0001056520-16-000294.txt : 20160912 0001056520-16-000294.hdr.sgml : 20160912 20160912124059 ACCESSION NUMBER: 0001056520-16-000294 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 31 CONFORMED PERIOD OF REPORT: 20160731 FILED AS OF DATE: 20160912 DATE AS OF CHANGE: 20160912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Star Gold Corp. CENTRAL INDEX KEY: 0001401835 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 270348508 STATE OF INCORPORATION: NV FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-52711 FILM NUMBER: 161880597 BUSINESS ADDRESS: STREET 1: 611 E. SHERMAN AVE. CITY: COEUR D'ALENE STATE: ID ZIP: 80814 BUSINESS PHONE: 208-664-5066 MAIL ADDRESS: STREET 1: 611 E. SHERMAN AVE. CITY: COEUR D'ALENE STATE: ID ZIP: 80814 FORMER COMPANY: FORMER CONFORMED NAME: Elan Development Inc DATE OF NAME CHANGE: 20070604 10-Q 1 f20160731stargold10qfilingco.htm Converted by EDGARwiz

UNITED STATES

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 quarterly period ended July 31, 2016

¨ Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act of 1934

For the transition period ________ to ________

COMMISSION FILE NUMBER 000-52711


 STAR GOLD CORP.

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

NEVADA

27-0348508

(State or other jurisdiction of incorporation or organization)

 (IRS Employer Identification No.)

611 E. Sherman Avenue

Coeur d'Alene, Idaho

(Address of principal executive office)

83814

(Postal Code)

(208) 664-5066

(Issuer's telephone number)

 

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


Indicate by 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [x]   No  [  ]



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

Large Accelerated Filer  [ ]

 Accelerated Filer [ ]

 Non-Accelerated Filer [ ]

Smaller Reporting Company [x]


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


As of September 2, 2016 there were 40,836,726 shares of issuer’s common stock outstanding.











Page 1 of 25




TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION


ITEM 1.  

FINANCIAL STATEMENTS (UNAUDITED)


BALANCE SHEETS AT JULY 31, 2016 AND APRIL 30, 2016


STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2016 AND 2015


STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JULY 31, 2016 AND 2015


NOTES TO THE FINANCIAL STATEMENTS


ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


ITEM 4.

CONTROLS AND PROCEDURES


PART II - OTHER INFORMATION


ITEM 1.

 

LEGAL PROCEEDINGS.


ITEM 1A.

RISK FACTORS.


ITEM 1B.

UNRESOLVED STAFF COMMENTS


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


ITEM 3.

DEFAULTS ON SENIOR SECURITIES


ITEM 4.

 

MINE SAFETY DISCLOSURES


ITEM 5.

 

OTHER INFORMATION


ITEM 6.

EXHIBITS


SIGNATURES






Page 2 of 25






PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

STAR GOLD CORP.

BALANCE SHEETS


 

July 31, 2016

 

April 30, 2016

ASSETS

 

(Unaudited)

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

$

                  51,889

 

$

 1,785

Prepaid expenses

 

                    8,818

 

 

 8,767


TOTAL CURRENT ASSETS

 

                  60,707

 

 

 10,552


EQUIPMENT AND MINING INTEREST, net (NOTE 3)

 

                336,700

 

 

 326,050


RESTRICTED CASH

 

                  21,600

 

 

 21,600


TOTAL ASSETS

$

                419,007

 

$

 358,202


LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 


CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

$

                  73,742

 

$

 53,742

Other accrued liabilities

 

                  23,037

 

 

 12,381

Notes payable, related party (NOTE 4)

 

                  85,000

 

 

 15,000


TOTAL CURRENT LIABILITIES

 

                181,779

 

 

 81,123


LONG TERM LIABILITIES:

 

 

 

 

 

Deposits on stock subscriptions (NOTE 7)

 

                137,500

 

 

 18,000


TOTAL LONG TERM LIABILITIES

 

                137,500

 

 

18,000


TOTAL LIABILITIES

 

                319,279

 

 

99,123


COMMITMENTS AND CONTINGENCIES (NOTE 3)

 

 

 

 

 


STOCKHOLDERS' EQUITY

 

 

 

 

 

Preferred Stock, $.001 par value; 10,000,000 shares authorized, none                       issued and outstanding

 

                          -   

 

 

-

Common Stock, $.001 par value; 300,000,000 shares authorized; 40,836,726 shares issued and outstanding

 

                  40,837

 

 

 40,837

Additional paid-in capital

 

             9,535,966

 

 

 9,535,751

Accumulated deficit

 

           (9,477,075)

 

 

 (9,317,509)


TOTAL STOCKHOLDERS' EQUITY

 

                  99,728

 

 

 259,079


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

                419,007

 

$

 358,202



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

Page 3 of 25




STAR GOLD CORP.

STATEMENTS OF OPERATIONS (UNAUDITED)




 

For the three months ended

 

July 31, 2016

 

July 31, 2015

OPERATING EXPENSE

 

 

 

 

 

Mineral exploration expense

$

                100,797

 

$

 113,455

Legal and professional fees

 

                  28,774

 

 

 21,734

Management and administrative

 

                  26,835

 

 

 26,159

Depreciation

 

                    1,350

 

 

 1,350


TOTAL OPERATING EXPENSES

 

                157,756

 

 

 162,698


LOSS FROM OPERATIONS

 

              (157,756)

 

 

            (162,698)


OTHER INCOME (EXPENSE)

 

 

 

 

 

   Interest expense

 

                  (1,810)

 

 

 (2,321)


TOTAL OTHER INCOME (EXPENSE)

 

                  (1,810)

 

 

 (2,321)


NET LOSS BEFORE INCOME TAXES

 

              (159,566)

 

 

             (165,019)


Provision for income tax

 

                            -

 

 

-


NET LOSS

$

              (159,566)

 

$

              (165,019)


Basic and diluted loss per share

    $

                    Nil

 

$

                    Nil


Basic and diluted weighted average number shares outstanding

 

           40,836,726

 

 

           36,595,726

 

 

 

 

 

 

 

 

 

 

 

 



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

Page 4 of 25




STAR GOLD CORP.

STATEMENTS OF CASH FLOWS (UNAUDITED)







For the three months ended

 

July 31, 2016

 

July 31, 2015


CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net loss

$

             (159,566)

 

$

             (165,019)

Adjustments to reconcile net loss to cash used by operating activities

 

 

 

 

 

    Stock based compensation

 

                       215

 

 

                       291

    Depreciation

 

                    1,350

 

 

                    1,350

Changes in operating assets and liabilities:

 

 

 

 

 

    Prepaid expenses

 

(51)

 

 

                33,740

    Accounts payable

 

                  20,000

 

 

                  58,169

    Other accrued liabilities

 

                  10,656

 

 

                 (9,937)

Net cash used by operating activities

 

             (127,396)

 

 

               (81,406)


CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

    Payments for mining interest

 

(12,000)

 

 

               (12,000)

Net cash used by investing activities

 

(12,000)

 

 

               (12,000)


CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

    Proceeds from note payable, related party

 

                  70,000

 

 

                  40,000

    Repayment of note payable, related party

 

                          -   

 

 

             (101,916)

    Proceeds from stock subscriptions

 

                119,500

 

 

                268,000

Net cash provided by financing activities

 

                189,500

 

 

                206,084


Net increase in cash and cash equivalents

 

                  50,104

 

 

                112,678


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

                    1,785

 

 

                    5,358


CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

                  51,889

 

$

                118,036

 

 

 

 

 

 

 

 

 

 

 

 


NON-CASH FINANCING AND INVESTING ACTIVITIES:

 

 

 

 

 

    Reduction of note payable, related party by vendor refund

$

-

 

$

(12,337)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 









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

Page 5 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016




NOTE 1 - NATURE OF OPERATIONS


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


The Company's main business consists of assembling and/or acquiring land packages and mining claims the Company believes have potential mining reserves, and expending capital to explore these claims by drilling, geophysical work or other exploration work deemed necessary.  The business is a high risk business as there is no guarantee that the Company's exploration work will ultimately discover or produce any economically viable minerals.


