PINX:IROG Ironwood Gold Corp Quarterly Report 10-Q Filing - 2/29/2012

Effective Date 2/29/2012

PINX:IROG (Ironwood Gold Corp): Fair Value Estimate
Premium
PINX:IROG (Ironwood Gold Corp): Consider Buying
Premium
PINX:IROG (Ironwood Gold Corp): Consider Selling
Premium
PINX:IROG (Ironwood Gold Corp): Fair Value Uncertainty
Premium
PINX:IROG (Ironwood Gold Corp): Economic Moat
Premium
PINX:IROG (Ironwood Gold Corp): Stewardship
Premium
 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended: February 29, 2012

 

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

 

Commission File Number:   000-53267

 

IRONWOOD GOLD CORP.
(Name of registrant as specified in its charter)

 

Nevada   74-3207792
(State or Other Jurisdiction of   (I.R.S. Employer
Incorporation or Organization)   Identification Number)
     

123 West Nye Ln., Ste. 129

Carson City, Nevada

  89706
(Address of Principal Executive Offices)   (Zip Code)

 

(888) 356-4942
(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  YES  x   NO  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

  YES  x   NO  ¨

 

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

 

¨  Large accelerated filer ¨  Accelerated filer ¨

 Non-accelerated filer

 (Do not check if smaller reporting company)

x  Smaller reporting company

 

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

  YES  ¨   NO  x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding at February 29, 2012
Common stock, $.001 par value   6,199,977

 

 
 

 

IRONWOOD GOLD CORP.

FORM 10-Q

 

INDEX

    PAGE
PART I—FINANCIAL INFORMATION    
     
Item 1.  Financial Statements   1
     
Balance Sheets as of February 29, 2012 (Unaudited) and August 31, 2011 (Audited)   2
     
Statements of Operations for the three and six month periods ended February 29, 2012 and February 28, 2011 and for the period from January 18, 2007 (inception) to February 29, 2012 (Unaudited)   3
     
Statements of Cash Flows for the six month periods ended February 29, 2012 and February 28, 2011 and for the period from January 18, 2007 (inception) to February 29, 2012 (Unaudited)   4
     
Notes to Financial Statements (Unaudited)   5
     
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations   18
     
Item 3.  Quantitative and Qualitative Disclosures About Market Risk   20
     
Item 4.  Controls and Procedures   20
     
PART II—OTHER INFORMATION   22
     
Item 1.  Legal Proceedings   22
     
Item 1A.  Risk Factors   22
     
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds   22
     
Item 3.  Defaults Upon Senior Securities   22
     
Item 4.  Mine Safety Disclosures   22
     
Item 5.  Other Information   22
     
Item 6.  Exhibits   23
     
Signature Page   24
     
Certifications    
Exhibit 31.1    
Exhibit 31.2    
Exhibit 32    
 
 

 

FORWARD-LOOKING STATEMENTS

 

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual report on Form 10-K for the fiscal year ended August 31, 2011, filed on November 29, 2011.

 

As used in this Form 10-Q, “we,” “us,” and “our” refer to Ironwood Gold Corp., which is also sometimes referred to as the “Company.”

 

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

 

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

  

 
 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

 
 

 

Ironwood Gold Corp
(An Exploration Stage Company)
Balance Sheets
(Unaudited)

 

   As at
29 February 2012
(Unaudited)
   As at
31 August 2011
(Audited)
 
   $   $ 
Assets          
           
Current          
Cash and cash equivalents   12,042    231,877 
Prepaid expenses   -    25,000 
           
Total Current Assets   12,042    256,877 
           
Mineral properties (Note 2 and 3)   193,000    120,000 
           
    205,042    376,877 
Liabilities          
           
Current          
Accounts payable and accrued expenses (Note 5)   439,002    328,650 
Shareholder advance (Note 6   26,000    - 
Convertible promissory note, net of discount of $35,557 at
29 February 2012
   514,443    - 
Total Current Liabilities   979,445    328,650 
           
Long Term          
Convertible promissory note, net of discount of $60,365
at 31 August, 2011
   -    489,635 
           
Total Liabilities   979,445    818,285 
           
Stockholders’ Deficiency          
Common stock (Note 8)          
Authorized          
25,000,000 common shares, par value $0.001          
Issued and outstanding          
29 February 2012  – 6,199,977 common shares          
31 August 2011 – 6,199,977 common shares   6,700    6,200 
Capital in excess of par value   2,817,402    2,692,290 
Subscriptions received   60,000    60,000 
Deficit accumulated during exploration stage   (3,658,505)   (3,199,898)
           
Total Stockholders’ Deficiency   (774,403)   (441,408)
           
Total Liabilities and Stockholders’ Deficiency   205,042    376,877 

 

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

 

2
 

  

Ironwood Gold Corp
(An Exploration Stage Company)
Statements of Operations
 (Unaudited)

 

   For the three
months
ended
29 February
2012
   For the three
months
ended
28 February
2011
   For the six
months
ended
29 February
2012
   For the six
months
ended
28 February
2011
   For the period
from the date
of inception on
18 January
2007 to 29
February 2012
 
           $   $     
                     
Expenses                         
Exploration   16,337    9,259    98,987    367,392    862,539 
General and administrative   149,706    167,412    332,080    404,537    2,162,402 
Impairment loss on mineral property   -    633,360    -    1,250,360    1,250,360 
                          
Total Operating Expenses   166,043    810,031    431,067    2,022,289    4,275,301 
                          
Other (income) expense                         
Forgiveness of debt   -    (587,030)   -    (587,030)   (647,031)
Interest expense   13,770    -    27,540    -    30,235 
   Total other (income) expense   13,770    (587,030)   27,540    (587,030)   (616,794)
                          
Net Loss   179,813    223,001    458,607    1,435,259    3,658,505 
                          
Basic and diluted loss per common share   (0.03)   (0.05)   (0.07)   (0.35)     
Weighted average number of common shares  - Basic and diluted   6,199,977    4,159,960    6,199,977    4,096,424      

 

 

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

 

3
 

 

Ironwood Gold Corp
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited) 

 

   For the
six month period
ended 29
February
2012
   For the
six month period
ended 28
February
2011
   For the period
from the date of
inception on 18
January 2007 to
29 February 2012
 
