SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-QSB





x
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the period ended June 30, 2009





o
Transition report under Section 13 or 15(d) of the Exchange Act for the transition period from          to





Commission file number:   333-72163





DUTCH GOLD RESOURCES, INC.


(FORMERLY SMALL TOWN RADIO, INC.- Exact name of small business issuer as specified in its charter)





Nevada

58-2550089(State of Incorporation)

(I.R.S. Employer Identification No.)3500 Lenox Road, NESuite 1500Atlanta, Georgia  30326(Address of principal executive offices)(404) 419-2440(Issuer’s telephone number, including area code)





Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.


Yeso                                Nox


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:





Class

Outstanding at June 30, 2009Common Stock, par value $0.001 per share

84,979,042





Transitional Small Business Disclosure Format:       Yeso         Nox










TABLEOF CONTENTS





PART I
FINANCIAL INFORMATIONITEM 1.
FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEET
F-1CONSOLIDATED STATEMENTS OF OPERATION
F-2CONSOLIDATED STATEMENTS OF CASH FLOWS
F-3CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
F-4NOTES TO CONSOLIDATED FINANCIAL STATEMENTSITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OFOPERATIONS AND FINANCIAL CONDITION
1FORWARD LOOKING STATEMENTS
1OVERVIEW AND RESULTS OF OPERATIONS
2TWELVE MONTH BUSINESS OUTLOOK
3OPERATING EXPENSES AND CAPITAL EXPENDITURES
4SOURCE OF REVENUE
4OPERATING LOSSES
4LIQUIDITY AND CAPITAL RESOURCES
4ITEM 3.
CONTROLS AND PROCEDURES
4PART II
OTHER INFORMATION
5ITEM 1.
LEGAL PROCEEDINGS
5ITEM 2.
RISK FACTORS
5ITEM 3.
CHANGES IN SECURITIES AND USE OF PROCEEDS
7ITEM 4.
DEFAULTS UPON SENIOR SECURITIES
7ITEM 5.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
7ITEM 6.
OTHER INFORMATION
7ITEM 7.
EXHIBITS AND REPORTS ON FORM 8-K
7SIGNATURES
7


Table of Contents


DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)





FINANCIAL STATEMENTS





As of June 30, 2009 (unaudited) and December 31, 2008


Table of Contents


DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


CONSOLIDATED BALANCE SHEETS


As of JUNE 30, 2009 and DECEMBER 31, 2008




June 30,


December 31,2009


2008(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents

$
8,453


$
(1,063
)Prepaid expenses and other current assets


1,602,548



-Total current assets


1,611,001



(1,063
)Property, plant and equipmentProperty, plant and equipment at cost


2,398,776



2,398,776Less accumulated depreciation


(1,392,375
)


(1,152,497
)Net property, plant and equipment


1,006,401



1,246,279Other Assets


179,852



179,852TOTAL ASSETS

$
2,797,254


$
1,425,068LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIES:Accounts payable

$
2,048,275


$
1,217,256Accounts payable-related parties


222,613



222,613Convertible Debentures


-



525,000Payroll liabilities


(99,373
)


(99,373
)Accrued liabilities


543,173



420,415Loans from shareholders


494,198



453,072Total current liabilities


3,208,886



2,738,983LONG-TERM LIABILITIES:Long-term Notes payable-related parties


2,514,926



2,514,926Total long-term liabilities


2,514,926



2,514,926TOTAL LIABILITIES


5,723,812



5,253,909Commitments and contingencies


-



-STOCKHOLDERS' DEFICITPreferred stock, $.001 par value 10,000,000 authorized, no shares issued and outstanding at June 1 30, 2009 and December 31, 2008Common stock, $.001 par value 500,000, 000 shares authorized, 84,979,042 and 52,985,409 1issued and outstanding at June 30, 2009 and December 31, 2008 respectively


84,979



52,985Additional paid-in-capital


6,977,879



2,335,934Accumulated deficit


(9,989,416
)


(6,217,760
)Total stockholders' deficit


(2,926,558
)


(3,828,841
)TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT

$
2,797,254


$
1,425,068




See notes to consolidated financial statements


F-2
 Table of Contents


DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND JUNE 30, 2008





Three Months Ended

June 30,


Three Months Ended

June 30,2009


2008


2009


2008RevenueSales

$
-


$
271,442


$
-


$
600,960Cost of sales


-



290,828



-



1,385,808Gross profit


-



(19,386
)


