0001521536-13-000217.txt : 20130305 0001521536-13-000217.hdr.sgml : 20130305 20130305170208 ACCESSION NUMBER: 0001521536-13-000217 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20130305 DATE AS OF CHANGE: 20130305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Bullfrog Gold Corp. CENTRAL INDEX KEY: 0001448597 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 412252162 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-54653 FILM NUMBER: 13666609 BUSINESS ADDRESS: STREET 1: 897 QUAIL RUN DRIVE CITY: GRAND JUNCTION STATE: CO ZIP: 81505 BUSINESS PHONE: (970) 270-8306 MAIL ADDRESS: STREET 1: 897 QUAIL RUN DRIVE CITY: GRAND JUNCTION STATE: CO ZIP: 81505 FORMER COMPANY: FORMER CONFORMED NAME: Kopr Resources Corp. DATE OF NAME CHANGE: 20081023 10-Q/A 1 q1100994_10qa93012-bullfrog.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

 

FORM 10-Q/A

Amendment No. 1

 

(Mark One)

 

   
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For quarterly period ended September 30, 2012

 

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

 

For the transition period from ___________ to ___________

 

Commission file number 000-54653

 

BULLFROG GOLD CORP.

(Exact name of registrant as specified in its charter)

 

   
Delaware 41-2252162
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
   
897 Quail Run Drive  
Grand Junction, Colorado 81505
(Address of principal executive offices) (Zip Code)

 

(970) 628-1670

(Registrant’s telephone number, including area code)

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 30,203,846 shares of common stock, par value $0.0001, were outstanding on November 9, 2012.

 

 
 

 

EXPLANATORY NOTE

 

This amended Quarterly Report on Form 10-Q/A is being filed as Amendment No. 1 to our Quarterly report on Form 10-Q which was originally filed on November 13, 2012 (the “Original Report”). Management of Bullfrog Gold Corp. (the “Company”, “we”, “us”, or “our”), determined that: (i) the unaudited consolidated financial statements for the period ended September 30, 2011 included in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, (ii) the audited consolidated financial statements for the year ended December 31, 2011 included in its Annual Report on Form 10-K for the year ending December 31, 2011 and, (iii) the unaudited consolidated financial statements for the periods ended March 31, 2012, June 30, 2012 and September 30, 2012, respectively, included in the Quarterly Reports on Form 10-Q for the periods ending on March 31, 2012, June 30, 2012 and September 30, 2012, respectively, could no longer be relied upon. This determination was made after a review of the proper accounting treatment as it relates to the Company’s warrant liability.

 

We have determined that a restatement of our previously recorded values of our warrant liability and revaluation of warrant was required after a review of the proper accounting treatment. On September 30, 2011, the Company sold an aggregate of 9,127,250 units in a Private Placement (the “Private Placement”) at a per unit price of $0.40, with each unit consisting of (i) one share of the Company’s common stock (except that certain investors elected to receive in lieu of common stock, one share of the Company’s Series A Convertible Preferred Stock) and (ii) a three year warrant to purchase shares of common stock equal to 50% of the number of shares purchased in the Private Placement at an exercise price of $0.60 per share resulting in 4,563,625 warrants. The Company sold a total of 5,252,250 units consisting of common shares and a total of 3,875,000 units consisting of Series A Preferred Stock, resulting in total proceeds of $3,650,900. The Private Placement included the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis into the Private Placement. The net proceeds were allocated based on the relative fair values of the common stock or preferred stock and the warrants on the date of issuance. This resulted in a warrant liability of $671,928 as of September 30, 2011 and a revaluation of warrant liability of $1,689,997 for the period ending December 31, 2011.

 

However, management determined that such transaction should be accounted pursuant to ASC 815 “Derivatives and Hedging” and related subtopics for allocating the carrying amount of the hybrid instrument between the host contract and the derivative. As a result the warrant liability as of September 30, 2011 should be recorded at a fair value of $1,235,229 and the December 31, 2011 revaluation of warrant liability would be $1,126,696. We anticipate the effects on our consolidated balance sheets, statements of operations, and statements of cash flows as of and for the periods ended September 30, 2011 and December 31, 2011. Such adjustment resulted in (i) an increase in our warrant liability of $563,301, decrease in our additional paid in capital of $563,301, and a zero effect on net loss for the period ending September 30, 2011 and (ii) a decrease in our loss on revaluation of warrant liability of $563,301, and decrease in net loss of $563,301 for the period ending December 31, 2011. The restatement adjustment is non-cash in nature. We believe that the recording of the warrant liability and all related matters are now correctly recorded and presented on our consolidated balance sheet, statement of operations, statement of stockholders’ equity and statement of cash flows.

 

Please see Note 7 - Restatement contained in the Notes to Consolidated Financial Statements appearing later in this Form 10-Q/A which further describes the effect of these restatements.

 

No other changes have been made to the Original Report. This Amendment speaks as of the original date of the Original Report, does not reflect events that may have occurred subsequent to the filing of the Original Report and does not modify or update in any way disclosures made in the Original Report other than as described above.

 

 
 

 

 

BULLFROG GOLD CORP.

TABLE OF CONTENTS TO FORM 10-Q

 

     
Part I Financial Information Page
     
Item 1. Consolidated Financial Statements (Unaudited)  
     
  Consolidated Balance Sheets 3
     
  Consolidated Statements of Operations 4
     
  Consolidated Statements of Cash Flows 5
     
  Notes to Consolidated Financial Statements 6
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 15
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk. 20
     
Item 4. Controls and Procedures. 20
     
     
Part II OTHER INFORMATION  
     
Item 1. Legal Proceedings 21
     
Item 1A. Risk Factors 21
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
     
Item 3. Defaults Upon Senior Securities 21
     
Item 4. Mine Safety Disclosures 21
     
Item 5. Other Information 21
     
Item 6. Exhibits 21
     
  Signatures 22
     
     
Exhibit 31 Section 302 Certification of President, Chief Executive Officer and Chief Financial Officer EX31
     
Exhibit 32 Section 906 Certification of President, Chief Executive Officer and Chief Financial Officer EX32

 

 

 

 

 

2

 

 
 

 

           
BULLFROG GOLD CORP.
 (An Exploration Stage Company)
 
 CONSOLIDATED BALANCE SHEETS
 September 30, 2012 and December 31, 2011
 
 
       
 Assets  9/30/12    12/31/11
  (Restated)   (Restated)
 Current assets          
 Cash and cash equivalents $ 29,005   $ 1,815,055
 Deposits   10,875     151,125
 Prepaid expenses   24,026     46,619
 Total current assets   63,906     2,012,799
           
 Other assets          
 Mineral properties   975,700     800,700
           
 Total assets $ 1,039,606   $ 2,813,499
           
 Liabilities and Stockholders' Equity          
           
 Current liabilities          
 Accounts payable $ 56,170   $ 61,294
 Other liabilities   10,084     10,661
 Notes payable   200,000     -
 Total current liabilities   266,254     71,955
           
 Warrant liability   151,450     2,361,925
           
 Total liabilities   417,704     2,433,880
           
 Stockholders' equity          
 Preferred stock, 50,000,000 shares authorized, $.0001 par value          
 Series A 4,586,539 issued and outstanding as of 9/30/12 and 12/31/11, respectively   459     459
 Common stock, 200,000,000 shares authorized, $ .0001 par value; 30,153,846 shares          
  and 29,897,846 shares issued and outstanding as of 9/30/12 and 12/31/11, respectively   3,015     2,990
 Additional paid in capital   3,492,151     2,644,795
 Deficit accumulated during the exploration stage   (2,873,723)     (2,268,625)
           
 Total stockholders' equity   621,902     379,619
           
 Total liabilities and stockholders' equity $ 1,039,606   $ 2,813,499

 

 

See accompanying notes to consolidated financial statements

 

 

3

 

 
 

 

                             
BULLFROG GOLD CORP.
 (An Exploration Stage Company)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended September 30, 2012 and 2011, the Nine Months Ended September 30, 2012 and 2011
 and the Cumulative Period from January 12, 2010 (Inception) through September 30, 2012
 
 
                   Inception
                   (January 12, 2010)
   Three Months Ended    Nine Months Ended    through
   9/30/12    9/30/11    9/30/12    9/30/11    9/30/12
                  (Restated)
 Revenue $ -   $ -   $ -   $ -   $ -
                             
 Operating expenses                            
 General and administrative   228,910     162,517     769,022     188,278     1,396,902
 Exploration costs   132,624     -     993,136     -     1,131,532
 Marketing   215,510     23,464     1,053,415     23,464     1,428,268
                             
 Total operating expenses   577,044     185,981     2,815,573     211,742     3,956,702
                             
 Net operating loss   (577,044)     (185,981)     (2,815,573)     (211,742)     (3,956,702)
                             
 Gain on forgiveness of debt   -     28,499     -     28,499     28,499
 Interest expense   -     (6,539)     -     (18,941)     (29,299)
 Revaluation of warrant liability   996,618     -     2,210,475     -     1,083,779
                             
 Net income (loss) $ 419,574   $ (164,021)   $ (605,098)   $ (202,184)   $ (2,873,723)
                           
 Weighted average common shares outstanding - basic   30,120,879     11,078,539     29,982,436     9,283,974    
 Weighted average common shares outstanding - diluted   34,707,418     11,078,539     29,982,436     9,283,974    
                           
 Earnings (loss) per common share - basic $ 0.01   $ (0.01)   $ (0.02)   $ (0.02)    
 Earnings (loss) per common share - diluted $ 0.01   $ (0.01)   $ (0.02)   $ (0.02)    

 

 

See accompanying notes to consolidated financial statements


 

4

 

 
 

 

                 
BULLFROG GOLD CORP.
 (An Exploration Stage Company)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months Ended September 30, 2012 and 2011, and the Cumulative Period
 from January 12, 2010 (Inception) through September 30, 2012
 
           Inception
           (January 12, 2010)
   Nine Months Ended    through
   9/30/12    9/30/11    9/30/12
          (Restated)
 Cash flows from operating activities                
 Net loss $ (605,098)   $ (202,184)   $ (2,873,723)
 Adjustments to reconcile net loss to net cash used in operating activities                
 Gain on forgiveness of debt   -     (28,499)     (28,499)
 Revaluation of warrant liability   (2,210,475)     -     (1,083,779)
 Stock-based compensation   695,131     -     1,087,320
 Stock issued for services   152,250     -     152,250
 Change in operating assets and liabilities:                
 Cash in trust account   -     2,521     -
 Receivable from pre-merger Bullfrog   -     48,637     48,637
 Deposits   140,250     -     40,489
 Prepaid expenses   22,593     (16,305)     (24,026)
 Accounts payable   (5,124)     53,606     56,170
 Other liabilities   (577)     (4,179)     (3,299)
 Accrued interest   -     18,941     28,499
                 
 Net cash used in operating activities   (1,811,050)     (127,462)     (2,599,961)
                 
 Cash flows from investing activity                
 Acquisition of property   (175,000)     -     (325,000)
                 
 Net cash used in investing activity   (175,000)     -     (325,000)
                 
 Cash flows from financing activities                
 Proceeds from sales of common stock   -     545     3,066
 Proceeds from private placement of common stock, preferred stock and warrants   -     2,710,000     2,710,000
 Proceeds from notes payable   200,000     10,100     270,900
 Repayment of notes payable   -     -     (30,000)
                 
 Net cash provided by financing activities   200,000     2,720,645     2,953,966
                 
 Net increase (decrease) in cash and cash equivalents   (1,786,050)     2,593,183     29,005
                 
 Cash and cash equivalents, beginning of period   1,815,055     -     -
                 
 Cash and cash equivalents, end of period $ 29,005   $ 2,593,183   $ 29,005
                 
 Noncash investing and financing activities                
                 
 Issuance of common stock for acquisition of mineral property       $ 400   $ 700
 Issuance of note payable for acquisition of mineral property       $ 550,000   $ 650,000
 Issuance of note payable for receivable from pre-merger Bullfrog       $ 250,000   $ 250,000
 Conversion of notes payable to common stock, preferred stock and warrants in private placement       $ 940,900   $ 940,900
 Contribution of deposits by shareholder             $ 51,364

 

 

See accompanying notes to consolidated financial statements

 

5

 

 
 

 

BULLFROG GOLD CORP.

Notes to Consolidated Financial Statements

 

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Business and Reverse Merger and Recapitalization

On September 30, 2011, Standard Gold Corp. (“Standard Gold”) entered into a Merger Agreement (the “Merger”) with a public shell company, Bullfrog Gold Corp. (“Bullfrog Gold”), formerly known as Kopr Resources Corp. pursuant to which Standard Gold merged with and into a wholly owned subsidiary of Bullfrog Gold as more fully described in Note 2. Such Merger caused Standard Gold to become a wholly-owned subsidiary of Bullfrog Gold. The Merger is being accounted for as a reverse-merger and recapitalization and Standard Gold is considered the accounting acquirer for accounting purposes and Bullfrog Gold the acquired company. The business of Standard Gold became the business of Bullfrog Gold. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the Merger are those of Standard Gold and are recorded at the historical cost basis of Standard Gold. Bullfrog Gold Corp. along with Standard Gold Corp. is referred to hereafter as “the Company”.

 

REVERSE STOCK SPLIT

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

 

FORWARD STOCK SPLIT

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

 

Bullfrog Gold was incorporated under the laws of the State of Delaware on July 23, 2007 as Kopr Resources Corp. On July 19, 2011, the Company’s board of directors approved the filing on an Amended and Restated Certificate of Incorporation of Bullfrog Gold with the Secretary of State of the State of Delaware to authorize (i) the change of the name of the Company to "Bullfrog Gold Corp." from "Kopr Resources Corp.” (ii) the increase in the authorized capital stock to 250,000,000 shares and (iii) the change in par value of the capital stock to $0.0001 per share. The Company is in the exploration stage of its resource business. On July 19, 2011, the Company’s board of directors also approved the amendment and restatement of bylaws in order to, among other things, include provisions for board and shareholder meetings.

 

The Company is a junior exploration company primarily engaged in the acquisition and exploration of properties that may contain gold mineralization in the United States. The Company’s target properties are those that have been the subject of historical exploration. The Company has acquired State exploration permits and Federal patented and unpatented mining claims in the states of Arizona and Nevada for the purpose of exploration and potential development of gold, silver and other minerals on a total of approximately 9,850 acres. In June 2012 the Company did not renew one of the four state exploration permits in Arizona for the Newsboy Project.  This reduced the land holdings at the Newsboy project from approximately 5,240 acres to approximately 4,920 acres.  In June 2012 the Company acquired the option to purchase the Klondike Project in Nevada that included 64 unpatented claims to which the Company added an additional 168 claims, or a total of 4,640 acres.  See Note 4 in the Notes to Consolidated Financial Statements for additional details concerning the Klondike Project.  The Company plans to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.

 

The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties with the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.

 

Interim Disclosure

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company's management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

 

6

 

 
 

 

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company's management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

 

Principles of Consolidation

The consolidated financial statements include the accounts of Bullfrog Gold Corp., as of the date of the reverse merger, and its wholly owned subsidiary, Standard Gold Corp. All significant inter-entity balances and transactions have been eliminated in consolidation.

 

Going Concern and Management’s Plans

The Company has incurred losses from operations since inception and has an accumulated deficit of $2,873,723 as of September 30, 2012. The Company’s financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s continuation as a going concern is dependent upon attaining profitable operations through achieving revenue growth. However, the Company will now have additional expenses as a result of it being a public company. The September 30, 2011 closing of the private placement of the Company’s securities for $3,650,900 (the “Private Placement”) included the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis.   The Company believes it will need to find additional sources of financing to meet its obligations through December 31, 2012.  There are no assurances that the Company will be successful in meeting its cash flow requirements. We are currently in the due diligence stage of negotiating a debt facility that will finance the general and administrative expense along with the projected costs of exploring the Newsboy project through 2013.  In addition, we are seeking additional financing of approximately $2,000,000 of private equity financing to fund our general corporate expenses as well as investor relation programs.

 

Cash and Cash Equivalents and Concentration

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At September 30, 2012, the Company’s cash balance was approximately $29,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate at least annually the rating of the financial institution in which it holds deposits.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Mineral Property Acquisition and Exploration Costs

Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties.

 

Exploration Stage Company

The Company complies with Accounting Standards Codification (“ASC”) 915-235-50 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an exploration stage enterprise.

 

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

 

     
  · Level 1 - Valuation based on quoted market prices in active markets for identical assets and liabilities.
  · Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.
  · Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

 

The Company does not have any assets or liabilities measured using Level 1 or 2 inputs. The Company’s Level 3 financial liabilities measured at fair value consisted of the warrant liability as of September 30, 2012. See Note 3.

 

Fair Value of Financial Instruments

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts payable, and other liabilities and the warrant liability is already recorded at fair value.

 

7

 

 
 

 

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.

 

The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of September 30, 2012 or December 31, 2011. The periods ended December 31, 2011 and 2010 are open to examination by taxing authorities.

 

Long Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

 

Preferred Stock

The Company accounts for its preferred stock under the provisions of Accounting Standards Codification on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification.

 

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with FASB ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

 

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of stock are reserved for such purpose.

 

8

 

 
 

 

Earnings (Loss) per Common Share

 

The following table shows basic and diluted earnings per share

 

         
  Three Months Ended Nine Months Ended
  9/30/12 9/30/11 9/30/12 9/30/11
Basic and Diluted Earnings (Loss) per Common Share        
Earnings (loss) per common share $419,574 $(164,021) $(605,098) $(202,184)
Basic weighted average shares outstanding 30,120,879 11,078,539 29,982,436 9,283,974
Dilutive effect of common stock equivalents 13,210,164 - - -
Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents 34,707,418 11,078,539 29,982,436 9,283,974
Basic Earnings (Loss) Per Common Share .01 (.01) (.02) (.02)
Diluted Earnings (Loss) Per Common Share .01 (.01) (.02) (.02)

 

4,586,539 of preferred shares were included in the computation of diluted shares outstanding for the three months ended September 30, 2012. 4,060,000 of stock options and 4,563,625 of warrants were not included in the diluted weighted average shares calculation because they were “out-of-the money” for the three month period ending September 30, 2012.  In periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.

