registrant’s quarterly report (SEC File No. 333-134549) on Form 10-Q, which exhibit is incorporated herein by reference.

(5)
Filed with the SEC on December 30,  2010, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

(6)
Filed with the SEC on January 18, 2011, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K/A-1, which exhibit is incorporated herein by reference.

(7)
Filed with the SEC on May 30, 2006, as an exhibit, numbered as indicated above, to the Registrant’s registration statement (SEC File No. 333-134549) on Form SB-2, which exhibit is incorporated herein by reference.

(8)
Filed with the SEC August 9, 2007, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

 (9)
Filed with the SEC on March 8, 2013 as an exhibit, numbered as indicated above, to the Registrant’s Registration Statement on Form S-1, Amendment No. 5, which exhibit is incorporated herein by reference.
 
(10)
Filed with the SEC on November 11, 2013, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 000-54706) on Form 8-K, which exhibit is incorporated herein by reference.

(11) 
 Filed with the SEC on May 17, 2011, as an exhibit, numbered as indicated above, to the Registrant’s annual report (SEC File No. 333-134549) on Form 10-K, which exhibit is incorporated herein by reference.

 
53

 
 
(12)
Filed with the SEC on February 12, 2013 as an exhibit, numbered as indicated above, to the Registrant’s Registration Statement on Form S-1, Amendment No. 4, which exhibit is incorporated herein by reference.
 
(13)
 Filed with the SEC on August 10, 2011, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

(14)
Filed with the SEC on July 9, 2010, as an exhibit,   numbered as indicated above, to the Registrant’s current report (SEC File No. 333-134549) on Form 8-K, which exhibit is incorporated herein by reference.

(15)
Filed with the SEC on March 10, 2014, as an exhibit, numbered as indicated above, to the Registrant’s current report (SEC File No. 000-54706) on Form 8-K, which exhibit is incorporated herein by reference.
 
In reviewing the agreements included as exhibits and incorporated by reference to this Annual Report on Form 10-K, please remember that, while these exhibits constitute public disclosure under the federal securities laws, they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

 
            should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

 
             have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

 
            may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

 
           were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.


 
54

 
 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
CALIFORNIA GOLD CORP.
 
       
Dated:  May 6, 2014
By:
 /s/ William D. Meadow  
   
William D. Meadow, President and
Principal Executive Officer
 
       
       
     
       
 
By:
/s/ Shea Ralph  
   
Shea Ralph, Treasurer and Principal
Financial Officer
 
       
       
 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 
SIGNATURE
 
 
TITLE
 
 
DATE
         
/s/ William D. Meadow
 
Director
 
May 6, 2014
William D. Meadow
       
         
/s/ Shea Ralph
 
Director
 
May 6, 2014
Shea Ralph
       
         
/s/ David Rector
 
Director
 
May 6, 2014
David Rector
       
 
 
55

 
 
PART IV – FINANCIAL INFORMATION
 
CALIFORNIA GOLD CORP.
(AN EXPLORATION STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm
    F-2  
         
Consolidated Balance Sheets as of January 31, 2014 and 2013
    F-3  
         
Consolidated Statements of Expenses for the years ended January 31, 2014 and 2013 and for the period from April 19, 2004 (inception) through January 31, 2014
    F-4  
         
Consolidated Statements of Changes in Stockholders’ Deficit for the period from April 19, 2004 (inception) through January 31, 2014
    F-5  
         
Consolidated Statements of Cash Flows for the years ended January 31, 2014 and 2013 and for the period from April 19, 2004 (inception) through January 31, 2014
    F-7  
         
Notes to Consolidated Financial Statements
    F-9  
 
 
 
F-1

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors
California Gold Corp.
(An Exploration Stage Company)
La Cañada, California
 
We have audited the accompanying consolidated balance sheets of California Gold Corp. and its subsidiary (an exploration stage company) (collectively, the “Company”) as of January 31, 2014 and 2013, and the related statements of expenses, stockholders’ deficit, and cash flows for the years then ended and for the period from inception (April 19, 2004) through January 31, 2014. These financial statements are the responsibility of California Gold Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of California Gold Corp. and its subsidiary as of January 31, 2014 and 2013 and the results of their expenses and their cash flows for the years then ended and for the period from inception (April 19, 2004) through January 31, 2014 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a working capital deficit as of January 31, 2014 and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
 
May 5, 2014

 
F-2

 
 
CALIFORNIA GOLD CORP.
 (AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
 
   
January 31,
 2014
   
January 31,
 2013
 
             
ASSETS
               
                 
Current assets:
               
Cash
 
$
209,392
   
$
259,200
 
Prepaid expenses
   
14,370
     
16,283
 
Total current assets
   
223,762
     
275,483
 
Property and equipment, net
   
4,342
     
6,104
 
Mining rights
   
108,750
     
91,250
 
Total assets
 
$
336,854
   
$
372,837
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current liabilities:
               
