UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| (Mark One) | ||
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the period ended June 30, 2021 | ||
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
For the quarterlytransition period endedfrom to October 31, 2010
Commission file numberFile No. 000-51068000-51068
YUKON GOLD CORPORATION, INC.
VETANOVA INC
(Exact name of registrant as specified in its charter)
| 85-1736272 | ||
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
1226 White Oaks Blvd., Suite 10AOakville, Ontario L6H 2B9 Canada(Address of principal executive offices including zip code)
| 335 AJosephine St. DenverCO | 80206 | |
| (Address of principal executive offices) | (Zip Code) |
905-845-1073(Registrant’s telephone number including area code)
(303)248-6883
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Trading | Name of each exchange | |||
| Title of each class | Symbol(s) | on which registered | ||
| None | N/A | N/A |
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 Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, 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 [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):Act:
| ☐ Large | ☐ Accelerated | ||
| ☒ Non-accelerated Filer | ☒Smaller reporting company | ||
| ☒ Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Yes [ ] No [X]
The numberAs of August 20, 2021, there were shares of the registrant’s common stock outstanding as of December 13, 2010 was 141,159,935.Common Stock that were outstanding.
VETANOVA INC
QUARTELRY report on form 10-Q
QUARTER ended June 30, 2021
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
YUKON GOLD CORPORATION, INC.(AN EXPLORATION STAGE MINING COMPANY)INTERIM CONSOLIDATED FINANCIAL STATEMENTSOCTOBER 31, 2010(Amounts expressed in US Dollars)(Unaudited-Prepared by Management)
TABLE OF CONTENTSItem 1. Interim Condensed and Consolidated Financial Statements
VETANOVA INC
Interim Condensed and Consolidated Financial Statements
For the Period Ended June 30, 2021
| 3 |
YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)VETANOVA INC
InterimCondensed and Consolidated Balance SheetsAs at October 31, 2010 (unaudited) and April 30, 2010 (audited)(Amounts expressed in US Dollars)(Unaudited-Prepared by Management)
| October 31, | April 30, | |||||
| 2010 | 2010 | |||||
| $ | $ | |||||
| ASSETS | (unaudited) | (audited) | ||||
| CURRENT ASSETS | ||||||
| Cash | 182,410 | 1,533 | ||||
| Prepaid expenses and other (Note 4) | 13,470 | 12,748 | ||||
| 195,880 | 14,281 | |||||
| PROPERTYAND EQUIPMENT | 23,586 | 27,868 | ||||
| 219,466 | 42,149 |
See condensed
| As of | ||||||||
| June 30, 2021 (Unaudited) | Dec 31, 2020 (Derived from audit) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 583,644 | $ | - | ||||
| Prepaid expenses | 332 | 13,734 | ||||||
| Due from related party - VitaNova Partners LLC | 174,600 | 51,179 | ||||||
| Total Current Assets | 758,577 | 64,913 | ||||||
| Long Term Assets | ||||||||
| Property, equipment and software, net | - | - | ||||||
| Other long term assets | - | - | ||||||
| Total Long Term Assets | - | - | ||||||
| TOTAL ASSETS | $ | 758,577 | $ | 64,913 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | - | $ | - | ||||
| Accrued liabilities | 10,000 | 11,925 | ||||||
| Current portion of notes payable | - | - | ||||||
| Total Current Liabilities | 10,000 | 11,925 | ||||||
| Notes Payable, net of current portion | - | - | ||||||
| TOTAL LIABILITIES | 10,000 | 11,925 | ||||||
| Commitments & Contingencies (Notes 4) | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding at June 30, 2021 and December 31, 2020, respectfully | 70,511 | 68,694 | ||||||
| VitaNova Solar Partners, LLC 53,391,350 common units outstanding and 2,168,611 preferred units outstanding, 100,000,000 preferred and 100,000,000 common units authorized | 546,983 | - | ||||||
| Additional paid-in capital | 501,308 | 298,322 | ||||||
| Accumulated (deficit) | (718,207 | ) | (314,028 | ) | ||||
| Total VITANOVA INC EQUITY | 400,594 | 52,988 | ||||||
| Non-controlling interest in a subsidiary | 347,982 | - | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 748,577 | 52,988 | ||||||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 758,577 | $ | 64,913 | ||||
The accompanying notes to the interim consolidatedcondensed financial statements are an integral part of these statements.
APPROVED ON BEHALF OF THE BOARD
| 4 | |
VETANOVA INC
Condensed and Chairman
F-2
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Interim Consolidated Balance SheetsStatements of Operations
As at October 31, 2010 (unaudited) and April 30, 2010 (audited)(Unaudited)(Amounts expressed in US Dollars)(Unaudited-Prepared by Management)
| October 31, | April 30, | |||||
| 2010 | 2010 | |||||
| LIABILITIES | $ | $ | ||||
| (unaudited) | (audited) | |||||
| CURRENT LIABILITIES | ||||||
| Loan from director (Note 10) | - | 102,000 | ||||
| Secured promissory note (Note 11) | 375,000 | - | ||||
| Accounts payable and accrued liabilities | 371,333 | 556,212 | ||||
| Obligation under capital lease- | 1,567 | 2,454 | ||||
| Total Current Liabilities | 747,900 | 660,666 | ||||
| GOING CONCERN (Note 2) | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 8) | ||||||
| RELATED PARTY TRANSACTIONS (Note 9) | ||||||
| SUBSEQUENT EVENTS (Note 14) | ||||||
| SHAREHOLDERS’ DEFICIENCY | ||||||
| CAPITAL STOCK (Note 5) | 4,184 | 4,184 | ||||
| ADDITIONAL PAID-IN CAPITAL | 15,149,504 | 14,931,204 | ||||
| ACCUMULATED OTHER COMPREHENSIVE LOSS | (110,686 | ) | (111,871 | ) | ||
| DEFICIT, ACCUMULATED DURING THE EXPLORATION STAGE | (15,571,436 | ) | (15,442,034 | ) | ||
| (528,434 | ) | (618,517 | ) | |||
| 219,466 | 42,149 |
See condensed
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Direct cost of revenue | - | - | - | - | ||||||||||||
| Gross Margin | - | - | - | - | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 232,395 | - | 425,199 | - | ||||||||||||
| Depreciation and amortization | - | - | - | - | ||||||||||||
| Total Operating Expenses | 232,395 | - | 425,199 | - | ||||||||||||
| Profit (Loss) from Operations | (232,395 | ) | - | (425,199 | ) | - | ||||||||||
| Other Income (Expense) | ||||||||||||||||
| Other | - | - | - | - | ||||||||||||
| Total Other Income (Expense) | - | - | - | - | ||||||||||||
| Minority Share of Loss | 21,021 | - | 21,021 | |||||||||||||
| Net Profit (Loss) Before Taxes | (211,375 | ) | - | (404,179 | ) | - | ||||||||||
| Income Tax (Provision) Benefit | - | - | - | - | ||||||||||||
| Net Profit (Loss) | $ | (211,375 | ) | $ | - | $ | (404,179 | ) | $ | - | ||||||
| (Loss) per Common Share - Basic | $ | (0.00 | ) | $ | - | $ | (0.00 | ) | $ | - | ||||||
| (Loss) per Common Share - Dilutive | $ | (0.00 | ) | $ | - | $ | (0.00 | ) | $ | - | ||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||
| Basic | 214,308,836 | 626,989 | 202,025,049 | 626,989 | ||||||||||||
| Dilutive | 214,308,836 | 626,989 | 202,025,049 | 626,989 | ||||||||||||
The accompanying notes to the interim consolidatedcondensed financial statements are an integral part of these statements.
F-3
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)For the six months and three months ended October 31, 2010 and October 31, 2009 andthe period from Inception to October 31, 2010(Amounts expressed in US Dollars)(Unaudited-Prepared by Management)
| For the | For the | ||||||||||||||
| For the | For the | three | three | ||||||||||||
| six months | six months | months | months | ||||||||||||
| Cumulative | ended | ended | ended | ended | |||||||||||
| since | October 31, | October 31, | October 31, | October 31, | |||||||||||
| inception | 2010 | 2009 | 2010 | 2009 | |||||||||||
| OPERATING EXPENSES | $ | $ | $ | $ | $ | ||||||||||
| General and administration | 7,536,630 | 125,301 | 330,360 | 60,034 | 216,229 | ||||||||||
| Project expenses | 9,077,029 | - | 12,104 | - | 6,650 | ||||||||||
| Exploration Tax Credit | (605,716 | ) | - | - | - | - | |||||||||
| Amortization | 177,065 | 4,101 | 5,494 | 2,060 | 2,818 | ||||||||||
| Loss on sale/disposal of capital assets | 5,904 | - | - | - | - | ||||||||||
| Gain on sale of mining property (Note7) | (110,306 | ) | - | (110,306 | ) | - | - | ||||||||
| TOTAL OPERATING EXPENSES | 16,080,606 | 129,402 | 237,652 | 62,094 | 225,697 | ||||||||||
| LOSS BEFORE INCOME TAXES | (16,080,606 | ) | (129,402 | ) | (237,652 | ) | (62,094 | ) | (225,697 | ) | |||||
| Income taxes recovery | 509,170 | - | - | - | - | ||||||||||
| NET LOSS | (15,571,436 | ) | (129,402 | ) | (237,652 | ) | (62,094 | ) | (225,697 | ) | |||||
| Loss per share – basic and diluted | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.01 | ) | |||||||
| Weighted average common shares outstanding | 41,839,535 | 40,489,532 | 41,839,535 | 40,489,535 | |||||||||||
See condensed notes to the interim consolidated financial statements.
F-4
| 5 |
YUKON GOLD CORPORATION, INC.VETANOVA INC
(An Exploration Stage Mining Company)InterimCondensed and Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | (425,109 | ) | $ | - | |||
| Adjustments to reconcile net (loss) to net cash used in operating activities: | ||||||||
| Depreciation & amortization | - | - | ||||||
| VSP common units issued for services | 2,756 | |||||||
| Stock returned that was issued for services | (233 | ) | - | |||||
| Net change in operating assets and liabilities: | ||||||||
| Decrease in prepaid expenses | 13,401 | - | ||||||
| Increase in related party payable | (123,421 | ) | - | |||||
| (Decrease) Increase in accounts payable | (1,927 | ) | - | |||||
| Net Cash Used in Operating Activities | (534,622 | ) | - | |||||
| Cash Flows from Investing Activities | - | - | ||||||
| Purchase of VSP LLC units | (4,420 | ) | - | |||||
| Net Cash Used in Investing Activities | (4,420 | ) | - | |||||
| Cash Flows from Financing Activities | ||||||||
| Sale of VETANOVA units | 205,036 | - | ||||||
| Sale of VSP LLC units | 917,650 | |||||||
| Cash Flows from Financing Activities | 1,122,686 | - | ||||||
| Net Change in Cash & Cash Equivalents | 583,644 | - | ||||||
| Beginning Cash & Cash Equivalents | - | - | ||||||
| Ending Cash & Cash Equivalents | $ | 583,644 | $ | - | ||||
The accompanying notes to condensed financial statements are an integral part of these statements.
