10-K 1 q1101020_10k-bullfrog.htm Unassociated Document
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2012

OR

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

Commission File No. 000-54653
BULLFROG GOLD CORP.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
41-2252162
(State or Other Jurisdiction
 
(I.R.S. Employer Identification
Of Incorporation or Organization)
 
Number)
     
897 Quail Run Drive
Grand Junction, CO
 
81505
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code (970) 628-1670

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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

Indicate by check mark 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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

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

Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer o
(Do not check if a smaller reporting company)
 
Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes o No þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $18,933,923.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 42,287,945 shares of common stock, par value $0.0001, were outstanding on March 11, 2013.
 
 
 

 

 
TABLE OF CONTENTS

PART I

Item 1.
 
Business
2
Item 1a.
 
Risk Factors
7
Item 1b.
 
Unresolved Staff Comments
14
Item 2.
 
Properties
14
Item 3.
 
Legal Proceedings
25
Item 4.
 
Mine Safety Disclosures
25

PART II

Item 5.
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
26
Item 6.
 
Selected Financial Data
30
Item 7.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
Item 7a.
 
Quantitative and Qualitative Disclosures About Market Risk
36
Item 8.
 
Financial Statements
36
Item 9.
 
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
36
Item 9a.
 
Controls and Procedures
36
Item 9b.
 
Other Information
37

PART III

Item 10.
 
Directors, Executive Officers and Corporate Governance
38
Item 11.
 
Executive Compensation
40
Item 12.
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
42
Item 13.
 
Certain Relationships and Related Transactions, and Director Independence
44
Item 14.
 
Principal Accountant Fees and Services
44

PART IV

Item 15.
 
Exhibits
45
   
Signatures
47

 
 
 

 
 
GLOSSARY OF SELECTED MINING TERMS

Breccia
Broken sedimentary and volcanic rock fragments cemented by a fine-grained matrix.
 
Clastic Rock
Fragments, or clasts, of pre-existing minerals.
 
Cutoff Grade:
The minimum mineral content included in mineral and ore reserve estimates and that may be economically mined and or processed.
 
Detachment Fault:
A regionally extensive, gently dipping normal fault that is commonly associated with extension in large blocks of the earth’s crust.
 
Exploration Stage:
The US Securities and Exchange Commission’s descriptive category applicable to public mining companies engaged in the search for mineral deposits and ore reserves and which are neither in the development or production stage.
 
Metamorphic Rock:
Rock that has transformed to another rock form after intense heat and pressure.
 
Miocene
A geologic era that extended form 5 million to 23 million years ago.
 
Net Smelter Royalty:
A percentage  payable to an owner or lessee from the production or net proceeds received by the operator from a smelter or refinery, less transportation, insurance, smelting and refining costs and penalties as set out in a royalty agreement. For gold and silver royalties, the deductions are relatively low while for base metals the deductions can be substantial.
 
Paleozoic:
A geologic era extending from 230 million to 600 million years ago.
 
Photogrammetry:
The science of making measurements from photographs. The output is typically a map or a drawing.
 
Protozeroic:
A geologic era extending from 540 million years to 2,500 million years ago.
 
Reserves:
That part of a mineral deposit that can be economically and legally extracted or produced at the time of the  reserve estimate
 
Reverse Circulation (RC):
A drilling method whereby drill cuttings are returned to the surface through the annulus between inner and outer drill rods, thereby minimizing contamination from wall rock.
 
Rhyolite
An igneous, volcanic extrusive rock containing more than 69% silica.
 
Schist
A group metamorphic rocks that contain more than 50% platy and elongated minerals such as mica.
 
Siliciclastic Rock:
Non-carbonate sedimentary rocks that are almost exclusively silicas-bearing, either as quartz or silicate minerals.
 
Tertiary
A geologic era from 2.6 million to 65 million years ago.
 
 
 

 
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K or as incorporated by reference contains “forward-looking statements” as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent our expectations or beliefs, including but not limited to, statements concerning our operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “could,” “might,” “plan,” “predict” or “project” or the negative of these words or other variations on these words or comparable terminology.

Such forward-looking statements include statements regarding, among other things, (1) our estimates of mineral reserves and mineralized material, (2) our projected sales and profitability, (3) our growth strategies, (4) anticipated trends in our industry, (5) our future financing plans, (6) our anticipated needs for working capital, (7) our lack of operational experience and (8) the benefits related to ownership of our common stock. These statements constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this filing generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Item 1A. Risk Factors” below and other risks and matters described in this filing and in our other SEC filings. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur as projected. We do not undertake any obligation to update any forward-looking statements.

PART I

ITEM 1. BUSINESS

Corporate History; Recent Events

As used in this Annual Report on Form 10-K, unless otherwise indicated, the terms “we,” “us,” “our,” “Bullfrog Gold” and “the Company” refer to Bullfrog Gold Corp, a Delaware corporation.

Bullfrog Gold Corp., (“Bullfrog Gold” or, the “Company") was incorporated under the laws of the State of Delaware on July 23, 2007 as Kopr Resources Corp. On July 19, 2011, Bullfrog Gold's board of directors approved an Amended and Restated Certificate of Incorporation of the Company to authorize (i) the change of the name of the Company to "Bullfrog Gold Corp." from "Kopr Resources Corp." (ii) the increase in the authorized capital stock to 250,000,000 shares and (iii) the change in par value of the capital stock to $0.0001 per share. The Company is in the exploration stage of its resource business.

On March 17, 2011 the Board of Directors of Bullfrog Gold unanimously approved the reverse stock split of the Company's issued and outstanding stock as of April 4, 2011 at a ratio of 1 for 5.75. The par value and total number of authorized shares were unaffected by the reverse stock split. All shares and per share amounts in these financial statements and notes thereto have been retrospectively adjusted to all periods presented to give effect to the reverse stock split.

On July 19, 2011, Bullfrog Gold's board of directors authorized a 51.74495487 for one forward split of our outstanding common stock in the form of a dividend, whereby an additional 50.74495487 shares of common stock, par value $0.0001 per share, was issued on each one share of common stock outstanding as of July 25, 2011. All shares and per share amounts in these financial statements and notes thereto have been retrospectively adjusted to all periods presented to give effect to the forward stock split.

On September 30, 2011, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Standard Gold Corp., a privately held Nevada corporation (“Standard Gold”), and Bullfrog Gold Acquisition Corp., the Company’s newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”), pursuant to which Standard Gold merged with and into Acquisition Sub, with Standard Gold as the surviving entity, causing Standard Gold to become the Company’s wholly-owned subsidiary (the “Merger”). Following the closing of the Merger the Company conducted a private placement (the “2011 Private Placement”) pursuant to which it sold units at a per unit price of $0.40 to thirty-five accredited investors with each unit consisting of one share of the Company’s common stock (except that three investors elected to receive, in lieu of common stock, one share of Series A Preferred Stock), and one warrant to purchase 50% of the number of shares purchased at an exercise price of $0.60 per share. Immediately following the closing of the Merger, under an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, the Company transferred substantially all of its pre-exchange assets and liabilities to a wholly-owned subsidiary, Kopr Resources Holdings, Inc. (“SplitCo”) and thereafter, pursuant to a stock purchase agreement, transferred all of the outstanding capital stock of SplitCo to our former officer and director in exchange for the cancellation of shares of our common stock she owned. See Note 2 in the Notes to Financial Statements for additional details concerning the reverse merger transaction.
 
 
2

 

 
On November 2, 2012 the Board of Directors unilaterally amended the exercise price of the Warrants as part of the 2011 Private Placement from $0.60 to $0.40.

On November 19, 2012, we sold an aggregate of 4,300,000 units with gross proceeds to the Company of $1,075,000 to certain accredited investors pursuant to a subscription agreement.

On December 10, 2012 (the “Closing Date”), the Company entered into a Facility Agreement evidencing a secured loan (the “Facility”) with RMB Australia Holdings Limited (“RMB”), as the lender, in the amount of $4.2 million.  The loan proceeds from the Facility will be used to fund an agreed work program relating to the Newsboy gold project located in Arizona and for agreed general corporate purposes.  Standard Gold Corp., a Nevada Corporation (“Standard Gold”) and the Company’s wholly owned subsidiary is the borrower under the Facility and the Company is the guarantor of Standard Gold’s obligations under the Facility.  Standard Gold will pay an arrangement fee of 7% of the Facility amount due upon the first draw down of the Facility.  The Facility will be available until March 31, 2014 with the final repayment date due 24 months after the Closing Date.  Standard Gold has the option to prepay without penalty any portion of the Facility at any time subject to 30 day notice, any broken period costs and minimum prepayment amounts of $500,000.  The Facility bears interest at the rate of LIBOR plus 7% with interest payable quarterly in cash.  In connection with the Facility, the Company issued 7,000,000 warrants to purchase shares of the Company’s common stock for $0.35 per share to be exercisable for 36 months after the Closing Date, with the proceeds from the exercise of the warrants to be used to repay the Facility.

On December 17, 2012, we sold an aggregate of 2,000,000 units with gross proceeds to the Company of $500,000 to certain accredited investors pursuant to a subscription agreement.

On December 21, 2012, the Board of Directors of the Company approved a stock compensation distribution to David Beling, the Chief Executive Officer and President of the Company, and Tyler Minnick, the Company’s Vice President of Administration and Finance in lieu of a cash year-end bonus and performance bonus. The Company awarded a total of 400,000 shares of its restricted common stock, par value $0.0001 per share (the “Common stock”) to Mr. Beling and awarded 100,000 shares of its restricted Common Stock to Mr. Minnick. The restricted stock awards were made at $0.37 per share determined by the Company’s board of directors based on the closing price of the Company’s Common Stock on the Over the Counter Bulletin Board on December 21, 2012. The restricted stock awards of Common Stock are 100% percent vested as of the grant date. There are no plans to register the shares of restricted stock and therefore sales of such shares will be subject to transfer restrictions pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended.

On February 4, 2013, we sold an aggregate of 1,800,060 units with gross proceeds to the Company of $450,015 to five accredited investors pursuant to a subscription agreement.

We are an exploration stage company engaged in the acquisition and exploration of properties that may contain gold mineralization in the United States. Our target properties are those that have been the subject of historical exploration. We have acquired exploration permits on state lands and Federal patented and unpatented mining claims in the states of Arizona and Nevada for the purpose of exploration and potential development of gold on a total of approximately 6,860 acres. We plan to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential. The Company has acquired three projects, as described below.

Newsboy Project
The Newsboy Project comprises 4,958 acres of state, federal and patented lands located 45 miles northwest of Phoenix, Arizona. In June 2012 the Company determined that one of the state permits was not beneficial to the project and did not renew one of the four state permits therefore reducing the land holdings from 5,240 to 4,958 acres and three state permits (in the normal course of business we have staked over 100 additional mining claims for the Newsboy Project, but these have not yet been filed with the US BLM or Maricopa County. As a result, the official ownership of these claims has not been recorded. After recordation, these additional claims will be owned by the Company and increase our Newsboy Project to approximately 7,400 acres).  The closest towns, Wickenburg and Morristown, are located 10 miles and 3 miles respectively from the site and provide excellent infrastructure. Approximately 1.2 million ounces of gold and 1 million ounces of silver have been produced within 25 miles of the Newsboy Project from several historic mines, including the Vulture, Congress, Octave and Yarnell.
 
