PINX:SRGZ Star Gold Corp. Annual Report 10-K Filing - 4/30/2012

Effective Date 4/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

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

 For the Fiscal Year Ended April 30, 2012

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

For the Transition Period From _____ to _____

 Commission File Number 000-52711

 STAR GOLD CORP.

(Exact name of small business issuer as specified in its charter) 

NEVADA

27-0348508

(State or other jurisdiction of incorporation or organization)

 (IRS Employer Identification No.)

 611 E. Sherman Avenue

Coeur d’Alene, Idaho

(Address of principal executive office)

 83814

(Postal Code)

(208) 664-5066

(Issuer's telephone number)

 

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT:  

None

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:

Common Stock, $0.001 par value


Indicate by check mark if the registrant is a well-known seasoned issued, 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 Section 15(d) of the Act: Yes[ ] No [ x]


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


Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of III of this Form 10-K or any amendment to the Form 10-K.  [x]


Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

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 Exchange Act).  Yes [   ]   No [x] 


The Company had $Nil  in revenue during the year.

 

The aggregate market value of the Common Stock held by non-affiliates (as affiliates are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed by reference to the average of the high and low sale price on October 31, 2011 was $3,163,000


As of July 30, 2012 there were 22,184,134 shares of issuer’s common stock outstanding.



Page 1 of 50







STAR GOLD CORP.

ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED APRIL 30, 2012

TABLE OF CONTENTS


CAUTIONARY NOTE REGARDING FORWARD LOOKING FINANCIAL STATEMENTS


PART I


ITEM 1.- BUSINESS

ITEM 1A. - RISK FACTORS

ITEM 1B. - UNRESOLVED STAFF COMMENTS

ITEM 2. - PROPERTIES

ITEM 3. - LEGAL PROCEEDINGS

ITEM 4. – MINE SAFETY DISCLOSURES


PART II


ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER

   MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6.

 - SELECTED FINANCIAL DATA

ITEM 7.

 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

   AND RESULTS OF OPERATIONS

ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.

 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

    AND FINANCIAL DISCLOSURE

ITEM 9A. - CONTROLS AND PROCEDURES

ITEM 9B. - OTHER INFORMATION


PART III


ITEM 10. - DIRECTORS, EXECUTIVE OFFICERS AND

     CORPORATE GOVERNANCE

ITEM 11. - EXECUTIVE COMPENSATION

ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     AND RELATED STOCKHOLDER MATTERS

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

     INDEPENDENCE.

ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES


PART IV


ITEM 15. - EXHIBITS


     SIGNATURES






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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning  of  the Private Securities Litigation Reform Act of 1995, as amended.  Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future.  These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.  

Any statement that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

·

Risks related to the Company’s properties being in the exploration stage;

·

Risks related to the mineral operations being subject to government regulation;

·

Risks related to the Company’s ability to obtain additional capital to develop the Company’s resources, if any;

·

Risks related to mineral exploration and development activities;

·

Risks related to mineral estimates;

·

Risks related to the Company’s insurance coverage for operating risks;

·

Risks related to the fluctuation of prices for precious and base metals, such as gold, silver and copper;

·

Risks related to the competitive industry of mineral exploration;

·

Risks related to the title and rights in the Company’s mineral properties;

·

Risks related to the possible dilution of the Company’s common stock from additional financing activities;

·

Risks related to potential conflicts of interest with the Company’s management;

·

Risks related to the Company’s shares of common stock;

This list is not exhaustive of the factors that may affect the Company’s forward-looking statements.  Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of Business” and “Management’s Discussion and Analysis” of this Annual Report.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  Star Gold Corp. disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.  The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s  Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

As used in this Annual Report, the terms “we,” “us,” “our,” “Star Gold,” and the “Company”, mean Star Gold Corp., unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto for the fiscal year ending April 30,  2012.  The following statements may be forward-looking in nature and actual results may differ materially.



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PART I

ITEM 1.

BUSINESS

Corporate Background

The Company was originally incorporated on December 8, 2006, under the laws of the State of Nevada as Elan Development, Inc.  On April 25, 2008, the name of the company was changed to Star Gold Corp.   Star Gold Corp. is an exploration stage company engaged in the acquisition and exploration of precious metal deposit properties and advancing them toward production.  The Company is engaged in the business of exploring, evaluating and acquiring mineral prospects with the potential for economic deposits of precious and base metals.

  

The Company currently owns the rights to acquire up to a 100% mining interest (covering a total of 50 unpatented claims) in a mineral property located in the State of Nevada known as the Excalibur Property.


The Company has completed an initial exploration program on the Excalibur Property, which included Geological Mapping, Rock Sampling and Assaying.  Based on this analysis the Company has decided to move forward with the permitting of this property and associated drilling program.  The permitting was completed in June 2010 and the drilling program commenced the week of June 20th, 2010.  The Company is expected to commence additional drilling and exploration in August 2012.


Star Gold Corp. currently leases with an option to acquire 60 unpatented mining claims (covering approximately 490 Hectares)located in the State of Nevada and known as the Longstreet Property. The Company is currently engaged in exploration and drilling activity at the Longstreet property.


On July 7th, 2010, Star Gold Corp. acquired a 100% mining interest in a property located in the State of Nevada (approximately 300 kilometers northwest of Las Vegas) known as the Jet Property.  The Company is currently engaged in preliminary exploration activities and surface testing of the Jet property.


The Company has no patents, licenses, franchises or concessions which are considered by the Company to be of importance.  The business is not of a seasonal nature.  Since the potential products are traded in the open market, the Company has no control over the competitive conditions in the industry.  

Overview of Mineral Exploration and Current Operations

Star Gold Corp. is an exploration stage mineral company with no producing mines.  Mineral exploration is essentially a research activity that does not produce a product.  As such the Company acquires properties which it believes have potential to host economic concentrations of minerals, particularly gold and silver.  These acquisitions have and may take the form of unpatented mining claims on federal land, or leasing claims, or private property owned by others.  An unpatented mining claim is an interest that can be acquired to the mineral rights on open lands of the federal owned public domain.  Claims are staked in accordance with the Mining Law of 1872, recorded with the federal government pursuant to laws and regulations established by the Bureau of Land Management  The Company intends to remain in the business of exploring for mining properties that have the potential to produce gold, silver, base metals and other commodities.

Compliance With Government Regulations

If the Company decides to continue with the acquisition and exploration of mineral properties in the State of Nevada it will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the State of Nevada and the United States Federal agencies.

United States

Mining in the State of Nevada is subject to federal, state and local law. Three types of laws are of particular importance to the Company’s U.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.



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Land Ownership and Mining Rights.

On Federal Lands, mining rights are governed by the General Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the General Mining Law and Nevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, the Company has the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable federal, state, and local laws, regulations and ordinances.

Mining Operations

The exploration of mining properties and development and operation of mines is governed by both federal and state laws.

The State of Nevada likewise requires various permits and approvals before mining operations can begin, although the state and federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. The Nevada Department of Environmental Protection, which is referred to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on the Nevada property. Local jurisdictions (such as Eureka County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

Environmental Law

The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of the Company’s operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to the Company’s proposed operations may be encountered. The Company is currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Unless and until a mineral resource is proved, it is unlikely Star Gold Corp. operations will move beyond the exploration stage. If in the future the Company decides to proceed beyond exploration, there will be numerous notifications, permit applications, and other decisions to be addressed at that time.

Competition

Star Gold Corp. competes with other mineral resource exploration and development companies for financing and for the acquisition of new mineral properties and also for equipment and labor related to exploration and development of mineral properties. Many of the mineral resource exploration and development companies with whom the Company competes have greater financial and technical resources.  Accordingly, competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact Star Gold Corp.’s ability to finance further exploration and to achieve the financing necessary for the Company to develop its mineral properties.

The Company provides no assurance it will be able to compete in any of its business areas effectively with current or future competitors or that the competitive pressures faced by the Company will not have a material adverse effect on the business, financial condition and operating results.



Page 5 of 50







Office and Other Facilities

Star Gold Corp. currently maintains its administrative offices at 611 E. Sherman Avenue, Coeur d'Alene, ID  83814.  The telephone number is (208) 664-5066.  Star Gold Corp. subleases office space from Marlin Property Management, LLC (“Marlin”) which is a single member limited liability company owned by the spouse of the Company’s Chairman of the Board, Lindsay Gorrill.  This office space consists of approximately 250 square feet, and Marlin supplies this office space to the Company at a monthly rental rate of $1,500.  Star Gold Corp. does not currently own title to any real property.

Employees

The Company has no employees other than its executive officers as of the date of this Annual Report on Form 10-K. Star Gold Corp. conducts business largely through independent contractor agreements with consultants.

Research and Development Expenditures

The Company has not incurred any research expenditures since incorporation.

Reports to Security Holders

The Registrant does not issue annual or quarterly reports to security holders other than the annual Form 10-K and quarterly Forms 10-Q as electronically filed with the SEC.  Electronically filed reports may be accessed at www.sec.gov.  Interested parties also may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street NW, Washington, DC 20549.  Information may be obtained on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330.

 ITEM 1A.

RISK FACTORS

The following factors, among others, could cause the actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-K or presented elsewhere from time to time.

Estimates of mineralized material are forward-looking statements inherently subject to error.  Although resource estimates require a high degree of assurance in the underlying data when the estimates are made, unforeseen events and uncontrollable factors can have significant adverse or positive impacts on the estimates.  Actual results may inherently differ from estimates.  The unforeseen and uncontrollable factors include but are not limited to:  geologic uncertainties including inherent sample variability, metal price fluctuations, variations in mining and processing parameters, and adverse changes in environmental or mining laws and regulations.  The timing and effects of variances from estimated values cannot be accurately predicted.

Failure to successfully address the risks and uncertainties described below would have a material adverse effect on the Company’s business, financial condition and/or results of operations, and the trading price of the Company’s common stock may decline and investors may lose all or part of their investment.  Star Gold Corp. cannot assure readers that the Company will successfully address these risks or other unknown risks that may affect its business.  

There is doubt about the Company’s ability to continue as a going concern.

The auditor’s report on the Company’s 2012 financial statement expresses an opinion that substantial doubt exists as to whether the Company can continue as a going concern.  Because obtaining investment capital is not certain, or that the Company’s officers and directors may be unable or unwilling to loan or advance any additional capital to the Company, Star Gold Corp may not have the funds necessary to continue operations.  See “April 30, 2012 Audited Financial Statements.”

Risks Related to the Company

The Company has a limited operating history on which to base an evaluation of the business and prospects

The Company has not derived any revenue from exploration of its properties.  The Company’s operating history has been limited to the acquisition and exploration of its mineral properties. Such history does not provide a meaningful basis for an evaluation of its



Page 6 of 50







prospects for success if future determinations are made that mineral reserves exist and to commence construction and operation of a mine.  Other than through conventional and typical exploration methods and procedures, the Company has no addition means to evaluate the likelihood of whether its mineral properties contain any mineral reserve or, if they do, that they will be operated successfully.  The Company anticipates that it will continue to incur operating costs without realizing any operating revenues during the period it explores the properties.

During the fiscal year ended April 30, 2012, the Company had losses of $314,071 in connection with the maintenance and exploration of its mineral properties and the operation of the exploration business.  The Company therefore expects to continue to incur significant losses into the foreseeable future.  The Company recognizes that if it is unable to generate significant revenues from mining operations and dispositions of its properties, the Company will not be able to earn profits or continue operations.  At this early stage of operations, the Company expects to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the development stage of their business.  The Company cannot ensure it will be successful in addressing these risks and uncertainties and the failure to do so could have a materially adverse effect on its financial condition.  There is no history upon which to base any assumption as to the likelihood that the Company will prove successful and the Company can provide investors no assurance that we will generate any operating revenue or ever achieve profitable operations.

Investors’ interests in the Company will be diluted and investors may suffer dilution in their net book value per share if the Company issues additional employee/director/consultant options or if the Company sells additional shares to finance its operation.

The Company has not generated any operational revenues from the exploration of its properties.  In order to further expand the Company’s business and meet its objectives, including but not limited to, raising funds to explore the Longstreet and Excalibur properties, additional capital funding may need to be obtained through the sale and issuance of additional debt and/or equity securities.  Furthermore, to finance any acquisition activity, growth and/or additional exploration programs, should those activities be properly approved, and depending on the outcome of its exploration programs, the Company may also need to issue additional shares.  The Company may also in the future grant to some or all of its directors, officers, insiders and key employee/consultants options, or other rights to acquire  common or preferred shares in the Company as non-cash incentives.  The issuance of any equity securities could cause then-existing stockholders to experience dilution of their ownership interests.

Should the Company issue additional shares in order to finance its business activities , investors’ interests in the Company may be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  As of the date of the filing of this report there are outstanding 7,370,002 common share purchase warrants exercisable into 7,370,002 shares of common stock, 965,702 options granted that are exercisable into 965,702 shares of common stock and 833,333 convertible debentures convertible into 833,333 shares of common stock.  If all of these are exercised or converted, these would represent approximately 29.2% of the Company’s issued and outstanding shares.  If all of the warrants and options are exercised and the underlying shares issued, such issuance would cause a reduction in the proportionate ownership and voting power of all other stockholders.  The dilution may result in a decline in the market price of the Company’s shares.

Conflicts of interest

Certain of the Company’s officers and directors may be or become associated with other businesses, including natural resource companies that acquire interests in properties.  Such associations may give rise to conflicts of interests from time to time.  The Company’s directors are required by law to act honestly and in good faith with a view to the Company’s best interests and to disclose any interest, which they may have in any of the Company’s projects or opportunities.  In general, if a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his interest and abstain from voting on such matter or, if he does vote, his vote will not be counted.

Dependence on Key Management Personnel

The Company’s ability to continue exploration and development activities and to develop a competitive edge in the marketplace depends, in large part, on its ability to attract and maintain qualified key management personnel.  Competition for such personnel is intense, and there can be no assurance that the Company will be able to attract and retain such personnel.  The Company’s development now and in the future will depend on the effort of key management figures such as Lindsay Gorrill, Kelly Stopher David Segelov and Scott Jenkins.  The loss of any of these key people could have a material adverse effect on the Company’s business.  In addition, the Company has expanded the provisions of its stock option plan so the Company can provide incentive for the key personnel.



Page 7 of 50







Failure to obtain additional financing

The Company’s only continuing source of funds is through sales of equity positions received from investors which may not be sufficient to sustain operations.  Any additional funds required would have to come from the issuance of debt or the sale of common stock.  There is no guarantee that funds will be available from either source.  If Star Gold Corp. is unsuccessful in raising additional funds, the Company will not be able to develop its properties and may be unable to continue as a going concern.

Company Chairman, Lindsay Gorrill, and Company President David Segelov own 50.8% of the Company’s outstanding common stock which may cause corporate decisions controlled by Mr. Gorrill and Mr. Segelov to appear to be inconsistent with the interests of other stockholders.

Company Chairman Lindsay Gorrill (41.3%) and Company President David Segelov (9.5.%) control a combined 50.8% of issued and outstanding shares of the Company’s common stock. Accordingly, in accordance with Star Gold Corp.’s Articles of Incorporation and Bylaws, Mr. Gorrill and Mr. Segelov are able to control who is elected to the board of directors. Since Mr. Gorrill and Mr. Segelov are not simply a passive investors but is also two of the Company’s  active executives, their interests as executives may, at times, be adverse to those of passive investors. Where those conflicts exist, stockholders will be dependent upon Mr. Gorrill and Mr. Segelov exercising their fiduciary duties as  members of the Board of Directors and/or an officer. Also, due to their stock ownership position, Mr. Gorrill and Mr. Segelov will have: (i) the ability to control the outcome of most corporate actions requiring stockholder approval, including amendments to the Company’s Articles of Incorporation; and (ii) the ability to control corporate combinations or similar transactions that might benefit minority stockholders which may be rejected by Mr. Gorrill and Mr. Segelov to their detriment.