| 6 |
VETANOVA INC
Condensed and Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Common Stock | VetaNova Solar | Additional | ||||||||||||||||||||||||||
| Shares (000s) | Amount | Partners (VSP) | Paid In Capital | Accumulated (Deficit) | Noncontrolling interest in VSP | Stockholders’ Equity | ||||||||||||||||||||||
| Six Month Activity ending June 30, 2020 | ||||||||||||||||||||||||||||
| Balances, December 31, 2019 | 627 | $ | 49,260 | - | $ | (49,260 | ) | $ | (16,509 | ) | - | $ | (16,509 | ) | ||||||||||||||
| Net (Loss) | - | - | - | - | - | - | ||||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||||||
| Private placement, shares | ||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||
| Stock issued for services, shares | ||||||||||||||||||||||||||||
| Stock issued to VitaNova Partners LLC | ||||||||||||||||||||||||||||
| Stock issued to VitaNova Partners LLC, shares | ||||||||||||||||||||||||||||
| Private placement - VTNA | ||||||||||||||||||||||||||||
| Private placement - VTNA, shares | ||||||||||||||||||||||||||||
| VetaNova Solar Partners | ||||||||||||||||||||||||||||
| Return of stock issued for services | ||||||||||||||||||||||||||||
| Return of stock issued for services, shares | ||||||||||||||||||||||||||||
| No Activity for the Six Months ended June 30, 2020 | - | - | - | - | - | - | ||||||||||||||||||||||
| Balances, June 30, 2020 | 627 | $ | 49,260 | - | $ | (49,260 | ) | $ | (16,509 | ) | - | $ | (16,509 | ) | ||||||||||||||
| Balances, December 31, 2019 | 627 | $ | 49,260 | $ | (49,260 | ) | $ | (16,509 | ) | $ | (16,509 | ) | ||||||||||||||||
| 2020 Activity: | ||||||||||||||||||||||||||||
| Net (Loss) | - | $ | - | - | (297,519 | ) | $ | (297,519 | ) | |||||||||||||||||||
| Private placement | 35,109 | $ | 3,511 | - | 347,582 | - | - | $ | 351,093 | |||||||||||||||||||
| Stock issued for services | 103,623 | $ | 10,362 | - | - | $ | 10,362 | |||||||||||||||||||||
| Stock issued to VitaNova Partners LLC | 55,613 | $ | 5,561 | - | - | - | - | $ | 5,561 | |||||||||||||||||||
| Balances, December 31, 2020 | 194,972 | $ | 68,694 | $ | - | $ | 298,322 | $ | (314,028 | ) | $ | - | $ | 52,988 | ||||||||||||||
| Balance | 194,972 | $ | 68,694 | $ | - | $ | 298,322 | $ | (314,028 | ) | $ | - | $ | 52,988 | ||||||||||||||
| 2021 Six Month Activity: | ||||||||||||||||||||||||||||
| Net (Loss) | - | $ | - | - | - | (404,179 | ) | - | $ | (404,179 | ) | |||||||||||||||||
| Private placement - VTNA | 20,503 | $ | 2,051 | - | 202,986 | - | - | $ | 205,037 | |||||||||||||||||||
| VetaNova Solar Partners | - | - | 546,983 | - | - | 347,982 | $ | 894,965 | ||||||||||||||||||||
| Return of stock issued for services | (2,333 | ) | $ | (233 | ) | - | - | - | - | (233 | ) | |||||||||||||||||
| Balances, June 30, 2021 | 213,142 | $ | 70,511 | $ | 546,983 | $ | 501,308 | $ | (718,207 | ) | $ | 347,982 | $ | 748,577 | ||||||||||||||
| Balance | 213,142 | $ | 70,511 | $ | 546,983 | $ | 501,308 | $ | (718,207 | ) | $ | 347,982 | $ | 748,577 | ||||||||||||||
The accompanying notes to condensed financial statements are an integral part of these statements.
| 7 |
VETANOVA INC
Notes to Condensed Financial Statements
For the six month period ended October 31, 2010Three and October 31, 2009Six Months Ended June 30, 2021 and June 30, 2020
Note 1 – Organization and Business
The Company intends to have two streams of revenue. One is from the perioddevelopment, construction, and sale leaseback of solar powered greenhouse facilities. The other from Inceptionthe growing fruits and vegetables for sale to October 31, 2010(Amounts expressedlocal markets.
On May 26, 2021 the Company acquired 29% of the issued and outstanding shares of GrowCo, Inc. GrowCo’s only asset is an approximately 39 acre parcel of land in US Dollars)(Unaudited-Preparedsoutheastern Colorado.
After the date of this 10-Q the Company plans to acquire:
| ● | GrowCo Partners 1, LLC, which owns approximately 39 acres of land; | |
| ● | approximately 78 acres of land from GrowCo Partners 2, LLC, and | |
| ● | approximately 39 acres of land from GrowCo, Inc. |
The 160 acres of land are located in southeastern Colorado. The Company will pay shares of its common stock and $ for GrowCo Partners 1, LLC and the land from GrowCo Partners 2, LLC and GrowCo Inc.
There is one fully completed 90,000 sq. ft. greenhouse, and one adjoining fully completed 15,000 sq. ft. warehouse on the land to be purchased by Management)
the Company. The greenhouse/ warehouse facilities, once purchased, retrofitted and/or constructed, will be used by the Company to grow farm fresh fruits and vegetables for delivery to local food markets. The completed greenhouse and warehouse have not been in operation since 2020.
| For the six | For the six | ||||||||
| month period | month period | ||||||||
| Cumulative | ended | ended | |||||||
| Since | October 31, | October 31, | |||||||
| Inception | 2010 | 2009 | |||||||
| $ | $ | $ | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
| Net loss for the period | (15,571,436 | ) | (129,402 | ) | (237,652 | ) | |||
| Items not requiring an outlay of cash: | |||||||||
| Amortization and impairment | 177,065 | 4,101 | 5,494 | ||||||
| Loss on sale/disposal of capital assets | 5,904 | - | - | ||||||
| Registration rights penalty expense | 188,125 | - | - | ||||||
| Shares issued for property payment | 772,826 | - | - | ||||||
| Common shares issued for settlement of severance liability to ex-officer | 113,130 | - | - | ||||||
| Stock-based compensation | 1,298,574 | - | 5,869 | ||||||
| Compensation expense on issue of warrants | 140,892 | - | - | ||||||
| Issue of shares for professional services | 875,023 | - | - | ||||||
| Gain on sale of mining property | (110,306 | ) | - | (110,306 | ) | ||||
| Issue of units against settlement of debts | 20,077 | - | - | ||||||
| Decrease (Increase) in prepaid expenses and other | (1,055 | ) | (777 | ) | 52,168 | ||||
| Increase (Decrease) in accounts payable and accrued liabilities | 344,160 | (183,532 | ) | 57,475 | |||||
| NET CASH USED IN OPERATING ACTIVITIES | (11,747,021 | ) | (309,610 | ) | (226,952 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
| Purchase of property, plant and equipment | (222,309 | ) | - | - | |||||
| Investment in available for sale securities | (36,530 | ) | - | - | |||||
| Proceeds from sale of mining property | 110,306 | - | 110,306 | ||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (148,533 | ) | - | 110,306 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Repayments from a shareholder | 1,180 | - | - | ||||||
| Proceeds (Repayments) from demand promissory notes | 200,000 | (102,000 | ) | 102,000 | |||||
| Proceeds from secured promissory note | 375,000 | 375,000 | - | ||||||
| Proceeds from convertible promissory notes converted | 200,500 | - | - |
| Proceeds from the exercise of stock options | 61,000 | - | - | ||||||
| Proceeds from exercise of warrants – net | 450,309 | - | - | ||||||
| Proceeds from subscription of warrants – net | 525,680 | - | - | ||||||
| Proceeds from subscription /issuance of units/shares – net | 10,300,490 | 218,300 | 44,000 | ||||||
| Proceeds from capital lease obligation | 2,454 | - | - | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 12,116,613 | 491,300 | 146,000 | ||||||
| EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES | (38,649 | ) | (813 | ) | 699 | ||||
| NET INCREASE (DECREASE) IN CASH FOR THE QUARTER | 182,410 | 180,877 | 30,053 | ||||||
| Cash, beginning of period | - | 1,533 | 9,349 | ||||||
| CASH, END OF PERIOD | 182,410 | 182,410 | 39,402 | ||||||
| INCOME TAXES PAID | - | - | |||||||
| INTEREST PAID | - | - |
See condensed notes
On the land in southeastern Colorado the Company plans to:
| 1. | retrofit the existing greenhouse and warehouse so that the equipment in the greenhouse and warehouse will run on solar power as opposed to propane. (Estimated cost: $750,000. Estimated time to complete: six months). Acquire solar system to power the greenhouse/ warehouse (Estimated cost: $1,125,000) | |
| 2. | construct one new 90,000 sq. ft. greenhouse and one new 15,000 sq. ft. warehouse (Estimated cost: $4,500,000. Estimated time to complete: twelve months). Acquire solar system to power the greenhouse/ warehouse (Estimated cost: $1,125,000) | |
| 3. | construct three new 180,000 sq. ft. greenhouses and three new 30,000 sq. ft. warehouses (Estimated cost: $27,000,000. Estimated time to complete: 36 months). Acquire solar systems to power the greenhouses and warehouses (Estimated cost: $3,375,000). |
The greenhouse/warehouse facilities will be solar powered. The Company plans to acquire the solar systems which will power the greenhouse/ warehouse facilities from VetaNova Solar Partners, LLC. (“VSP”) at a cost of approximately $1,125,000 per system. As of August 10, 2021 VSP had not constructed any solar systems and had cash of approximately $333,000. VSP will need to raise a significant amount of capital to build the solar systems for the Company
The Company plans to finance the cost of retrofitting the facility described in (1) above, and acquire the solar system needed to power the facility, with a loan from a lender associated with Colorado’s Commercial Property Assessed Clean Energy Program (“C-PACE”). Once the facility is operational, the Company plans to sell the facility to an investor and then lease back the facility from the investor. With the proceeds from the sale of this facility, the Company expects to have sufficient funds to construct the facility described in (2) above, and acquire the solar systems required to power the facility. Sequentially using the sale/ lease back financing technique for each greenhouse/ warehouse facility (with the exception of the last facility) the Company expects to have sufficient capital to construct the facilities described in (3) above and to acquire the solar systems for these facilities.
The Company may also finance all or a part of the cost of retrofitting/ constructing greenhouses and warehouses and acquiring solar systems through future offering of the Company’s securities proceeds from the exercise of the Company’s warrants or borrowings from private lenders.
| 8 |
As of the date of this 10-Q the Company did not have any agreements with any person to purchase any of the Company’s securities lend any funds to the interim consolidated financial statements.Company or purchase and lease back any of the greenhouse/ warehouse facilities which the Company plans to retrofit or construct.
F-5
YUKON GOLDCORPORATION, INC.(AnExploration StageMiningCompany)InterimConsolidatedStatementsRecent Transactions
On July 12, 2021, the Company issued shares ofChanges its common stock, as well as warrants to purchase an additional 10,249,375 shares of its common stock, to VitaNova Partners, LLC (“VitaNova”) inStockholders’DeficiencyFromInception payment of expenses (amounting toOctober $9,108) paid by VitaNova on behalf of the Company. The warrants are exercisable at any time on or before December 31, 2010(Amountsexpressed2022 at a price of $0.20 per share. VitaNova then transferred those shares to certain members of VitaNova in USDollars)(Unaudited-Prepared byManagement)
| Deficit, | |||||||||||||||||||||
| Number | Accumulated | Accumulated | |||||||||||||||||||
| of | Common | Additional | during the | Other | |||||||||||||||||
| Common | Shares | Paid-in | Subscription | Exploration | Comprehensive | Comprehensive | |||||||||||||||
| Shares | Amount | Capital | for Warrants | Stage | Income (loss) | Income (loss) | |||||||||||||||
| # | $ | $ | $ | $ | $ | $ | |||||||||||||||
| Issuance of Common shares | 2,833,377 | 154,063 | - | - | - | - | - | ||||||||||||||
| Issuance of warrants | - | - | 1,142 | - | - | - | - | ||||||||||||||
| Foreign currency translation | - | - | - | - | 604 | 604 | |||||||||||||||
| Net loss for the year | - | - | - | (124,783 | ) | (124,783 | ) | - | |||||||||||||
| Balance as of April 30, 2003 | 2,833,377 | 154,063 | 1,142 | - | (124,783 | ) | (124,179 | ) | 604 | ||||||||||||
| Issuance of Common shares | 1,435,410 | 256,657 | - | - | - | - | |||||||||||||||
| Issuance of warrants | - | - | 2,855 | - | - | - | |||||||||||||||
| Shares repurchased | (240,855 | ) | (5,778 | ) | - | - | - | - | |||||||||||||
| Recapitalization pursuant to reverse acquisition | 2,737,576 | (404,265 | ) | 404,265 | - | - | - | ||||||||||||||
| Issuance of Common shares | 1,750,000 | 175 | 174,825 | - | - | - | |||||||||||||||
| Issuance of Common shares for Property Payment | 300,000 | 30 | 114,212 | - | - | - | |||||||||||||||
| Foreign currency translation | - | - | - | - | - | (12,796 | ) | (12,796 | ) | ||||||||||||
| Net loss for the year | - | - | - | - | (442,906 | ) | (442,906 | ) | - | ||||||||||||
| Balance as of April 30, 2004 | 8,815,508 | 882 | 697,299 | - | (567,689 | ) | (455,702 | ) | (12,192 | ) | |||||||||||
| Issuance of Common shares for Property Payment | 133,333 | 13 | 99,987 | - | - | - | - | ||||||||||||||
| Issuance of common shares on Conversion of Convertible Promissory note | 76,204 | 8 | 57,144 | - | - | - | - |
F-6
YUKON GOLDCORPORATION, INC.(AnExploration StageMiningCompany)InterimConsolidatedStatements ofChanges inStockholders’DeficiencyFromInception toOctober 31, 2010(Amountsexpressedexchange for the members interests in USDollars)
VitaNova. John McKowen, the Company’s only Officer and Director and a controlling person of VitaNova, did not receive any of these shares.