 

 

NOTE 2 - STOCKHOLDER’S EQUITY

 

Pre-Reverse Merger Transactions

In 2010, Standard Gold began negotiations to acquire a 90% interest in property located near Beatty, Nevada (“the Bullfrog Project”) owned by NPX Metals, Inc. (“NPX Metals”). As of December 31, 2010, Standard Gold had issued 923,077 shares of common stock as consideration for the property interest

 

The remaining 10% interest in the Bullfrog Project was acquired by Standard Gold from Bull Frog Holdings Inc. in June, 2010 in exchange for $100,000 cash paid directly by one of Standard Gold’s lenders. Bull Frog Holdings, Inc. is an affiliate of NPX Metals.

 

On May 1, 2011, Standard Gold entered into a final agreement whereby Standard Gold acquired all of the working interest in the Bullfrog Project for a total consideration of a 3% net smelter return royalty due to NPX Metals.

 

Between July and August 25, 2011, Standard Gold issued a total of 1,678,612 common shares for cash consideration of $545. Such shares are reflective of a reverse split of Standard Gold’s common stock, effective August 26, 2011, on a 1 for 3.25 basis. All share data in the accompanying financial statements and notes have been retroactively restated to reflect the reverse split.

 

On August 30, 2011, Standard Gold entered into an Agreement of Conveyance, Transfer and Assignment with Aurum National Holdings Ltd. (“Aurum”), pursuant to which the Company purchased an option held by Aurum under that certain Option to Purchase and Royalty Agreement dated as of August 13, 2009 and as amended on June 30, 2011, between Aurum and Southwest Exploration, Inc. (“Southwest”), which gave Aurum the option to purchase a 100% right, title and interest in and to certain mineral claims in Arizona known as the “Newsboy Project”. In consideration for the assignment of the option, Standard Gold issued to Aurum and its designees an aggregate of 4,000,000 shares of its common stock. In addition Aurum had made deposits to vendors that were transferred to the Company to be applied to future expenses. Of these payments, $6,364 was paid back to the Company in October 2011 and $45,000 was applied to exploration costs in November 2011.

 

On September 28, 2011, Standard Gold and Southwest entered into an Option to Purchase and Royalty Agreement pursuant to which Southwest granted to Standard Gold, the sole and immediate working right and option to earn a One Hundred Percent (100%) interest in and to the Newsboy Project property free and clear of all charges encumbrances and claims in consideration for $3,425,000, of which $500,000 was previously paid by a third party (the “Prepayment Amount”). The balance due to Southwest as of September 28, 2011 (the date of the agreement) of $2,925,000 is payable on the following schedule:

 

9

 

 
 

 

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

 

The first option payment of $150,000 was paid in December 2011 and the second option payment of $150,000 was paid in June 2012. Upon the full payment of the balance of $2,625,000, the option will be considered automatically exercised and the Company will have earned a 100% interest in and to the Newsboy Project property free and clear of all liens and encumbrances. Notwithstanding the foregoing, the Company is obligated to pay a Net Smelter Royalty payment equal to two percent (2%) of the proceeds from the sale or other disposition from any purchaser of any mineral derived from the ore mined from the Newsboy Project property. To retain the property, the Company must also pay the annual claim maintenance fees and file a Notice of Intent to Hold with the Bureau of Land Management and Maricopa County. The Company must also make annual payments for the lands leased from the State of Arizona. Should the Company choose not to maintain the working right and option to the property, the Company can forego future payments to Southwest without penalty. A total of $500,000 was paid to Southwest as part of the option to purchase agreement by third parties, which converted into an aggregate of 1,250,000 Units in the Private Placement. These payments have been recorded as increases to mineral property on the balance sheet.

 

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

 

Reverse Merger Transaction

On September 30, 2011, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Standard Gold, a privately held Nevada corporation, and Bullfrog Gold Acquisition Corp., the Company’s newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”), pursuant to which Standard Gold merged with and into Acquisition Sub, with Standard Gold as the surviving entity, causing Standard Gold to become the Company’s wholly-owned subsidiary (the “Merger”).

 

Pursuant to the terms and conditions of the Merger Agreement, at the closing of the Merger, an aggregate of 14,357,135 shares of Standard Gold’s common stock issued and outstanding immediately prior to the closing of the Merger were converted into securities of the Company based on the following breakdown: (i) 13,645,596 of the shares of Standard Gold’s outstanding common stock were converted into the right to receive an aggregate of 13,645,596 shares of the Company’s common stock on a one for one basis and (ii) an aggregate of 711,539 of the issued and outstanding shares of common stock of Standard Gold immediately prior to the closing of the Merger was converted into the right to receive an aggregate of 711,539 shares of the Company’s Series A Convertible Preferred Stock on a one for one basis (the “Series A Preferred Stock”), which is convertible into shares of the Company’s common stock on a one for one basis.

 

Private Placement

Following the closing of the Merger, the Company sold an aggregate of 9,127,250 units in a Private Placement (the “Private Placement”) at a per unit price of $0.40, with each unit consisting of (i) one share of the Company’s common stock (except that certain investors elected to receive in lieu of common stock, one share of the Company’s Series A Convertible Preferred Stock) and (ii) a three year warrant to purchase shares of common stock equal to 50% of the number of shares purchased in the Private Placement at an exercise price of $0.60 per share. The Company sold a total of 5,252,250 units consisting of common shares and a total of 3,875,000 units consisting of Series A Preferred Stock, resulting in total proceeds of $3,650,900. The Private Placement includes the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis into the Private Placement. Net of converted debt, the Private Placement generated cash proceeds of $2,710,000.

 

The Company entered into registration rights agreements (the “Registration Rights Agreements”) with the investors in the Private Placement. Effective March 16, 2012, the Company and holders of the majority of Registrable Securities (as defined in the Registration Rights Agreement) agreed to amend the definitions of “Filing Date” and “Effectiveness Date”, as such terms are defined in the Registration Rights Agreement, such that “Filing Date” shall mean 12 months after the Trigger Date and “Effectiveness Date” shall mean eighteen months after the Trigger Date.  On November 9, 2012 the S1 Registration Statement was filed with the SEC.  As of November 9, 2012 the S1 Registration Statement has not been made effective.

 

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Split-Off

Immediately following the closing of the Merger and the Private Placement, under the terms of an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, the Company transferred substantially all of its pre-Merger assets and liabilities to its wholly owned subsidiary, Kopr Resources Holdings, Inc., a Delaware corporation (“SplitCo”). Thereafter, pursuant to a Stock Purchase Agreement, the Company transferred all of the outstanding capital stock of SplitCo to a former officer and director of the Company in exchange for cancellation of an aggregate of 22,510,919 shares of the Bullfrog Gold’s pre-merger common stock held by such person (the “Split-Off”), which left 11,000,000 shares of the Company’s common stock held by persons who were stockholders of Bullfrog Gold prior to the Merger. Of these shares, 9,000,000 shares constituted the Company’s “public float” prior to the Merger that will continue to represent the shares of the Company’s common stock eligible for resale without further registration by the holders thereof, until such time as the applicability of Rule 144 or other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), or the effectiveness of a further registration statement under the Securities Act, permits additional sales of issued shares.

 

As part of the reverse merger, the Company retained $13,383 of Bullfrog Gold’s pre-merger liabilities. In addition, Bullfrog Gold owed Standard Gold $201,363 at the merger date due to its collection of proceeds from a Standard Gold note payable. As a result of the merger, the combined $214,746 related to these balances has been recorded as a reduction in additional paid-in-capital. If the merger had occurred on the inception date of the Company, the net loss of the combined entity for all periods presented would not differ materially from what is already reported.

 

Common Stock Options

On September 30, 2011, the Company’s Board of Directors and stockholders adopted the 2011 Stock Incentive Plan (the “2011 Plan”). Under the 2011 Plan, options may be granted which are intended to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not intended to qualify as Incentive Stock Options thereunder. In addition, direct grants of stock or restricted stock may be awarded. The 2011 Plan has reserved 4,500,000 shares of common stock for issuance. All options issued are nonqualified stock options as amended on December 19, 2011. The modification to the option agreements increased the vesting period for only certain option agreements from one year to two years. The incremental cost associated with the differential in fair value at the modification date was not material. The option agreements are exercisable as follows in 20% increments:

 

 
Date Installment Becomes Exercisable
December 19, 2011
March 31, 2012
September 30, 2012
March 31, 2013
September 30, 2013

 

A summary of stock options is presented below:

 

         
Recipient Options Strike Price Term  
Officer 1,250,000 $0.40 10 years (1)
Officer 200,000 $0.40 10 years  
Consultant 50,000 $0.40 10 years  
Consultant 160,000 $0.40 10 years  
Consultant 600,000 $0.40 10 years  
Consultant 600,000 $0.40 10 years  
Director 1,200,000 $0.40 10 years (2)
TOTAL 4,060,000      

 

 
(1) Issued to David Beling, the Company's Chief Executive Officer and President.
(2) Issued to Alan Lindsay, the Company's Chairman of the Board of Directors.

 

Using the Black Scholes option pricing model the following assumptions were made to estimate the fair value of the stock options:

 

                                     
Options   Exercise Price   Volatility   Risk Free Interest Rate   Fair Value
  4,060,000     $ 0.40       78.5 %     1.74 %   $ 1,812,203  

 

At September 30, 2012, there was unrecognized compensation expense related to these stock options of $724,881, which is expected to be recognized over a weighted average period of 1 year.

 

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A summary of the stock options as of September 30, 2012 and changes during the period are presented below:

 

                           
   

Number of

Options

   

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Life (Years)

 

Aggregate

Intrinsic

Value

Balance at December 31, 2011     4,060,000     $ 0.40       9.75   $2,233,000
Granted     -       -       -    
Exercised     -       -       -    
Forfeited     -       -       -    
Cancelled     -       -       -    
Balance at September 30, 2012     4,060,000     $ 0.40       9.00    
Options exercisable at September 30, 2012     2,436,000     $ 0.40       9.00    
Options expected to vest     4,060,000                    
                           

 

Convertible Preferred Stock

In August 2011, the Board of Directors designated 5,000,000 shares of its Preferred Stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock in not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares beneficially owns more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Preferred Stock. The holders of the Company’s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.

 

Additional Stock Issued

During the period July 1, 2012 through September 30, 2012 there were 100,000 shares issued on July 3, 2012 to a third party consultant for providing the Company with various investor relation services.

 

 

NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS

In applying current accounting standards to the financial instruments issued in the Private Placement, the Company first considered the classification of the Series A Preferred Stock under ASC 480 Distinguishing Liabilities from Equity, and the Warrants under ASC 815 Derivatives and Hedging. The Series A Preferred Stock is perpetual preferred stock without redemption or dividend provisions, contingent or otherwise. Further, the Series A Preferred Stock is convertible into a fixed number of shares of Common Stock with adjustments to the conversion price solely associated with equity restructuring events such a stock splits and recapitalization. Generally redemption provisions that provide for the mandatory payment of cash to the Investor to settle the contract or certain provisions that cause the number of linked shares of Common Stock to vary result in liability classification; and, in some instances, classification outside of stockholders’ equity. There being no such provisions associated with the Series A Preferred Stock, it is classified as a component of stockholders’ equity. The warrants were also evaluated for purposes of classification. These financial instruments embody two features that are not consistent with the concept of stockholders’ equity. First, the exercise price of $0.60 is subject to adjustment upon the issuance of common stock or common share linked contracts at prices below the contractual exercise prices. Second, the financial instruments extend a fair-value (defined as Black-Scholes) cash redemption right to the Investors in the event of certain fundamental transactions, certain of which are not within the control of the Company. This particular provision is a written put and current accounting standards provide that such provisions are not consistent with the concept of stockholders’ equity. As a result, the Warrants require classification in liability as derivative warrants. Derivative warrants are carried both initially and subsequently at fair value with changes in fair value reflected in income.

 

 

 

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    Warrant Liability Amount  
Balance at December 31, 2011   $ 2,361,925  
Exercise or expiration     --  
Change in fair value of warrant liability     (2,210,475 )
Ending balance at September 30, 2012   $ 151,450  

 

The derivative warrants were calculated using Black-Scholes valuation technique. Significant inputs into this technique are as follows:

 

       
  Inception December 31, 2011 September 30, 2012
Fair market value of common stock $0.60 $0.95 $0.24
Exercise price $0.60 $0.60 $0.60
Term (1) 3 Years 2.75 Years 2.00 Years
Volatility range (2) 68.5% 63.9% 69.7%
Risk-free rate (3) 0.50% 0.50% 0.25%

 

(1) The term is the remaining years until expiration of warrants.

(2) The Company does not have a trading market value upon which to base its forward-looking volatility. Accordingly, the Company selected a peer company that provided a reasonable basis upon which to calculate volatility.

(3) The risk-free rate used represents the yield on zero coupon US Government Securities with a period to maturity consistent with the interval described in (2), above.

 

Warrants contain limitations on exercise, including the limitation that the holders may not convert their warrants to the extent that upon exercise the holder, together with its affiliates, would own in excess of 4.99% of our outstanding shares of common stock (subject to an increase upon at least 61-days’ notice by the subscriber to us, of up to 9.99%). For a period of twelve months from the date of issuance, the warrants issued in the Private Placement contain standard anti-dilution protection in the event the Company’s issues common stock at a lower per share price. The warrants may be exercised on a cashless basis in the event there is no effective registration statement registering the resale of the underlying common stock at any time after the Effectiveness Date.

 

The second classification-related accounting consideration related to the possibility that the conversion option embedded in the Series A Preferred Stock may require classification outside of stockholders’ equity. Generally, an embedded feature in a hybrid financial instrument (such as the Series A Preferred Stock) that both meets the definition of a derivative financial instrument and is not clearly and closely related to the host contract in term of risks would require bifurcation and accounting under derivative standards. The embedded conversion option is a feature that embodies risks of equity. The Company has concluded that the Series A Preferred Stock is a contract that affords solely equity risks.

 

NOTE 4 - ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT

On June 11, 2012, the Company entered into an option agreement with Arden Larson to purchase a 100% interest in the Klondike Project (“Klondike”) that included 64 unpatented mining claims, to which the Company recently staked an additional 100 claims.  Klondike is located in the Alpha Mining District about 40 miles north of Eureka, Nevada.

 

The Company will pay a total of $575,000 to Mr. Larson on the following schedule:

 

   
Payment Date Payment Amount
Effective Date (June 11, 2012) $25,000
Six months after Effective Date $25,000
June 11, 2013 $30,000
June 11, 2014 $35,000
June 11, 2015 $40,000
June 11, 2016 $45,000
June 11, 2017 $50,000
June 11, 2018 $55,000
June 11, 2019 $60,000
June 11, 2020 $65,000
June 11, 2021 $70,000
June 11, 2022 $75,000

 

 

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The Company has the option to buy-down the royalty component by making payments of $500,000 per 0.25% of base net smelter return royalties for gold, silver and other products to Mr. Larson based on the following schedule:

 

       
Product Base net smelter return royalty Average market price Maximum buy-down net smelter return royalty
GOLD 1.00 Less than $1,200/troy oz. 0.50
  1.50 $1,201 to $1,600/troy oz. 0.75
  2.00 $1,601 to $2,000/troy oz. 1.00
  2.50 $2,001 to $2,400/troy oz. 1.25
  3.00 $2,401 to $2,800/troy oz. 1.50
  3.50 $2,801 to $3,200/troy oz. 1.75
  4.00 Greater than $3,200/troy oz. 2.00
       
SILVER 1.00 Less than $15/troy oz. 0.50
  1.50 $15.01 to $30/troy oz. 0.75
  2.00 $30.01 to $45/troy oz. 1.00
  2.50 $45.01 to $60/troy oz. 1.25
  3.00 $60.01 to $75/troy oz. 1.50
  3.50 $75.01 to $90/troy oz. 1.75
  4.00 Greater than $90/troy oz. 2.00
       
OTHER 2.00 As determined by products 1.00

 

In addition, the Company is committed to spend no less than $850,000 for the benefit of the Klondike Project on the following schedule:

 

     
  1. $100,000 prior to June 11, 2013
     

 

     
  2. An additional $150,000 prior to June 11, 2014
     

 

     
  3. An additional $200,000 prior to June 11, 2015
     

 

     
  4. An additional $200,000 prior to June 11, 2016
     

 

     
  5. An additional $200,000 prior to June 11, 2017

 

Should the Company choose not to maintain the work commitment and option to the property, the Company can forego future payments to Mr. Larson without penalty.

 

NOTE 5 - NOTE PAYABLE

On September 5, 2012, the Company issued and sold to an accredited investor a Promissory Note (the “Promissory Note”) in the principal amount of $200,000. The Promissory Note accrues interest at the rate of three percent (3%) per month, on a 360 day per year basis. The Promissory Note matures on October 1, 2012 (the “Initial Maturity Date”). On the Initial Maturity Date, the Company may extend the Initial Maturity Date from October 1, 2012 to October 15, 2012 (the “Initial Extension Maturity Date”) by paying to the Holder an initial note extension payment equal to 50,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) issuable on the date such extension is elected (the “Initial Extension Payment”).

 

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

 

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

 

As of November 9, 2012, the Company has issued 50,000 shares of Common Stock as required by the Promissory Note. The Company intends to issue the Extension Payment of $100,000 shares on December 1, 2012. 

 

NOTE 6 - SUBSEQUENT EVENTS
On November 2, 2012, the Board of Directors of Bullfrog Gold Corp. (the “Company”) approved a unilateral re-pricing of warrants to purchase a total of 4,563,625 shares of the Company’s common stock that were originally issued as part of the Company’s private placement on September 30, 2011 (the “Original PIPE”) with an original exercise price of $0.60. Pursuant to the re-pricing, the warrants were unilaterally amended by the Board of Directors to reduce the exercise price of each warrant to $0.40, which is above the closing price of $0.38 price of the Company’s common stock on November 2, 2012. The number of shares and expiration period of the warrants were not altered. Mr. David Beling, the Company’s President and Chief Executive Officer, was an investor in the Original PIPE and received 100,000 warrants as part of his investment in the Original PIPE that were repriced on November 2, 2012. Other than Mr. Beling, none of the Company’s directors and officers received warrants in the Original PIPE.