In September 2011, the Company obtained the working right and option to earn a 100% interest in and to the Newsboy Project. Terms of this Agreement include the payment of $3,425,000 during the five-year period ending January 2017 plus a 2% net smelter royalty.
 
 
3

 

 
In addition to the main mineral zone drilled by predecessors, the Newsboy Project has nine relatively shallow priority drill targets and other secondary targets below existing drill depths. The Company and its independent consultants have developed a detailed exploration drilling program to confirm and expand mineralized zones and collect additional environmental and technical data. The Company has contracted an independent certified professional geologist, Clive Bailey, to prepare the permits and plans for the drill programs. Mr. Bailey also procures the drilling, assaying and surveying firms to complete the work and manages all the field activities on the project. All deliverables to the Company by Mr. Bailey from the period September 2011 to date include proposed and actual drill hole locations, geology logs of drill cuttings, plan maps and cross-sections and data received from drillers, assayers and surveyors. Mr. Bailey was engaged as an independent contractor by the President of the Company, who has known Mr. Bailey for 30 years. We paid Mr. Bailey approximately $130,000 for the period October 1, 2011 to September 30, 2012.  We have not requested Mr. Bailey to prepare and/or provide the Company with any reports as a certified professional geologist; however he does prepare the permits and plans for the drilling programs.

The following is a description of the first two phases of drilling the Company completed in 2012 at the Newsboy Project:

PHASE 1:

 
·
One vertical hole drilled in the basement schist rocks discovered a vein that contained 50 feet (15.2 meters) of 0.084 gold ounces per short ton (opt) (2.9 grams/metric tonne) and 0.18 silver opt (6.1 g/mt), including 5 feet (1.5 m) of 0.39 gold opt (13.5 g/mt) and 0.39 silver opt (13.5 g/mt).
 
 
·
Five holes drilled within a 1992 proposed open pit mine area averaged 0.048 gold opt (1.6 g/mt), 1.2 silver opt (41.1 g/mt) and 64 feet in thickness (19.5 m). These results are comparable and confirmatory of adjacent old drill data.
 
 
·
Sixteen additional holes were drilled in the large area surrounding the proposed open pit limits. Nine of these holes contained mineralization above the cutoff grade of 0.015 gold opt (0.5 g/mt).  A total of 24 drill holes were drilled in Phase 1.


PHASE 2:

During May and June 2012 the Company completed 24 additional holes as the second phase drilling program.  Below are highlights from the second phase drilling program.

 
·
Two holes show the high grade mineralization discovered in phase 1 to be tabular with an apparent dip of 15°. As a result, the thickness and tonnage in this area may be an order of magnitude greater than that of a narrow, near vertical vein as initially thought.
 
 
·
The pit limit will be expanded accordingly with 20% higher grade gold than the 0.044 gold opt estimated in the 1992 pit.
 
 
·
The open area immediately east of these three holes is approximately 800 feet by 1,200 feet and will be drilled to expand this new mineralization and establish its true thickness.


The Company intends to continue drilling the Newsboy Project and surrounding area during 2013. Phase 3 drilling was completed in early March 2013, with 26 drill holes, the drill data is currently being analyzed. The completion of Phase 3 drilling brings the total drill holes completed by the Company to 74. The Company is planning to update the historic feasibility study and environmental permit applications. Phase 4 is expected to begin in April with approximately 24 drill holes and phase 5 is expected to begin in December with approximately 24 drill holes.

In June 2012 the Company purchased a substantial historic data base from Moneta Porcupine Mines, who owned the property from 1993 through 1995. The company also intends to stake during early 2013 several additional mining claims in and around its current land holdings.

On December 11, 2012 the Company entered a lease agreement with Vulture View Mine, LLC (“Vulture View”) to lease two patents of approximately 38 acres.  As a result the Company’s land position as of January 1, 2013 totals 4,958 acres (in the normal course of business we have staked over 100 additional mining claims for the Newsboy Project, but these have not yet been filed with the US BLM or Maricopa County. As a result, the official ownership of these claims has not been recorded. After recordation, these additional claims will be owned by the Company and increase our Newsboy Project to approximately 7,400 acres). The Company paid $20,000 on December 11, 2012 for the first two lease years and agreed to a work commitment of $100,000 to explore the patents and surrounding area during the first lease year.   The Company will pay Vulture View $10,000 on the second anniversary and $10,000 each year thereafter until termination of the lease.
 
 
 
4

 
 
In addition, the Company shall pay Vulture View net smelter production royalties as set forth in the table below. Notwithstanding the forgoing, at the Company’s sole and absolute discretion prior to the commencement of commercial production from the two patents, the Company shall have the right at any time to purchase or buy-down up to one half of any, each or all of the three royalty components from Vulture View by making payments of $100,000.00 per 0.5% of base net smelter return royalties for Gold, Silver and/or Other Products to Vulture View, which shall be exercised only in one-half increments of percentage points. In the event that the Company exercises the right to purchase or buy-down the Royalty, Vulture View shall deliver to the Company any documents as the Company may require, evidencing such reduction of Vulture View’s Royalty interest. For clarification, the parties understand that any royalty payments made by the Company to Vulture View prior to the election to purchase the Royalty may not be credited toward the buy-down price.

 
 
Base NSR, %
Prices
Max. Buy- Down NSR, %
Gold
1.0
less than $1,200/ tr oz
0.50
 
1.5
$1,201 to $1,600
0.75
 
2.0
$1,601 to $2,000
1.00
 
2.5
$2,001 to $2,400
1.25
 
3.0
$2,401 to $2,800
1.50
 
3.5
$2,801 to $3,200
1.75
 
4.0
$3,200 to $4,000
2.00
 
4.5
$4,000 to $5,000
2.25
 
5.0
greater than $5,000
2.50
       
Silver
1.0
less than $15/ tr oz
0.50
 
1.5
$15.01 to $30
0.75
 
2.0
$30.01 to $45
1.00
 
2.5
$45.01 to $60
1.25
 
3.0
$60.01 to $75
1.50
 
3.5
$75.01 to $90
1.75
 
4.0
$90.01 to $105
2.00
 
4.5
$105.01 to $120
2.25
 
5.0
greater than $120
2.50
       
Other Products
2.0
Determined by Product
1.00

For further details and description of the Newsboy Project, please see Item 2, Properties, herein.

Bullfrog Project
The Bullfrog Gold Project lies approximately 3 miles northwest of the town of Beatty and 116 miles northwest of Las Vegas, Nevada. Standard Gold acquired a 100% right, title and interest in and to 1,650 acres of mineral claims and patents known as the “Bullfrog Project” subject to a 3% net smelter royalty. The Company proposes to drill 22 holes during 2013 to test for potential mineralization that may extend from the Montgomery-Shoshone open pit mine onto the Company’s adjacent property. The Company has engaged Mr. Chip Allender, certified professional geologist to prepare drilling plans and permit applications for the Bullfrog Project.  Mr. Allender was engaged as an independent contractor by the President of the Company, who has known Mr. Allender for four years. We paid Mr. Allender approximately $30,000 for the period October 1, 2011 to September 30, 2012.  We have not requested Mr. Allender to prepare and/or provide the Company with any reports as a certified professional geologist; however he does prepare the permits and plans for the drilling programs.

For further details and description of the Bullfrog Project, please see Item 2, Properties, herein.

Klondike Project
The Company acquired the option to purchase the Klondike Project in Nevada in June 2012.  The Klondike Project is located in the Alpha Mining District about 40 miles north of Eureka, Nevada. The initial property included 64 unpatented mining claims, to which Bullfrog recently staked an additional 168claims for a total of 4,640 acres

The Klondike Project covers mineralized structures 5 miles long and 1.5 miles wide along the west flank of the Sulfur Springs mountain range.  The rocks within this corridor are intensely broken by numerous periods of faulting, thereby providing a favorable environment for several sequences of hydrothermal solutions to form mineral deposits.   These host rocks are mostly Devonian age sediments typical of most Carlin gold deposits.

At least two styles of mineral deposits exist on the Company’s property:

 
·
The oldest is a silver-rich, lead-zinc event that appears to be related to a molybdenum porphyry system that is not exposed but indicated by geochemistry and alteration.  In this regard, the Klondike claims lie 10 miles north of the Mt. Hope molybdenum mine which is currently under development as one of the world’s largest molybdenum deposits.  The Mt. Hope deposit has a halo of silver-zinc mineralization that is typically more than a thousand feet thick and above several thousand feet of molybdenum mineralization.  A silver-rich copper event may also be related to this style of mineralization.
 
 
5

 
 
 
·
A later stage Carlin-style gold-arsenic-barite mineralizing event over-printed the earlier silver-zinc-molybdenum system.  This event has wide-spread anomalous gold values with arsenic and associated calcite veining.  Barite may be related to all events. A new gold discovery is currently being drilled by other companies 10 miles west of the Klondike and may be the continuation of the massive Cortez gold trend.

A total of 156 surface rock chip samples of the Klondike host rocks averaged 32 ppm silver, 1.3 % zinc, 0.8 % lead, 0.16 % copper and anomalous gold.   These contents compare well with major silver-zinc deposits such as San Cristobal in Bolivia, Penasquito in Mexico and the new discovery of Cordero in Mexico, each of which may contain more than 100 million tonnes of ore.  See Note 6 in the Notes to Financial Statements for additional details concerning the purchase transaction.

The Company also used Mr. Allender to evaluate acquisition of the Klondike Project and for developing its permit applications and drilling plans.

For further details and description of the Klondike Project, please see Item 2, Properties, herein.

Competition
We do not compete directly with anyone for the exploration or removal of minerals from our property as we hold all interest and rights to the claims. Readily available commodities markets exist in the U.S. and around the world for the sale of minerals. Therefore, we will likely be able to sell minerals that we are able to recover. We will be subject to competition and unforeseen limited sources of supplies in the industry in the event spot shortages arise for supplies such as explosives or large equipment tires, and certain equipment such as bulldozers and excavators and services, such as contract drilling that we will need to conduct exploration. If we are unsuccessful in securing the products, equipment and services we need, we may have to suspend our exploration plans until we are able to secure them.

Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the United States generally. We will also be subject to the regulations of the Bureau of Land Management (“BLM”) and Arizona with respect to mining claims on Federal lands and three exploration permits on Arizona state lands at the Newsboy Project.

We are required to pay annual maintenance fees to the BLM to keep our Federal lode and placer mining claims in good standing. The maintenance period begins at noon on September 1st through the following September 1st and payments are due by the first day of the maintenance period. The annual fee is $140 per lode claim and for each 20 acre portion of a placer claim. The Arizona state exploration permits currently are $13,440 per year.

