UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2008
[
]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ____________
Commission file number
000-50146
TORNADO GOLD INTERNATIONAL
CORPORATION
(Exact name of registrant as specified in its
charter)
Delaware
|
94-3409645
|
(State or other jurisdiction of incorporation or
organization)
|
(IRS Employer Identification No.)
|
8600 Technology Way, Suite 118, Reno, Nevada
89521
(Address of principal executive offices) (zip code)
(775) 852-3770
(Registrants telephone number,
including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ x ] No [
]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer," "accelerated
filer, and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer
|
[
]
|
Accelerated filer
|
[
]
|
Non-accelerated filer
|
[
]
|
Smaller reporting company
|
[ x ]
|
(Do not check if a smaller reporting company)
|
|
|
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes [
]
No [ x ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date:
33,513,189 common shares issued and outstanding as of
March 31, 2008
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
These financial statements have been prepared by Tornado Gold
International Corporation (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 generally accepted accounting principles
have been omitted in accordance with such SEC rules and regulations. In the
opinion of management, the accompanying statements contain all adjustments
necessary to present fairly the financial position of the Company as of March
31, 2008, and its results of operations, stockholders equity, and its cash
flows for the three month period ended March 31, 2008 and for the period from
inception (March 19, 2004) to March 31, 2008. The results for these interim
periods are not necessarily indicative of the results for the entire year. The
accompanying financial statements should be read in conjunction with the
financial statements and the notes thereto filed as a part of the Companys
annual report on Form 10-KSB filed on April 14, 2008.
TORNADO GOLD INTERNATIONAL CORPORATION
|
(AN EXPLORATORY STAGE COMPANY)
|
CONDENSED BALANCE
SHEET
|
|
|
March 31,
|
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
Cash
and cash equivalents
|
$
|
130,007
|
|
Prepaid Expenses
|
|
10,382
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
140,389
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
|
|
|
|
Mining
claims
|
|
581,048
|
|
Computer equipment,
net
|
|
1,826
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
Intangible
assets - net
|
|
4,007
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
727,270
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
Accounts
payable - related party
|
$
|
52,470
|
|
Accounts payable
- others
|
|
93,936
|
|
Accrued
expenses
|
|
249,975
|
|
Loan Payable
- related party
|
|
730,000
|
|
Notes
payable and accrued interest
|
|
12,000
|
|
Convertible
debt and accrued interest payable, net of discount
|
|
25,157
|
|
TOTAL CURRENT LIABILITIES
|
|
1,163,538
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
-
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT
|
|
|
|
Common stock;
$0.001 par value; 100,000,000 shares
|
|
|
|
authorized; 37,213,189 shares issued and outstanding
|
|
37,213
|
|
Additional
paid in capital
|
|
3,533,746
|
|
Accumulated
deficit
|
|
(704,993
|
)
|
Deficit accumulated
during the exploratory stage
|
|
(4,801,816
|
)
|
Subscribed
warrants
|
|
1,500,000
|
|
Stock subscription
receivable
|
|
(418
|
)
|
TOTAL STOCKHOLDERS' DEFICIT
|
|
(436,268
|
)
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
$
|
727,270
|
|
The accompanying notes are an integral part of these financial statements
F-1
TORNADO GOLD INTERNATIONAL CORPORATION
|
(AN EXPLORATORY STAGE COMPANY)
|
CONDENSED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
March 19,
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
For the Three Months Ended
|
|
|
through
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REVENUE
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
Compensation expense on option grants
|
|
-
|
|
|
-
|
|
|
68,765
|
|
Mining exploration
expenses
|
|
79,197
|
|
|
-
|
|
|
1,329,175
|
|
General and administrative expenses
|
|
125,756
|
|
|
31,053
|
|
|
1,191,458
|
|
Loss on abandonment
of mining claims
|
|
-
|
|
|
-
|
|
|
1,661,350
|
|
TOTAL OPERATING EXPENSES
|
|
204,953
|
|
|
31,053
|
|
|
4,250,748
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
(204,953
|
)
|
|
(31,053
|
)
|
|
(4,250,748
|
)
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
Accrued damages
on breach of contract
|
|
-
|
|
|
-
|
|
|
(249,975
|
)
|
Interest expense
|
|
(21,616
|
)
|
|
(31,594
|
)
|
|
(301,093
|
)
|
TOTAL OTHER INCOME (EXPENSE)
|
|
(21,616
|
)
|
|
(31,594
|
)
|
|
(551,068
|
)
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE PROVISION FOR INCOME TAXES
|
|
(226,569
|
)
|
|
(62,647
|
)
|
|
(4,801,816
|
)
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
$
|
(226,569
|
)
|
$
|
(62,647
|
)
|
$
|
(4,801,816
|
)
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE - BASIC AND DILUTED
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON EQUIVALENT
|
|
|
|
|
|
|
|
|
|
SHARES OUTSTANDING - BASIC AND
DILUTED
|
|
30,111,526
|
|
|
33,190,260
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements
F-2
TORNADO GOLD INTERNATIONAL CORPORATION
|
(AN EXPLORATORY STAGE COMPANY)
|
CONDENSED STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
March 19, 2004
|
|
|
|
For the Three Months Ended
|
|
|
through
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(226,569
|
)
|
$
|
(62,647
|
)
|
$
|
(4,801,816
|
)
|
Adjustment to reconcile net loss to net
cash
|
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
|
Loss on abandonment of mining claims
|
|
|
|
|
|
|
|
1,318,475
|
|
Value of options and warrants granted for services
|
|
-
|
|
|
-
|
|
|
68,765
|
|
Amortization
|
|
572
|
|
|
572
|
|
|
2,861
|
|
Depreciation
|
|
277
|
|
|
277
|
|
|
1,496
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses and other current assets
|
|
(43,333
|
)
|
|
3,626
|
|
|
(5,382
|
)
|
Accounts payable
|
|
42,646
|
|
|
(31,982
|
)
|
|
221,507
|
|
Accrued
expenses
|
|
|
|
|
-
|
|
|
249,975
|
|
Amortization of discount
on convertible debentures
|
|
-
|
|
|
11,250
|
|
|
11,250
|
|
Accrued
interest added to principal
|
|
21,616
|
|
|
20,345
|
|
|
208,733
|
|
Net cash used in operating activities
|
|
(204,791
|
)
|
|
(58,559
|
)
|
|
(2,724,136
|
)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase
of mining claims
|
|
(150,000
|
)
|
|
-
|
|
|
(1,778,973
|
)
|
Purchase of equipment
|
|
(1,980
|
)
|
|
-
|
|
|
(3,323
|
)
|
Website
design costs
|
|
|
|
|
-
|
|
|
(6,868
|
)
|
Net cash used in investing activities
|
|
(151,980
|
)
|
|
-
|
|
|
(1,789,164
|
)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds
from loan payable
|
|
330,000
|
|
|
185,000
|
|
|
3,082,816
|
|
Proceeds from issuance
of common stock
|
|
|
|
|
-
|
|
|
856,802
|
|
Proceeds
from subscribed warrants
|
|
|
|
|
-
|
|
|
1,500,000
|
|
Payment on note payable
|
|
|
|
|
-
|
|
|
(42,500
|
)
|
Repurchase
of shares on common stock
|
|
|
|
|
-
|
|
|
(577,906
|
)
|
Offering costs
|
|
|
|
|
-
|
|
|
(175,905
|
)
|
Net cash provided by financing
activities
|
|
330,000
|
|
|
185,000
|
|
|
4,643,307
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND
|
|
|
|
|
|
|
|
|
|
CASH EQUIVALENTS
|
|
(26,771
|
)
|
|
126,441
|
|
|
130,007
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, Beginning of period
|
|
144,106
|
|
|
3,566
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, End of period
|
$
|
117,335
|
|
$
|
130,007
|
|
$
|
130,007
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
Income taxes paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash investing and financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the quarter ended March 31, 2008, debt totalling $1,280,641
was converted into
|
|
|
|
|
3,201,663 shares of
the Company's common stock.
