XOTC:LBGO Liberty Gold Corp Annual Report 10-K Filing - 3/31/2012

Effective Date 3/31/2012

XOTC:LBGO (Liberty Gold Corp): Fair Value Estimate
Premium
XOTC:LBGO (Liberty Gold Corp): Consider Buying
Premium
XOTC:LBGO (Liberty Gold Corp): Consider Selling
Premium
XOTC:LBGO (Liberty Gold Corp): Fair Value Uncertainty
Premium
XOTC:LBGO (Liberty Gold Corp): Economic Moat
Premium
XOTC:LBGO (Liberty Gold Corp): Stewardship
Premium
 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-K


(Mark One)

 

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

         EXCHANGE ACT OF 1934

 

For the fiscal year ended: March 31, 2012

 

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

        EXCHANGE ACT OF 1934

 

Commission File No.: 333-16135


[lbgo10k_033112apg001.jpg]

Liberty Gold Corp.

-------------------------------------------------------------------

(Exact Name of Registrant as Specified in Its Charter)



Delaware

-------------------------------------------------

(State or Other Jurisdiction of Incorporation

or Organization)

80-0372385

-----------------------------------------

(I.R.S. Employer Identification No.)



2415 East Camelback Road, Suite 700, Phoenix, AZ 85016

-----------------------------------------------------------------------------

(Address of Principal Executive Offices)



602-553-1190

---------------------------------------------------------

(Registrant’s telephone number, including area code)



1065 Dobbs Ferry Road, White Plains, NY 10607

-----------------------------------------------------------------

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



Securities registered pursuant to Section 12(b) of the Act:  None


Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par value $0.0001





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ]   No [X]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes [  ]  No [X]


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


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


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s 229.405) 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.  [  ]


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


Large accelerated filer [  ]  Accelerated filer [  ]  Non-accelerated Filer [  ]  Smaller reporting company [X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [  ]   No [X]


The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of March 31, 2012:  $ 68,750,000


The number of shares of the registrant’s common stock outstanding as of July 16, 2012: 88,270,833.




2

 


INDEX TO FORM 10-K ANNUAL REPORT



Page

PART I

Item 1.

Business

4

Item 1A.

Risk Factors

9

Item 1B.

Unresolved Staff Comments

21

Item 2.

Properties

21

Item 3.

Legal Proceedings

21

Item 4.

Removed and Reserved

21

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

22

Item 6.

Selected Financial Data

24

Item 7.

Management’s Discussion and Analysis of Financial Condition an30

Results of Operations

24

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

26

Item 8.

Financial Statements and Supplementary Data

27

Item 9.

Changes in and Disagreements with Accountants on Accounting and

Financial Disclosure

28

Item 9A(T)

Controls and Procedures

28

Item 9B

Other Information

29

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

30

Item 11.

Executive Compensation

31

Item 12.

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

32

Item 13.

Certain Relationships and Related Transactions, and Director Independence

33

Item 14.

Principal Accountant Fees and Services

33

PART IV

Item 15.

Exhibits and Financial Statement Schedules

34

Signatures

36




3

 


FORWARD-LOOKING STATEMENTS

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS There are statements in this report that are not historical facts. These forward-looking statements can be identified by use of terminology such as believe, hope, may, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Report carefully, especially the risks discussed under Risk Factors. Although management believes that the assumptions underlying the forward looking statements included in this Report are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Report will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.


PART I


References to “us”, “we” and “our” in this report refer to Liberty Gold Corp. F/K/A iBos Inc together with any subsidiaries.  We do not presently have any subsidiaries.


ITEM 1.  BUSINESS.


Explanatory Note


Early in the period covered by this report, we entered into a transaction where our three officers sold all of their stock in us to Lynn Harrison, resigned, and we entered the business of gold and mineral exploration.  We filed a current Report on Form 8-K in April 2011 to reflect those changes.  The disclosure below describes both our former and our present business.    


OUR BUSINESS THROUGH THE END OF THE YEAR ENDED MARCH 31, 2011


We were formed as iBOS Inc. as a California Corporation in April 2006 and became and Delaware Corporation in March 2009.  In April 2011, iBos changed its name to Liberty Gold Corp. (‘we”, “us” “our”, “Liberty Gold”, “iBos”)


Prior to April 2011, we performed and provided electronic document indexing, a web-based comprehensive selection of electronic medical claims processing, and collection solutions to the healthcare provider industry. Our sole customer, with whom we had entered into an open-ended non-expiring but terminable service agreement, only utilized document indexing, but we had the ability to perform other services that could have helped doctors, clinics, surgical or hospital based practices, and other healthcare providers and their vendors significantly improve daily insurance claims transaction administration and management as follows:


 

Increase office efficiencies and lower collection costs;

 

Reduce administrative workload;

 

Improve claims accuracy before submission to, and increase acceptance by, third party payers;

 

Reduce payment cycle time;

 

Improve cash flow management;

 

Increase revenue control;

 

Improve information management, financial security and provider regulatory compliance;

 

‘‘End-to-end’’ solution for claims management; and

 

Fully automate the revenue process by the use of electronic claims and remittance advice, and payment reconciliation




4

 




 

iBOS was in operation since April, 2006.  Since our inception, the appropriate people, repeatable business processes, and technology have been put in place with a goal to ensure financial stability and earnings growth.  Our current mission is to provide best-of-industry electronic indexing of paper medical records into a purchased EHR (Electronic health record) product for medical groups and hospitals.  Our past and present revenues have been generated solely by our electronic indexing service.  We were capable of providing, and planned to provide, our additional services in the future when our sole customer or prospective future customers would be ready and willing to hire us for these additional services.  We used a third party vendor that is based in Southern California to perform work for us, the exact name of said vendor is confidential to protect our competitive interest,  This vendor provided our electronic indexing service, however we planned to bring that work in-house when we had necessary funds to reasonably do so.  When a medical group and/or hospital purchases the EHR product all of its present and future medical information is added to the patient health record within our system to streamline patient care, reduce costs and decrease errors in prescriptions given.  Standard practice requires that medical groups and/or hospitals update and retain these electronic charts and records going back 5-7 years depending on the age and medical history of the patient.


BUSINESS SERVICES


Our solutions and services improved a healthcare provider’s ability to electronically index documents, process and manage claims, and streamline office workflow. The burden of medical records in a physician practice is extreme. Overcrowded offices lead to inaccessible charts; whether misplaced, lost, or in use by another staff member. Physician practices continue to seek a solution to reduce or eliminate the increasing volumes of paper within their organizations. The optimal product would eliminate the issues of overcrowded office space and storage facilities as well as the problems associated with paper medical records like lost or misplaced patient charts. Physicians demand a flexible, easy-to-use solution, yet one capable of standardization for consistency and compliance. In short, physician practices need a solution that increases staff efficiency, productivity, and patient satisfaction, all while reducing operational costs.  Following are the services previously provided by us to meet these needs.

 

Our billing solution provided value added for improved efficiencies. As part of our solution, the billing platform offered collections and appeals services, as well as solutions for the collection of old existing medical claim submissions. Our billing solution was designed to operate in an integrated fashion with the other solutions and services. There are fewer manual and paper functions to be performed in the combined claims management processing/billing solutions process. This can reduce a healthcare provider’s claims related operations. Although we are only provided document indexing to our sole customer, the range of services we could have provided included:


Document Indexing: electronic indexing of paper medical records to allow for easy access of patient information with a touch of a button

Billing: focused on managing and optimizing the revenue cycle for healthcare providers

Collections: specialized in collection of small balance accounts, managed care verification, payments and profit line analysis for hospitals

Accounting: seamless extension for accounting departments enabling operations to be more efficient

Consulting: information for best practices on a multitude of practice issues ranging from new practice start-ups to cost containment on overhead expenses

Record Management: Electronic Medical Record (“EMR”) Services to provide a paperless back-office


Our past and present revenues have been generated solely by our electronic document indexing service, which is currently provided by a third party subcontractor.  We plan to bring this service in house once sufficient capital is raised to purchase the required software and computer equipment.  We can perform, and plan to provide, our additional services in the future and to take on more customers.  We are capable of providing, and plan to provide, our additional services in the future when our sole customer or prospective future customers are ready and willing to hire us for these additional services.  When our company’s capital resources are sufficient to hire additional employees, we shall expand accordingly to increase business operations and revenues.


Consulting Services




5

 


Although we provided solutions that did not require our customer or prospective customers to purchase new hardware or software, healthcare providers can take advantage of customized and premium enhancements through our third party associates, including enhanced billing and collection services. Consulting services are also available to enhance healthcare provider practices or business operations.


Revenue Generation


Our Business During the Year ended March 31, 2011


Backscanning and Electronic Indexing Fees.  Customers would be charged a per page fee to scan paper medical records, and electronically index the documents into the appropriate sections of electronic health records, with a minimum daily fee of $252 for each 24 hour period except holidays and weekends if a certain number of indexed pages are not met.


Potential Business


We planned to provide services and generate revenues from the following:


Examples of other services we could have performed and planned to earn revenue from in the future as we expanded included the following:


Subscription Fees:  Healthcare providers are typically charged a percentage of the value of every claim that we process for administration of claims, including claims remittances through various accounts.


Billing Solution Fees:  Providers are typically charged a percentage of the value of every claim that is collected by our service for collections, appeals and patient letter billing services; occasionally, other payment arrangements are made.


Support Fees:  Healthcare providers and financial institutions are typically charged a one-time setup and training fee.


Customization and Consulting Fees:  Our sole customer or future customers would be charged for any non-standard customer support, consulting and any customization, such as for electronic interfaces from the healthcare provider’s existing legacy management system to our systems.


COMPETITION

 

The market for medical claims-related products and services is generally highly competitive and subject to constant change as a result of new product introductions, technological developments and market activities of industry participants. We anticipated competition from a number of public and private companies involved in the business of medical claims transaction processing and solutions, including editing engines, claims management and/or practice management systems, clearinghouses, and medical receivable funding companies. We were also aware that other companies offer products and services with some or many features similar to those that we are capable of providing and have proven track records across a substantial customer base.


We initially planned to compete on price and service, meaning we would have offered competitive prices to keep our sole customer enrolled with us and would have offered lower service prices to potential future customers than they might find elsewhere.  We felt potential customers in our industry base a lot of their decision on which company to hire on the cost of services.  Therefore we felt that if we can beat the prices quoted by competing companies and save potential customers 5-10% in costs, we would have had a competitive edge when marketing our services to potential new customers and keeping our current customer using our services.  Because we were a boutique company, we had a small office and work very closely with our sole customer and will work closely with any additional future customers.  By keeping our overhead low, which is accomplished in part by free office space, we could have kept our service costs low as well.  We felt our customer service was of a higher caliber than what other larger firms offer because we had minimal layers of intra-business departments and when we had one key person communicating business needs with our customer there is no communication loss or confusion that might arise as in a larger firm that might use several different people on each customer.  We also were available to speak



6

 


with our sole customer and any additional future customers after normal business hours end and that is better customer service than many other competitors offer.


PRINCIPAL CUSTOMER


One (1) customer accounted for all of total sales for the fiscal years ended March 31, 2011 and 2010.  The sole customer is a growing non-profit, community based health care delivery network in Southern California that includes multiple hospitals and thousands of affiliated physicians.  A reduction in sales from or loss of such customer would have a material adverse effect on our results of operations and financial condition.  We were not aware of any negative trends, impeding business issue, or uncertainties related to their business that would adversely impact us.


BUSINESS OPERATIONS AFTER APRIL 5, 2011


Stock Purchase Agreement


On April 5, 2011, a Stock Purchase Agreement (the “SPA”) by and among our three officers and directors Deepak Danavar, Ravi Sharma, and James Villalobos, us and Lynn Harrison (“LH”) was executed and a closing was held under the SPA.


Pursuant to the SPA (i) LH purchased an aggregate of 8,280,000 shares of our common stock (87% of the outstanding shares) from Messrs. Danavar, Sharma and Villalobos for an aggregate purchase price of $370,000.00; (ii) we disposed of its California subsidiary by transferring its shares to Messrs. Danavar, Sharma and Villalobos;  (iii) LH was elected our sole director; (iv) LH was elected our President and CEO  and Frank J. Hariton was elected our secretary; and (v) Messrs Danavar, Sharma and Villalobos each resigned as our officers and directors.   LH made the purchase of the shares with her own funds.


Property Purchase Agreement


On April 5, 2011, we entered into a Property Purchase Agreement (“PPA”) with Precious Metals Exploration Corp., an unaffiliated seller with offices in Sweden (the “Seller”), for the purchase of an undivided 60% right title and interest in certain mining claims in Alaska in exchange for 40,000 shares of our common stock and the retention by the Seller of a 5% Net Smelter Royalty, as defined in the PPA.  The PPA agreement further provides for the issuance to the Seller of 40,000 additional shares of our common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold and requires us to expend at least $300,000 in exploration and mine development work on the property over three years commencing with the closing under the PPA.  The closing under the PPA, in addition to the satisfaction of the usual conditions is also subject to our (i) changing its corporate name; (ii) affecting a 50 for 1 stock split; (iii) increasing its authorized common stock to 250,000,000 shares, par value $0.001 per share; and (iv) the retirement of at least 80% of all presently outstanding shares. By May 19, 2011 we had met all of these conditions and the 40,000 share numbers above represent 500,000 post stock split shares.


