0001477932-13-003827.txt : 20130816 0001477932-13-003827.hdr.sgml : 20130816 20130816091406 ACCESSION NUMBER: 0001477932-13-003827 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20130630 FILED AS OF DATE: 20130816 DATE AS OF CHANGE: 20130816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRILLIANT EXPLORATION CORP CENTRAL INDEX KEY: 0001378948 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 200936313 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-138332 FILM NUMBER: 131043930 BUSINESS ADDRESS: STREET 1: 545 EIGHTH AVENUE STREET 2: SUITE 401 CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-560-5195 MAIL ADDRESS: STREET 1: 545 EIGHTH AVENUE STREET 2: SUITE 401 CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: Project Development Pacific, Inc. DATE OF NAME CHANGE: 20061023 10-Q 1 ttxp_10q.htm FORM 10-Q ttxp_10q.htm


U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
Mark One
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the period ended June 30, 2013
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____________ to _____________
 
Commission File No. 333-138332
 
TRILLIANT EXPLORATION CORPORATION
(Name of small business issuer in its charter)
 
Nevada
 
20-0936313
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
545 Eighth Avenue, Suite 401, New York, New York 10019
(Address of principal executive offices)
 
 
(212) 203 -0310
(Issuer’s telephone number)
(Previous address if changed from last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No 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.
 
Large accelerated filer
o
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o
Smaller reporting company
x
 
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
 
Class
 
Outstanding as of June 30, 2013
Common Stock, $0.001
 
191,446,114
 


 
 

 
 
EXPLANATORY NOTE:
 
This Quarterly report for the period ending June 30, 2013 contains unaudited financial statements which have not been reviewed by our independent registered public accounting firm in accordance with Article 10 of SEC Regulation S-X.
 
 
 
 
 
 
 
 
2

 
TRILLIANT EXPLORATION CORPORATION
 
Form 10-Q
 
 
 
 
Page
 
PART I - FINANCIAL INFORMATION
         
Item 1.
Financial Statements
  4  
 
Condensed Consolidated Balance Sheets as of June 30, 2013 (Unaudited), March 31, 2013 and December 31, 2012 (Unaudited)
   
4
 
 
Condensed Consolidated Statements of Operations for the Six months Ended June 30, 2013, the three months ended June 30, 2013, the three months ended March 31, 2013 and year ended Dec 31, 2012 (Unaudited)
   
5
 
 
Condensed Consolidated Statements of Cash Flows for the Six and three months ended June 30, 2013, Three months Ended March 31, 2013 and year ended Dec. 31, 2012 (Unaudited)
   
6
 
 
Consolidated Statement of Changes in Equity for the period ended June 30, 2013, March 31, 2013 and December 31, 2012 (Unaudited)
    7  
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
   
8
 
 
Forward Looking Statement
   
20
 
           
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
20
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
   
25
 
Item 4.
Controls and Procedures
   
26
 
           
PART II - OTHER INFORMATION
           
Item 1.
Legal Proceedings
   
27
 
Item 1A.
Risk Factors
   
27
 
Item 2.
Unregistered Sales of Equity Securities
   
27
 
Item 3.
Defaults upon Senior Securities
   
27
 
Item 4.
Mining Safety Disclosures
   
27
 
Item 5.
Other Information
   
27
 
Item 6.
Exhibits
   
28
 
           
Signatures
   
29
 
 
 
3

 
 
PART I
 
ITEM 1. FINANCIAL STATEMENTS
 
TRILLIANT EXPLORATION CORPORATION
Consolidated Balance Sheet
Unaudited
 
   
June 30,
2013
   
March 31,
2013
   
December 31,
2012
 
ASSETS
Current Assets
                 
Cash and cash equivalents
  $ 87     $ 60     $ 60  
Total current assets
  $ 87     $ 60     $ 60  
                         
LIABILATIES AND SHAREHOLDERS DEFICIT
Current liabilities
                       
Accounts payable
  $ 298,606     $ 292,949     $ 288,889  
Accrued interest
    181,236       176,868       172,499  
Convertible notes payable-related party
    585,495       597,495       597495  
Short term notes payable
    43,302       40,150       30,150  
Total current assets
  $ 1,108,639     $ 1,107,462     $ 1,089,033  
Long term liabilities
                       
Derivative liabilities
  $ 7,136,057     $ 505,275     $ 560,817  
                         
Total long term liabilities
    7,136,057     $ 505,275     $ 560,817  
Total liabilities
  $ 8,244,696     $ 1,612,737     $ 1,649,850  
                         
SHARHOLDERS' DEFICIT
                       
Common stock, par value $0.001; 1,000,000,000; 191,446,114 issued and outstanding June 30, 2013; 152,819,187 issued and outstanding at March 31, 2013 and December 31, 2012; respectively
  $ 191,446     $ 152,819     $ 152,819  
Additional paid-in capital
    66,781,251       66,681,901       66,681,901  
Accumulated deficit during pre-exploration stage
    (52,207,651 )     (52,207,651 )     (52,207,651 )
Deficit accumulated
    (12,809,655 )     (6,039,746 )     (6,076,859 )
Total shareholders' deficit before Treasury stock
  $ 1,955,391     $ 8,587,323     $ 8,550,210  
Treasury stock
    (10,200,000 )     (10,200,000 )     (10,200,000 )
Total shareholders' equity (deficit)
  $ (8,244,609 )   $ (1,612,677 )   $ (1,649,790 )
                         
Total liabilities and shareholders' equity (deficit)
  $ 87     $ 60     $ 60  
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
4

 
 
TRILLIANT EXPLORATION CORPORATION
Consolidated Statement of Operations
Unaudited
 
   
For the six
months ended
30-June-2013
   
For the three
months ended
30-June-2013
   
For the three
months ended
31-March-2013
   
For the
year ended
31-Dec-2012
 
                                 
REVENUES
  $ -     $ -     $ -     $ -  
                                 
Operating Expenses
                               
General and administrative
  $ 170,086     $ 156,026     $ 14,060     $ 276,034  
Total operating expense
    170,086       156,026       14,060       276,034  
Net loss from operations
  $ (170,086 )   $ (156,026 )   $ (14,060 )   $ (276,034 )
                                 
Other income (expense)
                               