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements
F-3
TORNADO GOLD INTERNATIONAL CORP.
(An Exploratory Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION
Organization
Tornado Gold International Corp. (formerly Nucotec, Inc.) was
incorporated in the state of Nevada on October 8, 2001. On July 7, 2004, the
name of the company was officially changed to Tornado Gold International Corp.
(the "Company"). The Company is currently in the exploratory stage as defined
in Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 7 and has been since March 19, 2004,
when it changed its principal activity to the exploration of mining properties
for future commercial development and production (See Note 4). On February 14,
2007, the Company changed its domicile from Nevada to Delaware.
Basis of Presentation and Going Concern
The accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) which, in the opinion of management,
are necessary to present fairly the financial position of the Company as of
March 31, 2008, and the results of its operations for the three months ended
March 31, 2008 and 2007, and for the period from March 19, 2004 to March 31,
2008, and its cash flows for the three months ended March 31, 2008 and 2007,
and for the period from March 19, 2004 to March 31, 2008. Certain information
and footnote disclosures normally included in financial statements have been
condensed or omitted pursuant to rules and regulations of the U.S. Securities
and Exchange Commission (the Commission). The Company believes that
the disclosures in the financial statements are adequate to make the information
presented not misleading. However, the financial statements included herein
should be read in conjunction with the financial statements and notes thereto
included in the Companys Annual Report on Form 10-KSB for the year ended
December 31, 2007 filed with the Commission on April 14, 2008.
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. The Company
has no established source of material revenue, has incurred a net loss for the
year ended March 31, 2008 of $62,647, had a negative working capital of $1,023,149,
and had an accumulated deficit since its inception of $5,506,809. These conditions
raise substantial doubt as to the Company's ability to continue as a going concern.
These financial statements do not include any adjustments that might result
from the outcome of this uncertainty. These condensed financial statements do
not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern
Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management intends to raise additional
funds through debt and/or equity financing or through other means that it deems
necessary. However, no assurance can be given that the Company will be successful
in raising additional capital. Further, even if the company raises additional
capital, there can be no assurance that the Company will achieve profitability
or
F-4
positive cash flow. If management is unable to raise additional
capital and expected significant revenues do not result in positive cash flow,
the Company will not be able to meet its obligations and may have to cease operations.
Stock Split
On April 19, 2004, the Company authorized a 50-for-1 stock split.
On August 18, 2004, the Company authorized a 6.82 -for-1 stock split. On May
16, 2005, the Company authorized a 1.20 -for-1 stock split. All references in
the accompanying financial statements to the number of shares outstanding and
per-share amounts have been restated to reflect the various indicated stock
splits.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Stock Based Compensation
The Company accounts for stock-based compensation under SFAS
No. 123R, "Share- based Payment and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123.
These standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby compensation
cost is the excess of the fair value of the award as determined by the pricing
model at the grant date or other measurement date over the amount an employee
must pay to acquire the stock. The resulting amount is charged to expense on
the straight-line basis over the period in which the Company expects to receive
the benefit, which is generally the vesting period. During 2008, the Company
recognized no compensation expense under SFAS No. 123R as no options were issued
to employees during these two periods (See Note 6).
As of April 15, 2005, the Company adopted its 2005 stock option
plan to compensate its directors. As of March 31, 2008, no options have been
granted to the directors.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses
during the reporting periods. Actual results could differ from these estimates.
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and
cash equivalents, accounts payable, accrued expenses and notes payable, Pursuant
to SFAS No. 107,
Disclosures About Fair Value of Financial Instruments
,
the Company is required to estimate the fair value of all financial instruments
at the balance sheet date. The Company considers the carrying values of its
financial instruments in the financial statements to approximate their fair
values.
F-5
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company defines
cash equivalents as all highly liquid debt instruments purchased with a maturity
of three months or less, plus all certificates of deposit.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are calculated using the straight-line
method and with useful lives used in computing depreciation of 3 years. When
property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts, and any
gain or loss is included in operations. Expenditures for maintenance and repairs
are charged to operations as incurred; additions, renewals and betterments are
capitalized.
Long- Lived Assets
The Company accounts for its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the historical cost
carrying value of an asset may no longer be appropriate. The Company assesses
recoverability of the carrying value of an asset by estimating the future net
cash flows expected to result from the asset, including eventual disposition.
If the future net cash flows are less than the carrying value of the asset,
an impairment loss is recorded equal to the difference between the asset's carrying
value and fair value or disposable value. As of March 31, 2008, the Company
did not deem any of its long-term assets to be impaired.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company
to concentrations of credit risk, consist of cash. The Company places its cash
with high quality financial institutions and at times may exceed the FDIC $100,000
insurance limit. The Company extends credit based on an evaluation of the customer's
financial condition, generally without collateral. The Company monitors its
exposure for credit losses and maintains allowances for anticipated losses,
as required.
Revenue Recognition
The Company has not generated any revenue from its mining operations.
Mining Costs
Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews
the recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not limited
to, historical production records taken from previous mining operations, results
of exploration activities conducted to date, estimated future prices and reports
and opinions of outside consultants. When it is determined that a project or
property will be abandoned or its
F-6
carrying value has been impaired, a provision is made for any
expected loss on the project or property.
Website Development Costs
Under FASB Emerging Issues Task Force Statement 00-2, Accounting
for Web Site Development Costs ("EITF 00-2"), costs and expenses incurred during
the planning and operating stages of the Company's web site development are
expensed as incurred. Under EITF 00-2, costs incurred in the web site application
and infrastructure development stages are capitalized by the Company and amortized
to expense over the web site's estimated useful life or period of benefit. As
of March 31, 2008, the Company had net capitalized costs of $4,006 related to
its web site development, which are being depreciated on a straight-line basis
over an estimated useful life of 3 years. Amortization expense for the three
months ended March 31, 2008 and 2007 amounted to $572 and $572, respectively.
A schedule of amortization expense for the periods ending December
31, 2009 is as follows:
December 31, 2008
|
$
|
2,289
|
|
December 31, 2009
|
|
1,718
|
|
|
$
|
4,007
|
|
Income Taxes
The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." Deferred taxes are provided on the liability
method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
Loss Per Share
The Company reports earnings (loss) per share in accordance with
SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is computed
by dividing income (loss) available to common shareholders by the weighted average
number of common shares available. Diluted earnings (loss) per share is computed
similar to basic earnings (loss) per share except that the denominator is increased
to include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. Diluted earnings (loss) per share has not been presented
since the effect of the assumed conversion of options to purchase common shares
would have an anti-dilutive effect. The only potential common shares as of March
31, 2008 were 160,200 options, 11,795,000 warrants, and $50,000 of debt convertible
into 1,000,000 shares of the Companys common stock that have been excluded
from the computation of diluted net loss per share because the effect would
have been anti-dilutive. If such shares were included in diluted EPS, they would
have resulted in weighted-average common shares of 46,145,660 for the 3 months
ended March 31, 2008.