The Properties


The claims consist of three separate blocks that are partially contiguous and located 2.5 miles west of the Pogo 3.6 million ounce Pogo deposit; the Indian claims (2 square miles – 32 state claims); the Aurora claims (1 square mile – 4 MTRSC state claims; conversions in- progress by the Alaska Division of Natural Resources): and the Rainbow claims (1 square mile – 4 MTRSC state claims). All claims are located on State of Alaska lands and are currently active and in good standing. The Rainbow, Indian and Aurora and collectively referred to as the RAI properties.


The claims are situated 80 air miles southeast of Fairbanks and 2.5 miles west of Teck-Cominco’s Pogo gold deposit in the Goodpaster Mining District of east central Alaska. Each claim block consists of active State of Alaska mining claims located in the Big Delta B-2 and B-3 1:63,360 Quadrangles.  Limited prospecting has found elevated gold and trace elements in a sporadic suite of rock and soil samples on the properties. Quartz vein float samples with up to 2.4 g/t gold and anomalous arsenic and bismuth are found from prospected slopes less than 3 miles from the Pogo mine, on trend to the east.  




7

 



GEOLOGY


The properties, as mapped by State geologists, are underlain predominately by pre-Mississippian paragneiss with lesser schist and quartzite, and Mississippian-Devonian orthogneiss rock packages, which both typically only crop out along prominent ridges. In general, foliation within the paragneiss strikes westerly and dips moderately to the south. Cretaceous age granite, granodiorite and tonalite plutons are mapped and in close proximity to the RAI properties. The granodioritic Goodpaster Batholith (Cretaceous) underlies a corner of the Indian block and extends further to the north and east.


The Aurora block is underlain by paragneiss (pMp), schist, and quartzite (pMsp) with minor orthogneiss (MDogd). Several early Tertiary basaltic dikes were noted by AngloGold geologists.  The Indian block is predominately underlain by orthogneiss (MDot and MDog), which is the same unit hosting the nearby Pogo deposit. Granodioritic phases of the Goodpaster Batholith lie along the northern edge of the claim block.  The Rainbow block consists mostly of paragneiss (pMp), hornfels surrounding a 96.5 to 99 Ma tonalite (Ktn), and lesser orthogneiss (MDogd). The tonalite is of the same age and composition as the block faulted tonalite proximal to the Pogo deposit and often locally referred to as the “Pogo diorite”. The northwest- trending gneissic packages and tonalite are easily linked between Rainbow and Pogo after restoring the inferred off-set along the intervening faults.


A small moderately sericite-carbonate altered Cretaceous granodiorite/quartz monzonite dike was noted by AngloGold geologists in the northwestern corner of the Rainbow claim block.  AngloGold described areas of alteration of the gneiss units on the property as consisting of localized moderate to strong silicification, sulfidation, sericite +/- carbonate alteration and small-scale quartz veining often associated with weak pervasive iron oxide staining.


GEOCHEMISTRY


Quartz veins with disseminated arsenopyrite are found in float along the western edge of the Rainbow Block near the mapped contact between the paragneiss, orthogneiss, and tonalite. These veins contain up to 2.4 g/t gold with high arsenic (>10,000ppm) and anomalous bismuth (27ppm). Higher up this slope and along the ridgeline connecting with the Aurora block are several rock samples with anomalous gold (~150ppb), arsenic, and bismuth. Soil samples collected in this area are also anomalous in gold (25-50ppb) and arsenic. Systematic soil grid sampling would better define targets in this talus and vegetation covered area.


In 2003 AngloGold spent 4-man days soil sampling along ridgelines in the Indian block and returned uniformly low gold (up to 17ppb) and trace element values. Limited sampling by the property owners has identified anomalous gold in soil to 31ppb.


A series of standard -80 mesh stream sediment samples collected by AngloGold in 2002 identified anomalous gold (10, 11, and 12ppb), arsenic and detectable bismuth and tellurium from the two east-west oriented creeks draining the Rainbow and southern Aurora blocks. Another stream sediment sample returned 23ppb gold, 198ppm arsenic, 30ppm antimony, with detectable bismuth and tellurium from a small stream draining the northwest corner of the Aurora block.


Only sporadic sampling since 1999 has occurred on the RAI properties. Almost all of the soil and rock samples were collected by the property owners, and only as time away from full-time work schedules and money allowed. No systematic soil or rock survey has been done on the Aurora and Rainbow blocks, leaving a large area of unexplored ground open to evaluation.


GEOPHYSICS


In 1999 and again in 2004 the State of Alaska funded an airborne geophysical survey over a large portion of the Goodpaster Mining district that encompassed the RAI claim blocks. The survey collected magnetic, conductive and radiometric data at 400m line spacings with 5km spaced tie lines. Hornfels surrounding a mapped tonalite is well defined as strongly magnetic (red to purple) on the Rainbow block with weak magnetic (green to blue) responses coming from the paragneiss and orthogneiss packages proximal to the RAI properties. The large magnetic response on the northern half of the Aurora block may indicate a shallow unexposed hornfels and associated intrusion similar to the tonalite found on the




8

 


Rainbow block. Of particular interest are the similar magnetic signatures found at the Pogo deposit and its nearby tonalite, to the signatures found on the RAI properties.


Management believes that the properties control mineral rights in a highly favorable location, with prospective geology and geophysical signatures similar to the 3.6 million ounce Pogo deposit located only 2.5 miles to the east.  The discovery of gold bearing quartz veins (up to 2.4 g/t Au) with bismuth and arsenic signatures indicating close proximity to an intrusive-hydrothermal source, warrant a systematic follow-up program of exploration. Work to date on the property has been sporadic.


Other Property Acquisitions and Dispositions


On July 13, 2011, we entered into an Asset Purchase Agreement (“Mexican APA”) with Precious Metals Exploration Corp., an unaffiliated seller with offices in Sweden (the “Seller”), for the purchase of an undivided 75% right title and interest in certain mining claims in Hostotipaquillo, Mexico in exchange for 3,000,000 shares of our common stock to be issued 50% on closing, an additional 25% after six months and the final 25% after 12 months.  The Mexican APA further provides for the issuance to the Seller of 5,500,000 additional shares of our common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver and requires us to expend at least $850,000 in exploration and mine development work on the property over fifteen months commencing with the closing under the Mexican APA (including $350,000 in the first 3 months).  We are also required to hire a project manager designated by the Seller at $10,000 per month.  Management believes these properties to be promising prospects.


On July 18, 2011, we entered into an Asset Purchase Agreement (“APAAR1”) with Precious Metals Exploration Corp., an unaffiliated seller with offices in Sweden (the “Seller”), for the purchase of an undivided 100% interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona.  The purchase price was $600,000 payable in installments in the seven months following the closing and 500,000 shares of our common stock. APAAR1 further provides for the issuance to the Seller of 1,500,000 additional shares of our common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver and requires us to pay a 5% smelter’s royalty.  Management believes these properties to be promising prospects.


On July 18, 2011, we entered into a second Asset Purchase Agreement (“APAAR2”) with Precious Metals Exploration Corp., an unaffiliated seller with offices in Sweden (the “Seller”), for the purchase of an undivided 100% interest in 2 patented claims and 5 federal claims comprising roughly 134 acres in Mohave County, Arizona.  The Purchase Price was $674,022 payable in installments in the twenty months following the closing.  Management believes these properties to be promising prospects.


On December 23, 2011, we entered into a termination agreement (the “Termination Agreement”) with Seller of the Mexican APA. Under the Termination Agreement, the Seller returned to us the 1,500,000 shares that were issued to it and we were relieved from all further obligations under the Mexican APA.  We had expended $208,000 inclusive of $40,000 in project management fees and $168,000 in exploration costs under the Mexican APA which will not be recovered.


Management based its decision to terminate the Mexican APA on several factors including its assessment of the political situation and threats of instability in Mexico.


Item 1A.  Risk Factors.


Risks Relating To Our Prior Business


You should carefully consider the risks described below before investing in our publicly traded securities. The risks described below are not the only ones facing us. Our business is also subject to the risks that affect many other companies, such as competition, technological obsolescence, labor relations, general economic conditions, geopolitical events, climate change and international operations. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and our liquidity.




9

 



We had a very limited operating history, making it difficult to accurately forecast our revenues and appropriately plan our expenses.

 

We began operations as iBOS, Inc. in April 2006.  We incurred net losses of $11,609 for the three months ended June 30, 2010, net losses of $22,823 for the fiscal year ended March 31, 2010, and net losses of $12,525 for the fiscal year ended March 31, 2009. For the fiscal year ended March 31, 2011 we incurred losses of $41,189.


Because we have had a limited operating history, it is difficult to accurately forecast our revenues and expenses. Additionally, our operations will continue to be subject to risks inherent in the establishment of a developing new business, including, among other things, efficiently deploying our capital, developing our product and services offerings, developing and implementing our marketing campaigns and strategies and developing awareness and acceptance of our products. Our ability to generate future revenues will be dependent on a number of factors, many of which are beyond our control, including the pricing of other services, overall demand for our products, market competition and government regulation. As with any investment in a company with a limited operating history, ownership of our securities may involve a high degree of risk and is not recommended if an investor cannot reasonably bear the risk of a total loss of his or her investment.


If we did not receive additional funding to expand operations the value of our stock could have been adversely affected.


As of March 31, 2011, we had cash of $7,574 and we estimate that such cash reserves were not sufficient to fund our daily operations. To fund our daily operations we needed to raise additional capital or employ other financing alternatives.  No assurance could be given that we would have received additional funds required to fund our daily operations.  In addition, in the absence of the receipt of additional funding we would have been required to scale back current operations or cease operations completely.  In part, because of these obvious financial pressures and the unlikelihood of obtaining significant funding, we opted to change our line of business.


Competition from providers of similar products and services could have adversely affected our revenues and financial condition.


We competed in a rapidly evolving, highly competitive and fragmented market. We expected competition to intensify in the future. There was no assurance that we would have been able to compete effectively. We believed that the main competitive factors in the medical transactions processing, billing and payment industry included effective marketing and sales, brand recognition, product quality, ease of product use, niche marketing and segmentation and value propositions. Competitive factors also include the features, functionality and cost of product and services. Many of our competitors are established, profitable and have strong attributes in many, most or all of these areas. They might have been able to leverage their existing relationships to provide alternative products or services on more attractive terms or with better customer support. Other companies also might have entered our markets with better products or services, greater financial and human resources and/or greater brand recognition. Competitors may have continued to improve or expand current products and introduced new products. We might have been perceived as relatively too small or untested to be awarded business relative to the competition. To be competitive, we would have had to invest significant resources in business development, advertising and marketing. We may also have had to rely on forming personal and business relationships for critical branding and rely on existing personal or business relationship leverage, which relationships may or may not have been available or sufficient. We could not assure that we would have sufficient resources to make these investments or that we would be able to make the advances necessary to be competitive. Increased competition might have resulted in fee reductions, reduced gross margin and loss of market share. Failure to compete successfully against current or future competitors would have resulted in less revenue and have a material adverse effect on our business, operating results and financial condition.


If our sole customer terminated our Service Agreement or if the service agreement were not renegotiated or extended past the October 1, 2011 expiration date, our business could have been adversely affected.


We had one customer for which we relied upon for all of our revenue generation.  Unless we attracted additional customers the number of revenue streams into us, our business success would have been completely dependent upon the relationship and agreement we had with this sole customer.  Our agreement with the customer could have been terminated at



10

 


any time by either party with a 90-day notice.  At this time, or any time before attracting additional customers, losing our customer would have resulted in a material adverse effect on our business, operating results, and financial condition and we would have to curtail operations or discontinue operations completely.


If our technology was not operational and usable it could adversely affect our business.

 

We relied almost exclusively on the technology of the third party.  We believed that we could not operate as a stand-alone business without the operations and usability of third party software. As a result, the success of our business was materially and substantially dependent on third party software (and the availability, operability and use of such technology in whole or in part). If the technology were not usable, we would have been unable to operate.

 

Our services were designed to rely upon third-party software that is non-proprietary to us, which we did not own.  The software was owned and operated by our third party vendor, with whom we had a Subcontract Agreement that expired October 1, 2011, and was terminable by either party with 90-day notice and is compatible with the indexing service we provided.  We depended on these other companies for software updates, technical support and possibly for system management or for new product development. Although we believed there might be alternative suppliers for some or all of these technologies, it would have taken a significant period of time and money to establish relationships with alternative suppliers and substitute their technologies for technologies currently being used. The loss of any of our relationships or agreements with these suppliers could result in system shut downs and/or the inability to provide services, which could result in a material adverse effect on our business, operating results and financial condition. 


If our systems failed, it could have interrupted operations and could have adversely impacted us.

 

Our operations were dependent upon our ability to support our complex network infrastructure which is owned by our third party vendor and avoid damage from fires, earthquakes, floods, hurricanes, power losses, war, terrorist attacks, telecommunications failures and similar natural or manmade events. The occurrence of a natural disaster, intentional or unintentional human error or action, or other unanticipated problem could have caused interruptions in the services that we provided. Any damage or failure that causes interruptions in our operations could have resulted in loss of revenues from our customer or prospective customers, loss of our customer or prospective customers, monetary damage, or increased costs of operations, any or all of which could have had a material adverse effect on our business, operating results and financial condition.


If the partnership retained with our third party vendor was discontinued, or if they become insolvent, dissolve, or the quality of work becomes substandard, our ability to provide services will be greatly hindered.