There is substantial risk that no commercially viable mineral deposits will be found due to speculative nature of mineral exploration,

Exploration for commercially viable mineral deposits is a speculative venture involving substantial risk. Star Gold cannot provide investors with assurance that its mining claim contains commercially viable mineral deposits. The exploration program that the Company will conduct on its claim may not result in the discovery of commercial viable mineral deposits. Problems such as unusual and unexpected rock formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, the Company may be unable to complete its business plan and investors could lose their entire investment.

Due to the inherent dangers involved in mineral exploration, there is a risk that the Company may incur liability or damages as it conducts its business.

The search for minerals involves numerous hazards. As a result, Star Gold Corp. may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which the Company cannot insure or against which we may elect not to insure. Star Gold Corp. currently has no such insurance nor does the Company expect to acquire such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed the Company’s asset value and cause management to liquidate all of the Company’s assets resulting in the loss of a stockholder’s entire investment.

Exploration efforts may be adversely affected by metals price volatility causing the Company to cease exploration efforts.

The company has no earnings.  However, the success of any exploration effort is derived from the price of metal prices that are affected by numerous factors including:  1) expectations for inflation; 2) investor speculative activities: 3) relative exchange rate of the U.S. dollar to other currencies; 4) global and regional demand and production; 5) global and regional political and economic conditions; and 6) production costs in major producing regions.  These factors are beyond the Company’s control and are impossible for the Company to accurately predict.

There is no guarantee that current favorable prices for metals and other commodities will be sustained.  If the market prices for these commodities fall the Company may temporarily suspend or cease exploration efforts.

Governmental regulation and environmental risks

The Company’s business is subject to extensive federal, state and local laws and regulations governing mining exploration, development, production, labor standards, occupational health, waste disposal, use of toxic substances, environmental regulations,



Page 8 of 50







mine safety and other matters.  New legislation and regulations may be adopted at any time that results in additional operating expense, capital expenditures or restrictions and delays in the exploration, mining, production or development of its properties.

Internal control, fraud detection and financial reporting

Should the Company fail to maintain an effective system of internal controls, it may not be able to detect fraud or report financial results accurately, which could harm the business and could be subject to regulatory scrutiny.  

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), the Company is required to perform an evaluation of its internal controls over financial reporting.  The Company is required to have an independent registered public accounting firm test and evaluate the design and operating effectiveness of such internal controls and publicly attest to such evaluation.  Continuing compliance with the requirements of Section 4040 is expected to be expensive and time-consuming.  If the independent registered public accounting firm cannot attest to management’s evaluation, the Company could be subject to regulatory scrutiny and a loss of public confidence in the Company’s internal controls.  In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause the Company to fail to meet its reporting obligations.

Risks Associated with the Company’s Common Stock

Star Gold Corp. stock is a penny stock; stockholders will be more limited in their ability to sell their stock.

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

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

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

(a)

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

 

 

(b)

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

 

 

(c)

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

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

The Company’s stock price has been volatile and stockholder investment in the Company’s common stock could suffer a decline in value.

The Company’s common stock is quoted on the OTC Bulletin Board.  The market price of the Company’s common stock may fluctuate significantly in response to a number of factors, some of which are beyond the Company’s control.  These factors include price fluctuations of precious metals, government regulations, disputes regarding mining claims, broad stock market fluctuations and economic conditions in the United States.  



Page 9 of 50







Although the Company’s common stock is currently quoted on the OTC Bulletin Board, there are no assurances any public market for the Company’s common stock will continue.  There are also no assurances as to the depth or liquidity of any such market or the prices at which holders may be able to sell the shares.  An investment in these shares may be totally illiquid and investors may not be able to liquidate their investment readily or at all when they need or desire to sell.

The Company does not intend to pay any dividends on shares of common stock in the near future.

The Company does not currently anticipate declaring and paying dividends to its stockholders in the near future, and any future decision as to the payment of dividends will be at the discretion of the board of directors and will depend upon the Company’s earnings, financial position, capital requirements, plans for expansion and such other factors as the board of directors deems relevant.  It is the Company’s intention to apply net earnings, if any, in the foreseeable future to finance the growth and development of the business.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None

ITEM 2.

 PROPERTIES.

The Company subleases office space at 611 E. Sherman Avenue,  Coeur d'Alene, Idaho,  83815 for $1500 per month from Marlin Property Management, LLC, an entity owned by the spouse of the Company's Chairman of the Board,  Lindsay Gorrill.  The Company believes this office space and facilities are sufficient to meet the Company's present needs, and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to the Company.  

The Company currently does not own any real property.   The Company owns a vehicle for business use in Nevada.

THE EXCALIBUR PROPERTY

On April 11, 2008, Star Gold Corp. executed a property purchase agreement (the "Excalibur Agreement") with MinQuest, Inc. ("MinQuest") granting the Company the right to acquire up to 100% of the mining interests within the Excalibur Property, a mineral exploration property. The property is located in Mineral County Nevada and the Excalibur Agreement originally covered 8 unpatented mining claims. On June 18, 2009, the Company and MinQuest entered into an amending agreement to add an additional 42 claims and expanding the total to 50 claims.

The Company has completed an initial exploration program on the Excalibur Property, which included Geological Mapping, Rock Sampling and Assaying.  Based on this analysis we have decided to move forward with the permitting of this property and associated drilling program.  The permitting was completed in June 2010 and the drilling program commenced the week of June 20, 2010.

The Company has plans to commence additional exploration and drilling at the Excalibur Property during August 2012.

History: The Moho vein, located within the Excalibur Property, was discovered in 1903 and mined intermittently until the 1930’s.  According to the US Bureau of Mines IC 6941 written in 1937, the property produced over $100,000 of ore at an average grade of 1 opt gold, 6.5 opt silver and 1.4% lead. This equates to about 5000 tons of hand sorted ore. The report also states that an additional 250,000 tons of ore were blocked out which average approximately 8.5 ppm gold over 3.2 feet of width. After 1937 additional work was completed along the northern portion of the property. However, no additional production information is available for the property. The property went into foreclosure around 1984 and was held by the lender until 2006 when Tesoro Resources purchased the property. Although there is significant underground work and numerous trenches along strike of the mineralized zones, no apparent drilling was found within Tesoro’s property during this investigation. In 1991 Dennis Flagle discovered the Excalibur area. He leased the project to Alta Gold in 1996. The project is located approximately 3000 feet northeast of the Moho mine.

Alta staked an additional 120 claims south and east of Flagle’s original Excalibur claims. Alta reportedly conducted minimal geology, a soil sampling program and completed eleven RC drill holes from 1997 to 1998. Although this data is not currently available, it has been offered for sale by Mr. Flagle. Mr Flagle reports that some “highly” anomalous gold was encountered in two or more of the drill holes. Alta Gold went into receivership in 1998 and the property reverted to the lessor. The claims were abandoned shortly thereafter. MinQuest acquired the ground through staking of eight unpatented mining claims in 2004 and leased the project to Star Gold in 2007.



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Since that time an additional 46 claims have been added, 175 rock chip samples have been collected throughout the property and a geologic map with structure, alteration and cultural features has been completed.

Geology: Outcrops within the project boundary have been mapped as Permian Mina Formation to recent alluvial fill.  The oldest apparent unit outcropping in the area is at least partially of Permian age known as the Mina Formation. It has been age dated by K-Ar dates of detrital hornblende and by fossil fusulinids. The Formation is composed of silty to sandy shale and greywacke. Graded bedding and turbidity structures were noted in the field and were useful in identifying the upside of steeply dipping beds. This unit is green to gray grading from sands to feldspathic mudstone. Massive units are green in color and probably derived from a basic volcanic component. This unit is at least 600 feet thick based on mapping within the project area. The middle unit is composed of tuff with a pumice-rich basal layer. This unit is distinctive and can be used as a top-set indicator since bedding and sag structures in shale are generally destroyed by alteration. This unit is rather thin from a few feet to 20 feet thick. The upper unit is composed of massive to laminated gray to red-brown chert. It may be up to 200 feet thick in some places. However, this unit may be thickened by folding and faulting where mapped. The Mina Formation has been intruded by a Cretaceous quartz-eye granite porphyry stock on the south end of the project. This porphyry ranges from 89 to 93 Ma. The sediment contact is metamorphosed to slate and bleached quartzite. Feldspathic diorite plugs intrude the north and central portion of the property. The diorite has distinctive feldspar laths, often encased in another feldspar. These plugs may be lower Miocene in age correlating with other feldspathic diorite bodies elsewhere in the range. The age dates for similar plugs in the area range from 15 to 22 Ma. Fractionated mafic dikes or sills are probably related to the feldspathic diorite plugs. The dikes or sills utilize fault planes for emplacement. Most of the mineralization occurs during this phase and strongly affects adjacent slate, meta-tuff. Mild alteration effects are also noted within the quartz porphyry. The dikes are generally bleached and altered to clay suggesting mineralizing fluids are related to this event or at least provided plumbing for later hydrothermal fluids. A late stage leucocratic dike swarm parallels the main northwesterly trending valley bisecting the project. This dike swarm cuts all rock types and appears to be the youngest rock formation within the project boundary. No age dates are known for this unit.

Mineralization: Mineralization appears to be related to the mafic dikes and portions of the feldspathic diorite contacts. These intrusive events appear to have acted as conduits for hydrothermal fluids to migrate upwards and deposit minerals. Prospecting preferentially occurs along the diorite contact near the south-central portion of the claims, along the Moho “Vein”, and along altered mafic dikes and plugs identified elsewhere on the property. There are three distinct types of breccias related to historic prospecting activities. The first breccia type occurs along fault zones that contain zones of rubble up to 10 feet thick flanked by bright orange to red iron oxide staining. A second breccia type is represented by chert fragments cemented by chalcedonic silica. The third type of breccia is related to narrow calcite-filled fault zones and associated weak hematite staining resulting in pink calcite and breccia float trails which are poorly exposed. The bulk of the historic prospecting occurs along multiple, continuous, en echelon zones from 0.5 to 10 feet thick composed of hematite and sparcemented pebble breccias. These breccias wind through the faults zones and can be discontinuous and in discordant orientations. The zones are sometimes 'slaggy' specifically near diorite and mafic dike contacts. The Moho mine and parallel zones are 6 strongly associated with the diorite contact and along mafic dikes. The Moho “Veins” have been prospected to depths of 200 feet or more by multiple shafts and adits. The entire Moho “Vein” zone can be traced for over 7500 feet in length, 600 feet in width and over 1000 feet in elevation. The Central Target is represented by the extension of the Moho that lies within the current claim position can be traced for over 1800 feet before it is lost under alluvial debris. Samples along this extension range from 0.8 to 7 g/t gold and 6 to 90 g/t silver. The workings are less extensive on Star Gold’s claim position. However, the low angle deposition of the mineralization coupled with multiple stacked veins indicates potential for either open pit or underground mining. Recent sampling and mapping have identified alteration consisting of silicified and brecciated zones with associated anomalous gold and silver concentrations. These alteration zones are located within the southern and northeastern portions of the property.


The Southern target is defined by an area roughly 1200 by 1500 feet composed of chert fragments cemented with chalcedonic silica. In places, later fault zones cut this material. The later faults contain clay gouge probably related to the aforementioned dikes and iron oxides. Gold values can be as high as 3 g/t, but are generally in the 0.1 to 0.8 g/t range. Silver values range from 3 to 80 g/t. The Northeastern target is hosted within brecciated chert and silicified diorite. Barite veins have been noted locally. Gold values range from 0.1 to 1.5 g/t and average 0.7 g/t while silver values can reach 10 g/t. This area was soil sampled by Alta Gold in 1997 and reportedly contained gold to 3 g/t in soils and 8 g/t in select rock chips. In 1998 Alta drilled five holes to test this target. The hole collars were poorly selected and proved to be too far from the target. Three holes failed to intersect any alteration while two holes were lost as they entered the mineralized zone. The area of anomalous gold is roughly 2500 feet by 900 feet. A target was also identified in the northwestern corner of the property. Samples collected from this area range from 0.8 to 14 g/t gold and 3 to 90 g/t silver from various pits and shafts. To date, this area appears to represent narrow, discontinuous structures hosted by a diorite plug. The target is currently considered too small and will need more work to bring it to a potential drill target.





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THE LONGSTREET PROPERTY

In January of 2010 Star Gold signed an option agreement to lease with an option to acquire from MinQuest, 60 unpatented mining claims (the “Longstreet Property”) totaling approximately 490 hectares (the “Longstreet Agreement”). The Company is currently going through the permitting stage to allow it to commence drilling.


The terms of the Longstreet Agreement call for an initial cash payment of $20,000, issuance of 25,000 shares of Star Gold shares and 25,000 stock options based on “fair market price” to MinQuest.  The Longstreet Agreement also requires cash payments totaling $250,000 over seven years and the issuance of 175,000 shares and 175,000 stock options based on “fair market price” over the same seven-year period.  The Company has agreed to work commitments of $3,550,000 over seven years.  Following the seventh anniversary of the agreement and if commitments have been met Star Gold shall receive a quitclaim deed for a 100% interest in the Longstreet Property in consideration of an ongoing 3% NSR to MinQuest.


The Longstreet project is located 48 kilometers southeast of the Round Mountain Mine in Nevada.  Longstreet is a Round Mountain style volcanic-hosted gold deposit. Previous work on the property has defined a resource of +100,000 ounces of gold equivalent within the “Main” target which is open-ended. Main received the bulk of the drilling done on the property. The first vein mapping program ever done at Longstreet was completed in October, 2002. This work disclosed that gold-bearing veins at Main, as well as 6 other targets in the project area are steeply dipping. Most of the previous drilling was vertical. This indicates high potential to increase continuity, tonnage and grade of the resource. Surface geochemical sampling of veins from all the currently defined targets found gold values up to 18.1 g/t.  As at Round Mountain the property contains strong potential for both open pit heap-leachable and high-grade millable ore.


The property is located 275 kilometers north-northwest of Las Vegas in Nye County, Nevada and 48 kilometers southeast of the Round Mountain Mine, which has produced 10 million ounces of gold to date.  Located on U.S. Forest Service lands, the property is held via 60 unpatented mining claims and 5 unpatented claims on private land totaling approximately 4.9 km2. These claims cover part of the deep potential at Main and the NE Main target.


History:  The Longstreet Property was discovered in the early 1900’s, but had limited development work until 1929.  A 1929 report and maps show development of the “Golden Lion Mine” on two levels spaced 75 meters apart vertically.  The report indicates development of 300,000 tons of “vein material” averaging 0.20 oz/ton (6.8 g/t) gold and 8 oz/ton (274 g/t) silver.  A mill was constructed, the remnants of which are still on the property.  However, the small stopes underground indicate very little mining was done and the operation was abandoned.


The property lay idle until 1980 when Keradamex Inc. and E & B Exploration formed a joint venture to explore the property.  The venture conducted soil and rock chip geochemical surveys, limited underground sampling and drilled seven (one was abandoned) angle core holes into the Main mine workings area.  This drilling revealed the presence of fracture related gold mineralization up to 36 meters thick extending into the hanging wall of the vein structure.  Gold mineralization within this zone averaged 0.02- 0.528 oz/ton (0.7-18.1 g/t) and revealed the presence of a heap leachable target.  In 1982 Minerva Exploration optioned the property and initiated an underground sampling program.  In 1983 a joint venture was formed with Geomex Canada Resources Ltd. Derry, Michener, and Booth were commissioned to assess the property and conducted underground sampling, bulk sampling and metallurgical testing. 


Historic Drilling Summary

 

 

 

 

 

 

 

Date

Company

 

 

 

 

Number of Holes

 

Total Footage

1980

Keradamex

 

 

                              7

 

 NA

1982-1983

Minerva

 

                             -   

 

 UG Sampling, no drilling

1984-1997

Naneco

 

 

 Approx 500

 

 NA, RC and air track

1987

Cyprus

 

 

                              7

 

                       3,000

2002-2005

R.E.M.

