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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 4
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended November 30, 2003
OR
[ ] 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 000-32919
PATRIOT GOLD CORP.
(Exact name of registrant as specified in its charter)
Nevada 86-0947048
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
#501-1775 Bellevue Avenue, West Vancouver, British Columbia Canada V7V 1A9
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(Address of principal executive offices) (Zip Code)
(604) 925-5257
(Registrant's telephone number, including area code)
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(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. X Yes __ No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.001 par value, 27,939,400 shares outstanding as of April 8,
2004.
Transitional Small Business Disclosure Format (elect one) ___ Yes __X___ No
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Explanatory Note
We are filing this Amendment No. 3 to our Quarterly Report on Form 10-QSB for
the quarter ended November 30, 2003 to respond to certain comments received by
us from the Staff of the Securities and Exchange Commission ("SEC") in
connection with its review of our Registration Statement on Form SB-2 (File No.
333-112424). Our financial position and results of operations for the periods
presented have been restated from the financial position and results of
operations originally reported to reflect the expensing of approximately $42,747
in costs of exploring unproven properties which we previously had capitalized.
In addition, to increase compensation expense by $599,490 due to incorrectly
calculating compensation for stock options granted.
For convenience and ease of reference we are filing this Quarterly Report in its
entirety with the applicable changes. Unless otherwise stated, all information
contained in this amendment is as of January 14, 2004, the filing date of our
Quarterly Report on Form 10-QSB for the fiscal quarter ended November 30, 2003.
Accordingly, this Amendment No. 3 to the Quarterly Report on Form 10-QSB/A
should be read in conjunction with our subsequent filings with the SEC.
PATRIOT GOLD CORP.
(An Exploration State Company)
BALANCE SHEETS
Restated
(Unaudited)
November 30, May 31,
------------------ ------------------
2003 2003
------------------ ------------------
ASSETS:
Current Assets:
Cash $ 715,651 $ -
Receivables 675 -
------------------ ------------------
Total Assets $ 716,326 $ -
================== ==================
LIABILITIES & STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 16,534 $ 14,059
------------------ ------------------
Stockholders' Equity:
Preferred Stock, Par Value $.001
Authorized 20,000,000 shares,
No shares issued at November 30, 2003
and May 31, 2003 - -
Common Stock, Par Value $.001
Authorized 100,000,000 shares,
Issued 27,699,400 and 15,230,400 shares at
November 30, 2003 and May 31, 2003 27,699 15,230
Paid-In Capital 5,188,979 45,810
Stock Subscription Receivable (2,345,750) -
Currency Translation Adjustment (16,361) (16,361)
Deficit Accumulated Since Inception of Exploration State (2,113,693) (17,656)
Retained Deficit (41,082) (41,082)
------------------ ------------------
Total Stockholders' Equity 699,792 (14,059)
------------------ ------------------
Total Liabilities and Stockholders' Equity $ 716,326 $ -
================== ==================
The accompanying notes are an integral part of these financial statements.
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF OPERATIONS
Restated
(Unaudited)
Cumulative
Since
For the Three Months For the Six Months June 1, 2000
Ended Ended Inception of
November 30, November 30, Exploration
--------------------------------- ---------------------------------
2003 2002 2003 2002 State
----------------- --------------- ----------------- --------------- -----------------
Revenues $ - $ - $ - $ - $ -
Cost of Revenues - - - - -
----------------- --------------- ----------------- --------------- -----------------
Gross Margin - - - - -
Expenses:
Mining Costs 27,010 - 42,757 - 42,757
General & Administrative 1,770,643 695 2,053,280 1,895 2,070,936
----------------- --------------- ----------------- --------------- -----------------
Net Loss from Operations (1,797,653) (695) (2,096,037) (1,895) (2,113,693)
Other Income (Expense)
Interest, Net - - - - -
----------------- --------------- ----------------- --------------- -----------------
Net Loss $ (1,797,653) $ (695) $ (2,096,037) $ (1,895) $ (2,113,693)
================= =============== ================= =============== =================
Basic & Diluted loss per
Share $ (0.07) $ - $ (0.12) $ -
================= =============== ================= ===============
Weighted Average Shares
Outstanding 25,593,499 15,504,000 18,186,094 15,504,000
================= =============== ================= ===============
The accompanying notes are an integral part of these financial statements.
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF CASH FLOWS
Restated
(Unaudited)
Cumulative
Since
June 1, 2000
For the Six Months Ended Inception of
November 30, Exploration
-------------------------------------
2003 2002 State
----------------- ------------------ ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (2,096,037) $ (1,895) $ (2,113,693)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Compensation Expense of Stock Options 1,984,413 - 1,984,413
Common Stock Issued for Services 13,500 - 13,500
Change in Operating Assets and Liabilities:
(Increase) Decrease in Receivables (675) - (675)
Increase (Decrease) in Accounts Payable 2,475 (75) 10,291
----------------- ------------------ ------------------
Net Cash Used in Operating Activities (96,324) (1,970) (106,164)
----------------- ------------------ ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net Cash Used in Investing Activities - - -
----------------- ------------------ ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Sale of Common Stock 811,975 - 811,975
Proceeds from Contributed Capital - 1,970 9,840
----------------- ------------------ ------------------
Net Cash Provided by Financing Activities 811,975 1,970 821,815
----------------- ------------------ ------------------
Net (Decrease) Increase in
Cash and Cash Equivalents 715,651 - 715,651
Cash and Cash Equivalents
at Beginning of Period - - -
----------------- ------------------ ------------------
Cash and Cash Equivalents
at End of Period $ 715,651 $ - $ 715,651
================= ================== ==================
PATRIOT GOLD CORP.