F-7
Recent Accounting Pronouncement
SFAS No. 161
- In March 2008, the FASB issued Statement
No. 161,
Disclosures about Derivative Instruments and Hedging Activitiesan
amendment of FASB Statement No. 133
. This Statement changes the disclosure
requirements for derivative instruments and hedging activities. Entities are
required to provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entitys
financial position, financial performance, and cash flows.
This Statement is intended to enhance the current disclosure
framework in Statement 133. The Statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative use in
terms of the risks that the entity is intending to manage. Disclosing the fair
values of derivative instruments and their gains and losses in a tabular format
should provide a more complete picture of the location in an entitys financial
statements of both the derivative positions existing at period end and the effect
of using derivatives during the reporting period. Disclosing information about
credit-risk-related contingent features should provide information on the potential
effect on an entitys liquidity from using derivatives. Finally, this Statement
requires cross-referencing within the footnotes, which should help users of
financial statements locate important information about derivative instruments.
This Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.
The Company is currently evaluating SFAS 161 and has not yet
determined its potential impact on its future results of operations or financial
position.
NOTE 3 COMPUTER EQUIPMENT
A summary of computer equipment at March 31, 2008 is as follows:
Computer equipment
|
$
|
3,323
|
|
Accumulated depreciation
|
|
(1,497
|
)
|
|
$
|
1,826
|
|
Depreciation expense for the 3 months ended March 31, 2008 and
2007 amounted to $277 and $277, respectively.
NOTE 4 MINING CLAIMS
Illapah and NT Greens
The Company originally leased 16 mining properties of which 15
were leased from Mr. Carl Pescio, a former director of the Company, and one
property owned by the Companys president and another director. In 2007,
Mr. Pescio transferred the 15 properties he owned to Allied Nevada Gold Holdings,
LLC (Allied).
F-8
In 2007, the Company was in breach of its lease of the 15 properties
and entered into an agreement with Allied effective January 1, 2008, whereby
the Company returned all mining properties leased with the exception of the
Illipah and NT Green claims. Effective January 1, 2008, the Company returned
all of its mining properties leased transferred to Corporation related party
except for the Illipah and NT Green claims. The agreement pertaining to these
two properties has a term of five years. Under the agreement, the Company is
responsible to pay a 2% overriding royalty on the net smelter returns from the
production of the minerals on the Illipah claim. The agreement also requires
the Company to incur exploration and development expenses as follows:
On or before December 31, 2008
|
$
|
150,000
|
|
On or before December 31, 2009
|
$
|
200,000
|
|
On or before December 31, 2010 and
|
|
|
|
December 31, of each succeeding
|
|
|
|
year during the term of
the agreement
|
$
|
400,000
|
|
The agreement provides for a credit for previous expenditures
incurred on these two properties of no more than $250,000 per property. In addition,
the Company agreed to pay Allied $100,000 on February 6, 2008, and pay $70,000
on June 30 of each and succeeding year during the term of this agreement. The
annual payment will be adjusted if on or before June 30, of any year during
the term of the agreement, Company notifies Allied of its intent to surrender
any of the unpatented mining claims subject to the agreement. The agreement
further provides that the Company has the option to earn and vest an undivided
sixty percent (60%) interest in a property and to form a joint venture with
Allied for the management and ownership of the property when the Company has
incurred and paid expenditures in the amount of $1,500,000 on a particular property.
Jack Creek Property
On October 3, 2005, the Company paid the Bureau of Land Management
$30,875 as consideration on the Exploration License and Option to Lease Agreement
entered into between the Company and Mr. Earl Abbott, and Stanley Keith ("the
owners"), to explore 247 claims (nearly 5,000 acres) known as the Jack Creek
Property. Mr. Abbott is the Company's President and Mr. Keith was a Company
Director through 2006.
The Company entered into a definitive Exploration License and
Option to Lease Agreement for the above claims for a period of twenty years.
Under this agreement, the Company is responsible to make minimum lease payments
to the owners as follows:
Due Date
|
|
Amount
|
|
|
|
|
|
Upon signing
|
$
|
22,500
|
|
1st anniversary
|
$
|
30,000
|
|
2nd anniversary
|
$
|
37,500
|
|
3rd anniversary
|
$
|
50,000
|
|
4th anniversary
|
$
|
62,500
|
|
5th anniversary and each anniversary thereafter
|
$
|
100,000
|
|
F-9
If any payments due by the Company to the owners are not paid
within 30 days of its due date, interest will begin to accrue on the late payment
at a rate of 2% over the prime rate established by the Department of Business
and Industry of the State of Nevada.
Upon completion of a bankable feasibility study and payments
totaling $140,000, all subsequent payments will convert into advance minimum
royalty payments that are credited against the 4% production royalty due.
The Company shall have the option to purchase one-half (1/2)
of the royalty applicable to the property representing two percent (2%) of the
Net Smelter Returns. The Company shall have the right to elect to purchase such
part of the royalty in increments representing one percent (1%) of the Net Smelter
Returns and the purchase price for each such increment shall be $1,500,000.
The Company shall have the option to purchase one-half (1/2) of the area-of-interest
royalty applicable to mineral rights, mining claims and properties which the
Company acquires from third parties representing one-half percent (.5%) of the
Net Smelter Returns. The purchase price for such part of the area-of-interest
royalty shall be $500,000 for the one-half percent (.5%) of the area-of-interest
royalty applicable to mineral rights, mining claims and properties which the
Company acquires from any third party.
The Company shall be responsible for all environmental liabilities
and reclamation costs it creates and indemnifies the owners against any such
claims or obligations. The Company can terminate the lease at any time by giving
30 days notice provided that there are no outstanding environmental or reclamation
liabilities and that all lease and production royalty payments are current.
In addition, on August 7, 2006, the Company acquired an option
for 53 additional claims (approx 1,000 acres) at the Jack Creek Property. The
option was acquired from Gateway Gold (USA) Corp. through two of the Companys
directors, Earl Abbott and Stanley Keith, and is subject to the Area of Interest
clause in the original Jack Creek agreement between the Company and those directors
that the Company announced in its October 3, 2005, news release. The Company
has the option to earn a 50% undivided interest in the 53 claims through its
expenditure on the claims of a total of $500,000 in various stages by March
1, 2007, 2008, and 2009. Thereafter, the Company and Gateway Gold could form
a joint venture; but, if Gateway declines to participate at its 50% level, the
Company could exercise its option to earn an additional 20% in the claims through
its expenditure on the claims of an additional $500,000 in two equal stages
on or before March 1, 2010, and 2011. Mr. Abbott is also an officer of the Company.
A description of the mining properties leased by the Company
is as follows:
NT Green Property is located in central Lander County, Nevada
about 40 miles southwest of the town of Battle Mountain. The property is within
the Battle Mountain/Eureka (Cortez) Trend at the northern end of the Toiyabe
Range.
Jack Creek Property is located in the northern Independence Range
about 50 miles north of Elko, Elko County, Nevada. It is comprised of 247 lode
mining claims (nearly 5,000 acres) adjacent to Gateway Gold Corp.'s (TSX Venture:GTQ)
Big Springs and Dorsey Creek Properties.
The Illipah gold prospect is situated in eastern Nevada at the
southern extension of the Carlin Trend (T 18N, R 58E). The property consists
of one hundred ninety one unpatented federal Bureau of Land Management lode
mining claims, approximately 3,820 acres.