-



(784,848
)Operational ExpensesOrganizational, selling, general and administrative expenses


54,843



574,050



782,695



797,172Professional fees


2,040,935



656,251



2,069,435



740,808Rent and repairs and maintenance


1,200



1,454



2,219



2,054Depreciation


119,939



119,415



239,878



235,831Total operating expenses


2,216,917



1,351,170



3,094,227



1,775,865Operating loss


(2,216,917
)


(1,370,556
)


(3,094,227
)


(2,560,713
)Other income (expense)Interest expense


(612,550
)


(237,700
)


(677,429
)


(312,658
)Income before income taxes


(2,829,467
)


(1,608,256
)


(3,771,656
)


(2,873,371
)Income tax provision


-



-



-



-Net income (loss) for the period


(2,829,467
)


(1,608,256
)


(3,771,656
)


(2,873,371
)Basic earnings (loss) per share

$
(0.04
)

$
(0.04
)

$
(0.05
)

$
(0.06
)Weighted average shares outstanding


68,982,226



44,934,238



68,982,226



44,934,238Fully diluted earnings (loss) per share

$
(0.04
)

$
(0.04
)

$
(0.05
)

$
(0.06
)Fully diluted weighted average shares outstanding


68,982,226



44,934,238



68,982,226



44,934,238





See notes to consolidated financial statements


F-3
 Table of Contents




DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008




Six Months Ended

September 30,2009


2008Cash provided by (used in):Operating activities:Net income

$
(3,771,656
)

$
(2,691,588
)Adjustments to reconcile net loss to cash used by operating activitiesFair value of common stock issued for payment of interest expense


554,656



32,677Fair value of common stock issued for services


3,544,282



215,927Depreciation


239,878



235,831Changes in assets and liabilitiesPrepaid expenses and other current assets


(1,602,548
)


-Inventories


-



257,248Other assets


-



(25,000
)Accounts payable


831,020



597,507Accounts payable-related parties


-



37,925Accrued liabilities


122,758



195,502Payroll liabilities


-



(55,777
)Net cash used by operating activities


(81,610
)


(1,199,748
)Investing activities:Purchase of property and equipment


-



(91,891
)Net cash used by investing activities


-



(91,891
)Financing activities:Proceeds from sale of Debentures


-



600,000Proceeds from sale of common stock, net


50,000



200,000Proceeds from Shareholder loans


41,126



337,500Net cash provided by financing activities


91,126



1,137,500Net increase/(decrease) in cash


9,516



(154,139
)Cash and cash equivalents at beginning of period


(1,063
)


80,541Cash and cash equivalents at end of period

$
8,453


$
(73,598
)SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during year for interest

$
-


$
72,037Non-cash Transactions:Notes payable converted to equity

$
525,000


$
-Fair value of common stock issued for payment of interest expense


554,656



32,677Fair value of common stock options issued for services


3,544,282



215,927$
4,623,938


$
248,604





See notes to consolidated financial statements


F-4
 Table of Contents




DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)


FOR THE SIX MONTHS ENDED JUNE 30, 2009





Common


StockShares


Dollars at Par ($.001)


Paid in Cap.

Dollars $


Accum

Deficit


Stockholders' EquityBalances 12/31/08


52,985,409


$
52,985


$
2,335,934


$
(6,217,760
)

$
(3,828,841
)Common shares issued for cash


375,000



375



49,625







50,000Common shares issued for services


21,698,333



21,698



3,522,584







3,544,282Common shares issued for payment of interest


2,400,000



2,400



552,256







554,656Common shares issued in settlement of obligation


7,520,300



7,520



517,480







525,000Gain (loss) for year














(3,771,656
)


(3,771,656
)Balances 06/30/2009


84,979,042


$
84,979


$
6,977,879


$
(9,989,416
)

$
(2,926,558
)





See notes to consolidated financial statements


F-5
 Table of Contents


DUTCHGOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1—NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





NATURE OF OPERATIONS


Dutch Gold Resources, Inc. (DGRI.PK) is a junior gold miner, experienced in the exploration, development and production of gold properties, through the production stage. Its first project was an advanced development and production stage mine system located in Southern Oregon. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.