 

 

                            30

 

                     11,000


In 1982 Minerva Exploration optioned the property and initiated an underground sampling program.  In 1983 a joint venture was formed with Geomex Canada Resources Ltd. Derry, Michener, and Booth were commissioned to assess the property and conducted underground sampling, bulk sampling and metallurgical testing.  


In early 1984 Naneco Resources Ltd., an Alberta company, acquired all of the assets of Minerva and an additional 10 percent interest in the property from Geomex.  As operator, Naneco immediately initiated drilling.  In 1985, with over 200 RC holes drilled the venture announced its drilling samples averaged 0.079 oz/ton (2.7 g/t) gold and 1.1 oz/ton (38 g/t) silver on the high end grade along



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with an additional low grade average of  0.021 oz/ton (0.72 g/t) gold and 0.4 oz/ton (14 g/t) silver. 


During the next few years Naneco increased its interest from 53 percent to 100 percent, conducted additional metallurgy, economic evaluation and drilling.  At least 492 RC holes have been drilled, most within the Main resource area.  Unable to raise money because of falling gold prices and strapped with high land payments to the claim owners, Naneco dropped the property in 1998.  MinQuest acquired it shortly thereafter. The Cyprus target, which was evaluated by Cyprus Minerals Company in 1987 was acquired by MinQuest in early 2002.


The property was optioned to Rare Earth Metals Corp. (REM) in May of 2002. REM later changed its name to Harvest Gold. Mapping and geochemical sampling of the 7 targets shown on the attached map was completed in October, 2002. From 2003 through 2005 REM drilled 30 holes into Main totaling 3,350 meters. The drill holes were angled toward the intersection of the two primary sheeted vein sets. Results showed a 20% improvement in average grade over vertical drilling.


When REM split into Harvest Gold and VMS Ventures Inc. all of the attention and funding went to VMS and Harvest did no additional work at Longstreet from late 2005 to the present. After continuing protests from MinQuest the property was finally returned in August, 2009. By agreement with Minquest, Star Gold Corp. received an option to acquire the property on January 15, 2010.


Regional Geology and Mineralization: The Longstreet Property is located in the Nevada portion of the Basin and Range Province. This geological province is characterized by repeated episodes of compressional deformation in Paleozoic and Mesozoic time followed by extensional deformation and extensive magmatism and volcanism in Cenozoic time. Gold deposits are most often described as being associated with ‘mineralization trends’, that are a reflection of deep crustal structures and magmatism, such as the ‘Walkers Lane’ and the ‘Carlin Trend’. The Longstreet Project is located in the Monitor Range, adjacent to the northwest trending Walker Lane volcanic-hosted gold trend that includes such world-class deposits as the Comstock and Goldfields mining camps (Figure 1).



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The Monitor Range is a westward-tilted fault block that has been elevated by normal faults along its eastern front, and is typical of the uplifted mountains of the Basin and Range Province. The ranges are topographic highs rising above alluvium-filled valleys generated by Tertiary extensional tectonics. Central Nevada was an area of intense Oligocene – Miocene ash-flow volcanism that created numerous calderas and their outflow products. At least 13 calderas that range in age between 32 and 22 Ma have been mapped or interpreted in the area extending from the Shoshone Mountains eastward to the Monitor Range.  The southern Monitor Range consists Mainly of Tertiary age volcanics and hypabyssal rocks related to the eruption of the Big Ten Peak volcano and a nearby unnamed 29 Ma caldera (Kleinhampl and Ziony, 1985) intruding and overlying Paleozoic sedimentary and metamorphic rocks.



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The Paleozoic rocks are thrust-faulted marine sedimentary rocks comprised of quartzite, argillite and limestone of Cambrian, Ordovician and Silurian age. Minor amounts of Permian marine sediments are also present in the Georges Canyon area.

 

In the southern Monitor Range Tertiary age volcanic rocks comprise more than 90% of the exposed bedrock. These rocks are more than 1 km thick and are predominantly flat-lying. Early Oligocene to early Miocene rhyolitic to dacitic ash-flow tuffs, with rhyolitic welded tuff are the thickest and most extensive units. Most of the Tertiary intrusions in the region are rhyolitic, but several small dacitic to andesitic dikes are present in the Georges Canyon area.


Mineral deposits in this part of the Basin and Range Province are varied and widespread and some of them have (had) substantial metal production. The producing Round Mountain gold deposit is about 25 miles northwest, and the past-producing Manhattan Mining Camp (gold/silver) is about 20 miles west-northwest of the Longstreet Property.

 

The Round Mountain Mine is a giant among epithermal precious metal deposits hosted by volcanic rocks, and the mineralization is a classic example of low sulphidation epithermal gold mineralization (White and Hedenquist, 1995). Gold deposits were discovered at Round Mountain in 1906 (Shawe, 1982) and by 1959 about 410 thousand ounces (troy ounces) of gold had been produced from placer and narrow vein lode deposits. Current production by open-pit mining methods commenced in 1977. Kinross (2010) reported an annual production for 2010 at 184,554 ounces of AuEq, with over 66 million tons of proven and probable reserves.


The oxidized ore is described as a closely spaced set of steeply dipping veins and veinlets following northwest-trending faults and associated joints over broad areas. Significant gold mineralization is not found in northeast-trending faults and fractures. The vein/veinlet system contains quartz, adularia, limonite (oxidized from pyrite), manganese oxide and associated native free gold. Flat veins are similar to the steep veins in character and mineral content, but with more brecciation of the wall rocks. Gold contents also appear to be higher in the flat veins. The adularia in the ore related veins is dated at 25.9 to 26.6 Ma, which is indistinguishable from the age of the enclosing ‘Tuffs of Round Mountain’ welded ash flow tuffs. These tuffs were erupted from the Round Mountain caldera and were deposited within the caldera (Henry, Castor and Elson, 1996).


Hydrothermal alteration associated with the bulk mineable ore is evidenced by silicification and the replacement of magmatic feldspar by hydrothermal feldspar engendered by a potassium-rich hydrothermal fluid (Sander, 1988).


The Manhattan gold / silver camp is located approximately 20 miles west-northwest of the Longstreet Mine and is an example of Tertiary epithermal mineralization superimposed on Paleozoic sedimentary rocks. Gold / silver deposits were discovered at Manhattan in 1905 (Shawe, 1982) and by 1959 about 10,500 kg of gold and 4,400 kg of silver had been produced from placer and lode deposits. The lode deposits in the Manhattan district are of a variety of types, although they occur together in a coherent belt about 1 km wide, which follows the south side of the Manhattan caldera for about 10 km. The most productive deposits formed in strongly faulted argillite and quartzite of the Cambrian age Gold Hill Formation. The generally north-trending zones of mineralized fractures are stockworks containing quartz, adularia, pyrite (oxidized to limonite) and native gold similar to the sheeted zones at Round Mountain. The silver production recorded for this camp is related to electrum and various silver-bearing sulphosalts.


The Clipper Mine located approximately 5 miles southwest of the Longstreet Mine near Murphy Camp was discovered in 1903 and was worked intermittently until 1943. The mine was initially developed during World War I and included a 175 foot shaft and a 370 foot adit. Recorded production is about $12,000 (in 1951dollars) from mineralization having a gold to silver ratio of 1:1 and assaying from $34-124 per ton (1951 dollars). Host rocks are welded rhyolite ash-flow tuffs similar to the Longstreet mine.  The Little Joe Claim located 6 miles south-southwest of the Longstreet Mine was developed by a 75 foot inclined shaft. Gold-bearing veins in ‘rhyolitic tuff’ were mined but production details are lacking.


At an un-named mine, located 1.5 miles west of the mouth of Georges Canyon irregular gold / silver quartz veins and veinlets containing minor pyrite were exploited from a 25 foot inclined shaft. The vein system occurs in possible Paleozoic light gray chert and silicified argillite along a fault. No production details are available.

 

Mineralization on the Last Chance claims located 11 miles west-northwest of the Longstreet Mine and southwest of Big Ten Peak was discovered in the 1920s. Mineralization consists of argentiferous galena, minor sphalerite and pyrite occurring in irregular pipes and chimneys generally at the intersection of cross faults within a northwest-trending shear zone in pre-Tertiary rocks. This property was developed by a 30 m two compartment shaft and a 61 m adit. Production in the late 1920s is recorded as 13.6 tons containing an average of 720 g/t Ag, 21% Pb and 2% Zn. A further 18.1 tons produced in 1938 contained 240-275 g/t Ag and 8% Pb.




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Metallurgy:  Kappes, Cassiday and Associates composited numerous oxide drill intercept cuttings and conducted bottle roll tests on 10 samples.  Average results for -10 mesh samples were 85.4 percent gold and 37.9 percent silver recovery in 72 hours.  Chemical consumption was normal.  KCA then conducted column tests on three samples to test low, medium and high grade ore from underground.  After crushing to -3/4 inch the samples averaged 82 percent gold and 29 percent silver recovery.  Crushing to -6 mesh increased recovery to 93 percent for gold and 52 percent for silver.  KCA also conducted agitated cyanide tests on pulverized material and obtained 92 percent gold and 81 percent silver recovery.  These are the recoveries expected in a conventional mill.

Column leach tests were also done by Bacon-Donaldson on -2 inch material.  Recoveries varied from 85-90 percent for gold and 9-28 percent for silver, with underground samples being more susceptible to leaching than surface samples.  It appears the oxide zone of the Main deposit has reasonable leaching characteristics although silver recovery is poor.

Property Geology:  Geologic mapping by MinQuest since 2002 indicates that the majority of the Longstreet Project is underlain by moderately to poorly welded rhyolite ash-flow tuff (‘Tat’) containing conspicuous exotic lithic fragments and pumice (Figures 5, 7, 8 and 9). The ash-flow tuff unit is buff to gray, and contains <10% quartz phenocrysts, 15% feldspar phenocrysts, 5-15% pumice and 5-20% other exotic fragments in an aphanitic groundmass (Liedtke, 1984). Hydrothermal alteration is prevalent and consists of argillic (bleaching and clay mineral development), silicic (pervasive silica flooding, or extremely high veinlet density) and potassic (adularia in quartz veinlets). Limonite and geothite development is considered to be weathering phenomena. These felsic ash-flow tuffs of Oligocene age are similar in age and character to the ‘tuffs of Round Mountain’, which host the Round Mountain Mine.


The Tat tuff unit (see Figures 7, 8 and 9) displays horizontal bedding and may be in the order of 3,000 feet thick. The ash-flow tuff is intruded by rhyolite porphyry dykes (‘Trp’) exhibiting various orientations, and may represent feeder conduits to now-eroded rhyolitic lithologies higher in the stratigraphy.


A thin discontinuous unit of volcaniclastic and siliceous sediments (‘Ts’), including sinter is deposited upon the ash-flow tuff unit. The unit is white, yellowish and light gray, bedded in part and probably represents a hiatus in volcanism. Siliceous alteration resulting in the development of sheeted quartz vein systems affects the Tat, Ts and Trp rock units.


Overlying the Tat tuff and the Ts sediments is a black to brown strongly welded ash-flow tuff (‘Trt’) that forms bluffs and caps ridges. This unit has a distinctive thin (about 10 feet) vitrophyre zone near its base. This unit is estimated to be 300 to 450 feet thick and possibly a correlative of the Saulsbury Wash Formation (21.6 +/- 0.6 Ma).


The tectonic fabric on the Longstreet Project includes two Main directions of faulting/fracturing that have an influence on the mineralization. An east-trending steeply north-dipping system of fractures and faults has been noted at five of the seven gold / silver zones on the Property (see Figure 6). Quartz –adularia – limonite veins / veinlets and ‘rusty fractures’ following this trend contain gold mineralization. The other important gold / silver-bearing fault/fracture direction is 300-330° with steep north dips, and is characterized by sheeted quartz veins / veinlets and ‘rusty fractures’. The vein / veinlets also contain adularia and iron oxide minerals derived from the oxidation of sulfide minerals. This mineralized trend occurs at all seven of the gold / silver zones known on the Longstreet Project. Major displacement is not a feature of these structures.


The Longstreet project is an example of gold / silver mineralization related to east-trending structures. An east-tending fault dipping 40-55° is associated with the highest-grade gold / silver mineralization known to date. The bulk of the gold / silver mineralization in the Longstreet Mine is contained in steeply dipping multiple vein sets in the hanging wall of the fault.


Liedtke (1984) indicates that similar fault directions are known 4,600 feet south and 2,800 feet north of the Longstreet Mine, which may host similar high-grade gold / silver mineralization.

Targets:  A short description of the 7 currently identified drilling targets at Longstreet follows:

Main- The target consists of intersecting high-angle NW and E-W sheeted vein systems. Completion of an angle drilling program to the southwest perpendicular to the intersection of the two vein sets will continue to produce improved continuity and higher tonnage and grade.  Un-drilled extensions of this mineralization are indicated to the southeast and west.

NE Main: Approximately 450m N-NE of the Main resource there is a poorly-exposed, un-drilled target that looks identical to Main. The highest surface vein assay here is 0.93 ppm gold. 

Opal Ridge: This is an erosional remnant of a sinter apron that once covered a much larger area. Extensions of the Main resource are



Page 16 of 50







down-dropped approximately 60m with an apparent displacement to the north of less than 10m. E-W and NW high level opal-rich veins are exposed in the lower portion of the apron with gold values up to 0.51 ppm. Although there may be a higher stripping ratio here, more of the deposit may be preserved.

North: This is a sheeted vein system with identical vein attitudes to Main. Values up to 18.1 ppm Au indicate a strong system, although vein density appears to be less than at Main. The western end of the target has the strongest exposed mineralization.

Cyprus Ridge Zone: Quartz veins up to 5 m thick occur in this 1.1 km long northwest trending sheeted vein system.  Cyprus Minerals Company completed a 920 m drill program in 1987.  All of the Cyprus holes were vertical or high angle and none tested the large primary vein set. No high-grade gold was intersected in their drilling. MinQuest mapped the intricate vein system in 2002, and collected 41 surface samples that contained values of up to 11.16 g/t Au, but average values are approximately 0.50 g/t.  Due to the abundance of low temperature silica, MinQuest concluded that the gold values are leakage anomalies from a deeper boiling zone.  The boiling zone is a high priority drill target.

Red Knob Zone: Mineralization outcrops as northwest trending sheeted quartz-adularia veins over an area 150m wide by 300m long. Surface sampling found values up to 2.97 g/t gold. In addition, a boulder field on the north side of the target contains quartz-adularia veins up to 1m in thickness in an area of no outcrop.  Drill intercepts from two holes testing a small portion of the target include 4.6 m @ 5.6 g/t Au and 7.6 m @ 0.99 g/t Au.

Spire: This is an E-W vertical to steeply north dipping sheeted vein system. Intersecting NW  trending veins are present, but are much less abundant than at Main. The highest assay from Spire is 0.45 ppm gold.

There is a strong possibility of discovering two or more economic, open pitable, heap leachable, deposits grading +0.06 oz/ton (+2.1 g/t) gold with significant silver credits at Longstreet.  In addition, the Cyprus target, has strong potential of becoming a high-grade +0.5 oz/ton (+17.1 g/t) underground mine.  Situated on a high ridge-top, it could be easily mined from a canyon elevation adit.


THE JET PROPERTY


On July 7, 2010 the Company acquired, from MinQuest, a 100% mining interest in the Jet Property which is located in Nevada.  The Jet Agreement calls for the Company to invest a total of $110,000 (consisting of $40,000 in direct payments to MinQuest and $70,000 in expenditures towards development of the project) prior to July 7, 2017,  Under the agreement MinQuest is also entitled to receive residual payments if and when the project enters into production.


Location: The Jet Property is located between the Palmetto Mountains south of Silver Peak in Esmeralda County, Nevada about 300 kilometers northwest of Las Vegas.  Goldfield, a 5.0 million ounce gold producer is 40 kilometers to the east. Access to the property is by 15 kilometers of good gravel road from Silver Peak.


Land Status: Star Gold holds the Jet Property via unpatented mining claims on BLM federal lands.  MinQuest controls all claims that cover known targets within the Jet Property.       