The failure of our third-party vendor backbone providers to provide the data communications capacity that we require, as a result of natural disaster, operational disruption, insolvency, dissolution, or any other reason would certainly cause interruptions in the services that we provide and hinder our operations.


If our provided technological services are replaced with newer technologies or methodologies that are more competitive and better accepted by our sole customer, potential customers, and future regulations, our ability to compete will be diminished.


Newer technologies such as encrypted medical records on computer chip cards, bar-coding systems, and other methodologies could inhibit our company from continuing its services in the capacity of electronic indexing of files.  Our revenue stream would be substantially, if not completely affected and we could lose our current customer if they accepted a different process to the electronic indexing that we provide, as this is the only service we presently generate revenue from.


Our services were designed to rely upon third-party software that is non-proprietary to us, which we do not own currently.  The software is owned and operated by our third party vendor, with whom we have a Subcontract Agreement that expires October 1, 2011, and is terminable by either party with 90-day notice and is compatible with the indexing service we provide.  We will depend on these other companies for software updates, technical support and possibly for system management or for new product development. Although we believe there might be alternative suppliers for some or all of these technologies, it would take a significant period of time and money to establish relationships with alternative suppliers




11

 


and substitute their technologies for technologies currently being used. The loss of any of our relationships or agreements with these suppliers could result in system shut downs and/or the inability to provide services, which could result in a material adverse effect on our business, operating results and financial condition.


If we had been unable to retain key personnel it would have had an adverse effect on our business. We did not maintain ‘‘key man’’ life insurance policies on our key personnel.

 

Our operations had been and dependent on the efforts of Mr. Deepak Danavar, our President and Chief Executive Officer, Mr. Ravi Sharma, our Chief Financial Officer and Corporate Secretary, and Mr. James Villalobos, our Vice President of Sales and Marketing. The development of improvements to our products and services, as well as the development of new products were dependent on retaining the services of certain technical personnel who were involved in the development of our products and services. The loss of key management, the inability to secure or retain such key personnel with unique knowledge of our products and services and the technology and programming employed as part of our products and services, or an inability to attract and retain sufficient numbers of other qualified management personnel would have adversely affected our business, products and services and could have had a material adverse effect on our business, operating results and financial condition.

 

We did not have ‘‘key man’’ life insurance policies for Mr. Danavar, Mr. Sharma or Mr. Villalobos. Even if had obtained ‘‘key man’’ insurance for Mr. Danavar, Mr. Sharma or Mr. Villalobos of which there could have been  no assurance, the amount of such policies might not have been sufficient to cover losses experienced by us as a result of the loss of Mr. Danavar, Mr. Sharma or Mr. Villalobos.


Our management served us on a part time basis and conflicts could have arisen.


Mr. Danavar, Mr. Sharma, and Mr. Villalobos performed employee like services for us on a part time basis.  Mr. Danavar and the other officers worked approximately 10 hours each per week for our benefit.  Employee-like services provided by our officers and directors were not compensated in the fiscal year ended 2011 and no employee contracts with them have been entered into.  These individuals have other employment and responsibilities outside of the Company.  While they will each sought to give us sufficient time to allow us to operate on a basis that was beneficial to our shareholders, this goal might not have been accomplished and our operating results might have been negatively impacted by the unavailability of our key personnel.

 

If we failed to attract skilled personnel it could have adversely affected our business.

 

Our future success in our prior business depended, in large part, on our ability to attract and retain highly skilled personnel. If we were unable to attract or retain qualified personnel in the future or there were any delays in hiring required personnel, particularly technical, sales, marketing and financial personnel, it could have had a material adverse affect our business, operating results and financial condition.

 

In our prior business we would have needed to expand our sales operations and marketing operations in order to increase market awareness of our products and generate revenues. New sales personnel and marketing personnel would have been required training and it would have taken time to achieve full productivity. Competition for such personnel was intense. We could not be certain that we would have been successful in attracting and retaining additional qualified personnel.

 

We were subject to substantial government regulation which could have adversely affected the way we conducted our business and the costs of conducting our business.  The United States healthcare industry is currently changing and new legislation, offered incentives, and regulations might have inhibited our business.


The healthcare industry is highly regulated and is subject to changing political, economic and regulatory influences.  Federal and state legislatures have periodically considered programs to reform or amend the U.S. healthcare system at both the federal and state level and to change healthcare financing and reimbursement systems, such as the Balanced Budget Act of 1997 and the Medicare Modernization Act of 2003. These programs may contain proposals to increase governmental involvement in healthcare, lower reimbursement rates or otherwise change the environment in which healthcare industry




12

 


participants operate. Current or future government regulations or healthcare reform measures, such as the healthcare reform legislation that was enacted in 2010, may affect our business. Healthcare industry participants may respond by reducing their investments or postponing investment decisions, including investments in our products and services.


The healthcare industry and standards of medical record keeping may be currently changing due to proposed healthcare reform and passed legislation.  There are many companies that have electronic medical record technologies that have incentives to replace paper and electronically indexed recordkeeping.  A healthcare bill was passed by the Unites States Congress and Senate recently that will open pathways for an evolving healthcare industry that could be detrimental to our current method of indexing medical records.  On January 13, 2010, the Centers for Medicare and Medicaid Services and the Office of the National Coordinator of Health Information Technology published two much-anticipated and coordinated sets of regulations.  These regulations establish the requirements for eligible providers to earn Medicare and Medicaid electronic health record (EHR) incentives.  The Department of Health and Human Services accepted comments on these regulations through March 15, 2010.  Eligible hospitals and professionals, vendors, would-be certifying bodies and others interested in or affected by the regulations should thus consider submitting comments to HHS, with a particular emphasis on requesting the “grandfathering” of existing, successful EHR technology.

 

Our former medical billing and collection activities, for which we never had a customer, are governed by numerous federal and state civil and criminal laws. Federal and state regulators use these laws to investigate healthcare providers and companies that provide lending, billing and collection services. In connection with these laws, we may have been subjected to federal or state government investigations and possible penalties might have been imposed, false claims actions may have had to be defended, private payers may have filed claims against us, and we may have been excluded from Medicare, Medicaid or other government-funded healthcare programs. Some of these laws carry strict liability provisions that impose responsibilities and liabilities on us without any wrongdoing or negligence on our part.

 

We might have become the subject of false claims litigation or additional investigations relating to our possible future lending, billing and collection activities, even when simply passing on claims originating from and edited by third parties for content. Any such proceeding or investigation could have had a material adverse effect on our business, operating results and financial condition.


Under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, final rules were published regarding standards for electronic transactions as well as standards for privacy and security of individually identifiable health information. The HIPAA rules set new or higher standards for the healthcare industry in handling healthcare transactions and information, with penalties for noncompliance. We have incurred and we will continue to incur costs to comply with these rules. Compliance with these rules may prove to be more costly than we currently anticipate. Failure to comply with such rules may have had a material adverse effect on our business and may subject us to civil and criminal penalties as well as loss of our sole customer or any prospective customers.

 

We relied upon third parties to provide data elements to process electronic medical claims in a HIPAA compliant format. While we believed we would be fully and properly prepared to process electronic medical claims in a HIPAA-compliant format, there could be no assurance that third parties, including healthcare providers and payers, would likewise be prepared to supply all the data elements required to process electronic medical claims and make electronic remittance under HIPAA's standards. We had made investments in product enhancements to support customer operations that are regulated by HIPAA. Responding to HIPAA's impact might have required us to make investments in new products or charge higher prices.

 

HIPAA, in part, governs the collection, use, storage and disclosure of health information for the purpose of safeguarding the privacy and security of such information. Persons who believe health information has been misused or disclosed improperly may file complaints against offending parties, which may lead to investigation and potential civil and criminal penalties from Federal or state governments.


The passage of HIPAA is part of a wider healthcare reform initiative. We expected that the debate on healthcare reform would continue. We also expected that the federal government as well as state governments would pass laws and issue regulations addressing healthcare issues and reimbursement of healthcare providers. We could not predict whether the




13

 


governmental-bodies regulators would enact new legislation and regulations, and, if enacted, whether such new developments would have an adverse affect on our business, operating results or financial condition.


In addition, recent proposed legislation enacted by the United States Congress and regulations thereunder, if enacted, may have placed substantial burdens upon us and required that we invest in additional software and equipment.  In addition, this law would force us to ensure that we had the following protocols in place to comply with its strict security guidelines:


1.

Security breach notification is one of the key measures of the Health Information Technology for Economic and Clinical Health (HITECH) Act designed to further the adoption of electronic health records systems by providing more stringent protections for patient information.

2.

HIPAA covered entities and their business associates must report security breaches in compliance with the new rules.

3.

Covered Entities must timely notify affected individuals if their unsecured protected health information was the subject of a security breach. In doing so, Covered Entities also must report such breaches to the Department of Health & Human Services (either concurrently or annually) and, in certain circumstances, the media.

4.

Business Associates must timely notify their covered entities of reportable security breaches such that the covered entities can make reports to affected individuals and others as required by the regulations.  The regulations require business associates to provide notice to covered entities without unreasonable delay, and no later than 60 days from the date that the business associates discovers the breach, or should have discovered it using reasonable diligence. Business associates, to the extent possible, must identify each affected individual and provide such information to the Covered Entity.


We had these protocols in place for compliance with the HITECH act.  However, if there were changes made in the future to legislation or regulations, we would need to review our processes for compliance.


Many healthcare providers who were potential customers may have existing systems that do not generate electronic files in a HIPAA-compliant format, which will limit the amount of services we could provide to and the amount of revenues that could be generated from such healthcare providers.


Many healthcare providers have practice management systems that do not have electronic interfaces which produce a HIPAA compliant form. If the interface doesn't exist, they must purchase a new system from a third party, which may be expensive and not a desirable business proposition for such healthcare providers. If claims cannot be submitted electronically, the claims data must be manually entered into our system, which can be time consuming and duplicative of work already done by a healthcare provider. Manually entering the data also subjects claims to greater risk of human error in the data entry process. While we believe we can provide solutions to healthcare providers to enable them to establish electronic interfaces to submit claims electronically in a HIPAA compliant manner, there can be no assurance healthcare providers will be willing to implement the solutions that we propose. If healthcare providers cannot supply electronic medical claims and such claims are processed manually rather than electronically, services that we could have provided would have been greatly limited and our ability to generate revenues from such providers would have been curtailed which could have resulted in a material adverse affect on our business, operating results or financial condition.

 

We may have made errors in processing information provided by our sole customer or future customers and, as a result, we might have suffered  losses.

 

Our prior business involved our receiving detailed information provided by our customer or future customers.  Even if our customer or future customer provided full and accurate disclosure of all material information to be submitted as part of a claim for payment, such information may be misinterpreted or incorrectly analyzed. Mistakes by our systems or personnel might have caused us to incur liability to our customer or future customers in connection with such mistakes.

 

Solutions and services that we offered may have subjected us to product liability claims.

 

Solutions that we sold might fail to perform in a variety of ways, and services that we provided may not meet our sole customer’s expectations or any future customers’ expectations, or which faces frequent internet service interruptions,




14

 


which take it off-line. Such problems would have seriously harmed our credibility, market acceptance of our products and the value of our brands. In addition, such problems may result in liability for damages arising out of service interruption. The occurrence of some of these types of problems may seriously harm our business, operating results and financial condition.


Our systems were subject to certain security risks which might have adversely affected our operations.


Despite the implementation of security measures, our systems might have been vulnerable to unauthorized access, computer viruses and other disruptive problems. Companies have experienced, and may experience, interruptions in service as a result of the accidental or intentional actions of internet users, current and former employees or others. Unauthorized access could also potentially have jeopardized the security of our sole customer or security of future customers and our confidential information stored in our computer systems, which may have resulted in liability to customers and also may have deterred potential customers from using our products and services. Although we intended to continue to implement industry-standard security measures, such measures have been circumvented in the past, and there can be no assurance that measures that we implement will not be circumvented in the future. Eliminating computer viruses and alleviating other security problems may require interruptions, delays or cessation of service to our customers, such interruptions, delays or cessation of services may have resulted in a loss of customers or subjected us to potential liability for actions out of such interruptions, delays or cessation of services.


Dependence on Key Customer


One (1) customer accounted for all of total sales for the fiscal years ended March 31, 2011 and 2010.  Hence, a reduction in sales from or loss of this sole customer would have had a material adverse effect on our results of operations and financial condition.


RISKS RELATD TO OUR BUSINESS AFTER APRIL 5, 2011.


We have incurred losses to date and have not produced any gold or other precious minerals or metals.


For the fiscal year ended March 31, 2012 we incurred losses of $741,975.  We have relied on equity investments to fund operations, but unless we become profitable, these may become more difficult to secure.


We have limited operating history and if we are not successful in growing our business, we may have to scale back or even cease our ongoing business operations.


We have a limited history as a mineral exploration and mining company and we must be considered in the exploration stage. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history.


We may be unable to generate revenues or operate on a profitable basis.


We are in the exploration stage and potential investors should be aware of the difficulties normally encountered by enterprises in the exploration stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.


There are numerous exploration and development risks associated with our industry.


The business of exploration for minerals and mining involves an extremely high degree of risk. Few properties that are explored are ultimately developed into producing mines. There is no assurance that our mineral exploration and development activities will result in the discovery, development, or production of a commercially viable ore body.  The economics of developing gold properties are affected by many factors, including capital and operating costs, variations of the grade of ore mined, fluctuating gold markets, costs of processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of gold, and environmental protection.




