CAPITAL STOCK

9 Months Ended

Sep. 30, 2012

CAPITAL STOCK

CAPITAL STOCK

NOTE 3 - CAPITAL STOCK

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock.  All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

An equity financing was initiated in third quarter of 2011.  This financing raised $355,833 through sales of 309,420 shares of common stock.  This offering concluded January 31, 2012.   A separate equity financing was initiated February 20, 2012 for the sale of up to 2,000,000 shares of stock.  No sales were recorded in conjunction with this offering, which ended June 30, 2012.

An equity financing was initiated August 21, 2012 for the sale of up to 1,150,000 shares of common stock.  As of September 30, 2012 no sales had been recorded in conjunction with this offering.  Under the terms of this offering, stock can be converted to cash generated from the sale of gold, for a period of 12 months after commencement of operations at the Kiewit project.  Proceeds from 5% of the gold produced during the first year of production will be allocated to fund this option.  Each investor will receive the right to convert a minimum of one-half and up to all of his shares (on a pro rata basis) into the value of the number of ounces represented by the total investment, determined using a base price of $1,000 per ounce.  As of November 6, 2012, this offering had raised $110,000 through sales of 110,000 shares of stock.

Preferred Stock

In July 2010 the Company filed a Certificate of Designations with the State of Nevada to create 958,033 shares of Series A Preferred Stock. The Series A Preferred Shares have voting rights with the common stock equal to the conversion value of the preferred shares into common shares.

In July 2010 the Company issued 958,033 shares of its Series A Preferred Stock to DMRJ Group in connection with financing (see Note 8). These preferred shares are convertible into shares of the Company’s common stock at the rate of one common share for each preferred share converted, subject to certain adjustments.

In connection with the Fourth Amendment to the DMRJ Group funding (see Note 8), on May 3, 2011, the Company created and designated 2,500,000 shares of its authorized preferred stock as Series A-1 Preferred Stock and 1,000,000 shares as Series A-2 Preferred Stock.  During the quarter ended June 30, 2011, 100,000 shares of Series A-2 Preferred stock were issued in connection with this Fourth Amendment.  These shares are convertible by the holder into 1,000,000 shares of the Company’s common stock, subject to the beneficial ownership rules detailed below.

Each share of Series A-1 Preferred Stock and Series A-2 Preferred Stock is convertible at the option of the holder at any time into that number of shares of common stock equal to (i) for the Series A-1 Preferred Stock ten times the Series A-1 Issue Price ($0.70) divided by the conversion price for Series A-1 Preferred and (ii) for the Series A-2 Preferred Stock ten times the Series A-2 Issue Price ($1.00) divided by the conversion price for such Series A-2 Preferred Stock.  The initial conversion price of the Series A-1 preferred stock is $0.70 per share and the conversion price of the Series A-2 preferred stock is $1.00.  If the Company issues or sell shares of its common stock, or grant options or other convertible securities which are exercisable or convertible into common shares, at prices less than the conversion price of Series A-1 or A-2 shares, except in certain exempted situations, then the conversion price of the Series A-1 and A-2 shares will be reduced to this lower of sale or conversion price.  The Series A-1 and A-2 shares may not be converted into common shares if the beneficial owner of such shares would thereafter exceed 4.9% of the outstanding common shares.

In connection with the Forbearance Agreement of the DMRJ Group funding arrangement (see Note 8) dated June 29, 2012, an additional 80,000 shares of Series A-2 Preferred stock were issued.  These shares are convertible by the holder into 800,000 shares of the Company’s common stock, subject to the beneficial ownership rules mentioned above.