Loss on settlement of debt
                               
Net realized and unrealized gain (loss) in the change in fair value of derivative liability
    (6,603,085 )     (6,658,627 )     55,542       -161,264  
Interest expense
    (8,738 )     (4,369 )     (4,369 )     (313,904 )
Total other income (expense)
    (6,611,823 )     (6,662,996 )     51,173       (475,168 )
                                 
Net gain (loss) before income tax
  $ (6,781,909 )   $ (6,819,022 )   $ 37,113     $ (751,202 )
Income taxes (benefits)
                               
                                 
Net gain (loss)
  $ (6,781,909 )   $ (6,819,022 )   $ 37,113     $ (751,202 )
                                 
Basic and Diluted loss per share
                               
Net gain (loss) per share, continuing operations
  $ (0.04 )   $ (0.04 )   $ 0.00     $ (0.02 )
Weighted Average Number of Common Shares outstanding (Basic and Diluted)
    178,570,472       178,570,472       152,819,817       39,405,131  
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
5

 
 
TRILLIANT EXPLORATION CORPORATION
Consolidated Statement of Cash Flows
Unaudited
 
   
For the six
months ended
30-June-2013
   
For the three
months ended
30-June-2013
   
For the three
months ended
31-March-2013
   
For the
year ended
31-Dec-2012
 
                         
CASH FLOWS FROM OPERATING ACTIVITIES
                       
Net gain (loss)
  $ (6,781,909 )   $ (6,819,022 )   $ 37,113     $ (751,202 )
Adjustments to reconcile net income to net cash by operations and non-cash items:
                               
Net realized and unrealized change in fair value of derivative liability
    6,612,353       6,667,895       (55,542 )     (16,842 )
Amortization of conversion feature
                            (12,571 )
Changes in operating assets and liabilities
                               
Accounts payable and accrued expenses
    9,717       5,657       4,060       134,000  
Loan from Cortland Capital
    13,152       3,152       10,000       20,000  
Loan from Eightfold Entertainment
                            7,060  
Trafalgar bonds payable
                            (127,830 )
Accrued interest
    8,738.0       4,369       4,369       (301,331 )
Net cash (used in) provided by operating activities
  $ (137,949 )   $ (137,949 )   $ -     $ (1,048,716 )
                                 
CASH FLOWS FROM INVESTING ACTIVITIES
                               
Common shares issued (in escrow) acquisition
                          $ (56,500 )
Net cash (used in) provided by investing activities
  $ -     $ -     $ -     $ (56,500.00 )
                                 
CASH FLOWS FROM FINANCING ACTIVITIES
                               
Common stock issued for services
    37,626       37,626               82,764  
Common stock issued to retire preferred stock
                            40,000  
Common stock issued in settlement of debt
    1,000       1000               94,679  
Additional paid-in capital
    99,350       99,350               887,833  
Net cash (used in) provided by financing activities
  $ 137,976     $ 137,976     $ -     $ 1,105,276  
                                 
Net increase (decrease) in cash
  $ 27     $ 27     $ -     $ 60  
                                 
Cash at beginning of period
  $ 60     $ 60     $ 60     $ -  
Cash at end of period
  $ 87     $ 87     $ 60     $ 60  
                                 
SUPPLEMENTAL CASH FLOW INFORMATION
                               
Cash paid for interest
  $ -     $ -     $ -     $ -  
Cash paid for income taxes
  $ -       -     $ -     $ -  
                                 
Non-cash investing activities
                               
Common stock issued for debt and accrued interest
  $ -     $ -     $ -     $ 94,679  
Common stock issued to retire preferred stock
  $ -     $ -     $ -     $ 56,500  
Common stock issued for services
  $ 37,626     $ 37,626     $ -     $ 40,000  
Common stock issued to settle debt
  $ 1,000     $ 1,000                  
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
6

 
 
TRILLIANT EXPLORATION CORPORATION, INC
Consolidated Statement of Changes in Equity
Unaudited
 
   
Common
   
Additional
Paid-in
   
Treasury
   
Accumulated deficit during pre-exploration
         
 
 
   
Stock
   
Amount
    Capital    
Stock
    stage    
Deficit
   
Total
 
                                           
Balance 31-Dec-2012
    152,819,187     $ 152,819     $ 6,681,901     $ (10,200,000 )     (52,207,651 )     (6,076,859 )     (1,649,790 )
Common issued in settlement of debt and accrued interest
                                                       
Common issued for services
                                                       
Common issued in escrow for acquisition                                                        
Treasury stock
                                                       
Net gain (loss)
                                            37,113       37,113  
Balance 31-March-2013
    152,819,187     $ 152,819       66,681,901       (10,200,000 )     (52,207,651 )     (6,039,746 )     (1,612,677 )
Common issued in settlement of debt and accrued interest
    1,000,000       1,000.00       11,000                                  
Common issued for services
    37,626,927       37,626.93       88,350                                  
Common issued in escrow for acquisition                                                        
Treasury stock
                                                       
Net loss
                                            (6,643,929 )     (6,643,929 )
Balance 30-Jun-2013
    191,446,114       191,446       66,781,251       (10,200,000 )     (52,207,651 )     (12,683,675 )     (8,256,606 )
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
 
7

 
 
TRILLIANT EXPLORATION CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
 
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Trilliant Exploration Corporation, (the “Company”) was incorporated as Project Development Pacific, Inc. on December 29, 2003, under the laws of the State of Nevada. The business purpose of the Company was originally to assist Canadian citizens to access health care services from private providers. On November 26, 2007, the Company changed its name to Trilliant Exploration Corporation, with a purpose to acquire and develop mineral properties. The Company has elected a fiscal year end of December 31.

On March 30, 2009 (Date of Acquisition), Trilliant Exploration Corporation (the Parent) acquired a 100% interest in MuluncayGoldCorp (a Subsidiary) (Muluncay). The transaction was accounted for as a purchase pursuant to ASC Topic No. 805.

On June 29, 2009 (Date of Formation), the Company established a wholly-owned Trilliant Diamonds Limited (a Subsidiary) (Trilliant Diamonds), a private limited England and Wales Company, to facilitate the Company’s diamond exploration. Trilliant Diamonds was sold off on August 26, 2010 to Charms with its current and future debt.

On July 1, 2009 the Company acquired 799 of 800 shares of AyapampaGold S.A (AYA) (a Subsidiary) at $1 per share for a purchase price of $799. AYA was formed in mid-2007 as a shell and has been inactive since inception.