   $   $   $ 
Cash flows used in operating activities               
Net loss for the period   (458,607)   (1,435,259)   (3,648,505)
Adjustments to reconcile net loss to net cash used by operating activities:               
Amortization of debt discount   24,808    -    26,875 
Stock issued for services        160,234    330,000 
Vesting of stock options   57,612         392,488 
Impairment loss on mineral property acquisition costs   -    1,250,360    1,250,360 
Forgiveness of debt – other income   -    (587,030)   (647,030)
Contributions to capital by related party – expenses (Notes 7 and 9)   -    -    48,300 
Changes in operating assets and liabilities               
Shareholder advance (Note 6)   26,000    -    60,166 
Prepaid expenses   25,000    -    - 
Increase in accounts payable and accrued liabilities   110,352    102,404    491,123 
Net cash flows (used in) operating activities   (214,835)   (509,291)   (1,696,223)
                
Cash flows used in investing activities               
Acquisition of mineral property interest (Note 3)   (5,000)   (35,892)   (215,785)
Net cash flows (used in) investing activities   (5,000)   (35,892)   (215,785)
                
Cash flows from financing activities               
Payment on note payable for mineral property   -    -    (5,000)
Advances from Director   -    -    61,875 
Payments to Director   -    -    (61,875)
Advances from shareholder             100,000 
Payments to shareholder   -    -    (100,000)
Demand loan   -    (100,000)   - 
Convertible promissory note   -    -    550,000 
Common shares issued for cash (Note 7)   -    315,000    1,319,050 
Subscriptions received   -    130,000    60,000 
Net cash flows provided by financing activities   -    345,000    1,924,050 
                
Increase (decrease) in cash and cash equivalents   (219,835)   (200,183)   12,042 
Cash and cash equivalents, beginning of period   231,877    201,068     - 
Cash and cash equivalents, end of period   12,042    885    12,042 

Supplemental Disclosures with Respect to Cash Flows (Note 9)

               

  

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

 

4
 

 

Ironwood Gold Corp
(An Exploration Stage Company)
Notes to Financial Statements
29 February 2012

 

1.Nature and Continuance of Operations

 

The Company, Ironwood Gold Corp. (formerly Suraj Ventures, Inc.), was incorporated under the laws of the State of Nevada on 18 January 2007, with the authorized common stock of 25,000,000 shares at $0.001 par value. The Company was organized for the purpose of acquiring and developing mineral properties.  On 6 October 2009, the Company formed a wholly-owned subsidiary in the State of Nevada named “Ironwood Gold Corp”. On 8 October 2009, the Company merged with its wholly-owned subsidiary, Ironwood Gold Corp. and the name of the merged entity was change to Ironwood Gold Corp.

 

The Company is an exploration stage company. The Company is devoting all of its present efforts in securing and establishing a new business, and its planned principal operations have not commenced, and, accordingly, no revenue has been derived during the exploration stage.

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to exploration stage enterprises. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The Company’s fiscal year end is 31 August.

 

Going Concern

 

These financial statements as at 29 February 2012 and for the six months then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company had a net loss for the six months ended 29 February 2012, of $458,607 (12 months ended 31 August 2011 – $2,258,691, cumulative – $3,658,505) and had working capital deficit of $967,403 at 29 February 2012 (31 August 2011 - $71,773).

 

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company will be able to raise additional capital to continue operating and maintaining its business strategy during the fiscal year ending 31 August 2012. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2.Significant Accounting Policies

  

The following is a summary of significant accounting policies used in the preparation of these financial statements.

 

5
 

 

Basis of presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America applicable to exploration stage enterprises (“GAAP).

 

Cash and cash equivalents

 

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

 

Financial instruments


The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and amounts due to related parties. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks rising from these financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwise noted.

 

Mineral property costs

 

The Company has been in the exploration and development stage since its formation on 18 January 2007 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties.

 

Mineral property acquisition costs are initially capitalized as tangible assets when purchased. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

 

Mineral property exploration costs are expensed as incurred.

 

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

 

As of the date of these financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs (Note 3).

 

Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

 

6
 

 

Reclamation costs

 

The Company’s policy for recording reclamation costs is to record a liability for the estimated costs to reclaim mined land by recording charges to production costs for each tonne of ore mined over the life of the mine. The amount charged is based on management’s estimation of reclamation costs to be incurred. The accrued liability is reduced as reclamation expenditures are made. Certain reclamation work is performed concurrently with mining and these expenditures are charged to operations at that time. To date the Company has not incurred any reclamation costs.

 

Long-lived assets

 

The carrying value of long-lived assets, including mineral property costs, is reviewed on a regular basis for the existence of facts or circumstance that may suggest impairment. The Company recognized an impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

 

Derivative financial instruments

 

The Company has not, to the date of these financial statements, entered into derivative instruments.

 

Income taxes

 

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. 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 Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

 

Basic and diluted net loss per share

 

The Company presents both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

 

Foreign currency translation

  

The Company’s functional and reporting currency is in U.S. dollars. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

7
 

 

Reclassification

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Use of estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

 

3.Mineral Properties

 

Falcon Mine Property

 

On 2 February 2011, the Company entered into an acquisition agreement (the “Falcon Agreement”) for an interest in the prospective gold-silver project known as the Falcon Mine Property with the signing of a 2-year lease agreement which included a 50% earn-in Joint Venture agreement option. The property consists of 6 patented claims and 60-100 newly staked claims that join the patented claims on which the mine is situated.

 

The Falcon Agreement calls for cash payments of $225,000 by 1 September 2012, issuance of 75,000 shares of common stock by 28 January 2011, issuance of another 75,000 shares of common stock by 30 November 2011, and a minimum of 8 drill holes by 30 November 2012 with 4 holes completed by 30 November 2011. On February 22, 2012, Amendment No 1 to the Falcon Agreement was executed. In consideration for Falcon’s agreement to extend the due dates of the November 2011 Payment and the Share Issuance to April 6, 2012, the Company paid Falcon $10,000 and issued to Falcon 500,000 shares of common stock of the Company. As of 29 February 2012, the Company had paid $75,000 under the original agreement and $5,000 under the amended agreement, and had issued 75,000 common shares under the original agreement and 500,000 common shares under the Amended Agreement. The 75,000 share issuance was completed in accordance with the Amended Agreement on April 6, 2012.

 

During the quarter ended February 29, 2012, the Company incurred cost of $16,337 for exploration on the Falcon Mine Property bringing the total expenditures to date to $98,987.