15

 


Substantial expenditures are required to establish reserves mining, to develop metallurgical processes to extract metal from ore, and to develop the mining and processing facilities and infrastructure at any site chosen for mining.


We cannot guaranty that the funds required for exploration and development can be obtained. The marketability of any gold acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately foreseen or predicted, such as market fluctuations, the global marketing conditions for gold, the proximity and capacity of milling facilities, mineral markets, and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting minerals, and environmental protection.


The price of gold can be volatile.


Gold prices historically have fluctuated widely and are affected by numerous factors outside of our control, including industrial and retail demand, central bank lending, sales and purchases of gold, forward sales of gold by producers and speculators, levels of gold production, short-term changes in supply and demand because of speculative hedging activities, confidence in the global monetary system, expectations of the future rate of inflation, the strength of the US dollar (the currency in which the price of gold is generally quoted), interest rates, and global or regional political or economic events. The potential profitability of our operations is directly related to the market price of gold. A decline in the market price of gold would materially affect the value of our assets. A decline in the market price of gold may also require us to write-down any gold reserves that we might book, which would negatively impact our financial position.


Competition in the gold mining industry is intense and there is no assurance that we will be successful in acquiring any further properties.


The gold mining industry is intensely competitive. We compete with numerous individuals and companies, including many major gold exploration and mining companies that have substantially greater technical, financial, and operational resources and staffs. Accordingly, there is a high degree of competition for desirable properties for mining operations, and necessary mining equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed. There are other competitors that have operations in the Alaska area and the presence of these competitors could harm our ability to acquire additional properties.


Government regulation and environmental regulatory requirements may impact our operations.


Failure to comply with applicable environmental laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities, causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations, and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on us and cause increases in capital expenditures or require abandonment or delays in development of new mining properties.


Decreases in prices of precious metals would reduce the value of our properties.


The value of our exploration properties is directly related to the market price of precious metals. The market price of various precious metals fluctuates widely and is affected by numerous factors beyond the control of any mining company. These factors include industrial and jewelry fabrication demand, expectations with respect to the rate of inflation, the relative strength of the U.S. dollar and other currencies, interest rates, gold sales and loans by central banks, forward sales by gold producers, global or regional political, economic or banking crises, and a number of other factors. If the gold price drops dramatically, the value of our exploration properties will decrease. The selections of a property for exploration or development, and the dedication of funds necessary to achieve such purposes are decisions that must be made long before the first revenues from production will be received, if ever. Price fluctuations between the time that such decisions are made and the commencement of production can have a material adverse effect on the economics of a mine, and can eliminate or have a material adverse impact on the value of the properties. Because of the speculative nature of exploration of natural




16

 


resource properties, there is substantial risk that we will not find commercially viable gold ore deposits. There is no assurance that any of the claims we explore or acquire will contain commercially exploitable reserves of gold minerals.


Exploration for natural resources, particularly gold, is a speculative venture involving substantial risk.


Hazards such as unusual or unexpected geological formations and other conditions often result in unsuccessful exploration efforts. Success in exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological expertise and availability of exploration capital. Due to these and other factors, no assurance can be given that our exploration programs will result in the discovery of new mineral reserves or resources.


We may not have access to all of the supplies and materials we need for exploration, which could cause us to delay or suspend operations.


Demand for gold mining equipment and limited industry suppliers may result in occasional shortages of supplies, and certain equipment such as drilling rigs that we need to conduct exploration activities. We have not negotiated any long term contracts with any suppliers of products, equipment or services. If we cannot find the trained employees and equipment when required, we will have to suspend or curtail our exploration plans until such services and equipment can be obtained.


We have only preliminary studies and no known ore reserves and we cannot predict when and if we will find commercial quantities of gold ore deposits.


The failure to identify and extract commercially viable mineral ore deposits will affect our ability to generate revenues. We have no known ore reserves and there can be no assurance that any of the mineral claims we are exploring contain commercial quantities of gold or silver. Even if we identify commercial reserves, we cannot predict whether we will be able to mine the reserves on a profitable basis, if at all. If we are unable to hire and retain key personnel, we may not be able to implement our business plan.


We are substantially dependent upon the continued services of Lynn Harrison.


We do not have an employment agreement with Lynn Harrison or any key person life insurance or disability insurance on her. While Lynn Harrison expects to devote 40 hours per week of her time assisting us and our business, there can be no assurance that her services will remain available to us. If Lynn Harrison's services are not available to us, we will be materially harmed. While Lynn Harrison is a significant stockholder and considers her investment of time and money of significant personal value, there is no assurance that she will remain with us.


Our success is also largely dependent on our ability to hire highly qualified personnel.


This is particularly true in the highly technical business such as mineral exploration. These individuals are in high demand and we may not be able to retain the personnel we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Failure to hire key personnel when needed, or on acceptable terms, to carry out our exploration and mining programs would harm our business. Because the probability of many of the individual mining prospects explored will not show commercially viable amounts of gold ore deposits, substantial amounts of funds spent on exploration will not result in identifiable reserves. The probability of our exploration program identifying individual prospects having commercially significant reserves cannot be predicted. It is likely that many of the properties explored will not contain any commercially significant reserves. As such substantial funds will be spent on exploration which may identify only a few, if any, claims having commercial development potential.


Our mining claims could be contested which would add significant costs and delays to our exploration programs.


Our mining property rights currently consist of a number of unpatented mining claims. The validity of unpatented mining claims and staked claims are often uncertain and are always subject to contest. Unpatented mining claims are generally considered subject to greater title risk than patented mining claims, or real property interests that are owned in fee



17

 


simple. If our claims on a particular property are successfully challenged, we may not be able to develop or retain our interests on that property, which could reduce our future revenues.


Mining operations are subject to extensive federal and state regulation which increases the costs of compliance and possible liability for non-compliance.


Mining is subject to extensive regulation by state and federal regulatory authorities. State and federal statutes regulate environmental quality, safety, exploration procedures, reclamation, employees' health and safety, use of explosives, air quality standards, pollution of stream and fresh water sources, noxious odors, noise, dust, and other environmental protection controls as well as the rights of adjoining property owners. We believe that we are currently operating in compliance with all known safety and environmental standards and regulations applicable to our Alaska properties. However, there can be no assurance that our compliance could be challenged or that future changes in federal or Alaskan laws, regulations or interpretations thereof will not have a material adverse affect on our ability to resume and sustain exploration operations.


Mining operations are subject to various risks and hazards which could result in significant costs or hinder ongoing operations.


The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft. We intend to carry insurance against certain property damage loss (including business interruption) and comprehensive general liability insurance. While we hope to maintain insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost. We have not obtained environmental liability insurance because such coverage is not considered by management to be cost effective.


We reasonably anticipate that our auditors will express substantial doubt regarding our ability to continue operations as a "going concern." Investors may lose all of their investment if we are unable to continue operations and generate revenues, or if we do not raise sufficient funds.


We will seek to raise additional funds to meet our working capital needs principally through the additional sales of our securities. However, we cannot guaranty that we will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to us. If we do not raise sufficient funds, we may not be able to continue in business. As a result, we believe it likely that our auditors will conclude that substantial doubt exists about our ability to continue operations.


RISKS RELATED TO OPERATING AS A PUBLIC COMPANY


Our officers have no experience in managing a public company.


Our CEO has no previous experience in managing a public company and we do not have a sufficient number of employees or officers to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.


We are subject to the reporting requirements of federal securities laws, which is expensive.




18

 


We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we were a privately-held company.


Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls will be time consuming, difficult and costly.


It will be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley. We will need to hire additional financial reporting, internal control, and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley's internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain. We will also incur additional costs of up to $10,000 per year and work associated with preparing our evaluation report of internal control over financial reporting for our next Form 10-K and annual reports. The work associated with preparing our evaluation report of internal control over financial reporting includes our management assessing the effectiveness of our internal control over financial reporting by using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework .


If we fail to maintain the adequacy of our internal controls, our ability to provide accurate financial statements and comply with the requirements of the Sarbanes-Oxley Act could be impaired, which could cause our stock price to decrease substantially.


We have committed limited personnel and resources to the development of the external reporting and compliance obligations that are required of a public company. We plan to obtain additional financial and accounting resources to support and enhance our ability to meet the requirements of being a public company. We will need to continue to improve our financial and managerial controls, reporting systems and procedures, and documentation thereof. If our financial and managerial controls, reporting systems, or procedures fail, we may not be able to provide accurate financial statements on a timely basis or comply with the Sarbanes-Oxley Act of 2002 as it applies to us. Any failure of our internal controls or our ability to provide accurate financial statements could cause the trading price of our common stock to decrease substantially.


Our common shares are thinly-traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares or otherwise desire to liquidate such shares.


We cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained. The market price for our common stock may be particularly volatile given our status as a relatively small company with a thinly-traded "float" and lack of current revenues that could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.


The market for our common shares may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite future.


The potential volatility in our share price is attributable to a number of factors. First, as noted above, our common shares may be sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small




19

 


quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. Secondly, an investment in us is a speculative or "risky" investment due to our lack of revenues or profits to date and uncertainty of future market acceptance for current and potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through pre-arranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price. We do not anticipate paying any cash dividends.


We presently do not anticipate that we will pay any dividends on any of our capital stock in the foreseeable future.


The payment of dividends, if any, would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of our Board of Directors. We presently intend to retain all earnings, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends in the foreseeable future.


Our common stock may be subject to penny stock rules, and broker dealer imposed policies, which may make it more difficult for our stockholders to sell their common stock.


Broker-dealer practices in connection with transactions in "penny stocks" are regulated by certain penny stock rules adopted by the Securities and Exchange Commission ("SEC"). Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.  In addition, certain brokerage firms that provide clearing services to other brokerage firms have recently imposed new restrictions on transactions in stock priced under $0.10.  On July 5, 2012, our stock closed at $0.42.


We will need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders.


We will require additional capital to meet our obligations under the PPA and do not have any commitments for such capital. We can give no assurance that such capital will be available on acceptable terms or at all.  If we are unable to meet our obligations under the PPA, we may lose our interests in the properties and the value of our stock would probably decline.


We are controlled by our present sole director.


Lynn Harrison, our sole director and CEO owns 22,100,000 (25.04%) of our issued and outstanding shares and is in a position to exercise substantial control over our affairs for the foreseeable future.


Shares Eligible for Future Sale.



20

 



The sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.  In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate.  If and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act, we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares of common stock reserved for issuance thereunder.  Following the effectiveness of any such registration statement, the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.  


The sale of shares of our common stock which are not registered under the Securities Act, known as “restricted” shares, typically are effected under Rule 144.  At March 31, 2012 we had outstanding an aggregate of 87,412,500 shares of restricted common stock.  All of our shares of common stock, except those issued in the last six months, might be sold under Rule 144. No prediction can be made as to the effect, if any, that future sales of “restricted” shares of our common stock, or the availability of such shares for future sale, will have on the market price of our common stock or our ability to raise capital through an offering of our equity securities.


The sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock.  In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate.  If and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act, we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares of common stock reserved for issuance thereunder.  Following the effectiveness of any such registration statement, the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.


No Dividends


We never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future.  


ITEM 1B.  UNRESOLVED STAFF COMMENTS.


None


ITEM 2.  PROPERTIES.


We currently lease space and services within a serviced office suite in Phoenix, Arizona for approximately $1,000 per month. The lease is for an initial term of 12 months. This is an annual renewable lease which was last renewed on  December 1, 2011. As we took the longer option we have been given a 13th month free which means we will have to renew again on January 1, 2013.


Our leased premises are presently adequate for our needs.  However, if our business expands we may be required to seek larger premises. Management believes that other suitable premises are available at reasonable cost in proximity to our present offices.


We also hold interests in certain mining properties as described under Item 1.


ITEM 3.  LEGAL PROCEEDINGS.


We currently have no legal proceedings pending nor have any legal proceeding been threatened against us or any of our officers, directors or control persons of which we are aware.


ITEM 4.  REMOVED AND RESERVED



21

 


PART II


ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY AND ISSUER PURCHASES OF EQUITY SECURITIES.


Market Information


Since December 31, 2010, our common stock has traded on the Over the Counter Bulletin Board under the symbol “IBOS”.  On May 19, 2011 our symbol was changed to “LBGO”.  There were no trades during the fiscal year ended March 31, 2012


Reports to Shareholders


We plan to furnish our shareholders with an annual report for each fiscal year ending March 31 commencing in 2012 containing financial statements audited by our independent certified public accountants.  Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our shareholders when we deem appropriate.  We intend to maintain compliance with the periodic reporting requirements of the Securities Exchange Act of 1934.


Holders


As of July 11, 2012, we had 46 shareholders of record and 88,270,833 common shares issued and outstanding.  The number of holders does not include the shareholders for whom shares are held in a "nominee" or "street" name.


Dividend Policy


We have not declared or paid any dividends on our common stock to date.  We anticipate that any future earnings will be retained as working capital and used for business purposes.  Accordingly, it is unlikely that we will declare or pay any such dividends in the foreseeable future.


Securities Authorized for Issuance under Equity Compensation Plans


None


Recent Sales of Unregistered Securities


The following is a summary of all transactions since our inception involving our sales of our securities that were not registered under the Securities Act.  Shares issued for cash consideration paid to us are valued at the purchase price per share; all other shares are valued as stated.  All shares issued were issued as “restricted” shares of our common stock except as otherwise expressly stated.