Future exploration drilling on any of our properties that consist of BLM land will require us to either file a Notice of Intent or a Plan of Operations with the BLM, depending upon the amount of new surface disturbance that is planned. A Notice of Intent is required for planned surface activities that anticipate less than 5.0 acres of surface disturbance, and usually can be obtained within a 30 to 60-day time period. A Plan of Operations will be required if there is greater than 5.0 acres of new surface disturbance involved with the planned exploration work. A Plan of Operations can take several months to be approved, depending on the nature of the intended work, the level of reclamation bonding required, the need for archeological surveys, and other factors as may be determined by the BLM.

Research and Development
During the fiscal years ended December 31, 2012 and 2011 and the period from inception until December 31, 2010, we have had no expense related to research and development.

Corporate Office
Our principal executive office is 897 Quail Run Drive, Grand Junction, CO 81505. Our main telephone number is (970) 628-1670. Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available free of charge through the Securities and Exchange Commission’s website at www.sec.gov as soon as reasonably practicable after those reports are electronically filed with or furnished to the SEC.

Employees
As of the date of this filing, we employ 2 full-time employees, including our Chief Executive Officer.  We have contracts with various independent contractors and consultants to fulfill additional needs, including investor relations, exploration, development, permitting, and other administrative functions, and may staff further with employees as we expand activities and bring new projects on line.

Legal Proceedings
We are not involved in any pending legal proceeding or litigations and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.
 
 
6

 

 
ITEM 1A. RISK FACTORS

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

Risks Relating to Our Business

We are a new company with a short operating history and have only lost money.

Standard Gold Corp., our exploration and operating subsidiary, was formed in January 2010. Our operating history consists of starting our preliminary exploration activities. We have no income-producing activities from mining or exploration. We have already lost money because of the expenses we have incurred in acquiring the rights to explore our properties and starting our preliminary exploration activities. Exploring for gold and other minerals or resources is an inherently speculative activity. There is a strong possibility that we will not find any commercially exploitable gold or other deposits on our properties. Because we are an exploration company, we may never achieve any meaningful revenue.

Since we have a limited operating history, it is difficult for potential investors to evaluate our business.

Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. Since our formation, we have not generated any revenues. As an early stage company, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. Our business is dependent upon the implementation of our business plan. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.

Exploring for gold is an inherently speculative business.

Natural resource exploration, and exploring for gold in particular, is a business that by its nature is very speculative. There is a strong possibility that we will not discover gold or any other resources which can be mined or extracted at a profit. Even if we do discover gold or other deposits, the deposit may not be of the quality or size necessary for us or a potential purchaser of the property to make a profit from actually mining it. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological formations, geological formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.

We will need to obtain additional financing to fund our Bullfrog and Klondike exploration programs.

We do not have sufficient capital to fund our exploration programs for the Bullfrog Project and Klondike Project as it is currently planned or to fund the acquisition and exploration of new properties. We will require additional funding to continue our planned exploration programs and cover the costs of being a public company. We do not have any sources of funding for the Bullfrog Project and the Klondike Project. We may be unable to secure additional financing on terms acceptable to us, or at all. Our inability to raise additional funds on a timely basis could prevent us from achieving our business objectives and could have a negative impact on our business, financial condition, results of operations and the value of our securities. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership of existing stockholders may be diluted and the securities that we may issue in the future may have rights, preferences or privileges senior to those of the current holders of our common stock. Such securities may also be issued at a discount to the market price of our common stock, resulting in possible further dilution to the book value per share of common stock. If we raise additional funds by issuing debt, we could be subject to debt covenants that could place limitations on our operations and financial flexibility.

As discussed in later detail (Liquidity and Capital Resources), the Company has obtained financing for the Newsboy Project and certain corporate expenses in the form of a debt facility of $4,200,000 available until March 31, 2014 with the full amount of the loan to be repaid on or before December 10, 2014.

The global financial crisis may have an impact on our business and financial condition in ways that we currently cannot predict.

The continued credit crisis and related turmoil in the global financial system may have an impact on our business and financial position. The high costs of fuel and other consumables may negatively impact costs of our operations. In addition, the financial crisis may limit our ability to raise capital through credit and equity markets. As discussed further below, the prices of the metals that we may produce are affected by a number of factors, and it is unknown how these factors will be impacted by a continuation of the financial crisis.
 
 
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We do not know if our properties contain any gold or other minerals that can be mined at a profit.

The properties on which we have the right to explore for gold are not known to have any deposits of gold which can be mined at a profit (as to which there can be no assurance). Whether a gold deposit can be mined at a profit depends upon many factors. Some but not all of these factors include: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; operating costs and capital expenditures required to start mining a deposit; the availability and cost of financing; the price of gold, which is highly volatile and cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection.

We are a junior gold exploration company with no mining operations and we may never have any mining operations in the future.

Our business is exploring for gold and other minerals. In the event that we discover commercially exploitable gold or other deposits, we will not be able to make any money from them unless the gold or other minerals are actually mined or we sell all or a part of our interest. Accordingly, we will need to find some other entity to mine our properties on our behalf, mine them ourselves or sell our rights to mine to third parties. Mining operations in the United States are subject to many different federal, state and local laws and regulations, including stringent environmental, health and safety laws. In the event we assume any operational responsibility for mining our properties, it is possible that we will be unable to comply with current or future laws and regulations, which can change at any time. It is possible that changes to these laws will be adverse to any potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess of those anticipated, adversely affecting any potential mining operations. Our future mining operations, if any, may also be subject to liability for pollution or other environmental damage. It is possible that we will choose to not be insured against this risk because of high insurance costs or other reasons.

Our business is subject to extensive environmental regulations which may make exploring for or mining prohibitively expensive, and which may change at any time.

All of our operations are subject to extensive environmental regulations which can make exploration expensive or prohibit it altogether. We may be subject to potential liabilities associated with the pollution of the environment and the disposal of waste products that may occur as the result of exploring and other related activities on our properties. We may have to pay to remedy environmental pollution, which may reduce the amount of money that we have available to use for exploration. This may adversely affect our financial position, which may cause you to lose your investment. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or to enter into interim compliance measures pending the completion of the required remedy. If a decision is made to mine our properties and we retain any operational responsibility for doing so, our potential exposure for remediation may be significant, and this may have a material adverse effect upon our business and financial position. We have not purchased insurance for potential environmental risks (including potential liability for pollution or other hazards associated with the disposal of waste products from our exploration activities). However, if we mine one or more of our properties and retain operational responsibility for mining, then such insurance may not be available to us on reasonable terms or at a reasonable price. All of our exploration and, if warranted, development activities may be subject to regulation under one or more local, state and federal environmental impact analyses and public review processes. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have significant impact on some portion of our business, which may require our business to be economically re-evaluated from time to time. These risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capability. Inasmuch as posting of bonding in accordance with regulatory determinations is a condition to the right to operate under all material operating permits, increases in bonding requirements could prevent operations even if we are in full compliance with all substantive environmental laws.

We may be denied the government licenses and permits which we need to explore on our properties. In the event that we discover commercially exploitable deposits, we may be denied the additional government licenses and permits which we will need to mine our properties.

Exploration activities usually require the granting of permits from various governmental agencies. For example, exploration drilling on unpatented mineral claims requires a permit to be obtained from the United States Bureau of Land Management, which may take several months or longer to grant the requested permit. Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Indian grave yards, threatened or endangered species, archeological sites or the possibility thereof, difficult access, excessive dust and important nearby water resources may all result in the need for additional permits before exploration activities can commence. As with all permitting processes, there is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits. The needed permits may not be granted at all. Delays in or our inability to obtain necessary permits will result in unanticipated costs, which may result in serious adverse effects upon our business.
 
 
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The values of our properties are subject to volatility in the price of gold and any other deposits we may seek or locate.

Our ability to obtain additional and continuing funding, and our profitability in the unlikely event we ever commence mining operations or sell our rights to mine, will be significantly affected by changes in the market price of gold. Gold prices fluctuate widely and are affected by numerous factors, all of which are beyond our control. Some of these factors include the sale or purchase of gold by central banks and financial institutions; interest rates; currency exchange rates; inflation or deflation; fluctuation in the value of the United States dollar and other currencies; speculation; global and regional supply and demand, including investment, industrial and jewelry demand; and the political and economic conditions of major gold or other mineral producing countries throughout the world, such as Russia and South Africa. The price of gold or other minerals have fluctuated widely in recent years, and a decline in the price of gold could cause a significant decrease in the value of our properties, limit our ability to raise money, and render continued exploration and development of our properties impracticable. If that happens, then we could lose our rights to our properties and be compelled to sell some or all of these rights. Additionally, the future development of our properties beyond the exploration stage is heavily dependent upon the level of gold prices remaining sufficiently high to make the development of our properties economically viable. You may lose your investment if the price of gold decreases. The greater the decrease in the price of gold, the more likely it is that you will lose money.

Our property titles may be challenged. We are not insured against any challenges, impairments or defects to our mineral claims or property titles. We have not fully verified title to our properties.

Our properties in Arizona and Nevada are comprised of two patented parcels, three State exploration permits, twelve unpatented placer claims, and four hundred and one unpatented lode claims. These unpatented claims were created and maintained in accordance with the federal General Mining Law of 1872. Unpatented claims are unique U.S. property interests and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the General Mining Law. Although the annual payments and filings for these claims, permits and patents have been maintained, we have conducted limited title search on our Newsboy and Bullfrog project properties. The uncertainty resulting from not having comprehensive title searches on the properties leaves us exposed to potential title suits. Defending any challenges to our property titles may be costly, and may divert funds that could otherwise be used for exploration activities and other purposes. In addition, unpatented claims are always subject to possible challenges by third parties or contests by the federal government, which, if successful, may prevent us from exploiting our discovery of commercially extractable gold. Challenges to our title may increase our costs of operation or limit our ability to explore on certain portions of our properties. We are not insured against challenges, impairments or defects to our property titles, nor do we intend to carry extensive title insurance in the future. Potential conflicts to our mineral claims are discussed in detail elsewhere herein.

Possible amendments to the General Mining Law could make it more difficult or impossible for us to execute our business plan.

The U.S. Congress has considered proposals to amend the General Mining Law of 1872 that would have, among other things, permanently banned the sale of public land for mining. The proposed amendment would have expanded the environmental regulations to which we are subject and would have given Indian tribes the ability to hinder or prohibit mining operations near tribal lands. The proposed amendment would also have imposed a royalty of  8% of gross revenue on new mining operations located on federal public land, which would have applied to substantial portions of our properties. The proposed amendment would have made it more expensive or perhaps too expensive to recover any otherwise commercially exploitable gold deposits which we may find on our properties. While at this time the proposed amendment is no longer pending, this or similar changes to the law in the future could have a significant impact on our business model.

Market forces or unforeseen developments may prevent us from obtaining the supplies and equipment necessary to explore for gold and other resources.

Gold exploration, and resource exploration in general, has demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of our planned exploration activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times for our exploration program. Fuel prices are extremely volatile as well. We will attempt to locate suitable equipment, materials, manpower and fuel if sufficient funds are available. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower become available. Any such disruption in our activities may adversely affect our exploration activities and financial condition.

We may not be able to maintain the infrastructure necessary to conduct exploration activities.

Our exploration activities depend upon adequate infrastructure. Reliable roads, bridges, power sources and water supply are important factors which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our exploration activities and financial condition.
 