 

NOTE 7 – RESTATEMENT

The Company’s consolidated financial statements have been restated as follows as of September 30, 2012:

 

  As Originally Reported Adjustment As Restated
Consolidated Balance Sheet as of September 30, 2012      
       
Additional paid in capital $4,055,452 (563,301) $3,492,151
Deficit accumulated during the exploration stage (3,437,024) 563,301 (2,873,723)
       
Consolidated Balance Sheet as of December 31, 2011      
       
Additional paid in capital 3,208,096 (563,301) 2,644,795
Deficit accumulated during the exploration stage (2,831,926) 563,301 (2,268,625)
       
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012      
       
Revaluation of warrant liability 520,478 563,301 1,083,779
Net loss (3,437,024) 563,301 (2,873,723)
       
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012      
       
Net loss (3,437,024) 563,301 (2,873,723)
Revaluation of warrant liability (520,478) (563,301) (1,083,779)

 

The Company originally recorded the warrant liability at relative fair value as of September 30, 2011. However, management determined that such transaction should be accounted pursuant to ASC 815 “Derivatives and Hedging” and related subtopics for allocating the carrying amount of the hybrid instrument between the host contract and the derivative. As a result the warrant liability as of September 30, 2011 should be recorded at a fair value of $1,235,229, with the remaining balance of the Private Placement proceeds allocated to additional paid in capital.

 

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

The following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. Historical results and percentage relationships among any amounts in these financial statements are not necessarily indicative of trends in operating results for any future period. This Report contains “forward-looking statements”. The statements, which are not historical facts contained in this Report, including this Management’s discussion and analysis of financial condition and results of operation, and notes to our unaudited condensed consolidated financial statements, particularly those that utilize terminology such as “may” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements. Such statements are based on currently available operating, financial and competitive information, and are subject to various risks and uncertainties. Future events and our actual results may differ materially from the results reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, limited ability to establish new strategic relationships, ability to sustain and manage growth, variability of operating results, our expansion and development of new projects, general economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to maintain and develop new projects, the potential liability with respect to actions taken by our existing and past employees, and other risks described herein and in our other filings with the Securities and Exchange Commission.

 

The safe harbor for forward-looking statements provided by Section 21E of the Securities Exchange Act of 1934 excludes issuers of “penny stock” (as defined under Rule 3a51-1 of the Securities Exchange Act of 1934). Our common stock currently falls within that definition.

 

All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

 

Company History

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

 

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

 

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

 

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

 

15

 

 
 

 

Company Overview

We are primarily an exploration stage company engaged in the acquisition and exploration of properties that may contain gold, silver and other mineralization in the United States. Our target properties are those that have been the subject of historical exploration. We have acquired State exploration permits and Federal patented and unpatented mining claims in the states of Arizona and Nevada for the purpose of exploration and potential development of gold, silver and other minerals on a total of approximately 9,850 acres. We plan to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential. The Company has acquired three projects, as described below.

 

Newsboy Project, Arizona

The Newsboy Project comprises 4,920 acres of state and federal lands located 45 miles northwest of Phoenix, Arizona. In June 2012 the Company determined that one of the state permits was not beneficial to the project and did not renew one of the four state permits therefore reducing the land holdings from 5,240 to 4,920 acres and three state permits.  The closest towns, Wickenburg and Morristown, are located 10 miles and 3 miles respectively from the site and provide excellent infrastructure. Approximately 1.2 million ounces of gold and 1 million ounces of silver have been produced within 25 miles of the Newsboy Project from several historic mines, including the Vulture, Congress, Octave and Yarnell.

 

In September 2011, the Company obtained the working right and option to earn a 100% interest in and to the Newsboy Project. Terms of this Agreement include the payment of $3,425,000 during the five-year period ending January 2012 plus a 2% net smelter royalty.

 

In addition to the main mineral zone drilled by predecessors, the Newsboy Project has nine relatively shallow priority drill targets and other secondary targets below existing drill depths. The Company and its independent consultants have developed a detailed exploration drilling program to confirm and expand mineralized zones and collect additional environmental and technical data. The first phase drilling program was initiated in November 2011 and completed by the end of January 2012. A total of 6,750 feet of drilling was completed in 24 holes. Below are highlights from the first phase drilling program.

 

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

 

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

 

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

 

The Company intends to continue drilling the Newsboy Project and surrounding area during late 2012 and early 2013 and soon thereafter update the historic feasibility study and environmental permit applications. Drilling thereafter will be based on results and requirements.  In June 2012 the Company purchased a substantial historic data base from Moneta Porcupine Mines, who owned the property from 1993 through 1995.

 

Bullfrog Gold Project

The Bullfrog Gold Project lies approximately 3 miles northwest of the town of Beatty and 116 miles northwest of Las Vegas, Nevada. Standard Gold acquired a 100% right, title and interest in and to 1,650 acres of mineral claims and patents known as the “Bullfrog Project” subject to a 3% net smelter royalty. The Company’s first phase drilling program is scheduled to start in 2013, subject to approval of a drill program that was initially submitted  the US Bureau of Land Management in June 2012. The Company also continued its search for additional historic information on the Bullfrog Project and surrounding area.

 

16

 

 
 

 

Klondike Project

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

 

The Klondike Project covers mineralized structures 5 miles long and 1 mile wide along the west flank of the Sulfur Springs mountain range.  The rocks within this corridor are intensely broken by numerous periods of faulting, thereby providing a favorable environment for several sequences of hydrothermal solutions to form mineral deposits.   These host rocks are mostly Devonian age sediments typical of most Carlin gold deposits.

 

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

 

   
· The oldest is a silver-rich, lead-zinc event that appears to be related to a molybdenum porphyry system that is not exposed but indicated by geochemistry and alteration.  In this regard, the Klondike claims lie 10 miles north of the Mt. Hope molybdenum mine which is currently under development as one of the world’s largest molybdenum deposits.  The Mt. Hope deposit has a halo of silver-zinc mineralization that is typically more than a thousand feet thick and above several thousand feet of molybdenum mineralization.  A silver-rich copper event may also be related to this style of mineralization.
   
· A later stage Carlin-style gold-arsenic-barite mineralizing event over-printed the earlier silver-zinc-molybdenum system.  This event has wide-spread anomalous gold values with arsenic and associated calcite veining.  Barite may be related to all events. A new gold discovery is currently being drilled by other companies 10 miles west of the Klondike and may be the continuation of the massive Cortez gold trend.

 

A total of 156 surface rock chip samples of the Klondike host rocks averaged 32 ppm silver, 1.3 % zinc, 0.8 % lead, 0.16 % copper and anomalous gold.   These contents compare well with major silver-zinc deposits such as San Cristobal in Bolivia, Penasquito in Mexico and the new discovery of Cordero in Mexico, each of which may contain more than 100 million tonnes of ore.  See Note 4 in the Notes to Financial Statements for additional details concerning the purchase transaction.

 

Results of Operations

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

 

                 
    Three months ended  
    9/30/12     9/30/11  
Revenue   $ -     $ -  
                 
Operating Expenses                
General and Administrative     228,910       162,517  
Exploration Costs     132,624       -  
Marketing     215,510       23,464  
Total Operating Expenses     577,044       185,981  
                 
Net Operating Loss     (577,044 )     (185,981)  
                 
Gain on Forgiveness of Debt     -       28,499  
Interest Expense     -       (6,539 )
Revaluation of Warrant Liability     996,618       -  
Net Income (Loss)   $ 419,574     $ (164,021 )

 

We are still in the exploration stage and have no revenues to date.

 

During the three months ended September 30, 2012 we had a net income of $419,574 compared to a net loss of $164,021 for the three months ended September 30, 2011. The increase of $583,595 is due primarily to:

 

     
  1. General and Administrative variance of approximately $66,000 due to the following:

 

 

17

 

 
 

 

     
  a. Stock-based compensation of approximately $72,000 as a result of the 2011 Equity Incentive Plan in which options were granted to two officers of the Company and one consultant to the Company. See Note 2 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of common stock options.
     
  b. The Company having approximately $81,000 in payroll costs for the three months ended September 30, 2012. The Company did not have any employees for this period in 2011 and therefore had zero payroll expense.
     
  c. The Company incurred legal fees of approximately $131,000 for the three months ended September 30, 2011 compared to approximately $46,000 for the same period in 2012.  The cost in 2011 was due to the costs related to the reverse merger that was completed on September 30, 2011.  See Note 2 in the Notes to the Consolidated Financial Statements for additional discussion about the reverse merger.

 

     
  2. Exploration costs variance of approximately $133,000 due to the following:

 

     
  a. There was approximately $39,000 spent on site assessment work, which included $24,000 for drill sample testing. There were no costs for the same period in 2011.
     
  b. There was approximately $28,000 expense for geology consultants and $66,000 expense for filing fees for the three months ended September 30, 2012. There was approximately $35,000 in filing fees  for the same period in 2011, however the expenses were classified as General and Administrative.

 

     
  3. Marketing expenses for the three months ended September 30, 2012 were approximately $216,000 versus $23,000 for the same period in 2011. Approximately $109,000 of the expense is stock-based compensation for the Company’s marketing and investor relations consultants. See Note 2 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of common stock options. In addition, there was approximately $100,000 spent on investor relation programs, including 100,000 shares valued at approximately $59,000 that were issued to a consultant.
     
  4. The Revaluation of Warrant Liability of $996,618 for the three months ended September 30, 2012 resulted from warrants issued as part of the private placement. The change in value to the Warrant Liability is primarily due to the fair value price per share of $0.63 at June 30, 2012 and the fair value price per share of $0.24 at September 30, 2012. See Note 3 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of the warrant liability.

 

 

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

 

                 
    Nine months ended  
    9/30/12     9/30/11  
Revenue   $ -     $ -  
                 
Operating Expenses                
General and Administrative     769,022       188,278  
Exploration Costs     993,136       -  
Marketing     1,053,415       23,464  
Total Operating Expenses     2,815,573       211,742  
Net Operating Loss     (2,815,573 )     (211,742 )
                 
Gain on Forgiveness of Debt     -       28,499  
Interest Expense     -       (18,941 )
Revaluation of Warrant Liability     2,210,475       -  
Net Loss   $ (605,098 )   $ (202,184 )

 

We are still in the exploration stage and have no revenues to date.

 

During the nine months ended September 30, 2012 we had a net loss of $605,098 compared to a net loss of $202,184 for the nine months ended September 30, 2011. The increase of $402,914 is due primarily to:

 

     
  1. General and Administrative variance of approximately $580,000 due to the following:

 

 

18

 

 
 

 

     
  a. Stock-based compensation of approximately $276,000 as a result of the 2011 Equity Incentive Plan in which options were granted to two officers of the Company and one consultant to the Company. See Note 2 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of common stock options.
     

 

     
  b. The Company having approximately $243,000 in payroll costs for the nine months ended September 30, 2012. The Company did not have any employees for this period in 2011 and therefore had zero payroll expense.
     
  c. The Company has engaged two financing companies to provide funds for continued operations.  As part of the financing agreements, we paid one company $50,000 and the other company $12,500 for a total of $62,500 as nonrefundable, upfront fees.  There were no financing fees for the same period in 2011.

 

     
  2. Exploration costs variance of approximately $993,000 due to the following:

 

         
  a. There was approximately $530,000 spent on drilling the Newsboy Project, which included drilling costs, water truck and drill pad excavation. There were no costs for the same period in 2011.
     
  b. The Company spent an additional $90,000 on samples testing for the above mentioned drilling results. There were no costs for the same period in 2011.
     
  c. There was approximately $149,000 expense for geology consultants and $106,000 expense for filing fees for the nine months ended September 30, 2012.  There was approximately $35,000 in filing fees  for the same period in 2011, however the expenses were classified as General and Administrative.
     
  d. The Company paid $100,000 to Moneta Porcupine Mines (“Moneta”) for their historical data related to their exploration activities from when they owned the Newsboy Project from 1993 through 1995. This data included assay certificates and drill logs of nearly all 154 historical drill holes from 1987 to 1992 and eight additional holes drilled by Moneta during 1994 and 1995.
     
  3. Marketing expenses for the nine months ended September 30, 2012 were approximately $1,053,000 versus $23,464 for the same period in 2011. Approximately $419,000 of the expense is stock-based compensation for the Company’s marketing and investor relations consultants. See Note 2 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of common stock options. In addition, there was approximately $505,000 spent on investor relation programs, including 256,000 shares valued at approximately $152,000 that were issued to various consultants.
     
  4. The Revaluation of Warrant Liability of $2,210,475 for the nine months ended September 30, 2012 resulted from warrants issued as part of the private placement. The change in value to the Warrant Liability is primarily due to the fair value price per share of $0.95 at December 31, 2011 and the fair value price per share of $0.24 at September 30, 2012. See Note 3 in the Notes to the Consolidated Financial Statements for additional discussion and valuation of the warrant liability.

 

Liquidity and Capital Resources

As a result of the Private Placement of $3,650,900 (which includes the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis into the Private Placement) we received net cash proceeds of $2,710,000. As of September 30, 2012 we had $200,000 in debt, see Note 5 in the Notes to Consolidated Financial Statements for additional details. Losses from operations have been incurred since inception and there is an accumulated deficit of $2,873,723 as of September 30, 2012. Continuation as a going concern is dependent upon raising additional funds and attaining profitable operations. We do not believe that we will have sufficient cash to continue to explore and develop the Newsboy Gold Project in Arizona or the Bullfrog Gold Project in Nevada and Klondike Project in Nevada.  See Note 2 in the Notes to Consolidated Financial Statements for additional details concerning the reverse merger transaction.

 

In addition to the continued exploration of the Newsboy and Bullfrog Projects, the Company is committed to spend no less than $100,000 for the benefit of the Klondike Project by June 11, 2013. The work commitments  thereafter are discretionary to maintain the agreement in effect per the  following schedule:

 

     
  1. $100,000 prior to June 11, 2013

 

     
  2. An additional $150,000 prior to June 11, 2014

 

     
  3. An additional $200,000 prior to June 11, 2015

 

     
  4. An additional $200,000 prior to June 11, 2016

 

     
  5. An additional $200,000 prior to June 11, 2017

 

 

19

 

 
 

 

Off Balance Sheet Arrangements

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

 

Critical Accounting Policies and Use of Estimates

Stock based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

 

The Company accounts for derivative instruments in accordance with FASB ASC 815, Derivatives and Hedging, which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

 

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISK

 

N/A

 

ITEM 4 - CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

With respect to the quarterly period ended September 30, 2012, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, the Company’s management has concluded that certain disclosure controls and procedures were not effective as of September 30, 2012 and that the failure to have multiple levels of transaction review due to limited personnel constitutes a material weakness in internal controls. Management has determined that our internal audit function is significantly deficient due to insufficient qualified resources to perform internal audit functions, which results in a material weakness in internal control over our financial reporting. Due to our size and nature, internal audit functions may not always be possible and may not be economically feasible. However, to the extent possible, we will implement procedures to assist in the technical review of transactions for financial reporting.

 

Changes in Internal Controls

There have been no changes in the Company’s internal control over financial reporting during the nine months ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

 

 

 

 

 

 

 

 

 

20

 

 
 

PART II

 

OTHER INFORMATION

 

ITEM 1 - LEGAL PROCEEDINGS

 

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

 

ITEM 1A - RISKS FACTORS

 

Not applicable

 

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4 - MINE SAFETY DISCLOSURES

 

None

 

ITEM 5 - OTHER INFORMATION

 

None

 

ITEM 6 - EXHIBITS

 

     
Exhibit Number   Description
     
31   Certification of Chief Executive Officer and Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32   Certification of Chief Executive Officer and Chief Financial Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

21

 

 
 

 

SIGNATURE

 

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.

 

 

     
Date: March 5, 2013 BULLFROG GOLD CORP.
     
  By: /s/ David Beling
    Name: David Beling
    Title: President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

EX-31 2 q1100994_ex31.htm ex31


EXHIBIT 31


CERTIFICATION OF PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, David Beling, certify that:


1. I have reviewed this quarterly report on Form 10-Q of Bullfrog 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 quarterly report;


3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;


4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a. designed such disclosure controls and procedures, or caused such internal control over financial reporting to be designed under my supervision, to ensure that material information relating to the registrant, 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that was materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the board of directors of the registrant's board of directors (or other persons performing the equivalent functions):


a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and


b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: March 5, 2013

BULLFROG GOLD CORP.

  

 

 

 

 

  

By:

/s/ David Beling

  

  

  

Name: David Beling

  

  

  

Title: President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

  





EX-32 3 q1100994_ex32.htm ex32


EXHIBIT 32


CERTIFICATION OF PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER 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 Bullfrog Gold Corp., a Delaware corporation (the "Company"), on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Principal Executive Officer and Principal Financial Officer, hereby certifies pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 that, to the undersigned's knowledge:


(1) the Report of the Company filed today fully complies with the requirements of Section 13(a) or (15(d) of the Securities Exchange Act of 1934, as amended; and


(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.


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


 

Date: March 5, 2013

BULLFROG GOLD CORP.