On January 7, 2007, the Registrant consummated the terms of its Share Exchange Agreement (the “Agreement”) with Dutch Mining, LLC (“Dutch Mining”) whereby the Registrant issued 24,000,000 shares of its common stock, par value $.001 per share (the “Common Stock”) to the Dutch Mining equity holders and their designees in exchange for all of the issued and outstanding equity interests of Dutch Mining (the “Exchange”). Following the Exchange, Dutch Mining became a wholly-owned subsidiary of the Registrant and the Registrant had a total of 30,256,144 shares of Common Stock issued and outstanding. In accordance with the Exchange, the Registrant elected Ewald Dienhart as Chairman of the Board of Directors.





Immediately following the consummation of this transaction the Company issued 4,000,000 shares of its common stock to several parties holding notes with Dutch Gold Resources, Inc. Subsequent to this transaction, all notes payable for Dutch Gold Resources, Inc. were extinguished and the only remaining notes were the ones acquired in the Dutch Mining, LLC transaction.





PRINCIPLES OF CONSOLIDATION


Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and include our accounts and our wholly-owned subsidiaries’ accounts (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.





PREPARATION OF FINANCIAL STATEMENTS


The Company follows the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and has adopted a year-end of December 31.





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





Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.





In the opinion of management, the accompanying consolidated balance sheets and related consolidated interim statements of operations, cash flows, and stockholders’ equity (deficit) include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).





ORGANIZATIONAL AND START-UP EXPENSES


The Company has expensed all organizational and start-up expenses for financial reporting purposes.





USE OF ESTIMATES


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





CASH AND CASH EQUIVALENTS


Cash equivalents comprise certain highly liquid instruments with an original maturity of three months or less when purchased. As at the reporting dates, cash and cash equivalents consist of cash only.





PROPERTY PLANT AND EQUIPMENT


Property, plant and equipment are recorded at cost. Depreciation is recorded on the straight-line basis over estimated useful lives that range from three to five years, but do not exceed the useful life of the individual asset. Normal maintenance and repairs are charged to operations while expenditures for major maintenance and improvements are capitalized. When assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss arising from such disposition is included in the consolidated statement of activities.





REVENUE RECOGNITION


We recognize the sale of product when an agreement of sale exists, product delivery has occurred, title has transferred to the customer and collection is reasonably assured. The price received is based upon terms of the contract.


F-6
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





MINERAL CLAIM PAYMENTS AND EXPLORATION EXPENSES


The Company expenses all costs related to the acquisition, maintenance and exploration of its unproven mineral properties to which it has secured exploration rights. If and when proven and probable reserves are determined for a property and a feasibility study prepared with respect to the property, then subsequent development costs of the property will be capitalized. To date the Company has not established the commercial feasibility of its exploration prospects, therefore all costs have been expensed. The Company also considers the provisions of EITF 04-02 “Whether Mineral Rights are Tangible or Intangible Assets” which concluded that mineral rights are tangible assets. Accordingly, the Company capitalizes certain costs related to the acquisition of mineral rights where proven or probable reserves are present, or when the Company intends to carry out an exploration program and has the funds to do so.





CONCENTRATIONS


Concentration of Credit Risk — Financial instruments, which could potentially subject the Company to credit risk, consist primarily of cash in bank and receivables. The Company maintains its cash in bank deposit accounts insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s account balances, at times, may exceed federally insured limits. The Company has not experienced material losses in such accounts, and believes it is not exposed to any significant credit risk with respect to its cash accounts.


Concentration of Operations — The Company’s operations are all related to the minerals and mining industry. A reduction in mineral prices or other disturbances in the minerals market could have an adverse effect on the Company’s operations.





ENVIRONMENTAL COSTS


Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.





STOCK BASED COMPENSATION


The Company has adopted SFAS No. 123R, Share-Based Payment, an amendment of FASB Statements 123 and 95, which requires the Company to measure the compensation cost of stock options and other stock-based awards to employees and directors at fair value at the grant date and recognize compensation expense over the requisite service period for awards expected to vest.


The Company ceased the Stock Option program at 31 December 2007.




Convertible Notes


The Company reviews the terms of convertible debt and equity instruments it issues to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options, that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.




When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount.




When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest





FINANCIAL INSTRUMENTS


The Company’s financial instruments consist of cash and cash equivalents and accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values.