On February 11, 2010, Minera Del Pacifico (the seller of MuluncayGoldCorp) exercised its rights retroactive to December 31, 2009 to terminate the purchase of MuluncayGoldCorp. The activity of MuluncayGoldCorp from the Date of Acquisition through December 31, 2009 is reported as discontinued operations pursuant to ASC Topic 205.

The accompanying consolidated financial statements include the operations of the Subsidiaries’ activity from the dates of Acquisition and Formation through this quarter end. Intercompany transactions have been eliminated upon consolidation. The Parent and Subsidiaries are collectively referred to as “the Company.”

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates that may change in the near future include value of goodwill, impairment of long-lived assets acquired, and value of investments.
 
Cash and Cash Equivalents

Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase. The Company had $87 and $60 in cash and cash equivalents as of June 30, 2013 and March 31, 2013, respectively. 
 
 
8

 
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Revenue Recognition
 
The Company will follow the guidance of ASC Topic 605, formerly, SAB 104 for revenue recognition. In general, the Company will record revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenues from services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed and determinable and collectability is probable. In circumstances when these criteria are not met, revenue recognition is deferred until resolution occurs.
 
Property, Plant, and Equipment

Property and equipment are stated at cost. Depreciation and amortization are determined using the straight-line method over estimated useful lives of the assets. As of March 31, 2013, the Company held no property, plant or equipment.
 
Net Income or (Loss) Per Share of Common Stock

Basic and diluted loss per common share is based upon the weighted average number of common shares outstanding during the period computed under the provisions of Accounting Standards Codification subtopic 260-10, Earnings per Share (“ASC 260-10”). All primary dilutive common shares have been excluded since the inclusion would be anti-dilutive.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting standards, if adopted, will have a material effect on Companies consolidated financial statements.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not of being sustained.

In accordance with 740-10, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting this standard, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
 
 
9

 

Derivative Liabilities
 
The Company accounts for its embedded conversion features in its convertible debentures in accordance ASC 815-10, “Derivatives and Hedging”, which requires a periodic valuation of their fair value and a corresponding recognition of liabilities associated with such derivatives, and ASC 815-40, “Contracts in Entity’s Own Equity”. The recognition of derivative liabilities related to the issuance of convertible debt is applied first to the proceeds of such issuance as a debt discount, at the date of issuance, and the excess of derivative liabilities over the proceeds is recognized as “Loss on Valuation of Derivative” in other expense in the accompanying financial statements. Any subsequent increase or decrease in the fair value of the derivative liabilities is recognized as “Other expense” or “Other income”, respectively.
 
Accounting Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in Entity’s own Equity (“ASC 815-40”) became effective for the Company. The Company’s Convertible Preferred Stock and Convertible debt has certain provisions that require the Company to change conversion price of the Convertible debt and Convertible Preferred Stock based on the discounted market value. Upon the effective date, the provisions of ASC 815-40 required a reclassification to liability based on the reset feature of the agreements. Therefore, in accordance with ASC 815-40, the Company determined the fair value of the initial reset provision on preferred stock and convertible debt using the Black-Scholes formula assuming no dividends, a risk-free interest rate of 0.68%-0.85%, expected volatility of 155.49%-214.23%, and expected life of 1 and 5 years. The net value of the reset provision at the date of adoption of ASC 815-40 was recorded as a derivative liability on the balance sheet and a reduction to series A convertible redeemable preferred stock and convertible debt. Changes in fair value are recorded as non-operating, non-cash income or expense at each reporting date.
 
The fair value of the convertible debt at June 30, 2013 was determined using the Black Scholes Option Pricing Model with the following assumptions:
 
Dividend yield: 0%
Volatility 469.97%
Risk free rate: 0.28%

Fair Value of Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value

Reclassification

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss.
 
 
10

 

NOTE 3 - PROVISION FOR INCOME TAXES

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income regardless of when reported for tax purposes. Deferred taxes provided for under ASC Topic No. 740 give effect to the temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, and allowances based on the income taxes expected to be payable in future years. Deferred tax assets arising as a result of net operating loss carry-forwards and other temporary differences have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry-forwards of approximate $18 million generated since inception through December 31, 2011, will begin to expire in 2031 subject to limitations of Section 382 of the Internal Revenue Code, as amended. Accordingly, deferred tax assets of approximately approximate $6.3 million, which were completely offset by the valuation allowance, which increased by $1,484,443 from the previous year, respectively, based on the U.S. Statutory rate of 35%.
 
Significant changes in the Company’s ownership, the Company’s future use of its existing net operating losses may be limited.

NOTE 4- RELATED PARTY TRANSACTIONS

A – Convertible Notes Payable
 
The Company has entered into multiple convertible notes payable agreements with an investment firm that is also a minority stockholder of the Company. Each note carries a separately dated promissory note that bears interest of 8% and is payable on or before August 31, 2010, with each funding due one year from original date of receipt. Principal and interest are convertible at the option of the note-holder into shares of the Company’s common stock at the rate of 80% of the average of the five daily volume weighted average price preceding the conversion date. Several Notes are in default and status of default is indicated in the following table. The Notes carry no penalty or change in interest rate for default. Interest expense on the convertible notes years ended December 31, 2012 and December 31, 2011, totaled $45,200 and $45,680, respectively. Due to the contingent nature of the conversion price, the company accounted for beneficial conversion feature and derivative liability on the note. The convertible promissory notes with the investment firm totaled $565,000 at December 31, 2012, December 31, 2011 and December 31, 2010 and are summarized as follows:
 
Convertible Notes
 
   
Issue date
   
Maturity
   
Principal
   
Interest Rate
   
Date of Default
 
                                         
(A)
 
12/31/2008
   
1/5/2010
      90,000       8.00 %  
1/5/2010
 
(A)
 
1/16/2009
   
1/5/2010
      100,000       8.00 %  
1/5/2010
 
(A)
 
1/23/2009
   
1/5/2010
      50,000       8.00 %  
1/5/2010
 
(A)
 
2/2/2009
   
1/5/2010
      25,000       8.00 %  
1/5/2010
 
(A)
 
3/9/2009
   
1/5/2010
      10,000       8.00 %  
1/5/2010
 
(B)
 