 

Cobalt Canyon Gold Project

 

On 28 October 2009, the Company entered into an acquisition agreement (the “Acquisition Agreement”) with Kingsmere Mining Ltd. (“KML”) and Ironwood Mining Corp. (“IMC”) whereby the Company acquired an undivided 100% right, title and interest in and to certain mineral claims known as the Cobalt Canyon Gold Project, in the Chief District, located in Lincoln County, Nevada (the “Property”). The acquisition agreement called for cash payments of $755,000 and the issuance of an aggregate of 853,750 shares of our common stock (Note 8) and the completion of exploration expenditures of $2,800,000 as detailed below. Previously, Gold Canyon Partners LLP (“GC”) and KML entered into an option agreement (the “Option Agreement”) dated 31 January 2009 wherein KML acquired an exclusive option to acquire the Property from GC. KML assigned all of KML’s interest in the Property to IMC in an agreement (the “Assignment Agreement”) dated 15 April 2009. The Company would obtain all right, title and interest from KML and IMC pursuant to the terms of the Acquisition Agreement, subject to certain of the terms and conditions of the Option Agreement and the Assignment Agreement, including the obligation to make all required royalty payments to GC and all required property expenditures set forth in the Option Agreement.

 

8
 

  

   Payments   Shares   Exploration
Expenditures
 
   $       $ 
2009   465,000    853,750    - 
2010   50,000    -    250,000 
2011   80,000    -    350,000 
2012   100,000    -    450,000 
2013-2019   75,000    -    1,750,000 
                
    755,000    853,750    2,800,000 

 

On 30 November 2009 the Company entered into a purchase agreement with KML whereby the Company acquired certain rights in an additional 32 unpatented placer mining claims located at the Cobalt Canyon Gold Project in Lincoln County, Nevada. As a result of the purchase agreement, the Cobalt Canyon Gold Project will encompass a total of 696 acres in the Chief or Caliente mining district of southeastern Nevada.  The Company had issued 25,000 shares of our common stock and a cash sum of $65,000 was payable in consideration for the assignment of the rights (Note 8). On August 26, 2010, KML agreed to the cancellation of 747,500 shares (Note 8), including these 25,000 shares.

 

The Company had commenced the work program planned for the Cobalt properties, based on the recommended exploration program identified in the 43-101 compliant technical report on the properties, and to date had made exploration expenditures of approximately $617,575 on the property. After analyzing the drilling results the Company performed an impairment analysis and determined that the related acquisition cost for the Cobalt Canyon Gold Project was impaired. Therefore, an impairment loss of $617,575 representing the Company’s total investment in the Cobalt Canyon Gold Project property was recorded on 28 February 2011.

 

In a related transaction the Company reached an agreement with certain creditors to forgive in total $560,000 owed them for debt related to the acquisition of the Cobalt Canyon Gold Project.

 

Haystack Property and Rock Creek Properties

 

On 1 December 2009 the Company entered into an assignment agreement (the “Assignment Agreement”) with KML whereby the Company had the option to acquire an undivided 100% right, title and interest in and to certain mineral claims known as the Haystack Property located in Pershing County, Nevada (the “Haystack Property”). The Company agreed to issue an aggregate of 500,000 shares of our common stock valued at $10,000 and an aggregate of $300,000 in cash in consideration for the assignment of all right, title and interest in the Haystack Property as follows: 425,000 shares and $255,000 to KML and 75,000 shares and $45,000 to Teck CO, LLC (“Teck”). Previously, KML and Teck entered into an option agreement (the “Haystack Option Agreement”) dated 26 October 2009 wherein KML acquired an exclusive option to acquire the Haystack Property from Teck. The Company would obtain all right, title and interest to the Haystack Property from KML and Teck pursuant to the terms of the Assignment Agreement, subject to certain of the terms and conditions of the Haystack Option Agreement, including the right of Teck to certain royalties payments and the right of Teck to earn-in to the Haystack Property by making certain expenditures related to the exploration and development of the Haystack Property. On August 26, 2010 KML agreed to the cancellation of 747,500 shares (Note 8), including these 425,000 shares.

 

9
 

 

On 7 December 2009 the Company entered into an assignment agreement (the “Rock Creek Assignment Agreement”) with KML whereby the Company had the option to acquire an undivided 100% right, title and interest in and to certain mineral claims known as the Rock Creek property located in Elko County, Nevada (the “Rock Creek Property”). The Company agreed to issue an aggregate of 350,000 shares of our common stock valued at $7,000 and an aggregate of $300,000 in cash in consideration for the assignment of all right, title and interest in the Rock Creek Property as follows: 297,500 shares and $255,000 to KML and 52,500 shares and $45,000 to Teck. Previously, KML and Teck entered into an option agreement (the “Rock Creek Option Agreement”) dated 26 October 2009 wherein KML acquired an exclusive option to acquire the Rock Creek Property from Teck. The Company would obtain all right, title and interest to the Rock Creek Property from KML and Teck pursuant to the terms of the Rock Creek Assignment Agreement, subject to certain of the terms and conditions of the Rock Creek Option Agreement, including the right of Teck to certain royalties payments and the right of Teck to earn-in to the Rock Creek Property by making certain expenditures related to the exploration and development of the Rock Creek Property. On August 26, 2010 KML agreed to the cancellation of 747,500 shares (Note 8), including these 297,500 shares.

 

The Company was working on 43-101 compliant technical reports on both the Haystack and Rock Creek properties and had completed exploration related expenditures of approximately $175,000 on the Haystack and $283,000 on the Rock Creek properties when on November 24, 2010, Teck provided written notice that they had unilaterally terminated the Assignment Agreements. We disputed this unilateral termination due to force majeure events we suffered and believed that we had exceeded our obligations given the force majeure events we experienced. However, due to the ongoing dispute and the fact that we were not allowed access to those properties, the Company performed an impairment analysis and determined that the related acquisition costs for the Haystack and Rock Creek properties were impaired. Therefore, an impairment loss of $617,000 representing the Company’s total investment in the Haystack and Rock Creek properties was recorded on November 30, 2010.

 

Cherry Creek Property

 

In November 2010 the Company entered into a Letter of intent to acquire the prospective gold property at Cherry Creek. The Company incurred $15,785 in acquisition costs and an additional $2,500 in exploration costs before deciding to abandon the property. As a result, the Company recorded an impairment loss of $15,785.

 

4.Forgiveness of debt

 

During the year ended 31 August 2011 the Company negotiated the forgiveness of debts owed to seven creditors totaling $587,030. On November 29, 2011, the Company's Chief Executive Officer, Behzad Shayanfar, agreed to forgive $60,000 of salary accrued to August 31, 2011 (this was recorded as forgiveness of debt in the 31 August 2011 financial statements).

 

5.Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses are non-interest bearing, unsecured and have settlement dates within one year.