History: Several short adits were developed in the area in the 1920’s and1930’s.  Three of the four adits found are open to inspection. There is no evidence of any production from this work. The property lay idle until 1974 when Lyle Cambell, working on a grubstake agreement with American Selco, sampled and recommended it for acquisition. Cambell’s dump sampling averaged 2.0 g/t Au with a few grab samples assaying as high as 22 g/t.  American Selco sampled the underground working and developed a small reserve, according to Herb Duerr, who was one of the samplers. According to Duerr, some high grade values were found in brecciated quartz veins. MinQuest does not have this data, but sample tags are still present in the adits inspected.


Geology: Regionally, the Jet property is located within the Walker Lane, which hosts important precious metal deposits such as Bullfrog, Goldfield and Tonopah.  The project area is underlain largely by chert, argillite and lessor limestone of the Ordovician age Palmetto formation that has been intruded by a large intermediate intrusive. The contact zone between the intrusive and sediment is a brecciated zone that strikes nearly east-west. Several apparently gently dipping quartz veins have been emplaced within this contact zone and then breccciated by further faulting. Post-mineral dikes, following late high angle faults are also present. Tertiary extrusive volcanics cover part of the surrounding area.   The area has been partially buried by material eroded from higher topography to the south.  One adit, near the base of the contact zone, intersects chacopyrite-bearing quartz that looks similar to high-grade gold ores in the Silver Peak district to the north. Sampling of quartz from the adits and dumps found significant gold values (up to 10.7 g/t) associated with the vein quartz.



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Targets: Initial inspection of underground workings at Jet indicates that the workings are largely accessible and should be systematically mapped and sampled. It currently appears that several veins occur in a contact breccia zone that is greater than 15 meters thick and gently dipping.  Establishment of the attitude of this contact zone and confirmation of the grades found by American Selco could quickly produce a drill target. No drilling has been done on the property.

ITEM 3.                    LEGAL PROCEEDINGS.

Star Gold Corp. is not a party to any material legal proceedings and, to management’s knowledge, no such proceedings are threatened or contemplated.

ITEM 4. 

MINE SAFETY DISCLOSURES

Star Gold Corp. considers health, safety and environmental stewardship to be a core value for the Company.


Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities with respect to mining operations and properties in the United States that are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”).  During the year ended April 30, 2012, the Company’s exploration properties were not subject to regulation by the MSHA under the Mine Act.  

PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

General

Star Gold Corp. authorized capital stock consists of 300,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of July 30, 2012, there were 22,184,134 shares of Star Gold Corp. common stock issued and outstanding. The Company has not issued any shares of preferred stock.

Market Information

The Company’s shares became eligible for quotation on the OTC Bulletin Board in April, 2007 and are quoted under the symbol “SRGZ.”  The high and low bid information for the Company's common stock for the year ended April 30, 2012 and 2011 is:

 

Year

Quarter

 

 

HIGH ($)

 

LOW ($)(1)

 

2012

First quarter ending July 31, 2011

 

$

0.25

$

0.06

 

 

Second quarter ending October 31, 2011

 

 

0.09

 

0.04

 

 

Third quarter ending January 31, 2012

 

 

0.15

 

0.02

 

 

Fourth Quarter ending April 30, 2012

 

 

2.00

 

0.10

 

 

 

 

 

 

 

 

 

2011

First quarter ending July 31, 2010

 

$

0.51

$

0.08

 

 

Second quarter ending October 31, 2010

 

 

0.82

 

0.16

 

 

Third quarter ending January 31, 2011

 

 

0.80

 

0.74

 

 

Fourth quarter ending April 30, 2011

 

 

0.33

 

0.29

 

 

 

 

 

 

 

 

(1)

Effective February 2, 2012, the Company’s common stock was split on a 1:6 basis, such that shareholders received one new

share in exchange for every six old shares held on the record date of November 30, 2011.  Stock prices subsequent to the   effective date reflect this split.




Page 18 of 50







Quotations provided by the OTC Bulletin Board reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions

At July 30, 2012 the price per share quoted on the OTCBB was $0.51.

Transfer Agent:

The independent stock transfer agent for Star Gold Corp. is Holladay Stock Transfer located at 2939 N 67th Place, Suite C, Scottsdale, AZ  85251.

Dividends

The Company has not declared any dividends on its common stock since inception. There are no dividend restrictions that limit the Company's ability to pay dividends on common stock in its Articles of Incorporation or Bylaws. The Corporation's governing statute, Chapter 78 – “Private Corporations” of the Nevada Revised Statutes (the “NRS”), does provide limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

 (a)

the Company would not be able to pay its debts as they become due in the usual course of business; or

 

 

(b)

the Company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by our Articles of Incorporation).

Securities Authorized For Issuance under Stock Option Plan

On May 25, 2011, the Board of Directors approved a Stock Option Plan.  The Stock Option Plan will be administered by the Board of Directors and provides for the grant of stock options to eligible individuals including directors, executive officers and advisors that that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.

The Stock Option Plan has a maximum percentage of 10% of the Company's outstanding shares that are eligible for the plan pool whereby the number of shares under the Stock Option Plan increase automatically with increases in the total number of outstanding common shares.  This "Evergreen" provision permits the reloading of shares that make up the available pool for the Stock Option Plan, once the options granted have been exercised.  The number of shares available for issuance under the Stock Option Plan automatically increases as the total number of shares outstanding increase, including those shares issued upon exercise of options granted under the Stock Option Plan, which become re-available for grant subsequent to exercise of option grants.  The number of shares subject to the Stock Option Plan and any outstanding awards under the Stock Option Plan will be adjusted appropriately by the Board of Directors if the Company's common stock is affected through a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than quarterly cash dividends) or other distribution, stock split, spin-off or sale of substantially all of the Company's assets.

The Stock Option Plan also has terms and limitations including without limitation that the exercise price for stock options granted under the Stock Option Plan must equal the stock's fair market value, based on the closing price per share of common stock, at the time the stock option is granted.  

On May 30, 2011, the Board of Directors approved a grant of 326,666 options (as adjusted for reverse stock split of February 2, 2012) under the Stock Option Plan to Directors, Executive Officers and other non-employee consultants.  The options have a strike price of $0.90 which approximates the fair market value of the Company's common equity on the date of the grant based on the closing price as quoted by the National Quotation Bureau on the day of grant.  The option certificates will reflect the actual date of the grant.  The Company will recognize stock option expense related to these grants in subsequent periods.

On March 22, 2012, the Board of Directors authorized the grant of 236,667 options (as adjusted for reverse stock split of February 2, 2012) to purchase shares of the Company to various directors, officers and consultants.  The options have a strike price of $0.78 which approximates the fair market value of the Company's common equity on the date of the grant based on the closing price as quoted by



Page 19 of 50







the National Quotation Bureau on the day of grant.  The option certificates will reflect the actual date of the grant.  The Company will recognize stock option expense related to these grants in subsequent periods.

Recent Sales of Unregistered Securities

On November 26, 2010, the Company completed a private placement with one individual to issue 240,000 common shares and 240,000 share purchase warrants at a price of $0.50 per unit. Each unit comprises of one common share and one share purchase warrant. The term of the warrant is for two years, and may be exercised at $0.75 during the first year and $1.00 during the third year. No commissions were paid and no registration rights have been granted.   .  


On or about November 26, 2010 an individual exercised 650,000 share purchase warrants (originally issued in April, 2008) at $0.20 per share.


On November 1, 2010, the Company issued 25,000 shares of its common stock pursuant to the terms of the Longstreet Agreement.  The shares were valued at $0.60 as of the date of the agreement.


On December 18, 2010, the Company issued 25,000 shares of its common stock pursuant to the terms of the Longstreet Agreement.  The shares were valued at $0.28 as of the date of the agreement.


On September 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for investor relation services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On October 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On November 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for investor relation services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On December 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for investor relation services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On January 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for investor relation services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On February 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.96 per share or $22,500, representing the fair value of the shares at the date of grant.


On February 15, 2012, the Company issued five percent (5%) debentures convertible into 9,000,000 shares of the Company’s common stock at the conversion price of $.10 per share.  The debentures were convertible, solely at the option of the Company, within one (1) year of their issuance.


On February 15, 2012 the Company issued common stock purchase warrants exercisable into 9,000,000 shares of the Company’s common stock at the exercise price of $.15 per share.  The warrants expire one (1) year from their issuance.


On March 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.75 per share or $18,750, representing the fair value of the shares at the date of grant.


On March 23, 2012, a holder exercised 1,000,000 common stock purchase warrants at $0.15 per share.


On April 12, 2012, a holder exercised 250,000 common stock purchase warrants at $0.15 per share.


On April 20, 2012, a holder exercised 100,000 common stock purchase warrants at $0.15 per share.



Page 20 of 50







On May 10, 2012, the Company issued 9,000,000 shares of common stock to various debenture holders in satisfaction of common stock payable at April 30, 2012 as discussed in Note 7.  


On May 16, 2012,  an individual exercised 250,000 share purchase warrants at $0.15 per share.


On June 18, 2012 the Company issued five percent (5%) debentures convertible into 833,333 shares of the Company’s common stock at the conversion price of $.30 per share.  The debentures mature on the first anniversary of their issuance and are convertible, prior to maturity, solely at the option of the Company.


On June 18, 2012 the Company issued common stock purchase warrants exercisable into 833,333 shares of the Company’s common stock at the conversion price of $.75 per share.  The warrants expire two years from their original issue date.  


On June 18, 2012, a holder exercised 333,333 common stock purchase warrants at $0.15 per share.

As of April 30, 2012, the Company had a total of 12,018,333 shares outstanding.

During the fiscal year ended April 30, 2012, neither the Company nor any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our common stock, the only class of the Company's equity securities registered pursuant to section 12 of the Exchange Act at the date of this filing.

ITEM 6.   SELECTED FINANCIAL DATA  

Statement of Operations Information:


 

 

 

 

For the Year Ended April 30, 2012

 

For the Year Ended April 30, 2011

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

-

 

$

-

 

Gross profit

 

 

-

 

 

-

 

Total operating expenses

 

 

958,941

 

 

334,913

 

Loss from operations

 

 

(958,941)

 

 

(334,913)

 

Other expense (income)

 

 

(2,424,099)

 

 

(9,947)

 

Net loss

 

$

(3,383,040)

 

$

(344,860)

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding (basic and diluted)

 

 

10,684,249

 

 

10,403,710

 

 

 

 

 

 

 

 

 

Income (loss) per share (basic and diluted)

 

$

(0.32)

 

$

(0.03)

 

 

 

 

 

 

 

 

 


Balance Sheet Information:


 

 

 

 

April 30, 2012

 

April 30, 2011

 

 

 

 

 

 

 

 

 

 

Working capital

 

$

309,642

 

$

(60,888)

 

Total assets

 

 

707,749

 

 

217,719

 

Accumulated deficit

 

 

(4,050,428)

 

 

(667,388)

 

Stockholders' equity (deficit)

 

 

(358,629)

 

 

144,611


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

PLAN OF OPERATION

The Company maintains a corporate office in Coeur d'Alene, Idaho.  This is the primary administrative office for the company and is utilized by Board Chairman Lindsay Gorrill and Chief Financial Officer Kelly Stopher.  



Page 21 of 50







The financial condition of the Company was positive during 2012 and the metals commodity markets were favorable for most of the year.  

The Company's plan of operations for the next twelve months, subject to funding, and the availability of contractors, is as follows:

·

Continue the advanced exploration and pre-development program for the Longstreet Project.  This work may include the following:

·

Initiate up to 10,000 feet of core drilling from the surface to better define the mineralization.

·

Continue to work with potential joint venture or capital partners to advance the project into the next phase of exploration and pre-production goals.

Primary focus of 2012 exploration activities at Longstreet will be to enhance the known and defined resource in the Main Zone, and initiate evaluation of some of the additional higher priority targets.  Auger geochemistry surveys should be conducted on the possible extensions of Main to the east and west. These can be undertaken by project geologist and field technicians already required for the proposed drilling program, and will involve very little additional expense.  Additional angle holes will be needed to finish upgrading the Main deposit and allow all historic vertical holes to be discarded from future resource calculations.


A 2 phase exploration program is proposed for Longstreet in 2012. Phase 1 proposed budget is $378,000, and Phase 2 proposed budget is $547,000. Primary focus of Phase 1 2012 exploration activities at Longstreet will be to enhance the known and defined resource in the Main Zone, upgrade the resource with in-fill and core drilling where needed, add some core holes in the Main Zone for resource verification, and initiate evaluation of some of the additional higher priority targets. Phase 1 proposes 10

to 13 RC holes 300 foot average depth each in the Main Zone (see Figure 17A). These holes will be placed in areas where there are 'holes' in the resource and a high likelihood of adding to the Main resource. In addition, some of these holes will be placed in areas of the resource which currently rely largely on historic drilling, so that the resource may be raised to a higher level of confidence. Phase 1 will also include 4 to 5 core holes of 300-400 foot depths, also within the Main Resource zone. These core holes will also be placed in areas where they a high likelihood of enhancing the resource. Additionally the core will provide confirmation of both recent and historic RC results, and provide material more suitable for metallurgical and petrologic testing. Metallurgical testing is included in Phase 1 in order to better characterize the recovery and economic potential of the Main Zone.


Finally, four RC holes are planned at the North target and one in the Opal Ridge target to test the down-dropped extension of the Main Resource are included in Phase 1. These will be all be angle holes, except the single hole at Opal Ridge. Phase 2 drilling, also scheduled for 2012, is contingent on results of Phase 1.


PROPOSED BUDGET FOR LONGSTREET PROJECT 2012


Phase 1

 

 

RC Drilling

 

   5,000

feet @

$35

per foot

$175,000

(includes sample supplies, survey and assay)

 

Core Drilling

 

1,500

feet @

$100

per foot

150,000

(includes sample supplies, survey and assay)

 

Road building and drill pad construction

5,000

Geologist, technician and supervision

25,000

Surface and underground sampling

(includes supplies and assays)

3,500

Travel and lodging

15,000

Metallurgical testing

 4,500

 

Total proposed Phase 1 budget – Longstreet

$378,000

 

 

 

 

 


The 6500 feet of RC drilling in Phase 2 is contingent on results from Phase 1. If Phase 1 drilling is successful in expanding the Main zone resource beyond the current limits, then a portion of the Phase 2 RC drilling will be aimed at continuing to expand Main zone



Page 22 of 50







mineralization. If any or all of the drilling at North, NE Main or Opal Ridge targets is successful in identifying mineralization, then some portion of Phase 2 RC drilling will be allotted to those areas.


Phase 2

 

 

Phase 2 Core drilling

 

   2,100

feet @

$100

per foot

$210,000

(includes sample supplies, survey and assay)

 

Helicopter support

60,000

Geologist, technician and supervision

20,000

Other support equipment

5,000

Travel and lodging

6,000

Misc. and incidental supplies

3,000

Contingency

16,000

6,500

feet @

$35

per foot

227,500

 

Total proposed Phase 2 Budget for 2012

$547,500

 

 

 

 

 

Based on the recommendations of its consulting geologists, the Company is continuing its exploration program on the Excalibur Property and the Longstreet Property. At April 30, 2012, the Company had $225,940 cash on hand, and working capital of $309,642. As such, the Company will require substantial additional financing in the near future in order to meet current obligations and to continue our operations. Currently, Star Gold Corp. does not have any financing arrangements in place and there are no assurances that it will be able to obtain sufficient financing on terms acceptable to the Company, if at all.

Due to the Company's lack of operating history and its present inability to generate revenues, the Company’s auditors have stated in their audit report included in the audited financial statements for the year ended April 30, 2012 that there currently exists substantial doubt about the Company’s ability to continue as a going concern.

Management believes it can source additional capital in the investment markets in the coming months and years.  The Company  may also consider other sources of funding, including potential mergers or farm-out a portion of its exploration properties.  

Future liquidity and capital requirements depend on many factors including timing, cost and progress of the Company's exploration efforts.  The Company will consider additional public offerings, private placement, mergers or debt instruments.