 
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Our exploration activities may be adversely affected by the local climates, which could prevent or impair us from exploring our properties year round.

The local climates in Arizona and Nevada may impair or prevent us from conducting exploration activities on our properties year round. Because of their rural locations and current limited infrastructure on site, our properties are generally impassible for several days per year as a result of infrequent but significant rain or snow events. The main access coming from the east to the Newsboy project in Arizona requires crossing a normally dry river bed. However, this access route may be impaired for approximately six days per year, mainly during the monsoon rain season from July through early September. Notwithstanding, the property may be accessed through another, longer route route coming from the west.  The elevation of the Newsboy project is less than 2,000 feet above mean sea level (amsl). The Bullfrog property has occasional snow that can impair exploration activities for a few days per year but would not likely interfere with possible production operations. The elevation of the Bullfrog project ranges from 3,600 to 4,300 feet amsl. The Klondike property ranges in elevation from 6,400 to 7000 feet amsl. Limited snowfall from November through February may impair exploration activities for a few days per year, but is not expected to significantly impact possible production operations.  Earthquakes, heavy rains, snowstorms, and floods could result in serious damage to or the destruction of facilities, equipment or means of access to our properties, or may otherwise prevent us from conducting exploration activities on our properties.

We do not carry any property or casualty insurance at the Bullfrog of Klondike Projects, however we intend to carry such insurance in the future.

Our business is subject to a number of risks and hazards generally, including but not limited to adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to our properties, equipment, infrastructure, personal injury or death, environmental damage, delays, monetary losses and possible legal liability. You could lose all or part of your investment if any such catastrophic event occurs. We do not carry any property or casualty insurance at this time at the Bullfrog or Klondike Projects, however we intend to carry this type of insurance in the future (we carry all insurances that we are required to by law, such as motor vehicle and workers compensation plus other coverage that may be in the best interest of the Company). Even if we do obtain insurance, it may not cover all of the risks associated with our operations. Insurance against risks such as environmental pollution or other hazards as a result of exploration and operations are often not available to us or to other companies in our business on acceptable terms. Should any events against which we are not insured actually occur, we may become subject to substantial losses, costs and liabilities which will adversely affect our financial condition.

Risks Relating to our Organization and our Common Stock

Exercise of options and warrants and/or conversion of preferred stock will dilute your percentage of ownership.

As of March 11, 2013 we have authorized for issuance options to purchase 4,060,000 shares of our common stock and may issue options to purchase up to an aggregate of 4,500,000 shares of common stock under our 2011 Equity Incentive Plan. We also have warrants to purchase 20,972,285 shares of our common stock outstanding and 687,500 shares of Series A Preferred Stock and 2,004,600 shares of Series B Preferred Stock outstanding both of which are convertible into shares of common stock on a one for one basis. In the future, we may grant additional stock options, warrants and convertible securities. The exercise or conversion of stock options, warrants or convertible securities will dilute the percentage ownership of our other stockholders. The dilutive effect of the exercise or conversion of these securities may adversely affect our ability to obtain additional capital. The holders of these securities may be expected to exercise or convert them when we would be able to obtain additional equity capital on terms more favorable than these securities.

Difficulties we may encounter managing our growth could adversely affect our results of operations.

As our business needs expand, we may need to hire a significant number of employees. This expansion may place a significant strain on our managerial and financial resources. To manage the potential growth of our operations and personnel, we will be required to:

 
·
improve existing, and implement new, operational, financial and management controls, reporting systems and procedures;
 
·
install enhanced management information systems; and
 
·
train, motivate and manage our employees.

We may not be able to install adequate management information and control systems in an efficient and timely manner, and our current or planned personnel, systems, procedures and controls may not be adequate to support our future operations. If we are unable to manage growth effectively, our business would be seriously harmed.
 
 
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If we lose key personnel or are unable to attract and retain additional qualified personnel we may not be able to successfully manage our business and achieve our objectives.

We believe our future success will depend upon our ability to retain our key management, including Mr. Beling, our Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and director, and Mr. Lindsay, the Chairman of our Board of Directors. We may not be successful in attracting, assimilating and retaining our employees in the future.

As a result of the reverse merger on September 30, 2011, Standard Gold became a subsidiary of ours and since we are subject to the reporting requirements of federal securities laws, this can be expensive and may divert resources from other projects, thus impairing its ability to grow.

As a result of the reverse merger consummated on September 30, 2011, Standard Gold became a subsidiary of ours and, accordingly, is subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission (including reporting of the reverse merger) and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if Standard Gold had remained privately held and did not consummate the merger.

The Sarbanes-Oxley Act and new rules subsequently implemented by the Securities and Exchange Commission have required changes in corporate governance practices of public companies. As a public company, these new rules and regulations have increased our compliance costs in 2012 and we expect such increased costs to continue beyond 2012 and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

Our stock price may be volatile.

The stock market in general has experienced volatility that often has been unrelated to the operating performance of any specific public company. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

 
·
changes in our industry;
 
·
competitive pricing pressures;
 
·
our ability to obtain working capital financing;
 
·
additions or departures of key personnel;
 
·
limited “public float” in the hands of a small number of persons who sales or lack of sales could result in positive or negative pricing pressure on the market prices of our common stock;
 
·
sales of our common stock;
 
·
our ability to execute our business plan;
 
·
operating results that fall below expectations;
 
·
loss of any strategic relationship;
 
·
regulatory developments;
 
·
economic and other external factors; and
 
·
period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

We have never paid nor do we expect in the near future to pay dividends.

We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock for the foreseeable future.  Investors should not rely on an investment in our Company if they require income generated from dividends paid on our capital stock.  Any income derived from our common stock would only come from rise in the market price of our common stock, which is uncertain and unpredictable.
 
 
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There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

To date there has been no liquid trading market for our common stock. We cannot predict how liquid the market for our common stock might become. Since August 11, 2011, our common stock has been quoted for trading on the OTC Bulletin Board under the symbol BFGC.OB, and, as soon as is practicable, we intend to apply for listing of our common stock on either the NYSE Amex, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange. We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remain listed on the OTC Bulletin Board or suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility. Furthermore, for companies whose securities are traded in the OTC Bulletin Board, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.

Our common stock is subject to the “Penny Stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

Our common stock is considered a “Penny Stock”.  The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder's ability to buy and sell our stock. In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit investors’ ability to buy and sell our stock and have an adverse effect on the market for our shares.

Our common stock may be affected by limited trading volume and price fluctuation which could adversely impact the value of our common stock.

There has been limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants or upon the conversion of our Series A or Series B Preferred Stock, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity related securities in the future at a time and price that we deem reasonable or appropriate.
 
 
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We use paid-for media coverage as part of our investor relations activities.

The Company has entered into third party agreements for activities that we refer to as investor awareness activities.  These activities are intended to familiarize targeted audiences with our business.  These activities may result in attracting interest in our business from writers, bloggers, analysts, newsletters and others.  We are not responsible and we may not be aware of the content or timing of materials produced by such persons.    We may seek to suspend these activities from time to time when we are engaged in capital raising transactions.  Because third parties may continue to disseminate information about us we may be unable to persuade third parties to discontinue these activities.

Our investor relations activities includes paid-for media coverage, personal, video and telephone conferences and non-deal road shows in which our executives meet with prospective investors to discuss the Company’s business plans and methods and our management delivers a presentation about our business that is publicly available on our website.  In addition, to our investor relations activities, we also, in the ordinary course of our business, will attend trade shows and speak at industry conferences and may meet with investors and prospective investors. We do not consider these activities to be part of our investor relations activities.

The Company will sometimes provide compensation to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced for us by third parties. The Company seeks to direct the third parties to publicly-available information concerning the Company. The Company does not intend to review or approve the content of such reports or materials produced based upon their own industry, market or company research or methods.  Investor relations firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control nor is the content of such news stories. In addition, investors in the Company may, from time to time, also take steps to encourage investor awareness through similar activities that may be undertaken at the expense of the investors.   Investor relations activities may also be suspended or discontinued which may impact the trading market of our common stock.  Since we do not control the content and opinions expressed by third parties in connection with our paid-for media coverage, some of the information written or expressed by such third parties about our Company may contain inaccurate information about our Company.

The Company has inquired from its investor relations vendors, and believes that, investor relations activities were suspended in September 2012 prior to the Company's recently consummated private placements. The Company, however, continued to attend industry conferences in the ordinary course of business in September 2012 through November 2012 after such suspension, which has been and continues to be the Company’s practice.
 
 
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ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our principal executive office occupies approximately 230 square feet in Grand Junction, CO for a monthly payment of $600 per month. Total rent payments for 2012 at this location was $7,200 and are anticipated to be $7,200 in 2013. We believe that our facilities are adequate to meet our needs for the foreseeable future.

We are engaged in the acquisition and exploration of properties that may contain gold mineralization in the United States. Our target properties are those that have been the subject of historical exploration. We have acquired State Exploration Permits and Federal patented and unpatented mining claims in the states of Arizona and Nevada for the purpose of exploration and potential development of gold on a total of approximately 11,250 acres. We plan to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.

Our properties do not have any reserves. We plan to conduct exploration programs on these properties with the objective of ascertaining whether any of our properties contain economic concentrations of precious and base metals that are prospective for mining.

Bullfrog Gold Project

(1) Location

The central part of the Bullfrog Mining District lies approximately 2-1/2 miles northwest of the town of Beatty, which is in southwestern Nevada (Figure 1). Beatty lies 116 miles northwest of Las Vegas, via U.S. Highway 95, and 93 miles south of Tonopah, also via U.S. Highway 95. The property is accessed by traveling 2 miles west from Beatty on Nevada Highway 374, which intersects the southern block of the Company’s claims. The remaining claims are accessed by traveling north for four miles on various improved and unimproved roads to the northern end of the Company’s claims.
 
 
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Figure 1. Bullfrog Project Location Map

(2) Title & Holding Requirements

On September 29, 2011, Standard Gold entered into an Amended and Restated Agreement of Conveyance, Transfer and Assignment with Bullfrog Holdings, Inc. and NPX Metals, Inc., pursuant to which Standard Gold acquired 100% right, title and interest in and to certain mineral claims known as the “Bullfrog Project” in consideration for 923,077 shares of Standard Gold’s common stock which were issued to NPX Metals, Inc. and a 3% Net Smelter Royalty in the Bullfrog Project to Bullfrog Holdings, Inc. To retain the property, the Company must pay the annual claim maintenance fees and file a Notice of Intent to Hold with the BLM and Nye County, Nevada. The Company must also pay the county taxes on the two patented properties.

(3) History
 
In 1904 the Original Bullfrog and Montgomery-Shoshone mines were discovered by local prospectors. Prospecting activity was widespread over the Bullfrog Hills, and encompassed a 200 square mile area but centered within a two mile radius around the town of Rhyolite and included part of the Company’s property. The Montgomery-Shoshone mine reportedly produced about 94,000 ounces of gold prior to its closure in 1911, but there was no significant production from the other mines during that time period. Mines in the district were sporadically worked from 1911 through 1941, but the Company has no production records of such limited activities.