4/8/2009
   
4/8/2010
      50,000       8.00 %  
4/8/2010
 
   
6/23/2009
   
6/23/2010
      25,000       8.00 %  
6/23/2010
 
   
7/1/2009
   
7/1/2010
      *       8.00 %  
7/2/2010
 
   
7/6/2009
   
7/6/2010
      20,000       8.00 %  
7/7/2010
 
   
8/26/2009
   
8/31/2010
      195,000       8.00 %  
9/1/2010
 
Totals                   $ 565,000                  
                                         
(A), Amounts borrowed were part of a master note agreement totaling $ 275,000
 
* This note was repaid in January 2011
 
 
11

 
 
January 5, 2009 Note:
From January 5, 2009 to March 9, 2009, the Company issued a $275,000 Convertible Note that matured on January 5, 2010. The note bears interest at a rate of 8% and is convertible into the Company’s common stock at any time at the holder’s option, at the conversion rate of 80% of the average rate of five preceding the closing date prior to notice of conversion.

The Company identified embedded derivatives related to the Convertible Note entered into on March 9, 2009 (completion of funding as per agreement). These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Note, the Company determined a fair value of $218,585 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:
 
Dividend yield:
   
-0-
%
Volatility
   
181.03
%
Risk free rate:
   
0.82
%

The initial fair value of the embedded debt derivative of $125,165 was allocated as a debt discount with the remainder ($93,420) charged to current period operations as interest expense.

During the year ended December 31, 2011 and 2010, the Company amortized $0 and $2,072 to current period operations as amortization of beneficial conversion feature.

The fair value of the described embedded derivative of $3,449,722 and $266,461 at June 30, 2013 and March 31, 2013, respectively was determined using the Black Scholes Model with the following assumptions:

   
30-June-2013
   
31-March-2013
 
                 
Dividend yield:
   
-0-
%
   
0%
 
Volatility
   
469.97
%
   
395.51%
 
Risk free rate:
   
0..28
%
   
.025%
 

At June 30, 2013, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $ (3,183,261).

April 8, 2009 Note:
From April 8, 2009, the Company issued a $50,000 Convertible Note that matured on April 8, 2010. The note bears interest at a rate of 8% and is convertible into the Company’s common stock at any time at the holder’s option, at the conversion rate of 80% of the average rate of five preceding the closing date prior to notice of conversion.
 
 
12

 

The Company identified embedded derivatives related to the Convertible Note entered into on April 8, 2009. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Note, the Company determined a fair value of $42,239 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: 

Dividend yield:
   
-0-
%
Volatility
   
291.51
%
Risk free rate:
   
0.80
%

The initial fair value of the embedded debt derivative of $20,261 was allocated as a debt discount with the remainder ($21,978) charged to that period of operations as interest expense.

During the year ended December 31, 2012 and 2011, the Company amortized $0 to current period operations as amortization of beneficial conversion feature.
 
The fair value of the described embedded derivative of$ 636,872 and $41,175 at June 30, 2013 and March 31, 2013, was determined using the Black Scholes Model with the following assumptions:

   
30-Jun-13
   
31-Mar-13
 
Dividend yield:
   
-0-
%
   
-0-
%
Volatility
   
469.97%
%
   
395.51
%
Risk free rate:
   
0.28
%
   
0.25
%
 
June 23, 2009 Note:
From June 23, 2009, the Company issued a $25,000 Convertible Note that matured on June 23, 2010. The note bears interest at a rate of 8% and is convertible into the Company’s common stock at any time at the holder’s option, at the conversion rate of 80% of the average rate of five preceding the closing date prior to notice of conversion.

The Company identified embedded derivatives related to the Convertible Note entered into on June 23, 2009. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Note, the Company determined a fair value of $19,148 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: 

Dividend yield:
   
-0-
%
Volatility
   
291.5
3%
Risk free rate:
   
0.802
%
 
 
13

 

The initial fair value of the embedded debt derivative of $12,102 was allocated as a debt discount with the remainder ($7,046) charged to that period of operations as interest expense.

The fair value of the described embedded derivative of $318,158 and $20,587at June 30, 2013 and March 31, 2013 and December 31, 2012, respectively was determined using the Black Scholes Model with the following assumptions:

   
30-Jun-13
   
31-Mar-2013
 
Dividend yield:
   
-0-
%
   
-0-
%
Volatility
   
469.97
%
   
395.51
%
Risk free rate:
   
0.28
%
   
0..25
%

July 2009 and August 2009 Note:
From July 2009 to August, 2009, the Company issued a three note totaling to $315,000 Convertible Note that matured on July 1, 2010, July 6, 2010 and August 31, 2010. The note bears interest at a rate of 8% and is convertible into the Company’s common stock at any time at the holder’s option, at the conversion rate of 80% of the average rate of five preceding the closing date prior to notice of conversion.

The Company identified embedded derivatives related to the Convertible Note entered into on date of Note. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Note, the Company determined a fair value of $241,266 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:
 
Dividend yield:
   
-0-
%
Volatility
   
293
%
Risk free rate:
   
0.80
%

The initial fair value of the embedded debt derivative of $152,484 was allocated as a debt discount with the remainder ($88,782) charged to that period of operations as interest expense.

During the year ended December 31, 2012 and 20110, the Company amortized $0 to current period operations as amortization of beneficial conversion feature.

On January 22, 2011, the $100,000 of the Convertible Note was assigned to Shareholder at the $0.001 of conversion price. The Company recorded $582,973 as loss on change in term of note. On the same date the Company issued 333,333 no of Common stock against settlement of this Note of $100,000 and accrued interest of $12,482.

The fair value of the described embedded derivative of $ 2,731,305 and $ 177,052 at June 30, 2013 and March 31, 2013 was determined using the Black Scholes Model with the following assumptions:
 
   
30-Jun-13
   
31-Mar-13
 
Dividend yield:
   
-0-
%
   
-0-
%
Volatility
   
469.97
%
   
395.51
%
Risk free rate:
   
.28
%
   
.25
%
 
 
14

 

B – Short-Term Notes Payable

The Company has borrowed funds from stockholders for working capital purposes from time to time. The loans are non-interest bearing, payable on demand and, consequently, reported as current liabilities. The Company has received $39,514 in advances since inception and made repayments of $7,019 in cash, resulting in a payable balance of $32,495, during 2012 the remaining balance was settled through issuance of common stock and the Company obtained additional short term loan from Cortland Capital in the amount of $ 20,000 and $10,150 from Eightfold Entertainment. At December 31, 2012, the Company had remaining aggregate balance of $26,240.