On March 7, 2009, we issued 9,000,000 pre-stock split shares of our common stock to Mr. Deepak Danavar, Mr. Ravi Sharma and Mr. James Villalobos in exchange for their ownership interest in iBOS, Inc a California corporation. On March 8, 2009, we issued 200,000 shares of our common stock to Frank J. Hariton, Esq. for past legal services rendered, valued at $10,000 (the estimated fair value on the date of grant). All of such transactions with our officers, directors, and affiliates were exempt from registration by reason of Section 4(2) of the Securities Act of 1933, as amended (the “Act”) as transactions by an issuer not involving any public offering. All of the shares issued in such transactions bear an appropriate restrictive legend.


During July 2009, 320,000 pre – stock split shares of our common stock were issued to 32 investors for $32,000 or $0.10 per share. These shares were issued in a private offering pursuant to Regulation D Rule 506 under the Act, and each of the investors therein represented in writing that such investor was an accredited investor as that term is defined in Regulation D and that he was acquiring the shares for his own account and for investment. A copy of such subscription agreement was filed as Exhibit 4.1 to our Registration Statement on Form S-1 No. 333-161365. No underwriter or placement agent participated in the foregoing transactions, and no underwriting discounts or commissions were paid, nor was any general solicitation or general advertising conducted. The securities bear a restrictive legend and stop transfer



22

 


instructions are noted on our stock transfer records. The offering was, accordingly, exempt by reason of Section 4(6) of the Act.


In June 2011 we issued 500,000 post stock split shares in connection with the PPA.  The transaction was privately negotiated and exempt under Section 4(2) of the Act.  The certificate issued reflects the restriction under the Securities Act and we maintain Stop Transfer Instructions with respect thereto.


On October 11, 2011, the Company executed a Share Issuance Agreement with American Gold Holdings, Ltd. (“AGH”) that allows the Company to issue its equity in Units with each unit comprised of one share of common stock and a warrant to purchase one share of common stock.  The issue price of the Unit will be the greater of $0.45 or 90% of the volume weighted average of the closing price of common stock, for the five (5) banking days immediately preceding the date of the notice, as quoted on OTC markets, or other source of stock quotes as agreed to by both parties. The exercise price of the Warrants will be 130% of the price of the Unit and the term of the Warrants will be three (3) years from the date of issuance.


The Share Issuance Agreement commits AGH to make Advances to the Company up to $ 15,000,000 in tranches of no more than $1,000,000 each and in multiples of $25,000 until October 11, 2013 (the completion date) or to be extended for an additional term of up to twelve (12) months at the option of the Company or AGH upon written notice on or before the completion date.


On October 28, 2011 and November 12, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000 and $200,000, respectively. The Company issued 222,222 and 444,444 Units consisting (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On December 15, 2011, the Company issued Advance Notice to and received the funds from AGH of $100,000. The Company issued 101,010 Units consisting (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advance.


On February 7, 2012 and February 8, 2012, the Company issued Advance Notice to and received the funds from AGH of $25,000 and $220,000, respectively. The Company issued 55,556 and 500,000 Units consisting (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On March 21, 2012, 2012, the Company issued Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On April 23, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On May 18, 2012, the Company issued Advance Notices to and received the funds from AGH of $75,000. The Company issued 166,667 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On June 5, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.



23

 



On June 11, 2012, the Company issued Advance Notices to and received the funds from AGH of $100,000. The Company issued 222,222 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


In each of the above instances, the recipients of the shares evidenced their investment intent in writing.


ITEM 6.  SELECTED FINANCIAL DATA.


Not applicable


ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND REULTS OF OPERATION.


Overview


Shortly after the end of our fiscal year we changed our business. Accordingly, a discussion of our limited results during the year ended March 31, 2011 is of no value in determining our future prospects.


RESULTS OF ORPERATIONS:


Because we are in an exploratory stage and because we were not in the mineral exploration business last year, year to year comparisons are not meaningful.  Our plan is to continue to develop and evaluate our properties during the current year.


LIQUIDITY AND CAPITAL RESOURCES


Our plan is to acquire potential mineral producing properties by paying the bulk of the purchase price in our stock and to fund our operations through the private sale of our stock.  We have acquired several properties to date, but cannot give any assurance that we will be able to successfully sell stock at levels to meet our obligations under our property acquisition agreements. We had only cash on hand of $4,369 at March 31, 2012.


On October 11, 2011, we executed a Share Issuance Agreement with American Gold Holdings, Ltd. (“AGH”) that allows us to sell our shares in Units each unit comprised of a share of our common stock and a common stock purchase warrant.  The issue price of the Unit will be the greater of $0.45 or 90% of our share price as determined under the agreement and the exercise price of the Warrants will be 130% of the price of the Unit and the Warrants will be of three years duration.  The Share Issuance Agreement commits AGH to purchase up to $15,000,000 of Units in tranches of no more than $1,000,000 each and in multiples of $25,000 on five days notice from us.  This description of the Share Issuance Agreement is qualified in its entirety by reference to the Share Issuance Agreement which is an exhibit hereto.  Through July 11, 2012 we have received $1,125,000 under the Share Issuance Agreement and have issued or are obligated to issue a total of 2,378,788 shares.


Critical Accounting Policies


(a) Evaluation of Disclosure Controls and Procedures


Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test the Company’s internal control over financial reporting and include in this Annual Report on Form 10-K a report on management’s assessment of the effectiveness of our internal control over financial reporting.




24

 


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.  Under the supervision and with the participation of our management, including Lynn Harrison, our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on that evaluation, our management concluded that our internal control over financial reporting is not effective as of March 31, 2012. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.


The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions, the recording of transactions and the custody of assets; and (3) ineffective controls over period end financial disclosure and reporting processes.  The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of March 31, 2012.


To address the material weaknesses set forth in items (2) and (3) discussed above, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.


This annual report does not include an attestation report of our independent 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 that permit us to provide only management’s report in this annual report.


Management's Remediation Initiatives


In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:


We will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us.  First, we will create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets.  Second, we will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.


We anticipate that these initiatives will not be implemented prior to such time as we leave the exploratory stage of development and have additional resources available to us.


(b) Changes in Internal Controls


There were no changes in our internal controls and procedures in internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



25

 



Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


ITEM 7A.  QUANTITATIVE and QUALITATIVE DISCLOSURES about MARKET RISK.


Not applicable.




26

 



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


Our financial statements for the fiscal years ended March 31, 2012 and 2011 and the reports thereon of Li & Company PC, respectively are included in this annual report.



Liberty Gold Corp.


(An Exploration Stage Company)


March 31, 2012 and 2011


Index to the Financial Statements

 

 

 

 

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

 

 

F-1

 

 

 

 

 

Balance Sheets at March 31, 2012 and 2011

 

 

 

F-2

 

 

 

 

 

Statements of Operations for the Fiscal Year Ended March 31, 2012 and 2011 and for the Period from April 5, 2011 (Date of Entry into Exploration) through March 31, 2012

 

 

F-3

 

 

 

 

 

Statement of Stockholders’ Equity (Deficit) for the Period from March 31, 2010 through March 31, 2012

 

 

 

F-4

 

 

 

 

 

Statements of Cash Flows for the Fiscal Year Ended March 31, 2012 and 2011 and for the Period from April 5, 2011 (Date of Entry into Exploration) through March 31, 2012

 

 

 

F-5

 

 

 

 

 

Notes to the Financial Statements

 

F-6





27

 




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of

Liberty Gold Corp.

(An Exploration Stage Company)

Phoenix, Arizona


We have audited the accompanying balance sheets of Liberty Gold Corp., an exploration stage company, (the “Company”) as of March 31, 2012 and 2011, and the related statements of operations, equity (deficit) and cash flows for the fiscal years then ended and for the period from April 5, 2011 (date of entry into exploration) through March 31, 2012.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  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 purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining on a test basis, evidence supporting the amount and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our 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 the Company as of March 31, 2012 and 2011, and the related statements of operations, equity (deficit) and cash flows for the fiscal years then ended and for the period from April 5, 2011 (date of entry into exploration) through March 31, 2012 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 had an accumulated deficit at March 31, 2012 and a net loss and net cash used in operating activities for the fiscal year then ended.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regards to these matters are also described in Note 3.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.




/s/Li & Company, PC

Li & Company, PC


Skillman, New Jersey

July 16, 2012



F-1






Liberty Gold Corp.

 (An Exploration Stage Company)

 Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

March 31, 2011

 

 ASSETS

 

 

 

 

 

 

 

 

 CURRENT ASSETS:

 

 

 

 

 

 

 

 

 Cash

 

 

$

4,369 

 

$

7,574 

 

 

 Accounts receivable

 

 

 

 

28,585 

 

 

 Stock subscription receivable

 

 

50,000 

 

 

 

 

 Prepaid expenses

 

 

5,375 

 

 

1,087 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Current Assets

 

 

59,744 

 

 

37,246 

 

 

 

 

 

 

 

 

 

 

 

 

 MINERAL PROPERTIES:

 

 

 

 

 

 

 

 

 Mineral properties

 

 

1,274,272 

 

 

 

 

 Depletion, depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 MINERAL PROPERTIES

 

 

1,274,272 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Assets

 

$

1,334,016 

 

$

37,246 

 

 

 

 

 

 

 

 

 

 

 

 

 LIABILITIES AND EQUITY (DEFICIT)

 

 

 

 

 

 

 

 CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 Current portion of mineral property payable

 

$

654,319 

 

$

23,679 

 

 

 Accrued expenses

 

 

 

 

5,500 

 

 

 Advances from former stockholders

 

 

 

 

30,544 

 

 

 Advances from stockholders

 

 

28,356 

 

 

 

 

 Common stock to be issued

 

 

50 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Current Liabilities

 

 

682,725 

 

 

59,723 

 

 

 

 

 

 

 

 

 

 

 

 

 MINERAL PROPERTIES PAYABLE, net of current portion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 LIBERTY GOLD CORP. STOCKHOLDERS' EQUITY (DEFICIT):

 

 

 

 

 

 

 

 

 Preferred stock at $0.0001 par value: 5,000,000 shares authorized;

 

 

 

 

 

 

 

 

 

 none issued or outstanding

 

 

 

 

 

 

 Common stock at $0.0001 par value: 250,000,000 shares authorized,

 

 

 

 

 

 

 

 

 

 88,371,843 and 124,100,000 shares issued and outstanding, respectively

 

8,837 

 

 

12,410 

 

 

 Additional paid-in capital

 

 

1,432,816 

 

 

45,998 

 

 

 Accumulated deficit

 

 

(88,952)

 

 

(80,885)

 

 

 Deficit accumulated during the exploration stage

 

 

(701,410)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Liberty Gold Corp. Stockholders' Equity (Deficit)

 

 

651,291 

 

 

(22,477)

 

 

 

 

 

 

 

 

 

 

 

 

 NON-CONTROLLING INTEREST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Equity (Deficit)

 

$

1,334,016 

 

$

37,246 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the financial statements



F-2

 





Liberty Gold Corp.

 (An Exploration Stage Company)

 Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

For the Period from

 

 

 

 

 

 

 

For the Fiscal Year

 

For the Fiscal Year

 

April 5, 2011

 

 

 

 

 

 

 

Ended

 

Ended

 

(Exploration) through

 

 

 

 

 

 

 

March 31, 2012

 

March 31, 2011

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues earned during the exploration stage

 

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 Exploration costs

 

 

 

401,390 

 

 

 

 

401,390 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of revenues

 

 

 

401,390 

 

 

 

 

401,390 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Gross profit

 

 

 

 

(401,390)

 

 

 

 

(401,390)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 Officers' compensation

 

 

 

65,265 

 

 

 

 

65,265 

 

 

 Professional fees

 

 

 

164,768 

 

 

 

 

164,768 

 

 

 General and administrative expenses

 

 

 

69,986 

 

 

 

 

69,986 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total operating expenses

 

 

 

300,020 

 

 

 

 

300,020 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Loss from continuing operations before income taxes

 

 

 

(701,410)

 

 

 

 

(701,410)

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss from continuing operations

 

 

 

(701,410)

 

 

 

 

(701,410)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 Loss from operations of discontinued operations, net of taxes

 

 

 

(42,789)

 

 

 

 

 Loss from disposal of discontinued operations, net of taxes

 

 

(8,067)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Loss from discontinued operations, net of taxes

 

 

 

(8,067)

 

 

(42,789)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss before non-controlling interest

 

 

 

(709,477)

 

 

(42,789)

 

 

(701,410)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

$

(709,477)

 

$

(42,789)

 

$

(701,410)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

  - basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 Continuing operations

 

 

$

(0.01)

 

$

 

 

 

 

 

 

 Discontinued operations

 

 

 

(0.00)

 

 

(0.00)

 

 

 

 

 

 

 

 Total net loss per common share

 

 

$

(0.01)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 - basic and diluted

 

 

 

101,165,613 

 

 

124,100,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements



 

F-3

 





 

Liberty Gold Corp.