The Company’s Providence lode mining claim designated by the Surveyor General as Survey No. 2470 was located in October 1904, surveyed in April 1906, patented in May 1906 and recorded in Nye County Nevada in June 1908. The unpatented Lucky Queen claim is immediately east and adjacent to the Providence patent and is believed to have been located in the same time period but was not patented.
 
 
15

 
 
With the rise of precious metal prices in the early 1970's, the Bullfrog District again underwent intense prospecting and exploration activity for gold as well as uranium. Companies exploring the area included Texas Gas Exploration, Inc., Phillips Uranium, Tenneco /Copper Range, U.S. Borax, Western States Minerals, Rayrock, St. Joe American and successors Bond, Lac and Barrick Minerals, Noranda, Angst Mining Company, Placer Dome, Lac-Sunshine Mining Company Joint Venture, Homestake, and others. In addition to these major companies, several junior mining companies and individuals were involved as prospectors, promoters and owners. These scientific investigations yielded a new deposit model for the gold deposits that were mined by others in the Bullfrog District. The identification and understanding of the detachment fault system led to significant changes in exploration program techniques, focus, and success.
 
In 1982 St. Joe American, Inc. initiated drilling in the Montgomery-Shoshone mine area. By 1986, sixty holes had been drilled and a mineral inventory was defined. Subsequent drilling outlined a reported 2.9 million ounces of gold equivalent in the Bullfrog deposit. A series of corporate takeovers transferred ownership from St. Joe, to Bond Gold, to Lac Minerals and eventually to Barrick Minerals. Production started in 1989 and recovered approximately 200,000 ounces of gold annually from a conventional, 8,000 ton/day cyanidation mill mainly fed from open pit operations and later supplemented with underground production. Barrick discontinued production operations in 1999 and completed reclamation in 2003. Thereafter several groups continued exploration on a limited basis on lands currently held by the Company, but no resources or reserves were ever defined by these companies on the Company’s lands.

(4) Property Status and Plans

The Montgomery-Shoshone open pit mine remains open for possible access to additional mineralization that may occur on the Company’s adjacent property, but the company has no rights or authority to use such existing access on lands owned by others. The Company has conducted limited field examinations on its property to date but has evaluated all relevant available information. An exploration program has been developed and is scheduled to begin in 2013. Our primary targets are deposits that may be mined by open pit methods while assessing secondary targets that have potential for underground mining. The Company’s claims and patents cover approximately 1,620 acres and are in good standing, but contain no known resources or reserves and no plant or equipment. Electric power is available within two to five miles of the Company’s property.  The exploration program planned for the Bullfrog Project is provided below:
 
BULLFROG PROJECT
Dollars in thousands
 
   
2013
   
2014
       
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
Jun
   
Jul
   
Aug
   
Sep
   
Oct
   
Nov
   
Dec
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
TOTAL
 
BUDGET
                                                                                                           
Drill Holes
                                  11                         11                                                 22  
                                                                                                                   
Office & Warehouse Rent
    -       -       -       -       -       1       1       1       1       1       1       1       1       1       1       1       1       12  
Office Supplies & Equipment
    -       -       -       -       -       1       1       1       1       1       1       1       1       1       1       1       1       12  
Profession Consulting Services
    -       -       -       -       3       12       3       6       3       12       3       3       3       3       3       3       3       60  
Technician Consulting Services
    -       -       -       -       1       2       -       -       4       2       2       -       -       -       -       -       -       11  
Consulting Expense
    -       -       -       -       -       1       -       1       -       1       -       -       -       -       -       -       -       3  
Legal Fees
    4       2       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       21  
Land Fees
    -       -       -       -       -       -       -       12       -       -       -       -       -       -       -       -       -       12  
Drilling & Coring
    -       -       -       -       -       221       -       -       -       221       -       -       -       -       -       -       -       442  
Assaying
    -       -       -       -       -       -       50       -       -       -       50       -       -       -       -       -       -       100  
Support Equipment Services
    -       -       -       -       8       4       -       -       8       4       -       -       -       -       -       -       -       24  
Geochem, Geophysics etc
    -       -       -       -       10       10       -       -       -       -       -       -       -       -       -       -       -       20  
Surveying
    -       -       -       -       -       -       -       5       -       -       -       5       -       -       -       -       -       10  
Field Supplies
    -       -       -       -       -       2       2       -       -       -       2       2       -       -       -       -       -       8  
Environmental Permitting
    -       -       -       -       5       5       -       -       -       -       -       -       -       -       -       -       -       10  
TOTAL
    4       2       1       1       28       260       58       27       18       243       60       13       6       6       6       6       6       745  

Upon receipt of BLM approval, drilling would start soon thereafter. The geological justifications for the proposed exploration program are:

 
·
Our property is adjacent to an open pit mined in the late 1990’s and this area has significant potential for mineral extensions. It is noted that when previous production operations in the District were shut down, the price of gold was less than $350 per ounce compared to the current price near $1,600 per ounce. The previous operator  also did not control the patent and Lucky Queen claim that are adjacent to the Montgomery-Shoshone open pit and five other claims in the area which are now part of the Company’s property.
 
 
·
Several mineralized trends and structures occur on other areas of the Company’s property that further justify additional drilling, see Figure 1.
 
Each of the calendar quarters are phased programs whereby results from Q2 (phase 1) in 2013 must justify the continuation of activities in Q4 (phase 2). Exploration thereafter is dependent on results and other technical and economic considerations.
 
 
16

 

 
The exploration programs will be funded from debt and equity programs that the Company is currently working on. In the event sufficient funds are not obtained, the programs will be deferred accordingly.

The company has engaged Chip Allender to manage the exploration activities on the Bullfrog Project. Mr. Allender has 33 years of experience in the mining industry, has a BS in Geology from the Colorado State University, is a Registered Professional Geologist in Utah and Washington, is a member of the Society of Mining Engineers, is a Certified Professional Geologist (AIPG) and is recognized as a Qualified Person in Canada and a Competent Person under the European code.

The Company has not performed any drilling programs on the Bullfrog Project but will use comparable Quality Assurance/Quality Control (QA/QC) procedures and protocols as described under the Newsboy Project.

(5) Geology
 
The Bullfrog Hills, in which the Bullfrog Project is located, are characterized by a complex geologic environment. The Hills are composed of complexly folded and faulted Tertiary volcanic rocks overlying a basement core complex of Paleozoic sedimentary and metamorphic rocks. The geologic structure is distinguished by widespread detachment faulting associated with tectonic events that formed the Basin and Range Geomorphic Province. The Bullfrog area mineral deposits occupy dilatant zones caused by tension faulting associated with the large detachment fault underlying the area. This detachment displacement and tension faulting resulted in the fracturing of brittle volcanic rocks that then became a suitable conduit for the movement of mineralizing hydrothermal fluids. This fracturing and fluid movement allowed for the saturation of a large volume of rock with mineral bearing solutions. The structural framework of the area also shows that classic strike slip faulting associated with movement of the upper plate of the detachment fault caused north south tension fractures and additional dilatant zones. Much technical work has been completed by government as well as private entities in the district since the early 1970's. This work includes geophysics, airborne radiometric surveys, geologic mapping, drilling and geochemistry.

Newsboy Gold Project

(1) Location

The Newsboy Gold Project is located in the Vulture Mountains of Arizona and consists of approximately 4,958 acres of state and federal lands located 45 miles northwest of the City of Phoenix, Arizona in Maricopa County (In the normal course of business we have staked over 100 additional mining claims, but these have not yet been filed with the US BLM or Maricopa County. As a result, the official ownership of these claims has not been recorded. After recordation, these additional claims will be owned by the Company and increase our Newsboy Project to approximately 7,400 acres). The closest towns, Wickenburg and Morristown, are located 10 miles and 3 miles respectively from the site. The Project is accessed by traveling on paved and gravel roads for 3 miles due west of Morristown. This route includes an unimproved crossing of the Hassayampa River, which flows a few days per year after severe rain storms. The Newsboy Project is located close to several well-known historical gold mines including: the Vulture, Congress and Yarnell mines.
 
 
17

 

 

Figure 2.  Newsboy Project Location Map

(2) Title & Holding Requirements

On August 30, 2011, Standard Gold entered into an Agreement of Conveyance, Transfer and Assignment with Aurum National Holdings Ltd. (“Aurum”), pursuant to which Standard Gold purchased an option held by Aurum under that certain Option to Purchase and Royalty Agreement dated as of August 13, 2009 and as amended on June 30, 2011, between Aurum and Southwest Exploration, Inc. (“Southwest”), which gave Aurum the option to purchase a 100% right, title and interest in and to certain mineral claims known as the “Newsboy Project”. In consideration for the assignment of the option, Standard Gold issued to Aurum and its designees an aggregate of 4,000,000 shares of its common stock.

On September 28, 2011, Standard Gold and Southwest entered into an Option to Purchase and Royalty Agreement pursuant to which Southwest granted to Standard Gold, the sole and immediate working right and option to earn a One Hundred Percent (100%) interest in and to the Newsboy Project property free and clear of all charges encumbrances and claims. In order to maintain the working right and option, Standard Gold is obligated to pay Southwest an aggregate of $3,425,000. $500,000 has previously been paid. The balance of $2,925,000 is payable on the following schedule:

 
(i)
on January 1, 2012, the sum of US $150,000.00; July 1, 2012 the sum of US $150,000.00;
 
(ii)
on January 1, 2013, the sum of US $200,000.00; July 1, 2013 the sum of US $200,000.00;
 
(iii)
on January 1, 2014, the sum of US $250,000.00; July 1, 2014 the sum of US $250,000.00;
 
(iv)
on January 1, 2015, the sum of US $300,000.00; July 1, 2015 the sum of US $300,000.00;
 
(v)
on January 1, 2016, the sum of US $350,000.00; July 1, 2016 the sum of US $350,000.00; and
 
(vi)
on January 1, 2017, the sum of US $425,000.00.
 
 
18

 

 
The first option payment of $150,000 was paid in December 2011, the second option payment of $150,000 was paid in June 2012 and the third option payment of $200,000 was paid in December 2012. Upon the full payment of the balance of $2,425,000, the option will be considered automatically exercised and the Company will have earned a 100% interest in and to the Newsboy Project property free and clear of all liens and encumbrances. Notwithstanding the foregoing, the Company is obligated to pay a Net Smelter Royalty payment equal to two percent (2%) of the proceeds from the sale or other disposition from any purchaser of any mineral derived from the ore mined from the Newsboy Project property. To retain the property, the Company must also pay the annual claim maintenance fees and file a Notice of Intent to Hold with the Bureau of Land Management and Maricopa County. The Company must also make annual payments for the lands leased from the State of Arizona. Should the Company choose not to maintain the working right and option to the property, the Company can forego future payments to Southwest without penalty. A total of $500,000 was paid to Southwest as part of the option to purchase agreement by third parties, which converted into an aggregate of 1,250,000 Units in the 2011 Private Placement. These payments have been recorded as increases to mineral property on the balance sheet.

In addition to the above payments, $50,000 was paid to Southwest by a third party for additional direct costs of acquiring the mineral property which converted into an aggregate of 125,000 Units in the 2011 Private Placement. This payment is included as an increase to mineral property on the balance sheet.