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three-month period ended July 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending April 30, 2017.  All amounts presented are in U.S. dollars.  For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended April 30, 2016.


Going Concern


As shown in the accompanying financial statements, the Company has incurred operating losses since inception.  As of July 31, 2016, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows.  As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $9,477,075, and at July 31, 2016 the Company's working capital deficit was $121,072.  Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable mining properties and generate revenue from current and planned business operations, and control costs.  The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining commercial production.  However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.  The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. In the event the Company is unable to fulfill the annual exploration expenditures as specified in the Property Option Agreement (Note 3), the Company will default on the agreement(s) and surrender its right to future claims on the respective property.


Use of Estimates


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




Page 6 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



Cash and cash equivalents


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

Restricted cash


Restricted cash represents collateral for bonds held for exploration permits.


Financial Instruments

 

The Company's financial instruments include cash and cash equivalents, reclamation bonds, and short term notes payable, related party.  All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at July 31,2016 and 2015.


Fair Value Measures


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


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


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


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


At July 31, 2016 and 2015, the Company had no assets or liabilities accounted for at fair value on a recurring basis.


Mining Interests and Mineral Exploration Expenditures


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


Equipment


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





Page 7 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



Reclamation and Remediation


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


Impaired Asset Policy


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


Stock-based Compensation


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

  

Loss Per Share


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


The dilutive effect of outstanding securities at July, 2016 and 2015, would be as follows:


 

July 31, 2016

 

July 31, 2015

Stock options

 

3,083,667

 

 

3,058,667

Warrants

 

5,855,400

 

 

1,614,400

  TOTAL POSSIBLE DILUTION

 

8,939,067

 

 

4,673,067

 

 

 

 

 

 

At July 31, 2016 and 2015, respectively, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.


Income Taxes


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





Page 8 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



New Accounting Pronouncement


In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Early application is permitted.  The Company has concluded that adoption of the standard would have minimal impact on the Company’s financial statements as such disclosure is already included the financial statements.


NOTE 3 – EQUIPMENT AND MINING INTEREST


The following is a summary of the Company's equipment and mining interest at July 31,2016 and April 30, 2015.


 

July 31, 2016

 

April 30, 2016

Equipment

$

 27,007

 

$

 27,007

  Less accumulated depreciation

 

 (24,306)

 

 

 (22,956)

Equipment, net of accumulated depreciation

 

 2,701

 

 

 4,051

 

 

 

 

 

 

Mining interest - Longstreet

 

333,999

 

 

 321,999

  TOTAL EQUIPMENT AND MINING INTEREST

$

336,700

 

$

 326,050

 

 

 

 

 

 

The Longstreet Property


The Company leases with an option to acquire unpatented mining claims located in the State of Nevada and known as the Longstreet Property.  On December 10, 2014, the Longstreet Property Option Agreement was amended revising the required expenditures and annual stock option obligation.  The Company is also obligated to pay an annual owners advance royalty payment of $12,000 related to the Clifford claims.  


On January 5, 2016, the Longstreet Property Option Agreement was further amended revising the required expenditures and annual stock option obligation.  All allowable expenditures in excess of the required annual expenditures shall be carried-over to the subsequent year.


For the year ended April 30, 2016, the Company made an annual required payment to the optioner of $20,000 which is included in “Equipment and Mining Interest”. The Company issued options to purchase 25,000 shares of common stock with fair value of $1,500 (Note 6).  


For the three months ended July 31, 2016, the Company paid the annual $12,000 advance royalty for additional mining interest on the Longstreet property related to the Clifford claims.


The schedule of annual payments, minimum expenditures and number of stock options to be issued pursuant to the amended Longstreet Property Option Agreement of January 5, 2016, is as follows:


Required annual expenditure between:

 

Required Expenditure

 

Cash payment (1)

 

Stock options

January 17, 2016 through January 16, 2017

 

$

150,000

 

$

25,000

 

 

25,000

January 17, 2017 through January 16, 2018

 

 

300,000

 

 

35,000

 

 

40,000

January 17, 2018 through January 16, 2019

 

 

500,000

 

 

40,000

 

 

45,000

January 17, 2019 through January 16, 2020

 

 

700,000

 

 

45,000

 

 

50,000




Page 9 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016






Payment due upon transfer but no later than

January 16, 2021

 

 

-

 

 

85,000

 

 

-

TOTAL

 

$

1,650,000

 

$

230,000

 

 

160,000

 

 

 

 

 

 

 

 

 

 

(1)

Does not include $12,000 annual advance royalty payment related to Clifford claims.


NOTE 4 – RELATED PARTY TRANSACTIONS


On March 16, April 10 and April 14, 2015, the Company entered into short term promissory notes with the Company’s Chairman of the Board of Directors in the aggregate amount of $101,916.  The notes matured on December 31, 2015 and bore interest at 8% per annum with bi-monthly payments of $450 commencing on August 1, 2015. The notes and accrued interest were paid during the year ended April 30, 2016.


On March 20, 2016, the Company entered into short term promissory note with the Company’s Chairman of the Board of Directors in the amount of $15,000.  The note matures on December 31, 2016 and bears interest at 8% per annum.  


On May 4, 2016, the Company entered into short term promissory note with the Company’s Chairman of the Board of Directors in the amount of $70,000.  The note matures on December 31, 2016 and bears interest at 8% per annum.   


For the three months ended July 31, 2016 and 2015, interest expense on the short term promissory notes in aggregate was $1,656 and $2,113 respectively.


At July 31 and April 30, 2016, accrued interest associated with these notes was $1,787 and $131, respectively, and is included in other accrued liabilities on the balance sheet.


NOTE 5 - STOCK OPTIONS


Options issued for mining interest


In consideration for mining interests (see Note 4), the Company is obligated to issue stock options to purchase shares of the Company’s common stock based on "fair market price" which for financial statement purposes is considered to be the closing price of the Company's common stock on the issue dates.  


The following is a summary of the Company’s options issued and outstanding in conjunction with certain mining interest agreements on properties for the years ended July 31, 2016 and July 31, 2015, respectively:


 

For the three months ended July 31, 2016

 

For the three months ended July 31, 2015

 

 

Options

 

Price (a)

 

Options

 

Price (a)

Beginning balance

 

375,000

 

$

0.32

 

 

350,000

 

$

0.34

   Issued

 

-

 

 

-

 

 

-

 

 

-

   Exercised

 

-

 

 

-

 

 

-

 

 

-

   Expired

 

-

 

 

-

 

 

-

 

 

-

Ending balance

 

375,000

 

$

0.32

 

 

350,000

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

(a) Weighted average exercise price.





Page 10 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



Options issued for consulting services


As per an agreement fully executed on October 3, 2012, in consideration for consulting and advisory services rendered, the Company is obligated to issue a total of 1,000 stock options based on 5 day variable weighted-average price (VWAP) at the end of each month of the associated consulting contract.  The stock options have a term of 1 year.   The consultant options vest on the first day of the following month of service and are exercisable for a period of six months following the termination of the agreement.  The Company has estimated the fair value of these option grants using the Black-Scholes model with the following information and range of assumptions:


 

For the three months ended

 

July 31, 2016

 

July 31, 2015

Options issued

 

                         3,000

 

 

 3,000

Weighted average exercise price

$

                      0.06

 

$

 0.10

Weighted average volatility

 

440.2% to 452.3%

 

 

244.4% to 307.6%

Weighted average life remaining

 

0.46

 

 

 0.46

Risk free rate

 

0.48% to 0.54%

 

 

0.25% to 0.28%.