C – Bonds Payable, Convertible and Secured

The Company has entered into multiple convertible bond agreements with an investment firm that is also a minority stockholder of the Company.

The convertible bonds were listed below:
 
   
Issue date
 
Maturity
 
Principal
   
Interest rate
   
Default rate
   
Date of Default
 
                                   
(A)
 
10/15/2008
 
10/15/2010
  $ 1,058,407 *     9.00 %     18.00 %  
1/15/2010
 
(B)
 
4/30/2009
 
10/31/2010
    300,000       9.00 %     18.00 %  
1/15/2010
 
(C)
 
10/12/2009
 
1/12/2010
    252,000       9.00 %     9.00 %  
1/13/2010
 
(D)
 
11/3/2009
 
2/3/2010
    - *     9.00 %     9.00 %  
2/3/2010
 
Totals
 
 
      $ 1,610,407                          
 
*On August 23, 2010, the Company repaid $241,593 in principal on (A) and $210,000 in principal on (D).
 
In October 2012, the Company retired its Series I Preferred stock, by issuing 45,000,000 shares of common stock to retire the Series I Preferred in satisfaction of the remaining bond debt, recording an addition to paid- in-capital of $16,752,000.
 
NOTE 5 – STOCKHOLDERS’ DEFICIT

Reverse Stock Split

On January 26, 2011, the Company’s Board of Directors , pursuant to unanimous written consent resolutions , authorized and approved a reverse stock split of one for every three hundred (1:300) of our total issued and outstanding shares of common stock was effectuated on April 8, 2011. All references in the accompanying consolidated financial statements and notes thereto have been retroactively restated to reflect the above change in the ordinary share structure.
 
 
15

 
 
Preferred Stock

The Company is authorized to issue 200,000,000 shares of Preferred stock, par value of $ 0.001 per share.

On June 30, 2009, the Company filed a Certificate of Designation with the Secretary of State of Nevada, whereby 10,200,000 shares of the 200,000,000 authorized shares of Preferred stock were designated as Series I Preferred Stock, $0.001 par value and having the powers, designations, preferences, limitations, restrictions and relative rights as set forth in the Certificate of Designation of Series I Preferred Stock.

Holders of the Series I Preferred shares do not receive interest or dividends separately from common stock shareholders. Preferred Stock holder shall participate in dividends when and if declared in the same proportion as common stock shareholders. Preferred stock is convertible into common shares at the lowest volume weighted average price of the common shares in the five days preceding conversion.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, holders of the Series I Preferred Shares will be entitled to receive for each share of Preferred Shares, out of the assets of the Company or proceeds available for distribution to our shareholders, subject to any rights of our creditors, before any distribution of assets or proceeds is made to or set aside for the holders of our common stock and any other class or series of our stock ranking junior to the Series I Preferred Shares, payment of an amount equal to the sum of (i) the $1.00 liquidation preference amount per Series I Preferred Shares and (ii) the amount of any accrued and unpaid dividends on the Series I Preferred Shares (including dividends accrued on any unpaid dividends). To the extent the assets or proceeds available for distribution to shareholders are not sufficient to fully pay the liquidation payments owing to the holders of the Series I Preferred Shares and the holders of any other class or series of our stock ranking equally with the Series I Preferred Shares, the holders of the Series I Preferred Shares and such other stock will share ratably in the distribution.

For purposes of the liquidation rights of the Series I Preferred Shares, neither a merger or consolidation of the Company with another entity, including a merger or consolidation in which the holders of Series I Preferred Shares receive cash, securities or other property for their shares, nor a sale, lease or exchange of all or substantially all of the Company’s assets will constitute a liquidation, dissolution or winding up of the affairs of the Company.

In October 2012, the Company retired all shares of Series I Preferred Shares. See Note 4(c) above
 
Issuance of 10,200,000 shares of Series I Preferred Shares

In October 2012, the Company retired all shares of this Preferred Series. See Note 4(c) above.

Issuance of 2,363,500 shares of Series I Preferred Shares

In October 2012, the Company retired all shares of this Preferred Series. See Note 4(c) above.
 
 
16

 

Common Stock

The Company is authorized to issue 1,000,000,000 shares of common stock, par value $.001 per share

On January 22, 2011, a previously issued $100,000 Convertible Note was assigned to a Company shareholder at the $0.001 of conversion price. The Company recorded $582,973 as loss on change in term of note. On the same date the Company issued 333,333 of Common stock in exchange or settlement of the Note of $100,000 in principal and accrued interest of $12,482.

During fiscal year ended December 2012, the Company issued 275,888,257 shares of its common stock for services, debt reduction, and acquisition expenses and to retire the preferred shares. The Company is holding 126,069,070 shares in escrow for services pending performance. The outstanding shares of its common stock are 152,819,187. The company currently has no preferred shares issued and outstanding.

During the quarter ended June 30, 2013, the Company issued 2,550,000 shares of common stock, of which 1,000,000 were issued pursuant to the terms of the convertible note with a related party. The Company reported the beneficial conversion as additional paid-in capital of $11,000. The balance of 1,550,000 shares of common stock issued were for services.

Warrants

A summary of the changes in outstanding warrants is as follows.

As of December 31, 2012, the Company issued 2,740,300 common shares in full settlement of the warrant agreement.
 
NOTE 6 - OTHER MATERIAL CONTRACTS

During the last quarter of 2012, the Board of Directors approved the acquisition of two (2) mining entities but as of the date of these financial statements they have yet to enter into a definitive agreement of plan of acquisition or merger. As of the date of this report the Company has not entered into a definitive agreement of plan of acquisition or merger.

