SEC Filing Summary: Source Gold Corp. (10-Q)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended January 31, 2010, for Source Gold Corp. (formerly Ibex Resources Corp.), a Nevada-based exploration stage company. The company focuses on acquiring and exploring mineral properties in Canada, specifically the "Queen" claim in British Columbia and the "KRK West" claims in Ontario. The filing notes that the company is a smaller reporting company and a shell company.
Key Financial Metrics
| Metric | Six Months Ended Jan 31, 2010 | Six Months Ended Jan 31, 2009 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(195,915) | $(74,625) |
| Cash and Cash Equivalents | $17,961 | $31,160 |
| Working Capital | $4,567 | $(Negative in prior period context, see liabilities) |
| Total Current Liabilities | $13,394 | $7,532 |
| Accumulated Deficit (Inception) | $(307,808) | N/A |
| Net Cash Used in Operating Activities | $(187,178) | $(83,940) |
| Net Cash Provided by Financing Activities | $197,125 | $(1,200) |
Note: The company has no revenue and operates at a loss. Margins are not applicable.
Material Changes vs. Prior Period
- Increased Expenses: Operating expenses for the six months ended January 31, 2010, rose to $195,915 from $74,625 in the prior year period. This 162% increase was primarily driven by mineral property option costs ($103,718 vs. $1,875) related to the acquisition of the KRK West claims, as well as higher management fees and accounting costs.
- Financing Activity: The company raised $200,000 in cash through the issuance of common stock during the period, compared to no equity financing in the prior comparable period. This capital was used to repay a promissory note and related party debt.
- Liabilities: Current liabilities increased to $13,394 from $7,532, largely due to an increase in accounts payable and accrued liabilities ($13,394 vs. $4,690), offset by the repayment of a promissory note and related party debt.
Outlook, Risks, and Management Commentary
- Going Concern: Management explicitly states that the company has not achieved profitable operations and has accumulated losses of $307,808 since inception. There is substantial doubt about the company's ability to continue as a going concern. Continued operations depend on obtaining additional financing, which is not guaranteed.
- Exploration Plans:
- Queen Claim (BC): Phase I exploration is complete. Phase II (approx. $16,000) is anticipated to commence in Spring 2010. Phase III (approx. $210,000) is tentative and dependent on prior results.
- KRK West Claim (Ontario): Initial sampling yielded high-grade gold (9.55 oz/ton) and copper (15.5%) in the "Little Brother" area. Further assay results from 250+ samples are expected.
- Internal Controls: Management concluded that disclosure controls and procedures were ineffective as of January 31, 2010, due to inadequate segregation of duties and insufficient written policies.
- Subsequent Events: Following the period end, the company issued 120,000 shares at $1.00 per share for $120,000 in proceeds (March 2010).
Investor Verification Checklist
- Verify the status of the going concern warning and the company's ability to secure the necessary funding for Phase II and III exploration.
- Confirm the issuance of 2,000,000 shares to Thunder Bay Minerals as required by the KRK West option agreement, which was pending as of the filing date.
- Review the ineffective internal controls disclosure and any remediation plans to ensure financial reporting reliability.
- Validate the high-grade assay results (9.55 oz/ton gold) from the KRK West property through independent geological reports.
- Monitor the cash burn rate relative to the $17,961 cash balance to assess immediate liquidity risks.