 (An Exploration Stage Company)

Statement of Equity (Deficit)

For the period from Fiscal Year Ended March 31, 2011 through  2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common Stock, $0.0001 Par Value

 

 Additional

 

 

 

 Accumulated

 

 Total Liberty Gold

 

 

 

 

 

 

 

 

 

 

 

 Number of

 

 

 

 

 Paid-in

 

 Accumulated

 

 during the

 

 Corp Shareholders'

 

Non-controlling

 

Total

 

 

 

 

 

 Shares

 

 Amount

 

 Capital

 

 Deficit

 

 Exploration Stage

 

 Equity (Deficit)

 

Interest

 

Equity (Deficit)

 

 Balance, March 31, 2010

 

124,100,000 

 

$

12,410 

 

$

45,998

 

$

(38,096)

 

$

 

$

20,312 

 

$

-

 

$

20,312 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

(42,789)

 

 

 

 

(42,789)

 

 

-

 

 

(42,789)

 

 Balance,  March 31, 2011

 

124,100,000 

 

 

12,410 

 

 

45,998

 

 

(80,885)

 

 

 

 

(22,477)

 

 

-

 

 

(22,477)

 

 

 Common shares issued for mineral property acquisition in Alaska

500,000 

 

 

50 

 

 

-

 

 

 

 

 

 

 

 

50 

 

 

 

 

 

50 

 

 

 Forgiveness of debt by former stockholders

 

 

 

 

 

 

 

30,545

 

 

 

 

 

 

 

 

30,545 

 

 

 

 

 

30,545 

 

 

 Equity units inclusive one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 issued for cash at $0.80 per unit on June 28, 2011  

 

75,000 

 

 

 

 

59,992

 

 

 

 

 

 

 

 

60,000 

 

 

 

 

 

60,000 

 

 

 Common shares issued for mineral property acquisition in Arizona

500,000 

 

 

50 

 

 

-

 

 

 

 

 

 

 

 

50 

 

 

 

 

 

50 

 

 

 Common shares issued for mineral property acquisition in Mexico

1,500,000 

 

 

150 

 

 

-

 

 

 

 

 

 

 

 

150 

 

 

 

 

 

150 

 

 

 Equity units inclusive of one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 issued for cash at $0.80 per unit between July 28, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 and September 9, 2011

 

712,500 

 

 

71 

 

 

569,929

 

 

 

 

 

 

 

 

570,000 

 

 

 

 

 

570,000 

 

 

 Surrender of 40,000,000 common shares at $0.0001 par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 on August 10, 2011  

 

(40,000,000)

 

 

(4,000)

 

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common shares issued for mineral property acquisition in Alaska

500,000 

 

 

50 

 

 

-

 

 

 

 

 

 

 

 

50 

 

 

 

 

 

50 

 

 

 Equity units inclusive of one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 issued for cash at $0.45 per unit between October 28, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 and November 12, 2011

 

666,666 

 

 

67 

 

 

299,933

 

 

 

 

 

 

 

 

300,000 

 

 

 

 

 

300,000 

 

 

  Equity units inclusive of one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  issued for cash at $0.99 per unit on December 15, 2011  

 

101,010 

 

 

10 

 

 

99,990

 

 

 

 

 

 

 

 

100,000 

 

 

 

 

 

100,000 

 

 

 Cancellation of common shares issued for property acquisitions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  in Mexico

 

(1,500,000)

 

 

(150)

 

 

-

 

 

 

 

 

 

 

 

(150)

 

 

 

 

 

(150)

 

 

  Equity units inclusive of one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 issued for cash at $0.45 per unit between February 7, 2012

 

555,556 

 

 

55 

 

 

249,945

 

 

 

 

 

 

 

 

250,000 

 

 

 

 

 

250,000 

 

 

 

 and February 8, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Equity units inclusive of one common share and one warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 issued for cash at $0.45 per unit March 21, 2012

 

111,111 

 

 

11 

 

 

49,989

 

 

 

 

 

 

 

 

50,000 

 

 

 

 

 

50,000 

 

 

 Common shares issued for mineral property acquisition in Alaska

500,000 

 

 

50 

 

 

-

 

 

 

 

 

 

 

 

50 

 

 

 

 

 

50 

 

 

 Shares issued for advisory board services

 

50,000 

 

 

 

 

22,495

 

 

 

 

 

 

 

 

22,500 

 

 

 

 

 

22,500 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

(8,067)

 

 

(701,410)

 

 

(709,477)

 

 

 

 

 

(709,477)

 

 Balance,  March 31, 2012

 

88,371,843 

 

$

8,837 

 

$

1,432,816

 

$

(88,952)

 

$

(701,410)

 

$

651,291 

 

$

-

 

$

651,291 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements



F-4

 





Liberty Gold Corp.

 (An Exploration Stage Company)

 Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Period from

 

 

 

 

 

 

 

 

 

 

 

 

For the Fiscal Year

 

For the Fiscal Year

 

April 5, 2011

 

 

 

 

 

 

 

 

 

 

 

 

Ended

 

Ended

 

(Exploration) through

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2012

 

March 31, 2011

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

 

 

$

(709,477)

 

$

(42,789)

 

$

(701,410)

 

 Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

 

 Stock based compensation

 

 

 

 

 

 

 

 

 

22,500 

 

 

 

 

22,500 

 

 

 Loss from discontinued operations, net of taxes

 

 

 

 

 

 

 

 

 

8,067 

 

 

 

 

 

 

 Noncontrolling interest in mining properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Accounts receivable

 

 

 

 

 

 

 

 

 

 

 

(4,724)

 

 

 

 

 

 Prepaid expenses

 

 

 

 

 

 

 

 

 

(5,375)

 

 

(1,087)

 

 

(5,375)

 

 

 

 Accounts payable

 

 

 

 

 

 

 

 

 

 

 

(960)

 

 

 

 

 

 Accrued expenses  

 

 

 

 

 

 

 

 

 

 

 

 

(2,600)

 

 

 

 

 Net cash used in operating activities

 

 

 

 

 

 

 

 

 

(684,285)

 

 

(52,160)

 

 

(684,285)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Cash paid in disposal of discontinued operations

 

 

 

 

 

 

 

 

 

(7,574)

 

 

 

 

(7,574)

 

 

 Purchases of mineral properties

 

 

 

 

 

 

 

 

 

(619,903)

 

 

 

 

(619,903)

 

 

 Proceeds from disposal of property and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net cash used in investing activities

 

 

 

 

 

 

 

 

 

(627,477)

 

 

 

 

(627,477)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Advances from former stockholders

 

 

 

 

 

 

 

 

 

 

 

30,143 

 

 

 

 

 Advances from stockholders

 

 

 

 

 

 

 

 

 

28,356 

 

 

 

 

28,356 

 

 

 Proceeds from sale of common stock

 

 

 

 

 

 

 

 

 

1,280,201 

 

 

 

 

1,280,201 

 

 

 Net cash provided by financing activities

 

 

 

 

 

 

 

 

 

1,308,557 

 

 

30,143 

 

 

1,308,557 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 NET CHANGE IN CASH

 

 

 

 

 

 

 

 

 

(3,205) 

 

 

(22,017)

 

 

(3,205)

 

 Cash at beginning of period

 

 

 

 

 

 

 

 

 

7,574 

 

 

29,591 

 

 

7,574 

 

 Cash at end of period

 

 

 

 

 

 

 

 

$

4,369 

 

$

7,574 

 

$

4,369 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 

 

 

 

 

 Interest paid

 

 

 

 

 

 

 

 

$

 

$

 

$

 

 

 Income tax paid

 

 

 

 

 

 

 

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 NON CASH FINANCING AND INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 Receivable from the sale of stock

 

 

 

 

 

 

 

 

$

50,000 

 

$

 

$

50,000 

 

 

 Common shares issued for acquisition of mineral properties

$

200 

 

$

 

$

200 

 

 

 Common shares to be issued for acquisition of mineral properties

$

50 

 

$

 

$

50 

 

 

 Forgiveness of advances from former stockholders to contributed capital

$

30,545 

 

$

 

$

30,545 

 

 

 Mineral properties purchased with debt

 

 

 

 

 

 

 

 

$

654,319 

 

$

 

$

654,319 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements



F-5

 




Liberty Gold Corp.


(An Exploration Stage Company)

March 31, 2012 and 2011

Notes to the Financial Statements



Note 1 – Organization and Operations


IBOS, Inc.


IBOS, Inc. (“IBOS”) was incorporated as a Subchapter S corporation on April 11, 2006 under the laws of the State of California.  It was converted into a C corporation, incorporated in the State of Delaware on March 5, 2009, in a transaction in which the newly-formed corporation issued an aggregate of 9,000,000 shares of common stock to the former stockholders of the S corporation for all of the issued and outstanding shares of IBOS.  All shares were held by and all shares of common stock were issued to IBOS’s stockholders and President and Chief Executive Officer, Chief Technology Officer and Chief Financial Officer.  No cash consideration was paid.  No value was given to the shares issued by the newly formed corporation.  Therefore, the shares were recorded to reflect the $.0001 par value and additional paid-in capital was recorded as a negative amount ($900).


IBOS applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the United States Securities and Exchange Commission (the “SEC”)), by reclassifying all of IBOS’s undistributed earnings and losses to additional paid-in capital as of March 5, 2009.


The accompanying financial statements have been prepared as if IBOS had its corporate capital structure as of the first date of the first period presented.


IBOS provided web-based comprehensive selection of electronic medical claims processing and collection solutions to the healthcare provider industry prior to April 5, 2011.  IBOS had minimal operations between April 1, 2011 and April 4, 2011.


Change in Control and Scope of Business


On April 5, 2011, a Stock Purchase Agreement (the “SPA”) by and among IBOS’s three officers and directors Deepak Danavar, Ravi Sharma, and James Villalobos, the Company and Lynn Harrison (“LH”) was executed and a closing was held under the SPA.  Pursuant to the SPA (i) LH purchased an aggregate of 8,280,000 shares of common stock of the Company (87% of the outstanding shares) from Messrs. Danavar, Sharma and Villalobos for an aggregate purchase price of $370,000.00; (ii) the Company disposed of its California subsidiary by transferring its shares to Messrs. Danavar, Sharma and Villalobos;  (iii) LH was elected the sole director of the Company; (iv) LH was elected President and CEO of the Company and Frank J. Hariton was elected secretary of the Company; and (v) Messrs Danavar, Sharma and Villalobos each resigned as officers and directors of the Company. Additionally as part of the change in control the former shareholders agreed to forgive debts outstanding to them totaling $30,544 which have been recorded as contributed capital.  As part of the Stock Purchase transaction the Company transferred to a newly-formed company controlled by IBOS’s three officers and directors Deepak Danavar, Ravi Sharma, and James Villalobos, the Company’s three former officers and directors (the “Buyers”), certain operating assets associated with the operations of IBOS’s electronic medical claims processing and collection solutions, subject to related liabilities (the “Business”).  Pursuant to the terms of SPA, the assumption by the Buyer of all liabilities and debts of IBOS which relate to or arise out of the operations of the Business and



F-6

 




the indemnification by the Buyer of all losses, liabilities, claims, damages, costs and expenses that may be suffered by IBOS at any time which arise out of the operations of the Business.  Loss from disposal of the discontinued operations amounted to $8,067.


Upon acquisition of certain gold mine properties on April 5, 2011 IBOS decided to engage in the business of acquiring, exploring and developing mineral properties.


The financial statements for the interim period ended March 31, 2011 have been presented to give retroactive effect to the discontinuance of the discontinued operations.


Surrender of Common Shares from Principal Stockholder upon Change in Control


On April 21, 2001, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 351,900,000 shares of common stock owned by her, thus reducing her ownership from 414,000,000 shares to 62,100,000 shares and reducing the Company’s issued and outstanding common shares from 476,000,000 shares to 124,100,000 shares.


All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the surrender of those common shares.


Amendment to the Certificate of Incorporation


On April 26, 2011, IBOS filed a Certificate of Amendment of Certificate of Incorporation, and (i) changed its name to Liberty Gold Corp. (“Liberty Gold” or the “Company”) upon the acquisition of certain gold mine properties; (ii) increased its total number of shares of all classes of stock which the Company is authorized to issue from One Hundred and Five Million (105,000,000) shares, inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and One Hundred Million (100,000,000) shares of Common Stock, par value $.0001 per share, to Two Hundred Fifty Five Million (255,000,000) shares, inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and Two Hundred Fifty Million (250,000,000) shares of Common Stock, par value $.0001 per share; and (iii) effectuated a 50-for-1 (1:50) forward stock split (the “Stock Split”).


All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the Stock Split.


Note 2 – Summary of Significant Accounting Policies


Basis of presentation


The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).


Reclassification


Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.   These reclassifications had no effect on reported losses.


Exploration Stage Company


Upon acquisition of certain gold mine properties on April 5, 2011 the Company decided to engage in the business of acquiring, exploring and developing mineral properties.  Although the Company acquired



F-7

 




mineral properties, a substantial portion of the Company’s activities has involved establishing the business and the Company has neither started exploring the mineral properties, nor generated any revenue to date.  Upon entry into mining exploration business the Company became an exploration stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification.  All losses accumulated since inception have been considered as part of the Company’s exploration stage activities.


Use of Estimates and Assumptions


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reporting period.


The Company’s significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment of long-lived assets, including the values assigned to and the estimated reserves, dismantlement, restoration and abandonment costs, which are net of estimated salvage values of mineral properties; income tax rate, income tax provision, deferred tax assets, and valuation allowance of deferred tax assets; and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.


Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.


Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.


Actual results could differ from those estimates.


Fair Value of Financial Instruments


The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:



 

F-8

 






Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

Level 3

Pricing inputs that are generally observable inputs and not corroborated by market data.


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.


The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, common stock to be issued and mineral property payable, approximate their fair values because of the short maturity of these instruments.


Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.


It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.