The following is a summary of the Company’s options issued and outstanding associated with the consulting agreement:


 

For the three months ended July 31, 2016

 

For the three months ended July 31, 2015

 

 

Options

 

Price (a)

 

Options

 

Price (a)

Beginning balance

 

12,000

 

$

 0.16

 

 

12,000

 

$

0.34

   Issued

 

3,000

 

 

 0.06

 

 

3,000

 

 

0.10

   Exercised

 

-

 

 

 -   

 

 

-

 

 

 

   Expired

 

(3,000)

 

 

 (0.10)

 

 

(3,000)

 

 

(0.24)

Ending balance

 

12,000

 

$

 0.08

 

 

12,000

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

(a) Weighted average exercise price.


Total charged against operations under the option grants for consulting services was $215 and $291, for the three months ended July 31, 2016 and 2015, respectively.  These costs are classified as management and administrative expense.   


Options issued under the 2011 Stock Option/Restricted Plan


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


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


The Stock Option plan also has terms and conditions, including without limitations that the exercise price for stock options granted under the Stock Option Plan must equal the stock's fair market value, based on the closing price per share of common stock, at the time the stock option is granted.  The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes




Page 11 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



model and commonly utilized assumptions associated with the Black-Scholes methodology.  Options granted under the Plan have a ten-year maximum term and varying vesting periods as determined by the Board.  


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


 

For the three months ended July 31, 2016

 

For the three months ended July 31, 2015

 

 

Options

 

Price (a)

 

Options

 

Price (a)

Beginning balance

 

2,696,667

 

$

0.37

 

 

 2,696,667

 

$

0.37

   Issued

 

-

 

 

-

 

 

 -   

 

 

-

   Exercised

 

-

 

 

-

 

 

 -   

 

 

-

   Forfeited

 

-

 

 

-

 

 

 -   

 

 

-

Ending balance

 

2,696,667

 

$

0.37

 

 

 2,696,667

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

(a) Weighted average exercise price.


The following table summarizes additional information about the options under the Company’s Stock Option Plan as of July 31, 2016:


 

Options outstanding and exercisable

 

Date of Grant

Number

 

Price (a)

 

Remaining term (b)

 

 

 

 

 

 

 

 

May 27, 2011

200,000

 

$               0.90

 

4.83

 

May 22, 2012

146,667

 

0.78

 

5.65

 

June 18, 2012

1,350,000

 

0.30

 

5.89

 

May 22, 2013

650,000

 

0.29

 

6.67

 

February 13, 2014

350,000

 

0.28

 

7.55

 

Total options

2,696,667

 

$               0.37

 

6.22

 

 

 

 

 

 

 

 

(a)

Weighted average exercise price per shares

(b)

Weighted average remaining contractual term in years.


The total value of the Plan stock option awards is expensed ratably over the vesting period of the employees receiving the awards.  As of July 31, 2016, there was no unrecognized compensation cost related to stock-based options and awards.


Summary:

The following is a summary of the Company’s stock options outstanding and exercisable:

 

 

Options

 

Weighted average exercise price

 

Expiration date

 

 

 

 

 

 

 

 

Options issued for mining interests

375,000

 

$

0.32

 

April 11, 2019 through January 15, 2025

Options issued for consulting services

12,000

 

 

0.08

 

August 1, 2016 through July 1, 2017

Options issued under Stock Option Plan

2,696,667

 

 

0.37

 

May 27, 2021 through February 13, 2024

   Total outstanding and exercisable

3,083,667

 

$

0.36

 

 

 

 

 

 

 

 

 

The aggregate intrinsic value of all options vested and exercisable at April 30, 2016, was $76 based on the Company's closing price of $0.06 per common share at April 30, 2016.  The Company's current policy is to issue new shares to satisfy option exercises.  





Page 12 of 25




STAR GOLD CORP.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2016



NOTE 6 - WARRANTS


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


 

Warrants

 

Weighted Average Exercise Price

Balance outstanding at April 30, 2015

 

1,614,400

 

$

0.23

   Issued – October 12, 2015

 

4,241,000

 

 

0.20

Balance outstanding at April 30, 2016 and July 31, 2016

 

5,855,400

 

$

0.21

 

 

 

 

 

 


The composition of the Company’s warrants outstanding at July 31, 2016, is as follows:


Issue Date

 

Warrants

 

Exercise Price

 

Expiration Date

                                July 29, 2014

 

1,614,400

 

$

0.23

 

    July 29, 2019

October 12, 2015

 

4,241,000

 

 

0.20

 

October 12, 2020

 

 

5,855,400

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 


NOTE 7– DEPOSITS ON STOCK SUBSCRIPTIONS


The Company is engaged in a private placement offering that has raised a total of $137,500 as of July 31, 2016.  The private placement consists of the sale of Units at $0.06 per Unit.  Each Unit will consist of one common share of the Company’s stock and one common share purchase warrant (each a “Warrant” and together the “Warrants”).  Each Warrant will be exercisable no later than sixty months from the date of the issuance thereof to purchase one common Share of the Company’s stock at an exercise price of $0.15.  Once the Company has obtained a Record of Decision from the federal Bureau of Land Management approving an Environmental Impact Statement for the Longstreet Project, the Company, at its sole discretion may call the Warrants issued hereunder as due and exercisable by providing the holders of the Warrants with 60-day written notice of same.


As of July 31, 2016, the Company raised a total of $137,500 which is included as “Deposits on Stock Subscriptions” on the balance sheet.  


NOTE 8 – SUBSEQUENT EVENTS


On August 23, 2016, the Company paid $85,000 in principal and $2,224 in accrued interest to the Chairman of the Board of Directors in satisfaction of two notes payable, related party (Note 4).  The Chairman subsequently deposited $150,000 for the Company’s ongoing private placement offering (Note 7).

 

As of September 2, 2016, the Company raised a total of $537,500 in a private placement offering (Note 7).






Page 13 of 25






ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


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


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


·

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

·

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

·

Risks related to environmental concerns;

·

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

·

Risks related to mineral exploration and development activities;

·

Risks related to mineral estimates;

·

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

·

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

·

Risks related to the competitive industry of mineral exploration;

·

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

·

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

·

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

·

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


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


Star Gold Corp qualifies all forward-looking statements contained in this Quarterly Report by the foregoing cautionary statement.


Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements.” These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect,” and similar expressions include the Company’s expectations and objectives regarding its future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption “Management’s Discussion and Analysis or Plan of Operation” and elsewhere in this Quarterly Report.


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





Page 14 of 25






Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending April 30, 2015.  The following statements may be forward-looking in nature and actual results may differ materially.


Corporate Background


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

  

Star Gold Corp. currently leases with an option to acquire unpatented mining claims located in the State of Nevada which in part make up what we refer to as the Longstreet Property. The Longstreet Property in its entirety comprises 125 mineral claims (75 original optioned claims, of which 70 are unpatented staked claims and five claims leased from local ranchers), as well as 50 recently staked claims by Star Gold, covering a total area of approximately 2,500 acres (1,012 ha). The Longstreet property is at an intermediate stage of exploration.


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


Overview of Mineral Exploration and Current Operations


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


The Company will perform basic geological work to identify specific drill targets on the properties, and then collect subsurface samples by drilling to confirm the presence of mineralization (the presence of economic minerals in a specific area or geological formation).  The Company may enter into joint venture agreements with other companies to fund further exploration and/or development work.  It is the Company’s plan to focus on assembling a high quality group of mid-stage mineral (primarily gold and silver) exploration prospects, using the experience and contacts of the management group.  By such prospects, the Company means properties that have been previously identified by third parties, (including prior owners and/or exploration companies), as mineral prospects with potential for economic mineralization.  Often these properties have been sampled, mapped and sometimes drilled, usually with indefinite results.  Accordingly, such acquired projects will have either prior exploration history or will have strong similarity to a recognized geologic ore deposit model.  Geographic emphasis will be place on the western United States.