| Foreign currency translation | - | - | - | - | - | 9,717 | 9,717 | ||||||||||||||
| Net loss for the year | - | - | - | - | (808,146 | ) | (808,146 | ) | - | ||||||||||||
| Balance as of April 30, 2005 | 9,025,045 | 903 | 854,430 | - | (1,375,835 | ) | (798,429 | ) | (2,475 | ) | |||||||||||
| Stock based compensation - Directors and officers | 216,416 | ||||||||||||||||||||
| Stock based compensation - Consultants | 8,830 | ||||||||||||||||||||
| Issue of common shares and Warrants on retirement of Demand Promissory note | 369,215 | 37 | 203,031 | ||||||||||||||||||
| Units issued to an outside company for professional services settlement | 24,336 | 2 | 13,384 | ||||||||||||||||||
| Units issued to an officer for professional services settlement | 12,168 | 1 | 6,690 | ||||||||||||||||||
| Issuance of common shares for professional services | 150,000 | 15 | 130,485 | ||||||||||||||||||
| Units issued to shareholder | 490,909 | 49 | 269,951 | ||||||||||||||||||
| Units issued to a director | 149,867 | 15 | 82,412 | ||||||||||||||||||
| Units issued to outside subscribers | 200,000 | 20 | 109,980 | ||||||||||||||||||
| Issuance of common shares on Conversion of Convertible Promissory notes | 59,547 | 6 | 44,654 | ||||||||||||||||||
| Issuance of common shares on Exercise of warrants | 14,000 | 2 | 11,998 | ||||||||||||||||||
| Issuance of common shares on Conversion of Convertible Promissory notes | 76,525 | 8 | 57,386 | ||||||||||||||||||
| Private placement of shares | 150,000 | 15 | 151,485 | ||||||||||||||||||
| Issuance of Common shares for property payment | 133,333 | 13 | 99,987 | ||||||||||||||||||
| Issuance of common shares on Conversion of Convertible Promissory notes | 34,306 | 4 | 25,905 | ||||||||||||||||||
| Issuance of common shares on Exercise of warrants | 10,000 | 1 | 8,771 | ||||||||||||||||||
| Issuance of common shares on Conversion of Convertible promissory notes | 101,150 | 10 | 76,523 |
F-7
YUKON GOLDCORPORATION, INC.(AnExploration StageMiningCompany)InterimConsolidatedStatementsOn May 26, 2021 the Company acquired 29% ofChanges inStockholders’DeficiencyFromInception toOctober 31, 2010(Amountsexpressed the issued and outstanding shares of GrowCo, Inc. as well as membership interests in USDollars)
| Issue of 400,000 Special Warrants net | 371,680 | ||||||||||||||||||||
| Issue of 200,000 flow through warrants | 154,000 | ||||||||||||||||||||
| Brokered private placement of shares- net | 5,331,327 | 533 | 2,910,375 | ||||||||||||||||||
| Brokered Private placement of flow through Shares- net | 25,000 | 2 | 13,310 | ||||||||||||||||||
| Exercise of stock options | 10,000 | 1 | 5,499 | ||||||||||||||||||
| Foreign currency translation | - | - | - | (2,687 | ) | (2,687 | ) | ||||||||||||||
| Net loss for the year | - | - | - | (1,855,957 | ) | (1,855,957 | ) | - | |||||||||||||
| Balance at April 30, 2006 | 16,366,728 | 1,637 | 5,301,502 | 525,680 | (3,231,792 | ) | (1,858,644 | ) | (5,162 | ) | |||||||||||
| Exercise of warrants | 10,000 | 1 | 8,986 | ||||||||||||||||||
| Exercise of warrants | 45,045 | 5 | 40,445 | ||||||||||||||||||
| Exercise of warrants | 16,000 | 2 | 14,278 | ||||||||||||||||||
| Common shares issued for settlement of severance liability to ex-officer | 141,599 | 14 | 113,116 | ||||||||||||||||||
| Exercise of warrants | 43,667 | 4 | 39,364 | ||||||||||||||||||
| Exercise of warrants | 17,971 | 2 | 15,937 | ||||||||||||||||||
| Exercise of warrants | 43,667 | 4 | 38,891 | ||||||||||||||||||
| Exercise of warrants | 16,000 | 2 | 14,251 | ||||||||||||||||||
| Exercise of warrants | 158,090 | 16 | 141,616 | ||||||||||||||||||
| Issue of common shares for property payment | 43,166 | 4 | 53,841 | ||||||||||||||||||
| Exercise of warrants | 64,120 | 6 | 57,863 | ||||||||||||||||||
| Exercise of warrants | 61,171 | 6 | 53,818 | ||||||||||||||||||
| Exercise of stock options | 24,000 | 2 | 17,998 | ||||||||||||||||||
| Issuance of common shares for professional services | 342,780 | 34 | 438,725 | ||||||||||||||||||
| Brokered private placement of units-net | 400,000 | 40 | 363,960 | ||||||||||||||||||
| Brokered private placement of units- net | 550,000 | 55 | 498,923 | ||||||||||||||||||
| Stock based compensation-Directors and Officers | 451,273 | ||||||||||||||||||||
| Exercise of stock options | 50,000 | 5 | 37,495 | ||||||||||||||||||
| Issuance of common shares for property payment | 133,334 | 13 | 99,987 | ||||||||||||||||||
| Issuance of common shares for professional services | 160,000 | 16 | 131,184 | ||||||||||||||||||
| Issuance of common shares for professional services | 118,800 | 12 | 152,052 | ||||||||||||||||||
| Issue of shares for flow-through warrants | 200,000 | 20 | 153,980 | (154,000 | ) | ||||||||||||||||
| Issue of shares for special warrants | 404,000 | 41 | 375,679 | (371,680 | ) | ||||||||||||||||
| Issue of 2,823,049 flow- through warrants -net | 1,916,374 |
F-8
YUKON GOLDCORPORATION, INC.(AnExploration StageMiningCompany)InterimConsolidatedStatementsGrowCo Partners 1, LLC from an unrelated third party. In consideration for the assignment ofChanges inStockholders’DeficiencyFromInception toOctober 31, 2010(Amountsexpressed in USDollars)
| Issue of 334,218 unit special warrants-net | 230,410 | ||||||||||||||||||||
| Issue of 3,105,358 common shares for 2,823,049 flow through warrants | 3,105,358 | 310 | 1,916,064 | (1,916,374 | ) | ||||||||||||||||
| Issue of 367,641 common shares for 334,218 unit special warrants | 367,641 | 37 | 230,373 | (230,410 | ) | ||||||||||||||||
| Registration rights penalty expense | 188,125 | ||||||||||||||||||||
| Foreign currency translation | (58,446 | ) | (58,446 | ) | |||||||||||||||||
| Net loss for the year | (3,703,590 | ) | (3,703,590 | ) | |||||||||||||||||
| Balance April 30, 2007 | 22,883,137 | 2,288 | 10,949,726 | 0 | (6,935,382 | ) | (3,762,036 | ) | (63,608 | ) | |||||||||||
| Shares for property payment | 136,364 | 13 | 57,239 | ||||||||||||||||||
| Stock based compensation | 584,328 | ||||||||||||||||||||
| Unrealized gain on available-for-sale securities net of deferred taxes | 9,000 | 9,000 | |||||||||||||||||||
| 543,615 flow through units | 543,615 | 54 | 227,450 | ||||||||||||||||||
| 1,916,666 units-net | 1,916,666 | 192 | 698,110 | ||||||||||||||||||
| 1,071,770 flow through units | 1,071,770 | 108 | 449,379 | ||||||||||||||||||
| 2,438,888 units-net | 2,438,888 | 244 | 1,036,622 | ||||||||||||||||||
| Expenses relating to issue of units | (141,080 | ) | |||||||||||||||||||
| Compensation expense on issue of warrants | 123,079 | ||||||||||||||||||||
| Foreign currency translation | 251,082 | 251,082 | |||||||||||||||||||
| Net loss for the year | (4,953,775 | ) | (4,953,775 | ) | |||||||||||||||||
| Balance as of April 30, 2008 | 28,990,440 | 2,899 | 13,984,853 | - | (11,889,157 | ) | (4,693,693 | ) | 196,474 | ||||||||||||
| Shares for property payment | 476,189 | 48 | 58,839 | ||||||||||||||||||
| Shares for property payment | 6,838,906 | 684 | 187,916 | ||||||||||||||||||
| Stock based compensation | 31,858 | ||||||||||||||||||||
| Compensation expense on issue of warrants | 17,813 | ||||||||||||||||||||
| 4,134,000 flow through shares | 4,134,000 | 413 | 577,696 | ||||||||||||||||||
| Issuance of shares for professional services | 50,000 | 5 | 7,495 | ||||||||||||||||||
| Realized gain on available-for-sale securities | (9,000 | ) | ( 9,000 | ) | |||||||||||||||||
| Foreign currency translation | (282,694 | ) | (282,694 | ) | |||||||||||||||||
| Net loss for the year | (3,017,265 | ) | (3,017,265 | ) | - | ||||||||||||||||
| Balance as of April 30, 2009 | 40,489,535 | 4,049 | 14,866,470 | - | (14,906,422 | ) | (3,308,959 | ) | (95,220 | ) | |||||||||||
| Stock based compensation | 5,869 | ||||||||||||||||||||
| Issuance of 1,100,000 shares for cash | 1,100,000 | 110 | 43,890 | ||||||||||||||||||
| Issuance of common shares for | |||||||||||||||||||||
| professional services | 250,000 | 25 | 14,975 | ||||||||||||||||||
| Foreign currency translation | (16,651 | ) | (16,651 | ) | |||||||||||||||||
| Net loss for the year | (535,612 | ) | (535,612 | ) | - | ||||||||||||||||
| Balance as of April 30, 2010 | 41,839,535 | 4,184 | 14,931,204 | - | (15,442,034 | ) | (552,263 | ) | (111,871 | ) | |||||||||||
| Foreign currency translation | 1,185 | 1,185 | |||||||||||||||||||
| Stock subscriptions received | 218,300 | ||||||||||||||||||||
| Net loss for the period | (129,402 | ) | (129,402 | ) | |||||||||||||||||
| Balance as of October 31, 2010 | 41,839,535 | 4,184 | 15,149,504 | - | (15,571,436 | ) | (128,217 | ) | (110,686 | ) | |||||||||||
See condensed notes these securities the Company issued the unrelated third party shares of the Company’s common stock as well as warrants to purchase an additional 4,384,913 shares of the interim consolidated financial statements Company’s common stock. The warrants are exercisable at any time on or before September 30, 2022 at a price of $0.20 per share.
F-9
The Company recently completed a private placement and raised $556,129 by issuing common shares along with 55,612,9002-year warrants exercisable at $0.20 per share.
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(UnauditedNote 2 – Prepared by Management)Summary of Significant Accounting Policies
1. BASIS OF PRESENTATION
Basis of Presentation
The accompanying unaudited interim consolidated financial statements, prepared using the accrual basis of accounting, included herein, have been presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, 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 the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP); however,have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information reflectspresented not misleading.
In the opinion of management, these statements reflect all adjustments, (consisting solelyall of which are of a normal recurring adjustments),nature, which, are, in the opinion of management, are necessary for a fair statementpresentation of the results for theinformation contained therein. It is suggested that these interim periods. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020 and notes thereto together with management’s discussion and analysis of financial condition and results of operations containedincluded in the Company’s annual report on Form 10-K for10-K. The Company follows the year ended April 30, 2010. In the opinion of management, the accompanying interim consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at October 31, 2010 and April 30, 2010, the results of its operations for the six-month periods ended October 31, 2010 and October 31, 2009, and its cash flows for the six-month periods ended October 31, 2010 and October 31, 2009. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the six-month period ended October 31, 2010 are not necessarily indicative of results to be expected for the full year.
The interim consolidated financial statements include the accounts of Yukon Gold Corporation, Inc. (the “Company”) and its wholly owned subsidiary Yukon Gold Corp. (“YGC”). All material inter-company accounts and transactions have been eliminated.
2. GOING CONCERN
The Company's interim consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilitiessame accounting policies in the normal coursepreparation of business. The Company has no source for operating revenue and expects to incur significant expenses before establishing operating revenue. Becauseinterim reports.
Use of continuing operating losses, negative working capital, stockholders’ deficiency and cash outflows from operations, the Company’s continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation. In the event that the Company is unable to raise additional capital, as to which there is no assurance, the Company will not be able to continue doing business. The Company’s future success is dependent upon its continued ability to raise sufficient capital, not only to maintain its operating expenses, but to explore for reserves. There is no guarantee that such capital will be available on acceptable terms, if at all or if the Company will attain profitable levels of operation.Estimates
On August 31, 2010, the Company entered into an Agreement with Lance Capital Ltd. (“Lance”), an Ontario, Canada corporation, pursuant to which, among other things, Lance is assisting the Company in the settlement of certain debts of the Company and providing bridge financing. The efforts of Lance to settle or acquire all of the debts of Yukon Gold Corp. (“YGC”), the Company’s wholly owned Canadian subsidiary have not been successful and YGC has material obligations with creditors who have strongly indicated an unwillingness to settle. As neither YGC nor the Company has an ability to satisfy these material obligations, on October 6, 2010, the Company’s board of directors resolved to cause YGC to seek relief in a bankruptcy proceeding in Ontario, Canada where YGC is domiciled and instructed Lance to employ a trustee to proceed with the bankruptcy of YGC. Subsequent to the quarter ended October 31, 2010, on November 15, 2010 the Company’s wholly owned subsidiary, YGC declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada.