(An Exploration State Company)
STATEMENTS OF CASH FLOWS
(Continued)
Restated
(Unaudited)
Cumulative
Since
June 1, 2000
For the Six Months Ended Inception of
November 30, Exploration
-------------------------------------
2003 2002 State
----------------- ------------------ ------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
During 2003, the Company granted 3,735,000 stock options to various
directors and consultants for an exercise price ranging from $0.05 to $1.50 per
share. Consulting expense of $1,984,413 was recorded.
On June 11, 2003, the Company issued 13,500,000 shares of preferred
stock to its president for services rendered. Consulting expense of $13,500 was
recorded.
On July 25, 2003, the Company issued 350,000 Class A warrants, 350,000
Class B warrants, 350,000 Class C warrants, and 350,000 Class D warrants. Each
warrant is exercisable, commencing October 25, 2003, for a period of three years
at a price of $1.40, $1.45, $1.50 and $1.55, respectively, for one share of
common stock.
On November 27, 2003, the Company issued 864,000 Class A warrants,
864,000 Class B warrants, 864,000 Class C warrants, and 864,000 Class D
warrants. The Class A warrants are exercisable on November 27, 2004 for a period
of five years at an exercise price of $1.40 per share of common stock; the Class
B warrants are exercisable on November 27, 2005 for a period of four years at an
exercise price of $1.45; the Class C warrants are exercisable on November 27,
2006 an at exercise price of $1.50; and the Class D warrants are exercisable on
November 27, 2007 at an exercise price of $1.55. The Company has the right, in
its sole discretion, to accelerate the exercise date of the warrants, to
decrease the exercise price of the warrants and/or extend the expiration date of
the warrants.
The accompanying notes are an integral part of these financial statements.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Patriot Gold Corp. is presented
to assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Restatement of previously issued financial statements for the three months ended
November 30, 2003
We have restated our balance sheet at November 30, 2003, and statements of
income, stockholders equity and cash flows for the three and six months ended
November 30, 2003. The restatement impacts the three and six months ended
November 30, 2003 but has no effect on the financial statements issued in prior
fiscal years. The restatement corrects an error within the meaning of APB
Opinion No. 20, Accounting Changes, made in the application of GAAP. We
incorrectly calculated compensation expense for stock options granted under fair
market value. In addition, we expensed mining costs that were incorrectly
capitalized. The impact of the restatement on net loss is $642,237, net of tax
for the six months ended November 30, 2003.
Interim Reporting
The unaudited financial statements as of November 30, 2003 and for the
three and six month period then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
six months. Operating results for interim periods are not necessarily indicative
of the results which can be expected for full years.
Nature of Operations and Going Concern
The accompanying financial statements have been prepared on the basis
of accounting principles applicable to a "going concern", which assume that the
Company will continue in operation for at least one year and will be able to
realize its assets and discharge its liabilities in the normal course of
operations.
Several conditions and events cast doubt about the Company's ability to
continue as a "going concern". The Company has incurred net losses of
approximately $2,113,000 for the period from June 1, 2000 (inception of
exploration state) to November 30, 2003 and requires additional financing in
order to finance its business activities on an ongoing basis. The Company is
actively pursuing alternative financing and has had discussions with various
third parties, although no firm commitments have been obtained. However,
management believes that the money raised from the private placements in July
and November 2003, will be sufficient to continue planned operations for the
remainder of the current fiscal year.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Nature of Operations and Going Concern (Continued)
The Company's future capital requirements will depend on numerous
factors including, but not limited to, acquiring interests in various mining
opportunities and the success of its current mining operations.
These financial statements do not reflect adjustments that would be
necessary if the Company were unable to continue as a "going concern". While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial statements, there can be
no assurance that these actions will be successful.
If the Company were unable to continue as a "going concern", then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported expenses, and the balance
sheet classifications used.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
November 30, 1998. On June 11, 2003, the Company changed its name to Patriot
Gold Corp.
Nature of Business
The Company has no products or services as of November 30, 2003. The
Company operated from November 30, 1998 through approximately May 31, 2000 in
the production of ostrich meat. On June 1, 2000, the Company ceased operations.
The Company has recently decided to become a natural resource
exploration company and will seek opportunities in this field. The Company
anticipates engaging in the acquisition, exploration, and if warranted and
feasible, development of natural resource properties. Since June 1, 2000, the
Company is in the exploration state.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
Prior to the quarter ending August 31, 2003, the Company's primary
functional currency was the Canadian dollar. During, the quarter ended August
31, 2003, the Company underwent some significant changes in its operations.
Prior to May 31, 2000, the company was in the business of producing ostrich meat
in Canada. Subsequently on June 1, 2000, the Company ceased operations remained
dormant until June 2003, when the Company decided to enter the mining industry
in the United States. Due to the change in direction the Company was headed, the
majority of its operations and transactions would be located in the United
States and the majority of the transaction would be in U.S. dollars. This was
considered "a significant change in economic facts and circumstances" per SFAS
52, Appendix A and thus the Company changed its functional currency from the
Canadian dollar to the U.S. dollar.
The Company's primary functional currency is the U.S. dollar. However,
the Company still has a few transactions with Canadian suppliers. Transaction
gains and losses are included in income. However, for the three and six months
ended November 30, 2003 and 2002, no transaction gains or losses occurred.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
Loss per Share
Net income (loss) per share is computed by dividing the net income by
the weighted average number of shares outstanding during the period. The effect
of the Company's common stock equivalents would be anti-dilutive for November
30, 2003 and 2002 and are thus not considered.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income",
which establishes standards for reporting and display of comprehensive income,
its components and accumulated balances. The Company is disclosing this
information on its Consolidated Statement of Stockholders' Equity. Comprehensive
income is comprised of net income (loss) and all changes to capital deficit
except those resulting from investments by owners and distribution to owners.