(3) History

Recorded historic mining activity is limited to a mineralized breccia exposed in the central zone of the deposit. Miscellaneous workings dating from 1915 include adits, a raise, a winze, trenches and an irregular inclined shaft. From 1940 to 1941 an estimated 11,000 tons of ore was shipped as flux to smelters in Arizona. The average grade of this material was 0.07 ounces of gold and 8.1 ounces of silver per ton. Several smaller prospects consisting of shafts, adits and shallow pits (likely of limited production) are scattered throughout the Project.

During the 1980’s several junior mining companies conducted evaluation work on the Project. In 1985 a 22-hole (4,170 feet) rotary percussion drill program by the Checkmate Resources Ltd. /Little Bear Resources Ltd. joint venture (“CLB”). Subsequently, Westmont Mining Company (“Westmont” or “WMC”) recovered and assayed duplicate samples from the CLB holes. Westmont secured title to the Project and in 1987 began a program of geologic mapping, aerial photography and photogrammetry, rock chip sampling of outcrops and 83 reverse circulation drill holes totaling 19,080 feet. In 1989 Lupine Minerals Corporation (“LM”) secured a joint venture with Westmont and drilled 19 additional reverse circulation holes totaling 4,530 feet. By the end of 1989 a total of 102 holes (23,610 feet) had been drilled on the Project.

During 1990 and 1991, Newsboy Gold Mining Company (NGMC), a 100% owned subsidiary of the Australian listed Pima Mining NL executed a purchase option on the Newsboy Project from Westmont. NGMC drilled 12 diamond core holes (1,681 feet), 40 reverse circulation holes (6,560 feet), conducted metallurgical test work, re-interpreted the geology and completed resource/reserve and mine planning studies. NGMC also completed the following studies in 1991 and 1992 in preparation for mining the Newsboy Project:

 
·
Feasibility Study from Signet Engineering Pty Ltd. of Perth, Australia;
 
·
Metallurgical Study from Kappes, Cassiday & Associates of Reno, Nevada;
 
·
Resource and Reserve Calculation from Computer Aided Geoscience Pty. Ltd. of Sydney, Australia;
 
·
Environmental Assessment from Fletcher Associates;
 
·
Arizona Aquifer Protection by Lyntek Inc. Harding Lawson Associates, Water Resources Associates Inc.;
 
·
Socioeconomic Impact of the Newsboy Gold Mine from the Western Economic Analysis Center;
 
·
Mining Plan of Operations by Lyntek Inc. Harding Lawson Associates;
 
·
Due Diligence Review of Newsboy Gold Project by Pincock, Allen & Holt Inc. (“PAH”); and,
 
·
Newsboy Gold Project, Plan of Execution by Signet Engineering.

Prior to the Company’s  exploration programs completed in 2011 and 2012, a total of 31,851 feet of drilling has been completed on the Newsboy Project over five programs at an expenditure of more than $5 million.

Year
Operator
Drill Method
No. Holes
Total Footage
1987
WMC
RC
29
5,910
1988
WMC
RC
54
13,170
1989
LM/WMC
RC
19
4,530
1990
NGMC
DD
12
1,681
1992
NGMC
RC
40
6,560
Total
   
154
31,851
 
 
19

 
 
Metallurgical test work by Kappes, Cassiday and Associates (“KCA”) in 1991, has shown gold and silver recoveries on cyanide bottle roll tests of 82% and 19% respectively for mineral averaging 0.044 gold opt, ground to 80% passing 200 mesh and leached for 24 hours.  Cyanide and lime consumptions were low, ranging from 0.07 to 0.38 pounds per ton for cyanide and 1.3 to 2.3 pounds per ton for hydrated lime. KCA concluded that “the ore is fairly clean and free of cyanicides”.

In 1991 a feasibility study was completed for a 600,000 ton per annum processing plant for the Newsboy Project. The report included design criteria for the Newsboy Project including metallurgical test work, equipment lists, mass balance flow sheet consistent with the design criteria,, layouts, process description with proposed equipment and plant operation, infrastructure review, mine plan, development capital, operating costs and a project schedule.

The feasibility study concluded that ore could be economically processed at a rate of 600,000 ton per annum at a mineable grade of 0.05 ounces of gold and 1.4 ounces of silver per ton at an average strip ratio of 3.6:1. Anticipated recoveries, based on the metallurgical studies, were projected at 90% for gold and 20% for silver for a proposed production rate of 27,000 ounces of gold and 168,000 ounces of silver per year. In 1993 NGMC was sold to Moneta Porcupine Mines. Moneta cored 8 holes and completed geophysical and geochemical programs, but abandoned the property in 1995 due to low gold prices and other considerations.

From September 2008 to August 2009 Southwest acquired the Newsboy Project by staking 44 lode claims (880 acres) and 12 placer claims (1,920 acres). Four separate state leases (1,520 acres) were also acquired. Southwest evaluated the geology, drilling, workings, survey control and access, and collected 33 samples. Of these samples, 10 assayed at or above the gold cut-off range of 0.8 ppm. In 2009 and 2010 an additional 46 lode claims were staked.

(4) Property Status and Plans

The Company’s property contains no known reserves and no plant or equipment. Electric power is available approximately 3 miles from the Company’s property. The Company and its independent consultants have developed a detailed exploration drilling program to confirm and expand existing mineralized zones and collect additional environmental data. The first phase drilling of 24 holes was started in November 2011 and completed at the end of January 2012. After sufficient additional drilling is completed during 2013, the Company intends to update the historic feasibility study and environmental permit applications and advance the project toward development. The exploration program planned for the Newsboy Project is provided below:
 
 
20

 

 
NEWSBOY AGREED WORK PROGRAM
Dollars in thousands
 
   
2012
   
2013
   
2014
       
   
Dec
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
Jun
   
Jul
   
Aug
   
Sep
   
Oct
   
Nov
   
Dec
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
TOTAL
 
BUDGET
                                                                                                                 
Drill Holes
    8       14                   14       10                                           13       10                               69  
                                                                                                                                 
Office & Warehouse Rent
    1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       18  
Office Supplies
    -       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       -       -       15  
Professional Consulting
    13       13       8       8       18       18       23       23       24       24       23       24       24       23       24       24       9       9       332  
Technician Consulting
    4       4       -       -       4       4       -       -       -       -       -       -       4       4       -       -       -       -       24  
Consulting Expense
    1       1       1       1       2       2       2       2       2       2       2       2       2       2       2       2       1       1       30  
Land Fees
    27       -       -       -       -       -       7       21       -       -       -       -       7       -       -       -       -       -       62  
Insurance
    -       -       -       -       -       1       1       1       1       1       1       1       1       1       1       1       -       -       11  
Project Public Relations
    1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       1       -       -       16  
Drilling & Coring
    105       189       -       -       189       147       -       -       -       -       -       -       189       147       -       -       -       -       966  
Assaying
    -       24       43       -       -       43       34       -       -       -       -       -       -       43       34       -       -       -       221  
Support Equipment Services
    10       10       8       8       -       8       8       -       -       -       -       -       -       8       8       -       -       -       68  
Geochem, Geophysics etc
    -       5       10       10       10       -       -       -       -       -       -       -       -       -       -       -       -       -       35  
Surveying
    -       -       -       5       -       -       -       5       -       -       -       -       -       -       -       5       -       -       15  
Field Supplies
    2       2       -       -       -       2       2       -       -       -       -       -       -       -       -       -       -       -       8  
Metallurgical Testing
    -       -       -       -       -       -       -       -       10       10       -       -       -       -       -       -       -       -       20  
Process Consulting Services
    -       -       -       -       -       -       -       -       5       5       5       5       5       5       5       5       -       -       40  
Process Consulting Expense
    -       -       -       -       -       -       -       -       2       2       2       2       2       2       2       2       -       -       16  
Environmental Permitting
    -       -       -       -       5       5       5       5       5       5       5       5       5       5       5       5       -       -       60  
Environmental Services
    -       -       -       -       5       5       10       15       15       15       15       15       15       15       15       15       -       -       155  
Environmental Expense
    -       -       -       -       1       1       3       4       4       4       4       4       4       4       4       4       -       -       41  
Engineering & Resource Est.
    -       -       -       20       30       30       30       40       40       40       40       30       30       30       30       30       -       -       420  
Data Compilation
    5       5       5       -       -       -       -       -       -       -       -       -       -       -       -       -       -       -       15  
Land payments
    200       -       -       -       -       -       200       -       -       -       -       -       250       -       -       -       -       -       650  
Capital expenses
    -       10       10       10       6       6       6       6       6       6       6       6       6       16       16       16       -       -       132  
TOTAL
    369       266       88       65       273       275       334       125       117       117       106       97       547       308       149       112       11       11       3,370  

The Company intends to file Notices of Intent to Drill to the US BLM to allow drilling to be completed per the schedule above. The geological justifications for the proposed exploration program are:

 
·
A historic resource and open pit mine plan were established by predecessor owners in 1992. The company has successfully completed two drill programs during the first half of 2012 and is sufficiently encouraged to proceed with exploration and development activities. A new mineral zone has been discovered in the main deposit, which has several areas that justify additional drilling to increase mineralization and better define an open pit mine plan.
 
 
·
Additional exploration targets within a few miles of the main deposit are fully justified for drilling to test for further increases in mineralization and enhance the development and production potential of the Project.

Each of the calendar quarters are phased programs whereby results from Q1 (phase 3) in 2013 must justify the continuation of activities in Q2 (phase 4) and likewise for Q4 (phase 5) for 2013. Exploration and development thereafter is dependent on results and other technical and economic considerations and conditions.

The exploration programs will be funded from debt and equity programs that the Company is currently working on. In the event sufficient funds are not obtained, the programs will be deferred accordingly.

Mr. Clive Bailey has been responsible for all the Newsboy programs since October 2011 and will continue to manage the programs on the Newsboy Project. Mr. Bailey has 38 years of experience in the mining industry, has a BS in Geology from the Kent State University, is a Certified Professional Geologist (AIPG) and is s recognized as a Qualified Person in Canada.

The Company performs and abides by industry standard concerning QA/QC procedures and protocols. Below is a brief description of these procedures used during the drilling programs completed at the Newsboy Project:

 
1.
All drilling was performed using reverse circulation methods. Drill cuttings were sampled at intervals of 5 feet and split in the field to typically produce 15-pound representative samples for further preparation and assaying. These samples were then bagged, tagged and secured under the management, direction, supervision and custody of Clive Bailey, the Company’s Consulting Geologist. Sample lots were transported to the Company’s office in Morristown and stored until Skyline Laboratories accepted custody upon loading on their truck for transport to a secure sample storage building at their laboratory in Tucson, Arizona,
 
 
21

 
 
 
2.
All Company samples were analyzed using a 30 g fire assay (FA) with an atomic absorption spectroscopy (AAS) finish for gold. This technique has a lower detection limit of 0.005 ppm and an upper detection limit of 3.00 ppm. Samples with greater than 3.00 ppm gold were re-analyzed using a 30 g FA with a gravimetric finish. All samples were also analyzed using a5 g sample with a four acid digestion for silver and multi-element analysis using an Induced Coupled Plasma Emission spectroscopy (ICP-OES) instrument This technique has a lower detection limit of 1 ppm and an upper detection limit of 150 ppm. Samples with greater than 150 ppm silver were re-analyzed using a 30 g FA with a gravimetric finish.
 