Carrying Value, Recoverability and Impairment of Long-Lived Assets


The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include mineral properties, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.


The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.


The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased



F-9

 




competitive pressures; and (v) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.


Management periodically reviews the recoverability of the capitalized mineral properties and mining equipment. Management takes into consideration various information including, but not limited to, historical production records taken from previous mine operations, results of exploration activities conducted to date, estimated future prices and reports and opinions of outside consultants.  When it is determined that a project or property will be abandoned or its carrying value has been impaired, a provision is made for any expected loss on the project or property.


The impairment charges, if any, is included in operating expenses in the accompanying statements of operations.


Fiscal Year End


The Company elected March 31 as its fiscal year ending date.


Cash Equivalents


The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.


Mineral Properties


The Company follows Section 930 of the FASB Accounting Standards Codification for its mineral properties.  Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves.  If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production.  Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value.  General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred.  When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized.  The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible.  Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis.  Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off.  The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate.  A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues.  Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.


The provision for depreciation, depletion and amortization (“DD&A”) of mineral properties is calculated on a property-by-property basis using the unit-of-production method.  Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.



F-10

 





To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all general exploration costs, if any, are being expended.


Related Parties


The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.


Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.


The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include:  a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) mounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.


Commitments and Contingencies


The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.


If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.




F-11

 




Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.


Non-controlling Interest


The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to report the non-controlling interest in mineral properties, its majority owned subsidiary in the statements of balance sheets within the equity section, separately from the Company’s shareholders’ equity.  Non-controlling interest represents the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.


Revenue Recognition


The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.


The Company will derive its revenue from sales contracts with customers with revenues being generated upon the shipment of mineral ores upon the Company commencing exploration operations.  Persuasive evidence of an arrangement is demonstrated via invoice, product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from the trucking company or third party carrier and title transfers upon shipment, based on free on board (“FOB”) warehouse; the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.


Stock-Based Compensation for Obtaining Employee Services


The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.  If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.


The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for inputs are as follows:





F-12

 





·  Expected term of share options and similar instruments: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding.  Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments.  Pursuant to paragraph 718-50-S99-1, it may be appropriate to use the simplified method, if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.


·  Expected volatility of the entitys shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.


·  Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Companys current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.


·  Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.


The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.


Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services




F-13

 




The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).


Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.


The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for inputs are as follows:


·

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.  The Company uses historical data to estimate holder’s expected exercise behavior.  If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.


·

Expected volatility of the entitys shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.


·

Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Companys current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.


·

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.  The risk-free interest rate is based on the U.S.



F-14

 




Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.


Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.


Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9,an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.


Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.


Income Tax Provision


The Company was a Subchapter S corporation, until March 5, 2009 during which time the Company was treated as a pass through entity for federal income tax purposes.  Under Subchapter S of the Internal Revenue Code stockholders of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.


Effective March 6, 2009, the Company follows paragraph 740-10-30-2 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.




F-15

 




The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13.addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.


The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.


Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.


Uncertain Tax Positions


The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the fiscal year ended March 31, 2012 or 2011.


Limitation on Utilization of NOLs due to Change in Control


Pursuant to the Internal Revenue Code Section 382 (“Section 382”), certain ownership changes may subject the NOL’s to annual limitations which could reduce or defer the NOL.  Section 382 imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.”  In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.  In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years.  The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.


Net Income (Loss) per Common Share


Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.   Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock



F-16

 




during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.


The following table shows the potentially outstanding dilutive common shares excluded from the diluted net loss per share calculation for the fiscal year ended March 31, 2012 and 2011 as they were anti-dilutive:


 

Potentially Outstanding Dilutive Common Shares

 

 

For the Fiscal Year

 

 

For the Fiscal Year

 

 

Ended

Ended

March 31, 2012

March  31, 2011

Contingent shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000,000 contingent shares of the Company’s common stock issuable provided that mining operations on the property result in the discovery of 1,000,000 ounces of gold and requires the Company to expend at least $300,000 in exploration and mine development work on the property over three (3) years commencing with the closing under the Alaska mineral property purchase Agreement (“PPA”) entered into on April 5, 2011.

 

2,000,000

 

 

 

-

 

 

 

 

 

 

 

 

 

1,500,000 contingent shares of the Company’s common stock issuable provided that mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver and requires the Company to pay a 5% smelter’s royalty under the Arizona Asset Purchase Agreement No. 1 (“APAAR1”) entered into on July 18, 2011.

 

1,500,000

 

 

 

-

 

 

 

 

 

 

 

Total contingent shares

 

3,500,000

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued on June 28, 2011 in connection with the Company’s equity financing inclusive of warrants to purchase 75,000 shares to the investor with an exercise price of $1.25 per share expiring three (3) years from date of issuance

 

75,000

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants issued between July 28, 2011 and September 9, 2011 in connection with the Company’s equity financing inclusive of warrants to purchase 712,500 shares to the investor with an exercise of $1.25 per share expiring three (3) years from date of issuance

 

712,500

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants issued between October 28, 2011 and November 12, 2011 in connection with the Company’s equity financing inclusive of warrants to purchase 222,222 shares to the investor with an exercise of $0.59 per share expiring three (3) years from date of issuance

 

666,666

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants issued on December 15, 2011 in connection with the Company’s equity financing inclusive of warrants to purchase 101,010 shares to the investor with an exercise of $1.29 per share expiring three (3) years from date of issuance

 

101,010

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants issued on February 7 and 8, 2012 in connection with the Company’s equity financing inclusive of warrants to purchase 555,556 shares to the investor with an exercise of $0.59 per share expiring three (3) years from date of issuance

 

555,556

 

 

 

-

 

 

 

 

 

 

 

 

 

Warrants issued on March 21, 2012 in connection with the Company’s equity financing inclusive of warrants to purchase 111,111 shares to the investor with an exercise of $0.59 per share expiring three (3) years from date of issuance

 

111,111

 

 

 

-

 

 

 

 

 

 

 

Total warrants

2,221,843

 

 

-

 

 

 

 

 

 

 

Total potentially outstanding dilutive common shares

 

5,721,843

 

 

 

-

 



F-17

 







Cash Flows Reporting


The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.


Subsequent Events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.


Recently Issued Accounting Pronouncements


FASB Accounting Standards Update No. 2011-05


In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05 “Comprehensive Income” (“ASU 2011-05”), which was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now gives entities the option to present all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.


The amendments in this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within those years, beginning after December 15, 2011.


FASB Accounting Standards Update No. 2011-08


In September 2011, the FASB issued the FASB Accounting Standards Update No. 2011-08 “Intangibles—Goodwill and Other: Testing Goodwill for Impairment” (“ASU 2011-08”). This Update is to simplify how public and nonpublic entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an



F-18

 




entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.


The guidance is effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.


FASB Accounting Standards Update No. 2011-10


In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-10 “Property, Plant and Equipment: Derecognition of in Substance Real Estate-a Scope Clarification” (“ASU 2011-09”). This Update is to resolve the diversity in practice as to how financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling financial interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse debt of the subsidiaries.


The amended guidance is effective for annual reporting periods ending after June 15, 2012 for public entities. Early adoption is permitted.


FASB Accounting Standards Update No. 2011-11


In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.


The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.


FASB Accounting Standards Update No. 2011-12


In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-12 “Comprehensive Income:  Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”). This Update is a deferral of the effective date pertaining to reclassification adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits of those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time required to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary to reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were in place before the issuance of Update 2011-05.


All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011.


Other Recently Issued, but not Yet Effective Accounting Pronouncements




F-19

 




Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


Note 3 – Going Concern


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


As reflected in the accompanying financial statements, the Company had a deficit accumulated during the exploration stage at March 31, 2012, a net loss and net cash used in operating activities for the fiscal year then ended.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.


While the Company is attempting to commence explorations and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations.  Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to commence explorations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.


The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


Note 4 – Mineral Properties


Alaska Mineral Properties


On April 5, 2011, the Company entered into a Property Purchase Agreement (“PPA”) with Precious Metals Exploration Corp., an unaffiliated seller with offices in Sweden (the “Seller”), to acquire an undivided 60% right title and interest in certain mining claims in Alaska in exchange for (1) 2,000,000 shares of the Company’s common stock to be issued as follows: (i) 500,000 shares at the closing; (ii) an additional 500,000 shares on each of the first business day following the six month, twelve month and 18 month anniversary of the closing date; and (2) the retention by the Seller of a 5% Net Smelter Royalty, as defined in the PPA.  The PPA agreement further provides for the issuance to the Seller of an additional 2,000,000 shares of the Company’s common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold and requires the Company to expend at least $300,000 in exploration and mine development work on the property over three (3) years commencing with the closing under the PPA.


The Company valued the 2,000,000 common shares, the consideration given for the purchase at par, or $200 in aggregate.


The claims consist of three separate blocks that are partially contiguous and located 2.5 miles west of the Pogo 3.6 million ounce Pogo deposit; the Indian claims (2 square miles – 32 state claims); the Aurora claims (1 square mile – 4 MTRSC state claims; conversions in- progress by the Alaska Division of Natural



F-20

 




Resources): and the Rainbow claims (1 square mile – 4 MTRSC state claims). All claims are located on State of Alaska lands and are currently active and in good standing. The Rainbow, Indian and Aurora claims are collectively referred to as the RAI properties.


The claims are situated 80 air miles southeast of Fairbanks and 2.5 miles west of Teck-Cominco’s Pogo gold deposit in the Goodpaster Mining District of east central Alaska. Each claim block consists of active State of Alaska mining claims located in the Big Delta B-2 and B-3 1:63,360 Quadrangles.  Limited prospecting has found elevated gold and trace elements in a sporadic suite of rock and soil samples on the properties. Quartz vein float samples with up to 2.4 g/t gold and anomalous arsenic and bismuth are found from prospected slopes less than 3 miles from the Pogo mine, on trend to the east.


The Company expended  $150,890 in exploration and mine development work for the period from April 4, 2011 (date of acquisition) through March 31, 2012 towards the $300,000 in exploration and mine development work on the property over the three (3) year period as required under the PPA.


Acquisition and Termination of Mexico Mineral Property


Acquisition of Mexico Mineral Property


On July 13, 2011, the Company entered into an Asset Purchase Agreement (“APA”) with Precious Metals Exploration Corp., (the “Seller”), to acquire an undivided 75% right title and interest in certain mining claims in Hostotipaquillo, Mexico in exchange for (1) 3,000,000 shares of the Company’s common stock to be issued as follows: (i) 50% on closing, (ii) an additional 25% after six months and the final 25% after 12 months;  (2) retention by the Seller of a 5% Net Smelter Royalty, as defined in the APA. The APA further provides for the issuance to the Seller of an additional 5,500,000 shares of the Company’s common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver and requires the Company to expend at least $850,000 in exploration and mine development work on the property over fifteen (15) months commencing with the closing under the APA (including at least $350,000 in the first three (3) months and $500,000 in the next 12 months, respectively), as the work commitment (“Work Commitment”).  In addition, the Company is required to hire a project manager designated by the Seller to be compensated at $10,000 per month during the period of Work Commitment of fifteen (15) months. Any amounts paid to the consultant will be applied against and reduce the amount of the Work Commitment.


The Company sold 712,500 shares of its common shares for cash at $0.80 per share during the quarterly period ended September 30, 2011, however the management of the Company valued the 3,000,000 common shares, the consideration given for the purchase of the Mexican mineral property, at par, or $300 in aggregate due to the fact that the Company did not obtain an independent third party valuation for the mineral properties acquired.


The property consists of three (3) mining concessions in the project area known as “Monte de El Favor”, these are El Favor, Exploitation title No. 165974, Guadalupe, Exploitation title No. 183638 and Buenaventura Exploitation title No. 218973, which approximate 217.49 hectares in total located in the Municipality of Hostotipaquillo, State of Jalisco, Mexico.


The Company expended $228,000 and $0 in exploration and mine development work for the period from July 13, 2011 (date of acquisition) through December 23, 2011, the date of termination, respectively towards the $350,000 in the first three (3) months and $500,000 in the next 12 months Work Commitment in exploration and mine development work on the property as required under the PPA. On November 10, 2011, the Seller waived the Company’s short fall of the $350,000 Work Commitment in the first three (3) months and agreed to let the Company make up the Work Commitment short-fall in the next 12 month.



F-21

 





Termination of Mexico Mineral Property Purchase Agreement


On December 23, 2011, the Company entered into a termination agreement (the “Termination Agreement”) with Precious Metals Exploration Corp., (the “Contra Party of the APA”), for the purchase of an undivided 75% right title and interest in certain mining claims in Hostotipaquillo, Mexico.


Under the Termination Agreement, the Contra Party returned to the Company the 1,500,000 shares that were issued to it and the Company is relieved from all further obligations under the APA.  The Company had expended $228,000 inclusive of $60,000 in project management fees and $168,000 in exploration costs under the APA which will not be recovered.


Management based its decision to terminate the APA on several factors including its assessment of the political situation and threats of instability in Mexico.