F-10
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
2. GOING CONCERN-Cont’d
These interim consolidated financial statements have been prepared in accordance with United States generally acceptable accounting principles applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying interim consolidated financial statements.
3. NATURE OF OPERATIONS
The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property payments are initially capitalized in accordance with the ASC 805-20-55-37, previously referenced as EITF 04-2 when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. Impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. The Company assesses the carrying costs for impairment at each fiscal quarter end. The Company has determined that all property payments are impaired and accordingly has written off the acquisition costs to project expense.
4. PREPAID EXPENSES AND OTHER
Included in prepaid expenses and other is an amount of $11,743 (CDN$11,981) being Goods & Services tax receivable from the Federal Government of Canada.
5. CAPITAL STOCK
150,000,000 of Common shares, $0.0001 par value.
41,839,535 Common shares (41,839,535 at April 30, 2010).
F-11
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
5. CAPITAL STOCK-Cont’d
Year ended April 30, 2010
The Company received subscriptions for 1,100,000 common shares at $0.04 per share for a total consideration of $44,000 through a non-brokered private placement. The Company issued 1,100,000 common shares.
On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as its President and Chief Executive Officer. As per the terms of the said agreement, the Company issued to the Employee 250,000 common shares of the Company’s common stock, The Employee acknowledges that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledges that he will be considered as affiliate for purposes of Rule 144.
Six months ended October 31, 2010
On September 23, 2010 the Company accepted nine (9) subscriptions for a total of 87,320,400 shares at $.0025 per share for a total consideration of $218,300 through a non-brokered private placement. The proceeds of the private placement were being held in escrow pending the Company’s receipt of a certificate of Good Standing from the Delaware Secretary of State. On October 28, 2010 the Company was issued a certificate of Good Standing. Subsequent to the quarter ended October 31, 2010, on November 1, 2010 the balance of the proceeds of the private placement were released from escrow and transferred to the Company and on November 5, 2010 the shares were certificated and issued as directed by the subscription holders (see subsequent events note 14).
6. STOCK BASED COMPENSATION
Per SEC Staff Accounting Bulletin 107, Topic 14.F, “Classification of Compensation Expense Associated with Share-Based Payment Arrangements” stock based compensation expense is being presented in the same lines as cash compensation paid.
The Company adopted a new Stock Option Plan at its shareholders meeting on January 19, 2007 (the “2006 Stock Option Plan”). The 2006 Stock Option Plan will be administered by the board of directors of the Company or, in the board of directors’ discretion, by a committee appointed by the board of directors for that purpose. The TSX approved the 2006 Stock Option plan on March 9, 2007.
Subject to the provisions of the 2006 Stock Option Plan, the aggregate number of shares which may be issued under the 2006 Stock Option Plan shall not exceed 2,000,000 shares ("Total Shares"). On March 18, 2008 at the Annual and Special Meeting of Shareholders, the Shareholders of the Company approved an amendment to the 2006 Stock Option Plan increasing the number of Shares reserved for issuance there under from 2,000,000 to 2,899,044. Any Stock Option granted under the 2006 Stock Option Plan which has been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan, effectively resulting in a re-loading of the number of shares available for grant under the 2006 Stock Option Plan. Any shares subject to an option granted under the 2006 Stock Option Plan which for any reason is surrendered, cancelled or terminated or expires without having been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan.
F-12
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
6. STOCK-BASED COMPENSATION-Cont’d
Under the 2006 Stock Option Plan, at no time shall: (i) the number of shares reserved for issuance pursuant to Stock Options granted to any one optionee exceed 10% of the Total Shares; (ii) the number of shares, together with all security based compensation arrangements of the Company in effect, reserved for issuance pursuant to Stock Options granted to any "insiders" (as that term is defined under theSecurities Act (Ontario)) exceed 10% of the total number of issued and outstanding shares. In addition, the number of shares issued to insiders pursuant to the exercise of Stock Options, within any one year period, together with all security based compensation arrangements of the Company in effect, shall not exceed 10% of the total number of issued and outstanding shares.
The purchase price (the “Price”) per share under each Stock Option shall be determined by the board of directors or a committee, as applicable. The Price shall not be lower than the closing market price on the TSX, or another stock exchange where the majority of the trading volume and value of the Shares occurs, on the trading day immediately preceding the date of grant, or if not so traded, the average between the closing bid and asked prices thereof as reported for the trading day immediately preceding the date of the grant; provided that if the shares have not traded on the TSX or another stock exchange for an extended period of time, the “market price” will be the fair market value of the shares at the time of grant, as determined by the board of directors or committee. The board of directors or committee may determine that the Price may escalate at a specified rate dependent upon the date on which an option may be exercised by the Eligible Participant.
Year ended April 30, 2010
The company did not issue any stock options during the year ended April 30, 2010.
Six month period ended October 31, 2010
The company did not issue any stock options during the six month period ended October 31, 2010.
As of October 31, 2010 and April 30, 2010, there was $nil of unrecognized expenses related to non-vested stock-based compensation arrangements granted. The stock-based compensation expense for the six month period ended October 31, 2010 was $nil.
Cancellation/Expiration/Forfeiture of Stock Options:
Year ended April 30, 2010
On June 24, 2009, 200,000 stock options held by a former officer were forfeited.
On August 4, 2009, 340,000 stock options held by a former director were forfeited.
On October 24, 2009, the Company cancelled 200,000 stock options held by a former officer.
F-13
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
6. STOCK-BASED COMPENSATION-Cont’d
On December 15, 2009, 250,000 stock options held by a former director expired.
On January 5, 2010, 12,000 stock options held by an officer expired.
On January 19, 2010, 350,000 stock options held by a former director were forfeited.
On January 29, 2010, 400,000 stock options held by a former director were forfeited.
Cancellation/Expiration/Forfeiture of Stock Options:
For the six months ended October 31, 2010
On August 15, 2010, 62,500 stock options held by a consultant expired.
F-14
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
7. SALE OF MOUNT HINTON MINING PROPERTY CLAIMS
On May 21, 2009, the Company, through its wholly owned subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton Syndicate. All of the claims comprising the Mount Hinton Property were conveyed by the Company’s subsidiary to a member of the Hinton Syndicate. The Hinton Syndicate paid the Company (i) $110,306 (CDN$125,000) on May 21, 2009 and (ii) granted to the Company’s subsidiary a 2% “Net Smelter Royalty (an “NSR”) on the Mount Hinton Property claims. Such 2% NSR may be terminated at any time by payment to YGC of the following:
| If the payment is made to YGC within the 12-month anniversary of the Closing: | $ | 112,723 | |
| (CDN$115,000) | |||
| (This payment was not made within the 12-month anniversary of the Closing.) | |||
| If the payment is made to YGC after the 12-month | $ | 137,228 | |
| anniversary of the Closing but before the 24-month anniversary of the Closing: | (CDN$140,000) | ||
| If the payment is made to YGC after the 24-month | $ | 161,733 | |
| anniversary of the Closing but before the 36-month anniversary of the Closing: | (CDN$165,000) | ||
| If the payment is made to YGC after the 36-month | $ | 186,238 | |
| anniversary of the Closing but before the 48-month anniversary of the Closing: | (CDN$190,000) | ||
| If the payment is made to YGC after the 48-month anniversary of the Closing, it shall be increased by $24,505 (CDN$25,000) for each 12-month period following the 49-month anniversary of the Closing. |
F-15
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
8. COMMITMENTS AND CONTINGENCIES
The Marg Property
In March 2005, the Company acquired rights to purchase 100% of the Marg Property, which consists of 402 contiguous mineral claims covering approximately 20,000 acres located in the Mayo Mining District of the Yukon Territory of Canada. Title to the claims is registered in the name of YGC.
The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement (“Agreement”) with Atna Resources Ltd. (“Atna”). Under the terms of the Agreement as amended the Company paid $119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an additional 133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000) cash and an additional 133,334 common shares of the Company on December 12, 2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next payment then due.
The Company agreed to make subsequent payments under the Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. (“Atna”) entered into a letter agreement (the “Amendment Agreement”) amending the purchase agreement by which the Company acquired its Marg Property (the “Marg Acquisition Agreement”). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Company’s common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company’s common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna $972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.
On October 15, 2010, Lance Capital Ltd. (“Lance”) registered a lien against the Marg Property to secure a promissory note of the Company in the amount of $375,000 that was issued to Lance. The amount of the promissory note corresponds to the amount committed by Lance to fund expenses of the Company. Subsequent to the quarter ended October 31, 2010, on November 23, 2010, Lance issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance, the Company and YGC and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest.
On August 10, 2010, the following agreement was terminated by mutual consent of the parties and the consultant and the Company signed an unconditional and absolute general release which terminated the Agreement dated August 28, 2009:
F-16
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
8. COMMITMENTS AND CONTINGENCIES – Cont’d
On October 1, 2009 the Company’s board of directors ratified a retainer agreement (the “Agreement”) dated August 28, 2009 with a Panamanian corporation (the “Consultant”) to provide certain exclusive advisory services for financing, acquisition, collaboration, product or services sales transactions and strategies, for a period of twelve (12) months (the “Term”) from the date of execution. If at any time during the Term the Company wished to terminate the exclusivity of the Consultant, the Company could give the Consultant ten (10) days prior written notice and pay the Consultant $200,000. The Agreement stated that a monthly cash fee of $50,000 and the Consultant’s out-of-pocket expenses would accrue and be payable only at such time as the Company secures a minimum of $5,000,000 in financing during the Term of the Agreement, at which time the total amount accrued would be due and payable in full without interest. In the event that the Company failed to timely pay any of the compensation, as defined in the Agreement, each shall bear interest at the rate of six percent (6%) until paid in full.
The Consultant had the right upon written notice to the Company of its election to receive gold or other minerals in lieu of cash prior to or concurrent with the closing of any financing transactions (“Financing Transactions”). Compensation payable in kind shall not bear any interest. If an acquisition or divestiture had been consummated during the Term of the Agreement or for a period of one (1) year thereafter, the Company was obligated to pay a transaction fee (“TF”) to the Consultant based on the following transaction values (“TVs”): (i) 5% TF up to and including $1,000,000 TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3% TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from $3,000,000 to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi) 1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement or for a period of one (1) year after termination, the Company would have paid the Consultant a finder’s fee equal to two percent (2%) of the total amount of each and every Financing Transaction successfully undertaken by the Company. In addition the Company was to have granted to the Consultant options to purchase that number of shares of the Company’s common stock determined by multiplying two percent (2%) equal to the total number of equity shares placed and/or issued, or if convertible debt, two percent (2%) of the number of common equity shares as if the convertible debt was converted at its earliest possible date. Such options were to be exercisable for a period of five (5) years at an exercise price equal to the five-day weighted average trading price (WATP) for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. In addition to the foregoing fees, the Company shall grant to the Consultant a fully-vested option (“Equity Fee”) to acquire a number of shares equal to eight and one-half percent (8.5%) of the total common shares issued and outstanding at the time of the execution of the Agreement. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. The number of stock options shall be subject to any and all adjustments of the common shares during the five-year exercise period. Upon the Company entering into any definitive agreement, during the Term, to acquire any properties/projects, as defined in the Agreement, an additional fully-vested performance option was to be granted to the Consultant to acquire a number of shares equal to eight and one-half percent (8.5%) of the then issued and outstanding common shares of the Company. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the execution of the definitive agreement. The number of performance options was to be subject to any and all adjustments of the common shares during the five-year exercise period. If any acquisition transaction was contemplated by the Company during the Term or for a period of one (1) year after the Company would grant to the Consultant the absolute right to participate, on a pro rata basis, in up to a ten percent (10%) interest in the Company’s acquisition.