  

  

  

  

  

  

By:

/s/ David Beling

  

  

  

Name: David Beling

  

  

  

Title: President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

  





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margin-bottom: 0pt">Earnings (loss) per common share</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$419,574</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$(164,021)</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$(605,098)</p> </td> <td style="width: 103px; vertical-align: top; width: 77.4pt; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$(202,184)</p> </td> </tr> <tr> <td style="width: 343px; vertical-align: top; width: 257.4pt; padding: 0in 5.4pt"> <p style="margin: 0in; margin-bottom: 0pt">Basic weighted average shares outstanding</p> </td> <td style="width: 96px; vertical-align: top; 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text-align: right">13,210,164</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">--</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">--</p> </td> <td style="width: 103px; vertical-align: top; width: 77.4pt; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">--</p> </td> </tr> <tr> <td style="width: 343px; vertical-align: top; width: 257.4pt; padding: 0in 5.4pt"> <p style="margin: 0in; margin-bottom: 0pt">Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents</p> </td> <td style="width: 96px; vertical-align: bottom; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">34,707,418</p> </td> <td style="width: 96px; vertical-align: bottom; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">11,078,539</p> </td> <td style="width: 96px; vertical-align: bottom; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">29,982,436</p> </td> <td style="width: 103px; vertical-align: bottom; width: 77.4pt; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">9,283,974</p> </td> </tr> <tr> <td style="width: 343px; vertical-align: top; width: 257.4pt; padding: 0in 5.4pt"> <p style="margin: 0in; margin-bottom: 0pt">Basic Earnings (Loss) Per Common Share</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">.01</p> </td> <td style="width: 96px; vertical-align: top; width: 1in; padding: 0in 5.4pt"> <p style="text-align: right; margin: 0in; 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In addition Aurum had made deposits to vendors that were transferred to the Company to be applied to future expenses. Of these payments, $6,364 was paid back to the Company in October 2011 and $45,000 was applied to exploration costs in November 2011.</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">On September 28, 2011, Standard Gold and Southwest entered into an Option to Purchase and Royalty Agreement pursuant to which Southwest granted to Standard Gold, the sole and immediate working right and option to earn a One Hundred Percent (100%) interest in and to the Newsboy Project property free and clear of all charges encumbrances and claims in consideration for $3,425,000, of which $500,000 was previously paid by a third party (the &#147;Prepayment Amount&#148;). The balance due to Southwest as of September 28, 2011 (the date of the agreement) of $2,925,000 is payable on the following schedule:</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style="width: 100%; width: 100%"> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(i)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2012, the sum of US $150,000; July 1, 2012 the sum of US $150,000;</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(ii)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2013, the sum of US $200,000; July 1, 2013 the sum of US $200,000;</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(iii)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2014, the sum of US $250,000; July 1, 2014 the sum of US $250,000;</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(iv)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2015, the sum of US $300,000; July 1, 2015 the sum of US $300,000;</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(v)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2016, the sum of US $350,000; July 1, 2016 the sum of US $350,000; and</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: top; width: 6%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(vi)</p> </td> <td style="width: 66%; vertical-align: top; width: 66%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">on January 1, 2017, the sum of US $425,000.</p> </td> </tr> </table> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">The first option payment of $150,000 was paid in December 2011 and the second option payment of $150,000 was paid in June 2012. Upon the full payment of the balance of $2,625,000, the option will be considered automatically exercised and the Company will have earned a 100% interest in and to the Newsboy Project property free and clear of all liens and encumbrances. Notwithstanding the foregoing, the Company is obligated to pay a Net Smelter Royalty payment equal to two percent (2%) of the proceeds from the sale or other disposition from any purchaser of any mineral derived from the ore mined from the Newsboy Project property. To retain the property, the Company must also pay the annual claim maintenance fees and file a Notice of Intent to Hold with the Bureau of Land Management and Maricopa County. The Company must also make annual payments for the lands leased from the State of Arizona. Should the Company choose not to maintain the working right and option to the property, the Company can forego future payments to Southwest without penalty. A total of $500,000 was paid to Southwest as part of the option to purchase agreement by third parties, which converted into an aggregate of 1,250,000 Units in the Private Placement. These payments have been recorded as increases to mineral property on the balance sheet.</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">In addition to the above payments, $50,000 was paid to Southwest by a third party for additional direct costs of acquiring the mineral property which converted into an aggregate of 125,000 Units in the Private Placement. 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vertical-align: top; width: 23%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Officer</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">200,000</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$0.40</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">10 years</p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> </tr> <tr> <td style="width: 23%; vertical-align: top; width: 23%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Consultant</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; 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vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">10 years</p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> </tr> <tr> <td style="width: 23%; vertical-align: top; width: 23%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Consultant</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">600,000</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$0.40</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">10 years</p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> </tr> <tr> <td style="width: 23%; vertical-align: top; width: 23%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Consultant</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">600,000</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$0.40</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">10 years</p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> </tr> <tr> <td style="width: 23%; vertical-align: top; width: 23%; padding: 0in 0in 1.5pt"> <p style="margin: 0in; margin-bottom: 0pt">Director</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">1,200,000</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0in 0in 1.5pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$0.40</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0in 0in 1.5pt"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">10 years</p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0in 0in 1.5pt"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">(2)</p> </td> </tr> <tr> <td style="width: 23%; vertical-align: top; width: 23%; padding: 0in 0in 3pt"> <p style="margin: 0in; margin-bottom: 0pt">TOTAL</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; border-top-style: none; border-right-style: none; border-bottom: black 2.25pt none; padding: 0; border-left-style: none; border-bottom-style: double"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">4,060,000</p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0in 0in 3pt"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 16%; vertical-align: top; width: 16%; padding: 0in 0in 3pt"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 8%; vertical-align: top; width: 8%; padding: 0in 0in 3pt"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> </tr> </table> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style="width: 100%; width: 100%"> <tr> <td style="width: 78%; vertical-align: top; width: 78%; background-color: white; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(1) Issued to David Beling, the Company's Chief Executive Officer and President.</p> </td> </tr> <tr> <td style="width: 78%; vertical-align: top; width: 78%; background-color: white; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">(2) Issued to Alan Lindsay, the Company's Chairman of the Board of Directors.</p> </td> </tr> </table> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">Using the Black Scholes option pricing model the following assumptions were made to estimate the fair value of the stock options:</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style="width: 100%; width: 100%"> <tr> <td colspan="2" style="width: 21%; vertical-align: bottom; width: 21.92%; padding: 0"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center"><font style="display: none">.</font>Options</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.2%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 16%; vertical-align: bottom; width: 16.74%; padding: 0"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Exercise Price</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.2%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 17%; vertical-align: bottom; width: 17.76%; padding: 0"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Volatility</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.22%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 16%; vertical-align: bottom; width: 16.8%; padding: 0"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Risk Free Interest Rate</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.22%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 21%; vertical-align: bottom; width: 21.92%; padding: 0"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Fair Value</p> </td> </tr> <tr> <td style="width: 6%; vertical-align: bottom; width: 6.34%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 15%; vertical-align: bottom; width: 15.6%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">4,060,000</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.2%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: bottom; width: 6.34%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$</p> </td> <td style="width: 10%; vertical-align: bottom; width: 10.4%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">0.40</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.2%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: bottom; width: 6.36%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 11%; vertical-align: bottom; width: 11.4%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">78.5%</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.22%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: bottom; width: 6.36%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 10%; vertical-align: bottom; width: 10.44%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">1.74%</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1.22%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 6%; vertical-align: bottom; width: 6.36%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$</p> </td> <td style="width: 15%; vertical-align: bottom; width: 15.56%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">1,812,203</p> </td> </tr> <tr> <td style="width: 47px; border-style: none"></td> <td style="width: 117px; border-style: none"></td> <td style="width: 9px; border-style: none"></td> <td style="width: 47px; border-style: none"></td> <td style="width: 78px; border-style: none"></td> <td style="width: 9px; border-style: none"></td> <td style="width: 48px; border-style: none"></td> <td style="width: 85px; border-style: none"></td> <td style="width: 9px; border-style: none"></td> <td style="width: 48px; border-style: none"></td> <td style="width: 78px; border-style: none"></td> <td style="width: 9px; border-style: none"></td> <td style="width: 48px; border-style: none"></td> <td style="width: 116px; border-style: none"></td> </tr> </table> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">At September 30, 2012, there was unrecognized compensation expense related to these stock options of $724,881, which is expected to be recognized over a weighted average period of 1 year.</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt">A summary of the stock options as of September 30, 2012 and changes during the period are presented below:</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style="width: 100%; width: 100%"> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt"><font style="display: none">.</font>&#160; </p> </td> <td style="width: 0%; vertical-align: top; width: 0.98%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 10%; vertical-align: bottom; width: 10.24%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Number of </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Options</p> </td> <td style="width: 1%; vertical-align: top; width: 1%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 1%; vertical-align: top; width: 1%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 9%; vertical-align: bottom; width: 9%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Weighted </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Average </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Exercise </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Price</p> </td> <td style="width: 1%; vertical-align: top; width: 1%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 1%; vertical-align: top; width: 1%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td colspan="2" style="width: 10%; vertical-align: bottom; width: 10.82%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Weighted </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Average </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Remaining </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Contractual </p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Life (Years)</p> </td> <td style="width: 1%; vertical-align: top; width: 1%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">&#160; </p> </td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; border-top-style: none; border-right-style: none; border-bottom: black 1.5pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Aggregate</p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Intrinsic</p> <p style="text-align: center; margin: 0in; margin-bottom: 0pt; text-align: center">Value</p> </td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Balance at December 31, 2011</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">4,060,000</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$</p> </td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">0.40</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">9.75</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$2,233,000</p> </td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Granted</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"></td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"></td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Exercised</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"></td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"></td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Forfeited</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"></td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"></td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Cancelled</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"></td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">-</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"></td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Balance at September 30, 2012</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">4,060,000</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$</p> </td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">0.40</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">9.00</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"></td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; padding: 0"> <p style="margin: 0in; margin-bottom: 0pt">Options exercisable at September 30, 2012</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">2,436,000</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">$</p> </td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">0.40</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; padding: 0"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">9.00</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; padding: 0"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; padding: 0"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right"><font style="display: none">]</font></p> </td> </tr> <tr> <td style="width: 53%; vertical-align: bottom; width: 53.56%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="margin: 0in; margin-bottom: 0pt">Options expected to vest</p> </td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 0%; vertical-align: bottom; width: 0.98%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 9%; vertical-align: bottom; width: 9.26%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"> <p style="text-align: right; margin: 0in; margin-bottom: 0pt; text-align: right">4,060,000</p> </td> <td style="width: 1%; vertical-align: bottom; width: 1%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1.28%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 7%; vertical-align: bottom; width: 7.72%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1.36%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 9%; vertical-align: bottom; width: 9.46%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 1%; vertical-align: bottom; width: 1%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> <td style="width: 10%; vertical-align: bottom; width: 10.42%; border-top-style: none; border-right-style: none; border-bottom: windowtext 1pt none; padding: 0; border-left-style: none; border-bottom-style: solid"></td> </tr> </table> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt"><b><u>Convertible Preferred Stock</u></b></p> <p style="margin: 0in; margin-bottom: 0pt">In August 2011, the Board of Directors designated 5,000,000 shares of its Preferred Stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock in not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares beneficially owns more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Preferred Stock. The holders of the Company&#146;s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.</p> <p style="margin: 0in; margin-bottom: 0pt">&#160;</p> <p style="margin: 0in; margin-bottom: 0pt"><b><u>Additional Stock Issued</u></b></p> <p style="margin: 0in; margin-bottom: 0pt">During the period July 1, 2012 through September 30, 2012 there were 100,000 shares issued on July 3, 2012 to a third party consultant for providing the Company with various investor relation services.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>In applying current accounting standards to the financial instruments issued in the Private Placement, the Company first considered the classification of the Series A Preferred Stock under ASC 480 <i>Distinguishing Liabilities from Equity</i>, and the Warrants under ASC 815 <i>Derivatives and Hedging</i>. The Series A Preferred Stock is perpetual preferred stock without redemption or dividend provisions, contingent or otherwise. Further, the Series A Preferred Stock is convertible into a fixed number of shares of Common Stock with adjustments to the conversion price solely associated with equity restructuring events such a stock splits and recapitalization. Generally redemption provisions that provide for the mandatory payment of cash to the Investor to settle the contract or certain provisions that cause the number of linked shares of Common Stock to vary result in liability classification; and, in some instances, classification outside of stockholders&#146; equity. There being no such provisions associated with the Series A Preferred Stock, it is classified as a component of stockholders&#146; equity. The warrants were also evaluated for purposes of classification. These financial instruments embody two features that are not consistent with the concept of stockholders&#146; equity. First, the exercise price of $0.60 is subject to adjustment upon the issuance of common stock or common share linked contracts at prices below the contractual exercise prices. Second, the financial instruments extend a fair-value (defined as Black-Scholes) cash redemption right to the Investors in the event of certain fundamental transactions, certain of which are not within the control of the Company. This particular provision is a written put and current accounting standards provide that such provisions are not consistent with the concept of stockholders&#146; equity. As a result, the Warrants require classification in liability as derivative warrants. Derivative warrants are carried both initially and subsequently at fair value with changes in fair value reflected in income.</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="99%" style='width:99.74%'> <tr> <td width="80%" valign="bottom" style='width:80.42%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>&#160; </p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="18%" colspan="2" valign="bottom" style='width:18.28%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Warrant Liability Amount</p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2011</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="17%" valign="bottom" style='width:17.12%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>2,361,925</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercise or expiration</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="17%" valign="bottom" style='width:17.12%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Change in fair value of warrant liability</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="17%" valign="bottom" style='width:17.12%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> (2,210,475)</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0in 0in 1.5pt 0in'></td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Ending balance at September 30, 2012</p> </td> <td width="0%" valign="bottom" style='width:.52%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="17%" valign="bottom" style='width:17.12%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>151,450</p> </td> <td width="0%" valign="bottom" style='width:.78%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The derivative warrants were calculated using Black-Scholes valuation technique. Significant inputs into this technique are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="39%" valign="top" style='width:39.04%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>&#160; </p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Inception</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31, 2011</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>September 30, 2012</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Fair market value of common stock</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.95</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.24</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercise price</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Term (1)</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3 Years</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.75 Years</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00 Years</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Volatility range (2)</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>68.5%</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>63.9%</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>69.7%</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Risk-free rate (3)</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50%</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50%</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.25%</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>(1) The term is the remaining years until expiration of warrants.</p> <p style='margin:0in;margin-bottom:.0001pt'>(2) The Company does not have a trading market value upon which to base its forward-looking volatility. Accordingly, the Company selected a peer company that provided a reasonable basis upon which to calculate volatility.</p> <p style='margin:0in;margin-bottom:.0001pt'>(3) The risk-free rate used represents the yield on zero coupon US Government Securities with a period to maturity consistent with the interval described in (2), above.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>Warrants contain limitations on exercise, including the limitation that the holders may not convert their warrants to the extent that upon exercise the holder, together with its affiliates, would own in excess of 4.99% of our outstanding shares of common stock (subject to an increase upon at least 61-days&#146; notice by the subscriber to us, of up to 9.99%). For a period of twelve months from the date of issuance, the warrants issued in the Private Placement contain standard anti-dilution protection in the event the Company&#146;s issues common stock at a lower per share price. The warrants may be exercised on a cashless basis in the event there is no effective registration statement registering the resale of the underlying common stock at any time after the Effectiveness Date.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The second classification-related accounting consideration related to the possibility that the conversion option embedded in the Series A Preferred Stock may require classification outside of stockholders&#146; equity. Generally, an embedded feature in a hybrid financial instrument (such as the Series A Preferred Stock) that both meets the definition of a derivative financial instrument and is not clearly and closely related to the host contract in term of risks would require bifurcation and accounting under derivative standards. The embedded conversion option is a feature that embodies risks of equity. The Company has concluded that the Series A Preferred Stock is a contract that affords solely equity risks.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 4 - ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>On June 11, 2012, the Company entered into an option agreement with Arden Larson to purchase a 100% interest in the Klondike Project (&#147;Klondike&#148;) that included 64 unpatented mining claims, to which the Company recently staked an additional 100 claims.&#160; Klondike is located in the Alpha Mining District about 40 miles north of Eureka, Nevada.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company will pay a total of $575,000 to Mr. Larson on the following schedule:</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="50%" style='width:50.0%'> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>Payment Date</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Payment Amount</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Effective Date (June 11, 2012)</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$25,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Six months after Effective Date</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$25,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2013</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$30,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2014</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$35,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2015</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$40,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2016</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$45,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2017</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$50,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2018</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$55,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2019</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$60,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2020</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$65,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2021</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$70,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2022</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$75,000</p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company has the option to buy-down the royalty component by making payments of $500,000 per 0.25% of base net smelter return royalties for gold, silver and other products to Mr. Larson based on the following schedule:</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="10%" valign="bottom" style='width:10.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><font style='display:none'>.</font>Product</p> </td> <td width="15%" valign="bottom" style='width:15.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Base net smelter return royalty</p> </td> <td width="23%" valign="bottom" style='width:23.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average market price</p> </td> <td width="19%" valign="bottom" style='width:19.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Maximum buy-down net smelter return royalty</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>GOLD</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Less than $1,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$1,201 to $1,600/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$1,601 to $2,000/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,001 to $2,400/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.25</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,401 to $2,800/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,801 to $3,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>4.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Greater than $3,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'></td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>SILVER</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Less than $15/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$15.01 to $30/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$30.01 to $45/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$45.01 to $60/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.25</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$60.01 to $75/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$75.01 to $90/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>4.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Greater than $90/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'></td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>OTHER</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>As determined by products</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>In addition, the Company is committed to spend no less than $850,000 for the benefit of the Klondike Project on the following schedule:</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>1.</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$100,000 prior to June 11, 2013</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>2.</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>An additional $150,000 prior to June 11, 2014</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>3.</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>An additional $200,000 prior to June 11, 2015</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>4.</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>An additional $200,000 prior to June 11, 2016</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="24" valign="top" style='width:.25in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5.</p> </td> <td valign="top" style='padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>An additional $200,000 prior to June 11, 2017</p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>Should the Company choose not to maintain the work commitment and option to the property, the Company can forego future payments to Mr. Larson without penalty.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 5 - NOTE PAYABLE</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>On September 5, 2012, the Company issued and sold to an accredited investor a Promissory Note (the &#147;<u>Promissory Note</u>&#148;) in the principal amount of $200,000. The Promissory Note accrues interest at the rate of three percent (3%) per month, on a 360 day per year basis. The Promissory Note matures on October 1, 2012 (the &#147;<u>Initial Maturity Date</u>&#148;). On the Initial Maturity Date, the Company may extend the Initial Maturity Date from October 1, 2012 to October 15, 2012 (the &#147;<u>Initial Extension Maturity Date</u>&#148;) by paying to the Holder an initial note extension payment equal to 50,000 shares of the Company&#146;s common stock, par value $0.0001 per share (the &#147;<u>Common Stock</u>&#148;) issuable on the date such extension is elected (the &#147;<u>Initial Extension Payment</u>&#148;).</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>Furthermore, if the Initial Maturity Date of the Note is extended to the Initial Maturity Extension Date and, on such date, the Company fails to pay the principal amount of the Promissory Note, along with all accrued but unpaid interest thereon, then the Initial Extension Maturity Date shall automatically be extended to December 1, 2012 (the &#147;<u>Second Maturity Date</u>&#148;). If the Promissory Note is automatically extended to the Secondary Maturity Date, then the Company shall pay to the holder of the Promissory Note an extension payment equal to 100,000 shares of Common Stock (the &#147;<u>Extension Payment</u>&#148;).</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company may prepay the Promissory Note, in whole or in part, at any time prior to Initial Extension Maturity Date, or the Second Maturity Date, as then applicable, by paying a prepayment penalty to the Holder equal to 100,000 shares of the Common Stock (the &#147;<u>Prepayment Penalty</u>&#148;). However, in the event the Company is required to pay the Extension Payment, any Prepayment Penalty that the Company would otherwise be required to pay to the holder of the Note will be waived.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>As of November 9, 2012, the Company has issued 50,000 shares of Common Stock as required by the Promissory Note. The Company intends to issue the Extension Payment of 100,000 shares on December 1, 2012.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 6 - SUBSEQUENT EVENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>On November 2, 2012, the Board of Directors of Bullfrog Gold Corp. (the &#147;Company&#148;) approved a unilateral re-pricing of warrants to purchase a total of 4,563,625 shares of the Company&#146;s common stock that were originally issued as part of the Company&#146;s private placement on September 30, 2011 (the &#147;Original PIPE&#148;) with an original exercise price of $0.60. Pursuant to the re-pricing, the warrants were unilaterally amended by the Board of Directors to reduce the exercise price of each warrant to $0.40, which is above the closing price of $0.38 price of the Company&#146;s common stock on November 2, 2012. The number of shares and expiration period of the warrants were not altered. Mr. David Beling, the Company&#146;s President and Chief Executive Officer, was an investor in the Original PIPE and received 100,000 warrants as part of his investment in the Original PIPE that were repriced on November 2, 2012. Other than Mr. Beling, none of the Company&#146;s directors and officers received warrants in the Original PIPE </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Interim Disclosure</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (&quot;SEC&quot;). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company's management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company's management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Principles of Consolidation</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The consolidated financial statements include the accounts of Bullfrog Gold Corp., as of the date of the reverse merger, and its wholly owned subsidiary, Standard Gold Corp. All significant inter-entity balances and transactions have been eliminated in consolidation.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Going Concern and Management&#146;s Plans</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company has incurred losses from operations since inception and has an accumulated deficit of $3,437,024 as of September 30, 2012. The Company&#146;s financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company&#146;s continuation as a going concern is dependent upon attaining profitable operations through achieving revenue growth. However, the Company will now have additional expenses as a result of it being a public company. The September 30, 2011 closing of the private placement of the Company&#146;s securities for $3,650,900 (the &#147;Private Placement&#148;) included the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis.&#160;&#160; The Company believes it will need to find additional sources of financing to meet its obligations through December 31, 2012.&#160; There are no assurances that the Company will be successful in meeting its cash flow requirements. We are currently in the due diligence stage of negotiating a debt facility that will finance the general and administrative expense along with the projected costs of exploring the Newsboy project through 2013.&#160; In addition, we are seeking additional financing of approximately $2,000,000 of private equity financing to fund our general corporate expenses as well as investor relation programs.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Cash and Cash Equivalents and Concentration</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company&#146;s account at this institution is insured by the Federal Deposit Insurance Corporation (&quot;FDIC&quot;) up to $250,000. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At September 30, 2012, the Company&#146;s cash balance was approximately $29,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate at least annually the rating of the financial institution in which it holds deposits.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Use of Estimates</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Mineral Property Acquisition and Exploration Costs</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Exploration Stage Company</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company complies with Accounting Standards Codification (&#147;ASC&#148;) 915-235-50 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an exploration stage enterprise.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Fair Value Measurement</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#183;</p> </td> <td width="72%" valign="top" style='width:72.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Level 1<i> - </i>Valuation based on quoted market prices in active markets for identical assets and liabilities.</p> </td> </tr> <tr> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#183;</p> </td> <td width="72%" valign="top" style='width:72.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Level 2<i> - </i>Valuation based on quoted market prices for similar assets and liabilities in active markets.</p> </td> </tr> <tr> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="3%" valign="top" style='width:3.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#183;</p> </td> <td width="72%" valign="top" style='width:72.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Level 3<i> - </i>Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management&#146;s best estimate of what market participants would use as fair value.</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company does not have any assets or liabilities measured using Level 1 or 2 inputs. The Company&#146;s Level 3 financial liabilities measured at fair value consisted of the warrant liability as of September 30, 2012. See Note 3.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Fair Value of Financial Instruments</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts payable, and other liabilities and the warrant liability is already recorded at fair value.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Income Taxes</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>Income taxes are accounted for under the asset and liability method in accordance with ASC 740<i>, &quot;Income Taxes&quot;. </i>Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of September 30, 2012 or December 31, 2011. The periods ended December 31, 2011 and 2010 are open to examination by taxing authorities.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Long Lived Assets</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Preferred Stock</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company accounts for its preferred stock under the provisions of Accounting Standards Codification on <i>Distinguishing Liabilities from Equity</i>, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company&#146;s obligation to redeem these instruments could result in a change in classification.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Derivative Financial Instruments</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>The Company accounts for derivative instruments in accordance with FASB ASC 815, <i>Derivatives and Hedging</i> (&#147;ASC 815&#148;), which requires additional disclosures about the Company&#146;s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Stock-Based Compensation</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of stock are reserved for such purpose.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><u>Earnings (Loss) per Common Share</u></b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The following table shows basic and diluted earnings per share</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="192" colspan="2" valign="top" style='width:2.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Three Months Ended</p> </td> <td width="199" colspan="2" valign="top" style='width:149.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Nine Months Ended</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/12</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/11</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/12</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/11</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic and Diluted Earnings (Loss) per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Earnings (loss) per common share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$419,574</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(164,021)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(605,098)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(202,184)</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic weighted average shares outstanding</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>30,120,879</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>11,078,539</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>29,982,436</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9,283,974</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Dilutive effect of common stock equivalents</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,210,164</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>34,707,418</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>11,078,539</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>29,982,436</p> </td> <td width="103" valign="bottom" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9,283,974</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic Earnings (Loss) Per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>.01</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.01)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Diluted Earnings (Loss) Per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>.01</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.01)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>4,586,539 of preferred shares were included in the computation of diluted shares outstanding for the three months ended September 30, 2012. 4,060,000 of stock options and 4,563,625 of warrants were not included in the diluted weighted average shares calculation because they were &#147;out-of-the money&#148; for the three month period ending September 30, 2012.&#160; In periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="192" colspan="2" valign="top" style='width:2.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Three Months Ended</p> </td> <td width="199" colspan="2" valign="top" style='width:149.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Nine Months Ended</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/12</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/11</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/12</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>9/30/11</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic and Diluted Earnings (Loss) per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Earnings (loss) per common share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$419,574</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(164,021)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(605,098)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$(202,184)</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic weighted average shares outstanding</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>30,120,879</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>11,078,539</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>29,982,436</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9,283,974</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Dilutive effect of common stock equivalents</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>13,210,164</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>34,707,418</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>11,078,539</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>29,982,436</p> </td> <td width="103" valign="bottom" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9,283,974</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Basic Earnings (Loss) Per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>.01</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.01)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> </tr> <tr> <td width="343" valign="top" style='width:257.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Diluted Earnings (Loss) Per Common Share</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>.01</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.01)</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> <td width="103" valign="top" style='width:77.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(.02)</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>Recipient</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>Options</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>Strike Price</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>Term</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Officer</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,250,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>(1)</p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Officer</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>200,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Consultant</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>50,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Consultant</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>160,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Consultant</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>600,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Consultant</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>600,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Director</p> </td> <td width="16%" valign="top" style='width:16.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,200,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$0.40</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10 years</p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0in 0in 1.5pt 0in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>(2)</p> </td> </tr> <tr> <td width="23%" valign="top" style='width:23.0%;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>TOTAL</p> </td> <td width="16%" valign="top" style='width:16.0%;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>4,060,000</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="8%" valign="top" style='width:8.0%;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="21%" colspan="2" valign="bottom" style='width:21.92%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><font style='display:none'>.</font>Options</p> </td> <td width="1%" valign="bottom" style='width:1.2%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="16%" colspan="2" valign="bottom" style='width:16.74%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Exercise Price</p> </td> <td width="1%" valign="bottom" style='width:1.2%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="17%" colspan="2" valign="bottom" style='width:17.76%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Volatility</p> </td> <td width="1%" valign="bottom" style='width:1.22%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="16%" colspan="2" valign="bottom" style='width:16.8%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Risk Free Interest Rate</p> </td> <td width="1%" valign="bottom" style='width:1.22%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="21%" colspan="2" valign="bottom" style='width:21.92%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Fair Value</p> </td> </tr> <tr> <td width="6%" valign="bottom" style='width:6.34%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="15%" valign="bottom" style='width:15.6%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>4,060,000</p> </td> <td width="1%" valign="bottom" style='width:1.2%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="6%" valign="bottom" style='width:6.34%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="10%" valign="bottom" style='width:10.4%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.40</p> </td> <td width="1%" valign="bottom" style='width:1.2%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="6%" valign="bottom" style='width:6.36%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="11%" valign="bottom" style='width:11.4%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>78.5%</p> </td> <td width="1%" valign="bottom" style='width:1.22%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="6%" valign="bottom" style='width:6.36%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="10%" valign="bottom" style='width:10.44%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1.74%</p> </td> <td width="1%" valign="bottom" style='width:1.22%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="6%" valign="bottom" style='width:6.36%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="15%" valign="bottom" style='width:15.56%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,812,203</p> </td> </tr> <tr> <td width="47" style='border:none'></td> <td width="117" style='border:none'></td> <td width="9" style='border:none'></td> <td width="47" style='border:none'></td> <td width="78" style='border:none'></td> <td width="9" style='border:none'></td> <td width="48" style='border:none'></td> <td width="85" style='border:none'></td> <td width="9" style='border:none'></td> <td width="48" style='border:none'></td> <td width="78" style='border:none'></td> <td width="9" style='border:none'></td> <td width="48" style='border:none'></td> <td width="116" style='border:none'></td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="53%" valign="bottom" style='width:53.56%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>&#160; </p> </td> <td width="0%" valign="top" style='width:.98%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="10%" colspan="2" valign="bottom" style='width:10.24%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Options</p> </td> <td width="1%" valign="top" style='width:1.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="1%" valign="top" style='width:1.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="9%" colspan="2" valign="bottom" style='width:9.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Exercise </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Price</p> </td> <td width="1%" valign="top" style='width:1.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="1%" valign="top" style='width:1.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="10%" colspan="2" valign="bottom" style='width:10.82%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Remaining </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Contractual </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Life (Years)</p> </td> <td width="1%" valign="top" style='width:1.0%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="10%" valign="bottom" style='width:10.42%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Aggregate</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Intrinsic</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Value</p> </td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2011</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>4,060,000</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.40</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9.75</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$2,233,000</p> </td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Granted</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'></td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'></td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercised</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'></td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'></td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Forfeited</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'></td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'></td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Cancelled</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'></td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'></td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at September 30, 2012</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>4,060,000</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.40</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9.00</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'></td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options exercisable at September 30, 2012</p> </td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>2,436,000</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="7%" valign="bottom" style='width:7.72%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.40</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>9.00</p> </td> <td width="1%" valign="bottom" style='width:1.0%;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'><font style='display:none'>]</font></p> </td> </tr> <tr> <td width="53%" valign="bottom" style='width:53.56%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options expected to vest</p> </td> <td width="0%" valign="bottom" style='width:.98%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="0%" valign="bottom" style='width:.98%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="9%" valign="bottom" style='width:9.26%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>4,060,000</p> </td> <td width="1%" valign="bottom" style='width:1.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.28%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="7%" valign="bottom" style='width:7.72%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.36%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="9%" valign="bottom" style='width:9.46%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="1%" valign="bottom" style='width:1.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="10%" valign="bottom" style='width:10.42%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="99%" style='width:99.74%'> <tr> <td width="80%" valign="bottom" style='width:80.42%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>&#160; </p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="18%" colspan="2" valign="bottom" style='width:18.28%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Warrant Liability Amount</p> </td> <td valign="bottom" style='border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at December 31, 2011</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="17%" valign="bottom" style='width:17.12%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>2,361,925</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercise or expiration</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="17%" valign="bottom" style='width:17.12%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Change in fair value of warrant liability</p> </td> <td width="0%" valign="bottom" style='width:.52%;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> <td width="17%" valign="bottom" style='width:17.12%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'> (2,210,475)</p> </td> <td width="0%" valign="bottom" style='width:.78%;padding:0in 0in 1.5pt 0in'></td> </tr> <tr> <td width="80%" valign="bottom" style='width:80.42%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Ending balance at September 30, 2012</p> </td> <td width="0%" valign="bottom" style='width:.52%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&#160;</p> </td> <td width="1%" valign="bottom" style='width:1.16%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="17%" valign="bottom" style='width:17.12%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>151,450</p> </td> <td width="0%" valign="bottom" style='width:.78%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="39%" valign="top" style='width:39.04%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>&#160; </p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Inception</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>December 31, 2011</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>September 30, 2012</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Fair market value of common stock</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.95</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.24</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercise price</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$0.60</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Term (1)</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3 Years</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.75 Years</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00 Years</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Volatility range (2)</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>68.5%</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>63.9%</p> </td> <td width="20%" valign="top" style='width:20.32%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>69.7%</p> </td> </tr> <tr> <td width="39%" valign="top" style='width:39.04%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Risk-free rate (3)</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50%</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50%</p> </td> <td width="20%" valign="top" style='width:20.32%;border:none;border-bottom:solid black 1.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.25%</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="50%" style='width:50.0%'> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>Payment Date</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Payment Amount</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Effective Date (June 11, 2012)</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$25,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Six months after Effective Date</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$25,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2013</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$30,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2014</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$35,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2015</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$40,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2016</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$45,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2017</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$50,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2018</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$55,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2019</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$60,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2020</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$65,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2021</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$70,000</p> </td> </tr> <tr> <td width="25%" valign="top" style='width:25.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>June 11, 2022</p> </td> <td width="16%" valign="top" style='width:16.0%;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$75,000</p> </td> </tr> </table> </div> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr> <td width="10%" valign="bottom" style='width:10.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><font style='display:none'>.</font>Product</p> </td> <td width="15%" valign="bottom" style='width:15.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Base net smelter return royalty</p> </td> <td width="23%" valign="bottom" style='width:23.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average market price</p> </td> <td width="19%" valign="bottom" style='width:19.0%;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Maximum buy-down net smelter return royalty</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>GOLD</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Less than $1,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$1,201 to $1,600/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$1,601 to $2,000/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,001 to $2,400/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.25</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,401 to $2,800/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$2,801 to $3,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>4.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Greater than $3,200/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'></td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>SILVER</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Less than $15/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$15.01 to $30/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$30.01 to $45/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$45.01 to $60/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.25</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$60.01 to $75/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.50</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>3.50</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$75.01 to $90/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.75</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>4.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Greater than $90/troy oz.</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'></td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'></td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; </p> </td> </tr> <tr> <td width="10%" valign="top" style='width:10.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>OTHER</p> </td> <td width="15%" valign="top" style='width:15.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2.00</p> </td> <td width="23%" valign="top" style='width:23.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>As determined by products</p> </td> <td width="19%" valign="top" style='width:19.0%;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.00</p> </td> </tr> </table> </div> 1 for 5.75 51.74495487 for one 50.74495487 9850 5240 4920 4640 3437024 3650900 940900 29000 419574 -202184 -605098 -164021 30120879 9283974 29982436 11078539 13210164 34707418 9283974 29982436 11078539 .01 -.02 -.02 -.01 .01 -.02 -.02 -.01 4586539 4060000 4563625 0.9000 923077 0.1000 100000 0.0300 1678612 545 shares are reflective of a reverse split of Standard Gold&#146;s common stock, effective August 26, 2011, on a 1 for 3.25 basis 4000000 45000 1.0000 3425000 500000 2925000 150000 150000 200000 200000 250000 250000 300000 300000 350000 350000 425000 0.0200 1250000 14357135 13645596 711539 9127250 0.40 each unit consisting of (i) one share of the Company&#146;s common stock (except that certain investors elected to receive in lieu of common stock, one share of the Company&#146;s Series A Convertible Preferred Stock) and (ii) a three year warrant to purchase shares of common stock equal to 50% of the number of shares purchased in the Private Placement at an exercise price of $0.60 per share 5252250 3875000 3650900 940900 2710000 22510919 11000000 9000000 13383 201363 214746 4500000 The modification to the option agreements increased the vesting period for only certain option agreements from one year to two years 0.40 10 4060000 0.7850 0.0174 1812203 724881 2436000 0.40 5000000 100000 151450 2361925 -2210475 0.24 0.95 0.60 0.60 0.60 0.60 2.00 2.75 3 0.6970 0.6390 0.6850 0.0025 0.0050 0.0050 575000 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This element refers to percenarge of property interest acquired. This element refers to amount paid for the remaining property interest acquired Shares of common stock issued and outstanding immediately prior to the closing of the Merger that were converted into securities of the existing company Amount of shares of common stock that were converted into the right to receive common stock on a one for one basis in the existing company Amount of shares of common stock that were converted into the right to receive preferred stock on a one for one basis in the existing company Represents the expense recognized at end of the period arising from equity-based compensation arrangements. The value of the financial instrument(s) that the original debt is being converted into in a noncash (or part noncash) transaction. 'Part noncash' refers to that portion of the transaction not resulting in cash receipts or cash payments in the period. The value of the financial instrument(s) that the original debt is being converted into in a noncash (or part noncash) transaction. 'Part noncash' refers to that portion of the transaction not resulting in cash receipts or cash payments in the period. The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period. The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period, assuming conversion of common stock equivalents. Dilutive effect of common stock equivalents The consolidated profit or loss for the period Description of the reverse stock split arrangement. Also provide the retroactive effect given by the reverse split that occurs after the balance sheet date but before the release of financial statements. This element refers to fair value of common stock. Period the instrument, asset or liability is expected to be outstanding Measure of dispersion, in percentage terms (for instance, the standard deviation or variance), for a given stock price. Risk-free interest rate assumption used in valuing an instrument. Fair value of options outstanding at end of period. Represents the ratio of forward split of outstanding common stock to directors. Details pertaining the total land holdings under project. Represents minimum total additional amount to be spent for the benefit of the Klondike Project. Represents additional amount to be spent for the benefit of the Klondike Project. Represents additional amount to be spent for the benefit of the Klondike Project. Represents additional amount to be spent for the benefit of the Klondike Project. Represents additional amount to be spent for the benefit of the Klondike Project. Represents additional amount to be spent for the benefit of the Klondike Project. Details pertaining the total land holdings under project. Represents revised in the land holdings under project. This element refers to numbers of prior merger shares available for resale categories under public float. This element refers to numbers of prior merger remaining shares avavilable. number of stock option shares that were not included in the diluted weighted average shares calculation because they were ""out-of-the money"" for the quarter. This element refers to percenarge of remaining property interest acquired This element refers to percentage of net smelter return royalty. This element refers to percenarge of property interest acquired. number of preferred shares that were included in the computation of diluted shares outstanding This element refers to pre-merger liabilities. Per unit amount received in private placement offering. The cash inflow associated with the amount received from entity's raising of debt via private rather than public placement. The cash inflow associated with the amount received from entity's raising of capital via private rather than public placement. This element refers to collection of proceeds from a note payable. The Initial Maturity Date of the note may be extended by paying to the Holder an initial note extension payment equal to 50,000 shares of the Company's common stock Number of shares approved for purchase with re-pricing of warrants. Common stock that were originally issued as part of a private placement Pursuant to the re-pricing, the warrants were unilaterally amended by the Board of Directors to reduce the exercise price of each warrant Pursuant to the re-pricing, number of warrants that were reissued to original investors Represents the ratio of reverse split of outstanding common stock. Risk-free interest rate assumption used in valuing an instrument. The number of shares issued or sold by the subsidiary or equity method investee per stock transaction, consisiting of common stock. The number of shares issued or sold by the subsidiary or equity method investee per stock transaction, consisiting of preferred stock. This element refers to percentage of net smelter return royalty. This element refers to numbers of shares cancelled under split off. Common stock issued for cash Number of shares of stock issued during the period that is attributable to transactions involving issuance of stock not separately disclosed. Proceeds from Common stock issued for cash Weighted average price at which grantees can acquire the shares reserved for issuance under the stock option plan. Weighted average remaining contractual term for option awards outstanding The number of shares reserved for issuance under stock option agreements awarded under the plan that validly exist and are outstanding as of the balance sheet date, including vested options. Stock and warrant units issued in private placement This element refers to advance consideration received claim for newsboy project property. This element refers to total received consideration claim for newsboy project property. Measure of dispersion, in percentage terms (for instance, the standard deviation or variance), for a given stock price. number of Warrant shares that were not included in the diluted weighted average shares calculation because they were ""out-of-the money"" for the quarter. EX-101.PRE 8 bfgc-20120930_pre.xml XBRL PRESENTATION FILE XML 9 R39.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents and Concentration (Details) (USD $)
Sep. 30, 2012
Cash balance with FDIC $ 29,000
XML 10 R48.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT (Details) (USD $)
Jul. 11, 2012
Klondike Project acquisition total purchase price (by June 11, 2022) $ 575,000
Minimum additional amount to be spent for Klondike Project, total 850,000
Amount to be spent for Klondike Project prior to June 11, 2013 100,000
Additional amount to be spent for Klondike Project prior to June 11, 2014 150,000
Additional amount to be spent for Klondike Project prior to June 11, 2015 200,000
Additional amount to be spent for Klondike Project prior to June 11, 2016 200,000
Additional amount to be spent for Klondike Project prior to June 11, 2017 $ 200,000
XML 11 R46.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE FINANCIAL INSTRUMENTS: Derivative warrants fair value (Details) (USD $)
9 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Warrant liability amount $ 151,450 $ 2,361,925
Change in fair value of warrant liability $ (2,210,475)  
XML 12 R33.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE FINANCIAL INSTRUMENTS: Derivative warrants significant inputs (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Derivative warrants significant inputs