 
3.
Skyline crushed the entire sample to 75% passing – 10 mesh and then split 250 g for pulverization to 95% – 150 mesh. Cleaner sand was run through the crusher every 25 samples or at any color change in the sample as noticed by Skyline’s lab tech. Sand was run between every sample in the pulverizing step to preclude lingering contamination. Pulps were split again to separate a 30 g sample for FA/AAS for gold and a 5 g sample for multi-acid digestion and ICP-OES and multi element analysis.
 
 
4.
All Newsboy samples from the 48 holes from Phase 1 and Phase 2 drilled by the company were analyzed at Skyline Laboratories. Skyline has ISO/IEC 17025:2005 certification for FA/AAS. ICP-OES and ICP-Mass Spectroscopy (MS).  The 26 holes in Phase 3 drill results are being analyzed by Skyline using the same procedures.
 
 
5.
QA/QC samples used by the company include blanks, standards and field duplicates. The inserts QA/QC samples at the following frequencies:
 
 
·
One to two blanks per hole pending depth and observes mineralization. Blanks were inserted at the end of each mineralized sequence;
 
·
One to two standards per hole. Two standards were inserted if a second mineralized zone was observed ( two standards were used as deemed appropriate – one being high grade and the other being low grade); and
 
·
One duplicate sample for each 100 feet or 20 five-foot samples.

Blank material was a barren marble purchased from building material stores. The blank is uncertified but analysis continually showed it was below detection limits for gold and silver. Two certified standards were purchased from WCM Minerals Ltd (WCM) of Burnaby, British Columbia. In addition, Skyline performs their own internal controls to assure accuracy and precision of their results.

 
6.
The Company and its Consultants are of the opinion that the QA/QC program was appropriate for collecting, preparing and analyzing drill samples and were adequate for the purposes intended in the normal course for calculating resource and reserve estimates. Skyline’s assay certificates were also stamped by an assayer registered in the State of Arizona.
 
(5) Geology

The Newsboy Project is an epithermal gold deposit and is one of several gold deposits that occur within a broad mineral belt that sweeps across the southwestern half of Arizona. The Project area is located within the Basin and Range Province of Central Arizona. Tertiary volcanic and sedimentary sequences rest unconformably on Proterozoic metamorphic and granitic rocks. Middle Miocene faulting has dissected the tertiary sequences into a series of north-northwest homoclines that dip to the northeast.

The gold and silver mineralization at the Newsboy Project occurs in a shallow dipping, major brecciated shear zone referred to as the Newsboy Fault, which forms the local unconformable contact between the overlying brittle Tertiary volcanics and underlying Proterozoic metamorphic basement rocks. This contact is a shallow dipping, blanket-like breccia ranging from 50 feet to 120 feet thick. The deposit is cut by a series of northwest trending high angle faults, resulting in the Newsboy ore body being progressively down dropped to the east. The deposit is terminated on the west by one of these high angle faults, referred to as the “Wash Fault” but is open to the north, south and down dip.

Mineralization occurs in veins of white to light green banded quartz and is very low in sulphide minerals. The gold and silver appear to have been introduced into the breccia with silica by a series of low temperature epithermal pulses of mineralized fluids partially filled open spaced fractures. Extensive silicification accompanied mineralization and has been later overprinted by black, manganiferous calcite veining. The gold deposition is surrounded by intense oxidizing hydrothermal activity that has altered the rhyolitic rocks to various assemblages of quartz, alunite and kaolinite.
 
 
22

 

 

The Newsboy breccia mineralization is exposed in Wash Fault which marks the western boundary of the ore body. Elsewhere, Quaternary sediments, up to 60 feet in depth, cover the breccia.

Klondike Project

(1) Location

The central part of the Klondike claim block is located in the Alpha Mining District approximately 30 miles north from the town of Eureka in central Nevada (Figure 3).  The property is accessed by traveling 3 miles north from Eureka on US Hwy 50, thence 30 miles north on Nevada Highway 278, thence east 2 miles along various dirt roads. The claim block is approximately 5 miles north -south and 1.5 miles east-west.
 
 
23

 

 
 
 
24

 

 
(2) Title & Holding Requirements

On June 11, 2012, Standard Gold and Arden Larson entered into an Option to Purchase and Royalty Agreement pursuant to which Larson granted to Standard Gold, the sole and immediate working right and option to earn a One Hundred Percent (100%) interest in and to the Klondike Project property free and clear of all charges encumbrances and claims. In order to maintain the working right and option, Standard Gold is obligated to pay Larson an aggregate of $575,000 over a 10-year period plus net smelter royalties from the claims and an area of interest.

(3) History

The Alpha Mining District was organized about 1877 but no significant activity occurred until 1895. There is no record of production but tonnages were small. A second period of activity began with the discovery of the Old Whelan Mine, which was believed to have shipped to Salt Lake City, Utah. The Prince of Wales Mine produced copper sulfide ores from shallow workings during World War I.  Since then the district has been idle but was evaluated in detail in 1977 by W. Van der Ley, a consulting geologist.  During 2010 until mid-2012 Arden Larson, Geologist, investigated the property and staked the first 64 claims. Since then Standard Gold staked an additional 168 claims to cover most of the Alpha Mining District.

(4) Property Status and Plans

The Company’s property contains no known reserves and no plant or equipment.  The Company and its independent consultants have developed a mapping and drilling program to explore several priority targets observed on the Klondike claims. The first phase of this program will focus on those targets having shallow high grade silver potential. The exploration program planned for the Klondike Project is provided below:

KLONDIKE PROJECT
Dollars in thousands
 
   
2013
   
2014
       
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
Jun
   
Jul
   
Aug
   
Sep
   
Oct
   
Nov
   
Dec
   
Jan
   
Feb
   
Mar
   
Apr
   
May
   
TOTAL
 
BUDGET
                                                                                                           
 Drill Holes
                                  24                         24                                                 48  
                                                                                                                   
Profession Consulting Services
    -       -       2       2       6       13       3       3       6       13       3       3       3       3       3       3       3       69  
Technician Consulting Services
    -       -       -       -       1       4       1       -       1       4       1       -       -       -       -       -       -       12  
Consulting Expense
    -       -       -       -       1       3       1       1       1       3       1       1       1       1       1       1       1       17  
Land Fees (BLM-County-State)
    -       -       -       -       -       -       -       35       -       -       -       -       -       -       -       -       -       35  
Drilling & Coring
    -       -       -       -       -       168       -       -       -       168       -       -       -       -       -       -       -       336  
Assaying
    -       -       -       -       -       -       38       -       -       -       38       -       -       -       -       -       -       76  
Support Equipment Services
    -       -       -       -       5       3       -       -       5       3       -       -       -       -       -       -       -       16  
Surveying
    -       -       -       -       -       -       -       -       2       -       -       -       -       -       -       -       -       2  
Field Supplies
    -       -       -       -       -       1       1       1       1       1       -       -       -       -       -       -       -       5  
TOTAL
    -       -       2       2       13       192       44       40       16       192       43       4       4       4       4       4       4       568  

(5) Geology

The prospect pits, adits and shafts on the Klondike claims are located primarily in the lower elevations of the west side of the Sulphur springs Mountain range in Paleozoic lower plate carbonates and siliciclastics in NE trending fault breccia zones.  The western part of the area may be a structural outlier from the main range front fault.  This outlier is a much dissected faulted section of lower Paleozoic rocks in fault contact with the upper plate units of the Roberts Mountain Thrust. In addition to shallow silver, copper, lead, zinc and barite occurrences, the area also has a strong geochemical signature of molybdenum.

ITEM 3 - LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against the Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4 – MINE SAFETY DISCLOSURES

None.
 
 
25

 

 
PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been publicly traded since October 17, 2011 on the OTC Bulletin Board.  Our common stock is quoted under the symbol “BFGC.OB.” Prior to that, our common stock was quoted under the symbol “KOPR.OB” and had no trading activity.  The following table sets forth for the periods indicated the range of high and low bid quotations per share as reported by the OTC Bulletin Board. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions.

Year 2011
High
Low
Period from October 17, 2011 to December 31, 2011
$0.95
$0.60

Year 2012
High
Low
First Quarter
$0.86
$0.50
Second Quarter
$0.75
$0.40
Third Quarter
$0.85
$0.16
Fourth Quarter
$0.50
$0.16
 
Holders

On March 11,  2013, the closing price of our common stock as reported on the Over-the-Counter Bulletin Board was $0.34 per share. On March 11, 2013, we had approximately 400 holders of record of common stock.  As of March 11, 2012, 42,278,945 shares of our common stock were issued and outstanding and 2,692,100 shares of preferred stock were issued and outstanding.  As of March 11, 2012, we had outstanding warrants to purchase 20,972,285 shares of common stock and outstanding options to purchase 4,060,000 shares of common stock.

Dividend Policy

We have not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. We intend to retain any earnings to finance the growth of the business. We cannot assure you that we will ever pay cash dividends. Whether we pay any cash dividends in the future will depend on the financial condition, results of operations and other factors that the Board of Directors will consider.

Securities Authorized for Issuance under Equity Compensation Plans

On September 30, 2011, our board adopted the 2011 Equity Incentive Plan. The 2011 Equity Incentive Plan reserves 4,500,000 shares of common stock for grant to directors, officers, consultants, advisors or employees of the Company. Upon the closing of the merger, we authorized for issuance under the 2011 Equity Incentive Plan options to purchase an aggregate of 4,060,000 shares of our common stock at an exercise price of $0.40 per share, of which options to purchase 1,250,000 shares were issued to Mr. Beling, our Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and a director, options to purchase 1,200,000 shares were issued to Mr. Lindsay, the Chairman of our board of directors, and options to purchase 1,610,000 shares were issued to certain consultants and employees of the Company.

Equity Compensation Plan Information:

Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
   
Weighted-average exercise price of outstanding options
warrants and rights
   
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
 
                   
   
(a)
   
(b)
   
(c)
 
Equity compensation plans approved by security holders
    4,060,000     $ 0.40       440,000  
Equity compensation plans not approved by security holders
    0       0       0  
Total
    4,060,000     $ 0.40       440,000  
 
 
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Unregistered Sales of Equity Securities

Sales by Standard Gold

Between February 2010 and August 2011, Standard Gold sold an aggregate of 9,434,058 shares of common stock at a per share purchase price of $0.0001 to approximately 42 subscribers. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares and the representation of each investor to the is purchasing the shares for its own account and without a view to distribute them.

On August 30, 2011, Standard Gold issued 4,000,000 shares of common stock to Aurum and its designees in consideration for the assignment of Aurum’s option to purchase under the Option to Purchase and Royalty Agreement between Aurum and Southwest, as further described herein. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the representation of the investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it is purchasing the shares for its own account and without a view to distribute them.