Stock Options
The Company has adopted SFAS No. 123, "Stock Option and Purchase
Plans", which establishes standards for reporting compensation expense for stock
options that have been issued. The fair value of each stock option granted is
estimated using the Black-Scholes option-pricing model.
Exploration and Development Costs
On June 1, 2000, the Company ceased operations and until June 2003
conducted minimal administrative activities. The Company has been in the
exploration state since that time and has not yet realized any revenue from its
planned operations. It is primarily engaged in the acquisition, exploration and
development of mining properties. Mineral exploration costs and payments related
to the acquisition of the mineral rights are expensed as incurred. When it has
been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves, the costs incurred to
acquire and develop such property will be capitalized. Such costs will be
amortized using the units-of-production method over the estimated life of the
probable reserve.
Advertising Costs
Advertising costs are expensed as incurred. There was no advertising
expense for the three and six months ended November 30, 2003 and 2002.
NOTE 2 - INCOME TAXES
As of November 30, 2003, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $2,113,000 that
may be offset against future taxable income through 2022. Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 3 - EXPLORATION STATE COMPANY/ GOING CONCERN
The Company has not begun principal operations and as is common with a
company in the exploration state, the Company has had recurring losses.
Continuation of the Company as a going concern is dependent upon obtaining the
additional working capital necessary to be successful in its planned activity,
and the management of the Company has developed a strategy, which it believes
will accomplish this objective through additional equity funding and long term
financing, which will enable the Company to operate for the coming year.
NOTE 4 - RELATED PARTY TRANSACTIONS
As of November 30, 2003, all activities of the Company have been
conducted by corporate officers from either their homes or business offices.
There are no commitments for future use of the facilities.
On June 12, 2003, the Company issued 13,500,000 Series A 7% Redeemable
Preferred Shares to Mr. Bruce Johnstone, a former director and sole officer.
Subsequently, Mr. Johnstone converted these shares into the same number of
common shares and transferred 3,000,000 shares to each of the three directors,
Ronald C. Blomkamp, Robert D. Coale and Robert A. Sibthorpe.
NOTE 5 - STOCK OPTIONS / WARRANTS
Pursuant to a 2003 Stock Option Plan, grants of shares can be made to
employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 ("Code") or as non-qualified stock options. The
Plan is administered by the Option Committee of the Board of Directors (the
"Committee"), which has, subject to specified limitations, the full authority to
grant options and establish the terms and conditions for vesting and exercise
thereof. Currently the entire Board functions as the Committee.
In order to exercise an option granted under the Plan, the optionee
must pay the full exercise price of the shares being purchased. Payment may be
made either: (i) in cash; or (ii) at the discretion of the Committee, by
delivering shares of common stock already owned by the optionee that have a fair
market value equal to the applicable exercise price; or (iii) with the approval
of the Committee, with monies borrowed from us.
Subject to the foregoing, the Committee has broad discretion to
describe the terms and conditions applicable to options granted under the Plan.
The Committee may at any time discontinue granting options under the Plan or
otherwise suspend, amend or terminate the Plan and may, with the consent of an
optionee, make such modification of the terms and conditions of such optionee's
option as the Committee shall deem advisable.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 5 - STOCK OPTIONS / WARRANTS (Continued)
On May 26, 2003, the Board of Directors approved a stock option plan
whereby 2,546,000 common shares have been set aside for employees and
consultants to be distributed at the discretion of the Board of Directors. On
September 22, 2003, the Board of Directors amended the stock option plan to
allow 3,000,000 additional options. As of November 30, 2003, 3,735,000 stock
options were granted to various directors and consultants for an exercise price
ranging from $.05 to $1.50 per share.
In most cases the fair value of the stock issued was higher then the
exercise price. Compensation expense of $1,984,413 has been recorded in
connection with the granting of the stock options as of November 30, 2003. The
Black-Scholes option pricing model was used to calculate to estimate the fair
value of the options granted. The following assumptions were made:
Risk Free Rate (Equal to Libor) 1.028%
Expected Life of Option 10 years
Expected Volatility of Stock (Based on Historical Volatility) 96.00%
Expected Dividend yield of Stock 0.00
On July 25, 2003, the Company issued 350,000 Class A warrants, 350,000
Class B warrants, 350,000 Class C warrants, and 350,000 Class D warrants. Each
warrant is exercisable, commencing October 25, 2003, for a period of three years
at a price of $1.40, $1.45, $1.50 and $1.55, respectively, for one share of
common stock. The warrants were determined to have no value at the time of their
issuance. The shares and warrants were issued to David Langley, Almir Ramic and
Paul Uppal.
On November 27, 2003, the Company issued 864,000 Class A warrants,
864,000 Class B warrants, 864,000 Class C warrants, and 864,000 Class D
warrants. The Class A warrants are exercisable on November 27, 2004 for a period
of five years at an exercise price of $1.40 per share of common stock; the Class
B warrants are exercisable on November 27, 2005 for a period of four years at an
exercise price of $1.45; the Class C warrants are exercisable on November 27,
2006 an at exercise price of $1.50; and the Class D warrants are exercisable on
November 27, 2007 at an exercise price of $1.55. The Company has the right, in
its sole discretion, to accelerate the exercise date of the warrants, to
decrease the exercise price of the warrants and/or extend the expiration date of
the warrants. The warrants were determined to have no value at the time of their
issuance. The shares and warrants were issued to Jill Kurucz, Almir Ramic and
Colin Worth.