 

. 

Inception

December 31, 2011

September 30, 2012

Fair market value of common stock

$0.60

$0.95

$0.24

Exercise price

$0.60

$0.60

$0.60

Term (1)

3 Years

2.75 Years

2.00 Years

Volatility range (2)

68.5%

63.9%

69.7%

Risk-free rate (3)

0.50%

0.50%

0.25%

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Derivative Financial Instruments (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Derivative Financial Instruments

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with FASB ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

XML 15 R50.htm IDEA: XBRL DOCUMENT v2.4.0.6
NOTE PAYABLE (Details) (USD $)
Nov. 09, 2012
Sep. 05, 2012
Promissory Note   $ 200,000
Common stock issued for note extension $ 50,000  
XML 16 R42.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY (Details) (USD $)
0 Months Ended 1 Months Ended 2 Months Ended 3 Months Ended 12 Months Ended
Sep. 30, 2011
Nov. 30, 2011
Jun. 30, 2010
Aug. 25, 2011
Sep. 30, 2012
Dec. 19, 2011
Dec. 31, 2010
Sep. 28, 2011
Aug. 31, 2011
Aug. 30, 2011
May 01, 2011
Percentage of Bullfrog Project property interest             90.00%        
Acquisition of Bullfrog Project property, in shares             923,077        
Percentage of remaining Bullfrog Project property interest     10.00%                
Cash paid for remaining Bullfrog Project property interest     $ 100,000                
Percentage of Bullfrog Project net smelter return royalty                     3.00%
Common stock issued for cash       1,678,612              
Common stock issued for cash, proceeds       545              
Description of reverse stock split       shares are reflective of a reverse split of Standard Gold’s common stock, effective August 26, 2011, on a 1 for 3.25 basis              
Common stock issued for mineral claim purchase option                   4,000,000  
Exploration costs applied   45,000                  
Percentage of property interest in Newsboy Project property               100.00%      
Total consideration claim for Newsboy Project property               3,425,000      
Total advance consideration claim for Newsboy Project property               500,000      
Balance consideration claim for Newsboy Project property               2,925,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2012)               150,000      
Balance consideration claim for Newsboy Project property (Due July 1, 2012)               150,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2013)               200,000      
Balance consideration claim for Newsboy Project property (Due July 1, 2013)               200,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2014)               250,000      
Balance consideration claim for Newsboy Project property (Due July 1, 2014)               250,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2015)               300,000      
Balance consideration claim for Newsboy Project property (Due July 1, 2015)               300,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2016)               350,000      
Balance consideration claim for Newsboy Project property (Due July 1, 2016)               350,000      
Balance consideration claim for Newsboy Project property (Due January 1, 2017)               425,000      
Percentage of Newsboy property net smelter return royalty               2.00%      
Stock and warrant units issued in private placement               1,250,000      
Common stock to be converted, pursuant to merger 14,357,135                    
Common stock converted for common shares, pursuant to merger 13,645,596                    
Common stock converted into preferred shares, pursuant to merger 711,539                    
Number of units sold in private placement, total 9,127,250                    
Price per unit $ 0.40                    
Description of unit each unit consisting of (i) one share of the Company’s common stock (except that certain investors elected to receive in lieu of common stock, one share of the Company’s Series A Convertible Preferred Stock) and (ii) a three year warrant to purchase shares of common stock equal to 50% of the number of shares purchased in the Private Placement at an exercise price of $0.60 per share                    
Number of units sold in private placement, consisiting of common stock 5,252,250                    
Number of units sold in private placement, consisiting of preferred stock 3,875,000                    
Proceeds from private placement 3,650,900                    
Conversion of debt from private placement 940,900                    
Proceeds from debt conversion in private placement 2,710,000                    
Cancellation of shares, stock splits 22,510,919                    
Numbers of remaining shares of Bullfrog's pre-merger 11,000,000                    
Number of prior merger shares available for resale 9,000,000                    
Pre-merger liabilities 13,383                    
Collection of note payable 201,363                    
Reduction in additional paid-in-capital, as a result of the merger 214,746                    
Shares of common stock reserved for issuance 4,500,000                    
Description and terms of plan modification           The modification to the option agreements increased the vesting period for only certain option agreements from one year to two years          
Compensation expense related to stock options         $ 724,881            
Designated shares of Preferred Stock as Series A                 5,000,000    
Shares issued to third party consultant         100,000            
XML 17 R37.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
0 Months Ended
Jul. 25, 2011
Jul. 19, 2011
Apr. 04, 2011
Jun. 30, 2012
Jun. 11, 2012
Reverse stock split (ratio)     1 for 5.75    
Forward stock split (ratio)   51.74495487 for one      
Additional forward stock split for outstanding common shares 50.74495487        
Area acquired for exploration and potential development   9,850      
Newsboy project, number of land holdings in acres       5,240  
Newsboy project, revised number of land holdings, acres       4,920  
Klondike project, number of land holdings in acres         4,640
XML 18 R52.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTATEMENT - Restated financial statements (Details) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Consolidated Balance Sheet as of September 30, 2012    
Deficit accumulated during the exploration stage $ (2,873,723) $ (2,268,625)
As Originally Reported
   
Consolidated Balance Sheet as of September 30, 2012    
Additional paid in capital 4,055,452  
Deficit accumulated during the exploration stage (3,437,024)  
Consolidated Balance Sheet as of December 31, 2011    
Additional paid in capital   3,208,096
Deficit accumulated during the exploration stage   (2,831,926)
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012    
Revaluation of warrant liability 520,478  
Net loss (3,437,024)  
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012    
Net loss (3,437,024)  
Revaluation of warrant liability (520,478)  
Adjustment
   
Consolidated Balance Sheet as of September 30, 2012    
Additional paid in capital (563,301)  
Deficit accumulated during the exploration stage 563,301  
Consolidated Balance Sheet as of December 31, 2011    
Additional paid in capital (563,301)  
Deficit accumulated during the exploration stage 563,301  
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012    
Revaluation of warrant liability 563,301  
Net loss 563,301  
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012    
Net loss 563,301  
Revaluation of warrant liability (563,301)  
As Restated
   
Consolidated Balance Sheet as of September 30, 2012    
Additional paid in capital 3,492,151  
Deficit accumulated during the exploration stage (2,873,723)  
Consolidated Balance Sheet as of December 31, 2011    
Additional paid in capital 2,644,795  
Deficit accumulated during the exploration stage (2,268,625)  
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012    
Revaluation of warrant liability 1,083,779  
Net loss (2,873,723)  
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012    
Net loss (2,873,723)  
Revaluation of warrant liability $ (1,083,779)  
XML 19 R47.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE FINANCIAL INSTRUMENTS: Derivative warrants significant inputs (Details) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Jan. 13, 2010
Fair market value of common stock $ 0.24 $ 0.95 $ 0.60
Exercise price, fair value assumption $ 0.60 $ 0.60 $ 0.60
Term, fair value assumption, in years 2.00 2.75 3
Volatility range, fair value assumption 69.70% 63.90% 68.50%
Risk-free rate, fair value assumption 0.25% 0.50% 0.50%
XML 20 R9.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT

NOTE 4 - ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT

 

On June 11, 2012, the Company entered into an option agreement with Arden Larson to purchase a 100% interest in the Klondike Project (“Klondike”) that included 64 unpatented mining claims, to which the Company recently staked an additional 100 claims.  Klondike is located in the Alpha Mining District about 40 miles north of Eureka, Nevada.

 

The Company will pay a total of $575,000 to Mr. Larson on the following schedule:

 

.Payment Date

Payment Amount

Effective Date (June 11, 2012)

$25,000

Six months after Effective Date

$25,000

June 11, 2013

$30,000

June 11, 2014

$35,000

June 11, 2015

$40,000

June 11, 2016

$45,000

June 11, 2017

$50,000

June 11, 2018

$55,000

June 11, 2019

$60,000

June 11, 2020

$65,000

June 11, 2021

$70,000

June 11, 2022

$75,000

 

The Company has the option to buy-down the royalty component by making payments of $500,000 per 0.25% of base net smelter return royalties for gold, silver and other products to Mr. Larson based on the following schedule:

 

.Product

Base net smelter return royalty

Average market price

Maximum buy-down net smelter return royalty

GOLD

1.00

Less than $1,200/troy oz.

0.50

1.50

$1,201 to $1,600/troy oz.

0.75

2.00

$1,601 to $2,000/troy oz.

1.00

2.50

$2,001 to $2,400/troy oz.

1.25

3.00

$2,401 to $2,800/troy oz.

1.50

3.50

$2,801 to $3,200/troy oz.

1.75

4.00

Greater than $3,200/troy oz.

2.00

 

 

SILVER

1.00

Less than $15/troy oz.

0.50

1.50

$15.01 to $30/troy oz.

0.75

2.00

$30.01 to $45/troy oz.

1.00

2.50

$45.01 to $60/troy oz.

1.25

3.00

$60.01 to $75/troy oz.

1.50

3.50

$75.01 to $90/troy oz.

1.75

4.00

Greater than $90/troy oz.

2.00

 

 

OTHER

2.00

As determined by products

1.00

 

In addition, the Company is committed to spend no less than $850,000 for the benefit of the Klondike Project on the following schedule:

 

 

1.

$100,000 prior to June 11, 2013

 

 

 

 

2.

An additional $150,000 prior to June 11, 2014

 

 

 

 

3.

An additional $200,000 prior to June 11, 2015

 

 

 

 

4.

An additional $200,000 prior to June 11, 2016

 

 

 

 

5.

An additional $200,000 prior to June 11, 2017

 

Should the Company choose not to maintain the work commitment and option to the property, the Company can forego future payments to Mr. Larson without penalty.

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STOCKHOLDER'S EQUITY: Summary of stock options (Details) (USD $)
Sep. 30, 2012
Option strike price $ 0.40
Option term, in years 10
Total stock options outstanding at period end 4,060,000
XML 23 R29.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY: Summary of stock options (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Summary of stock options

 

.Recipient

Options

Strike Price

Term

 

Officer

1,250,000

$0.40

10 years

(1)

Officer

200,000

$0.40

10 years

 

Consultant

50,000

$0.40

10 years

 

Consultant

160,000

$0.40

10 years

 

Consultant

600,000

$0.40

10 years

 

Consultant

600,000

$0.40

10 years

 

Director

1,200,000

$0.40

10 years

(2)

TOTAL

4,060,000

 

 

 

XML 24 R28.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings (Loss) per Common Share: Basic and diluted earnings per share (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Basic and diluted earnings per share

 

.

Three Months Ended

Nine Months Ended

 

9/30/12

9/30/11

9/30/12

9/30/11

Basic and Diluted Earnings (Loss) per Common Share

 

 

 

 

Earnings (loss) per common share

$419,574

$(164,021)

$(605,098)

$(202,184)

Basic weighted average shares outstanding

30,120,879

11,078,539

29,982,436

9,283,974

Dilutive effect of common stock equivalents

13,210,164

--

--

--

Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents

34,707,418

11,078,539

29,982,436

9,283,974

Basic Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

Diluted Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

XML 25 R44.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY: Option pricing assumptions (Details) (USD $)
Sep. 30, 2012
Volatility rate, stock options 78.50%
Risk Free Interest Rate, stock options 1.74%
Fair Value, stock options $ 1,812,203
XML 26 R30.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY: Option pricing assumptions (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Option pricing assumptions

 

.Options

 

Exercise Price

 

Volatility

 

Risk Free Interest Rate

 

Fair Value

 

4,060,000

 

$

0.40

 

 

78.5%

 

 

1.74%

 

$

1,812,203

XML 27 R31.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY: Summary of stock option changes (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Summary of stock option changes

 

. 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

Aggregate

Intrinsic

Value

Balance at December 31, 2011

4,060,000

$

0.40

9.75

$2,233,000

Granted

-

-

-

Exercised

-

-

-

Forfeited

-

-

-

Cancelled

-

-

-

Balance at September 30, 2012

4,060,000

$

0.40

9.00

Options exercisable at September 30, 2012

2,436,000

$

0.40

9.00

]

Options expected to vest

4,060,000

XML 28 R8.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE FINANCIAL INSTRUMENTS
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 3 - DERIVATIVE FINANCIAL INSTRUMENTS

 

In applying current accounting standards to the financial instruments issued in the Private Placement, the Company first considered the classification of the Series A Preferred Stock under ASC 480 Distinguishing Liabilities from Equity, and the Warrants under ASC 815 Derivatives and Hedging. The Series A Preferred Stock is perpetual preferred stock without redemption or dividend provisions, contingent or otherwise. Further, the Series A Preferred Stock is convertible into a fixed number of shares of Common Stock with adjustments to the conversion price solely associated with equity restructuring events such a stock splits and recapitalization. Generally redemption provisions that provide for the mandatory payment of cash to the Investor to settle the contract or certain provisions that cause the number of linked shares of Common Stock to vary result in liability classification; and, in some instances, classification outside of stockholders’ equity. There being no such provisions associated with the Series A Preferred Stock, it is classified as a component of stockholders’ equity. The warrants were also evaluated for purposes of classification. These financial instruments embody two features that are not consistent with the concept of stockholders’ equity. First, the exercise price of $0.60 is subject to adjustment upon the issuance of common stock or common share linked contracts at prices below the contractual exercise prices. Second, the financial instruments extend a fair-value (defined as Black-Scholes) cash redemption right to the Investors in the event of certain fundamental transactions, certain of which are not within the control of the Company. This particular provision is a written put and current accounting standards provide that such provisions are not consistent with the concept of stockholders’ equity. As a result, the Warrants require classification in liability as derivative warrants. Derivative warrants are carried both initially and subsequently at fair value with changes in fair value reflected in income.

 

. 

 

Warrant Liability Amount

 

Balance at December 31, 2011

 

$

2,361,925

 

Exercise or expiration

 

 

--

 

Change in fair value of warrant liability

 

 

(2,210,475)

Ending balance at September 30, 2012

 

$

151,450

 

 

The derivative warrants were calculated using Black-Scholes valuation technique. Significant inputs into this technique are as follows:

 

. 

Inception

December 31, 2011

September 30, 2012

Fair market value of common stock

$0.60

$0.95

$0.24

Exercise price

$0.60

$0.60

$0.60

Term (1)

3 Years

2.75 Years

2.00 Years

Volatility range (2)

68.5%

63.9%

69.7%

Risk-free rate (3)

0.50%

0.50%

0.25%

 

(1) The term is the remaining years until expiration of warrants.

(2) The Company does not have a trading market value upon which to base its forward-looking volatility. Accordingly, the Company selected a peer company that provided a reasonable basis upon which to calculate volatility.

(3) The risk-free rate used represents the yield on zero coupon US Government Securities with a period to maturity consistent with the interval described in (2), above.