Additional financing will be required in the future to complete planned exploration projects and expand operations to the production stage.  The Company is unsure whether additional financing will be available at the time needed or on acceptable terms, if at all.  If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions, or be forced to cease operations.  Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims.

RESULTS OF OPERATIONS

 

 

 

For the Year Ended

 

For the Year Ended

 

 

 

April 30, 2012

 

April 30, 2011

REVENUE

 

$

-

$

-

 

 

 

 

 

 

 

 

 

EXPENSE

 

 

 

 

 

 

Mineral exploration and consultants expenses

 

 

314,071

 

169,429

 

Legal and professional fees

 

 

246,844

 

64,187

 

Management and administrative

 

 

390,676

 

98,097

 

Depreciation

 

 

1,350

 

 

 

Directors fees

 

 

6,000

 

3,200

 

Other expenses

 

 

2,424,099

 

9,947



Page 23 of 50










NET LOSS

 

$

3,383,040

$

344,860

 

 

 

 

 

 


 

 

 

 

 

For the Year Ended

 

For the Year Ended

SUMMARY OF GENERAL AND ADMINISTRATIVE EXPENSES

 

 

April 30, 2012

 

April 30, 2011

 

 

 

 

 

 

 

 

 

 

Auto and travel

 

$

57,361

$

7,500

 

General administrative and insurance

 

 

6,884

 

563

 

Management and administrative expense

 

 

118,900

 

70,972

 

Office and computer expense

 

 

17,611

 

8,288

 

Stock-based compensation

 

 

92,000

 

-

 

Stock option expense

 

 

168,126

 

-

 

Rent and lease expense

 

 

19,042

 

7,923

 

Telephone and utilities

 

 

2,752

 

3,152

 

 

Total general and administrative expenses

 

$

390,676

$

98,097

 

 

 

 

 

 


 

 

 

 

 

For the Year Ended

 

For the Year Ended

SUMMARY OF LEGAL AND PROFESSIONAL FEES

 

 

April 30, 2012

 

April 30, 2011

 

 

 

 

 

 

 

 

 

 

Audit and accounting

 

 

29,658

$

7,500

 

Legal and professional fees

 

 

63,953

 

19,415

 

Public company expense

 

 

10,358

 

9,828

 

Investor relations

 

 

142,875

 

24,444

 

 

Total legal and professional fees

 

$

246,844

$

64,187

 

 

 

 

 

 

 

 

 

Results of Operations

The Company has earned no operating revenue in 2012 or 2011 and does not anticipate earning any revenues in the near future. Star Gold Corp. is an exploration stage company and presently is seeking other business opportunities.

Total net loss for 2012 of $3,383,040 increased $3,038,180 over 2011 total net loss of $344,860.  The Company recognized loss on extinguishment of debt of $1,639,575 relative to the conversion of a related parties note payable in exchange for participation in the Company’s February 2012 financing.  Additionally, management determined the embedded conversion feature constituted a beneficial conversion feature resulting in an additional recognition of $754,600 in accretion of debt discount.  Neither the extinguishment of debt nor the accretion of debt discount resulted in a cash expenditure to the company and is recognized on the statement of operations under “other income (expense)”.

Exploration expense for the year end April 30, 2012 was $314,071, an increase of $144,642 over 2011 exploration expense of $169,429 resulting from drilling programs completed at the Longstreet and Excalibur projects and associated consulting fees related to exploration of those properties.  Management expects to continue the Company’s exploration and drilling programs at both Longstreet and Excalibur during the fiscal year ending April 30, 2013 in accordance with minimum spend requirements outlined in Note 4 of the Company’s financial statements.  Consulting and exploration expenses are expected to increase as the Company anticipates a significant drilling program on its Longstreet project during the summer and fall of 2012 (detail in Item 7 – Plan of Operation above).  As well, the Company anticipates additional exploration activities on its Jet property during fiscal year end April 30, 2013.

    

General and administrative expense increased $292,579 to $390,676 compared to 2011 expense of $98,097.  The increase was attributable to direct result stock-based compensation to executives of $92,000, stock option expense of $168,126 and travel expense primarily related to capital-raising activities of $57,361.  Management expects travel expense to remain constant in fiscal year end April 30, 2013.  


During the year ended April 30, 2012, the Company retained Scott Jenkins as Director of Exploration at an annual salary of $60,000.  Mr. Jenkins is domiciled in Tonopah, NV and oversees the Company's exploration and drilling projects at all three property sites. The Company also entered into Executive Compensation agreements with Chairman Lindsay Gorrill, President David Segelov and Chief Financial Officer Kelly Stopher.  Beginning January 1, 2012, those individuals were compensated with shares of the Company's common stock in lieu of cash payments totaling $92,000.  This was charged to management and administrative expense for the year ended April 30, 2012.



Page 24 of 50







Directors fees of $6,000 were expensed in 2012.  The Board added two additional directors during the year, David Segelov and Ian Falconer.  Certain Board members are also compensated on a per diem consulting rate to verify and assess technical information provided by outside consultants.  Those per diem consulting rates are charged to exploration expense as incurred.  

Total legal and professional fees increased $182,657 to $246,844 in 2012 from $64,187 in 2011.  Engaging an investment relations firm to assist in raising awareness and increasing liquidity in the market of Star Gold Corp., resulted in additional expense of $72,750, of which the firm's services were compensated via stock in lieu of cash.  Legal fees increased to $63,953 in 2012 from $19,415 in 2011 as a result of costs associated with the Company's reverse stock split in February 2012 and various legal matters associated with documentation required to complete financings throughout the course of the year.

LIQUIDITY AND FINANCIAL CONDITION


 

 

 

 

 

 

Working Capital

 

 

April 30, 2012

 

April 30, 2011

 

 

 

 

 

 

 

 

 

 

Current assets

 

$

359,494

$

12,220

 

Current liabilities

 

 

(49,852)

 

(73,108)

 

 

Working capital (deficit)

 

$

309,642

$

(60,888)

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

Year ended        April 30, 2012

 

Year ended          April 30, 2011

 

 

 

 

 

 

 

 

 

 

Cash flow used in operating activities

 

$

(714,173)

$

(327,412)

 

Cash flow provided from financing activities

 

 

1,027,500

 

290,000

 

Cash flow used in investing activities

 

 

(99,607)

 

(65,000)

 

 

Increase (decrease) in cash

 

$

213,720

$

(102,412)

 

 

 

 

 

 

 

 

 


The increase in working capital at April 30, 2012 from the year ended April 30, 2011 is the result of a private placement for $900,000 completed in mid-February 2012 and the subsequent exercise of common stock purchase warrants thereafter for a total of $1,027,500 cash flow provided from financing activities.

The Company utilized $51,000 in cash from Investing Activities to exercise its option on claims agreements and utilized for certain capitalized mineral assets at its Longstreet and Excalibur projects.  The Company intends to continue exploration activities at Longstreet, Excalibur and Jet, with the primary emphasis on the Longstreet property.    

As of April 30, 2012, the Company had cash on hand of $225,940. Since inception, the sole source of financing has been sales of the Company's common stock. Star Gold Corp. has not attained profitable operations and its ability to pursue any future plan of operation is dependent upon our ability to obtain financing. For these reasons, the auditors stated in their report to the Company's audited financial statements for the period ended April 30, 2012 that there is substantial doubt that the Company will be able to continue as a going concern.  

Star Gold Corp. anticipates continuing to rely on sales of its debt and/or equity in order to continue to fund business operations. Issuances of additional shares of common stock will result in dilution to the Company's existing stockholders. There is no assurance that the Company will be able to complete any additional sales of equity securities or that it will be able arrange for other financing to fund its planned business activities.  

The audit opinion and Notes that accompany the Company's financial statements for the year ended April 30, 2012, disclose a 'going concern' qualification to the Company's ability to continue in business.  The financial statements for the period then ended have been prepared under the assumption that the Company will continue as a going concern.  Such assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As shown in the financial statements for the year ended April 30, 2012, the Company incurred losses and negative cash flows from operating activities for the year then ended, and at April 30, 2012, did not have sufficient cash reserves to cover normal operating activities for the following twelve months.  These factors raise



Page 25 of 50







substantial doubts about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, or ultimately to attain profitability.  Potential sources of cash, or relief of demand for cash, include additional external debt, the sale of shares of the Company's stock or alternative methods such as mergers or sale of the Company's assets.  No assurances can be given, however, that the Company will be able to obtain any of these potential sources of cash.  The Company currently requires additional cash funding from outside sources to sustain existing operations and to meet current obligations and ongoing capital requirements.  

The Company plans for the long term continuation as a going concern include financing future operations through sales of our equity and/or debt securities and the anticipated profitable exploitation of the Company's mining properties.  These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for equity in the property.

OFF-BALANCE SHEET ARRANGEMENTS

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

CRITICAL ACCOUNTING POLICIES

The Company has identified certain accounting policies, described below, that are most important to the portrayal of its current financial condition and results of operations. The Company's significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.

Mineral Interests

Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mineral properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not hold any derivative instruments and does not engage in any hedging activities.



Page 26 of 50







ITEM 8. FINANCIAL STATEMENTS.

Index to Financial Statements:


Audited financial statements as of April 30, 2012, including:


1.

Report of Independent Registered Public Accounting firm;

2.

Balance Sheets as of April 30, 2012 and 2011;

3.

Statements of Operations for the years ended April 30, 2012 and 2011 and for the period from inception on December 8, 2006 to April 30, 2012

4.

Statements of Cash Flows for the years ended April 30, 2012 and 2011 and for the period from inception on December 8, 2006 to April 30, 2012;

5.

Statements of Stockholders’ Equity (Deficit) for the period from inception on December 8, 2006 through April 30, 2012;

6.

Notes to Financial Statements








Page 27 of 50







[f2012stargold10kv12finalc004.gif]



 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Star Gold Corp.

We have audited the accompanying balance sheets of Star Gold Corp. (“the Company”) as of April 30, 2012 and 2011, and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended. 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 audit.

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. An audit includes examining, on a test basis, evidence supporting the amounts 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 provides 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 Star Gold Corp. as of April 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, 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 1 to the financial statements, the Company has incurred substantial losses, has no source of revenue, and has an accumulated deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

DeCoria, Maichel & Teague, PS

[f2012stargold10kv12finalc006.gif]

Spokane, Washington

August 3, 2012




Page 28 of 50







STAR GOLD CORP.

(An Exploration Stage Company)

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

April 30, 2012

 

April 30, 2011

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash

 

$

225,940

 

$

12,220

 

 

Prepaid expense (Note 3)

 

 

133,554

 

 

-

 

 

 

TOTAL CURRENT ASSETS

 

 

359,494

 

 

12,220

 

 

 

 

 

 

 

 

 

 

 

EQUIPMENT AND MINING INTERESTS, net (Note 4)

 

 

326,655

 

 

205,499

 

 

 

 

 

 

 

 

 

 

 

RESTRICTED CASH

 

 

21,600

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

707,749

 

$

217,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

40,352

 

$

12,808

 

 

Other accrued expenses

 

 

9,500

 

 

20,100

 

 

Short term notes, related party (Note 6)

 

 

-

 

 

40,200

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

49,852

 

 

73,108

 

 

 

 

 

 

 

 

 

 

 

LONG TERM LIABILITIES:

 

 

 

 

 

 

 

 

Common stock payable (Note 8)

 

 

1,016,526

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

1,066,378

 

 

73,108

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Notes 6 and 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT):

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized,

 

 

 

 

 

 

 

 

 

no shares issued and outstanding

 

 

-

 

 

-

 

 

Common stock, $0.001 par value; 300,000,000 shares authorized,

 

 

 

 

 

 

 

 

 

12,018,333 and 10,493,333 shares issued and outstanding respectively (Note 13)

 

 

12,018

 

 

10,493

 

 

Additional paid-in capital

 

 

3,679,781

 

 

801,506

 

 

Accumulated deficit during exploration stage

 

 

(4,050,428)

 

 

(667,388)

 

 

 

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

 

(358,629)

 

 

144,611

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$

707,749

 

$

217,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




Page 29 of 50







STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2012

 

April 30, 2011

 

For the period from December 8, 2006     (inception) to   April 30, 2012 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Mineral exploration expenses

 

314,071

 

 

169,429

 

 

542,572

 

Legal and professional fees

 

246,844

 

 

64,187

 

 

350,616

 

Management and administrative

 

390,676

 

 

98,097

 

 

712,675

 

Depreciation

 

1,350

 

 

-

 

 

1,350

 

Directors fees

 

6,000

 

 

3,200

 

 

9,200

 

 

TOTAL OPERATING EXPENSES

 

958,941

 

 

334,913

 

 

1,616,413

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(958,941)

 

 

(334,913)

 

 

(1,616,413)

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

(1,639,575)

 

 

-

 

 

(1,639,575)

 

Interest expense from debt discount

 

(754,600)

 

 

-

 

 

(754,600)

 

Interest expense

 

(26,824)

 

 

53

 

 

(26,740)

 

Financing expense

 

(3,100)

 

 

(10,000)

 

 

(13,100)

OTHER INCOME (EXPENSE)

 

(2,424,099)

 

 

(9,947)

 

 

(2,434,015)

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAXES

 

(3,383,040)

 

 

(344,860)

 

 

(4,050,428)

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(3,383,040)

 

$

(344,860)

 

 

(4,050,428)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average number of

shares outstanding

 

10,684,249

 

 

10,403,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

$

(0.32)

 

$

(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



Page 30 of 50









STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Shares

issued

 

Par Value

$0.001 per share

 

Additional

Paid-In Capital

Stock Subscriptions

Accumulated Deficit

 

Total Stockholders' Equity (Deficit)

BALANCE, DECEMBER 8, 2006 (INCEPTION)

 

-

 

$

-

 

$

-

 

$

 

$

-

 

$

-

Common stock issued at $0.003 per share

 

10,025,000

 

 

10,025

 

 

76,475

 

 

-

 

-

 

 

86,500

Subscriptions towards common stock

 

-

 

 

-

 

 

-

 

 

60,000

 

-

 

 

60,000

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

(126,933)

 

 

(126,933)

BALANCE APRIL 30, 2008 (unaudited)

 

10,025,000

 

$

10,025

 

 

76,475

 

 

60,000

$

(126,934)

 

 

19,567

Common stock issued at $0.03 per share

 

200,000

 

 

200

 

 

59,800

 

 

-

 

-

 

 

60,000

Reversal of stock subscriptions

 

-

 

 

-

 

 

-

 

 

(60,000)

 

-

 

 

(60,000)

Subscriptions toward common stock

 

-

 

 

-

 

 

-

 

 

80,000

 

-

 

 

80,000

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

(53,299)

 

 

(53,299)

BALANCE, APRIL 30, 2009 (unaudited)

 

10,225,000

 

$

10,225

 

 

136,275

 

$

80,000

$

(180,232)

 

$

46,268

  Common stock issued at $3.00 per share

 

85,000

 

 

85

 

 

254,915

 

 

-

 

 

 

 

255,000

  Issuance of common stock towards subscriptions

 

26,667

 

 

27

 

 

79,973

 

 

(80,000)

 

 

 

 

-

  Options issued for mining interests

 

-

 

 

-

 

 

39,000

 

 

-

 

 

 

 

39,000

  Net loss

 

-

 

 

-

 

 

-

 

 

-

 

(142,296)

 

 

(142,296)

BALANCE, APRIL 30, 2010 (unaudited)

 

10,336,667

 

$

10,337

 

 

510,163

 

 

-

$

(322,528)

 

 

197,972

Common stock issued at $3.00 per share

 

40,000

 

 

40

 

 

119,960

 

 

-

 

-

 

 

120,000

Stock issued for mining interests

 

8,333

 

 

8

 

 

21,992

 

 

-

 

-

 

 

22,000

Options issued for mining interests

 

-

 

 

-

 

 

19,499

 

 

-

 

-

 

 

19,499

Stock issued for warrants exercised

 