 

6.Related Party Transactions

 

In connection with his appointment to our Board of Directors, on 18 July 2011, Mr. Borozdin was issued 5,000 shares of our common stock (post stock split) pursuant to that certain Restricted Stock Award Agreement attached as an exhibit to our Current Report on Form 8-K filed January 26, 2011.

 

10
 

 

On 31 July 2011, we issued to Behzad Shayanfar, our Chief Executive Officer, Interim Chief Financial Officer and a member of our Board of Directors, 1,250,000 shares of our common stock (post stock split), par value $0.001, as consideration for services provided to the Company.

 

In connection with his appointment to our Board of Directors, on 31 August 2011, Mr. Brill was issued 5,000 shares of Company common stock (post stock split) pursuant to that certain Restricted Stock Award Agreement attached as an exhibit to our Current Report on Form 8-K filed August 31, 2011.

 

During the six months ended 29 February 2012, an officer and director of the Company made contributions to capital for management fees in the amount of $Nil (2011 – Nil, cumulative – $33,000), rent in the amount of $Nil (2011 – Nil, cumulative – $10,200) and for telephone expenses $Nil (2011 - Nil cumulative $5,100) (Notes 6 and 11).

 

Included in accounts payable at 29 February 2012, is $50,000 due to the Company’s CEO for management fees and unreimbursed expenses.

 

On November 29, 2011, the Company's Chief Executive Officer, Behzad Shayanfar, agreed to forgive $60,000 of salary accrued to August 31, 2011.

 

During the quarter ended February 29, 2012, an officer and director of the Company had made cash advances to the company totalling $26,000. The Advances bear no interest and have no fixed terms for repayment.

 

7.Convertible Promissory Note

 

On 16 August 2011, the Company received $550,000 from an investor for a convertible promissory note, 1,375,000 warrants to purchase shares of the Company’s common stock (exercise price of $0.60, expiring 5 years from the date of issuance), and 220,000 shares of the Company’s common stock. This note matures on November 16, 2012, and has an interest rate of 10% per annum, simple interest, payable quarterly. After the maturity date, the interest rate increases to 16% per annum. This note is secured by all of the assets of the Company. Additionally, the conversion price is $0.40 per share (post share split).

 

The Company calculated the fair value of the warrants and common stock to be $26,427 (using the Black-Scholes model) and $44,000 (using the closing trading price of the stock on 16 August 2011), respectively. The relative fair values allocated to the warrants, common stock (and additional paid-in-capital), and debt were as follows:  warrants - $23,427; common stock (and additional paid-in-capital) - $39,005; debt - $487,568. Accordingly, a discount was created on the debt of $62,432, which will be amortized to interest expense over the life of the debt. Debt discount amortization as of 29 February 2012 was $26,875. Accrued interest on the note was $2,960 as of 29 February 2012.

 

8.Capital Stock

 

Authorized

 

The total authorized capital is 25,000,000 common shares with a par value of $0.001 per common share.

 

Issued and outstanding

 

The total issued and outstanding capital stock is 6,699,977 common shares with a par value of $0.001 per common share.

 

11
 

 

On 8 August 2007, Company completed a private placement consisting of 5,000,000 post split common shares sold to directors and officers for a total consideration of $2,000.  

 

On 31 August 2007, the Company completed a private placement of 1,925,000 post split common shares for a total consideration of $38,500.

 

On October 26, 2009, two directors gifted back to treasury for cancellation a total of 90,000 (4,500,000 post split) restricted common shares. The cancellation of these share resulted in the issued and outstanding share capital being reduced from 138,500 (6,925,000 post split) common shares to 48,500 (2,425,000 post split) common shares before the forward split of the common shares on October 27, 2009.

 

Effective 27 October 2009, the Company completed a 50 to 1 forward stock split. The authorized share capital remained unchanged at 500,000,000 common shares with the same par value of $0.001. Unless otherwise noted, all references herein to number of shares, price per share or weighted average number of shares outstanding have been adjusted to reflect this stock split on a retroactive basis.

 

On 28 October 2009, 853,750 common shares of the Company, valued at $17,075, were issued as partial settlement of an acquisition agreement to acquired an undivided 100% right, title and interest in and to certain mineral claims known as the Cobalt Canyon Gold Project, in the Chief District, located in Lincoln County, Nevada (Note 3).

 

On 30 November 2009, 25,000 common shares of the Company, valued at $500, were issued as partial settlement of a purchase agreement to acquire certain rights in 32 unpatented placer mining claims located at the Cobalt Canyon Gold Project in Lincoln County, Nevada. On August 26, 2010, KML agreed to the cancellation of these 25,000 shares (Note 3).

 

On 1 December 2009 the Company entered into the Assignment Agreement with KML whereby the Company has the option to acquire an undivided 100% right, title and interest in and to certain mineral claims known as the Haystack Property and issued an aggregate of 500,000 shares of our common stock valued at $10,000. On August 26, 2010, KML agreed to the cancellation of 425,000 of these shares (Note 3).

 

On 7 December 2009 the Company entered into the Rock Creek Assignment Agreement with KML whereby the Company has the option to acquire an undivided 100% right, title and interest in and to certain mineral claims known as the Rock Creek property and issued an aggregate of 350,000 shares of our common stock valued at $7,000. On August 26, 2010, KML agreed to the cancellation of 297,500 of these shares (Note 3).

 

On 13 January 2010, the Company completed a private placement and issued 233,710 common shares of the Company at a price of $5.00 per common share (post share split). The Company issued 130,710 of these common shares for net cash proceeds of $638,550, being gross proceeds of $653,550 less share issue costs of $15,000. In addition the Company issued 103,000 of these shares to pay $515,000 of the $1,025,000 debt owed KML under the mineral property acquisition agreements (Note 3).

 

On August 26, 2010, Kingsmere Mining Ltd. agreed to the cancellation of 747,500 shares of the Company’s common stock. The Shares were issued to Kingsmere pursuant to the following agreements: 20,000 shares of Common Stock pursuant to the Purchase Agreement, dated November 30, 2009, by and between Kingsmere and the Company; 425,000 shares of Common Stock issued to Kingsmere pursuant to the Assignment Agreement, dated December 1, 2009, by and between Kingsmere and the Company; and 297,500 shares of Common Stock issued to Kingsmere pursuant to the Assignment Agreement, dated December 7, 2009, by and between Kingsmere and the Company. Except for the cancellation of the Shares noted above, the agreements are still in full force and effect.