NOTE 7- GOING CONCERN
 
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has a recurring net losses, and total deficit accumulated including during pre-exploration stage is $ (52,207,651) and a deficit of $(12,809,655) accumulated during the six months ended June 30, 2013. The Company has working capital deficit of (current liabilities minus current assets) $(8,244,609) at June 30,, 2013 and December 31, 2012 of $(1,088,973). Additionally, current economic conditions in the United States and globally create significant problems attaining sufficient funding. Accordingly, management has encountered significant difficulties in obtaining financing. These items raise substantial doubt about the Company’s ability to continue as a going concern. In view of these matters, realization of the assets of the Company is dependent upon the Company’s ability to meet its financial requirements through equity financing, borrowing, and the success of future operations. These consolidated financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
 
17

 
 
NOTE 8 – CORRECTION OF PRIOR YEAR ACCOUNTING ERROR

The Company’s consolidated financial statements as of December 31, 2009, contained the following errors: (1) overstatement of debt in the amount of $2,389,200; overstatement of a related investment in the amount of $2,389,200, and overstatement of accrued interest payable in the amount of $149,112. As of December 31, 2009, the investment and debt (along with minimal foreign currency translation adjustments) were eliminated, and accumulated deficit was increased by $149,112 to correct the aggregate effect of the errors. The error is a result of the Company recording a transaction, known as Global Diamond Resources, which did not materialize wherein the Company was borrowing funds under a convertible loan agreement to purchase, through a subsidiary, stock of a privately held company. The lenders were unable to complete the transaction and neither funds nor equities changed hands. The Board of Directors issued a resolution to void the transaction. The Company also made the following adjustments:

         
 
Common
   
Additional
   
Deficit
Accumulated
   
Total
Stockholders
 
   
Preferred
   
Stock
   
Paid in
   
During Pre
   
Equity
 
   
Stock
   
Amount
   
Capital
   
Exploration
   
(Deficit)
 
Balance December 31, 2009
  $ 10,200     $ 93,132     $ 10,706,521     $ (3,557,556 )   $ 7,252,297  
                                         
Reverse Stock Split
    -       (92,822 )     92,822       -       -  
                                         
Reversal of interest Payable
    -       -       -       149,112       149,112  
                                         
Beneficial Conversion feature on Preferred Stock
    (10,034,407 )     -       -       -       (10,034,407 )
                                         
Re-class
    10,189,800               (10,189,800 )     -       -  
                                         
Amortization of Beneficial Conversion feature on Preferred Stock
    10,034,407       -       -       -       10,034,407  
                                         
Amortization of Beneficial Conversion on Convertible Debt
    -       -       363,883       -       363,883  
                                         
Change in Value of Derivative Liability
    -       -       -       1,747,423       1,747,423  
                                         
Change in Interest Expense and amortization of beneficial conversion feature
    -       -       -       (10,682,980 )     (10,682,980 )
                                         
Balance December 31, 2009 (restated)
    10,200,000       310       973,426       (12,344,001 )     (1,170,265 )
                                         
Removed Preferred Stock from Equity
    (10,200,000 )     -       -       -       (10,200,000 )
                                         
Total Stockholder's equity (deficit) (before treasury stock)
  $ -     $ 310     $ 973,426     $ (12,344,001 )   $ (11,370,265 )
 
 
18

 
 
NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement. The debt derivative, comprised of our bifurcated convertible debt features on our convertible notes, is measured at fair value using quoted market prices and estimated volatility factors based on historical prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy. 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities:
 
 
       
Fair Value Measurements at December 31, 2012 using:
 
 
 
June 30, 2013
   
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   
Significant
Other
Observable
Inputs (Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
Liabilities:
                       
Debt derivative liabilities
 
$
7,136,057
     
-
     
-
   
$
7,136,057
 
Preferred stock derivative liabilities
 
$
0
                   
$
0
 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2012:
 
   
Debt Derivative
Liability
 
Balance March 31, 2032
 
$
505,275
 
Mark-to-market at June 30, 2013
       
Embedded debt derivatives
   
6,630,732
 
         
Balance, March 31, 2013
 
$
7,136,057
 
         
Net gain (loss) on derivatives realized and unrealized for the period included in earnings relating to the liabilities held at June 30, 2013
 
$
(6,630,732)
 
 
 
19

 
 
FORWARD LOOKING STATEMENTS
 
Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identified by our use of certain terminology, including “will,” “believes,” “may,” “expects,” “should,” “seeks,” “anticipates,” or “intends,” or by discussions of strategy or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, among others, our history of operating losses and uncertainty of future profitability; our lack of working capital and uncertainty regarding our ability to continue as a going concern; uncertainty of access to additional capital; risks inherent in mineral exploration; environmental liability claims and insurance; dependence on consultants and third parties as well as those factors discussed in the sections entitled “ Risk Factors ,” “ Business ,” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations .” If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated, or projected. Forward-looking statements in this document are not a prediction of future events or circumstances, and those future events or circumstances may not occur. Given these uncertainties, users of the information included herein, including investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. We do not assume responsibility for the accuracy and completeness of these statements.
 
The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. The Company is an exploration stage company and its properties have no known body of ore. U.S. investors are cautioned not to assume that the Company has any mineralization that is economically or legally mineable.
 
All references in this Quarterly Report on Form 10-Q to the terms “we,” “our,” “us,” “TTXP,” and the “Company” refer to Trilliant Exploration Corporation.
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Trilliant Exploration Corporation was incorporated under the laws of the State of Nevada on December 29, 2003 under the name Project Development Pacific Inc. We were previously engaged in the business of assisting Canadian citizens to access health care services from private providers. On November 26, 2007, we changed our name to Trilliant Exploration Corporation with a business purpose to acquire and develop mineral properties. During 2007, we began acquiring interests in mining properties.
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Pre-Exploration Stage Company
 
The Company is considered to be in the pre-exploration stage as defined in ASC 915 “Accounting and Reporting by Development Stage Enterprises” as interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. The Company is devoting substantially all of its efforts to the execution of its business plan.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates that may change in the near future include value of goodwill, impairment of long-lived assets acquired, and value of investments.
 
 
20

 
 
Cash and Cash Equivalents
 
Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase. The Company had $87 and $60 in cash and cash equivalents as of June 30, 2013 and March 31, 2013, respectively.
 
Revenue Recognition
 
The Company will follow the guidance of ASC Topic 605, formerly, SAB 104 for revenue recognition. In general, the Company will record revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenues from services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed and determinable and collectability is probable. In circumstances when these criteria are not met, revenue recognition is deferred until resolution occurs.
 