 

Warrants contain limitations on exercise, including the limitation that the holders may not convert their warrants to the extent that upon exercise the holder, together with its affiliates, would own in excess of 4.99% of our outstanding shares of common stock (subject to an increase upon at least 61-days’ notice by the subscriber to us, of up to 9.99%). For a period of twelve months from the date of issuance, the warrants issued in the Private Placement contain standard anti-dilution protection in the event the Company’s issues common stock at a lower per share price. The warrants may be exercised on a cashless basis in the event there is no effective registration statement registering the resale of the underlying common stock at any time after the Effectiveness Date.

 

The second classification-related accounting consideration related to the possibility that the conversion option embedded in the Series A Preferred Stock may require classification outside of stockholders’ equity. Generally, an embedded feature in a hybrid financial instrument (such as the Series A Preferred Stock) that both meets the definition of a derivative financial instrument and is not clearly and closely related to the host contract in term of risks would require bifurcation and accounting under derivative standards. The embedded conversion option is a feature that embodies risks of equity. The Company has concluded that the Series A Preferred Stock is a contract that affords solely equity risks.

XML 29 R32.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE FINANCIAL INSTRUMENTS: Derivative warrants fair value (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Derivative warrants fair value

 

. 

 

Warrant Liability Amount

 

Balance at December 31, 2011

 

$

2,361,925

 

Exercise or expiration

 

 

--

 

Change in fair value of warrant liability

 

 

(2,210,475)

Ending balance at September 30, 2012

 

$

151,450

 

XML 30 R40.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings (Loss) per Common Share: Basic and diluted earnings per share (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Earnings (loss) for the period $ 419,574 $ (164,021) $ (605,098) $ (202,184)
Basic weighted average shares outstanding 30,120,879 11,078,539 29,982,436 9,283,974
Dilutive effect of common stock equivalents 13,210,164      
Diluted weighted average common shares outstanding 34,707,418 11,078,539 29,982,436 9,283,974
Basic Earnings (Loss) Per Common Share $ 0.01 $ (0.01) $ (0.02) $ (0.02)
Diluted Earnings (Loss) Per Common Share $ 0.01 $ (0.01) $ (0.02) $ (0.02)
XML 31 R53.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTATEMENT (Details Narrative) (USD $)
Sep. 30, 2011
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Fair value of warrant liability $ 1,235,229
XML 32 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED BALANCE SHEETS (USD $)
Sep. 30, 2012
Dec. 31, 2011
Current assets    
Cash and cash equivalents $ 29,005 $ 1,815,055
Deposits 10,875 151,125
Prepaid Expense 24,026 46,619
Total current assets 63,906 2,012,799
Other assets    
Mineral properties 975,700 800,700
Total assets 1,039,606 2,813,499
Current liabilities    
Accounts payable 56,170 61,294
Other liabilities 10,084 10,661
Notes payable 200,000  
Total current liabilities 266,254 71,955
Warrant liability 151,450 2,361,925
Total liabilities 417,704 2,433,880
Stockholders' equity    
Preferred stock value 459 459
Common stock value 3,015 2,990
Additional paid-in-capital 3,492,151 2,644,795
Deficit accumulated during the exploration stage (2,873,723) (2,268,625)
Total stockholders' equity 621,902 379,619
Total liabilities and stockholders' equity $ 1,039,606 $ 2,813,499
XML 33 R45.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY: Summary of stock option changes (Details) (USD $)
0 Months Ended
Sep. 30, 2012
Options exercisable 2,436,000
Weighted average exercise price, options exercisable $ 0.40
Weighted average remaining contractual life (years), options exercisable $ 9.00
XML 34 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Business and Reverse Merger and Recapitalization

On September 30, 2011, Standard Gold Corp. (“Standard Gold”) entered into a Merger Agreement (the “Merger”) with a public shell company, Bullfrog Gold Corp. (“Bullfrog Gold”), formerly known as Kopr Resources Corp. pursuant to which Standard Gold merged with and into a wholly owned subsidiary of Bullfrog Gold as more fully described in Note 2. Such Merger caused Standard Gold to become a wholly-owned subsidiary of Bullfrog Gold. The Merger is being accounted for as a reverse-merger and recapitalization and Standard Gold is considered the accounting acquirer for accounting purposes and Bullfrog Gold the acquired company. The business of Standard Gold became the business of Bullfrog Gold. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the Merger are those of Standard Gold and are recorded at the historical cost basis of Standard Gold. Bullfrog Gold Corp. along with Standard Gold Corp. is referred to hereafter as “the Company”.

 

REVERSE STOCK SPLIT

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

 

FORWARD STOCK SPLIT

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

 

Bullfrog Gold was incorporated under the laws of the State of Delaware on July 23, 2007 as Kopr Resources Corp. On July 19, 2011, the Company’s board of directors approved the filing on an Amended and Restated Certificate of Incorporation of Bullfrog Gold with the Secretary of State of the State of Delaware to authorize (i) the change of the name of the Company to "Bullfrog Gold Corp." from "Kopr Resources Corp.” (ii) the increase in the authorized capital stock to 250,000,000 shares and (iii) the change in par value of the capital stock to $0.0001 per share. The Company is in the exploration stage of its resource business. On July 19, 2011, the Company’s board of directors also approved the amendment and restatement of bylaws in order to, among other things, include provisions for board and shareholder meetings.

 

The Company is a junior exploration company primarily engaged in the acquisition and exploration of properties that may contain gold mineralization in the United States. The Company’s target properties are those that have been the subject of historical exploration. The Company has acquired State exploration permits and Federal patented and unpatented mining claims in the states of Arizona and Nevada for the purpose of exploration and potential development of gold, silver and other minerals on a total of approximately 9,850 acres. In June 2012 the Company did not renew one of the four state exploration permits in Arizona for the Newsboy Project.  This reduced the land holdings at the Newsboy project from approximately 5,240 acres to approximately 4,920 acres.  In June 2012 the Company acquired the option to purchase the Klondike Project in Nevada that included 64 unpatented claims to which the Company added an additional 168 claims, or a total of 4,640 acres.  See Note 4 in the Notes to Consolidated Financial Statements for additional details concerning the Klondike Project.  The Company plans to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.

 

The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties with the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.

 

Interim Disclosure

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company's management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

 

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company's management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

 

Principles of Consolidation

The consolidated financial statements include the accounts of Bullfrog Gold Corp., as of the date of the reverse merger, and its wholly owned subsidiary, Standard Gold Corp. All significant inter-entity balances and transactions have been eliminated in consolidation.

 

Going Concern and Management’s Plans

The Company has incurred losses from operations since inception and has an accumulated deficit of $2,873,723 as of September 30, 2012. The Company’s financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s continuation as a going concern is dependent upon attaining profitable operations through achieving revenue growth. However, the Company will now have additional expenses as a result of it being a public company. The September 30, 2011 closing of the private placement of the Company’s securities for $3,650,900 (the “Private Placement”) included the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis.   The Company believes it will need to find additional sources of financing to meet its obligations through December 31, 2012.  There are no assurances that the Company will be successful in meeting its cash flow requirements. We are currently in the due diligence stage of negotiating a debt facility that will finance the general and administrative expense along with the projected costs of exploring the Newsboy project through 2013.  In addition, we are seeking additional financing of approximately $2,000,000 of private equity financing to fund our general corporate expenses as well as investor relation programs.

 

Cash and Cash Equivalents and Concentration

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At September 30, 2012, the Company’s cash balance was approximately $29,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate at least annually the rating of the financial institution in which it holds deposits.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Mineral Property Acquisition and Exploration Costs

Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties.

 

Exploration Stage Company

The Company complies with Accounting Standards Codification (“ASC”) 915-235-50 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an exploration stage enterprise.

 

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

 

 

·

Level 1 - Valuation based on quoted market prices in active markets for identical assets and liabilities.

 

·

Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.

 

·

Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

 

The Company does not have any assets or liabilities measured using Level 1 or 2 inputs. The Company’s Level 3 financial liabilities measured at fair value consisted of the warrant liability as of September 30, 2012. See Note 3.

 

Fair Value of Financial Instruments

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts payable, and other liabilities and the warrant liability is already recorded at fair value.

 

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.

 

The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of September 30, 2012 or December 31, 2011. The periods ended December 31, 2011 and 2010 are open to examination by taxing authorities.

 

Long Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

 

Preferred Stock

The Company accounts for its preferred stock under the provisions of Accounting Standards Codification on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification.

 

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with FASB ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

 

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of stock are reserved for such purpose.

 

Earnings (Loss) per Common Share

 

The following table shows basic and diluted earnings per share

 

.

Three Months Ended

Nine Months Ended

 

9/30/12

9/30/11

9/30/12

9/30/11

Basic and Diluted Earnings (Loss) per Common Share

 

 

 

 

Earnings (loss) per common share

$419,574

$(164,021)

$(605,098)

$(202,184)

Basic weighted average shares outstanding

30,120,879

11,078,539

29,982,436

9,283,974

Dilutive effect of common stock equivalents

13,210,164

--

--

--

Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents

34,707,418

11,078,539

29,982,436

9,283,974

Basic Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

Diluted Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

 

4,586,539 of preferred shares were included in the computation of diluted shares outstanding for the three months ended September 30, 2012. 4,060,000 of stock options and 4,563,625 of warrants were not included in the diluted weighted average shares calculation because they were “out-of-the money” for the three month period ending September 30, 2012.  In periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.

XML 35 R35.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT: Schedule Of Buy Down Royalty Components (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Schedule Of Buy Down Royalty Components

 

.Product

Base net smelter return royalty

Average market price

Maximum buy-down net smelter return royalty

GOLD

1.00

Less than $1,200/troy oz.

0.50

1.50

$1,201 to $1,600/troy oz.

0.75

2.00

$1,601 to $2,000/troy oz.

1.00

2.50

$2,001 to $2,400/troy oz.

1.25

3.00

$2,401 to $2,800/troy oz.

1.50

3.50

$2,801 to $3,200/troy oz.

1.75

4.00

Greater than $3,200/troy oz.

2.00

 

 

SILVER

1.00

Less than $15/troy oz.

0.50

1.50

$15.01 to $30/troy oz.

0.75

2.00

$30.01 to $45/troy oz.

1.00

2.50

$45.01 to $60/troy oz.

1.25

3.00

$60.01 to $75/troy oz.

1.50

3.50

$75.01 to $90/troy oz.

1.75

4.00

Greater than $90/troy oz.

2.00

 

 

OTHER

2.00

As determined by products

1.00

XML 36 R22.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.

 

The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of September 30, 2012 or December 31, 2011. The periods ended December 31, 2011 and 2010 are open to examination by taxing authorities.

XML 37 R36.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTATEMENT (Tables)
3 Months Ended
Sep. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Restated financial statements
  As Originally Reported Adjustment As Restated
Consolidated Balance Sheet as of September 30, 2012      
       
Additional paid in capital $4,055,452 (563,301) $3,492,151
Deficit accumulated during the exploration stage (3,437,024) 563,301 (2,873,723)
       
Consolidated Balance Sheet as of December 31, 2011      
       
Additional paid in capital 3,208,096 (563,301) 2,644,795
Deficit accumulated during the exploration stage (2,831,926) 563,301 (2,268,625)
       
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012      
       
Revaluation of warrant liability 520,478 563,301 1,083,779
Net loss (3,437,024) 563,301 (2,873,723)
       
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012      
       
Net loss (3,437,024) 563,301 (2,873,723)
Revaluation of warrant liability (520,478) (563,301) (1,083,779)
       
XML 38 R24.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Preferred Stock (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Preferred Stock

Preferred Stock

The Company accounts for its preferred stock under the provisions of Accounting Standards Codification on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification.

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XML 40 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDER'S EQUITY
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
STOCKHOLDER'S EQUITY

NOTE 2 - STOCKHOLDER’S EQUITY

 

Pre-Reverse Merger Transactions

In 2010, Standard Gold began negotiations to acquire a 90% interest in property located near Beatty, Nevada (“the Bullfrog Project”) owned by NPX Metals, Inc. (“NPX Metals”). As of December 31, 2010, Standard Gold had issued 923,077 shares of common stock as consideration for the property interest.

 

The remaining 10% interest in the Bullfrog Project was acquired by Standard Gold from Bull Frog Holdings Inc. in June, 2010 in exchange for $100,000 cash paid directly by one of Standard Gold’s lenders. Bull Frog Holdings, Inc. is an affiliate of NPX Metals.

 

On May 1, 2011, Standard Gold entered into a final agreement whereby Standard Gold acquired all of the working interest in the Bullfrog Project for a total consideration of a 3% net smelter return royalty due to NPX Metals.

 

Between July and August 25, 2011, Standard Gold issued a total of 1,678,612 common shares for cash consideration of $545. Such shares are reflective of a reverse split of Standard Gold’s common stock, effective August 26, 2011, on a 1 for 3.25 basis. All share data in the accompanying financial statements and notes have been retroactively restated to reflect the reverse split.

 

On August 30, 2011, Standard Gold entered into an Agreement of Conveyance, Transfer and Assignment with Aurum National Holdings Ltd. (“Aurum”), pursuant to which the Company purchased an option held by Aurum under that certain Option to Purchase and Royalty Agreement dated as of August 13, 2009 and as amended on June 30, 2011, between Aurum and Southwest Exploration, Inc. (“Southwest”), which gave Aurum the option to purchase a 100% right, title and interest in and to certain mineral claims in Arizona known as the “Newsboy Project”. In consideration for the assignment of the option, Standard Gold issued to Aurum and its designees an aggregate of 4,000,000 shares of its common stock. In addition Aurum had made deposits to vendors that were transferred to the Company to be applied to future expenses. Of these payments, $6,364 was paid back to the Company in October 2011 and $45,000 was applied to exploration costs in November 2011.

 

On September 28, 2011, Standard Gold and Southwest entered into an Option to Purchase and Royalty Agreement pursuant to which Southwest granted to Standard Gold, the sole and immediate working right and option to earn a One Hundred Percent (100%) interest in and to the Newsboy Project property free and clear of all charges encumbrances and claims in consideration for $3,425,000, of which $500,000 was previously paid by a third party (the “Prepayment Amount”). The balance due to Southwest as of September 28, 2011 (the date of the agreement) of $2,925,000 is payable on the following schedule:

 

 

(i)

on January 1, 2012, the sum of US $150,000; July 1, 2012 the sum of US $150,000;

 

(ii)

on January 1, 2013, the sum of US $200,000; July 1, 2013 the sum of US $200,000;

 

(iii)

on January 1, 2014, the sum of US $250,000; July 1, 2014 the sum of US $250,000;

 

(iv)

on January 1, 2015, the sum of US $300,000; July 1, 2015 the sum of US $300,000;

 

(v)

on January 1, 2016, the sum of US $350,000; July 1, 2016 the sum of US $350,000; and

 

(vi)

on January 1, 2017, the sum of US $425,000.

 

The first option payment of $150,000 was paid in December 2011 and the second option payment of $150,000 was paid in June 2012. Upon the full payment of the balance of $2,625,000, the option will be considered automatically exercised and the Company will have earned a 100% interest in and to the Newsboy Project property free and clear of all liens and encumbrances. Notwithstanding the foregoing, the Company is obligated to pay a Net Smelter Royalty payment equal to two percent (2%) of the proceeds from the sale or other disposition from any purchaser of any mineral derived from the ore mined from the Newsboy Project property. To retain the property, the Company must also pay the annual claim maintenance fees and file a Notice of Intent to Hold with the Bureau of Land Management and Maricopa County. The Company must also make annual payments for the lands leased from the State of Arizona. Should the Company choose not to maintain the working right and option to the property, the Company can forego future payments to Southwest without penalty. A total of $500,000 was paid to Southwest as part of the option to purchase agreement by third parties, which converted into an aggregate of 1,250,000 Units in the Private Placement. These payments have been recorded as increases to mineral property on the balance sheet.

 

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

 

Reverse Merger Transaction

On September 30, 2011, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Standard Gold, a privately held Nevada corporation, and Bullfrog Gold Acquisition Corp., the Company’s newly formed, wholly-owned Delaware subsidiary (“Acquisition Sub”), pursuant to which Standard Gold merged with and into Acquisition Sub, with Standard Gold as the surviving entity, causing Standard Gold to become the Company’s wholly-owned subsidiary (the “Merger”).

 

Pursuant to the terms and conditions of the Merger Agreement, at the closing of the Merger, an aggregate of 14,357,135 shares of Standard Gold’s common stock issued and outstanding immediately prior to the closing of the Merger were converted into securities of the Company based on the following breakdown: (i) 13,645,596 of the shares of Standard Gold’s outstanding common stock were converted into the right to receive an aggregate of 13,645,596 shares of the Company’s common stock on a one for one basis and (ii) an aggregate of 711,539 of the issued and outstanding shares of common stock of Standard Gold immediately prior to the closing of the Merger was converted into the right to receive an aggregate of 711,539 shares of the Company’s Series A Convertible Preferred Stock on a one for one basis (the “Series A Preferred Stock”), which is convertible into shares of the Company’s common stock on a one for one basis.

 

Private Placement

Following the closing of the Merger, the Company sold an aggregate of 9,127,250 units in a Private Placement (the “Private Placement”) at a per unit price of $0.40, with each unit consisting of (i) one share of the Company’s common stock (except that certain investors elected to receive in lieu of common stock, one share of the Company’s Series A Convertible Preferred Stock) and (ii) a three year warrant to purchase shares of common stock equal to 50% of the number of shares purchased in the Private Placement at an exercise price of $0.60 per share. The Company sold a total of 5,252,250 units consisting of common shares and a total of 3,875,000 units consisting of Series A Preferred Stock, resulting in total proceeds of $3,650,900. The Private Placement includes the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis into the Private Placement. Net of converted debt, the Private Placement generated cash proceeds of $2,710,000.

 

The Company entered into registration rights agreements (the “Registration Rights Agreements”) with the investors in the Private Placement. Effective March 16, 2012, the Company and holders of the majority of Registrable Securities (as defined in the Registration Rights Agreement) agreed to amend the definitions of “Filing Date” and “Effectiveness Date”, as such terms are defined in the Registration Rights Agreement, such that “Filing Date” shall mean 12 months after the Trigger Date and “Effectiveness Date” shall mean eighteen months after the Trigger Date.  On September 24, 2012 the S1 Registration Statement was filed with the SEC.  As of November 9, 2012 the S1 Registration Statement has not been made effective.