The following table sets forth the options and warrants outstanding as
of November 30, 2003. There were no options or warrants outstanding as of
November 30, 2002.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 5 - STOCK OPTIONS / WARRANTS (Continued)
Weighted
Option / Average Weighted
Warrants Exercise Average
Shares Price Fair Value
------------------- --------------- ---------------
Options & warrants outstanding, May 31, 2003 - $ -
Granted, Exercise price more than fair value 3,895,000 0.79 0.64
Granted, Exercise price less than fair value 4,696,000 1.05 1.88
Expired - -
Exercised (3,075,000) .56
-------------------
Options & warrants outstanding,
November 30, 2003 5,516,000 $ 1.32
=================== ===============
Exercise prices for optioned shares and warrants outstanding as of
November 30, 2003 ranged from $0.05 to $1.55. A summary of these options by
range of exercise prices is shown as follows:
Weighted- Weighted-
Weighted- Shares/ Average Average
Shares / Average Warrants Exercise Price Contractual
Exercise Warrants Exercise Currently Currently Remaining
Price Outstanding Price Exercisable Exercisable Life
------------------ ------------------ --------------- ------------------ --------------------- -----------------
$0.05 550,000 $ 0.05 550,000 $ 0.05 10 years
0.80 10,000 0.80 10,000 0.80 10 years
1.03 100,000 1.03 100,000 1.03 10 years
1.40 to 1.45 2,428,000 1.43 700,000 1.43 4 years
1.50 to 1.55 2,428,000 1.53 700,000 1.53 4 years
NOTE 6 - COMMON STOCK TRANSACTIONS
The Company was incorporated to allow for the issuance of up to
100,000,000 shares of $.001 par value common stock (as amended).
At inception, the Company issued 7,600,000 shares of common stock to
its officers and directors for services performed and payments made on the
Company's behalf during its formation. This transaction was valued at
approximately $.001 per share or an aggregate approximate $1,000.
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 6 - COMMON STOCK TRANSACTIONS (Continued)
On February 8, 1999, to provide initial working capital, the Company
authorized a private placement sale of an aggregate of 7,600,000 (1,000,000
pre-split) shares of common stock at approximately $.05 per share. The private
placement was completed April 1, 1999 and 7,630,400 shares were issued for
approximately $50,200 in proceeds to the Company which were primarily used to
pay operating expenses.
On June 12, 2003, the previous President of the Company, returned
5,320,000 (700,000 pre split) shares of common stock to the Company.
On July 25, 2003, the Company issued 350,000 shares of common stock and
1,400,000 warrants for cash to Almir Ramic, Paul Uppal and David Langley. Shares
and warrants were issued for $1.05 per share. The warrants were determined to
have no fair value at the time of their issuance and thus none of the proceeds
were allocated to the warrants.
On September 2, 2003, the Company's previous president converted his
13,500,000 shares of preferred stock into 13,500,000 shares of common stock
During September, October and November 2003, 3,075,000 common shares
were issued various directors and consultants in connection with the exercising
of stock options. The exercise price ranged from $.05 to $1.50.
On November 27, 2003, the Company issued 864,000 shares of common stock
and 3,456,000 warrants for cash to Almir Ramic, Colin Worth and Jill Kurucz.
Shares and warrants were issued for $1.25 per share. The warrants were
determined to have no fair value at the time of their issuance and thus none of
the proceeds were allocated to the warrants.
NOTE 7 - PREFERRED STOCK
The Company has authorized a total of 20,000,000 shares of Preferred
Stock with a par value of $.001. As of November 30, 2003, there are no preferred
shares outstanding.
The Corporation is under no obligation to pay dividends on the Series A
Redeemable Preferred Stock, and the stock is redeemable at the option of the
Company.
In the event of any liquidation, dissolution or winding-up of the
Corporation, the holders of outstanding shares of Series A Preferred shall be
entitled to be paid out of the assets of the Corporation available for
distribution to shareholders, before any payment shall be made to or set
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 7 - PREFERRED STOCK (Continued)
aside for holders of the Common Stock, at an amount of $.001 plus any unpaid and
accrued dividends per share.
A holder of Series A Preferred has the right to one vote per share in
the case of matters provided for in the General Corporation Law of the State of
Nevada or the Amended and Restated Articles of Incorporation or Bylaws to be
voted on by the holders of the Series A Preferred Stock as a separate class. In
the case of matters to be voted on by the holders of Common Stock and the
holders of Series A Preferred voting together as a single class, each share of
Series A Preferred, has full voting rights and powers equal to the voting rights
and powers of the holders of the Common Stock.
On June 11, 2003, the Company issued 13,500,000 Series A shares of
preferred stock to its president for services rendered and recorded $13,500 in
consulting expenses. The Series A shares have non-cumulative dividends of 7% of
the redemption price when declared by the Board. On September 2, 2003, the
Company's previous president converted his 13,500,000 shares of preferred stock
into 13,500,000 shares of common stock.
NOTE 8 - STOCK SPLIT
On June 17, 2003, the Company approved a forward split at a rate of one
for seven and six- tenths so that each share of common stock will be equal to
7.6 shares. All references to shares in the accompanying financial statements
have been adjusted for the stock split.
NOTE 9 - MINERAL PROPERTIES
The Company has an agreement with Minquest, Inc. which gives them the
right to purchase 100% of the mining interests of two Nevada mineral exploration
properties currently controlled by MinQuest, a natural resource exploration
company. Together, these two properties consist of 28 mining claims on a total
of 560 acres in the northwest trending Walker Lane located in western Nevada.