Mineral Acquisition and Exploration Costs
 
Mineral property interests include optioned and acquired mineral development and exploration stage properties. The amount capitalized related to a mineral property interest represents its fair value at the time it was optioned or acquired, either as an individual asset or as a part of a business combination. The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Exploration costs are expensed as incurred and development costs are capitalized if proven and probable reserves exist and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mineral interests costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
 
Property, Plant, and Equipment
 
Property and equipment are stated at cost. Depreciation and amortization are determined using the straight-line method over estimated useful lives of the assets. All property, plant, and equipment were disposed of and any gains and losses on the disposal are included in discontinued operations as disclosed in Note 10. As of September 30, 2012, the Company held no property, plant or equipment.
 
Net Income or (Loss) Per Share of Common Stock
 
Basic and diluted loss per common share is based upon the weighted average number of common shares outstanding during the period computed under the provisions of Accounting Standards Codification subtopic 260-10, Earnings per Share (“ASC 260-10”). For the three month period the weighted average number of shares issued and outstanding is 152,819,187 for the period ended March 31, 2013 and 39,405,131 for the period ended December 31, 2012.
 
Goodwill and Other Intangibles
 
As of June 30, 2013, the Company held no Goodwill. The Company possesses no other intangible assets.
 
 
21

 
 
Recently Issued Accounting Pronouncements
 
Management does not believe that any recently issued, but not yet effective accounting standards, if adopted, will have a material effect on our financial statements
 
Income Taxes
 
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not of being sustained.
 
In accordance with 740-10, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting this standard, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
 
Derivative Liabilities
 
The Company accounts for its embedded conversion features in its convertible debentures in accordance ASC 815-10, "Derivatives and Hedging", which requires a periodic valuation of their fair value and a corresponding recognition of liabilities associated with such derivatives, and ASC 815-40, “Contracts in Entity’s Own Equity”. The recognition of derivative liabilities related to the issuance of convertible debt is applied first to the proceeds of such issuance as a debt discount, at the date of issuance, and the excess of derivative liabilities over the proceeds is recognized as “Loss on Valuation of Derivative” in other expense in the accompanying financial statements. Any subsequent increase or decrease in the fair value of the derivative liabilities is recognized as “Other expense” or “Other income”, respectively.
 
Accounting Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in Entity’s own Equity (“ASC 815-40”) became effective for the Company. The Company ’ s Convertible Preferred Stock and Convertible debt has certain provisions that require the Company to change conversion price of the Convertible debt and Convertible Preferred Stock based on the discounted market value. Upon the effective date, the provisions of ASC 815-40 required a reclassification to liability based on the reset feature of the agreements. Therefore, in accordance with ASC 815-40, the Company determined the fair value of the initial reset provision on preferred stock and convertible debt using the Black-Scholes formula assuming no dividends, a risk-free interest rate of 0.68%-0.85%, expected volatility of 155.49%-214.23%, and expected life of 1 and 5 years. The net value of the reset provision at the date of adoption of ASC 815-40 was recorded as a derivative liability on the balance sheet and a reduction to convertible redeemable preferred stock and convertible debt. Changes in fair value are recorded as non-operating, non-cash income or expense at each reporting date. The fair value of the preferred stock and convertible debt June 30, 2013 was determined using the Black Scholes Option Pricing Model with the following assumptions:
 
Dividend yield: 0%
Volatility 469.97%
Risk free rate: 0.28%
 
The change in fair value of the convertible debt derivative liability resulted in a current period non-operating loss to operations of $6,630,782.
 
 
22

 

Fair Value of Instruments
 
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
 
The company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value
 
Reclassification
 
Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss.
 
Currency Risk and Foreign Currency Translations
 
The functional currency of the Company is the United States Dollar (USD). In accordance with ASC Topic No. 830, realized gains or losses on expenses incurred in denominations other than USD are recognized in earnings on the transaction date. At such time as there are any foreign denominated assets or liabilities, the Company will report changes in valuation in a Statement of Other Comprehensive Income or (Loss) due to the changes in cumulative adjustments from foreign currency translation.
 
CURRENT BUSINESS OPERATIONS

We are engaged in the evaluation, acquisition, exploration and advancement of mining projects. As of the date of this Quarterly Report, we are devoting substantially all of our efforts to the execution of our business operations. Through fiscal 2012, funding to acquire and explore alternative mining, gold and copper properties and for operational purposes was acquired through private financings.

RESULTS OF OPERATION
 
Six Month Period Ended June 30, 2013 Compared to the Year Ended December 31, 2012
 
Our net gain for the six months period ended June 30, 2013 was $(6,781,909) compared to a net loss of $(39,863,640) during the period ended December 31, 2012, a change of $ 33,081,731. During the six month period ended June 30, 2013 and December 2012, we did not generate any revenue from continuing operations.
 
During the six month period ended June 30, 2013, we incurred operating expenses of $170,086 compared to $8,031,052 incurred during the three month period ended December 31, 2012, a decrease of $7,860,966,. The decrease in operating expenses incurred during the three month period ended June 33, 2013 was primarily attributable to the elimination of office expense, use of consultants and professionals charges. Operating expenses reflect the limited scope and scale of our business operations.
 
Other income (expense) was incurred during the three month period ended June 30, 2013 of $ (6,603,085), unrealized and realized loss on derivative liabilities.
 
Therefore, this resulted in a net income applicable to common shares during the six month period ended June 30, 2013 of $(6,781,909).
 
 
23

 
 
LIQUIDITY AND CAPITAL RESOURCES
 
Six Month Period Ended June 30, 2013
 
As of June 30, 2013, our current assets and total assets were $87 in cash. Our current liabilities were $1,108,639, which resulted in a working capital deficit of $1,108,552. As of June 30,, 2013, liabilities were primarily comprised of: (i) $298,606 in accounts payable; (ii) $585,495 in convertible notes payable; and, (iii) $ $181,236 of accrued interest payable. The increase in liabilities during the six month period ended June 30, 2013 from fiscal year ended December 31, 2012 was primarily due to the increase in the derivative liability associated with the convertible note and the significantly lower conversion price.
 
Stockholders’ deficit increased from $1,649,790 for fiscal year ended December 31, 2012 to $8,244,609 for the six month period ended June 30, 2013
 
Cash Flows from Operating Activities
 
We have not generated positive cash flows from operating activities. For the six month period ended June, 2013, no net cash flows used in or provided by operating activities.
 