F-17
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
8. COMMITMENTS AND CONTINGENCIES–Cont’d
The Consultant would also be responsible for all pro rata future development and operating costs of said acquisition when paid by the parties owning the other 90% interests. Notwithstanding anything within the Agreement to the contrary, any stock or equity-based compensation must be pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s) described in paragraphs 2 A and B of Schedule A to this Agreement are concluded during the Term, or for a period of one (1) year thereafter, provided such Financing Transaction(s) results from parties identified in writing by the Consultant in performing the Services, the Company will pay to the Consultant, or a designee of the Consultant, the following: (i) with respect to any equity financing, a cash fee equal to seven percent (7%) of the total amount of the Financing Transaction (gross proceeds, without offset for costs or fees), (ii) with respect to any debt financing, a cash fee equal to four percent (4%) of the total amount of such Financing Transaction (gross proceeds, without offset for costs or fees), and (iii) in addition, upon the completion of any Financing Transaction of the Company or its, parents, subsidiaries or affiliates, the Company shall grant to the Consultant the right and option to purchase that number of shares, units or interests in the Company determined by dividing five percent (5%) of the amount of the Financing Transaction by an amount equal to equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the payment of Yukon Gold Corporation stock options. Such rights shall be exercisable, for a period of five (5) years, from date of issue and shall possess “most favored nation” registration rights, i.e., registration rights equal to the best/most favorable rights/treatment of any issued/outstanding registration rights provisions applicable to any securities of the Company, specifically including, but not limited to demand and “piggy back” registration rights, including the right to include such shares in any offering undertaken by the Company, i.e., “tag-along” rights. Such Fee shall be paid by the Company to the Consultant within ten (10) calendar days after the closing of each Financing Transaction, or, if such Financing Transaction closes in several tranches, within ten (10) calendar days after the closing of each tranche, until paid in full.
Subsequent to the period covered by this report, on November 18, 2010 the Company and the consultant signed an unconditional and absolute general release which terminated the following Agreement:
On October 1, 2009 the Company’s board of directors ratified a consulting agreement (the “Agreement”), dated September 20, 2009, with an individual to provide services as a special advisor (the “Consultant”). The Agreement stated that the Consultant would receive 450,000 restricted common shares no later than ten (10) business days from the date of signing the Agreement. The Consultant was entitled to receive a cash fee of two and one-half percent (2.5%) on the aggregate value of a financing(s) or transaction(s) entered into by the Company during the term of the Agreement or within the twelve (12) months following the term of the Agreement if the discussions regarding the financial transaction(s) were initiated by the Consultant during the term of the Agreement. Further it was agreed that the Consultant would receive a bonus of up to 1,000,000 restricted common shares of the Company of any financing or transaction, such bonus to be awarded on transactions values (“TV”) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a $1,000,000 up to a $6,000,000 TV, an additional 300,000 shares and (iii) over a $6,000,000 TV, an additional 500,000 shares. Upon receipt of an itemized invoice the Consultant would be reimbursed for all traveling and other actual legitimate expenses. The Agreement was for a three month minimum term and could be extended by the mutual agreement of both parties in writing. On December 20, 2009 the agreement terminated and the Consultant was not successful in raising any financing. No services were provided under this agreement. The Company considered the agreement not consummated and did not issue the shares for that reason but the Company did expense the cost at fair value. The Company reversed the expense of the cost of the 450,000 shares at fair value during the period ended October 31, 2010.
F-18
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
8. COMMITMENTS AND CONTINGENCIES-Cont’d
On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as its President and Chief Executive Officer. During the employment term, the Company was to pay the Employee a base salary at the annual rate of one hundred and eighty thousand ($180,000) dollars per year ("Base Salary"). Half of the Employee’s Base Salary was to be deferred and was to accrue interest at the LIBOR rate plus five percent (5%). Deferred Base Salary was to be payable to the Employee with interest no sooner than the Cerro Quema gold project entering production but could be further deferred at the Employee’s discretion. In the event that this Agreement was terminated for any reason, the Employee would be entitled to all deferred Base Salary, with interest, to be paid within three (3) months of such termination. The Agreement further stated that the Employee immediately was to be awarded 250,000 shares of the Company’s common stock, which were issued in the last quarter of the year ended April 30, 2010. The Employee acknowledged that such shares would be “restricted shares” subject to limitations on re-sale. The Employee further acknowledged that he would be considered as affiliate for purposes of Rule 144. The Company agreed to register such shares as part of any registration statement it files under the Securities Act of 1933. Additional stock options could be awarded to the Employee based upon the Company’s achieving certain production goals and in accordance with the Company’s 2006 Stock Option Plan. Employee and the Company were to agree upon the goals and option amounts within two (2) months of the execution of this Agreement. As of the date of these statements, the option amounts were not agreed upon. The Employee couldterminate employment at any time after providing forty-five (45) days’ prior written notice to the Company. The Company could terminate the Employee's employment without cause at any time after providing written notice to Employee and paying all unpaid salaries and benefits.
In addition, an amount equal to twelve (12) months of Base Salary (at the rate in effect as of the date of the Employee’s termination without cause) would be paid to the Employee if this Agreement was terminated by the Company at any time prior to the second anniversary of the date of this Agreement. On August 9, 2010 the Employee and the Company mutually agreed to terminate their Agreement without notice. The Employee permitted the assignment of all amounts owed to the Employee by the Company to Lance Capital Ltd. Due to limited activity in the Company Mr. Douglas Oliver further agreed to stay on as a director and Chief Executive Officer without compensation.
F-19
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
8. COMMITMENTS AND CONTINGENCIES-Cont’d
On October 26, 2009, the Company entered into a letter agreement (the “Agreement”) with a former officer to act as a consultant providing accounting and administration services for $1,960 (CDN$2,000) per month and to warehouse the Company records for $490 (CDN$500) per month. The Company further agreed to reimburse the consultant for any out of pocket expenses and that either party may give 30 days notice in writing of their intention to terminate the Agreement. On August 31, 2010, the consultant agreed to termination of the Agreement without notice and further agreed to accept $8,822 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd. agreed to advance the funds to the Company to cover this payment. The Company paid $8,822 (CDN$9,000) to the consultant on October 14, 2010.
The Company’s subsidiary YGC has been served an Ontario Court order to pay a penalty for $117,759 (CDN $120,138) for early termination of its office lease. The Company’s former landlord had made the said claim in the Ontario Superior Court of Justice. On June 17, 2010, the subsidiary’s financial institution remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice being the balance of funds in YGC’s bank account.
On October 1, 2010, the Company entered into a consulting agreement (the “Agreement”) with Lance Capital Ltd. (the “Consultant”) to provide administrative and other services for $7,500 per month. The Company further agreed to reimburse the Consultant for all expenses incurred with respect to the operation of the administration of the Company provided that these expenses are incurred in substantial accordance with monthly and annual budgets to be prepared by the Consultant and approved by the Board of Directors of the Company from time to time. The term of this Agreement is one (1) year and automatically renews from year to year unless terminated upon 30 days prior written notice by either party.
9. RELATED PARTY TRANSACTIONS
Six month period ended October 31, 2010
The Company and its subsidiary expensed a total of $nil in consulting fees and wages to three Company Directors, and $69,569 to two of its officers.
No director or officer exercised stock options during the six month period ended October 31, 2010.
Six month period ended October 31, 2009
The Company and its subsidiary expensed a total of $nil in consulting fees and wages to three Company Directors, and $4,593 to two of its officers.
No director or officer exercised stock options during the six month period ended October 31, 2009.
F-20
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
10. DEMAND LOAN FROM DIRECTOR
The Company received loans for $64,500 on September 21, 2009, $37,500 on October 5, 2009, $8,000 on June 28, 2010, and $7,798 on July 20, 2010 for a total of $117,798 from a director of the Company. The Company issued Promissory Notes to the director which carried simple interest at the rate of seven percent (7%) of the outstanding principal balance per annum. The entire principal balance outstanding and any interest thereon was payable on demand by the holder of the Promissory Notes, but no later than three years from the date of the loan. On August 6, 2010 the Company received a loan for $9,900 from this same director of the Company. The Company issued a Promissory Note to the director which carried simple interest at the rate of seven percent (7%) of the outstanding principal balance per annum. The entire principal balance outstanding and any interest thereon was payable on demand by the holder of the Promissory Note, but no later than three years from the date of the loan. On August 10, 2010, the director assigned all of the demand loans including interest and expenses owed to the director to Lance Capital Ltd.
11. SECURED CONVERTIBLE PROMISSORY NOTE
On August 31, 2010, Yukon Gold Corporation, Inc. (the “Company”) and Lance Capital Ltd. (“Lance”), an Ontario, Canada company entered into a Note Purchase and Security Agreement (the “Agreement”) pursuant to which the Company issued to Lance a Secured Convertible Promissory Note (the “Note”) with a face amount of $375,000, bearing interest at 5% per annum and convertible into common shares of the Company at a conversion rate of $0.0025 per share. The Note matures on December 31, 2011. The Note is secured by a first lien and security interest in the Marg Property, a group of mineral claims located in the Mayo Mining District of the Yukon Territory, Canada (the “Marg Property”). The Agreement was completed October 15, 2010 upon registration of the lien. The Marg Property is owned by the Company’s wholly-owned Canadian subsidiary Yukon Gold Corp. (“YGC”).
The Note was issued by the Company to Lance as consideration for: (i) the assumption by Lance of certain of the Company’s obligations to three creditors which amounts were settled with Lance for $356,835 plus (ii) a loan from Lance to the Company of $18,165 to cover certain ongoing expenses of the Company. This Note totaling $375,000 replaces the payables assumed by Lance and the loan of $18,165.
During the quarter ended October 31, 2010 the Company accrued interest on the note in the amount of $3,185.
Subsequent to the quarter ended October 31, 2010, on November 15, 2010, the Company’s wholly owned subsidiary, Yukon Gold Corp., declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed Schwartz Levitsky Feldman Inc. as trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed in the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division. On November 23, 2010, Lance Capital Ltd. issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance Capital Ltd., the Company and YGC and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest.
12. BANKRUPTCY OF YUKON GOLD CORP.
During the quarter ended October 31, 2010 the efforts of Lance Capital Ltd. (“Lance”) to settle or acquire all of the debts of Yukon Gold Corp. (“YGC”), the Company’s wholly owned Canadian subsidiary have not been successful and YGC has material obligations with creditors who have strongly indicated an unwillingness to settle. As neither YGC nor the Company has an ability to satisfy these material obligations, on October 6, 2010, the Company’s board of directors resolved to cause YGC to seek relief in a bankruptcy proceeding in Ontario, Canada where YGC is domiciled and instructed Lance to employ a trustee to proceed with the bankruptcy of YGC.
F-21
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
12. BANKRUPTCY OF YUKON GOLD CORP.-Cont’d.
Subsequent to the quarter ended October 31, 2010, on November 15, 2010, the Company’s wholly owned subsidiary, Yukon Gold Corp., declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed a trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed in the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division.
13. CHANGES IN OFFICERS
On September 2, 2010, the Company’s board of directors accepted the resignation of Rakesh Malhotra as Chief Financial Officer effective September 1, 2010. There were no material disagreements between Mr. Malhotra, the Company or its board with respect to the Company’s operations or public disclosures.
On September 2, 2010, the Company’s board of directors appointed Mrs. Kathy Chapman, Chief Financial Officer and Corporate Secretary of the Company. Mrs. Chapman is also the Corporate Secretary of YGC.
On September 15, 2010, the Company’s board of directors appointed Ms. Joanne Hughes, Vice President, Operations of the Company.
14. SUBSEQUENT EVENTS
On November 1, 2010 the Company’s board of directors passed a resolution to acquire equipment from a third party for a total consideration of $30,000. The Company paid the $30,000 on November 2, 2010.
On November 3, 2010 the Company accepted one (1) subscription for 12,000,000 shares at $.0025 per share for a total consideration of $30,000 through a non-brokered private placement and the shares were certificated on November 5, 2010.
On November 5, 2010 the Company issued 87,320,400 shares against subscriptions received during the quarter ended October 31, 2010 for $218,300.
F-22
YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Condensed Notes to Interim Consolidated Financial StatementsOctober 31, 2010(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)
14. SUBSEQUENT EVENTS-Cont’d
On November 15, 2010, the Company’s wholly owned subsidiary, Yukon Gold Corp., declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed Schwartz Levitsky Feldman Inc. as trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed in the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division.
On November 18, 2010, the Company and a consultant signed an unconditional and absolute general release which terminated the agreement dated September 20, 2009.
On November 23, 2010, Lance Capital Ltd. issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance Capital Ltd., the Company and the Company’s wholly-owned subsidiary, Yukon Gold Corp., and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest.
On December 1, 2010, 325,000 stock options held by a former officer expired.
On December 2, 2010, a meeting of the creditors of the Company’s wholly-owned subsidiary, Yukon Gold Corp., was held in Toronto, Ontario, Canada.
On December 13, 2010, 250,000 stock options held by a director expired.
On December 13, 2010, 76,000 stock options held by a former officer expired.
On December 13, 2010, 88,000 stock options held by an officer expired.