In order to earn a 100% interest in these two properties, we must pay
MinQuest, Inc. and incur expenditures relating to mining operations in
accordance with the following schedule: (i) on or before July 25, 2004, $20,000
to MinQuest and $75,000 in expenditures; (ii) on or before July 25, 2005,
$20,000 to MinQuest and an additional $100,000 in expenditures; (iii) on or
before July 25, 2006, $20,000 to MinQuest and an additional $100,000 in
expenditures; (iv) on or before July 25, 2007, $20,000 to MinQuest and an
additional $100,000 in expenditures; and (v) on or before July 25, 2008, an
additional $125,000 in expenditures. If we have not incurred the requisite
expenditures
PATRIOT GOLD CORP.
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
NOTE 9 - MINERAL PROPERTIES (Continued)
to maintain our option in good standing, we have a 60-day period subsequent to
July 25th to make such payment along with such amount which shall be deemed to
have been an expenditure incurred by us during such period. Since our payment
obligations are non-refundable, if we do not make any payments, we will lose any
payments made and all our rights to the properties. If all said payments are
made, then we will acquire all mining interests in the property, subject to
MinQuest retaining a 3% royalty of the aggregate proceeds. The Company has the
right at anytime to discontinue making the payments if the exploration is
determined to be unfeasible. As of November 30, 2003, the Company has paid
$42,757 in mine development costs.
In November 2003, the Company entered into an agreement to purchase a
100% interest in a mining property located in the historic Oatman gold mining
district. The property is located some 5 miles northwest to the town of Oatman,
with Kingsman, Arizona to the east, Laughlin, Nevada to the west and Las Vegas,
Nevada to the north.
As of November 30, 2003, $42,747 has been paid for expenditures in
exploration of these properties. As these properties are unproven, the $42,747
has been expensed.
NOTE 10 - SUBSEQUENT EVENTS
On December 21, 2003, the Company issued 220,000 in additional stock
options with an exercise price of $.75. Consulting expense of $227,304 will be
recorded as a result of these stock options. Also, in December 2003, 20,000
options were exercised.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Certain statements contained in this report, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of the Company and the feasibility of the property in which we have an interest
and other statements contained herein regarding matters that are not historical
facts, are "forward-looking" statements. Future filings with the Securities and
Exchange Commission, future press releases and future oral or written statements
made by us or with our approval, which are not statements of historical fact,
may contain forward-looking statements. Because such statements include risks
and uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. For a more detailed listing of some
of the risks and uncertainties we face, please see the 2003 Form 10-KSB filed by
us with the Securities and Exchange Commission.
All forward-looking statements speak only as of the date on which they are made.
We undertake no obligation to update such statements to reflect events that
occur or circumstances that exist after the date on which they are made.
OVERVIEW
a natural resource exploration company ur focus is to locate prospective
properties that may host mineral reserves that could eventually be put into
mining production. Our primary focus in the natural resource sector is gold.
Although not opposed to considering alternative mineral types, because of the
current strong price of gold, it presents the best value for our shareholders
when considering the risk reward ratio of exploration costs and return from
minerals recovered. We do not consider ourselves a "blank check" company
required to comply with Rule 419 of the Securities and Exchange Commission,
because we were not organized for the purpose of effecting, and our business
plan is not to effect, a merger with or acquisition of an unidentified company
or companies, or other entity or person. We do not intend to merge with or
acquire another company in the next 12 months.
Though we have the expertise on our board of directors to take a resource
property that hosts a viable ore deposit into mining production, the costs and
time frame for doing so are considerable, and the subsequent return on
investment for our shareholders would be very long term indeed. We therefore
anticipate selling any ore bodies that we may discover to a major mining
company. Most major mining companies obtain their ore reserves through the
purchase of ore bodies found by junior exploration companies. Although these
major mining companies do some exploration work themselves, many of them rely on
the junior resource exploration companies to provide them with future deposits
for them to mine. By selling a deposit found by us to these major mining
companies, it would provide an immediate return to our shareholders without the
long time frame and cost of putting a mine into operation ourselves, and it
would also provide future capital for the company to continue operations.
With this in mind, we have to this date identified and secured two properties in
the Walker Lane area of Nevada, and are working to acquire a property in the
historic Oatman mining district of Arizona. The property is located some 5 miles
northwest to the town of Oatman, with Kingsman, Arizona to the east, Laughlin,
Nevada to the west and Las Vegas, Nevada to the north.
With adequate funding to meet all our obligations on our current projects, as
well as those of any that are currently under review for acquisition, and a
highly qualified and well motivated management team, we are well positioned to
carry out the operations of a natural resource exploration company.
We do not intend to use any employees, with the exception of part-time clerical
assistance on an as-needed basis. Outside advisors, attorneys or consultants
will only be used if they can be obtained for a minimal cost or for a deferred
payment basis. Management is confident that it will be able to operate in this
manner and continue during the next twelve months. With the expertise provided
by our Board of Directors and consulting geology professionals, all of whom have
been compensated by way of the company stock option plan, we feel that we have
the expertise required to decide if we should invest in a particular project.
This decision will be based on information that will be provided by the vendor
or the project and by information collected by our experts through independent
due diligence, and included at least the following:
- A description of the project and the location of the property;
- The lands that will be subject to the exploration project;
- The royalties, net profit interest or other charges applicable to the
subject lands;
- The estimated cost of any geophysical work contemplated; and
- The estimated acquisition costs, exploration costs and development
costs of the property.
An agreement with Minquest, Inc. signed in July 2003 gives us the right to
purchase 100% of the mining interests of two Nevada mineral exploration
properties currently controlled by MinQuest, a natural resource exploration
company. Together, these two properties consist of 28 mining claims on a total
of 560 acres in the northwest trending Walker Lane located in western Nevada. We
also entered into a letter of intent in November 2003 to purchase a 100%
interest in a mining property located in the historic Oatman gold mining
district in Nevada.