The geologic potential and ore deposit models have been defined and specific drill targets identified the Company’s sole remaining property.  The Company’s property evaluation process involves using basic geologic fieldwork to perform an initial evaluation of a property.  If the evaluation is positive, the Company seeks to acquire, either by staking unpatented mining claims on open public domain, or by leasing the property from the owner of private property or the owner of unpatented claims.  Once acquired, the Company then typically makes a more detailed evaluation of the property.  This detailed evaluation involves expenditures for exploration work which may include rock and soil sampling, geologic mapping, geophysics, trenching, drilling or other means to determine if economic mineralization is present on a property.




Page 15 of 25






Portions of the Company’s mining properties are owned by third parties and leased to Star Gold as outlined in the following table:


 

Property Name

Third Party

Number of Claims

 

Acres

 

Agreements/Royalties

 

Longstreet

Minquest

125

 

2,500

 

3% Net Smelter Royalty (“NSR”)

Annual lease payments totaling $247,000, annual exploration expenditures totaling $1.75m, and 185,000 shares due through 2020.  Annual advance royalty payment of $12,000.


Compliance with Government Regulations


Continuing to acquire and explore mineral properties in the State of Nevada will be require the Company to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the State of Nevada and the United States Federal agencies.


United States


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


Land Ownership and Mining Rights.


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


Mining Operations


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


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


Environmental Law


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





Page 16 of 25






Competition


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


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


Office and Other Facilities


Star Gold Corp. currently maintains its administrative offices at 611 E. Sherman Avenue, Coeur d'Alene, ID  83814.  The telephone number is (208) 664-5066.  Star Gold Corp. does not currently own title to any real property.


Employees


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


Research and Development Expenditures


The Company has not incurred any research expenditures since incorporation.


Reports to Security Holders


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


PLAN OF OPERATION   


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


The financial condition of the Company was positive during 2016 and the metals commodity markets swung favorable late in 2015 with little impact as Star Gold is an exploration stage company.


In the past year the Company completed the following:


·

Star Gold Corp Board formally decided to proceed with the studies necessary to allow an EIS document to be produced with the goal of obtaining a mine permit to be issued at Longstreet.

·

Met with representatives from USFS and BLM and other stakeholders as to an agreed pathway to proceed through to an EIS document.


In 2016 the following studies were commenced:


1.

Fauna and Flora studies – late 2015 and completed June 2016.

2.

Water rights negotiations and requirements commenced in late 2015 and will be ongoing.




Page 17 of 25






3.

Cultural Resource Studies began in July 2016.


With the exception of hydrology related drilling, the Company does not intend to drill further at Longstreet deposit until permitting has been completed.


Funds being raised pursuant to our current private placement (see Notes 7 and 8) are intended to finish all necessary studies and should be sufficient to progress from completing the necessary studies and into preparing an Environmental Impact Statement.


The preliminary budget for Fiscal Year End April 2017:

STAR GOLD CORP. – LONGSTREET Au-Ag PROJECT, NEVADA

 

 

 

Permit fees

$

45,000

 

 

 

Flora and fauna contractor

 

30,000

 

 

 

Cultural studies

 

130,000

 

 

 

Water rights costs

 

65,000

 

 

 

Geochemistry

 

40,000

 

 

 

Engineering for pads, air, permit, initial plan

 

85,000

 

 

 

Aerial mapping

 

15,000

 

 

 

Plan of Operations

 

80,000

 

 

 

Project management

 

33,000

 

 

 

Hydrology

 

120,000

 

 

 

Contingency

 

34,000

 

 

 

   Total

$

677,000

 

 

 

 

 

 

 

 

 

The hydrology work is contingent on securing additional financing.


Based upon the current condition of the capital markets, mineral prices and the state of the Longstreet project, management reasonably believes it can source additional capital in the investment markets in the coming months and years.  The Company may also consider other sources of funding, including potential mergers, joint ventures and/or farm-out a portion of its exploration properties.

 

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


Additional financing will be required in the future to complete all necessary steps to apply for final permits required to allow the Company to commence any construction of our mining facilities and to begin production of any minerals present in economically viable quantities. Although the Company believes it will be able to source additional financing there are no guarantees any needed financing will be available at the time needed or on acceptable terms, if at all.  If the Company is unable to raise additional financing when necessary, it may have to delay exploration efforts or property acquisitions, or be forced to cease operations.  Collaborative arrangements may require the Company to relinquish rights to certain of its mining claims.





Page 18 of 25







RESULTS OF OPERATIONS


The Company has earned no revenues from operations in 2016 or 2015 and does not anticipate earning any revenues, from operations, in the foreseeable future. Star Gold Corp. is an exploration stage company and presently is seeking additional business opportunities.


 

For the three months ended July 31,

 

 

 

 

 

 

2016

 

2015

 

$ Change

 

% Change

Mineral exploration expense

$

                100,797

 

$

 113,455

 

$

 (12,658)

 

(11.2%)

Legal and professional fees

 

                  28,774

 

 

 21,734

 

 

 7,040

 

32.4%

Management and administrative

 

                  26,835

 

 

 26,159

 

 

 676

 

2.6%

Depreciation

 

                    1,350

 

 

 1,350

 

 

 -

 

0.0%

Other expense (income)

 

                    1,810

 

 

 2,321

 

 

 (511)

 

(22.0%)

  NET LOSS

$

                159,566

 

$

 165,019

 

$

 (5,453)

 

(3.3%)

 

 

 

 

 

 

 

 

 

 

 


Total expenses for the three months ended July 31, 2016 of $159,566 decreased $5,453 from total expenses of $165,019 for the comparable period ended July 31, 2015.  The Company reduced field exploration and drilling activities during the three months ended July 31, 2016 compared to the prior period.


Mineral exploration and consultants expense


 

For the three months ended July 31,

 

 

 

 

 

 

2016

 

2015

 

$ Change

 

% Change

Drilling and field work

$

 2,103

 

$

 4,891

 

$

 (2,788)

 

(57.0%)

Environmental and permitting

 

 74,976

 

 

 63,629

 

 

 11,347

 

17.8%

Technical consultants

 

 -

 

 

 15,298

 

 

 (15,298)

 

(100.0%)

Claims

 

 23,718

 

 

 29,637

 

 

 (5,919)

 

(20.0%)

    Total mineral exploration expense

$

 100,797

 

$

 113,455

 

$

 (12,658)

 

(11.2%)

 

 

 

 

 

 

 

 

 

 

 


Mineral exploration expense for the three months ended July 31, 2016 was $100,797 a decrease of $12,658 from the three months ended July 31, 2015 expense of $113,455.   During the three months ended July 31, 2015, the Company engaged technical consultants, engineers and biologists to conduct studies and activities related to the environmental and permitting phase on the Longstreet project.  


The emphasis on exploration expense in the current year is on conducting environmental and engineering work geared toward permitting of an open pit heap leach pad operation at Longstreet.  


Legal and professional fees


For the three months ended July 31,

 

 

 

 

 

 

2016

 

2015

 

$ Change

 

% Change

Audit and accounting

$

                  14,684

 

$

 17,500

 

$

 (2,816)

 

(16.1%)

Legal fees

 

                    3,770

 

 

 4,540

 

 

 (770)

 

(17.0%)

Public company expense

 

                  10,320

 

 

 (680)

 

 

 11,000

 

(1,617.6%)

Investor relations

 

                            -

 

 

 374

 

 

 (374)

 

(100.0%)

    Total legal and professional fees

$

                  28,774

 

$

 21,734

 

$

 7,040

 

32.4%

 

 

 

 

 

 

 

 

 

 

 


Total legal and professional fees increased $7,040 (32.4%) for the three months ended July 31, 2016 from the three months ended July 31, 2015.  This is primarily related to recognition of the Company’s annual public company costs related to listing and certification which were recorded in a different comparable period in prior years.