F-23
MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONFOR THE SIX MONTH PERIODENDED OCTOBER 31, 2010
Discussion of Operations & Financial Condition
Yukon Gold has no source of revenue and we continue to operate at a loss. We expect our operating losses to continue for so long as we remain in an exploration stage and perhaps thereafter. As at October 31, 2010, we had accumulated losses of $15,571,436. These losses raise substantial doubt about our ability to continue as a going concern. Our ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon our raising additional equity financing.
As described in greater detail below, the Company’s major endeavor over the year has been its effort to re-structure its obligations, settle debt and raise additional capital to meet its administrative expenses and pursue its exploration activities. We are working urgently to obtain additional financing, which may entail the acquisition of additional properties in order to attract such financing.
As of August 31, 2010, the Company engaged Lance Capital Ltd. (“Lance”), an Ontario company, to assist it with the re-structuring of its obligations and to assist in securing additional equity financing. The Company’s contractual arrangement with Lance Capital Ltd. (“Lance”) is described below in “Contractual Obligations and Commercial Commitments.” As part of that agreement, Lance agreed to advance funds to creditors of the Company in exchange for a Convertible Promissory Note of the Company in the amount of $375,000 which is secured by a lien on the Marg Property, which is owned by the Company’s wholly-owned subsidiary, Yukon Gold Corp (“YGC”). In its sole discretion, Lance may continue to fund operating expenses of the Company for a limited period of time while it explores the feasibility of private placement or other financing for the Company. In the event that Lance exercises its option to convert the Convertible Promissory Note issued by the Company into Shares, Lance would become the principal shareholder of the Company and would effectively control the Company.
Shortly after YGC filed for bankruptcy protection in Ontario, and subsequent to the quarter ended October 31, 2010, Lance issued a Notice of Default to the Company in accordance with the provisions the Note Purchase and Security Agreement dated August 31, 2010 among Lance, the Company and YGC. Lance demanded full payment of the $375,000 note plus accrued interest. As of the date of this report, Lance has taken no further action and continues to pursue resolution of the Company’s obligations with its creditors and private placement financing.
SELECTED INFORMATION
| Three months | Three months | |||||
| ended | ended | |||||
| October 31,2010 | October 31,2009 | |||||
| Revenues | Nil | Nil | ||||
| Net Loss | $ | 62,094 | $ | 225,697 | ||
| Loss per share-basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) |
| Six months | Six months | |||||
| ended | ended | |||||
| October 31, 2010 | October 31,2009 | |||||
| Revenues | Nil | Nil | ||||
| Net Loss | $ | 129,402 | $ | 237,652 | ||
| Loss per share-basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) |
| As at | As at | |||||
| October 31, 2010 | April 30, 2010 | |||||
| Total Assets | $ | 219,466 | $ | 42,149 | ||
| Total Liabilities | $ | 747,900 | $ | 660,666 | ||
| Cash dividends declared per share | Nil | Nil |
The Company's expenses are reflected in the Interim Consolidated Statements of Operations under the category of Operating Expenses. To meet the criteria of United States generally accepted accounting principles (“GAAP”), all exploration and general and administrative costs related to projects are charged to operations in the year incurred.
The significant components of expense that have contributed to the total operating expense are discussed as follows:
(a)General and Administrative Expense
Included in operating expenses for the six months ended October 31, 2010 is general and administrative expense of $125,301 as compared to $330,360 for the six months ended October 31, 2009. General and administrative expenses have decreased substantially during the period ended October 31, 2010 as compared to the period ended October 31, 2009 due to efforts by management to reduce costs.
(b)Project Expense
Included in operating expenses for the six months ended October 31, 2010 is project expenses of $nil as compared with $12,104 for the six months ended October 31, 2009. The Company has incurred little or no project expenses during these periods due to lack of funding.
Agreement with Hinton Syndicate Concerning our Former Mount Hinton Property
The following disclosure relates to our former property known as the “Mount Hinton” property. Our interest in the Mount Hinton property was sold on May 21, 2009.
On May 21, 2009, the Company, through its wholly owned subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton Syndicate. YGC retained a 2% NSR on the property sold with the following provisions and rights. Such 2% NSR may be terminated at any time by payment to YGC of the following:
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Calculation and payment of the NSR are as follows:
1. The NSR which may be payable to a party (the “Payee”) by a party (the “Payor”) shall be calculated and paid to the Payee in accordance with the terms of this Schedule.
2. The NSR shall be calculated on a calendar quarterly basis.
3. The following words shall have the following meanings:
3.1 “Gross Revenue” shall mean the aggregate of the following amounts received in each quarterly period:
(a) (i) all revenue received by the Payor in such quarter from arm’s length purchasers of mineral products, or
(ii) the fair market value of all mineral products sold by the Payor in such quarter to persons not dealing at arm’s length with the Payor; and
(b) any proceeds of insurance received in such quarter due to losses or damages in respect to mineral products.
3.2 “Permissible Deductions” shall mean the aggregate of the following charges (to the extent not previously deducted or accrued in computing Gross Revenue) that are paid in each quarterly period:
(a) sales charges levied by any sales agent in respect to the sale of mineral products;
(b) all costs, expenses and charges of any nature whatsoever which are either paid or incurred by the Payor in connection with the refinement or beneficiation of mineral products after leaving the Property, including all weighing, sampling, assaying and representation costs, metal losses, any umpire charges and any penalties charged by the processor, refinery or smelter, and;
(c) all other insurance costs in respect of mineral products;
(d) provided: (i) that where a cost or expense otherwise constituting a Permissible Deduction is incurred by the Payor in a transaction with a party with whom it is not dealing at arm’s length (as that term is defined in the Income Tax Act (Canada)), such costs or expenses may be deducted, but only as to the lesser of the actual cost incurred by the Payor and the fair market value thereof considering the time of such transaction and under all the circumstances thereof; and (ii) transportation costs and milling costs at another site, prior to the smelting and refining shall not be included in the definition of Permissible Deductions.
3.3 “Net Smelter Returns” shall mean Gross Revenue less Permissible Deductions in respect to such quarter.
3.4 “NSR” shall mean Net Smelter Returns.
4. The NSR shall be calculated and paid within 30 days after the end of each calendar quarter ending March 31, June 30, September 30 and December 31 of each year. Smelter settlement sheets, if any, and a statement setting forth calculations in sufficient detail to show how the payment was derived (the “Statement”) shall be submitted with the payment.
5. In the event that final amounts required for the calculation of the NSR are not available within the time period referred to in paragraph 4 of this Schedule, then provisional amounts shall be established, the NSR shall be paid on the basis of such provisional amounts and positive or negative adjustments shall be made to the payment in the succeeding quarter, as necessary.
6. All NSR payments shall be considered final and in full satisfaction of all obligations of the Payor with respect thereto, unless the Payee delivers to the Payor a written notice (the “Objection Notice”) describing and setting forth a specific objection to the calculation thereof within 60 days after receipt by the Payee of the Statement. If the Payee objects to a particular Statement as herein provided, the Payee shall, for a period of 60 days after the Payor’s receipt of such Objection Notice, have the right, upon reasonable notice and at a reasonable time, to have the Payor’s accounts and records relating to the calculation of the NSR in question audited by the auditors of the Payor. If such audit determines that there has been a deficiency or an excess in the payment made to the Payee, such deficiency or excess will be resolved by adjusting the next monthly NSR payment due hereunder. The Payee shall pay all the costs and expenses of such audit unless a deficiency of 2 1/2% or more of the amount due is determined to exist. The Payor shall pay the costs and expenses of such audit if a deficiency of 2 1/2% or more of the amount due is determined to exist. All books and records used and kept by the Payor to calculate the NSR due hereunder shall be kept in accordance with Canadian generally accepted accounting principles. Failure on the part of the Payee to make claim against the Payor for adjustment in such 60 day period by delivery of an Objection Notice shall conclusively establish the correctness and sufficiency of the Statement and NSR payment in respect of the applicable quarter.
7. All profits and losses resulting from the Payor engaging in any commodity futures trading, option trading, metals trading, gold loans or any combination thereof, and any other hedging transactions with respect to mineral products (collectively, “Hedging Transactions”) are specifically excluded from calculations of the NSR pursuant to this Schedule, it being understood by the parties that both the Payor and Payee may engage in speculative hedging trading activities for their own account. All Hedging Transactions by the Payor and all profits or losses associated therewith, if any, shall be solely for the Payor’s account, irrespective of whether or not mineral products are delivered in fulfilment of such obligations. When necessary to give effect to the provisions of this paragraph 7, Gross Revenue from mineral products subject to Hedging Transactions by the Payor shall be determined pursuant to subclause 3.1(a)(ii), rather than 3.1(a)(i) hereof.
8. Fair market value shall be determined by using, for gold, the quarterly average price of gold which shall be calculated by dividing the sum of all London Bullion Market Association P.M. Gold Fix prices reported for the calendar quarter in question by the number of days for which such prices were quoted and, for silver and other metals, the quarterly average price which shall be calculated by dividing the sum of all New York Commodity Exchange (“COMEX”) prices reported for silver and the other metal quoted by and at the closing of COMEX for the calendar quarter in question by a number of days for which such prices were quoted, less, in each case, an amount reasonably equivalent to the deductions permitted by clause 3.2 hereof.
Exploration
During the year ended April 30, 2009, the Company completed its acquisition of the Marg Property and currently owns it outright. The Marg Property consists of 402 contiguous mineral claims covering approximately 20,000 acres. Access to the claim group is possible either by helicopter, based in Mayo, Yukon Territory, Canada, located approximately 80 km to the southwest or by small aircraft to a small airstrip located near the Marg deposit. A 50 kilometer winter road from Keno City to the property boundary was completed in 1997. The camp site on the property provides accommodation for up to 12 people. Presently the hydroelectric power grid terminates at Keno City some 50km to the southwest and water is available from the Keno Ladue River, which flows through the property. The Company on August 31, 2010 granted Lance Capital Ltd. a security interest of $375,000 registered against the Marg Property on October 15, 2010. The Company also credited the Company’s wholly-owned subsidiary, Yukon Gold Corp., (“YGC”) with an equal amount of the amount owed to the Company. Subsequent to the quarter ended October 31, 2010, on November 15, 2010 the Company’s wholly owned subsidiary Yukon Gold Corp. declared bankruptcy. On November 23, 2010 Lance Capital Ltd. issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance Capital Ltd., the Company and YGC and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest.
Liquidity and Capital Resources
The following table summarizes the Company's cash flows and cash in hand:
| October 31, 2010 | October 31, 2009 | |||||
| Cash and cash equivalent | $ | 182,410 | $ | 39,402 | ||
| Working capital deficit | $ | (552,020 | ) | $ | (354,043 | ) |
| Cash used in operating activities | $ | (309,610 | ) | $ | (226,952 | ) |
| Cash provided (used) in investing activities | $ | Nil | $ | 110,306 | ||
| Cash provided in financing activities | $ | 491,300 | $ | 146,000 |
As at October 31, 2010 the Company had working capital deficit of $552,020 as compared to a working capital deficit of $354,043 in the previous period. During the current period the Company received a demand loan of $9,900 carrying interest of 7% per annum from a director of the Company.
Off-Balance Sheet Arrangement
The Company has no Off-Balance Sheet Arrangement as of October 31, 2010 and April 30, 2010.
Contractual Obligations and Commercial Commitments
The Marg Property
In March 2005, the Company acquired rights to purchase 100% of the Marg Property, which consists of 402 contiguous mineral claims covering approximately 20,000 acres located in the Mayo Mining District of the Yukon Territory of Canada. Title to the claims is registered in the name of YGC.
The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement (“Agreement”) with Atna Resources Ltd. (“Atna”). Under the terms of the Agreement as amended the Company paid $119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an additional 133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000) cash and an additional 133,334 common shares of the Company on December 12, 2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next payment then due.
The Company agreed to make subsequent payments under the Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. (“Atna”) entered into a letter agreement (the “Amendment Agreement”) amending the purchase agreement by which the Company acquired its Marg Property (the “Marg Acquisition Agreement”). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Company’s common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company’s common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna $972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.
On October 15, 2010 Lance Capital Ltd. (“Lance”) registered a lien against the Marg Property to secure a promissory note of the Company in the amount of $375,000 that was issued to Lance. The amount of the promissory note corresponds to the amount committed by Lance to fund expenses of the Company. Subsequent to the quarter ended October 31, 2010, on November 23, 2010 Lance Capital Ltd. issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance Capital Ltd., the Company and the Company’s wholly-owned subsidiary, Yukon Gold Corp., and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest.