108,333

 

 

108

 

 

129,892

 

 

-

 

-

 

 

130,000

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

(344,860)

 

 

(344,860)

BALANCE, APRIL 30, 2011

 

10,493,333

 

$

10,493

 

 

801,506

 

 

-

$

(667,388)

 

 

144,611

Stock option compensation

 

-

 

 

-

 

 

168,126

 

 

-

 

-

 

 

168,126

Options issued for mining interests

 

-

 

 

-

 

 

42,250

 

 

-

 

-

 

 

42,250

Stock issued in consideration of services

 

175,000

 

 

175

 

 

72,575

 

 

-

 

-

 

 

72,750

Stock issued for exercise of warrants

 

1,350,000

 

 

1,350

 

 

201,150

 

 

-

 

-

 

 

202,500

Warrants and beneficial conversion feature on notes payable

 

-

 

 

-

 

 

754,600

 

 

-

 

-

 

 

754,600

Warrants and beneficial conversion feature in connection with related party notes payable converted

 

-

 

 

-

 

 

1,639,575

 

 

-

 

-

 

 

1,639,575

Net loss

 

 

 

 

 

 

 

-

 

 

-

 

(3,383,040)

 

 

(3,383,040)

BALANCE, APRIL 30, 2012

 

12,018,333

 

$

12,018

 

$

3,679,781

 

$

-

$

(4,050,428)

 

$

(358,629)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



Page 31 of 50








STAR GOLD CORP.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended April 30, 2012

 

For the Year Ended April 30, 2011

 

For the period from December 8, 2006     (inception) to   April 30, 2012 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net loss

$

(3,383,040)

 

$

(344,860)

 

$

(4,050,428)

 

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

 

 

Common stock issued in consideration of services

 

72,750

 

 

-

 

 

72,750

 

Stock based compensation and options

 

260,126

 

 

-

 

 

260,126

 

Interest expense from debt discounts

 

754,600

 

 

-

 

 

754,600

 

Loss on extinguishment of debt

 

1,639,575

 

 

-

 

 

1,639,575

 

Depreciation

 

1,350

 

 

-

 

 

1,350

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Prepaid expenses

 

(133,554)

 

 

-

 

 

(133,554)

 

 

Accounts payable

 

27,544

 

 

17,448

 

 

60,452

 

 

Other accrued expenses

 

46,476

 

 

-

 

 

46,746

 

 

 

Net cash used by operating activities

 

(714,173)

 

 

(327,412)

 

 

(1,348,653)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Payments related to mining interests

 

(51,000)

 

 

(65,000)

 

 

(176,000)

 

Purchase of equipment

 

(27,007)

 

 

-

 

 

(27,007)

 

Restricted cash as collateral for exploration bonds

 

(21,600)

 

 

-

 

 

(21,600)

 

 

Net cash used by investing activities

 

(99,607)

 

 

(65,000)

 

 

(224,607)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Proceeds from issuance of stock

 

-

 

 

120,000

 

 

601,500

 

Proceeds exercise of warrants

 

202,500

 

 

130.000

 

 

332,500

 

Proceeds from convertible debentures

 

719,600

 

 

-

 

 

719,600

 

Proceeds from short-term notes, related party

 

105,400

 

 

40,000

 

 

145,600

 

 

Net cash provided by financing activities

 

1,027,500

 

 

290,000

 

 

1,799,200

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

213,720

 

 

(102,412)

 

 

225,940

 

 

 

 

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

12,220

 

 

114,632

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

CASH AT END OF PERIOD

$

225,940

 

$

12,220

 

$

225,940

 

 

 

 

 

 

 

 

 

 

 

 

NON-CASH FINANCING AND INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Options to purchase common stock issued for mining interests

$

42,250

 

$

19,499

 

 

 

 

Common stock payable/issued for mining interests

 

2,250

 

 

22,000

 

 

 

 

Short term notes, related party converted to debenture

 

145,400

 

 

-

 

 

 

 

Debentures converted to common stock payable

 

900,000

 

 

-

 

 

 

 

Accrued interest paid with common stock payable

 

22,276

 

 

-

 

 

 

 

Executive compensation paid with common stock payable

 

92,000

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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




Page 32 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



NOTE 1 - NATURE OF OPERATIONS


Star Gold Corp. (the "Company") was initially incorporated as Elan Development, Inc., in the State of Nevada on December 8, 2006. The Company was originally organized to explore mineral properties in British Columbia, Canada but the Company is currently focusing on Gold properties in Nevada.


These financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business over a reasonable length of time. As of April 30, 2012, the Company had $225,940 in cash, working capital of $309,642, and stockholders’ equity (deficit) of ($358,629) and accumulated net losses of $4,050,428 since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating 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. Its continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, to develop commercially viable mining reserves, and ultimately to establish profitable operations.


Management's plans for the continuation of the Company as a going concern include financing the Company's operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans.


Unless otherwise indicated, amounts provided in these notes to the financial statements pertain to continuing operations. The Company is not currently earning any revenues.


The financial statement represents those of an exploration stage company whose main focus is in the exploration of gold bearing properties.  The Company's main business is putting together land packages and mining claims that the Company perceives to have some potential for mineral reserves.  The Company then spends capital to explore these claims by drilling, geophysical work or other exploration work deemed necessary.  The business is a high risk business as there is no guarantee that the Company's exploration work will ultimately discover or produce any economically viable minerals.


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. The Company has not produced any revenue from its principal business and is an exploration stage company as defined by the Accounting Standard Codification (ASC) Topic 915 “Accounting and Reporting by Development Stage Enterprises”.


Use of Estimates


The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to asset impairments and stock option valuation.  Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations.


Exploration Stage Enterprise


The Company's financial statements are prepared using the accrual method of accounting and according to "Accounting for Development Stage Enterprises," as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company's existence.  Until such interests are engaged in commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the exploration stage.  



Page 33 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012




Cash and cash equivalents


For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents.  


Restricted cash


Restricted cash represents collateral for bonds held for exploration permits.


Fair Value Measures


ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820") requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1:  Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2:  Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for   identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by,   observable market data.


Level 3:  Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


Mining Interests and Exploration Expenditures


Exploration costs are expensed in the period in which they occur. The Company capitalizes costs for acquiring and leasing mineral properties and expenses costs to maintain mineral rights as incurred. Should a property reach the production stage, these capitalized costs would be amortized using the units-of-production method on the basis of periodic estimates of ore reserves. Mineral interests are periodically assessed for impairment of value, and any subsequent losses are charged to operations at the time of impairment. If a property is abandoned or sold, its capitalized costs are charged to operations.


Property and equipment


Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from three to seven years.  Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses.


Reclamation and Remediation


The Company's operations are subject to standards for mine reclamation that have been established by various governmental agencies.  In the period in which the Company incurs a contractual obligation for the retirement of tangible long-lived assets, the Company will record the fair value of an asset retirement obligation as a liability.  A corresponding asset will also be recorded and depreciated over the life of the asset.  After the initial measurement of an asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation.  To date, the Company has not incurred any contractual obligation requiring recording either a liability or associated asset.






Page 34 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



Impaired Asset Policy


The Company periodically reviews its long-lived assets to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC Topic 360, "Accounting for the Impairment or Disposal of Long-lived Assets". The Company determines impairment by comparing the undiscounted net future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.


Stock-based Compensation


The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten year maximum term and varying vesting periods as determined by the Board.  The value of common stock awards is determined based on the closing price of the Company’s stock on the date of the award.

  

Loss Per Share


Basic Earnings Per Share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.


The dilutive effect of convertible and outstanding securities as of April 30, 2012 and 2011, would be as follows:

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Stock options

 

 

805,000

 

 

200,000

Warrants

 

 

7,690,000

 

 

131,667

 

 

Total possible dilution

 

 

8,495,000

 

 

331,667

 

 

 

 

 

 

 

 

 

 

At April 30, 2012 and 2011, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.


Fair Value of Financial Instruments


ASC topic 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value.  For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation.


Income Taxes


Deferred income tax liabilities or assets at the end of each period are determined using the tax rates expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.


Reclassifications


 Certain reclassifications have been made to the 2011 financial statements in order to conform to the 2012 presentation.  These reclassifications have no effect on net loss, total assets or accumulated deficit as restated.







Page 35 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



NOTE 3 – PREPAID EXPENSES


The following is a summary of the Company’s prepaid expenses at April 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration expense

 

 

 

 

 

 

$

92,424

Legal retainer

 

 

 

 

 

 

 

15,000

Directors and officers liability insurance

 

 

 

 

 

 

 

26,130

 

 

Total

 

 

 

 

 

 

$

133,554


Exploration expense was prepaid in order to satisfy required expenditure obligations for the year ended January 15, 2012 for which the corresponding work could not be completed by that date.  The prepaid balance will be reduced as invoices are applied to ongoing drilling and exploration activities in the future which the Company expects to recognize as exploration expense during the remainder of its fiscal year ending April 30, 2013.


NOTE 4 – EQUIPMENT AND MINING INTERESTS


The following is a summary of the Company's equipment and mining interests at April 30, 2012 and 2011, respectively:


 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

Equipment

 

$

27,007

 

$

-

Less accumulated depreciation

 

 

(1,351)

 

 

-

 

Equipment, net of accumulated depreciation

 

 

25,656

 

 

-

Mining interests

 

 

300,999

 

 

205,499

 

Total

 

$

326,655

 

$

205,499

 

 

 

 

 

 

 

 

 

 

Excalibur Property


On April 11, 2008, the Company executed a property purchase agreement (the "Excalibur Agreement") with MinQuest, Inc. ("MinQuest") granting the Company the right to acquire 100% of the mining interests of the Nevada mineral exploration property known as the “Excalibur Property.”  The Excalibur Property is located in Mineral County, Nevada. On June 18, 2009 the Company entered into an amending agreement to add an additional 42 claims surrounding the original 8 claims, expanding the total claims to 50 claims held.


The Company has completed an initial exploration program on the Excalibur Property, which included geological mapping, rock sampling and assaying. Based on this analysis the Company decided to move forward with the exploration of this property and drilling program.  The permitting was completed in June 2010 and the drilling program commenced the week of June 20, 2010.


The Excalibur Agreement includes cash payments totaling $100,000 over five years and the issuance of 200,000 stock options based on “fair market price” over the same five-year period.  The Company has agreed to work commitments of $275,000 over five years.  Following the fifth anniversary, if commitments have been met, the Company shall receive a quitclaim for 100% interest in the property in consideration of a 3% Net Smelter Return.   The Excalibur Property Option Agreement was amended on January 30, 2012 revising the payment date of the final required expenditure to August 31, 2012.  The schedule of remaining annual payments, minimum expenditures and number of stock options to be issued pursuant to the Excalibur Property agreement is as follows:


 

 

 

 

Required expenditure

 

Payment to optioner

 

Annual stock  option obligation

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2012

$

100,000

 

 

20,000

 

 

50,000

 

 

Total

$

100,000

 

$

20,000

 

 

50,000








Page 36 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



The Longstreet Property


On January 15, 2010, the Company signed an option agreement (the “Longstreet Agreement”) for the Sole Exclusive Rights to lease and obtain the option to acquire 60 unpatented mining claims totaling approximately 490 hectares known as the “Longstreet Property.”


The terms of the Longstreet Agreement included an initial cash payment of $20,000, issuance of 25,000 common shares and 25,000 stock options based on “fair market price” to MinQuest.  The Longstreet Agreement terms also include cash payments totaling $250,000 over seven years and the issuance of 175,000 common shares and 175,000 stock options based on “fair market price” over the same seven-year period.  The Company has agreed to work commitments of $3,550,000 over seven years.  Following the seventh anniversary of the agreement, if commitments have been met, the Company shall receive a quitclaim deed for a 100% interest in the property in consideration of a 3% Net Smelter Return.  


The Company recognized prepaid expense of $92,424 at April 30, 2012, paid to Minquest to satisfy certain required expenditure obligations under the Longstreet Property Agreement in advance of completion of exploration and drilling operations required.  


The schedule of remaining annual payments, minimum expenditures and number of stock options to be issued pursuant to the Longstreet Agreement is as follows:

 

 

 

 

Required expenditure

 

Payment to

 optioner

 

Annual stock option obligation

 

Annual stock

grant obligation

 

 

 

 

 

 

 

 

 

 

 

 

January 15, 2013

 

350,000

 

36,000

 

25,000

 

25,000

January 15, 2014

 

450,000

 

36,000

 

25,000

 

25,000

January 15, 2015

 

550,000

 

56,000

 

25,000

 

25,000

January 15, 2016

 

750,000

 

56,000

 

25,000

 

25,000

January 15, 2017

 

1,000,000

 

56,000

 

25,000

 

25,000

 

 

 

 

$

3,100,000

$

240,000

 

125,000

 

125,000

 

 

 

 

 

 

 

 

 

 

 

 

The Jet Property


On July 7, 2010 the Company acquired, pursuant to the Jet Agreement, a 100% mining interest in the Jet Property located in Nevada.  The Jet Agreement calls for the Company to invest a total of $110,000 (consisting of $40,000 in direct payments and $70,000 in expenditures towards development of the project) over the next seven years.  Under the Jet Agreement, MinQuest is also entitled to receive residual payments if and when the project enters into production. The Excalibur Property Option Agreement was amended on

January 30, 2012 revising the payment date of the required expenditure to August 31, 2012 for one year only. The schedule of remaining annual payments and minimum expenditures pursuant to the Jet Agreement is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required expenditure

 

Payment to

Optioner

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2012

 

 

 

$

10,000

 

$

5,000

July 7, 2013

 

 

 

 

10,000

 

 

5,000

July 7, 2014

 

 

 

 

10,000

 

 

5,000

July 7, 2015

 

 

 

 

10,000

 

 

5,000

July 7, 2016

 

 

 

 

10,000

 

 

5,000

July 7, 2017

 

 

 

 

10,000

 

 

5,000

 

 

 

Total

 

 

 

$

60,000

 

$

30,000

 

 

 

 

 

 

 

 

 

 

 

 

The following is a summary of capitalized mineral interests as of April 30, 2012 and 2011:

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Longstreet Property

 

 

114,499

 

$

83,999

 

 

Excalibur Property

 

 

176,500

 

 

116,500

 

 

Jet Property

 

 

10,000

 

 

5,000

 

 

 

Total

 

$

300,999

 

$

205,499

 

 

 

 

 

 

 

 

 

 



Page 37 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012







NOTE 5 - INCOME TAXES


The components of the Company's deferred tax asset is as follows:

 

 

 

 

April 30,

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Deferred tax asset:

 

 

 

 

 

 

 

 

 

Exploration costs

 

$

176,299

 

$

82,425

 

 

 

Share-based compensation

 

 

58,844

 

 

-

 

 

 

Charitable contribution carryover

 

 

1,190

 

 

-

 

 

 

Federal operating net losses

 

 

448,763

 

 

225,398

 

 

 

 

Deferred tax asset

 

 

685,096

 

 

307,823

 

 

Deferred tax liability:

 

 

 

 

 

 

 

 

 

Mineral interest

 

 

(109,199)

 

 

(71,925)

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred tax asset

 

 

575,897

 

 

233,586

 

 

 

Less valuation allowance

 

 

(575,897)

 

 

(233,586)

 

 

Deferred tax asset

 

$

-

 

$

-


There was no income tax expense for the years ended April 30, 2012 and 2011 due to the Company’s net losses.  Deferred income taxes arise from timing differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. A deferred tax asset valuation allowance is recorded when it is more likely than not that deferred tax assets will not be realized. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at April 30, 2012 and 2011.  The Company utilizes an effective federal tax rate of 35%.  There is no state tax effect.