Page 19 of 25






Legal fees decreased $770 for the three months ended July 31, 2016 from the three months ended July 31, 2015.  The Company expects a slight increase in legal fees during the subsequent three months as a result of ongoing legal matters related to corporate governance and private placements.


Audit and accounting fees for the three months ended July 31, 2016 decreased $2,816 (16.1%) compared to the three months ended July 31, 2015. The annual audit of the Company’s financial statements came in on budget.  The Company expects its audit and accounting fees for the subsequent fiscal quarter to remain relatively constant per a fixed fee engagement with the audit firm.


Management and administrative expense  


For the three months ended July 31,

 

 

 

 

 

 

2016

 

2015

 

$ Change

 

% Change

Auto and travel

$

                    4,199

 

$

 1,305

 

$

 2,894

 

221.8%

General administrative and insurance

 

                    8,750

 

 

 8,490

 

 

 260

 

3.1%

Management fees and payroll

 

                  13,295

 

 

 11,434

 

 

 1,861

 

16.3%

Office and computer expense

 

                       376

 

 

 1,604

 

 

 (1,228)

 

(76.6%)

Rent and lease expense

 

                            -

 

 

 2,500

 

 

 (2,500)

 

(100.0%)

Stock based compensation

 

                       215

 

 

 291

 

 

 (76)

 

(26.1%)

Telephone and utilities

 

                            -

 

 

 535

 

 

 (535)

 

(100.0%)

    Total management and administrative

$

                  26,835

 

$

 26,159

 

$

 676

 

2.6%

 

 

 

 

 

 

 

 

 

 

 


Management and administrative expenses for the three months ended July 31, 2016 increased $676 to $26,835 compared to 2015 expenses of $26,159 resulting primarily from increases in travel expense in the current quarter.  


Management fees and payroll of $13,295 for the three months ended July 31, 2016, increased $1,861 compared to the three months ended July 31, 2015.  The Company expects management fees and payroll to remain relatively constant through the remainder of fiscal year 2017.    


During the three months ended July 31, 2015, the Company terminated its lease of office premises with a related party resulting in a monthly savings of $2,500 plus common area expenses.  

LIQUIDITY AND FINANCIAL CONDITION

BALANCE SHEET INFORMATION

July 31, 2016

 

April 30, 2016

Working capital (deficit)

$

 (121,072)

 

$

 (70,571)

Total assets

 

 419,007

 

 

 358,202

Accumulated deficit

 

 9,477,075

 

 

 9,317,509

Stockholders’ equity

 

 99,728

 

 

 259,079

 

 

 

 

WORKING CAPITAL

July 31, 2016

 

April 30, 2016

Current assets

$

 60,707

 

$

 10,552

Current liabilities

 

 181,779

 

 

 81,123

Working capital (deficit)

$

(121,072)

 

$

 (70,571)

 

 

 

 

 

 

 

For the three months ended July 31,

CASH FLOWS

2016

 

2015

Cash flow used by operating activities

$

 (127,396)

 

$

 (81,406)

Cash flow used by investing activities

 

 (12,000)

 

 

 (12,000)

Cash flow provided by financing activities

 

 189,500

 

 

 206,084

Net increase in cash during period

$

 50,104

 

$

 112,678





Page 20 of 25






The Company total assets increased to $419,007 at July 31, 2016 compared to $358,202 at April 30, 2015, primarily as a result of an increase in cash balance related to an ongoing private placement of the Company’s common stock.


Equipment and mining interest, net of depreciation increased from $326,050 at April 30, 2016 to $336,700 at July 31, 2016 as a result of the acquisition of additional mining interests in thee Clifford claims at the Longstreet Property.


At July 31, 2016, the Company had a working capital deficit of $121,072, primarily related to short term promissory notes due to a related party.  Subsequent to July 31, 2016, the Company repaid all short term promissory notes due to a related party.  


The Company is in compliance with all obligations of the Longstreet Property Option Agreement including required cumulative exploration expenditures.  During the three months ended, the Company gave notice of termination on the Jet and Excalibur Property Option Agreements.


As of July 31, 2016, the Company had cash of $51,889.  Since inception, the sources of the Company’s financing have been through offerings of its equity and debt securities. Star Gold Corp. has not attained profitable operations and its ability to pursue any future plan of operation is likely dependent upon the Company’s ability to obtain additional financing in the future.  


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


The Company is engaged in a private placement offering that raised a total of $537,500 as of August 30, 2016.  The private placement consists of the sale of Units (each a “Unit” and together, the “Units”) at $0.06 per Unit. Each Unit will consist of one common share of the Company (each a “Common Share” and together, the “Common Shares”) and one common share purchase warrant (each a “Warrant” and together, the “Warrants”). Each Warrant will be exercisable no later than sixty months from the date of issuance thereof to purchase one Common Share of the Company’s stock at an exercise price of $0.15.  Once the Corporation has obtained all permits necessary to begin site development and construction at its Longstreet Project, the Corporation, at its sole discretion, may call the Warrants issued hereunder as due and exercisable by providing holders of Warrants with 60 days’ written notice of same.  


Disruptions in the credit and financial markets over the past several years have had a material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies.  The prices for gold, silver and other base metals have also recently been subject to fluctuations which have had a material adverse impact on mining related companies’ ability to raise capital.  These disruptions could, among other things, make it more difficult for the Company to obtain, or increase the cost of obtaining, capital and financing for operations.  Access to additional capital may not be available to terms acceptable to the Company or at all.


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


The Company’s plans for its long term continuation as a going concern include financing future operations through sales of our common stock and/or debt and the eventual profitable exploitation of the Company's mining properties.  These plans may also, at some future point, include the formation of mining joint ventures with senior mining company partners on specific mineral properties whereby the joint venture partner would provide the necessary financing in return for an interest in the Company’s properties and/or any minerals it may produce in the future.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


ITEM 4.

CONTROLS AND PROCEDURES.


Evaluation of Disclosure Controls and Procedures




Page 21 of 25







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


Management, under the supervision and with the participation of the Company’s President and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2016 and concluded that it is ineffective in assuring that the financial reports of the Company are free from material errors or misstatements.


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


·

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


Management’s Remediation Initiatives.


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


The Company clearly recognizes, and continues to recognize, the importance of implementing and maintaining disclosure controls and procedures and internal controls over financial reporting and is working to implement an effective system of controls.   Management is currently evaluating avenues for mitigating the Company's internal controls weaknesses, but mitigating controls that are practical and cost effective may not be found based on the size, structure, and future existence of the organization, Since the Company has not generated any significant revenues, the Company is limited in its options for remediation efforts. Management, within the confines of its budgetary resources, will engage its outside accounting firm to assist with an assessment of the Company’s internal controls over financial reporting as of July 31, 2016.


Changes in internal controls over financial reporting


There have been no material changes in internal controls over financial reporting during the quarter ended July 31, 2016.


PART II - OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS


Star Gold Corp. is not a party to any material legal proceedings and, to Management’s knowledge, no such proceedings are threatened or contemplated. No director, officer or affiliate of Star Gold Corp. and no owner of record or beneficial owner of more than 5% of the Company’s securities or any associate of any such director, officer or security holder is a party adverse to Star Gold Corp. or has a material interest adverse to Star Gold Corp. in reference to pending litigation.


ITEM 1A.