Minquest Property Option Agreement for Burner and Vernal Properties
Simultaneous with the execution and delivery of the Property Option
Agreement, we paid MinQuest $12,500. In order to earn a 100% interest in these
two properties, we must pay MinQuest, Inc. and incur expenditures relating to
mining operations in accordance with the following schedule: (i) on or before
July 25, 2004, $20,000 to MinQuest and $75,000 in expenditures; (ii) on or
before July 25, 2005, $20,000 to MinQuest and an additional $100,000 in
expenditures; (iii) on or before July 25, 2006, $20,000 to MinQuest and an
additional $100,000 in expenditures; (iv) on or before July 25, 2007, $20,000 to
MinQuest and an additional $100,000 in expenditures; and (v) on or before July
25, 2008, an additional $125,000 in expenditures. If we have not incurred the
requisite expenditures to maintain our option in good standing, we have a 60-day
period subsequent to July 25th to make such payment along with such amount which
shall be deemed to have been an expenditure incurred by us during such period.
Since our payment obligations are non-refundable, if we do not make any
payments, we will lose any payments made and all our rights to the properties.
If all said payments are made, then we will acquire all mining interests in the
property, subject to MinQuest retaining a 3% royalty of the aggregate proceeds
received by us from any smelter or other purchaser of any ores, concentrates,
metals or other material of commercial value produced from the property, minus
the cost of transportation of the ores, concentrates or metals, including
related insurance, and smelting and refining charges, including penalties.
Pursuant to the Property Option Agreement, we have a one-time option to purchase
up to 2% of MinQuest's royalty interest at a rate of $1,000,000 for each 1%. We
must exercise our option 90 days following completion of a bankable feasibility
study of the Bruner and Vernal properties, which, as it relates to a mineral
resource or reserve, is an evaluation of the economics for the extraction
(mining), processing and marketing of a defined ore reserve that would justify
financing from a banking or financing institution for putting the mine into
production.
In July 2003, members of our Board of Directors and geology team made an onsite
inspection of both properties optioned by the company from MinQuest. From this
visit, an exploration plan was determined and a schedule to begin work on the
properties was organized to commence in the month of September 2003. On
September 19, 2003 the company announced that an exploration program consisting
of geologic mapping and surface geochemical sampling was underway on the Bruner
property and that a Global Positioning System geophysical survey (electrical,
magnetic and other means used to detect features, which may be associated with
mineral deposits) conducted on the ground was scheduled for later that month.
Such a survey measures the magnetic variations within the underlying rocks.
Since then, a ground magnetics survey and detailed mapping and rock sampling of
the western portion of the claim block on the Bruner property has been
completed. The rock sampling is a collection of a series of small chips over a
measured distance, which is then submitted for a chemical analysis, usually to
determine the metallic content over the sampled interval. The magnetics indicate
the presence of northwesterly and northerly trending faults under the pediment
cover that may host gold mineralization. A fault, which is a break in the rock
along which the movement has taken place, are often the sites for the deposition
of metallic rich fluids. A pediment cover is a broad, gently sloping surface at
the base of a steeper slope. Geologic mapping of rocks exposed in the western
portion of the Patriot held claims show several small quartz bearing structures
trending northwest and dipping steeply to the northeast. These small structures
are thought to be related to a much larger vein, often filled with quartz,
contained within a fault or break in the rock (a fault-hosted vein system) under
gravel cover in the broad valley south of the mapping. Approximately 1 square
mile of ground magnetics was completed at Bruner. The survey was done on 50
meter spaced lines, run north-south using a GPS controlled Geometrics
magnetometer, which is the geophysical instrument used in collecting magnetic
data with an attached GPS that allows the operator to more precisely determine
the location of each station where the magnetic signature is taken. The
interpretation shows numerous northwest and north-south trending magnetic lows
associated with faults. Magnetic lows are an occurrence that may be indicative
of a destruction of magnetic minerals by later hydrothermal (hot water) fluids
that have come up along these faults. These hydrothermal fluids may in turn have
carried and deposited precious metals such as gold and/or silver. To the
southeast, under gravel cover (where there is no exposure of rock at the
surface), is a much more continuous northwest trending feature that has not been
drill tested, and data is sufficiently encouraging that an expanded CSMT survey
is recommended to trace these structures in the third dimension. Three or four
north-south lines of CSMT are scheduled and further work is ongoing. A CSMT
survey is an electromagnetic method used to map the variation of the Earth's
resistance to conduct electricity by measuring naturally occurring electric and
magnetic fields at the Earth's surface.
At the Vernal property, mapping (the process of laying out a grid on the land
for area identification where samples are taken) and sampling (the process of
taking small quantities of soil and rock for analysis) has been initiated.
Poorly exposed narrow masses of rock intersecting other rocks and filling
inclined or vertical fractures with quartz minerals (quartz veining) in volcanic
rock has been sampled and submitted to a chemical laboratory for analysis. Some
assays indicated up to 0.42 oz/ton gold and 0.17 oz/ton silver in initial
sampling. The gold/silver ratios indicate at Vernal we are very high in the
process by which an area of rock has been altered by hypothermal (hot water)
fluids that have come up along fractures and faults in the rock (hydrothermal
system). These fluids are often enriched in minerals. Additional mapping and
sampling is ongoing.