Accounts payable
 
$
22,467
   
$
47,466
 
Accounts payable - related party
   
145,858
     
101,873
 
Derivative liabilities
   
324,642
     
327,661
 
Convertible notes and interest payable - short-term, net of discount of $243,469
   
19,030
     
-
 
Other accrued liabilities - related party
   
-
     
56,500
 
Total current liabilities
   
511,997
     
533,500
 
Convertible notes- long-term
   
69,452
     
-
 
Total non-current liabilities
   
69,452
     
-
 
                 
Total liabilities
   
581,449
     
533,500
 
                 
Commitments and contingencies (Note 14)
               
                 
Stockholders' deficit:
               
Preferred stock, par value $0.001 per share, 22,000,000 shares authorized; 22,000,000 shares issued and outstanding
   
22,000
     
22,000
 
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 125,101,260 and 115,201,260 shares issued and outstanding at January 31, 2014 and 2013, respectively
   
125,101
     
115,201
 
Additional paid-in capital
   
3,094,596
     
2,534,588
 
Deficit accumulated during the exploration stage
   
(3,486,292
)
   
(2,832,452
)
Total stockholders' deficit
   
(244,595
)
   
(160,663
)
Total liabilities and stockholders' deficit
 
$
336,854
   
$
372,837
 
 
The accompanying notes are an integral part of these audited consolidated financial statements.
 
 
F-3

 
 
 
CALIFORNIA GOLD CORP.
 (AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF EXPENSES
 
   
Year Ended
 January 31,
 2014
   
Year Ended
 January 31,
 2013
   
April 19,
 2004
 (Inception)
 to January
 31, 2014
 
                   
Expenses:
                 
                   
Mineral property expenses
  $ 48,161     $ 233,718     $ 715,634  
Bad debt expense
    -       -       559,483  
Depreciation expense
    1,762       1,761       4,467  
General and administrative expenses
    568,071       1,066,824       3,724,061  
Total operating expenses
    617,994       1,302,303       5,003,645  
Loss from operations
    (617,994 )     (1,302,303 )     (5,003,645 )
                         
Other income (expenses):
                       
Interest income
    183       938       3,472  
Interest expense
    (6,951 )     -       (8,714 )
Realized and unrealized gain on derivatives, net
    3,019       1,591,424       1,564,900  
Loss on settlement of debt
    (22,788 )     -       (22,788 )
Amortization of debt discount
    (9,309 )     -       (18,927 )
Foreign currency exchange loss
    -       (590 )     (590 )
Total other income (expenses)
    (35,846 )     1,591,772       1,517,353  
Net income (loss)
  $ (653,840 )   $ 289,469     $ (3,486,292 )
                         
Earnings (loss) per common share:
                       
Income (loss) per common share - basic and diluted
  $ (0.01 )   $ 0.00                
  Weighted average number of common shares outstanding - basic and diluted
    116,180,381       114,401,945          
 
The accompanying notes are an integral part of these audited consolidated financial statements.
 
 
F-4

 
 
CALIFORNIA GOLD CORP.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
 
                                 
Deficit
       
                           
Additional
   
Accumulated
 During the
       
   
Common Stock
   
Preferred Stock
   
Paid-In
   
Exploration
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stage
   
Total
 
Balance - April 19, 2004 (inception)
   
-
   
$
-
     
-
   
$
-
   
$
-
   
$
-
   
$
-
 
Loss for the year ended January 31, 2005
   
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Balance - January 31, 2005
   
-
   
$
-
     
-
   
$
-
   
$
-
   
$
-
   
$
-
 
Common stock issued for cash
   
46,990,000
     
46,990
     
-
     
-
     
(39,590
)
   
-
     
7,400
 
Common stock issued for cash
   
6,985,000
     
6,985
     
-
     
-
     
4,015
     
-
     
11,000
 
Common stock issued for cash
   
1,778,000
     
1,778
     
-
     
-
     
54,222
     
-
     
56,000
 
Loss for the year ended January 31, 2006
   
-
     
-
     
-
     
-
     
-
     
(29,275
)
   
(29,275
)
Balance - January 31, 2006
   
55,753,000
   
$
55,753
     
-
   
$
-
   
$
18,647
   
$
(29,275
)
 
$
45,125
 
Loss for the year ended January 31, 2007
   
-
     
-
     
-
     
-
     
-
     
(21,158
)
   
(21,158
)
Balance - January 31, 2007
   
55,753,000
   
$
55,753
     
-
   
$
-
   
$
18,647
   
$
(50,433
)
 
$
23,967
 
Common stock issued for services
   
12,700,000
     
12,700
     
-
     
-
     
(10,700
)
   
-
     
2,000
 
Cancellation of common stock
   
(44,450,000
)
   
(44,450
)
   
-
     
-
     
44,450
     
-
     
-
 
Common stock issued for expenses paid by officer
   
31,000,002
     
31,000
     
-