F-10
NOTE 5 NOTES PAYABLE
On July 1, 2005, the Company borrowed $100,000 from Gatinara
Holdings, Inc., an unrelated third party. The loan is evidenced by an unsecured
promissory note. The note accrues interest at 8% per annum and matured on December
31, 2006. In February 2008, the principal balance and accrued interest totaling
$122,099 was cancelled through the issuance of 305,275 shares of the Companys
common stock.
From August 2005 to February 2006, the Company borrowed a total
of $980,816 from Greenshoe Investment, Inc., an unrelated third party. The loans
are evidenced by unsecured promissory notes. The notes accrue interest at 8%
per annum and matured on December 31, 2007. In February 2008, the principal
balance and accrued interest totaling $1,158,542 was cancelled through the issuance
of 2,896,388 shares of the Companys common stock.
In May 2007, the Company borrowed $12,000 from an unrelated third
party. The loan is non-interest bearing, unsecured and due on demand.
During 2007, the Company borrowed a total of $730,000 from Mr.
Carl Pescio. The loans are non-interest bearing and due on demand.
During 2007, the Company borrowed a total of $50,000 from Greenshoe
Investment, Inc. The loans are evidenced by unsecured promissory notes. The
notes accrue interest at 8% per annum and mature on the anniversary date of
the two loans. Accrued interest related to these notes as of March 31, 2008
amounted to $1,660. Principal and accrued interest are convertible into common
shares of the Companys common stock at a conversion price of $.05 per
share.
As the conversion price is less then the trading price of the
shares on the loan date, the Company recognized beneficial conversion features
on each loan totaling $45,000. The $45,000 is an offset to the amount borrowed
and is being charged to interest over the term of the debt.
Interest expense accrued on the above loans during the three
months ended March 31, 2008 and 2007 totaled $20,345 and $21,616. Interest charged
to expense relating to the amortization of the beneficial conversion feature
totaled $11,250 and $0 for the three months ended March 31, 2008 and 2007, respectively.
NOTE 6 STOCKHOLDERS EQUITY (DEFICIT)
Common Stock
During the three months ended March 31, 2008, the Company issued
3,201,663 shares of its common stock through the cancellation of $1,280,641
of debt which includes principal and accrued interest.
Also during the three months ended March 31, 2008, the Company
received $185,000 through the issuance of 3,700,000 shares of its common stock.
The shares were issued through the Companys private offering. The Company
is offering 10,000,000 shares of its common stock to certain eligible investors
at a price per share of $.05.
F-11
Options and Warrants
The following table summarizes the options and warrants outstanding
at March 31, 2008:
|
|
|
|
|
Weighed
|
|
|
|
Options/
|
|
|
Average
|
|
|
|
Warrants
|
|
|
Exercise
|
|
|
|
Outstanding
|
|
|
Price
|
|
Balance - December 31, 2006
|
|
11,955,200
|
|
$
|
.4886
|
|
Granted
|
|
-
|
|
|
-
|
|
Exercised
|
|
-
|
|
|
-
|
|
Forfeited
|
|
-
|
|
|
-
|
|
Balance - December 31, 2007
|
|
11,955,200
|
|
$
|
.4886
|
|
Granted
|
|
-
|
|
|
-
|
|
Exercised
|
|
-
|
|
|
-
|
|
Forfeited
|
|
-
|
|
|
-
|
|
Balance March 31. 2008
|
|
11,955,200
|
|
$
|
.4886
|
|
All of the above options and warrants are exercisable at March
31, 2008.
NOTE 7 INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
statement purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of March
31, 2008 are as follows:
Deferred tax assets:
|
|
|
|
Net operating
loss
|
$
|
1,872,000
|
|
Less valuation allowance
|
|
(1,872,000
|
)
|
|
$
|
-
|
|
At March 31, 2008, the Company had federal net operating loss
("NOL") carryforwards of approximately $5,507,000. Federal NOLs could, if unused,
begin to expire in 2025. The increase in deferred tax assets in 2008 of $21,000
related to the Companys 2008 net operating loss which was reduced to $0
due to the Companys 2008 valuation allowance.
Utilization of the net operating loss and tax credit carryforwards
is subject to significant limitations imposed by the change in control under
Internal Revenue Code Section 382, limiting its annual utilization to the value
of the Company at the date of change in control multiplied by the federal discount
rate.
F-12
NOTE 8 SUBSEQUENT EVENTS
In April 2008, the Company received $22,500 through the issuance
of 450,000 shares of its common stock under its private offering.
F-13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and section 21E of the United States Securities Exchange Act of 1934. These statements relate to future
events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes,
estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled Risk Factors, that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States dollars and are prepared in conformity with generally accepted accounting principles in the United States of America for interim financial statements. The following discussion should be read in
conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.
As used in this quarterly report and unless otherwise indicated, the terms we, us and our refer to Tornado Gold International Corporation, unless otherwise indicated. Unless otherwise specified, all dollar amounts
are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock.
Corporate History
We were incorporated in Nevada as Nucotec, Inc. on October 8, 2001, in order to serve as a holding company for Saltys Warehouse, Inc. We disposed of that asset in March 2004 as described herein and changed our name to Tornado Gold
International Corp. in July 2004. Prior to March 2004, we operated through Saltys Warehouse; Since July 2004, we have been an exploration stage company that acquired properties for potential gold exploration in Nevada. Using the evaluation
technique described herein, we hope to acquire properties that will offer new economically viable gold mining properties for resale to entities who will undertake to begin mining operations on those properties. We believe that our technical team,
consisting of our current management, will help us operate successfully. Earl W. Abbott, our officer and director, has extensive data and program management experience; Carl A. Pescio, also one of our directors, has on-the-ground
prospecting and property knowledge; and George Drazenovic, our director and chief financial officer, has experience in managing the financial functions of public reporting companies. There is, however, no assurance that a commercially viable mineral
deposit exists on any of our properties. Further exploration will be required before a final evaluation as to the economic and legal feasibility is determined.
Effective February 28, 2007, we changed our domicile from Nevada to Delaware. The change of domicile was effected by merging Tornado Gold International Corporation, our wholly-owned subsidiary incorporated for this purpose, into our company, and
with our company carrying on as the surviving corporation under the name Tornado Gold International Corporation.
From 2004 to 2006, we acquired a total of 16 properties comprised of about 44,840 acres, all located in the North Central Nevada area, in several transactions. These 16 properties included Jack Creek, Brock, Dry Hills, Golconda, Goodwin Hill, HMD,
Horseshoe Basin, Illipah, Marr, North Battle Mountain, NT Green, South Lone Mountain, Stargo, Walti, West Whistler and Wilson Peak. Under the various lease agreements we entered into respecting these properties, we were obligated to make periodic
lease payments to maintain our interests in these properties. On September 24, 2007, we entered into a joint venture agreement with Allied Nevada Gold Corp., a company created by Carl Pescio and others to which Carl Pescio assigned all of his
interests in 15 separate properties, relating to our joint venture with Allied Nevada Gold Corp. The 15 properties covered by the joint venture agreement included
Brock, Dry Hills, Golconda, Goodwin Hill, HMD, Horseshoe Basin,
Illipah, Marr, North Battle Mountain, NT Green, South Lone Mountain, Stargo,
Walti, West Whistler and Wilson Peak.
Under the September 2007 joint venture agreement, we were
obliged to pay Allied Nevada Gold Crop. $975,000 on or before February 5, 2008.
We also agreed to pay $375,000 on or before June 30 of each year for annual
property payment on these 15 properties. We also agreed to incur certain minimum
amounts on field geologic activities during the earn-in period. This agreement
also provides that once we expended a total of $1,500,000 on any property, we
will have earned a 60% interest in that property.