 

12
 

 

On 27 August 2010, the Company issued 200,000 Units for gross proceeds of $200,000, of a private placement of 1,000,000 Units offered at $1.00 per unit of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 200,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $96,677 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

On 3 September 2010, the Company completed a private placement and issued 50,000 Units for gross proceeds of $50,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 50,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $24,124 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

On 28 September 2010, the Company completed a private placement and issued 15,000 Units for gross proceeds of $15,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 15,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $7,251 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

On 30 September 2010, the Company issued 5,000 common shares to a member of its Advisory board for services of the Company valued at $1.00 per common share (post share split) for a total consideration of $5,000.

 

On 8 October 2010, the Company completed a private placement and issued 50,000 Units for gross proceeds of $50,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 50,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $24,133 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

On 13 October 2010, the Company completed a private placement and issued 100,000 Units for gross proceeds of $100,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 100,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $48,231 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

On 19 October 2010, the Company completed a private placement and issued 100,000 Units for gross proceeds of $100,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months. The 100,000 warrants were valued using the Black-Scholes model. Based on this valuation, a fair value of $48,421 was assigned to the warrants, using a relative fair value approach, considering the shares of common stock with which they were issued.

 

12
 

 

On 16 March 2011, the Company issued 75,000 common shares to Robert Wyllie in accordance with an acquisition agreement dated 2 February 2011, for an interest in the prospective gold-silver project known as the Falcon Mine Property. The property consists of 6 patented claims and 60-100 newly staked claims that join the patented claims on which the mine is situated.

 

On 15 June 2011, the Company completed a private placement and issued 125,000 Units for gross proceeds of $125,000, of a private placement of 1,000,000 Units offered at $1.00 per unit of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share (post share split) and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months.

 

On July 18, 2011, the Company issued 20,000 shares under Restricted Stock Award Agreement (the “Agreement”) dated January 24, 2011, with Anton S. Borozdin, whereby Mr. Borozdin will serve as a director of the Company. Pursuant to the Agreement, Mr. Borozdin received five thousand (5,000) shares of Company common stock in connection with his service as a director. The transaction was valued at $4,000 being the trading price of the Company’s shares on January 24, 2010, $0.80 per share (post share split) multiplied by the number of shares issued 5,000.

 

On July 31, 2011, the Company issued 1,250,000 shares to Behzad Shayanfar, the Company's current Chief Executive Officer, Interim Chief Financial Officer and a member of the Company's Board of Directors, as consideration for services provided to the Company. The transaction was valued at $250,000 being the trading price of the Company’s shares on July 31, 2011, $0.20 per share (post share split) multiplied by the number of shares issued 1,250,000.

 

On August 5, 2011 the Company issued 10,000 shares in exchange for amounts owed by the Company to a supplier for services provided in November 2011. The transaction was valued at $9,257 being the amount owed.

 

On August 16, 2011 the Company issued 200,000 shares to a consultant for services. The transaction was valued at $40,000 being the trading price of the Company’s shares on August 16, 2011, $0.20 per share (post share split) multiplied by the number of shares issued 200,000.

 

On August 16, 2011 the Company issued 220,000 shares under a secured promissory note agreement (Note 8). The transaction was valued at $44,000 being the trading price of the Company’s shares on August 16, 2011, $0.20 per share (post share split) multiplied by the number of shares issued 220,000.

 

On August 24, 2011 the Company issued 150,000 shares to a consultant for services. The transaction was valued at $30,000 being the trading price of the Company’s shares on August 16, 2011, $0.20 per share (post share split) multiplied by the number of shares issued 150,000.

 

On August 31, 2011, the Company entered into a Restricted Stock Award Agreement (the "Agreement") with Keith P. Brill, in connection with his service as a director of the Company. Pursuant to the Agreement, Mr. Brill will receive five thousand (5,000) shares of Company common stock. The transaction was valued at $1,000 being the trading price of the Company’s shares on August 31, 2011, $0.20 per share (post share split) multiplied by the number of shares issued 5,000.

 

13
 

 

Effective 28 October 2011, the Company completed a 20 to 1 reverse stock split. The authorized share capital changed to 25,000,000 common shares with the same par value of $0.001 (post share split). Unless otherwise noted, all references herein to number of shares, price per share or weighted average number of shares outstanding have been adjusted to reflect this stock split and the 50 to 1 forward stock split effective 27 October 2009, described above (“post splits”) on a retroactive basis (Note 8).

 

On February 22, 2012, the Company issued 500,000 common shares under an Amendment to the Falcon agreement (Note 3). The transaction was valued at $68,000 being the trading price of the Company’s shares on January 22, 2012, $0.136 per share, multiplied by the number of shares issued 500,000.

 

Subscriptions received

 

On November 24, 2010, the Company received $60,000 as partial payment on the private placement of 60,000 Units for gross proceeds of $60,000, of a private placement of 1,000,000 Units offered at $1.00 per unit (post share split) of the Company’s securities. Each Unit consists of 1 share of common stock, par value $0.001 per share and 1 warrant exercisable to purchase 1 share of common stock of the Company at an exercise price of $1.40 per share for a period of 24 months.

 

Stock Options

 

The Company has a stock option plan whereby the Board of Directors is authorized to grant options to a rolling ceiling of 10% of the issued and outstanding common shares of the Company.

 

Options to purchase common shares have been granted to directors at exercise prices determined by reference to the market value on the date of the grant. The terms of the option and the option price are fixed by the directors at the time of grant subject to price restrictions imposed by the TSX Venture Exchange. Stock options awarded have a maximum term of ten years.

 

On 20 April 2010, the Company granted an aggregate of 312,500 incentive options to various directors and officers of the Company. The options vest evenly, at the end of each calendar quarter, over five years beginning on June 30, 2010. The weighted average exercise price of the options is $0.31 each and they are exercisable until April 20, 2020. 625,000 options were vested at 30 November 2010.

 

The weighted average grant-date fair value for these options was $1,800,400. During the year ended 31 August 2011, 212,500 options were forfeited and on 29 February 2012, 100,000 options were outstanding. 30,000 options were vested at 29 February 2012. The aggregate intrinsic value of options outstanding and exercisable at 29 February 2012 was $0.

 

Stock-based compensation expense

 

Options granted to directors and officers of the Company are accounted for using the Black-Scholes option pricing model and recoded as the options vest. The exercise price of the options is $0.31 each and they are exercisable until April 20, 2015. The fair value of stock options vested at 31 August 2011, was $172,800 ($5.76 each), as estimated at the date of grant using the Black-Scholes option pricing model.