INCOME TAX


The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards 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 not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.





We adopted FIN 48, “Accounting for Uncertainty in Income Taxes”, on January 1, 2007 with no resulting cumulative effect adjustment at adoption. FIN 48 requires that uncertain tax positions are evaluated in a two-step process, whereby (1) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the related tax authority would be recognized.


F-7
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





IMPAIRMENT OF LONG-LIVED ASSETS


Impairment of Long-lived Assets — Management reviews and evaluates the net carrying value of all facilities, including idle facilities, for impairment at least annually, or upon the occurrence of other events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. We estimate the net realizable value of each property based on the estimated undiscounted future cash flows that will be generated from operations at each property, the estimated salvage value of the surface plant and equipment, and the value associated with property interests. All assets at an operating segment are evaluated together for purposes of estimating future cash flows.




Although management has made a reasonable estimate of factors based on current conditions and information, assumptions underlying future cash flows are subject to significant risks and uncertainties. Estimates of undiscounted future cash flows are dependent upon estimates of metals to be recovered from proven and probable ore reserves, and to some extent, identified resources beyond proven and probable reserves, future production and capital costs and estimated metals prices (considering current and historical prices, forward pricing curves and related factors) over the estimated remaining mine life. It is reasonably possible that changes could occur in the near term that could adversely affect our estimate of future cash flows to be generated from our operating properties. In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-lived Assets,” if undiscounted cash flows including an asset’s fair value are less than the carrying value of a property, an impairment loss is recognized.





ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES


The Company has adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, which requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.




The Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes. The adoption of this pronouncement does not have an impact on the Company’s financial statements.




BASIC AND DILUTED LOSS PER SHARE


The Company computes net income (loss) per share in accordance with SFAS No. 128, “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Because the Company does not have any potentially dilutive securities only basic loss per share is presented in the accompanying financial statements. At June 30, 2009, the Company had no outstanding options, warrants and stock purchase rights that could have a future dilutive effect on the calculation of earnings per share.





The Company computes net income (loss) per share in accordance with SFAS No. 128 “Earnings per Share”. The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the “as if converted” basis.





ASSET RETIREMENT OBLIGATIONS


The Company follows SFAS No. 143, “Accounting for Asset Retirement Obligations”, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.




SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at June 30, 2009 and December 31, 2008 the Company had no asset retirement obligations.





RECENT ACCOUNTING PRONOUNCEMENTS


On January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133, which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for and how derivative instruments and the related hedged items affect an entity’s financial position, financial performance and cash flows. Since the Company currently does not have any derivative instruments, there are no additional disclosures required.





On January 1, 2009, the company adopted guidance issued by the FASB on business combinations FAS141(R), including that the purchase method be used for all business combinations and for an acquirer to be identified for each business combination. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. In a business combination, including business combinations achieved in stages (step acquisition), the acquirer is required to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. Additionally, it requires acquisition-related costs to be expensed in the period in which the costs are incurred and the services are received instead of including such costs as part of the acquisition price. The adoption has not had a material impact on the company’s financial statements.


F-8
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





In April 2009, the FASB issued FSP No. FAS 157-4 “Determining Fair Values When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly." This FSP provides guidance on (1) estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly declined and (2) identifying transactions that are not orderly. The FSP also amends certain disclosure provisions of SFAS No. 157 to require, among other things, disclosures in interim periods of the inputs and valuation techniques used to measure fair value. This pronouncement is effective prospectively beginning April 1, 2009. The Company is evaluating the impact that the adoption of this standard will have on the Company's results of operations and financial condition.





In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments" (FSP 115-2). This FSP modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The FSP also requires additional disclosures for both annual and interim periods with respect to both debt and equity securities. Under the FSP, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security's entire amortized cost basis (even if the entity does not intend to sell). The FSP further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the security's fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. FSP 115-2 requires entities to initially apply the provisions of the standard to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulated other comprehensive income. This pronouncement is effective April 1, 2009. The Company has adopted this pronouncement for the quarter ended June 30, 2009; however, since the Company has no such investments in debt or equity securities, there was no impact on the Company’s financial position or results of operations as a result of the adoption.





In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments." This FSP essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the FSP requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments.