Effective January 1, 2008, we entered into a new Exploration
and Option to Enter Operating Agreement with Allied Nevada Gold Corp., which
superseded the September 2007 joint venture agreement. The 2008 Exploration and
Option to Enter Operating Agreement limited the scope of joint ventures between
our company and Allied Nevada Gold Corp. to only two properties, namely the
Illipah property and the NT Green property.
Pursuant to the 2008 Exploration and Option to Enter Operating
Agreement, we paid to Allied Nevada Gold Corp. $100,000 on February 6, 2008 to
compensate them for federal annual mining claim maintenance fees, county
recording fees and other fees payable for the maintenance of the two properties.
Beginning on June 30, 2008 and on June 30 of each succeeding year during the
term of the agreement, we also agree to pay $70,000 to Allied Nevada Gold Corp.
for the purpose of compensating them for fees payable for the maintenance of
these two properties.
Under the 2008 Exploration and Option to Enter Operating
Agreement, we also agreed to certain annual expenditure obligations in
accordance with the following schedule:
Performance Date
|
Annual Amount
|
On or before December 31, 2008
|
$150,000
|
On or before December 31, 2009
|
$200,000
|
On or before December 31, 2010
|
$400,000
|
On or before December 31 of each succeeding year
|
$400,000
|
The 2008 Exploration and Option to Enter Operating Agreement
further provides that we have the option to earn and vest an undivided sixty
percent (60%) interest in a property and to form a joint venture for the
management and ownership of the property when the Company has incurred and paid
expenditures in the amount of $1,5000,000 on a particular property.
As a result of the 2008 Exploration and Option to Enter
Operating Agreement, we currently have mining claims in three (3) properties and
they are the Jack Creek property, the Illipah property and the NT Green
property.
After further exploration, our next phases of development will
be to advance these properties by identifying and prioritizing the drill
targets, evaluating the economic and legal feasibility of drilling those
targets, and then actually drilling those targets.
Mining Claims
. The properties we hold claims to are
described below:
Jack Creek Property
- On October 3, 2005, we paid the
Bureau of Land Management $30,875 as consideration on the Exploration License
and Option to Lease Agreement entered into between the Company and Mr. Earl
Abbott, and Stanley Keith to explore 247 claims (nearly 5,000 acres) known as
the Jack Creek Property. Mr. Abbott is our president, chief executive officer,
and one of our directors, and Mr. Keith was a director of our company at that
time. In addition, on August 7, 2006, we acquired an option for 53 additional
claims at the Jack Creek Property. The option was acquired from Gateway Gold
(USA) Corp. through Messrs. Abbott and Keith.
Under the preliminary terms of this agreement, we were granted
a license to explore the property for a period of six-months to determine what
claims, if any, we wish to lease. The term of the license is for six-months, but
we have the option to extend.
If we lease all of the 247 claims, we will be required to make
the following advance lease payments:
Due Date
|
|
Amount
|
|
Upon signing
|
$
|
22,500
|
|
1st anniversary
|
$
|
30,000
|
|
2nd anniversary
|
$
|
37,500
|
|
3rd anniversary
|
$
|
50,000
|
|
4th anniversary
|
$
|
62,500
|
|
5th anniversary and each anniversary thereafter
|
$
|
100,000
|
|
If any payments due from us to the Owners are not paid within
30 days of its due date, interest will be begin to accrue on the late payment at
a rate of 2% over the prime rate established by the Department of Business and
Industry of the State of Nevada.
Upon completion of a bankable feasibility study and payments
totaling $140,000, all subsequent payments will convert into advance minimum
royalty payments that are credited against the 4% production royalty due. A 1%
royalty is also due the owners on production on property consisting of a
two-mile circumference surrounding the leased property.
We will have the option to purchase one-half of the royalty
applicable to the property representing 2% of the net smelter returns. We will
also have the right to elect to purchase such part of the royalty in increments
representing 1% of the net smelter returns and the purchase price for each such
increment shall be $1,500,000. We will have the option to purchase one-half of
the area of interest royalty applicable to mineral rights, mining claims, and
properties which we acquire from third parties representing 0.5% of the Net
Smelter Returns. The purchase price for such part of the area of interest
royalty shall be $500,000 for the 0.5% of the area of interest royalty
applicable to mineral rights, mining claims, and properties which we acquire
from any third party.
We shall be responsible for all environmental liabilities and
reclamation costs we create and for indemnifying the Owners against any such
claims or obligations. We can terminate the lease at any time by giving 30 days
notice provided that there are no outstanding environmental or reclamation
liabilities and that all lease and production royalty payments are current.
The terms and obligations disclosed above are based upon
preliminary agreements of the parties still under review and may be subject to
change.
NTGreen Property
- The NTGreen property is located in
central Lander County, Nevada, about 30 miles southwest of the town of Battle
Mountain. The property is connected with Battle Mountain via an interstate
highway, paved roads, good gravel roads, and finally a system of unimproved,
dirt roads. We held a total of 12 unpatented lode mining claims in the form of
an option agreement with the claimant, Carl A. Pescio, one of our directors. All
of the claims are recorded with the Lander County Recorder and filed with the
Bureau of Land Management (BLM). The property is subject to a 4% net smelter
royalty that may be bought down to a 2% net smelter royalty by the payment of
$1,500,000 per one percent. On September 24, 2007, we entered into a joint
venture agreement with Allied Nevada Gold Corp., a company created by Carl
Pescio and others to which Carl Pescio assigned all of his interests in, among
other things, the NTGreen property, relating to our joint venture with Allied
Nevada Gold Corp. Under this joint venture agreement, we were obliged to pay
Allied Nevada Gold Crop. $975,000 on or before February 5, 2008. Subsequently,
we entered into the 2008 Exploration and Option to Enter Operating Agreement
superseding the 2007 joint venture agreement with respect to the NT Green
property. This agreement provides that, among other things, once we expended a
total of $1,500,000 on this property, we will have earned a 60% interest in this
property.
Geological information relating to the NT Green property: upper
Paleozoic sedimentary rocks are exposed in an erosional window beneath Tertiary
volcanic rocks. The Paleozoic rocks exhibit the characteristics of gold-bearing
rocks. A fault structure does traverse onto the NTGreen property. Placer Dome
Mining Company is a former operator of the NTGreen property, but no data from
their exploration work is in our hands. Low levels of gold as well as associated
trace elements are documented from the property by limited surface sampling done
by Mr. Pescio.
The NTGreen property is undeveloped and no reserves or
resources are known. No mining or other mineral development is known to have
been performed on the property. Mr. Pescio did only limited work on the property
and no work has been done by us. We believe that there are indications that an extensive gold system is present on the property that may have significant economic potential, though there is no guarantee that this is the case. We plan to conduct
exploration work in the form of geological, geochemical, and geophysical studies to develop drill targets. Drilling will investigate these targets. Our management believes discovery of potentially economic gold values will be followed by development
of a reserve and, eventually, mining.