 

The Company uses historical data to estimate option exercises and employee termination in the option pricing model. The expected term of options granted is derived from the output of the option pricing model and represents the period of time that options granted are expected to be outstanding. The expected volatilities are based on the historical volatility of the Company's traded stock and other factors. The following table shows the assumptions used and weighted average fair value for grants in the year ended 31 August 2010 (no options issued in fiscal year 2011 and year-to-date 2012).

 

14
 

 

Expected annual dividend rate   0.00%
Weighted average exercise price  $6.20 
Risk-free interest rate   3.25%
Average expected life (years)   10 
Expected volatility of common stock   98.43%
Forfeiture rate   0.00%
Weighted average fair value of option grants  $5.76 

 

The Company recorded share-based compensation expense only for those options that are expected to vest. The estimated fair value of the stock options is amortized over the vesting period of the respective stock option grants.

 

Warrants

 

As at February 29, 2012, and August 31, 2011, the following share purchase warrants were outstanding and exercisable:

 

Expiry
Date
  Exercise
Price
   29-Feb-12   31-Aug-
11
 
27-Aug-12  $1.40    200,000    200,000 
3-Sep-12  $1.40    50,000    50,000 
28-Sep-12  $1.40    15,000    15,000 
8-Oct-12  $1.40    50,000    50,000 
13-Oct-12  $1.40    100,000    100,000 
24-Nov-12  $1.40    100,000    100,000 
11-Jun-13  $1.40    125,000    125,000 
16-Aug-16  $0.60    1,375,000    1,375,000 
            2,015,000    2,015,000 

 

Share purchase warrant transactions and the number of share purchase warrants outstanding and exercisable are summarized as follows:

 

   29-Feb-12   31-Aug-11 
   Number of
Warrants
   Weighted
Average
Exercise
Price
   Number of
Warrants
   Weighted
Average
Exercise
Price
 
Outstanding at beginning of period   2,015,000   $0.85    200,000   $1.40 
Issued   -    -    1,815,000   $0.80 
Exercised   -    -    -    - 
Expired   -    -    -    - 
Outstanding at end of period   -    -    -    - 
    2,015,000   $0.85    2,015,000   $0.85 

 

15
 

  

9.Income Taxes

 

The Company has cumulative net operating loss carry-forwards of $3,26,017 (deficit accumulated during the exploration stage of $3,658,505, less cumulative expense related to the vesting of incentive stock options of $392,488). The related deferred tax asset of approximately $1,110,000 has been fully offset by a valuation allowance as we have determined it unlikely that the Company will be able to use these losses to offset future taxable income. These net operating losses will begin to expire in 2026.

 

10.Supplemental Disclosures with Respect to Cash Flows

 

   For the period
from the date
of inception on
18 January
2007 to 29
February 2012
   For the six
months ended 
29 February
2012
   For the six
months ended
28 February
2011
 
   $   $   $ 
         
Cash paid during the period for interest   -    -    - 
Cash paid during the period for income taxes   -    -    - 

 

Supplemental disclosures of noncash investing and financing activities:

 

On 28 October 2009 the Company issued 853,750 common shares, valued at $17,075, as partial settlement of an acquisition agreement to acquired an undivided 100% right, title and interest in and to certain mineral claims known as the Cobalt Canyon Gold Project, in the Chief District, located in Lincoln County, Nevada (Note 3 and 9).

 

On 30 November 2009 the Company issued 25,000 common shares, valued at $500, as partial settlement of a purchase agreement to acquire certain rights in 32 unpatented placer mining claims located at the Cobalt Canyon Gold Project in Lincoln County, Nevada (Note 3 and 9). 

 

On 13 January 2010, the Company completed a private placement and issued 103,000 common shares at $5.00 per share (post share split) in exchange for the cancellation of $515,000 owed KML (Note 3 and 9).

 

On 1 December 2009 the Company issued 500,000 common shares, valued at $10,000, as partial settlement of a purchase agreement to acquire certain mineral claims known as the Haystack Property located in Pershing County, Nevada (Note 3 and 9). 

 

On 7 December 2009 the Company issued 350,000 common shares, valued at $10,000, as partial settlement of a purchase agreement to acquire certain mineral claims known as the Rock Creek property located in Elko County, Nevada (Note 3 and 9).

 

On 13 January 2010, the Company completed a private placement and issued 103,000 common shares at $5.00 per share (post share split) in exchange for the cancellation of $515,000 owed KML (Note 3 and 9).

 

During the year ended 31 August 2010, the Company issued stock for cash and warrants. The relative fair value allocated to the 200,000 warrants and recorded to additional paid in capital, was $96,677.

 

16
 

 

On 30 September 2010, the Company issued 5,000 common shares to a member of its Advisory board for services to the Company valued at $1.00 per common share (post share split) for a total consideration of $5,000.

 

On 15 December 2010, the Company issued a note payable for $40,000 for a mineral property acquisition payment.

 

On 28 February 2011, the Company issued 5,000 common shares to a member of its board of directors for services to the Company valued at $0.80 per common share for a total consideration of $4,000.

 

On 16 March, 2011, the Company issued 75,000 shares of common stock as consideration for a mineral property acquisition payment of $45,000.

 

On 5 August 2011, the Company issued 10,000 shares of common stock for accounts payable of $9,257.

 

During the year ended 31 August 2011, the Company negotiated the forgiveness of debts owed to seven creditors totaling $587,030. $525,000 of this amount related to payables for mineral property that existed at 31 August 2010; $35,000 related to a note payable recorded in fiscal year 2011; and $27,030 related to accounts payable.

 

On February 22, 2012 the Company issued 500,000 common shares under an Amendment to the Falcon agreement (Note 3). The transaction was valued at $68,000 being the trading price of the Company’s shares on January 22, 2012 ($0.136 per share) multiplied by the number of shares issued 500,000.

 

Since the Company’s inception, related parties have contributed $48,300 to capital in the form of management fees, rent, and telephone expenses.

 

During the year ended 31 August 2011, the Company issued stock for cash and warrants. The relative fair value allocated to the 1,815,000 warrants and recorded to additional paid in capital, was $233,896.

 

11.Commitments

 

The Company has outstanding and future commitments under mineral property agreements (Note 3).

 

12.Subsequent Events

 

On April 20, 2012 the Company signed an Amendment Agreement with Alpha Capital Ansalt regarding the note issued by the Company to Alpha dated August 16, 2011 (Note 7) and agreed to an Allonge to the Amended Agreement and issued an additional $100,000 in convertible notes. The effect of the Amendment and the Allonge was to:

 

·Increase the original principal amount of the notes from $550,000 to $650,000 and reduce the conversion price from $0.40 per share to $0.08 per share.
·Increase the number warrants to purchase common shares of the Company from 1,375,000 to 6,000,000 and reduce the strike price of the warrants from $0.60 per share to $0.08 per share. The expiry date of the warrants remains unchanged at August 16, 2016.