Letter of Intent for the Williams Property at Moss Mine
In November 2003 we executed a letter of intent to purchase a 100% interest in a
mining property owned by an extended family and which is located in the historic
Oatman gold mining district in Arizona. Work already completed on this property
includes a pre-feasibility study as well as 36,000 feet of primarily Reverse
Circulation (RC) drilling which was done over twenty years ago. drilling is a
less expensive form of drilling that does not allow for the recovery of a tube
or core of rock. The material is brought up from depth as a series of small
chips of rock that are then bagged and sent in for analysis. This is a quicker
and cheaper method of drilling, but does not necessarily give one as much
information about the underlying rocks.
The letter of intent grants us an exclusive right to close on the purchase of
the Williams property for six months from the date the contract is executed. The
owners, who are 23 members of an extended family, are represented by Barbara
Williams, a realtor and a member of this extended family. None of the owners,
including Barbara Williams, has or had any relationship or affiliation with us
prior to the agreement for the Williams property.
On February 19, 2004, we executed a formal agreement to purchase the Williams
property for $350,000. We deposited $25,000 with the title company as escrow
agent and three months after signing are required to deposit an additional
$25,000 deposit. When the escrow agent receives signature pages from the 10
sellers, the initial $25,000 deposit shall be delivered to the seller. On the
3-month anniversary from when we signed the definitive agreement, the second
$25,000 belongs to the seller. On or before the 6-month anniversary from when we
signed the definitive agreement, the balance of $300,000 is due to the seller.
During the 6 month period after the signing of the definitive agreement we have
the right to conduct our due diligence on the Williams property and if we decide
not to proceed we have to give the Seller and escrow agent notice no less than
10 days prior to the 6-month anniversary of our intention not to close. During
this period we can not perform mining operations or remove any ore from the
Williams property, but we are able to perform exploration activities which
include, but are not limited to, sampling and drilling. We are responsible for
all costs and expenses associates with the purchase of the Williams property,
including escrow fees, cost of feasibility study, charges resulting from any
tests, environmental assessments reports or surveys, and any exploration
activity costs. Once we have concluded our analysis and have determined that it
is feasible to close on the purchase of the Williams property, doing so will
give us full rights to begin mining operations.
We will require additional capital to fund our operations. A private placement
consummated in November 2003, generated an aggregate of $1,080,000 of gross
proceeds through the issuance of shares of common stock and warrants, and a
further $1,723,650 was collected from the exercise of stock options issued under
the company's stock option plan. We cannot be certain that any additional
financing will be available to us. However, notwithstanding the going concern
opinion we have received from our auditors, we believe that the funds that we
now have on hand exceed our anticipated obligations for the next 12 months.
As of the date hereof, we have not made any arrangements or definitive
agreements to use outside advisors or consultants to raise any capital. In the
event we need to raise capital, most likely the only method available to us
would be through the private sale of our securities. Because of our nature as an
exploration state company, it is unlikely we could make a public sale of
securities or be able to borrow any significant sum, from either a commercial or
private lender. There can be no assurance that we will be able to obtain
additional funding when and if needed, or that such funding, if available, can
be obtained on terms acceptable to us.
Over the next 12 months we should have three work programs underway. Improving
weather has allowed us to resume exploration of our Bruner and Vernal properties
in Nevada.
Interpretation of a CSMT geophysical survey confirms the presence of a major
northwest trending structural zone at Bruner. Ground magnetics had indicated the
presence of such a structure under gravel cover. The CSMT survey has identified
a 500m by 700m area of complex structural intersections in altered and possibly
mineralized rocks. Depth of the anomaly is 20 to 100m. A drilling plan is
currently being developed and permitted. Drilling at Bruner should commence by
early summer.
At the Vernal property, mapping and sampling is 50% completed in the area of
poorly exposed sheeted quartz veining in rhyolitic volcanics. This work is
scheduled to be completed by May 1, weather permitting. Trenching (the digging
of a long deep channel using a back hoe) or shallow auger drilling is planned as
the next step in the exploration process.
On the Williams property in Arizona, based on previous geological data obtained
by work programs done by previous owners in the past, a $200,000 drill program
has been developed and will be initiated as soon as work crews and equipment can
be secured.
RESULTS OF OPERATIONS
Restatement of previously issued financial statements for the three months ended
November 30, 2003
We have restated our balance sheet at November 30, 2003, and statements of
income, stockholders equity and cash flows for the three and six months ended
November 30, 2003. The restatement impacts the three and six months ended
November 30, 2003 but has no effect on the financial statements issued in prior
fiscal years. The restatement corrects an error within the meaning of APB
Opinion No. 20, Accounting Changes, made in the application of GAAP. We
incorrectly calculated compensation expense for stock options granted under fair
market value. In addition, we expensed mining costs that were incorrectly
capitalized. The impact of the restatement on net loss is $642,237, net of tax
for the six months ended November 30, 2003.
During the three months ended November 30, 2003, we incurred a net loss of
$1,797,653 compared to a net loss of $695, for the comparative period in 2002.
Until the execution of the Property Option Agreement with Minquest, we had no
operations so our net loss for the three months ended November 30, 2002 were as
a result of $695 of expenses incurred during said period. These expenses
consisted of professional services and administrative expenses. During the
period ending November 30, 2003, we had general and administrative expenses of
$1,770,643 and marketing and selling expenses of $0 and mining costs of $27,010.
We expect such expenses to continue.
REVENUES
We had no revenues for the quarter ended November 30, 2003. No revenues were
generated for the comparative period in 2002.
COST OF REVENUE
There was no cost of revenue for the quarter ended November 30, 2003.
GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative (G&A) expenses for the three and six months ended
November 30, 2003 were $1,770,643 and $2,053,280, respectively, compared to $695
and $1,895 for the three and six months ended November 30, 2002. The increase in
G&A expenses from 2002 to 2003 is largely attributable to $1,984,413 in
consulting fees as a result of the issuance of stock options to various
consultants that were issued at a discounted price The Company felt this was
necessary in order to attract the best consultants in the field of geology,
ground operations, corporate development and financial management to work for
the Company, without having to compensate them by way of cash paid directly from
the funds that have been raised for project operations. Compensation expense was
determined using the Black-Scholes method.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of November 30, 2003 reflects assets of $716,326 consisting
of $715,651 in cash and $675 in receivables. Total liabilities on the balance
sheet as of November 30, 2003 reflect current liabilities of $16,534, consisting
of accounts payable.
Cash and cash equivalents from inception to date have been insufficient to
provide the operating capital necessary to operate. In November 2003 we issued
864,000 shares of common stock and 864,000 Class A warrants, 864,000 Class B
warrants, 864,000 Class C warrants and 864,000 Class D warrants. This private
offering generated gross proceeds of $1,080,000. The Class A warrants are
exercisable on November 27, 2004 for a period of five years at an exercise price
of $1.40 per share of common stock; the Class B warrants are exercisable on
November 27, 2005 for a period of four years at an exercise price of $1.45; the
Class C warrants are exercisable on November 27, 2006 an at exercise price of
$1.50; and the Class D warrants are exercisable on November 27, 2007 at an
exercise price of $1.55. The Company has the right, in its sole discretion, to
accelerate the exercise date of the warrants, to decrease the exercise price of
the warrants and/or extend the expiration date of the warrants.
During the quarter ended November 30, 2003, $1,710,250 was obtained from the
exercise of stock options issued under the company's stock option plan.
Going Concern Consideration
As indicated in the accompanying balance sheet, as of November 30, 2003 we had
$715,651 cash available and accounts payable of $16,534. The cash was as a
result of the private placement, which was closed in November 2003. Management
believes that the gross proceeds of $1,080,000 plus the remaining cash from the
private placement we closed in July 2003 (in which we generated $367,500) will
be sufficient to continue our planned activities for the remainder of the
current fiscal year. In addition, a further $1,723,650 was obtained from the
exercise of stock options issued under the company's stock option plan. However,
we anticipate generating losses and therefore we may be unable to continue
operations in the future as a going concern. In addition, on or before July 25,
2004 we are required to incur no less than $75,000 in expenditures in connection
with mining operations as well as paying MinQuest $20,000. Our plans to deal
with this uncertainty include raising additional capital or entering into a
strategic arrangement with a third party. There can be no assurance that our
plans can be realized. No adjustment has been made in the accompanying financial
statements to the amounts and classification of assets and liabilities that
could result should be unable to continue as a going concern.
Accordingly, our independent auditors included an explanatory paragraph in their
report on the accompanying financial statements regarding concerns about our
ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.
ITEM 3. CONTROLS AND PROCEDURES.
As of the end of the period covered by this quarterly report, we carried out an
evaluation, under the supervision and with the participation of our management,
including the Chief Executive Officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 15d-15 under the Securities Exchange Act of 1934.
Based on that evaluation, our Chief Executive Officer and principal financial
officer concluded that our disclosure controls and procedures are effective in
ensuring that the information required to be disclosed in the reports we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.
There have been no changes in internal control over financial reporting that has
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting subsequent to the date the Chief Executive
Officer and principal financial officer completed their evaluation.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not involved in any pending legal proceedings nor are we aware of any
pending or contemplated proceedings against us. We know of no legal proceedings
pending or threatened, or judgments entered against any of our directors or
officers in their capacity as such.
ITEM 2. CHANGES IN SECURITIES.
On November 27, 2003 we issued 864,000 shares of common stock and 864,000 Class
A warrants, 864,000 Class B warrants, 864,000 Class C warrants and 864,000 Class
D warrants. This private offering generated gross proceeds of $1,080,000. The
proceeds will be used for working capital. The Class A warrants are exercisable
on November 27, 2004 for a period of five years at an exercise price of $1.40
per share of common stock; the Class B warrants are exercisable on November 27,
2005 for a period of four years at an exercise price of $1.45; the Class C
warrants are exercisable on November 27, 2006 an at exercise price of $1.50; and
the Class D warrants are exercisable on November 27, 2007 at an exercise price
of $1.55. The Company has the right, in its sole discretion, to accelerate the
exercise date of the warrants, to decrease the exercise price of the warrants
and/or extend the expiration date of the warrants.
As the Company previously reported, as of September 2, 2003, we executed and
delivered an agreement with Bruce Johnstone, a former officer and director,
whereby the 13,500,000 shares of Series A 7% Redeemable Preferred Stock held by
Mr. Johnstone were exchanged for 13,500,000 shares of our common stock. There
was no additional consideration between the parties for such exchange; however,
Mr. Johnstone agreed to consider transferring an aggregate of 9,000,000 shares
of his common stock to our current directors. We agreed to file a registration
statement covering the shares of common stock held by Mr. Johnstone prior to
December 31, 2003 and in the next registration statement we prepare if filed
prior to such date. As a result of this transaction, we have no preferred stock
outstanding.
During the three months ended November 30, 2003, an aggregate of 3,075,000
options were exercised at exercise prices ranging from $.05 to $1.50 per share,
generating $1,723,650 to the Company. All these options were issued in
accordance with the Company's stock option plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 31 - Certification of Principal Executive and Financial Officer
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32 - Certification of Principal Executive and Financial Officer
Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
act of 1934, as amended, the Registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized.
Patriot Gold Corp.
Date: December 22, 2004 By /s/ Ronald C. Blomkamp
----------------------
Ronald C. Blomkamp
President, Chief Executive
Officer, Chief Financial Officer,
Secretary and Treasurer