RISK FACTORS


There have been no material changes from the risk factors as previously disclosed in the Company’s Form 10-K for the year ended April 30, 2016 which was filed with the SEC on August 15, 2016.


ITEM 2.

RECENT SALES OF UNREGISTERED SECURITIES


None.




Page 22 of 25







ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4.  

MINE SAFETY DISCLOSURES


Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. The Company is in the exploration stage and has no operations.


ITEM 5.

OTHER INFORMATION.


None




Page 23 of 25







ITEM 6.

EXHIBITS

Exhibit

 

Number

Description of Exhibits

 

 

3.1

Articles of Incorporation. (1)

 

 

3.2

Bylaws, as amended. (1)

 

 

4.1

Form of Share Certificate. (1)

 

 

10.1

Purchase Agreement dated June 22, 2004 between Guy R. Delorme and Star Gold Corp. (1)

 

 

10.2

Declaration of Trust executed by Guy R. Delorme. (1)

 

 

14.1

Code of Ethics. (2)

 

 

31.1

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

 

 

32.1

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

 

 

101.INS(2)

XBRL Instance

 

 

101.SCH*

XBRL Taxonomy Extension Schema

 

 

101.CAL*

XBRL Taxonomy Extension Calculation

 

 

101.DEF*

XBRL Taxonomy Extension Definition

 

 

101.LAB*

XBRL Taxonomy Extension Labels

 

 

101.PRE*

XBRL Taxonomy Extension Presentation

 

 

(1)

Filed with the SEC as an exhibit to the Company’s Registration Statement on Form SB-2 originally filed on June 14, 2007, as amended.

(2)

Filed with the SEC, on February 02, 2012, as an exhibit to form 8-K.

(*)

XBRL 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.











Page 24 of 25






SIGNATURES

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

  

  

  

STAR GOLD CORP.

  

  

  

  

  

  

  

  

Date:

September 2, 2016

By:

/s/ David Segelov

  

  

  

President

  

  

  

(Principal Executive Officer)

  

  

  

 

Date:

September 2, 2016

 

/s/Kelly J. Stopher

 

 

      By:

Kelly J. Stopher

  

  

  

Chief Financial Officer and Secretary

  

  

  

(Principal Financial Officer)






















Page 25 of 25



EX-31 2 exhibit31.htm Converted by EDGARwiz

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLY ACT OF 2002

Rule 13a-14(a)/15d-14(a) Certifications.

 

I, David Segelov, certify that:


  

1.

I have reviewed this quarterly report on Form 10-Q of Star Gold Corp.;

  

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 small business issuer as of, and for, the periods presented in this report;

  

4.

The registrant's other certifying officer 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) of 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 small business issuer, 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

  

5.

The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.

 Date: September 2, 2016

 

 

 

 

 

/s/ David Segelov 

 

 

 

 

David Segelov

 

 

 

 





President

 

 

 

 




 Exhibit 32.1 Certification of Chief Financial Officer

Pursuant to Section 302 of Sarbanes-Oxley Act

I, Kelly J. Stopher, certify that:

 

 

 1.

I have reviewed this quarterly report on Form 10-Q of Star Gold Corp.;

 

 

 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 small business issuer as of, and for, the periods presented in this report;

  

 

4.

The small business issuer'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 13(a)-15(f) of 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 small business issuer, 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 small business issuer'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 small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting.

 

 

5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting.


 Date: September 2, 2016

/s/ KELLY J. STOPHER

 

 

 

 

Kelly J. Stopher

Chief Financial Officer

 

 

 

 









EX-32 3 ex32.htm Converted by EDGARwiz


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 of Star Gold Corp. a Nevada corporation (the "Company") on Form 10-Q for the period ending July 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David Segelov, Chief Executive Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:


  

(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 result of operations of the Company.


A signed original of this written statement required by Section 906 has been provided to Star Gold Corp., and will be retained by Star Gold Corp. and furnished to the Securities and Exchange Commission or its staff upon request.


/s/ David Segelov

 

 

 

 

David Segelov

President

September 2, 2016

 

 

 

 


 


























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The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. 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Document and Entity Information - shares
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Jul. 31, 2016
Sep. 02, 2016
Document And Entity Information    
Entity Registrant Name Star Gold Corp.  
Entity Central Index Key 0001401835  
Document Type 10-Q  
Document Period End Date Jul. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --04-30  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   40,836,726
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2016  
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Balance Sheets (Unaudited) - USD ($)
Jul. 31, 2016
Apr. 30, 2016
CURRENT ASSETS:    
Cash and cash equivalents $ 51,889 $ 1,785
Prepaid expenses 8,818 8,767
TOTAL CURRENT ASSETS 60,707 10,552
EQUIPMENT AND MINING INTEREST, net 336,700 326,050
RESTRICTED CASH 21,600 21,600
TOTAL ASSETS 419,007 358,202
CURRENT LIABILITIES:    
Accounts payable 73,742 53,742
Other accrued liabilities 23,037 12,381
Notes payable, related party 85,000 15,000
TOTAL CURRENT LIABILITIES $ 181,779 $ 81,123
LONG TERM LIABILITIES:    
Deposits on stock subscriptions 137,500 18,000
TOTAL LONG TERM LIABILITIES $ 137,500 $ 18,000
TOTAL LIABILITIES $ 319,279 $ 99,123
STOCKHOLDERS' EQUITY    
Preferred Stock, $.001 par value; 10,000,000 shares authorized, none issued and outstanding
Common Stock, $.001 par value; 300,000,000 shares authorized; 40,836,726 shares issued and outstanding $ 40,837 $ 40,837
Additional paid-in capital 9,535,966 9,535,751
Accumulated deficit (9,477,075) (9,317,509)
TOTAL STOCKHOLDERS' EQUITY 99,728 259,079
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 419,007 $ 358,202
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Balance Sheets (Parenthetical) - shares
Jul. 31, 2016
Apr. 30, 2016
Statement of Financial Position [Abstract]    
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Statements of Operations (Unaudited) - USD ($)
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Jul. 31, 2015
OPERATING EXPENSE    
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Management and administrative 26,835 26,159
Depreciation 1,350 1,350
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LOSS FROM OPERATIONS (157,756) (162,698)
OTHER INCOME (EXPENSE)    
Interest expense (1,810) (2,321)
TOTAL OTHER INCOME (EXPENSE) (1,810) (2,321)
NET LOSS BEFORE INCOME TAXES (159,566) (165,019)
Provision for income tax
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Statements of Cash Flows (Unaudited) - USD ($)
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Jul. 31, 2015
Statement of Cash Flows [Abstract]    
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Net loss (159,566) (165,019)
Adjustments to reconcile net loss to cash used by operating activities    
Stock based compensation 215 291
Depreciation 1,350 1,350
Changes in operating assets and liabilities:    
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Accounts payable 20,000 58,169
Other accrued liabilities 10,656 (9,937)
Net cash used by operating activities (127,396) (81,406)
CASH FLOWS FROM INVESTING ACTIVITIES:    
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Net cash used by investing activities (12,000) (12,000)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from note payable, related party 70,000 40,000
Repayment of note payable, related party 101,916
Proceeds from stock subscriptions 119,500 268,000
Net cash provided by financing activities 189,500 206,084
Net increase in cash and cash equivalents 50,104 112,678
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,785 5,358
CASH AND CASH EQUIVALENTS AT END OF PERIOD 51,889 118,036
NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Reduction of note payable, related party by vendor refund $ (12,337)
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Nature of Operations
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Jul. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations

NOTE 1 - NATURE OF OPERATIONS

 

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

 

The Company's main business consists of assembling and/or acquiring land packages and mining claims the Company believes have potential mining reserves, and expending capital to explore these claims by drilling, geophysical work or other exploration work deemed necessary. The business is a high risk business as there is no guarantee that the Company's exploration work will ultimately discover or produce any economically viable minerals.