Illipah Prospect
- On August 23, 2006, the company entered into an agreement to acquire the Illipah prospect consisting of 191 unpatented mining claims located in White Pine County, Nevada in consideration of $100,000 and 300,000 shares
of its common stock. Under the terms of the purchase agreement, $50,000 was paid and 50,000 shares of our common stock were issued upon signing with an additional $50,000 paid and 100,000 shares of restricted common stock issued on November
21, 2006. An additional 200,000 shares of restricted common stock have been issued as agreed to under the agreement. Further, we assumed the sellers obligations in an underlying exploration and mining lease agreement on the claims, and granted
to the seller a production royalty of two percent (2%) of net smelter returns on all rents and mineral production from the property. We also agreed to pay $48,007 to the United States Department of the Interior Bureau of Land Management for
mining claim maintenance fees, and be responsible for future annual maintenance and filing fees on the acquired claims and any advanced minimum royalty payments due to Carl Pescio, one of our directors, and Janet Pescio under an August 31, 2001,
agreement between the Pescios and the seller. On September 24, 2007, we entered into a joint venture agreement with Allied Nevada Gold Corp., a company created by Carl Pescio and others to which Carl Pescio assigned all of his interests in,
among other things, the NTGreen property, relating to our joint venture with Allied Nevada Gold Corp. Under this joint venture agreement, we were obliged to pay Allied Nevada Gold Crop. $975,000 on or before February 5, 2008. Subsequently, we
entered into the 2008 Exploration and Option to Enter Operating Agreement superseding the 2007 joint venture agreement with respect to the NT Green property. This agreement provides that, among other things, once we expended a total of
$1,500,000 on this property, we will have earned a 60% interest in this property.
The Illipah prospect is situation in eastern Nevada at the southern extension of the Carlin Trend. The property consists of one hundred ninety one unpatented federal Bureau of Land Management lode mining claims, approximately 3,820 acres.
All of the properties held are located in the state of Nevada. We have recently commenced our exploration of these properties and have yet to determine whether any of our properties are commercially viable. In order for us to complete this analysis,
additional funding is required.
For the three month period ended March 31, 2008, compared
to the three month period ended March 31, 2007.
Revenue - We have realized no revenues for the three month
period ended March 31, 2008 and no revenues for the three month period ended
March 31, 2007.
Operating Expenses - For the three month period ended March
31, 2008, our total operating expenses were $31,053 compared to our total
operating expenses of $204,953 in the corresponding prior period. Of the
$31,053 incurred in the three month period ended March 31, 2008, $Nil
related to our mining exploration, $31,053 related to general and administrative
activities, and $Nil related to our compensation expense on option grants.
Of the $204,953 incurred in the three month period ended March 31, 2007,
$79,197 related to mining exploration, $125,756 related to general and
administrative activities, and $Nil related to our compensation expense
on options grants. During the three month period ended March 31, 2008, we accrued
$31,594 in interest expenses on notes payable, compared to interest accruing
during the three month period ended March 31, 2007, of $21,616.
LIQUIDITY AND CAPITAL RESOURCES
We had cash totalling $130,007 and prepaid expenses totalling
$10,382 as of March 31, 2008, making our total current assets $140,389.
We also had mining claims of $581,048, computer equipment of $1,826
and intangible assets of $4,007, making our total assets $727,270 as
of March 31, 2008. As of that date, our available cash and cash equivalents
were not sufficient to pay our day-to-day expenditures or to effectuate our
business plan. We are committed to continue to seek the necessary financing
needed to continue operating through the sale of equity or debt financing, though
there is no guarantee we will be able to do so.
As of March 31, 2008, we had a net working capital deficit
of $1,023,149.
Net cash used in operating activities was $58,599 for
the three month period ended March 31, 2008 compared to $204,791 for the
three month period ended March 31, 2007.
Due to numerous economic and competitive risks, any or all
of which may have a material adverse impact upon our operations, there can be
no assurance that we will be able to generate significant revenues or achieve
a level of positive cash flow that would permit us to continue our current business
plan. Our current plans encompass the identification and acquisition of properties
exhibiting the potential for gold mining operations by others. However, as noted,
we must continue to raise additional capital in order to ensure the availability
of resources sufficient to fund all of our general and administrative expenses
for the next twelve months.
No assurances can be given that we will be able to obtain
sufficient operating capital through the sale of our common stock and borrowing
or that the development and implementation of our business plan will generate
sufficient revenues in the future to sustain ongoing operations. These factors
raise substantial doubt with our auditor about our ability to continue as a
going concern.
Off-Balance Sheet Arrangements
There are no off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to investors;
except for our commitment to lease certain mining property that require us to
make substantial lease payments in the future as disclosed in Notes to the financial
statements included in our 10-KSB filed on April 14, 2008.
Critical Accounting Policies
Our Managements Discussion and Analysis or Plan of Operation
section discusses our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and litigation. Management
bases its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. The
most significant accounting estimates inherent in the preparation of our financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities, which are not readily apparent from other sources, accruals
for other costs, and the classification of net operating loss and tax credit
carry-forwards between current and long-term assets.
Mining Costs
Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews
the recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not limited
to, historical production records taken from previous mine operations, results
of exploration activities conducted to date, estimated future prices and reports,
and opinions of outside consultants. When it is determined that a project or
property will be abandoned or its carrying value has been impaired, a provision
is made for any expected loss on the project or property.
In December 2004, the FASB issued SFAS No. 123R, Share-Based
Payment (SFAS 123R), which revises SFAS No. 123, Accounting
for Stock Based Compensation, and supersedes APB 25. Among other items,
SPAS 123R eliminates the use of APS 25 and the intrinsic value method of accounting,
and requires companies to recognize in the financial statements the cost of
employee services received in exchange for awards of equity instruments, based
on the grant date fair value of those awards. This cost is to be recognized
over the period during which an employee is required to provide service in exchange
for the award (typically the vesting period). SFAS 123R also requires that benefits
associated with tax deductions In excess of recognized compensation cost be
reported as a financing cash inflow, rather than as an operating cash flow as
required under current literature.
SFAS 123R permits companies to adopt its requirements using either a modified prospective method, or a modified retrospective method.
Under the modified prospective method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based awards granted or modified after that date,
and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 1 23R, Under the modified retrospective method, the requirements are the same as under the modified prospective
method, but this method also permits entities to restate financial statements of previous periods based on pro forma disclosures made in accordance with SFAS 123.
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS 154), which changes the requirements for the accounting for and reporting of a change in accounting principle. The statement requires
retrospective application to prior period financial statements of changes in accounting principle, unless impracticable to do so. It also requires that a change in the depreciation, amortization, or depletion method for long-lived non-financial
assets be accounted as a change in accounting estimate, effected by a change in accounting principle. Accounting for error corrections and accounting estimate changes will continue under the guidance in APB Opinion 20, Accounting
Changes, as carried forward in this pronouncement. The statement is effective for fiscal years beginning after December 15, 2005.
In November 2005, the FASB issued FSP Nos. FAS 115-1 and 124-1. The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. This FSP addresses the determination as to when an investment is considered
impaired, whether the impairment is other-than-temporary, and the measurement of an impairment loss. The investment is impaired if the fair value is less than cost. The impairment is other-than-temporary for equity securities and debt
securities that can contractually be prepaid or otherwise settled in such a way that the investor would not recover substantially all of its cost. if other-than-temporary, an impairment loss shall be recognized in earnings equal to the
difference between the investments cost and its fair value. The guidance in this FSP is effective in reporting periods beginning after December 15, 2005. Our company is reviewing FSP Nos. FAS 115-1 and 124-1, but does not expect that the
adoption of this FSP will have a material effect on its consolidated financial statements.
We do not anticipate that the adoption of these standards will have a material impact on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Managements Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934
, as amended, is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president, secretary and treasurer (also our principal
executive officer) and our chief financial officer (also our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of March 31, 2008, the end of the first quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president, secretary and treasurer (also our principal executive officer) and our chief
financial officer (also our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president, secretary and treasurer
(also our principal executive officer) and our chief financial officer (also our principal financial officer and principal accounting officer)concluded that our disclosure controls and procedures were effective as of the end of the period covered by
this quarterly report.