 

A reconciliation between the statutory federal income tax rate and the Company's tax provision is as follows:


 

 

 

 

April 30,

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected income tax benefit based on statutory rate

 

(1,184,064)

 

(35%)

 

$

(120,701)

 

(35%)

 

 

Permanent differences

 

 

 

 

 

 

 

 

 

 

 

 

Extinguishment of debt

 

573,851

 

17%

 

 

-

 

-

 

 

 

Interest expense from debt discount

 

264,110

 

8%

 

 

-

 

-

 

 

 

Meals and entertainment

 

3,792

 

-%

 

 

-

 

-

 

 

Non-recognition due to increase in valuation account

 

342,311

 

10%

 

 

120,701

 

35%

 

 

 

Total income tax benefit

$

-

 

-%

 

$

-

 

-%


The Company has concluded that the guidance regarding accounting for uncertainty in income taxes had no significant impact on our results of operations or financial position as of April 30, 2012 or 2011. Therefore, the Company does not have an accrual for uncertain tax positions as April 30, 2012 or 2011.  As a result, tabular reconciliation of beginning and ending balances would not be meaningful.  If interest and penalties were to be assessed, the Company would charge interest to interest expense, and penalties to other operating expense.  It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.


At April 30, 2012 and 2011 respectively, the Company had federal net operating loss carry forwards of approximately $1,282,180 and  $643,994 which will expire in fiscal years ending April 30, 2028 through April 30, 2031.









Page 38 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



NOTE 6– RELATED PARTY TRANSACTIONS


On July 1, 2008, the Company leased office space for $1,000 per month plus a proportionate share of utilities and insurance from Marlin Property Management, LLC (“Marlin”) an entity owned by the spouse of the Company President.  On September 1, 2012, the Company moved its offices to Coeur d’Alene, Idaho and continues to lease space from Marlin at the rate of $1,500 per month.  The Company believes this office space and facilities are sufficient to meet its present needs, and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.  For the year ended April 30, 2012 and 2011, $23,348 and $11,063, respectively, was paid to this related entity inclusive of the Company’s pro-rata share of common expenses.  


During the years ended April 30, 2012 and 2011, the Company entered into a series of short term promissory notes, with the spouse of the Company’s then President (and current Chairman of the Board) Lindsay Gorrill, in the amount of $145,400.  The notes matured October 1, November 1, December 1, 2011 and January 1, 2012 and bore interest at 12% per annum and have subsequently been extended at the payor's option for an additional six months each.  The Company recognized interest expense of $4,415 and $8,998 for the year ended April 30, 2012 and 2011, respectively.  Accrued interest of $5,816 was paid through issuance of 9,693 shares of common stock at $0.60 per share which approximated fair value of the shares at the date of issuance and is included in “Common stock payable” on the Company’s balance sheet at April 30, 2012.   


On or about February 17, 2012, the balance of the short term promissory notes was subsequently converted into  debentures as discussed in Note 7.  


NOTE 7 - CONVERTIBLE DEBENTURES


On or about February 17, 2012, the Company issued $900,000 in five percent (5%) convertible debentures which were due one (1) year after their original issue date and were convertible into 9,000,000 shares of the Company’s common stock at the conversion price of $.10 per share.  In connection with the issuance the Company issued common stock purchase warrants convertible into 9.000,000 shares of the Company’s common stock at the exercise price of $.15 per share.  The warrants expire one (1) year from their original issue date.

 

Management recognized a debt discount of $667,571 representing the relative fair value of the detachable warrants, to be amortized over the term of the associated debt.  Management determined the fair value of the detachable warrants using a Black-Scholes pricing model with the following inputs:

 

 

 

 

 

 

 

 

 

 

Stock price

 

 

$0.60

 

 

$1.15

 

Exercise price

 

 

$0.15

 

 

$0.15

 

Expected life

 

 

1 year

 

 

1 year

 

Weighted average volatility

 

 

373.9%

 

 

376.2%

 

Risk-free rate

 

 

0.18%

 

 

0.18%


Management determined the embedded conversion feature in the debentures constituted a beneficial conversion feature, and recognized a debt discount of $87,029. In calculating the accounting conversion rate of the beneficial conversion feature, the intrinsic value exceeded the debt instrument itself.  Therefore, the amount of discount assigned to the feature was limited to the proceeds allocated to the convertible instrument.


$145,400 of related-party short term promissory notes (Note 6) were converted into the debentures. The Company has considered the impact of ASC 470-50 “Debt-Modifications and Extinguishments” on the  conversion of the related-party short term promissory notes and concluded that it constitutes a substantial modification and therefore should be accounted for as an extinguishment of debt.  During the year ended April 30, 2012, the Company recognized a loss on extinguishment of the short term promissory notes of $1,639,575 representing the difference between the fair value of the debt and warrants and the carrying value of the original notes.


As per Note 8, on April 30, 2012, the Company elected to convert all the debentures into common shares pursuant to the terms of the agreement.  Therefore, all remaining debt discount was recognized as of that date.  







Page 39 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



NOTE 8 - COMMON STOCK PAYABLE


On April 30, 2012, the Company elected to convert all convertible debentures (Note 7) into 9,000,000 shares of the Company's common stock at the conversion price of $0.10 per share as per terms of the debenture agreement.  The Company also elected to convert $22,276 of accrued interest associated with the debentures to 27,434 shares of common stock at $0.60 per share which approximated fair value of the shares at the date of conversion.


As per terms of their respective employment agreements, the Company authorized the issuance of common stock to executives and management for accrued compensation through April 30, 2012 of $92,000 or 130,333 shares of common stock valued at $0.71 per share which is the average end of month closing price for the period in which compensation was earned.


NOTE 9 - REVERSE STOCK SPLIT


On or about November 30, 2011 the Company received written consents in lieu of a special meeting of the Board and of the Shareholders authorizing the Board to undertake a 1:6 reverse split of the Company's common shares. Pursuant to the reverse split, holders of Star Gold common stock, as of November 30, 2011 (the "Record Date"), received one (1) share of Star Gold common stock in exchange for every six (6) shares of Star Gold common stock held by the shareholder on the Record Date (the "Reverse Split").  The Company's shares immediately prior to the Reverse stock split totaled 63,710,000, which were adjusted to 10,618,333 shares as a result of the Reverse Stock Split.  The Reverse Stock Split became effective February 2, 2012 when the Financial Industry Regulatory Authority ("FINRA") approved the Reverse Stock Split. 


The Company's common stock began trading at its post Reverse Stock Split price at the beginning of trading on February 3, 2012.  Share, per share, and stock option amounts for all periods presented within this report for common stock and additional paid-in capital have been retroactively adjusted to reflect the Reverse Stock Split.


NOTE 10 - WARRANTS


The following is a summary of the Company’s warrants outstanding:

 

 

 

Shares

 

Weighted Average Exercise Price

 

Expiration Date

 

 

 

 

 

 

 

 

 

Outstanding at April 30, 2010

 

200,000

$

1.20

 

 

 

 

Issued

 

40,000

 

3.00

 

November 15, 2012

 

 

Exercised

 

(108,333)

 

(1.20)

 

 

 

 

Expired

 

-

 

 

 

 

 

Outstanding at April 30, 2011

 

131,667

$

1.75

 

 

 

 

Issued

 

9,000,000

 

0.15

 

February 17, 2013

 

 

Exercised

 

(1,350,000)

 

0.15

 

 

 

 

Expired

 

(91,667)

 

(1.20)

 

 

 

Outstanding at April 30, 2012

 

7,690,000

$

0.16

 

 


NOTE 11 - STOCK OPTIONS


In consideration for mining interests on several properties (see Note 4), the Company is obligated to issue a total of 350,000 stock options based on "fair market price" which is considered to be the closing price of the Company's common stock on the grant dates.  The Company has estimated the fair value of these option grants using the Black-Scholes model for the years ended April 30, 2012 and 2011 with the following assumptions:

 

 

 

 

April 30,

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

Options issued

 

 

75,000

 

 

75,000

 

Weighted average volatility

 

 

373.8%

 

 

288.3%

 

Expected dividends

 

 

-

 

 

-

 

Expected term (years)

 

 

3.00

 

 

3.0



Page 40 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012






 

Risk-free rate

 

 

2.5%

 

 

0.44%


The following is a summary of the Company’s options issued and outstanding in conjunction with certain mining interest agreements on several properties:

 

 

 

 

Options

 

Weighted Average Exercise Price

 

 

 

 

 

 

 

 

 

 

Outstanding at April 30, 2010

 

 

125,000

 

$

0.30

 

 

 

Issued

 

 

75,000

 

 

0.27

 

 

 

Exercised

 

 

-

 

 

-

 

 

 

Expired

 

 

-

 

 

-

 

Outstanding April 30, 2011

 

 

200,000

 

 

0.28

 

 

 

Issued

 

 

75,000

 

 

0.56

 

 

 

Exercised

 

 

-

 

 

-

 

 

 

Expired

 

 

-

 

 

-

 

Outstanding April 30, 2012

 

$

275,000

 

$

0.36

 

 

 

 

 

 

 

 

 


Total mining interest cost capitalized under the issuance of options was $42,250 and $19,499 for the year ended April 30, 2012 and 2011, respectively.  These costs are classified on the Company's balance sheets as mining interests.  


Future stock option obligations under the terms of property agreements detailed in Note 4 are as follows:


 

Fiscal year ending April 30,

 

Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

75,000

 

 

 

 

2014

 

 

25,000

 

 

 

 

2015

 

 

25,000

 

 

 

 

2016

 

 

25,000

 

 

 

 

2017

 

 

25,000

 

 

 

 

 

 

 

175,000

 

 

 


The Company established the 2011 Stock Option/Restricted Stock Plan.  The Stock Option Plan is administered by the Board of Directors and provides for the grant of stock options to eligible individual including directors, executive officers and advisors that have furnished bona fide services to the Company not related to the sale of securities in a capital-raising transaction.  


The Stock Option Plan has a fixed maximum percentage of 10% of the Company's outstanding shares that are eligible for the plan pool, whereby the number of Shares under the plan increases automatically increases as the total number of shares outstanding increase.  The number of shares subject to the Stock Option Plan and any outstanding awards will be adjusted appropriately by the Board of Directors if the Company's common stock is affected through a reorganization, merger, consolidation, recapitalization, restructuring, reclassification dividend (other than quarterly cash dividends) or other distribution, stock split, spin-off or sale of substantially all of the Company's assets.  


The Stock Option plan also has terms and limitations, including without limitations that the exercise price for stock options granted under the Stock Option Plan must equal the stock's fair market value, based on the closing price per share of common stock, at the time the stock option is granted.  The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes model and commonly utilized assumptions associated with the Black-Scholes methodology.  Options granted under the Plan have a ten year maximum term and varying vesting periods as determined by the Board.  


On May 30, 2011 the Board of Directors authorized the grant of 326,667 options to purchase shares of common stock of the Company to various directors, officers and consultants.  On March 22, 2012, the Board of Directors authorized the grant of 236,667 options to purchase shares of the Company to various directors, officers and consultants.   The fair value of each option award was estimated on the date of the grant using the assumptions noted in the following table:





Page 41 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012





 

 

 

 

 

 

 

 

 

May 30, 2011

 

March 22, 2012

 

 

 

 

 

 

 

 

 

 

Options issued

 

 

326,666

 

 

236,667

 

Weighted average volatility

 

 

276.1%

 

 

350.2%

 

Expected dividends

 

 

-

 

 

-

 

Expected term (years)

 

 

3.1

 

 

3.1

 

Risk-free rate

 

 

3.07%

 

 

0.56%


The following is a summary of the Company’s options issued and outstanding in conjunction with the Company’s Stock Option Plan:



 

 

 

Options

 

Weighted Average Exercise Price

 

 

 

 

 

 

 

 

 

 

Outstanding April 30, 2011

 

 

-

 

 

-

 

 

 

Issued

 

 

563,333

 

$

0.84

 

 

 

Exercised

 

 

-

 

 

-

 

 

 

Expired or forfeited

 

 

(33,333)

 

 

0.90

 

Outstanding April 30, 2012

 

$

530,000

 

$

0.83

 

 

 

 

 

 

 

 

 


The total value of the stock option awards is expensed ratably over the vesting period of the employees receiving the awards.  As of April 30, 2012, total unrecognized compensation cost related to stock-based options and awards is $283,551 and the related weighted average period over which it is expected to be recognized is approximately 2.42 years. There are 186,119 options vested under the Plan at April 30, 2012, and 343,881 unvested options as of the same date.  


The average remaining contractual term of the options both outstanding and exercisable at April  30, 2012 was 9.44 years.  No options were exercised during the year ended April 30, 2012.  


Total compensation charged against operations under the plan for employees and consultants was $168,126 and $nil for the years ended April 30, 2012 and 2011, respectively.  These costs are classified under management and administrative expense.


The aggregate intrinsic value of options both outstanding and exercisable at April 30, 2012, was $ nil  based on the Company's closing price of $0.60 per common share at April 30, 2012.  The Company's current policy is to issue new shares to satisfy option exercises.


NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT)


On November 26, 2010, the Company completed a private placement with one individual to issue 240,000 common shares and 240,000 share purchase warrants at a price of $0.50 per unit. Each unit comprises of one common share and one share purchase warrant. The term of the warrant is for two years, and may be exercised at $0.75 during the first year and $1.00 during the third year. No commissions were paid and no registration rights have been granted.     


On or about November 26, 2010 an individual exercised 650,000 share purchase warrants at $0.20 per share.


On November 1, 2010, the Company issued 25,000 shares of its common stock pursuant to the Longstreet Agreement.  The shares were valued at $0.60 as of the date of the agreement based on the current market price of the Company's common stock.


On December 18, 2010, the Company issued 25,000 shares of its common stock pursuant to the Longstreet Agreement.  The shares were valued at $0.28 as of the date of the agreement based on the current market price of the Company's common stock.


On September 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.




Page 42 of 50




STAR GOLD CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012



On October 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.

On November 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On December 1, 2011, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On January 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.36 per share or $9,000 which approximated fair value of the shares at the date of grant.


On February 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.96 per share or $22,500, representing the fair value of the shares at the date of grant.


On March 1, 2012, the Company issued 25,000 shares of common stock to one vendor in lieu of cash payment for services provided.  These shares were valued at $0.75 per share or $18,750, representing the fair value of the shares at the date of grant.


On March 23, 2012, an entity exercised 1,000,000 share purchase warrants at $0.15 per share.


On April 12, 2012, an individual exercised 250,000 share purchase warrants at $0.15 per share.


On April 20, 2012, an individual exercised 100,000 share purchase warrants at $0.15 per share.


NOTE 13 -SUBSEQUENT EVENTS


On May 10, 2012, the Company issued 9,000,000 shares of common stock to various debenture holders in satisfaction of common stock payable at April 30, 2012 as discussed in Note 7.  


On May 16, 2012,  an individual exercised 250,000 share purchase warrants at $0.15 per share.


On June 18, 2012, the Company closed on a private placement of its securities.  The placement consisted of issuing two hundred fifty thousand dollars ($250,000) in five percent (5%) convertible debentures.  The debentures are due one (1) year from their original issue date and are convertible to 833,333 shares of the Company’s common stock, at the conversion price of $.30 per share, at any time before maturity, solely at the option of the Company.  The placement also included the issuance of warrants to the debenture holders, giving the holders thereof the ability to purchase, at the exercise price of $.75 per share, one (1) share of common stock of the Company for each share of Company’s common stock issuable to the holder upon conversion of the debentures issued in conjunction with the warrants.  The warrants expire two (2) years from their original issue date.  


On June 18, 2012,  a holder exercised 333,333 common stock purchase warrants at $0.15 per share.

On June 18, 2012 the Board of Directors authorized the grant of 1,725,000 options to purchase shares of common stock of the Company to various directors, officers and consultants.  The options have a strike price of $0.30 which approximates the fair market value of the Company's common equity on the date of the grant based on the closing price as quoted by the National Quotation Bureau on the day of grant.  The option certificates will reflect the actual date of the grant.  The Company will recognize stock option expense related to these grants in subsequent periods.




Page 43 of 50







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


For the years ended April 30, 2012 and 2011 there were no disagreements with DMT on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.  For the years ended April 30, 2012 and 2011, there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

ITEM 9A.                 CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures


The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.  The Company’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America.*  Management evaluates the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – “Integrated Framework.”


Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2012 and concluded that it is ineffective in assuring that the financial reports of the Company are free from material errors or misstatements.


*This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.


Management has identified two material weaknesses and is taking action to remedy and remove the weakness in its internal controls over financial reporting:


·

Lack of an independent board of directors, including an independent financial expert. On December 21, 2010 the Company, added an independent director, the latter of which has been designated the Company’s independent financial expert. On July 21, 2011 this individual tendered his resignation from the board of directors.  Consequently, the current board of directors is evaluating expanding the board of directors to include additional independent directors.  The current board is composed of three members and may be expanded to as many as nine members as permitted under the Company’s Articles of Incorporation and Bylaws.


·

Inappropriate Segregation of Duties, as the same Officer and Director was responsible for initiating and recording transactions, thereby creating segregation of duties weakness.


Management’s Remediation Initiatives.


Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.


The Company clearly recognizes, and continues to recognize, the importance of implementing and maintaining disclosure controls and procedures and internal controls over financial reporting and is working to implement an effective system of controls.   Management is currently evaluating avenues for mitigating the Company's internal controls weaknesses, but mitigating controls that are practical and cost effective may not be found based on the size, structure, and  future existence  of the organization, Since the Company has not generated any significant revenues,  the Company is limited in its options for  remediation efforts. Management, within the confines of its budgetary resources, will engage its outside accounting firm to assist with an assessment of the Company’s internal controls over financial reporting as of April 30, 2011.



Page 44 of 50







Changes in internal controls over financial reporting


None

ITEM 9B.                 OTHER INFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The Company's executive officers and directors and their age and titles are as follows:

Name

Age

Position

Lindsay Gorrill

50 

Chairman of the Board

David Segelov

45

President and Director

Kelly Stopher

49

Chief Financial Officer and Corporate Secretary/Treasurer

Scott Jenkins

60

Director

Edwin Ullmer

70

Director

Set forth below is a brief description of the background and business experience of the Company's officers and directors:

Lindsay E. Gorrill – Chairman


Mr. Lindsay Gorrill is a Chartered Accountant and has university degrees in Finance and Marketing from Simon Fraser University. Mr. Gorrill has a background in acquisitions, company building, financial markets and world exposure. Mr. Gorrill currently serves as Chairman of the Company’s Board of Directors and previously served as President, Chief Financial Officer and Treasurer between 2006 and 2010.  He has also served as President, Chief Executive Officer and Treasurer of JayHawk Energy, Inc., a company quoted on the OTC Bulletin Board since July 2007.  Mr. Gorrill has also served as a member of the board of directors of Yaterra Ventures Corp, a company quoted on the OTC Bulletin Board since August 2008.  He has served as President, Chief Operating Officer and as a member of the board of directors of Berkley Resources Inc., a company listed on the TSX Venture Exchange, since July 2004, and is currently only a director. Additionally, since April 2009, Mr. Gorrill has served as President, Chief Executive Officer and Chief Financial Officer of Canada Fluorspar Inc., a company listed on the TSX Venture Exchange.  He has also been a member of the board of directors of Dear Horn Metals (formerly Golden Odyssey Mining Inc.), a TSX Venture Exchange listed company since September 2009.  


David Segelov - President and Director


Mr David Segelov is a Chartered Financial Analyst (CFA) and has an Masters of Business Administration from Columbia University in New York. He holds a law degree from Sydney University. He is the sole partner of Reverse Swing Capital which is a financial consulting firm. Reverse Swing Capital provides financial analysis of investments and ideas for hedge funds in New York. For the past six years his primary focus has been on resource companies in USA, Australia and Canada with an expertise in gold investments. Prior to Reverse Swing Capital, he was analyst at various hedge funds including Para Partners in New York for five years. He holds no public company office.

Kelly J. Stopher – Chief Financial Officer and Corporate Secretary/Treasurer


Mr. Kelly Stopher was appointed Chief Financial Officer of the Company on October 20, 2010.  Mr. Stopher has developed strategies to implement financial management systems, internal control policies and procedures, and financial reporting and modeling for small-cap companies.  From March, 20010 through September, 2010, Mr. Stopher worked for Allied Security. Mr. Stopher worked as a Business Relationship Manager for Wells Fargo Bank, Spokane, WA, from April 2006 through August 2009.  From September 2004 through January 2006, he acted as the CFO of Weldon Barber, Spokane, WA.  From October 2003 through September 2004, he was a sales associate for Kiemle & Hagood Company, in Spokane, WA.  And from January 2001 through March 2003 he worked as an account executive for Aston Business solutions in Boise, ID.  Prior that Mr. Stopher worked as CFO for Lee Read Jewelers in Boise,



Page 45 of 50






ID and spent 5 years in public accounting with Langlow Tolles & Company in Tacoma, WA.  Mr. Stopher also serves as Chief Financial Officer for JayHawk Energy, Inc., a company quoted on the OTC Bulletin Board, and was appointed to that position in September 2010.  Mr. Stopher holds a bachelors degree from Washington State University in Business Administration - Accounting.


Scott Jenkins - Director


Scott Jenkins brings over 30 years of international geological exploration and development experience, including 15 years within the Nevada region and nearly 10 years in South Africa, which included successful tenures as New Projects Manager for RTZ Limited (also known as Rio Tinto Zinc) and as Managing Director of Geelfontein Exploration. Mr. Jenkins' most recent positions are as current President of Complex Systems Analysis Inc. (based out of Nevada) and formerly as Quality Assurance Inspector for Veka West Inc. where he received an achievement award in 2005 for his work. Scott bolstered his management experience with Jenkins & Associates in Botswana, SLJ Exploration and RTZ Limited (also known as Rio Tinto Zinc) in South Africa. He has also served as a Geologist for Kenecott Exploration, Westmont Mining, Homestake Mining Company, Amselco Exploration in Nevada, AMAX Exploration in Montana, Moly Corporation in Washington, Anaconda Minerals Company in Utah and in the public sector for the Oregon Department of Minerals. He holds a Bachelor's Degree in Geology from the University of Colorado. Mr. Jenkins also continued his study in Economic-Structural Geology at the Oregon State University.

Edwin Ullmer - Director

Mr. Ullmer brings over 30 years of international geological exploration and development experience, including time with DeBeers Diamonds Inc. (Anglo-American Corp.), Hudson Bay Mining and Smelting Co., and Union Pacific Railroad. He has dealt with many different types of precious and base metals, including uranium, vanadium, diamonds and other commodities. Along with his North American exposure, Mr. Ullmer has also amassed an international profile, serving recently as a uranium exploration consultant for Denison Mining Co. in Mongolia and Zambia. Some of Mr. Ullmer's geologic efforts have been spent assessing and exploring areas of geologic terrain in Nevada and California similar to Star Gold's Excalibur Project.

Along with working for the petroleum and mining industries, Ed Ullmer has experience in Environmental Geology for Cameron Cole LLC. His work has been published in Economic Geology, Newsletter of the International Geological Correlation Programme, UN Project and Contributions to Geology. He holds a Bachelor's Degree in Geology, and a Masters Degree in both Geology and in Education.

Ian Falconer - Director

Mr. Falconer started in the investment business in 1952, spending thirty years with Midland Doherty Ltd., Canada's largest investment firm. Mr. Falconer eventually became one of three senior partners with Midland Doherty. Mr. Falconer spent 10 years as a Governor of Simon Fraser University, and three years as Governor of Emily Carr College of Art and Design. In 1987 Mr. Falconer founded Canadian Springs Water Co. Ltd. which eventually became a part of Canada's largest bottled water Company. Canadian Springs was sold in 1995 and is now a part of Aquaterra Corporation.

Mr. Falconer does not currently serve as an officer or director of any company other than Star Gold although he has served as a director of numerous natural resource (oil/gas and mining) companies in the past. In 1989 Mr. Falconer became a director of Hawkeye Mining (the name was later changed to WGI Heavy Minerals Ltd.), becoming chairman of the board in 1994. Mr. Falconer and Star Gold’s President, Lindsay Gorrill, previously worked with one another at WGI, identifying properties of Ilminite and Garnet in India, going on to build four mills and three pre con plants for both Ilminite and Garnet. Mr. Falconer retired from WGI in 1994.

TERM OF OFFICE

The Company's directors are appointed for a one-year term to hold office until the next annual general meeting of its stockholders or until a replacement is duly elected or until removed from office in accordance with the Company's Bylaws. The Company's officers are appointed by the board of directors and hold office until removed by the board.

SIGNIFICANT EMPLOYEES

The Company employs one part-time administrative assistant.  The remainder of employees are officers and directors of the Company.





Page 46 of 50






AUDIT COMMITTEE

Star Gold Corp. is not a listed issuer and as such the Company's Board of Directors is not required to maintain a separately-designated standing audit committee. As a result, the entire Board of Directors acts as the audit committee.  The Company believes that the cost related to appointing a financial expert to its Board of Directors at this time is prohibitive.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires executive officers and directors, and persons who beneficially own more than 10% of the Company's equity securities (collectively, the “Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulation to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based on the Company's review of the copies of such forms received by it, other than as described below, no other reports were required for those persons. The Company believes that, during the year ended April 30, 2012, all Reporting Persons complied with all Section 16(a) filing requirements applicable to them.

ITEM 11.   EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

The following table sets forth total compensation paid to or earned by the Company's named executive officers, as that term is defined in Item 402(a)(2) of Regulation S-X during the fiscal year ended April 30, 2012:

 

Salary

($)

 

Bonus

($)

 

Stock

Awards

($)

 

Option

Awards

($)

 

Non-Equity

Incentive Plan Compensation

($)

 

Non-Qualified

Deferred

Compensation

Earnings

($)

 

All other compensation

($)

 

Total

($)

Lindsay Gorrill,

Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

20,000

 

-

 

40,000

 

69,484

 

-

 

-

 

-

 

129,484

2011

30,000

 

-

 

-

 

-

 

-

 

-

 

 

 

30,000

2010

12,500

 

-

 

-

 

-

 

-

 

-

 

 

 

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Segelov,

President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

-

 

-

 

32,000

 

-

 

-

 

-

 

-

 

32,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kelly Stopher

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

6,000

 

-

 

20,000

 

34,742

 

-

 

-

 

-

 

60,742

2011

24,818

 

-

 

-

 

-

 

-

 

-

 

-

 

24,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Jenkins,

Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

 

9,500

 

-

 

27,354

 

-

 

-

 

3,600

 

40,454

2011

 

 

-

 

-

 

-

 

-

 

-

 

1,950

 

1,950

2010

 

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ed Ullmer, Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

 

-

 

-

 

19,966

 

-

 

-

 

-

 

19,966

2011

 

 

-

 

-

 

-

 

-

 

-

 

1,250

 

1,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

As of April 30, 2012, we did not have any outstanding equity awards.




Page 47 of 50






EMPLOYMENT CONTRACTS

The Company has employment contracts, termination of employment or change-in-control arrangements with its Chairman, President, Chief Financial Officer and Director of Exploration, which may be viewed on the SEC’s website at www.sec.gov.    

ITEM 12.

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

EQUITY COMPENSATION PLANS

We have entered into employment contracts with our Chairman of Board, President, Chief Financial Officer and Director of Exploration.  These agreements allow the Company, at its discretion, to compensate these respective individuals through the issuance of common stock in lieu of cash compensation.  See Note 11 for a discussion on the issuance of stock pursuant to these agreements.  These agreements may be viewed on the SEC’s website at www.sec.gov.  The Company has also adopted its 2011 Stock Option/Restricted Stock Plan.  See Note/(s) for a discussion on the 2011 Plan and issuances of options pursuant to the 2011 Plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the number of shares of the Company's common stock owned beneficially as of July 30th, 2012 by: (i) each person (including any group) known to it to own more than five percent (5%) of any class of its voting securities, (ii) each of the Company's directors, (iii) each of the Company's named executive officers; and (iv) officers and directors as a group. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.   

Title of Class

 

Name and Address of Beneficial Owner

 

Amount and Nature of Beneficial Ownership

 

Percentage of

Common Stock

DIRECTORS AND EXECUTIVE OFFICERS

 

 

 

 

Common stock

 

Lindsay Gorrill, 611 E. Sherman Avenue, Coeur d'Alene, ID

 

9,152,105(1)

 

41.3%

Common stock

 

David Segelov, 611 E. Sherman Avenue, Coeur d' Alene, ID

 

2,103,094(2)

 

9.5%

Common stock

 

Kelly Stopher,  611 E. Sherman Avenue, Coeur d' Alene, ID

 

228,810

 

1.0%

Common stock

 

Ian Falconer, 611 E. Sherman Avenue, Coeur d'Alene, ID

 

603,145

 

2.7%

Common stock

 

Scott Jenkins, Tonopah, NV

 

-

 

-

Common stock

 

Ed Ullmer, Denver, CO

 

-

 

-

Common stock

 

All Directors and Officers

as a Group

 

12,087,154

 

54.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% STOCKHOLDERS

 

 

 

 

Common stock

 

Lindsay Gorrill

 

9,152,105(1)

 

41.3%

Common stock

 

David Segelov

 

2,103,094(2)

 

9.5%

 

 

 

 

 

 

 

(1) Includes 6,565,982 shares held directly in shareholders name, and 2,586,123 shares held in name of shareholders spouse.

(2) Includes 99,898 shares held directly in shareholders name, and 2,003,196 shares held in name of shareholder’s affiliate.

|

Notes:

 

(1)

Based on 22,184,134 shares of the Company's common stock issued and outstanding as of July 30, 2011, Under Rule 13d-3, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on April 30, 2012



Page 48 of 50










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

Except as described below, none of the following parties has, since the Company's date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, other than noted in this section:

 

(i)

Any of the Company's directors or officers;

 

(ii)

Any person proposed as a nominee for election as a director;

 

(iii)

Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to the Company's outstanding shares of common stock;

 

(iv)

Any of the Company's promoters; and

 

(v)

Any relative or spouse of any of the foregoing persons who has the same house as such person.

Director Independence

Quotations for the Company's common stock are entered on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation.

ITEM 14.         PRINCIPAL AND ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed for the two most recently completed fiscal years ended April 30, 2012 and 2011 for professional services rendered by the principal accountant for the audit of the Company's annual financial statements and review of the financial statements included the Company's Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

  

Year Ended April 30, 2012

Year Ended April 30, 2011

Audit Fees

$40,138

$21,470

Audit Related Fees

Nil

Nil

Tax Fees

Nil

Nil

All Other Fees

$1,115

Nil

                                   Total

$41,253

$21,470


PART IV

ITEM 15.                    EXHIBITS.

Exhibit

 

Number

Description of Exhibits

 

 

 

 

31.1

Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32.1

Certification of Principal Executive Officer and Principal Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 




Page 49 of 50






SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  

  

  

STAR GOLD CORP.

  

  

  

  

  

  

  

  

Date:

August 9, 2012

 

/s/ David Segelov

 

 

 

 

 

 

By:

David Segelov

  

  

  

President and Director

  

  

  

(Principal Executive Officer)

  

  

  

 

Date:

August 9, 2012

  

/s/ Kelly J. Stopher

 

 

 

 

 

 

      By:

Kelly J. Stopher

  

  

  

Treasurer and Corporate Secretary

 

 

 

(Chief Financial Officer and Principal Accounting Officer)

  

  

 

 

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

Date:

August 9, 2012

By:

/s/David Segelov

  

  

  

 

  

  

  

President and Director

  

  

  

(Principal Executive Officer )

  

  

  

 

Date:

August 9, 2012

  

/s/ Kelly J. Stopher

 

 

 

 

 

 

      By:

Kelly J. Stopher

  

  

  

Treasurer and Corporate Secretary

 

 

 

(Chief Financial Officer and Principal Accounting Officer)



 



Page 50 of 50



PINX:SRGZ Star Gold Corp. Annual Report 10-K Filling

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

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PINX:SRGZ Star Gold Corp. Annual Report 10-K Filing - 4/30/2012
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