 

17
 

 

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

 

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

 

Overview

 

Ironwood Gold Corp., formerly known as Suraj Ventures, Inc., was incorporated on January 18, 2007 under the laws of the State of Nevada under the name Suraj Ventures, Inc. for the purpose of acquiring, exploring and developing mineral properties.  On October 27, 2009, we changed our name to Ironwood Gold Corp.

 

We are a mineral exploration stage company building a portfolio of exploration properties containing known deposits of gold. We have targeted several prospective locations in Nevada, where approximately 80% of all gold in America is produced today.

 

On January 25, 2011, we entered into a lease agreement with The Falcon Group Claims (“Falcon”) for the development of a gold-silver mining project known as the Falcon Mine Property (the “Falcon Property”) located in the northern end of the Carlin Trend gold belt in Nevada (the “Lease”). The Lease includes an earn-in joint venture agreement option, to be negotiated by the parties, for further development of the Falcon Property. Such joint venture option is exercisable anytime on or before November 30, 2012, unless such option period is extended pursuant to the terms and conditions of the Lease. The Falcon Property consists of six patented claims and between 60-100 newly staked claims that join the patented claims on which the mine is situated. In accordance with the Lease, we are obligated to make certain expenditures on the Falcon Property, including drilling a minimum of four (4) drill holes for the purpose of obtaining soil samples and conducting field survey work on the Falcon Property. In September 2011, we announced that Snowden Mining Industry Consultants Inc. (“Snowden”) has commenced the 2011 field exploration program on the Falcon Property. On February 21, 2012, we announced that based on the results from surface mapping, sampling and a geophysical program, Snowden has identified a number of significant mineralization targets that are recommended as warranting a follow up exploration drilling program. As such, we have announced plans to proceed with an 18-hole, 6000 meter drilling program after receiving Snowden’s favorable assessment.

 

The Lease calls for cash payments of $225,000 by September 1, 2012, issuance of 75,000 shares of common stock by January 28, 2011, issuance of another 75,000 shares of common stock by November 30, 2011, and a minimum of 8 drill holes by November 30, 2012, with 4 holes completed by November 30, 2011. As of February 29, 2012, we had paid $75,000, and had issued the initial 75,000 shares of our common stock to Falcon.

 

On February 22, 2012, we entered into Amendment No. 1 to the Lease (“Amendment No. 1”) with Falcon. In consideration for Falcon’s agreement to extend the due dates of the cash payments and share issuances due to Falcon in November 2011 to April 6, 2012, we paid Falcon $10,000 and agreed to issue to Falcon 500,000 shares of common stock. As of February 29, 2012, we have paid $75,000 under the original Lease and $5,000 under Amendment No. 1, and we have issued 75,000 shares of common stock under the original Lease and 500,000 shares of common stock under Amendment No. 1.

 

Background

 

On October 27, 2009, we effected a 50-for-1 forward stock split.

 

Effective October 28, 2011, we completed a 1-for-20 reverse stock split of both our authorized and issued and outstanding shares of our common stock. As a result of the reverse split, our authorized share capital is now 25,000,000 shares of common stock, with the same par value of $0.001. Unless otherwise noted, all references to share info contained in this Form 10-Q are to figures and numbers post-reverse stock split.

 

18
 

 

We expect to continue to incur operating losses in the near future as we initiate mining exploration operations at our property through the remainder of 2012. We have funded our operations primarily through sales of our common stock and debt offerings, including most recently the issuance of a $550,000 secured convertible promissory note to Alpha Capital Anstalt in August 2011. We intend to explore for undiscovered deposits on these properties and to acquire and explore new properties, all with the view to enhancing the value of such properties.

 

Our ability to satisfy the cash requirements of our mining development and exploration operations will be dependent upon future financing. No assurance can be made that that additional financing will be obtained.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management of our company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

 

 The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements. A description of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended August 31, 2011. As of, and for the six months ended February 29, 2012, there have been no material changes or updates to our critical accounting policies.

 

Results of Operations

 

The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2011, filed on November 29, 2011.

 

Comparison of three month periods ended February 29, 2012 and February 28, 2011

 

During the six month periods ended February 29, 2012 and February 28, 2011, we earned no revenues.

 

For the six month periods ended February 29, 2012 and February 28, 2011, we incurred a net loss of $458,607 and $1,435,259, respectively.  This decrease for the period ended February 29, 2012 is primarily attributed to decreases in an impairment loss on mineral property (2011 - $Nil; 2010 - $Nil).

 

Period from inception, January 18, 2007 to February 29, 2012

 

Since inception, we have an accumulated deficit during the exploration stage of $3,658,505. We expect to continue to incur losses as a result of expenditures for general and administrative activities while we remain in the exploration stage.

 

Liquidity and Capital Resources

 

As of February 29, 2012, we had approximately $12,042 in cash and a working capital deficiency of $967,403 including $439,002 in accounts payable and accrued expenses.  

 

For the six month period ended February 29, 2012, we used net cash of $214,835 in operations and used net cash of $5,000 in investing activities.  Net cash used in operating activities reflected an increase in accounts payable and accrued expenses of $110,352. For the six months ended February 29, 2012, we had $Nil in net cash flow provided by financing activities.

 

19
 

 

On August 16, 2011, we entered into a Subscription Agreement (the “Agreement”) with Alpha Capital Anstalt, a foreign entity (the “Investor”) in connection with the private offering and issuance of (i) a $550,000 secured convertible promissory note (the “Note”), such Note convertible, at the option of the Investor, into shares of our common stock, par value $0.001, at a conversion price of $0.40 per share (post stock split); (ii) a warrant to purchase up to 1,375,000 shares of common stock (post stock split) at an exercise price of $0.60 per share (post stock split) (the “Warrant”), such Warrant expiring five (5) years from the date of issuance, and (iii) 220,000 shares of common stock (post stock split) (the “Shares”). The Note is senior to any and all of our indebtedness and is secured substantially by all of our assets in accordance with the terms and conditions of the Security Agreement with the Investor dated August 16, 2011. The Note carries an interest rate of 10% per annum (increases to 16% in the event of default), is payable quarterly, and matures fifteen (15) months from the date of issuance.