Inherent limitations on effectiveness of
controls
Internal control over financial reporting has inherent
limitations which include but is not limited to the use of independent
professionals for advice and guidance, interpretation of existing and/or
changing rules and principles, segregation of management duties, scale of
organization, and personnel factors. Internal control over financial reporting
is a process which involves human diligence and compliance and is subject to
lapses in judgement and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or
improper management override. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements on a
timely basis, however these inherent limitations are known features of the
financial reporting process and it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial
Reporting
There have been no significant changes in our internal controls
over financial reporting that occurred during the first quarter ended March 31,
2008 that have materially or are reasonably likely to materially affect, our
internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, active or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors
Much of the information included in this quarterly report
includes or is based upon estimates, projections or other forward-looking
statements. Such forward-looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein.
Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward-looking statements.
Our common shares are considered speculative during the
development of our new business operations. Prospective investors should
consider carefully the risk factors set out below.
Risks Related to Our Business and Our Industry
There is no assurance that we will operate profitably or
will generate positive cash flow in the future.
We have never generated any revenues from operations. We do not
presently have sufficient financial resources or any operating cash flow to
undertake by ourselves all of our planned exploration and development programs.
If we cannot generate positive cash flows in the future, or raise sufficient
financing to continue our normal operations, then we may be forced to scale down
or even close our operations. Furthermore, our ability to meet our business plan
could be adversely affected.
We will depend almost exclusively on outside capital to pay for
the continued exploration and development of our properties. Such outside
capital may include the sale of additional stock and/or commercial borrowing.
Capital may not be available to meet our continuing exploration and development
costs or, if the capital is available, it may not be on terms acceptable to us.
The issuance of additional equity securities by us would result in a significant
dilution in the equity interests of our then-current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.
If we are unable to obtain financing in the amounts and on
terms deemed acceptable to us, we may be unable to continue our business, and as
a result, we may be required to scale back or cease operations for our business,
the result of which would be that our stockholders would lose some or all of
their investment.
We have a limited operating history, and if we are not
successful in continuing to grow our business, we may have to scale back or even
cease our ongoing business operations.
Our company has a limited operating history and must be
considered in the exploration stage. Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating history. We
may be unable to operate on a profitable basis. We are in the exploration stage
and potential investors should be aware of the difficulties normally encountered
by enterprises in the exploration stage. If our business plan is not successful,
and we are not able to operate profitably, investors may lose some or all of
their investment in our company.
There are numerous exploration and development risks
associated with our industry.
There is no assurance given by us that our exploration and
development programs and properties will result in the discovery, development,
or production of a commercially viable ore body.
The business of exploration for minerals and mining involves a
high degree of risk. Few properties that are explored are ultimately developed
into producing mines. There is no assurance that our mineral exploration and
development activities will result in any discoveries of bodies of commercial
ore. The economics of developing gold and other mineral properties are affected
by many factors, including capital and operating costs, variations of the grade
of ore mined, fluctuating mineral markets, costs of processing equipment, and
such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals, and
environmental protection. Substantial expenditures are required to establish
reserves through drilling, to develop metallurgical processes to extract metal
from ore, and to develop the mining and processing facilities and infrastructure
at any site chosen for mining. No assurance can be given that funds required for
development can be obtained on a timely basis. The marketability of any minerals
acquired or discovered may be affected by numerous factors which are beyond our
control and which cannot be accurately foreseen or predicted, such as market
fluctuations, the global marketing conditions for precious and base metals, the
proximity and capacity of milling facilities, mineral markets, and processing
equipment, and such other factors as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
minerals, and environmental protection.
The price of gold can be volatile.
Gold prices historically have fluctuated widely and are
affected by numerous factors outside of our control, including industrial and
retail demand, central bank lending, sales and purchases of gold, forward sales
of gold by producers and speculators, levels of gold production, short-term
changes in supply and demand because of speculative hedging activities,
confidence in the global monetary system, expectations of the future rate of
inflation, the strength of the US dollar (the currency in which the price of
gold is generally quoted), interest rates, and global or regional political or
economic events.
The potential profitability of our operations is directly
related to the market price of gold. A decline in the market price of gold would
materially and adversely affect our financial position. A decline in the market
price of gold may also require us to write-down any mineral reserves that we
might book, which would have a material and adverse effect on our earnings and
financial position. Further, if the market price of gold declines, we may
experience liquidity difficulties if and when we attempt to sell any gold we
discover. This may reduce our ability to invest in exploration and development,
which would materially and adversely affect future production, earnings, and our
financial position.
Competition in the gold mining industry is highly competitive and there is no assurance that we will be successful in acquiring leases.
The gold mining industry is intensely competitive. We compete with numerous individuals and companies, including many major gold exploration and mining companies, that have substantially greater technical, financial, and operational resources and
staffs. Accordingly, there is a high degree of competition for desirable mining leases, suitable properties for mining operations, and necessary mining equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised
or that any projected work will be completed. There are other competitors that have operations in the Nevada area and the presence of these competitors could adversely affect our ability to acquire additional leases.
Government regulation and environmental regulatory requirements may impact our operations.
Failure to comply with applicable environmental laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities, causing operations to cease or be curtailed,
and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining
activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
Amendments to current laws, regulations, and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on us and cause increases in capital expenditures or
production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.
To the best of our knowledge, we are operating in compliance with all applicable environmental regulations.
Adversarial legal proceedings may adversely affect us.
We may become party to litigation or other adversary proceedings, with or without merit, in a number of jurisdictions. The cost of defending such claims may take away from management time and effort and if determined adversely to us, may have a
material and adverse effect on our cash flows, results of operation, and financial condition. As at the date of this quarterly report, we are not a party to any material litigation or other adversary proceeding.
Our directors and/or officers may have conflicts of interest.
There is no assurance given by us that our directors and officers will not have conflicts of interest from time to time.
Our directors and officers have entered into, and may continue to enter into, numerous mining leases and options with us, which may not have been, or may not be, at arms-length.
Furthermore, our directors and officers may serve as directors or officers of other public resource companies or have significant shareholdings in other public resource companies and, to the extent that such other companies may participate in
ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. The interests of these companies may differ from time to time. In the event that
such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against any resolution involving any such conflict.
We may be subject to uninsured risks.
There is no assurance given by us that we are adequately insured against all risks.
We may become subject to liability for cave-ins, pollution, or other hazards against which we cannot insure or against which we have elected not to insure because of high premium costs or other reasons. The payment of such liabilities would reduce
the funds available for exploration and mining activities.
Our Bylaws contain provisions indemnifying our officers and directors against all costs, charges, and expenses incurred by them.
Our Bylaws contain provisions with respect to the indemnification of our officers and directors against all costs, charges, and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, in
a civil, criminal, or administrative action or proceeding, to which he is made a party by reason of his being or having been one of our directors or officers.
Our Bylaws do not contain anti-takeover provisions, which could result in a change of our management and directors if there is a take-over of us.
We do not currently have a stockholder rights plan or any anti-takeover provisions in our Bylaws. Without any anti-takeover provisions, there is no deterrent for a take-over of us, which may result in a change in our management and directors.
Risks Related to Owning Our Stock
A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of
convertible debt and equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability to raise equity capital in the future would force us to
reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new projects and continue our current operations. If our stock price declines, we may not be
able to raise additional capital or generate funds from operations sufficient to meet our obligations.
Trading of our stock may be restricted by the SECs Penny Stock regulations, which may limit a stockholders ability to buy and sell our stock.