Cash Flows from Investing Activities
 
We did not engage in any investing activities during the six month period ended June 30, 2013.
 
Cash Flows from Financing Activities
 
For the six month period ended June 30, 2013, there were $137,976 net cash flows provided from financing activities.
 
PLAN OF OPERATION AND FUNDING
 
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has reported a net loss from operations of $6,781,909 for the six month period ended June 30, 2013, a total shareholders’ deficit of $ 8,244,609 and total current liabilities in excess of current assets of $1,108,639 as of June 30, 2013.

 The Company is in the pre-exploratory stage and does not have any revenues from operations and will be dependent on funds raise to satisfy its ongoing capital requirements for at least the next 12 months. The Company will require additional financing in order to execute its operating plan and continue as a going concern. The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, the Company may be unable to implement its current plans for expansion or respond to competitive pressures, any of these circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

Management expects that global economic conditions will continue to present a challenging operating environment through 2013.

While we have been able to manage our working capital needs with the current credit facilities, additional financing is required in order to meet our current and projected cash flow requirements from operations. We cannot predict whether this new financing will be in the form of equity or debt. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments.

Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.
 
 
24

 
 
MATERIAL COMMITMENTS
 
As of the date of this Quarterly Report, we have the following material commitments as described as described in Footnote 4 of our financial statements (all of which are in default). 
 
Contractual Obligations
 
Total
 
 
Less than one year
 
 
1 – 3 Years
 
 
3 – 5 Years
 
 
More than 5 Years
 
                                         
Convertible Notes Payable
 
 
585,495
 
 
 
585,495
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
585,495
 
 
$
585,495
 
 
$
 
 
$
 
 
$
 
 
OFF-BALANCE SHEET ARRANGEMENTS
 
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 

GOING CONCERN
 
The independent auditors' report accompanying our December 31, 2011 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
 
Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.
 
Number of Employees

As of June 30, 2013 the Company had one (1) part-time employee.
 
Disclosure of Contractual Obligations
 
The Company does not have any significant contractual obligations which could negatively impact our results of operations and financial condition.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MATERIAL RISK
 
None
 
 
25

 
 
ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
As of June 30, 2013, the Company performed an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting Officer), of the effectiveness of the design and operation of its disclosure controls and procedures as defined in Rules 13a - 15(e) or 15d - 15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation and due to the lack of segregation of duties and failure to implement accounting controls, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.
 
The reason for the ineffectiveness of our disclosure controls and procedures was the result of having a limited number of employees and not having proper segregation of duties based on the cost benefit of hiring additional employees solely to address the segregation of duties issue. We compensate for the lack of segregation of duties by employing close involvement of management in day-to-day operations.
 
Limitations on Effectiveness of Controls and Procedures
 
Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 
Remediation of Material Weaknesses in Internal Control over Financial Reporting
 
As a small business, without a viable business and revenues, the Company does not have the resources to install a dedicated staff with deep expertise in all facets of SEC disclosure and GAAP compliance. As is the case with many small businesses, the Company will continue to work with its external consultants and attorneys as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future.
 
The Company will conduct a review of existing sign-off and review procedures as well as document control protocols for critical accounting spreadsheets. The Company will also increase management's review of key financial documents and records.
 
As a small business, the Company does not have the resources to fund sufficient staff to ensure a complete segregation of responsibilities within the accounting function. However, Company management does review, and will increase the review of, financial statements on a monthly basis. These actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.
 
Changes in Internal Controls
 
During the fiscal quarter ended June 30, 2013, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
 
 
26

 
 
PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
The Company is subject to legal proceedings and claims from time to time, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS
 
The Company’s results of operations, financial condition and cash flows can be adversely affected by various risks. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this quarterly report on Form 10-Q. You should carefully consider all of these risks.
 
ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
 
There were no unregistered sales of securities during the period of this report.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
None
 
ITEM 4. MINING SAFETY DISCLOSURES

None
 
ITEM 5. OTHER INFORMATION
 
None.
 
 
27

 
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
(A) Exhibits
 
Exhibit Number
 
Description
     
Exhibit 31.1
 
Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
Exhibit 31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
Exhibit 32.1
 
Certification of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 
 
101.INS**
 
XBRL Instance Document
101.SCH**
 
XBRL Taxonomy Extension Schema Document
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
*Filed herewith
 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
28

 
 
TRILLIANT EXPLORATION CORPORATION
 
SIGNATURES
 
Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TRILLIANT EXPLORATION CORPORATION
 
 
 
Dated: August 15, 2013
By:
/s/ Eric Radtke
 
 
 
Eric Radtke
 
 
President/Chief Executive Officer
 
 
 
     
Dated: August 15, 2013
By:
/s/ Eric Radtke
 
 
 
Eric Radtke
    Chief Financial Officer
 
 
 
29

EX-31.1 2 ttxp_ex311.htm CERTIFICATION ttxp_ex311.htm
EXHIBIT 31.1
 
CERTIFICATION
 
I, Eric Radtke, certify that:
 
1. I have reviewed this Form 10-Q of Trilliant Exploration Corporation;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
     
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
     
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
     
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Date: August 15, 2013
By:
/s/ Eric Radtke
 
   
Eric Radtke, President and CEO
 
   
(Principal Executive Officer)
 
EX-31.2 3 ttxp_ex312.htm CERTIFICATION ttxp_ex312.htm
EXHIBIT 31.2
 
CERTIFICATION
 
I, Eric Radtke, certify that:
 
1. I have reviewed this Form 10-Q of Trilliant Exploration Corporation;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
   
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
     
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
     
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Date: August 15, 2013
By:
/s/ Eric Radtke
 
   
Eric Radtke, CFO
 
   
(Principal Accounting Officer)
 
EX-32.1 4 ttxp_ex321.htm CERTIFICATION ttxp_ex321.htm
EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
In connection with the Quarterly Report on Form 10-Q (the “Report”) of Trilliant Exploration Corporation (the “Company”) for the quarter ended June 30, 2013, each of Eric Radtke, the Chief Executive Officer, and Eric Radtke, the Chief Financial Officer, of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned’s knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Date: August 15, 2013
By:
/s/ Eric Radtke
 
   
Eric Radtke
 
    Principal Executive Officer  
       
       
Date: August 15, 2013
By:
/s/ Eric Radtke
 
   
Eric Radtke
 
    Principal Financial Officer  
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