On August 10, 2010, the following agreement was terminated by mutual consent of the parties and the consultant and the Company signed an unconditional and absolute general release which terminated the Agreement dated August 28, 2009;
On October 1, 2009 the Company’s board of directors ratified a retainer agreement (the “Agreement”) dated August 28, 2009 with a Panamanian corporation (the “Consultant”) to provide certain exclusive advisory services for financing, acquisition, collaboration, product or services sales transactions and strategies, for a period of twelve (12) months (the “Term”) from the date of execution. If at any time during the Term the Company wishes to terminate the exclusivity of the Consultant, the Company will give the Consultant ten (10) days prior written notice and pay the Consultant $200,000. The Agreement stated that a monthly cash fee of $50,000 and the Consultant’s out-of-pocket expenses would accrue and be payable only at such time as the Company secures a minimum of $5,000,000 in financing during the Term of this agreement at which time the total amount accrued shall be due and payable in full without interest. In the event that the Company fails to timely pay any of the compensation, as defined in the Agreement, each shall bear interest at the rate of six percent (6%) until paid in full. The Consultant has the right upon written notice to the Company of its election to receive gold or other minerals in lieu of cash prior to or concurrent with the closing of any financing transactions (“Financing Transactions”). Compensation payable in kind shall not bear any interest. If an acquisition or divestiture has been consummated during the Term of the Agreement or for a period of one (1) year thereafter, the Company was obligated to pay a transaction fee (“TF”) to the Consultant based on the following transaction values (“TVs”): (i) 5% TF up to and including $1,000,000 TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3% TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from $3,000,000 to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi) 1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement or for a period of one (1) year after termination, the Company would have paid the Consultant a finder’s fee equal to two percent (2%) of the total amount of each and every Financing Transaction successfully undertaken by the Company. In addition the Company was to have granted to the Consultant options to purchase that number of shares of the Company’s common stock determined by multiplying two percent (2%) equal to the total number of equity shares placed and/or issued, or if convertible debt, two percent (2%) of the number of common equity shares as if the convertible debt was converted at its earliest possible date. Such options were to be exercisable for a period of five (5) years at an exercise price equal to the five-day weighted average trading price (WATP) for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. In addition to the foregoing fees, the Company shall grant to the Consultant a fully-vested option (“Equity Fee”) to acquire a number of shares equal to eight and one-half percent (8.5%) of the total common shares issued and outstanding at the time of the execution of the Agreement. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. The number of stock options shall be subject to any and all adjustments of the common shares during the five-year exercise period. Upon the Company entering into any definitive agreement, during the Term, to acquire any properties/projects, as defined in the Agreement, an additional fully-vested performance option was to be granted to the Consultant to acquire a number of shares equal to eight and one-half percent (8.5%) of the then issued and outstanding common shares of the Company. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the execution of the definitive agreement. The number of performance options was to be subject to any and all adjustments of the common shares during the five-year exercise period. If any acquisition transaction was contemplated by the Company during the Term or for a period of one (1) year after the Company would grant to the Consultant the absolute right to participate, on a pro rata basis, in up to a ten percent (10%) interest in the Company’s acquisition. The Consultant would also be responsible for all pro rata future development and operating costs of said acquisition when paid by the parties owning the other 90% interests. Notwithstanding anything within the Agreement to the contrary, any stock or equity-based compensation must be pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s) described in paragraphs 2 A and B of Schedule A to this Agreement are concluded during the Term, or for a period of one (1) year thereafter, provided such Financing Transaction(s) results from parties identified in writing by the Consultant in performing the Services, the Company will pay to the Consultant, or a designee of the Consultant, the following: (i) with respect to any equity financing, a cash fee equal to seven percent (7%) of the total amount of the Financing Transaction (gross proceeds, without offset for costs or fees), (ii) with respect to any debt financing, a cash fee equal to four percent (4%) of the total amount of such Financing Transaction (gross proceeds, without offset for costs or fees), and (iii) in addition, upon the completion of any Financing Transaction of the Company or its, parents, subsidiaries or affiliates, the Company shall grant to the Consultant the right and option to purchase that number of shares, units or interests in the Company determined by dividing five percent (5%) of the amount of the Financing Transaction by an amount equal to equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the payment of Yukon Gold Corporation stock options. Such rights shall be exercisable, for a period of five (5) years, from date of issue and shall possess “most favored nation” registration rights, i.e., registration rights equal to the best/most favorable rights/treatment of any issued/outstanding registration rights provisions applicable to any securities of the Company, specifically including, but not limited to demand and “piggy back” registration rights, including the right to include such shares in any offering undertaken by the Company, i.e., “tag-along” rights. Such Fee shall be paid by the Company to the Consultant within ten (10) calendar days after the closing of each Financing Transaction, or, if such Financing Transaction closes in several tranches, within ten (10) calendar days after the closing of each tranche, until paid in full.
Subsequent to the period covered by this report, on November 18, 2010 the Company and the consultant signed an unconditional and absolute general release which terminated the following Agreement:
On October 1, 2009, the Company’s board of directors ratified a consulting agreement (the “Agreement”), dated September 20, 2009, with an individual to provide services as a special advisor (the “Consultant”). The Agreement states that the Consultant will receive 450,000 restricted common shares no later than ten (10) business days from the date of signing the Agreement The Consultant is entitled to receive a cash fee of two and one-half percent (2.5%) on the aggregate value of a financing(s) or transaction(s) entered into by the Company during the term of the Agreement or within the twelve (12) months following the term of this Agreement if the discussions regarding the financial transaction(s) were initiated by the Consultant during the term of this Agreement. Further it was agreed that the Consultant would receive a bonus of up to 1,000,000 restricted common shares of the Company of any financing or transaction, such bonus to be awarded on transactions values (“TV”) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a $1,000,000 up to a $6,000,000 TV, an additional 300,000 shares and (iii) over a $6,000,000 TV, an additional 500,000 shares. Upon receipt of an itemized invoice the Consultant will be reimbursed for all traveling and other actual legitimate expenses. The Agreement is for a three month minimum term and may be extended by the mutual agreement of both parties in writing. On December 20, 2009 the agreement terminated and the Consultant was not successful in raising any financing. No services were provided under this agreement. The Company considered the agreement not consummated and did not issue the shares for that reason but the Company did expense the cost at fair value. The Company reversed the expense of the cost of the 450,000 shares at fair value during the period ended October 31, 2010.
On September 28, 2009, the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as its President and Chief Executive Officer. During the employment term, the Company was to pay the Employee a base salary at the annual rate of one hundred and eighty thousand ($180,000) dollars per year ("Base Salary"). Half of the Employee’s Base Salary was to be deferred and was to accrue interest at the LIBOR rate plus five percent (5%). Deferred Base Salary was to be payable to the Employee with interest no sooner than the Cerro Quema gold project entering production but could be further deferred at the Employee’s discretion. In the event that this Agreement was terminated for any reason, the Employee would be entitled to all deferred Base Salary, with interest, to be paid within three (3) months of such termination. The Agreement further stated that the Employee immediately was to be awarded 250,000 shares of the Company’s common stock, which were issued in the last quarter of the year ended April 30, 2010. The Employee acknowledged that such shares would be “restricted shares” subject to limitations on re-sale. The Employee further acknowledged that he would be considered as affiliate for purposes of Rule 144. The Company agreed to register such shares as part of any registration statement it files under the Securities Act of 1933. Additional stock options could be awarded to the Employee based upon the Company’s achieving certain production goals and in accordance with the Company’s 2006 Stock Option Plan. Employee and the Company were to agree upon the goals and option amounts within two (2) months of the execution of this Agreement. As of the date of these statements, the option amounts were not agreed upon. The Employee could terminate employment at any time after providing forty-five (45) days’ prior written notice to the Company. The Company could terminate the Employee's employment without cause at any time after providing written notice to Employee and paying all unpaid salaries and benefits.
In addition, an amount equal to twelve (12) months of Base Salary (at the rate in effect as of the date of the Employee’s termination without cause) would be paid to the Employee if this Agreement was terminated by the Company at any time prior to the second anniversary of the date of this Agreement. On August 9, 2010 the Employee and the Company mutually agreed to terminate their Agreement without notice. The Employee permitted the assignment of all amounts owed to the Employee by the Company to Lance Capital Ltd. Due to limited activity in the Company Mr. Douglas Oliver further agreed to stay on as a director and Chief Executive Officer without compensation.
On October 26, 2009, the Company entered into a letter agreement (the “Agreement”) with a former officer to act as a consultant providing accounting and administration services for $1,945 (CDN$2,000) per month and to warehouse the Company records for $486 (CDN$500) per month. The Company further agreed to reimburse the consultant for any out of pocket expenses and that either party may give 30 days notice in writing of their intention to terminate the Agreement. On August 31, 2010, the consultant agreed to termination of the Agreement without notice and further agreed to accept $8,822 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd. agreed to advance the funds to the Company to cover this payment. The Company paid $8,822 (CDN$9,000) to the consultant on October 14, 2010.
The Company’s subsidiary YGC has been served an Ontario Court order to pay a penalty for $117,759 (CDN $120,138) for early termination for its office lease. The prior landlord had made the said claim in the Ontario Superior Court of Justice. On June 17, 2010 the Company’s subsidiary’s financial institution remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice being the balance of funds in YGC’s bank account.
On October 1, 2010, the Company entered into a consulting agreement (the “Agreement”) with Lance Capital Ltd. (the “Consultant”) to provide administrative and other services for $7,500 per month. The Company further agreed to reimburse the Consultant for all expenses incurred with respect to the operation of the administration of the Company provided that these expenses are incurred in substantial accordance with monthly and annual budgets to be prepared by the Consultant and approved by the Board of Directors of the Company from time to time. The term of this Agreement is one (1) year and automatically renews from year to year unless terminated upon 30 days prior written notice by either party.
Critical Accounting Policies
The preparation of financial statements in accordanceconformity with generally accepted accounting principles generally accepted in the United States of America requires usmanagement to make estimates and assumptions. These estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amountamounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates.
Consolidation
In January 2021, the Company formed VetaNova Solar Partners, LLC (“VSP”). VSP is authorized to issue common and preferred membership units. As of June 30, 2021, common units and preferred units were outstanding, representing a total of units outstanding. The Company owns of common units of VSP which represent approximately 60% of the outstanding common units of VSP. Additionally, both the Company and VSP share common management. As a result, VSP is consolidated with the Company’s financial statements.
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Cash and cash equivalents
For purposes of reporting cash flows, the Company considers cash and cash equivalents to include highly liquid investments with original maturities of 90 days or less. Those are readily convertible into cash and not subject to significant risk from fluctuations in interest rates. The recorded amounts for cash equivalents approximate fair value due to the short-term nature of these financial instruments.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of its position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
Basic net (loss) per share is computed by dividing net income (loss) attributed to the Company’s common shareholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period.
As of December 31, 2020, and June 30, 2021, the Company’s outstanding warrants were excluded from the fully diluted weighted average number of shares outstanding since the warrants would be anti-dilutive.
Accounting for Equity Raise
The Company recently sold common stock and warrants. Accounting Standards Codification (“ASC”) requires the Company to first analyze the warrants to determine if the warrants are a liability or an equity instrument.
The warrants in the offering qualify as equity. The warrants do not obligate the Company to repurchase its shares by transferring an asset. The warrants do not obligate the Company to settle the warrants by issuing a variable number of shares if the monetary value of the obligation is based on a predetermined fixed amount, variation in something other than the issuers stock price, or variations inversely related to the issuers stock price. Therefore, since there is no obligation on behalf of the Company, the warrants have been classified as equity.
The next step is to determine the fair value of the equity unit. The Company’s offering does not meet any of the four areas of ASC 820-10-30-3A requiring a fair value calculation; therefore, fair value equals the actual transaction value. The next step is to compute the fair in order to determine the allocation of value between the common shares and the warrants issued (ASC 815). The Company performed this calculation which gave a value of 50% to the warrant and 50% to the common shares.
The following variables were used to calculate the warrant value:
| ● | Annualized volatility of 865% | |
| ● | Expected life in years of 1.02 | |
| ● | Discount rate – bond equivalent (US Treasury 5-year coupon rate) of 0.37% |
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The common share value was computed by evaluating each equity raise closing date to the Company’s market stock price to the price issue, which was $/share.
Note 3 – Equity Transactions
During the six months ended June 30, 2021 there were the following equity transactions:
| ● | shares to outside investors; | |
| ● | shares as a rounding/true-up issuance to an outside investor, and | |
| ● | shares returned from a prior issuance to a consultant for services rendered. |
During the year ended December 31, 2020 there were the following equity transactions:
| ● | shares issued to the Company’s founders, officers and board members; | |
| ● | shares issued to the Company’s consultants; | |
| ● | shares issued to VitaNova Partners, LLC, and | |
| ● | shares issued to outside investors. |
Note 4 – Commitments and Contingencies
The Company has no commitments or contingencies.
Note 5 – Related Party Transactions
As of June 30, 2021 VitaNova Partners owed the Company $174,600.