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Significant Accounting Policies
3 Months Ended
Jul. 31, 2016
Accounting Policies [Abstract]  
Significant Accounting Policies

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three-month period ended July 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending April 30, 2017.  All amounts presented are in U.S. dollars.  For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended April 30, 2016.

 

Going Concern

 

As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of July 31, 2016, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $9,477,075, and at July 31, 2016 the Company's working capital deficit was $121,072. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable mining properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. In the event the Company is unable to fulfill the annual exploration expenditures as specified in the Property Option Agreement (Note 3), the Company will default on the agreement(s) and surrender its right to future claims on the respective property.

 

Use of Estimates

 

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

 

Cash and cash equivalents

 

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

 

Restricted cash

 

Restricted cash represents collateral for bonds held for exploration permits.

 

Financial Instruments

 

The Company's financial instruments include cash and cash equivalents, reclamation bonds, and short term notes payable, related party. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at July 31,2016 and 2015.

 

Fair Value Measures

 

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

 

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

 

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

 

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

 

At July 31, 2016 and 2015, the Company had no assets or liabilities accounted for at fair value on a recurring basis.

 

Mining Interests and Mineral Exploration Expenditures

 

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

 

Equipment

 

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

 

Reclamation and Remediation

 

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

 

Impaired Asset Policy

 

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

 

Stock-based Compensation

 

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

 

Loss Per Share

 

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

 

The dilutive effect of outstanding securities at July, 2016 and 2015, would be as follows:

 

  July 31, 2016   July 31, 2015
Stock options   3,083,667     3,058,667
Warrants   5,855,400     1,614,400
  TOTAL POSSIBLE DILUTION   8,939,067     4,673,067                
           

At July 31, 2016 and 2015, respectively, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.

 

Income Taxes

 

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

 

New Accounting Pronouncement

 

In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Early application is permitted.  The Company has concluded that adoption of the standard would have minimal impact on the Company’s financial statements as such disclosure is already included the financial statements.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equipment and Mining Interests
3 Months Ended
Jul. 31, 2016
Property, Plant and Equipment [Abstract]  
Equipment and Mining Interests

NOTE 3 – EQUIPMENT AND MINING INTEREST

 

The following is a summary of the Company's equipment and mining interest at July 31,2016 and April 30, 2015.

 

  July 31, 2016   April 30, 2016
Equipment $  27,007   $  27,007
  Less accumulated depreciation    (24,306)      (22,956)
Equipment, net of accumulated depreciation    2,701      4,051
           
Mining interest - Longstreet   333,999      321,999
  TOTAL EQUIPMENT AND MINING INTEREST $ 336,700   $  326,050
           

The Longstreet Property

 

The Company leases with an option to acquire unpatented mining claims located in the State of Nevada and known as the Longstreet Property. On December 10, 2014, the Longstreet Property Option Agreement was amended revising the required expenditures and annual stock option obligation. The Company is also obligated to pay an annual owners advance royalty payment of $12,000 related to the Clifford claims.

 

On January 5, 2016, the Longstreet Property Option Agreement was further amended revising the required expenditures and annual stock option obligation. All allowable expenditures in excess of the required annual expenditures shall be carried-over to the subsequent year.

 

For the year ended April 30, 2016, the Company made an annual required payment to the optioner of $20,000 which is included in “Equipment and Mining Interest”. The Company issued options to purchase 25,000 shares of common stock with fair value of $1,500 (Note 6).

 

For the three months ended July 31, 2016, the Company paid the annual $12,000 advance royalty for additional mining interest on the Longstreet property related to the Clifford claims.

 

The schedule of annual payments, minimum expenditures and number of stock options to be issued pursuant to the amended Longstreet Property Option Agreement of January 5, 2016, is as follows:

 

Required annual expenditure between:   Required Expenditure   Cash payment(1)   Stock options  
January 17, 2016 through January 16, 2017   $ 150,000   $ 25,000     25,000
January 17, 2017 through January 16, 2018     300,000     35,000     40,000
January 17, 2018 through January 16, 2019     500,000     40,000     45,000
January 17, 2019 through January 16, 2020     700,000     45,000     50,000

Payment due upon transfer but no later than

January 16, 2021

    -     85,000     -
TOTAL   $ 1,650,000   $ 230,000     160,000
                   
                     
(1)Does not include $12,000 annual advance royalty payment related to Clifford claims.

 

 

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions
3 Months Ended
Jul. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 4 – RELATED PARTY TRANSACTIONS

 

On March 16, April 10 and April 14, 2015, the Company entered into short term promissory notes with the Company’s Chairman of the Board of Directors in the aggregate amount of $101,916. The notes matured on December 31, 2015 and bore interest at 8% per annum with bi-monthly payments of $450 commencing on August 1, 2015. The notes and accrued interest were paid during the year ended April 30, 2016.

 

On March 20, 2016, the Company entered into short term promissory note with the Company’s Chairman of the Board of Directors in the amount of $15,000. The note matures on December 31, 2016 and bears interest at 8% per annum.

 

On May 4, 2016, the Company entered into short term promissory note with the Company’s Chairman of the Board of Directors in the amount of $70,000. The note matures on December 31, 2016 and bears interest at 8% per annum.

 

For the three months ended July 31, 2016 and 2015, interest expense on the short term promissory notes in aggregate was $1,656 and $2,113 respectively.

 

At July 31 and April 30, 2016, accrued interest associated with these notes was $1,787 and $131, respectively, and is included in other accrued liabilities on the balance sheet.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options
3 Months Ended
Jul. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options

NOTE 5 - STOCK OPTIONS

 

Options issued for mining interest

 

In consideration for mining interests (see Note 4), the Company is obligated to issue stock options to purchase shares of the Company’s common stock based on "fair market price" which for financial statement purposes is considered to be the closing price of the Company's common stock on the issue dates.

 

The following is a summary of the Company’s options issued and outstanding in conjunction with certain mining interest agreements on properties for the years ended July 31, 2016 and July 31, 2015, respectively:

 

  For the three months ended July 31, 2016   For the three months ended July 31, 2015
    Options   Price (a)   Options   Price (a)
Beginning balance   375,000   $ 0.32     350,000   $ 0.34
   Issued   -     -     -     -
   Exercised   -     -     -     -
   Expired   -     -     -     -
Ending balance   375,000   $ 0.32     350,000   $ 0.34
                       

(a) Weighted average exercise price.

 

Options issued for consulting services

 

As per an agreement fully executed on October 3, 2012, in consideration for consulting and advisory services rendered, the Company is obligated to issue a total of 1,000 stock options based on 5 day variable weighted-average price (VWAP) at the end of each month of the associated consulting contract. The stock options have a term of 1 year. The consultant options vest on the first day of the following month of service and are exercisable for a period of six months following the termination of the agreement. The Company has estimated the fair value of these option grants using the Black-Scholes model with the following information and range of assumptions:

 

  For the three months ended
  July 31, 2016   July 31, 2015
Options issued                            3,000      3,000
Weighted average exercise price $                       0.06   $  0.10
Weighted average volatility   440.2% to 452.3%     244.4% to 307.6%
Weighted average life remaining   0.46      0.46
Risk free rate   0.48% to 0.54%     0.25% to 0.28%.

 

The following is a summary of the Company’s options issued and outstanding associated with the consulting agreement:

 

  For the three months ended July 31, 2016   For the three months ended July 31, 2015
    Options   Price (a)   Options   Price (a)
Beginning balance   12,000   $  0.16     12,000   $ 0.34
   Issued   3,000      0.06     3,000     0.10
   Exercised   -      -        -      
   Expired   (3,000)      (0.10)     (3,000)     (0.24)
Ending balance   12,000   $  0.08     12,000   $ 0.16
                       

(a) Weighted average exercise price.