 

Our current cash requirements are significant due to planned exploration and development of current projects, and we anticipate generating losses. In order to execute on our business strategy, including the exploration and development of our current mining properties, we will require additional working capital, commensurate with the operational needs of our planned drilling projects and obligations.  Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund exploration and development of our properties.

 

Such working capital will most likely be obtained through equity or debt financings until such time as we reach the production stage.  There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to cease our operations.

 

Off-Balance Sheet Transactions

 

There are no off-balance sheet transactions.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer who is also our Principal Financial Officer, of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of February 29, 2012 pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer, who is also our Principal Financial Officer, concluded that our disclosure controls and procedures are not effective as of February 29, 2012 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our interim financial statements will not be prevented or detected on a timely basis.

 

In performing the above-referenced assessment, our management identified the following material weaknesses:

 

·Our Audit Committee does not function as an Audit Committee should since there is a lack of independent directors on the Committee and our Board of Directors has not identified an “expert,” one who is knowledgeable about reporting and financial statements requirements, to serve on the Audit Committee.

 

·We have limited segregation of duties which is not consistent with good internal control procedures.

 

20
 

 

·We do not have a written internal control procedurals manual which outlines the duties and reporting requirements of our officers and directors. This lack of a written internal control procedurals manual does not meet the requirements of the SEC for good internal controls.

 

·There are no effective controls instituted over financial disclosure and the reporting processes.

 

Our management feels the weaknesses identified above, being the latter three, have not had any material affect on our financial results. Our management will have to address the lack of independent members on the Audit Committee and identify an “expert” for the Audit Committee to advise other members as to correct accounting and reporting procedures.

 

We will endeavor to correct the above noted weaknesses in internal control once we have adequate funds to do so. Appointing independent members and using the services of an expert on the Audit Committee will greatly improve the overall performance of the Audit Committee. With the addition of other Board Members and staff, the segregation of duties issue will be addressed and will no longer be a concern to management. Having a written policy manual outlining the duties of each of our officers and staff will facilitate better internal control procedures.

 

Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

Changes in Internal Controls Over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the six months ended February 29, 2012 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected. 

 

21
 

 

PART IIOTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On February 16, 2012, Peter E. Walcott & Associates Limited, a British Columbia Incorporated Company (“Walcott”), filed a complaint against the Company in the District Court of the Fourth Judicial District of the State of Nevada. Walcott’s complaint stems from alleged unpaid fees owed under an agreement between Walcott and the Company, whereby Walcott provided geophysical services to the Company between October 25, 2010 and November 15, 2010 on our former Rock Creek Property in Nevada. As of the date of this Quarterly Report, we have not responded to Walcott’s complaint and we dispute the amount of alleged unpaid fees owed to Walcott.

 

Item 1A. Risk Factors.

 

Not applicable.

 

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

 

In accordance with Amendment No. 1 to the Lease with Falcon, on February 22, 2012, we agreed to issue 500,000 shares of common stock to Falcon. The issuance of the shares to Falcon was effected without registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended, and the rules promulgated thereunder.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Amendment & Allonge with Alpha Capital Anstalt

 

On April 20, 2012, we entered into an Amendment Agreement (the “Amendment”) with Alpha Capital Anstalt (“Alpha”) to the Secured Convertible Promissory Note, dated August 16, 2011 (the “Note”), previously disclosed in our Current Report on Form 8-K filed on August 18, 2011. In connection therewith, effective April 20, 2012 we also agreed to an Allonge to the Note (the “Allonge”) pursuant to which an additional $100,000 was issued to us under the Note. In accordance with the Amendment and the Allonge, (i) the original principal amount under the Note has increased from $550,000 to $650,000; (ii) the conversion price under the Note has been reduced from $0.40 per share to $0.08 per share; (iii) the number of warrants to purchase shares of our common stock issuable to Alpha has increased from 1,375,000 to 6,000,000; and (iv) the exercise price of the warrants has been reduced from $0.60 per share to $0.08 per share. The expiry date of the warrants issuable to Alpha remains unchanged at August 16, 2016.

 

22
 

 

Item 6. Exhibits.

 

The following exhibits are included as part of this report by reference:

 

Exhibit Number   Name
3.1   Certificate of Incorporation (incorporated by reference to the registrant’s Registration Statement on Form SB-2 filed on October 18, 2007)
3.2   Articles of Incorporation (incorporated by reference to the registrant’s Registration Statement on Form SB-2 filed on October 18, 2007)
3.3   By-laws (incorporated by reference to the registrant’s Registration Statement on Form SB-2 filed on October 18, 2007)
3.4   Amendment to Articles of Incorporation (incorporated by reference to the registrant’s Current Report on Form 8-K filed on October 29, 2009)
3.5   Amendment to Articles of Incorporation (incorporated by reference to the registrant’s Current Report on Form 8-K filed on October 28, 2011)
10.1   Allonge to Secured Promissory Note, dated April 20, 2012*
10.2   Amendment Agreement with Alpha Capital Anstalt, dated April 20, 2012*
10.3   Amendment No. 1 to Falcon Mines/Falcon Group Claims Lease Agreement - Joint Venture Option*
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002*
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002*
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS   XBRL Instance Document**
101.SCH   XBRL Taxonomy Extension Schema**
101.CAL   XBRL Taxonomy Extension Calculation Linkbase**
101.DEF   XBRL Taxonomy Extension Definition Linkbase**
101.LAB   XBRL Taxonomy Extension Label Linkbase**
101.PRE   XBRL Taxonomy Extension Presentation Linkbase**

  

 

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

 

23
 

 

SIGNATURES

 

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

 

 

IRONWOOD GOLD CORP.

(Registrant)

     
Date: April 27, 2012 By: /s/ Behzad Shayanfar
   

Behzad Shayanfar, Chief Executive Officer

(Principal Executive Officer)

     
Date: April 27, 2012 By: /s/ Behzad Shayanfar
   

Behzad Shayanfar, Interim Chief Financial Officer

(Principal Financial Officer & Principal Accounting
Officer)

 

24

 

PINX:IROG Ironwood Gold Corp Quarterly Report 10-Q Filling

Ironwood Gold Corp PINX:IROG Stock - Get Quarterly Report SEC Filing of Ironwood Gold Corp PINX:IROG stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:IROG Ironwood Gold Corp Quarterly Report 10-Q Filing - 2/29/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Popularity |  Our Choices |  Most Recent Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: PINX:IROG Ironwood Gold Corp Insider Activity 4 Filing - 9/24/2012  |  Next: PINX:IROG Ironwood Gold Corp Quarterly Report 10-Q Filing - 5/31/2012