The U.S. Securities and Exchange Commission has adopted regulations which generally define penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited
investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides
information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be
given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation. In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of
broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.
In addition to the penny stock rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Trading in our common shares on the OTC Bulletin Board is limited and sporadic, making it difficult for our stockholders to sell their shares or liquidate their investments.
Our common shares are currently quoted on the OTC Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. The market price of a publicly traded stock, especially a junior resource issuer like us, is affected by
many variables in addition to those directly related to exploration successes or failures. Such factors include the general condition of the market for junior resource stocks, the strength of the economy generally, the availability and
attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of the common shares on the OTC Bulletin Board suggests that our shares will continue to be
volatile. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance
that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating
performance. Therefore, investors could suffer significant losses if our shares are depressed or illiquid when an investor seeks liquidity and needs to sell our shares.
In the past, following periods of volatility in the market price of a companys securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion
of managements attention and resources.
Because of the early stage of development and the nature of our business, our securities are considered highly speculative.
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We are engaged in the business of mining. Our properties are in the exploration stage only and are without
known gold reserves. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any
profitability in the future from our business will be dependent upon locating and developing gold, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional
monies through the sale of our equity securities or debt in order to continue our business operations.
Investors interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.
In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors interests in us will be diluted and investors may suffer dilution in their
net book value per share, depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other stockholders.
Further, any such issuance may result in a change in our control.
Failure to pay mandatory state fees may impact our business prospects.
We must pay annual fees to the State of Nevada in connection with certain of our mining claims. Failure to pay those fees could result in the temporary or permanent loss of our rights to such mining claims. To the best of our knowledge, we are
current on all fees owed to the State of Nevada.
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.
None.
Item 6. Exhibits.
Exhibits required by Item 601 of Regulation S-B
Exhibit
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Description of Exhibit
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3(i).1
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Articles of Incorporation filed
with the Nevada Secretary of State on October 8, 2001 (Incorporated by
reference from our Registration Statement on Form SB-2, filed on September
11, 2002, as amended (Registration No. 333-99443)).
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3(i).2
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Certificate of Amendment to
Articles of Incorporation filed with the Nevada Secretary of State on July
7, 2004. (Incorporated by reference to Exhibit 3.1.1 of our Current Report
on Form 8-K filed on July 13, 2004).
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3(i).3
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Certificate of Amendment to
Articles of Incorporation filed with the Nevada Secretary of State on
August 25, 2004. (Incorporated by reference to Exhibit 3.1 of our Current
Report on Form 8-K filed on August 31, 2004).
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3(ii).1
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Bylaws (Incorporated by
reference from our Registration Statement on Form SB-2, filed on September
11, 2002, as amended (Registration No. 333-99443)).
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4.1
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2005 Stock Option Plan.
(Incorporated by reference to Exhibit 4.1 of our Amended Annual Report for
2005 filed on September 1, 2005).
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5.1
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Form of Opinion of Bryan Cave
LLP regarding the legality of common stock (to be filed by amendment).
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10.1
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Plan of Reorganization and
Acquisition, dated May 10, 2002 (Incorporated by reference from our
Registration Statement on Form SB-2, filed on September 11, 2002, as
amended (Registration No. 333-99443)).
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10.2
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Promissory note between the
Company and Gattinara Holdings, Inc. (Incorporated by reference to Exhibit
10 of the Companys Quarterly Report for the second quarter of 2005 on
Form 10-QSB filed on August 23, 2005.)
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10.3
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Consulting Agreement with Carl
Pescio. (Incorporated by reference to Exhibit 10.12 of our Amended Annual
Report for 2004 filed on September 1, 2005).
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10.4
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Consulting Agreement with Earl
Abbott. (Incorporated by reference to Exhibit 10.13 of our Amended Annual
Report for 2004 filed on September 1, 2005).
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10.5
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Consulting Agreement with
Stanley Keith. (Incorporated by reference to Exhibit 10.14 of our Amended
Annual Report for 2004 filed on September 1, 2005).
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10.6
|
Mining Lease and Option to
Purchase Agreement - Goodwin Hill. (Incorporated by reference to Exhibit
10.15 of our Amended Annual Report for 2004 filed on September 1, 2005).
|
10.7
|
Mining Lease
and Option to Purchase Agreement - NT Green. (Incorporated by reference
to Exhibit 10.16 of our Amended Annual Report for 2004 filed on September
1, 2005).
|
|
|
10.8
|
Mining Lease
and Option to Purchase Agreement - Wilson Peak. (Incorporated by reference
to Exhibit 10.17 of our Amended Annual Report for 2004 filed on September
1, 2005).
|
|
|
10.9
|
Mining Lease
and Option to Purchase Agreement - HMD. (Incorporated by reference to
Exhibit 10.18 of our Amended Annual Report for 2004 filed on September
1, 2005).
|
|
|
10.10
|
Letter Agreement
with Carl Pescio dated November 10, 2005. (Incorporated by reference to
Exhibit 10.1 of our Current Report on Form 8-K filed on November 14, 2005).
|
|
|
10.11
|
Promissory note
issued to Green Shoe Investment, Inc. (Incorporated by reference to our
Quarterly Report for the third quarter of 2005 filed on November 17, 2005).
|
|
|
10.12
|
Form of Subscription
Agreement. (Incorporated by reference to Exhibit 10.1 of our Current Report
on Form 8-K filed on July 24, 2006).
|
|
|
10.13
|
Form of Common
Stock Purchase Warrant. (Incorporated by reference to Exhibit 10.2 of
our Current Report on Form 8-K filed on July 24, 2006).
|
|
|
10.14
|
Form of Registration
Rights Agreement. (Incorporated by reference to Exhibit 10.3 of our Current
Report on Form 8-K filed on July 24, 2006).
|
|
|
10.15
|
Form of Special
Warrant. (Incorporated by reference to Exhibit 10.4 of our Current Report
on Form 8-K filed on July 24, 2006).
|
|
|
10.16
|
Exploration License
and Option to Lease Agreement, effective as of October 1, 2005, including,
as Exhibit B thereto, Mining Lease and Option to Purchase Agreement, entered
on or about April 1, 2006. (Incorporated by reference to Exhibit 10.1
of our Current Report on Form 8-K filed on August 7, 2006).
|
|
|
10.17
|
Option and Joint
Venture Agreement, made as of May 1, 2006. (Incorporated by reference
to Exhibit 10.2 of our Current Report on Form 8-K filed on August 7, 2006).
|
|
|
10.18
|
Form of Letter
Agreement between the registrant and Golden Cycle Gold Corporation, entered
on or about August 23, 2006. (Incorporated by reference to Exhibit 10.1
of our Current Report on Form 8- K filed on August 29, 2006).
|
|
|
10.19*
|
Joint Venture
Agreement between the registrant and Allied Nevada Gold Corp. made as
of September 24, 2007
|
|
|
17.1
|
Letter of resignation
of Earl Abbott as Chief Financial Officer. (Incorporated by reference
to our Current Report on Form 8-K filed on March 30, 2006).
|
|
|
31.1*
|
Certification
of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
31.2*
|
Certification
of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
32.1*
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2*
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TORNADO GOLD INTERNATIONAL CORPORATION
By:
/s/ Earl W. Abbott
Earl W. Abbott
CEO, President, Secretary, Treasurer
(Principal Executive Officer)
Date: May 21, 2008
By:
/s/ George Drazenovic
George Drazenovic
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Date: May 21, 2008
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