 

Total charged against operations under the option grants for consulting services was $215 and $291, for the three months ended July 31, 2016 and 2015, respectively. These costs are classified as management and administrative expense.

 

Options issued under the 2011 Stock Option/Restricted Plan

 

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

 

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

 

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

 

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

 

  For the three months ended July 31, 2016   For the three months ended July 31, 2015
    Options   Price (a)   Options   Price (a)
Beginning balance   2,696,667   $ 0.37      2,696,667   $ 0.37
   Issued   -     -      -        -
   Exercised   -     -      -        -
   Forfeited   -     -      -        -
Ending balance   2,696,667   $ 0.37    2,696,667   $ 0.37
                       

(a) Weighted average exercise price.

 

The following table summarizes additional information about the options under the Company’s Stock Option Plan as of July 31, 2016:

 

  Options outstanding and exercisable  
Date of Grant Number   Price (a)   Remaining term  (b)  
             
May 27, 2011 200,000   $               0.90   4.83  
May 22, 2012 146,667   0.78   5.65  
June 18, 2012 1,350,000   0.30   5.89  
May 22, 2013 650,000   0.29   6.67  
February 13, 2014 350,000   0.28   7.55  
Total options 2,696,667   $               0.37   6.22  
             
(a)Weighted average exercise price per shares
(b)Weighted average remaining contractual term in years.

 

The total value of the Plan stock option awards is expensed ratably over the vesting period of the employees receiving the awards. As of July 31, 2016, there was no unrecognized compensation cost related to stock-based options and awards.

 

Summary:

The following is a summary of the Company’s stock options outstanding and exercisable:

    Options   Weighted average exercise price   Expiration date
               
Options issued for mining interests 375,000   $ 0.32   April 11, 2019 through January 15, 2025
Options issued for consulting services 12,000     0.08   August 1, 2016 through July 1, 2017
Options issued under Stock Option Plan 2,696,667     0.37   May 27, 2021 through February 13, 2024
   Total outstanding and exercisable 3,083,667   $ 0.36    
             

The aggregate intrinsic value of all options vested and exercisable at April 30, 2016, was $76 based on the Company's closing price of $0.06 per common share at April 30, 2016. The Company's current policy is to issue new shares to satisfy option exercises.

XML 20 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Warrants
3 Months Ended
Jul. 31, 2016
Other Liabilities Disclosure [Abstract]  
Warrants

NOTE 6 - WARRANTS

 

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

  Warrants   Weighted Average Exercise Price
Balance outstanding at April 30, 2015   1,614,400   $ 0.23
   Issued – October 12, 2015   4,241,000     0.20
Balance outstanding at April 30, 2016 and July 31, 2016   5,855,400   $ 0.21
           

 

The composition of the Company’s warrants outstanding at July 31, 2016, is as follows:

 

Issue Date   Warrants   Exercise Price   Expiration Date
                                July 29, 2014   1,614,400   $ 0.23       July 29, 2019
October 12, 2015   4,241,000     0.20   October 12, 2020
    5,855,400   $ 0.21      
                 

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Deposits on Stock Subscriptions
3 Months Ended
Jul. 31, 2016
Equity [Abstract]  
Deposits on Stock Subscriptions

NOTE 7– DEPOSITS ON STOCK SUBSCRIPTIONS

 

The Company is engaged in a private placement offering that has raised a total of $137,500 as of July 31, 2016. The private placement consists of the sale of Units at $0.06 per Unit. Each Unit will consist of one common share of the Company’s stock and one common share purchase warrant (each a “Warrant” and together the “Warrants”). Each Warrant will be exercisable no later than sixty months from the date of the issuance thereof to purchase one common Share of the Company’s stock at an exercise price of $0.15. Once the Company has obtained a Record of Decision from the federal Bureau of Land Management approving an Environmental Impact Statement for the Longstreet Project, the Company, at its sole discretion may call the Warrants issued hereunder as due and exercisable by providing the holders of the Warrants with 60-day written notice of same.

 

As of July 31, 2016, the Company raised a total of $137,500 which is included as “Deposits on Stock Subscriptions” on the balance sheet.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events
3 Months Ended
Jul. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events

NOTE 8 – SUBSEQUENT EVENTS

 

On August 23, 2016, the Company paid $85,000 in principal and $2,224 in accrued interest to the Chairman of the Board of Directors in satisfaction of two notes payable, related party (Note 4). The Chairman subsequently deposited $150,000 for the Company’s ongoing private placement offering (Note 7).

 

As of September 2, 2016, the Company raised a total of $537,500 in a private placement offering (Note 7).

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Accounting Policies (Policies)
3 Months Ended
Jul. 31, 2016
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three-month period ended July 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending April 30, 2017.  All amounts presented are in U.S. dollars.  For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended April 30, 2016.

Going Concern

Going Concern

 

As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of July 31, 2016, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $9,477,075, and at July 31, 2016 the Company's working capital deficit was $121,072. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable mining properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. In the event the Company is unable to fulfill the annual exploration expenditures as specified in the Property Option Agreement (Note 3), the Company will default on the agreement(s) and surrender its right to future claims on the respective property.

Use of Estimates

Use of Estimates

 

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

Cash and cash equivalents

Cash and cash equivalents

 

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

Restricted cash

Restricted cash

 

Restricted cash represents collateral for bonds held for exploration permits.

Financial Instruments

Financial Instruments

 

The Company's financial instruments include cash and cash equivalents, reclamation bonds, and short term notes payable, related party. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at July 31,2016 and 2015.

Fair Value Measures

Fair Value Measures

 

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

 

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

 

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

 

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

 

At July 31, 2016 and 2015, the Company had no assets or liabilities accounted for at fair value on a recurring basis.

Mining Interests and Mineral Exploration Expenditures

Mining Interests and Mineral Exploration Expenditures

 

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

Equipment

Equipment

 

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

Reclamation and Remediation

Reclamation and Remediation

 

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

Impaired Asset Policy

Impaired Asset Policy

 

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

Stock-based Compensation

Stock-based Compensation

 

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

Loss Per Share

Loss Per Share

 

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

 

The dilutive effect of outstanding securities at July, 2016 and 2015, would be as follows:

 

  July 31, 2016   July 31, 2015
Stock options   3,083,667     3,058,667
Warrants   5,855,400     1,614,400
  TOTAL POSSIBLE DILUTION   8,939,067     4,673,067                
           

At July 31, 2016 and 2015, respectively, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.

Income Taxes

Income Taxes

 

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

New Accounting Pronouncement

New Accounting Pronouncement

 

In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Early application is permitted.  The Company has concluded that adoption of the standard would have minimal impact on the Company’s financial statements as such disclosure is already included the financial statements.

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Accounting Policies (Tables)
3 Months Ended
Jul. 31, 2016
Accounting Policies [Abstract]  
Dilutive Securities
  July 31, 2016   July 31, 2015
Stock options   3,083,667     3,058,667
Warrants   5,855,400     1,614,400
  TOTAL POSSIBLE DILUTION   8,939,067     4,673,067                
           
XML 25 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equipment and Mining Interests (Tables)
3 Months Ended
Jul. 31, 2016
Property, Plant and Equipment [Abstract]  
Property Plant and Equipment
  July 31, 2016   April 30, 2016
Equipment $  27,007   $  27,007
  Less accumulated depreciation    (24,306)      (22,956)
Equipment, net of accumulated depreciation    2,701      4,051
           
Mining interest - Longstreet   333,999      321,999
  TOTAL EQUIPMENT AND MINING INTEREST $ 336,700   $  326,050
           
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Deposits on Stock Subscriptions (Details Narrative) - USD ($)
2 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Equity [Abstract]    
Proceeds from Stock Sales $ 119,500 $ 268,000
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