 

Split-Off

Immediately following the closing of the Merger and the Private Placement, under the terms of an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations, the Company transferred substantially all of its pre-Merger assets and liabilities to its wholly owned subsidiary, Kopr Resources Holdings, Inc., a Delaware corporation (“SplitCo”). Thereafter, pursuant to a Stock Purchase Agreement, the Company transferred all of the outstanding capital stock of SplitCo to a former officer and director of the Company in exchange for cancellation of an aggregate of 22,510,919 shares of the Bullfrog Gold’s pre-merger common stock held by such person (the “Split-Off”), which left 11,000,000 shares of the Company’s common stock held by persons who were stockholders of Bullfrog Gold prior to the Merger. Of these shares, 9,000,000 shares constituted the Company’s “public float” prior to the Merger that will continue to represent the shares of the Company’s common stock eligible for resale without further registration by the holders thereof, until such time as the applicability of Rule 144 or other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), or the effectiveness of a further registration statement under the Securities Act, permits additional sales of issued shares.

 

As part of the reverse merger, the Company retained $13,383 of Bullfrog Gold’s pre-merger liabilities. In addition, Bullfrog Gold owed Standard Gold $201,363 at the merger date due to its collection of proceeds from a Standard Gold note payable. As a result of the merger, the combined $214,746 related to these balances has been recorded as a reduction in additional paid-in-capital. If the merger had occurred on the inception date of the Company, the net loss of the combined entity for all periods presented would not differ materially from what is already reported.

 

Common Stock Options

On September 30, 2011, the Company’s Board of Directors and stockholders adopted the 2011 Stock Incentive Plan (the “2011 Plan”). Under the 2011 Plan, options may be granted which are intended to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not intended to qualify as Incentive Stock Options thereunder. In addition, direct grants of stock or restricted stock may be awarded. The 2011 Plan has reserved 4,500,000 shares of common stock for issuance. All options issued are nonqualified stock options as amended on December 19, 2011. The modification to the option agreements increased the vesting period for only certain option agreements from one year to two years. The incremental cost associated with the differential in fair value at the modification date was not material. The option agreements are exercisable as follows in 20% increments:

 

Date Installment Becomes Exercisable

December 19, 2011

March 31, 2012

September 30, 2012

March 31, 2013

September 30, 2013

 

A summary of stock options is presented below:

 

.Recipient

Options

Strike Price

Term

 

Officer

1,250,000

$0.40

10 years

(1)

Officer

200,000

$0.40

10 years

 

Consultant

50,000

$0.40

10 years

 

Consultant

160,000

$0.40

10 years

 

Consultant

600,000

$0.40

10 years

 

Consultant

600,000

$0.40

10 years

 

Director

1,200,000

$0.40

10 years

(2)

TOTAL

4,060,000

 

 

 

 

(1) Issued to David Beling, the Company's Chief Executive Officer and President.

(2) Issued to Alan Lindsay, the Company's Chairman of the Board of Directors.

 

Using the Black Scholes option pricing model the following assumptions were made to estimate the fair value of the stock options:

 

.Options

 

Exercise Price

 

Volatility

 

Risk Free Interest Rate

 

Fair Value

 

4,060,000

 

$

0.40

 

 

78.5%

 

 

1.74%

 

$

1,812,203

 

At September 30, 2012, there was unrecognized compensation expense related to these stock options of $724,881, which is expected to be recognized over a weighted average period of 1 year.

 

A summary of the stock options as of September 30, 2012 and changes during the period are presented below:

 

. 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

Aggregate

Intrinsic

Value

Balance at December 31, 2011

4,060,000

$

0.40

9.75

$2,233,000

Granted

-

-

-

Exercised

-

-

-

Forfeited

-

-

-

Cancelled

-

-

-

Balance at September 30, 2012

4,060,000

$

0.40

9.00

Options exercisable at September 30, 2012

2,436,000

$

0.40

9.00

]

Options expected to vest

4,060,000

 

Convertible Preferred Stock

In August 2011, the Board of Directors designated 5,000,000 shares of its Preferred Stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock in not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares beneficially owns more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Preferred Stock. The holders of the Company’s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.

 

Additional Stock Issued

During the period July 1, 2012 through September 30, 2012 there were 100,000 shares issued on July 3, 2012 to a third party consultant for providing the Company with various investor relation services.

XML 41 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Preferred stock, shares authorized 50,000,000 50,000,000
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares issued 4,586,539 4,586,539
Preferred stock, shares outstanding 4,586,539 4,586,539
Common stock, shares authorized 200,000,000 200,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares issued 30,153,846 29,897,846
Common stock, shares outstanding 30,153,846 29,897,846
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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

XML 44 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information
3 Months Ended
Sep. 30, 2012
Document and Entity Information:  
Entity Registrant Name Bullfrog Gold Corp.
Document Type 10-Q
Document Period End Date Sep. 30, 2012
Amendment Flag true
Amendment Description Amendment No. 1
Entity Central Index Key 0001448597
Current Fiscal Year End Date --12-31
Entity Common Stock, Shares Outstanding 29,897,846
Entity Filer Category Smaller Reporting Company
Entity Current Reporting Status Yes
Entity Voluntary Filers Yes
Entity Well-known Seasoned Issuer Yes
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q3
XML 45 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Mineral Property Acquisition and Exploration Costs (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Mineral Property Acquisition and Exploration Costs

Mineral Property Acquisition and Exploration Costs

Mineral property acquisition and exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties.

XML 46 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
3 Months Ended 9 Months Ended 33 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Revenues               
Operating expenses          
General and administrative 228,910 162,517 769,022 188,278 1,396,902
Exploration costs 132,624   993,136   1,131,532
Marketing 215,510 23,464 1,053,415 23,464 1,428,268
Total operating expenses 577,044 185,981 2,815,573 211,742 3,956,702
Net operating loss (577,044) (185,981) (2,815,573) (211,742) (3,956,702)
Gain on forgiveness of debt   28,499   28,499 28,499
Interest expense   (6,539)   (18,941) (29,299)
Revaluation of warrant liability 996,618   2,210,475   1,083,779
Net income (loss) $ 419,574 $ (164,021) $ (605,098) $ (202,184) $ (2,873,723)
Weighted average common shares outstanding - basic 30,120,879 11,078,539 29,982,436 9,283,974  
Weighted average common shares outstanding - diluted 34,707,418 11,078,539 29,982,436 9,283,974  
Earnings (loss) per common share - basic $ 0.01 $ (0.01) $ (0.02) $ (0.02)  
Earnings (loss) per common share - diluted $ 0.01 $ (0.01) $ (0.02) $ (0.02)  
XML 47 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTATEMENT
3 Months Ended
Sep. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
RESTATEMENT

NOTE 7 – RESTATEMENT

The Company’s consolidated financial statements have been restated as follows as of September 30, 2012:

 

  As Originally Reported Adjustment As Restated
Consolidated Balance Sheet as of September 30, 2012      
       
Additional paid in capital $4,055,452 (563,301) $3,492,151
Deficit accumulated during the exploration stage (3,437,024) 563,301 (2,873,723)
       
Consolidated Balance Sheet as of December 31, 2011      
       
Additional paid in capital 3,208,096 (563,301) 2,644,795
Deficit accumulated during the exploration stage (2,831,926) 563,301 (2,268,625)
       
Consolidated Statement of Operations for January 12, 2010 (inception) through September 30, 2012      
       
Revaluation of warrant liability 520,478 563,301 1,083,779
Net loss (3,437,024) 563,301 (2,873,723)
       
Consolidated Statement of Cash Flows for January 12, 2010 (inception) through September 30, 2012      
       
Net loss (3,437,024) 563,301 (2,873,723)
Revaluation of warrant liability (520,478) (563,301) (1,083,779)
       

 

The Company originally recorded the warrant liability at relative fair value as of September 30, 2011. However, management determined that such transaction should be accounted pursuant to ASC 815 “Derivatives and Hedging” and related subtopics for allocating the carrying amount of the hybrid instrument between the host contract and the derivative. As a result the warrant liability as of September 30, 2011 should be recorded at a fair value of $1,235,229, with the remaining balance of the Private Placement proceeds allocated to additional paid in capital.

XML 48 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENTS
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
SUBSEQUENT EVENTS

NOTE 6 - SUBSEQUENT EVENTS

 

On November 2, 2012, the Board of Directors of Bullfrog Gold Corp. (the “Company”) approved a unilateral re-pricing of warrants to purchase a total of 4,563,625 shares of the Company’s common stock that were originally issued as part of the Company’s private placement on September 30, 2011 (the “Original PIPE”) with an original exercise price of $0.60. Pursuant to the re-pricing, the warrants were unilaterally amended by the Board of Directors to reduce the exercise price of each warrant to $0.40, which is above the closing price of $0.38 price of the Company’s common stock on November 2, 2012. The number of shares and expiration period of the warrants were not altered. Mr. David Beling, the Company’s President and Chief Executive Officer, was an investor in the Original PIPE and received 100,000 warrants as part of his investment in the Original PIPE that were repriced on November 2, 2012. Other than Mr. Beling, none of the Company’s directors and officers received warrants in the Original PIPE

XML 49 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Long Lived Assets (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Long Lived Assets

Long Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

XML 50 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Exploration Stage Company (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Exploration Stage Company

Exploration Stage Company

The Company complies with Accounting Standards Codification (“ASC”) 915-235-50 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an exploration stage enterprise.

XML 51 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Management's Plans (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Going Concern and Management's Plans

Going Concern and Management’s Plans

The Company has incurred losses from operations since inception and has an accumulated deficit of $3,437,024 as of September 30, 2012. The Company’s financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s continuation as a going concern is dependent upon attaining profitable operations through achieving revenue growth. However, the Company will now have additional expenses as a result of it being a public company. The September 30, 2011 closing of the private placement of the Company’s securities for $3,650,900 (the “Private Placement”) included the conversion of debt owed by the Company in the aggregate amount of $940,900 which was converted on a dollar for dollar basis.   The Company believes it will need to find additional sources of financing to meet its obligations through December 31, 2012.  There are no assurances that the Company will be successful in meeting its cash flow requirements. We are currently in the due diligence stage of negotiating a debt facility that will finance the general and administrative expense along with the projected costs of exploring the Newsboy project through 2013.  In addition, we are seeking additional financing of approximately $2,000,000 of private equity financing to fund our general corporate expenses as well as investor relation programs.

XML 52 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Interim Disclosure (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Interim Disclosure

Interim Disclosure

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company's management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

 

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company's management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

XML 53 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Bullfrog Gold Corp., as of the date of the reverse merger, and its wholly owned subsidiary, Standard Gold Corp. All significant inter-entity balances and transactions have been eliminated in consolidation.

XML 54 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents and Concentration (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Cash and Cash Equivalents and Concentration

Cash and Cash Equivalents and Concentration

The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At September 30, 2012, the Company’s cash balance was approximately $29,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate at least annually the rating of the financial institution in which it holds deposits.

XML 55 R34.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT: Schedule of Payments (Tables)
3 Months Ended
Sep. 30, 2012
Table Text Block Supplement [Abstract]  
Schedule of Payments

 

.Payment Date

Payment Amount

Effective Date (June 11, 2012)

$25,000

Six months after Effective Date

$25,000

June 11, 2013

$30,000

June 11, 2014

$35,000

June 11, 2015

$40,000

June 11, 2016

$45,000

June 11, 2017

$50,000

June 11, 2018

$55,000

June 11, 2019

$60,000

June 11, 2020

$65,000

June 11, 2021

$70,000

June 11, 2022

$75,000

XML 56 R51.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENTS (Details) (USD $)
Nov. 02, 2012
Re-pricing of warrants to purchase shares 4,563,625
Re-pricing of warrants, reduced exercise price $ 0.40
Re-pricing of warrants, shares reissued 100,000
XML 57 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fair Value of Financial Instruments (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Fair Value of Financial Instruments

Fair Value of Financial Instruments

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts payable, and other liabilities and the warrant liability is already recorded at fair value.

XML 58 R26.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Stock-Based Compensation (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of stock are reserved for such purpose.

XML 59 R49.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION OF OPTION TO PURCHASE KLONDIKE PROJECT: Schedule of Payments (Details) (USD $)
Jul. 11, 2012
Klondike Project acquisition part of purchase price (by June 11, 2012) $ 25,000
Klondike Project acquisition part of purchase price (by December 11, 2012) 25,000
Klondike Project acquisition part of purchase price (by June 11, 2013) 30,000
Klondike Project acquisition part of purchase price (by June 11, 2014) 35,000
Klondike Project acquisition part of purchase price (by June 11, 2015) 40,000
Klondike Project acquisition part of purchase price (by June 11, 2016) 45,000
Klondike Project acquisition part of purchase price (by June 11, 2017) 50,000
Klondike Project acquisition part of purchase price (by June 11, 2018) 55,000
Klondike Project acquisition part of purchase price (by June 11, 2019) 60,000
Klondike Project acquisition part of purchase price (by June 11, 2020) 65,000
Klondike Project acquisition part of purchase price (by June 11, 2021) 70,000
Klondike Project acquisition part of purchase price (by June 11, 2022) $ 75,000
XML 60 R41.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings (Loss) per Common Share (Details)
3 Months Ended
Sep. 30, 2012
Preferred shares included in the computation of diluted outstanding 4,586,539
Stock option shares not included in the computation of diluted outstanding 4,060,000
Warrant shares not included in the computation of diluted outstanding 4,563,625
XML 61 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
9 Months Ended 33 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Cash flows from operating activities      
Net loss $ (605,098) $ (202,184) $ (2,873,723)
Adjustments to reconcile net loss to net cash used in operating activities      
Gain on forgiveness of debt   (28,499) (28,499)
Revaluation of warrant liability (2,210,475)   (1,083,779)
Stock-based compensation 695,131   1,087,320
Stock issued for services 152,250   152,250
Change in operating assets and liabilities:      
Cash in trust account   2,521  
Receivable from pre-merger Bullfrog   48,637 48,637
Deposits 140,250   40,489
Prepaid expenses 22,593 (16,305) (24,026)
Accounts payable (5,124) 53,606 56,170
Other liabilities (577) (4,179) (3,299)
Accrued interest   18,941 28,499
Net cash used in operating activities (1,811,050) (127,462) (2,599,961)
Cash flows from investing activity      
Acquisition of property (175,000)   (325,000)
Net cash used in investing activity (175,000)   (325,000)
Cash flows from financing activities      
Proceeds from sale of common stock   545 3,066
Proceeds from private placement of common stock, preferred stock and warrants   2,710,000 2,710,000
Proceeds from notes payable 200,000 10,100 270,900
Repayment of notes payable     (30,000)
Net cash provided by financing activities 200,000 2,720,645 2,953,966
Net increase (decrease) in cash and cash equivalents (1,786,050) 2,593,183 29,005
Cash and cash equivalents, beginning of period 1,815,055    
Cash and cash equivalents, end of period 29,005 2,593,183 29,005
Noncash investing and financing activities:      
Issuance of common stock for acquisition of mineral property   400 700
Issuance of note payable for acquisition of mineral property   550,000 650,000
Issuance of note payable for receivable from pre-merger Bullfrog   250,000 250,000
Conversion of notes payable to common stock, preferred stock and warrants in private placement   940,900 940,900
Contribution of deposits by shareholder     $ 51,364
XML 62 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
NOTE PAYABLE
3 Months Ended
Sep. 30, 2012
Disclosure Text Block [Abstract]  
NOTE PAYABLE

NOTE 5 - NOTE PAYABLE

 

On September 5, 2012, the Company issued and sold to an accredited investor a Promissory Note (the “Promissory Note”) in the principal amount of $200,000. The Promissory Note accrues interest at the rate of three percent (3%) per month, on a 360 day per year basis. The Promissory Note matures on October 1, 2012 (the “Initial Maturity Date”). On the Initial Maturity Date, the Company may extend the Initial Maturity Date from October 1, 2012 to October 15, 2012 (the “Initial Extension Maturity Date”) by paying to the Holder an initial note extension payment equal to 50,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) issuable on the date such extension is elected (the “Initial Extension Payment”).

 

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

 

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

 

As of November 9, 2012, the Company has issued 50,000 shares of Common Stock as required by the Promissory Note. The Company intends to issue the Extension Payment of 100,000 shares on December 1, 2012.

XML 63 R27.htm IDEA: XBRL DOCUMENT v2.4.0.6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings (Loss) per Common Share (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Earnings (Loss) per Common Share

Earnings (Loss) per Common Share

 

The following table shows basic and diluted earnings per share

 

.

Three Months Ended

Nine Months Ended

 

9/30/12

9/30/11

9/30/12

9/30/11

Basic and Diluted Earnings (Loss) per Common Share

 

 

 

 

Earnings (loss) per common share

$419,574

$(164,021)

$(605,098)

$(202,184)

Basic weighted average shares outstanding

30,120,879

11,078,539

29,982,436

9,283,974

Dilutive effect of common stock equivalents

13,210,164

--

--

--

Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents

34,707,418

11,078,539

29,982,436

9,283,974

Basic Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

Diluted Earnings (Loss) Per Common Share

.01

(.01)

(.02)

(.02)

 

4,586,539 of preferred shares were included in the computation of diluted shares outstanding for the three months ended September 30, 2012. 4,060,000 of stock options and 4,563,625 of warrants were not included in the diluted weighted average shares calculation because they were “out-of-the money” for the three month period ending September 30, 2012.  In periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Management's Plans (Details) (USD $)
0 Months Ended 33 Months Ended
Sep. 30, 2011
Sep. 30, 2012
Accumulated deficit   $ 3,437,024
Proceeds from issuance of private placement 3,650,900  
Conversion of debt in private placement $ 940,900  
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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fair Value Measurement (Policies)
3 Months Ended
Sep. 30, 2012
Policy Text Block [Abstract]  
Fair Value Measurement

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

 

 

·

Level 1 - Valuation based on quoted market prices in active markets for identical assets and liabilities.

 

·

Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.

 

·

Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

 

The Company does not have any assets or liabilities measured using Level 1 or 2 inputs. The Company’s Level 3 financial liabilities measured at fair value consisted of the warrant liability as of September 30, 2012. See Note 3.