Arizona Mineral Properties


On July 18, 2011, the Company entered into an Asset Purchase Agreement (“APAAR1”) with Precious Metals Exploration Corp., (the “Seller”), to acquire a 100% interest in 2 patented claims, 6 federal claims and 25 prospects comprising 660 acres near Kingman, Arizona.  Total consideration includes (1) $600,000 in cash payable in installments as follows: (i) $200,000 within one (1) month of the closing of agreement; (ii) $200,000 within four (4) months of the closing of the agreement; (iii) $200,000 within seven months (7) months of the closing of the agreement; (2) 500,000 shares of the Company’s common stock; and (3) a 5% smelter’s royalty.  The APAAR1 further provides for the issuance to the Seller of an additional 1,500,000 shares of the Company’s common stock if mining operations on the property result in the discovery of 1,000,000 ounces of gold or 10,000,000 ounces of silver.  The Seller will have the option to appoint an individual to serve on the Company’s advisory board for one (1) year and shall be compensated for the services at the end of the year for One Hundred Thousand (100,000) shares of common stock.


The Company sold 712,500 shares of its common shares for cash at $0.80 per share during the quarterly period ended September 30, 2011, however the management of the Company valued the 500,000 common shares, the consideration given for the purchase at par, or $50 in aggregate due to the fact that the Company did not obtain an independent third party valuation for the mineral properties acquired.


The “Property” is defined as follows: A) Fountain Head – patented (a lode mining claim in the Walapai Mining District, being shown on Mineral Survey No. 1942, as filed in the Bureau of land Management, and as granted by Patent recorded in Book 16 Of Deeds, page 524; situate in section 4, Township 22 North, Range 17 West of the Gila and Salt River Base and Meridian, Mohave County, Arizona.) B)    Eagle – patented (a lode mining claim in the Walapai Mining District, being shown on Mineral Survey No. 1943, as filed in the Bureau of land Management, and as granted by Patent recorded in Book 16 Of Deeds, page 527; situate in section 4, Township 22 North, Range 17 West of the Gila and Salt River Base and Meridian, Mohave County, Arizona.). Plus 6 federal claims are located in town ship 22 North, Range 17 west of the Gila and Salt River Base and Meridian, as follows: C) Golden Wonder – federal D)    Holy Smoke – federal E) High Grade Vein – federal F) Bluebell – federal G) Bluebell Extension – federal H) Golden Legion – federal. Plus 25 Prospects each representing 20 acres adjacent to the claims outlined above.


The Company paid off the entire $600,000 in installments for the period from July 18, 2011 (date of acquisition) through March 31, 2012. On October 17, 2011, the Company appointed an Advisory Board member for one (1) year, compensated with 100,000 common shares of the Company at the end of the year



F-22

 




of service.  As of March 31, 2012, 50,000 shares were granted to the advisor and the shares were valued at $0.45 per share or $22,500.


On July 18, 2011, the Company entered into a third Asset Purchase Agreement (“APAAR2”) with Precious Metals Exploration Corp., (the “Seller”), to acquire a 100% interest in 2 patented claims and 5 federal claims comprising roughly 134 acres in Mohave County, Arizona.   The total consideration includes (1) $674,022 in cash payable in installments as follows: (i) a cash payment of $4,188.44 within seven (7) days of closing; (ii) an equal monthly cash payment of $4,188.44 every one (1) month for a further seventeen (17) months, ending in December 2012; (iii) a final cash payment of $598,630, due on the nineteenth (19th) month following the closing date, being January 2013; (2) 10% net smelter returns (NSR) royalty on the gross mineral production from the Assets until such time as it no longer owns or operates the Assets. After the full balance is paid, the NSR will reduce to 5% from that day forward.


The “Property” is defined as follows: A) Alta Patented lode Mining Claim, Parcel No.330-02-009 and the Sirius Patented Mining Claim, Parcel No. 330 02 011 both shown on Mineral Survey MS 2854A, located in Section 4, Range 17W, Township 22N of the Gila and Salt River Base and Meridian, composed of 18 and 16 acres respectively, together with all buildings, tunnels, and shafts and other improvements thereon, and all rents, issues and profits thereof. B) 5 Federal Mining Claims recorded as Copper & Gold, Copper & Gold No.1, Rico I, Rico II, and Rico III, consisting of approx. 20 acres each, located in Sec. 29 & 30, of Mohave County, T23N R17W, G.&S.R.B.&M recorded as FEE# 2010070725- 2010070729 respectively.


As of March 31, 2012, the balance due was $632,138 under the APAAR2 agreement.


Note 5 – Related Party Transactions


Advances from Stockholders and Former Stockholders


From time to time, stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.


Advances from stockholders and former stockholders at March 31, 2012 and March 31, 2011 consisted of the following:


 

 

 

March 31, 2012

 

 

March 31, 2011

 

 

 

 

 

 

 

 

 

 

Advances from major stockholder and officer

 

$

28,356

 

 

$

-

 

 

 

 

 

 

 

 

 

 

Advances from former major stockholders and officers

 

 

-

 

 

 

30,544

 

 

 

 

 

 

 

 

 

 

$

28,356

 

 

$

30,544

 


On April 5, 2011 as part of the change in control the former major shareholders and officers agreed to forgive debts outstanding to them totaling $30,544 which have been recorded as contributed capital.


The major stockholder and officer advanced $28,356 to the Company and no repayment has been made for the period from April 5, 2011 (date of change in control) through March 31, 2012.




F-23

 




Note 6 – Stockholders’ Equity (Deficit)


Shares Authorized


Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred and Five Million (105,000,000) shares of which Five Million (5,000,000) shares shall be Preferred Stock, par value $.0001 per share, and One Hundred Million (100,000,000) shares shall be Common Stock, par value $.0001 per share.


On April 28, 2011, the Company filed a Certificate of Amendment of Certificate of Incorporation, and increased its total number of shares of all classes of stock which the Company is authorized to issue to Two Hundred Fifty Five Million (255,000,000) shares inclusive of Five Million (5,000,000) shares of Preferred Stock, par value $.0001 per share, and Two Hundred Fifty Million (250,000,000) shares of Common Stock, par value $.0001 per share.


Common Stock


For the period from July 6, 2009 through July 27, 2009, the Company sold 16,000,000 shares of its common stock to 32 individuals at $0.002 per share or $32,000 in aggregate.


On April 21, 2001, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 351,900,000 shares of common stock owned by her, thus reducing her ownership from 414,000,000 shares to 62,100,000 shares and reducing the Company’s issued and outstanding common shares from 476,000,000 shares to 124,100,000 shares. This transaction was given retroactive effect to the opening numbers at March 31, 2010.


On June 28, 2011, the Company issued to an individual 75,000 Units (each unit being comprised of one share of the Company’s common stock and a warrant exercisable over a three year period for 75,000 shares of common stock exercisable at $1.25 per share).  The Units were sold at $.80 per Unit for an aggregate of $60,000.


For the period from July 28, 2011 through September 9, 2011, the Company issued to a foreign institutional investor a total of 712,500 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $1.25 per share expiring three (3) years from the date of issuance.  The Units were sold at $.80 per Unit for an aggregate of $570,000. 


On August 10, 2011, Lynn Harrison, President, CEO and principal shareholder of the Company, surrendered 40,000,000 shares of common stock.


Equity Financing Agreement


On October 11, 2011, the Company executed a Share Issuance Agreement with American Gold Holdings, Ltd. (“AGH”) that allows the Company to issue its equity in Units with each unit comprised of one share of common stock and a warrant to purchase one share of common stock.  The issue price of the Unit will be the greater of $0.45 or 90% of the volume weighted average of the closing price of common stock, for the five (5) banking days immediately preceding the date of the notice, as quoted on OTC markets, or other source of stock quotes as agreed to by both parties. The exercise price of the Warrants will be 130% of the price of the Unit and the term of the Warrants will be three (3) years from the date of issuance.




F-24

 




The Share Issuance Agreement commits AGH to make advances to the Company up to $ 15,000,000 in tranches of no more than $1,000,000 each and in multiples of $25,000 until October 11, 2013 (the completion date) or to be extended for an additional term of up to twelve (12) months at the option of the Company or AGH upon written notice on or before the completion date.


On October 28, 2011 and November 12, 2011, the Company issued Advance Notices to and received the funds from AGH of $100,000 and $200,000, respectively. The Company issued 222,222 and 444,444 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On December 15, 2011, the Company issued an Advance Notice to and received the funds from AGH of $100,000. The Company issued 101,010 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advance.


On February 7, 2012 and February 8, 2012, the Company issued Advance Notices to and received the funds from AGH of $25,000 and $225,000, respectively. The Company issued 55,556 and 500,000 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


On March 21, 2012, 2012, the Company issued an Advance Notices to and received the funds from AGH of $50,000. The Company issued 111,111 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


Additional Paid-in Capital


On March 31, 2010, the former stockholders and officers of the Company forgave $10,730 of their advances to the Company and contributed the same amount to capital.


On April 5, 2011, as part of the change in control the former major shareholders and officers agreed to forgive debt outstanding to them totaling $30,544 which has been recorded as contributed capital.


Warrants Issued in Connection with Sale of Common Shares


Description of Warrants


(i) Warrants Issued in June, 2011


In connection with the sale of 75,000 shares of its common stock at $0.80 per share or $60,000 in gross proceeds to one investor on June 28, 2011, the Company issued a warrant to purchase 75,000 shares of its common stock exercisable at $1.25 per share earned and exercisable upon issuance expiring three (3) year from the date of issuance.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:




F-25

 







Expected life (year)

 

 

 

 

 

 

3.00

 

 

 

 

 

 

 

 

 

 

Expected volatility (*)

 

 

 

 

 

 

55.91

%

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

 

 

 

 

 

0.75

%

 

 

 

 

 

 

 

 

 

Dividend yield

 

 

 

 

 

 

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $60,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $48,000 and $12,000, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


(ii) Warrants Issued for the period from July 28, 2011 through September 9, 2011


For the period from July 28, 2011 through September 9, 2011, in connection with the sale of 712,500 shares of its common stock at $0.80 per share or $570,000 in gross proceeds to the investors, the Company issued warrants to purchase 712,500 shares of its common stock exercisable at $1.25 per share earned and exercisable upon issuance expiring three (3) years from the date of issuance.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:


Expected life (year)

 

 

 

3.00

 

 

 

 

 

 

 

Expected volatility (*)

 

 

 

49.48

%

 

 

 

 

 

 

Risk-free interest rate

 

 

 

0.33

%

 

 

 

 

 

 

Dividend yield

 

 

 

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $570,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $475,000 and $95,000, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


(iii) Warrants Issued for the period from October 28, 2011 through November 12, 2011




F-26

 




For the period from October 28, 2011 through November 12, 2011, the Company sold 666,666 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:


Expected life (year)

 

 

 

3.00

 

 

 

 

 

 

 

Expected volatility (*)

 

 

 

49.48

%

 

 

 

 

 

 

Risk-free interest rate

 

 

 

0.37

%

 

 

 

 

 

 

Dividend yield

 

 

 

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $300,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $241,071 and $58,929, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


(iv) Warrants Issued on December 15, 2011


On December 15, 2011, the Company sold 101,010 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.99 per Unit for the advances.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:


Expected life (year)

 

 

 

3.00

 

 

 

 

 

 

 

Expected volatility (*)

 

 

 

43.21

%

 

 

 

 

 

 

Risk-free interest rate

 

 

 

0.37

%

 

 

 

 

 

 

Dividend yield

 

 

 

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and



F-27

 




averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $100,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $82,500 and $17,500, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


(v) Warrants Issued on February 7 and February 8, 2012


On December 15, 2011, the Company sold 555,556 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:


Expected life (year)

 

3.00

 

 

 

 

 

Expected volatility (*)

 

41.56

%

 

 

 

 

Risk-free interest rate

 

0.35

%

 

 

 

 

Dividend yield

 

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $250,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $160,720 and $89,280 , respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


(vi) Warrants Issued on March 21, 2012


On March 21, 2011, the Company sold 111,111 Units consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one share of the Company’s common stock exercisable at $130% of the price of the Unit per share expiring three (3) years from the date of issuance at $0.45 per Unit for the advances.


The fair value of the warrant grant estimated on the date of grant uses the Black-Scholes Option-Pricing Model with the following assumptions:



F-28

 






Expected life (year)

3.00

 

 

 

 

Expected volatility (*)

41.12

%

 

 

 

Risk-free interest rate

0.58

%

 

 

 

Dividend yield

0.00

%


* As a thinly traded public entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public traded goldmine companies to calculate the expected volatility.  The reason for selecting comparable public traded goldmine companies is that the Company plans to engage in the goldmine business.  The Company calculated five (5) comparable public traded goldmine companies’ historical volatility over the expect life of the warrants and averaged the five (5) comparable public traded goldmine companies’ historical volatility as its expected volatility.


The Company allocated the gross proceeds of $50,000 between common stock and warrants based on their relative fair value, estimated on the date of grant, valued common stock and the warrant at $41,667 and $8,333, respectively, using the Black-Scholes Option-Pricing Model with the above assumptions.


Exercise of Warrants


For the fiscal year ended March 31, 2012, none of the warrants have been exercised.


Summary of Warrant Activities


The table below summarizes the Company’s non-derivative warrant activities through March 31, 2012:


 

 

Number of

Warrant

Shares

 

Exercise Price

Range

Per Share

 

Weighted Average Exercise Price

 

Fair Value at Date of Issuance

 

Aggregate

Intrinsic

Value

 

Balance, March 31, 2011

 

 

-

 

 

 

$

-

 

 

 

$

-

 

 

$

-

 

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

2,221,843

 

 

 

$

0.59 - 1.29

 

 

 

$

0.86

 

 

$

281,042

 

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canceled for cashless exercise

 

 

(-

)

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised (Cashless)

 

 

(-

)

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

(-

)

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-