A note payable, dated April 8, 2011, in the amount of $10,100 was issued to Lindsay Capital Corp. The unsecured note was payable on demand and bore interest at the rate of 18% per annum. The proceeds of the note were used to pay audit fees for the period ending December 31, 2010. An officer of Lindsay Capital Corp. is also an officer of Standard Gold. The note was issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the note; the representation of the investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D); and the Company's issuance of the note with a restrictive legend.

Sales by Bullfrog Gold Corp.

On August 12, 2011, the Company sold an aggregate of 2,000,000 shares of common stock to the Beling Family Trust for an aggregate purchase price of $200. David Beling, the Company’s President, Chief Executive Officer, Chief Financial Officer and Director, holds voting and dispositive power over the shares held by the Beling Family Trust.  The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the representation of each investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it is purchasing the shares for its own account and without a view to distribute them.

On August 30, 2011, the Company sold a convertible promissory note in the principal amount of $150,000 to an accredited investor.  The note was issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the note; the representation of the investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D); and the Company's issuance of the note with a restrictive legend.

On September 30, 2011, the Company entered into subscription agreements (the “Agreements”) with thirty-five accredited investors (the “Investors”) whereby it sold an aggregate of 9,127,250 units (the “Units”), at a purchase price $0.40 per Unit for an aggregate purchase price of $3,650,900 (the “2011 Private Placement”). As part of the 2011 Private Placement (and inclusive in the foregoing), the Company (i) exchanged the bridge note in the aggregate principal amount of $150,000 issued by the Company to an investor on a dollar for dollar basis into 375,000 Units in the 2011 Private Placement, (ii) converted an aggregate of $140,900 principal amount of promissory notes issued by Standard Gold into an aggregate of 352,250 Units in the 2011 Private Placement, (iii) converted an aggregate of $550,000 of debt and advances to Standard Gold on a dollar for dollar basis into an aggregate of 1,375,000 Units in the 2011 Private Placement and (iv) exchanged an aggregate of $100,000 of debt owed for consulting services provided to the Company, on a dollar for dollar basis, into an aggregate of 250,000 Units in the 2011 Private Placement. Each Unit consists of: (i) one share of the Company’s common stock, par value $0.0001 per share (except, at the election of any purchaser who would, as a result of purchase of Units, become a beneficial owner of five (5%) percent or greater of the outstanding Common Stock of the Company, the Units consisted of (in lieu of one share of Common Stock) one share of the Company’s Series A Preferred Stock, par value $0.0001 per share which is convertible into one share of Common Stock) and (ii) a three (3) year warrant to purchase 50% percent of the number of shares purchased in the 2011 Private Placement at a per share exercise price of $0.60. An aggregate of 3,875,000 Units consist of Series A Preferred Stock.  The shares were issued in reliance upon an exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933 since no general solicitation or advertising was conducted by us in connection with the offering of any of the shares, all shares purchased in the offering were restricted in accordance with Rule 144 of the Securities Act and each of these shareholders were either accredited as defined in Rule 501 (a) of Regulation D promulgated under the Securities Act or sophisticated as defined in Rule 506(b)(2)(ii) of Regulation D promulgated under the Securities Act.  On November 2, 2012, the Board of Directors unilaterally amended the exercise price of the Warrants as part of the 2011 Private Placement from $0.60 to $0.40.
 
 
27

 

 
On April 20, 2012, the Company issued 25,000 shares of common stock, to Ten West Holdings for investor relations and consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On April 30, 2012, the Company issued 6,000 shares of common stock to Randy Perini for advertising services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On May 17, 2012, the Company issued 25,000 shares of common stock, to Ten West Holdings for investor relations and consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On June 11, 2012, the Company issued 50,000 shares of common stock, to Ten West Holdings for investor relations and consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On June 27, 2012, the Company issued 50,000 shares of common stock, to Mundial Financial Group for consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On July 3, 2012, the Company issued 100,000 shares of common stock to Interactive Investors for online advertising services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On September 5, 2012, the Company issued and sold to one accredited investor a Promissory Note (the “Promissory Note”) in the principal amount of $200,000. The Promissory Note accrues interest at the rate of three percent (3%) per month, on a 360 day per year basis.  The Promissory Note matures on October 1, 2012 (the “Initial Maturity Date”).  On the Initial Maturity Date, the Company may extend the Initial Maturity Date from October 1, 2012 to October 15, 2012 (the “Initial Extension Maturity Date”) by paying to the Holder an initial note extension payment equal to 50,000 shares of the Company’s common stock issuable on the date such extension is elected (the “Initial Extension Payment”).

Furthermore, if the Initial Maturity Date of the Note is extended to the Initial Maturity Extension Date and, on such date, the Company fails to pay the principal amount of the Promissory Note, along with all accrued but unpaid interest thereon, then the Initial Extension Maturity Date shall automatically be extended to December 1, 2012 (the “Second Maturity Date”).  If the Promissory Note is automatically extended to the Secondary Maturity Date, then the Company shall pay to the holder of the Promissory Note an extension payment equal to 100,000 shares of our common stock (the “Extension Payment”).

The Company may prepay the Promissory Note, in whole or in part, at any time prior to Initial Extension Maturity Date, or the Second Maturity Date, as then applicable, by paying a prepayment penalty to the Holder equal to 100,000 shares of our common stock (the “Prepayment Penalty”).  However, in the event the Company is required to pay the Extension Payment, any Prepayment Penalty that the Company would otherwise be required to pay to the holder of the Promissory Note will be waived.
 
 
28

 

 
On October 24, 2012, the Company issued 50,000 shares for the Initial Extension Payment as part of the Promissory Note agreement. Additionally, on November 29, 2012, the Company issued 100,000 shares for the Prepayment Penalty as part of the Promissory Note.

The Promissory Note and shares issued pursuant to the Promissory Note were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the note; the representation of the investor to the Company that he is an accredited investor (as that term is defined in Rule 501 of Regulation D); and the Company's issuance of the Promissory Note and shares issued pursuant to the Promissory Note with a restrictive legend.

On November 19, 2012, the Company sold an aggregate of 4,300,000 units (the “Units”) with gross proceeds to the Company of $1,075,000 to six accredited investors (the “Investors”) pursuant to a subscription agreement (the “Subscription Agreement”).  Each Unit was sold for a purchase price of $0.25 per Unit and consisted of: (i) one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) (or, at the election of any purchaser who would, as a result of purchase of Units become a beneficial owner of five (5%) percent or greater of the outstanding Common Stock of the Company, one share of the Company’s Series B Preferred Stock, par value $0.0001 per share, which is convertible into one (1) share of Common Stock, one share of the Company’s Series B Preferred Stock) and (ii) a four-year warrant (the “Warrants”) to purchase one hundred (100%) percent of the number of shares of Common Stock or Series B Preferred Stock purchased at an exercise price of $0.35 per share, subject to adjustment upon the occurrence of certain events such as stock splits and dividends. In connection with the private placement, the Company issued an aggregate of 3,100,000 shares of its Common Stock and 1,200,000 shares of its Series B Preferred Stock.  In addition, on November 19, 2012, the holder of the Promissory Note converted such indebtedness in exchange for 804,600 shares of the Company’s Series B Preferred Stock (which includes the conversion of $1,150 of accrued and unpaid interest on the Promissory Note) and Warrants to acquire 804,600 shares of the Company’s Common Stock. The Company also issued to its legal counsel 276,000 shares of Common Stock and Warrants to acquire 276,000 shares of the Company’s Common Stock in exchange for $69,000 of certain legal fees.  The Warrants may be exercised on a cashless basis if at any time there is no effective registration statement within 90 days after the closing date of the private placement covering the resale of the shares of Common Stock underlying the Warrants. The Warrants contains limitations on the holder’s ability to exercise the Warrant in the event such exercise causes the holder to beneficially own in excess of 4.99% of the Company’s issued and outstanding Common Stock, subject to a discretionary increase in such limitation by the holder to 9.99% upon 61 days’ notice.  The Company paid placement agent fees of $45,000 in cash to a placement agent in connection with the sale of the Units. The placement agent also received Warrants to acquire 180,000 shares of the Company’s Common Stock. The shares were issued in reliance upon an exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933 since no general solicitation or advertising was conducted by us in connection with the offering of any of the shares, all shares purchased in the offering were restricted in accordance with Rule 144 of the Securities Act and each of these shareholders were either accredited as defined in Rule 501 (a) of Regulation D promulgated under the Securities Act or sophisticated as defined in Rule 506(b)(2)(ii) of Regulation D promulgated under the Securities Act.

On December 10, 2012, the Company entered into a Facility Agreement evidencing a secured loan (the "Facility") with RMB Australia Holdings Limited ("RMB"), as the lender, in the amount of $4.2 million. The loan proceeds from the Facility will be used to fund an agreed work program relating to the Newsboy gold project located in Arizona and for agreed general corporate purposes. Standard Gold Corp., a Nevada Corporation ("Standard Gold") and the Company's wholly owned subsidiary is the borrower under the Facility and the Company is the guarantor of Standard Gold's obligations under the Facility. Standard Gold will pay an arrangement fee of 7% of the Facility amount due upon the first draw down of the Facility. The Facility will be available until March 31, 2014 with the final repayment date due 24 months after the Closing Date. Standard Gold has the option to prepay without penalty any portion of the Facility at any time subject to 30 day notice, any broken period costs and minimum prepayment amounts of $500,000. The Facility bears interest at the rate of LIBOR plus 7% with interest payable quarterly in cash. In connection with the Facility, the Company issued 7,000,000 warrants to purchase shares of the Company's common stock for $0.35 per share to be exercisable for 36 months after the Closing Date, with the proceeds from the exercise of the warrants to be used to repay the Facility.

On December 13, 2012, we sold an aggregate of 2,000,000 units with gross proceeds to the Company of $500,000 to three accredited investors pursuant to a subscription agreement. The shares were issued in reliance upon an exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933 since no general solicitation or advertising was conducted by us in connection with the offering of any of the shares, all shares purchased in the offering were restricted in accordance with Rule 144 of the Securities Act and each of these shareholders were either accredited as defined in Rule 501 (a) of Regulation D promulgated under the Securities Act or sophisticated as defined in Rule 506(b)(2)(ii) of Regulation D promulgated under the Securities Act.

On January 8, 2013, the Company issued 250,000 shares of common stock, to MockingJay, Inc. for future investor relations and consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.
 
 
29

 

 
On January 16, 2013, the Company issued 150,000 shares of common stock, to Verge Consulting for future investor relations and consulting services. The shares were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(2) thereof based on the lack of any general solicitation or advertising in connection with the sale of the shares; the investor is purchasing the shares for its own account and without a view to distribute them; and the Company's issuance of the shares with a restrictive legend.

On February 4, 2013, the Company sold an aggregate of 1,800,060 units (the “Units”) with gross proceeds to the Company of $450,015 to five accredited investors (the “Investors”) pursuant to a subscription agreement (the “Subscription Agreement”).  Each Unit was sold for a purchase price of $0.25 per Unit and consisted of: (i) one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) and (ii) a four-year warrant (the “Warrants”) to purchase one hundred (100%) percent of the number of shares of Common Stock purchased at an exercise price