On July 15, 2020, the Company and VitaNova entered into a consulting agreement whereby VitaNova would provide management services to the Company. VitaNova is paid $456,000 annually for its management services. Payments are made in 12 monthly installments of $38,000. On December 15, 2020 the consulting agreement was amended to reduce payments to $19,000 a month effective January 1, 2021.
During the year ended December 31, 2020 there were the following equity transactions involving related parties:
| ● | shares issued to the Company’s founders, officers and board members, and | |
| ● | shares issued to VitaNova Partners, LLC. |
During the six months ended June 30, 2021 there were the following equity transactions involving related parties:
| ● | VSP common units were issued to John McKowen. |
Note 6 – Subsequent Events
On August 4, 2021 the Company entered in an agreement with Mastronardi Produce Limited pursuant to which Mastronardi was granted the exclusive right to sell and market all US Grade No. 1 fresh fruits and vegetables produced from all of the Company’s greenhouses that exist or may be built in North America.
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Item 2.Management’s Discussion and Analysis of Financial Condition or Plan of Operation
Unless the context requires otherwise, references in this Form 10-Q to “we,” “our,” “us” and similar terms refer to VETANOVA INC.
Note about Forward-Looking Statements
This Form 10-Q contains forward-looking statements, such as statements relating to our financial condition, results of operations, plans, objectives, future performance and business operations. These statements relate to expectations concerning matters that are not historical facts. These forward-looking statements reflect our current views and expectations based largely upon the information currently available to us and are subject to inherent risks and uncertainties. Although we believe our expectations are based on reasonable assumptions, they are not guarantees of future performance and there are a number of important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including the risks described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020. By making these forward-looking statements, we do not undertake to update them in any manner except as may be required by our disclosure obligations in filings we make with the Securities and Exchange Commission under the Federal securities laws. Our actual results may differ materially from our forward-looking statements.
Overview
VETANOVA INC (“the Company) is in the business of building and operating sustainable photovoltaic (“PV”) solar powered, state of the art, greenhouse facilities which grow high value greenhouse produce.
As its initial development project, the Company expects to purchase, develop and operate four adjoining parcels of approximately 39 acres each, totaling approximately 157 acres in rural Pueblo County, Colorado (“Pueblo Complex”). The Pueblo Complex has an existing greenhouse facility consisting of 90,000 sq ft of growing space and 15,000 sq ft of warehouse space, another partially built greenhouse and two parcels of vacant land.
The Pueblo Complex was significantly underpowered with only 300KVA of electrical power and no natural gas available. The lack of power made the initial greenhouse facility unsuitable for its intended purpose. Since acquiring control The Company has installed 1500KVA electrical service and is retrofitting the existing greenhouse with equipment that can be solar powered.
The Company recently completed a private placement and raised $556,129 by issuing 55,612,900 common shares along with 55,612,900 2-year warrants exercisable at $0.20 per share.
Results of Operations
For Three Months Ended June 30, 2021 and June 30, 2020
The Company did not begin operations until July, 2020; therefore, there were no operations for the three months ended June 30, 2020.
For the three months ended June 30, 2021, the Company had no revenues. During this period the Company recognized $232,395 in general and administrative expenses. This produced a loss of $232,395, of which $21,021 was attributal to minority ownership; therefore the Company’s shareholders recorded a $211,375 loss.
For Six Months Ended June 30, 2021 and June 30, 2020
The Company did not begin operations until July, 2020; therefore, there were no operations for the six months ended June 30, 2020.
For the three months ended June 30, 2021, the Company had no revenues. During this period the Company recognized $425,199 in general and administrative expenses. This produced a loss of $425,199, of which $21,021 was attributal to minority ownership; therefore the Company’s shareholders recorded a $404,179 loss.
Liquidity and Capital Resources
We have begun our operations relying on external investors. Since inception and through July 2021, we have raised $1,118,801 in captial.
See Note 1 to the financial statements included as part of this report for a discussion of our anticipated capital requirements and plans to fund our anticipated capital requirements.
The Company received preliminary approval from C-PACE, a Colorado specialized solar financing program developed by federal, state and county governments. The Company is in the process of developing the engineering necessary to complete the C-Pace financing application.
We believe with additional capital from third party investors we will have sufficient capital to meet our anticipated cash needs for at least the next twelve months.
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To date we have only had limited revenue, which occurred the last one-half of 2020 via a sublease of farming land. Therefore, presently operations are not sufficient to sustain our operations without the additional sources of capital. As of June 30, 2021, we had cash and cash equivalents of $583,644. We used $534,622 in cash in our operating activities during the six months ended June 30, 2021.
Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results from operations. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” where such policies affect our reported and expected financial results. For a detailed discussion of the application of these and other accounting policies, see Note 2 of the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q. Our preparation of such condensed consolidated financial statements and this Form 10-Q requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities. On an ongoing basis, we evaluateliabilities at the date of our estimatesfinancial statements, and judgments, particularly those related to the determinationreported amounts of revenue and expenses during the estimated Canadian exploration tax credit receivable and accrued liabilities. To the extentreporting period. There can be no assurance that actual results will not differ from those estimates,estimates.
Impairment Policy
At least once every year, management examines all of our futureassets for proper valuation and to determine if an impairment is necessary. In terms of real estate owned, this impairment examination also includes the accumulated depreciation. Management examines market valuations and if an additional impairment is necessary for lower of cost or market, then an impairment charge is recorded.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the impact of interest rate changes and change in the market values of our real estate properties and water assets. Because we had no market risk sensitive instruments outstanding as of March 31, 2021, it was determined that there was no material market risk exposure to our consolidated financial position, results of operations, may be affected. Besides this critical accounting policy on useor cash flows as of estimates, we believe the following critical accounting policy affects the preparationsuch date. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
Item 4. Controls and Procedures
Our management, comprised of our consolidated financial statements.
Acquisition, Exploration and Evaluation Expenditures
The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged inchief executive officer (CEO), evaluated the acquisition and explorationeffectiveness of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property payments are initially capitalized in accordance with the ASC 805-20-55-37, previously referenced as EITF 04-2 when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. The Company assesses the carrying costs for impairment at each fiscal quarter end. The Company has determined that all property payments are impaired and accordingly has written off the acquisition costs to project expense.
Change in Corporate Office
On August 23, 2010 the Company moved its corporate offices to 1226 White Oaks Blvd, Suite 10A, Oakville, Ontario L6H 2B9 Canada.
Change in Transfer Agent
On September 2, 2010, the Company’s board of directors appointed Olde Monmouth Stock Transfer Co., Inc. to replace Equity Transfer & Trust Company as the Company’s transfer agent. The Company had no disagreements with the services provided by Equity Transfer & Trust Company. The transfer of records was completed on September 15, 2010. Our new transfer agent’s address is:
Olde Monmouth Stock Transfer Co., Inc.200 Memorial ParkwayAtlantic Highlands, NY 07716
Tel: 732-872-2727
Changes in Officers
On September 2, 2010 the Company’s board of directors accepted the resignation of Rakesh Malhotra as Chief Financial Officer effective September 1, 2010. There were no material disagreements between Mr. Malhotra, the Company or its board with respect to the Company’s operations or public disclosures.
On September 2, 2010, the Company’s board of directors appointed Mrs. Kathy Chapman, Chief Financial Officer and Corporate Secretary of the Company. Mrs. Chapman is also the Corporate Secretary of YGC. Mrs. Chapman has over 30 years of experience in internal accounting and administration and 13 years of experience in public company disclosure in the United States and Canada. Mrs. Chapman also is employed by Lance Capital Ltd. Lance does not have any relationship with the Company, except as described above. Mrs. Chapman also owns and operates an award winning bed and breakfast establishment in Paris, Ontario, which she has managed since July, 2000. Since 2008 she has been the Co-Chair of Women in Mining Toronto Branch, based in Toronto, Canada. The focus of this group is to assist women in pursuing careers in the mining sector through mentorship, job opportunities and networking venues. On November 4, 2010 Mrs. Chapman was elected to the board of directors of Women In Mining Canada.
On September 15, 2010, Joanne Hughes of Burlington, Ontario, was appointed Vice President, Operations of the Company. Ms. Hughes has over 20 years of experience in the areas of corporate administration and regulatory compliance. Ms. Hughes also served as an officer of another exploration stage mining company in the United States. Ms. Hughes is employed by Lance Capital Ltd. and provides legal and administrative support to the Company and its clients. Prior to joining the team at Lance Capital Ltd. in 2006, Ms. Hughes spent 10 years as an executive assistant to the CEO, CFO and internal counsel of a publicly held Canadian corporation.
CONTROLS AND PROCEDURES
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DISCLOSURE AND FINANCIAL CONTROLS AND PROCEDURES
The board of directors has concluded that the Company'sour disclosure controls and procedures as of June 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are effective. There have been no significant changesdesigned to ensure that information required to be disclosed by a company in these controlsthe reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in other factorsthe SEC’s rules and forms. Based on that could significantly affect these controls subsequent toevaluation, and taking the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Internal financialmatters described below into account, the Company’s CEO has concluded that our disclosure controls and procedures have been designed under the supervision of the Company's board of directors. The internal financial controls provide reasonable assurance regarding the reliability of the Company'sover financial reporting and preparation of financial statements in accordance with generally accepted accounting principals. were not effective during reporting period ended June 30, 2021.
There have beenwere no significant changes in these controlsour internal control over financial reporting that occurred during the fiscal quarter covered by this report that materially affected or in other factors that could significantlyare reasonably likely to materially affect, these controls since they were instituted, including any corrective actions with regard to significant deficiencies and material weaknesses.our internal control over financial reporting.
PART II-OTHERII – OTHER INFORMATION
Item 1. LEGAL PROCEEDINGSLegal Proceedings
On June 17, 2010
There are no legal proceedings and management is not aware of any pending litigation against the Company’s bank received a Notice of Garnishment from the Ontario Superior Court of Justice, Canada, dated June 15, 2010, in the amount of $117,759 (CDN$120,138) with the Company’s former landlord named as the creditor, the Company’s wholly owned Canadian subsidiary (YGC) named as the debtor, and the Company’s bank as the garnishee. On June 17, 2010 our subsidiary’s bank remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice, being the balance of funds in YGC’s bank account. YGC did not have the funds to fully settle the Notice of Garnishment. It is possible that one or more other creditors of YGC will bring an action to enforce a debt.Company.
Item 1A. RISK FACTORSRisk Factors
Refer to our 10-K/A, Item 1A. that was filed with the SEC on May 4, 2021. Our risk factors have not significantly changed since this filing.
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Item 6. Exhibits
| 31.1 |
| Rule 13a-14(a) Certification |
| 31.2 | Rule 13a-14(a) Certification | |
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our ability to raise the capital necessary to conduct this exploration and preserve our interest in these mineral claims;
our ability to raise capital to develop the Marg Property, establish a mining operation, and operate this mine in a profitable manner; and.
our ability to raise capital to purchase additional properties that may make our business more attractive to investors in exploration stage mining companies.
Failure to raise the necessary capital to continue exploration and development could cause us to go out of business.
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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5.OTHER INFORMATION
On November 1, 2010, the Company’s board of directors passed a resolution to acquire equipment from a third party for a total consideration of $30,000. The Company paid the $30,000 on November 2, 2010.
On November 3, 2010, the Company accepted one (1) subscription for 12,000,000 shares at $.0025 per share for a total consideration of $30,000 through a non-brokered private placement and the shares were certificated on November 5, 2010.
On November 5, 2010, the Company issued 87,320,400 shares against subscriptions received during the quarter ended October 31, 2010 for $218,300.
On November 15, 2010, the Company’s wholly owned subsidiary, Yukon Gold Corp., declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed Schwartz Levitsky Feldman Inc. as trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed in the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division.
On November 18, 2010, the Company and a consultant signed an unconditional and absolute general release which terminated the agreement dated September 20, 2009.
On November 23, 2010, Lance Capital Ltd. issued a Notice of Default to the Company in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement dated August 31, 2010 between Lance Capital Ltd., the Company and Yukon Gold Corp. the Company’s wholly owned subsidiary, and further in accordance with the provision of Article 6 demanded payment in full of the entire amount of the $375,000 note plus interest.
On December 1, 2010, 325,000 stock options held by a former officer expired.
On December 2, 2010, a meeting of the creditors of the Company’s wholly-owned subsidiary, Yukon Gold Corp., was held in Toronto, Ontario, Canada.
On December 13, 2010, 250,000 stock options held by a director expired.
On December 13, 2010, 76,000 stock options held by a former officer expired.
On December 13, 2010, 88,000 stock options held by an officer expired.
Item 6.EXHIBITS & REPORTS ON FORM 8-K
(a) Exhibits
| Inline XBRL Instance Document | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has dulyregistrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: August 23, 2021 | By: | /s/ John McKowen |
| John McKowen, Chief Executive | ||
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