In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB SFAS No. 162”, as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009.  The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is for disclosure only and will not impact our financial condition or results of operations. We are currently evaluating the impact to our financial reporting process of providing Codification references in our public filings.





In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. SFAS 165 is effective for interim and annual periods ending after June 15, 2009, and accordingly, the Company adopted this pronouncement during the second quarter of 2009. SFAS 165 requires that public entities evaluate subsequent events through the date that the financial statements are issued. The Company has looked at subsequent events through December 31, 2009 and has included all subsequent events in Note 10 - Subsequent Events





In June 2009, the FASB issued SFAS No. 166, "Accounting For Transfers of Financial Assets -- An Amendment Of FASB Statement No. 140" ("SFAS 166"), which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a "qualifying special-purpose entity", changes the requirements for derecognizing financial assets and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company has not completed its assessment of the impact SFAS 166 will have on its financial condition, results of operations or cash flows.





In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)" ("SFAS 167"), which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company's involvement in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 is effective for fiscal years beginning after November 15, 2009. The Company has not completed its assessment of the impact SFAS 167 will have on its financial condition, results of operations or cash flows.





NOTE 2—PREPAID AND OTHER CURRENT ASSETS


Prepaid and Other Current Assets are comprised of:





June 30,


December 31,2009


2008Prepaid consulting fees

$
1,602,548


$
-Total prepaid and other current assets

$
1,602,548


$
-


F-9
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 3—PROPERTIES, PLANT AND EQUIPMENT


Our major components of properties, plants, equipment are:





June 30, 2009


December 31, 2008Office equipment

$
11,127


$
11,127Lab equipment


30,494



30,494Mill equipment


1,488,482



1,488,482Mine - structural


359,782



359,782Mine equipment


508,891



508,8922,398,776



2,398,776Less: accumulated depreciation, depletion and amortization


1,392,375



1,152,497Net carrying value

$
1,006,401


$
1,246,279





Depreciation expense was $239,878 for the six months ended June 30, 2009.





The Internal Revenue Service has a federal lien on the company’s subsidiary Dutch Mining, LLC’s equipment, real property and leases in the amount of $567,062. The State of Oregon Department of Revenue has a lien on the company’s subsidiary Dutch Mining, LLC’s personal and real property in the amount of $118,663. Dutch Gold Resources, Inc. is not liable for the taxes associated with these liens, except to the extent that it makes additional capital available to Dutch Mining, LLC.





NOTE 4—ACCRUED EXPENSES AND ACCOUNTS PAYABLE


Accrued expenses and Accounts Payable are comprised of:





June 30,


December 31,2009


2008Accrued interest expense

$
543,173


$
420,415Accounts Payable


2,048,275



1,217,256Accounts Payable-related parties


222,613



222,613Total Accrued expenses and Accounts Payable

$
2,814,061


$
1,860,284





NOTE 5—INCOME TAX


The Company accounts for income taxes under the provisions of SFAS No. 109, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes are provided using the liability method. Under the liability method, deferred income taxes are recognized for all significant temporary differences between the tax and financial statement bases of assets and liabilities.





Uncertain Tax Positions





On January 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FIN 48 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions.





Based on our assessment of FIN 48, we concluded that the adoption of FIN 48, as of January 1, 2007, had no significant impact on our results of operations or financial position, and required no adjustment to the opening balance sheet accounts. Our year-end analysis supports the same conclusion, and we do not have an accrual for uncertain tax positions as of June 30, 2009. As a result, tabular reconciliation of beginning and ending balances would not be meaningful. If interest and penalties were to be assessed, we would charge interest to interest expense, and penalties to other operating expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.





NOTE 6—CONVERTIBLE DEBENTURES


The Company had no convertible debentures outstanding at June 30, 2009 and $525,000 at December 31, 2008. The notes bear an interest at a rate of 8% per annum. Under the convertibility terms of the notes payable, the principal, plus accrued interest, can be converted immediately, at the option of the holder, either in whole, or in part, into fully paid common shares of the Company.


F-10
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 7—ACQUISITION OF SUBSIDIARY


In January 4, 2007, the company entered into a definitive Share Exchange agreement (the “Agreement”) with Dutch Mining, L.L.C. , an Oregon limited liability company (‘Dutch Mining’). Pursuant to the agreement, the company agreed to acquire 100% of the outstanding equity of Dutch Mining from the stockholders of Dutch Mining (the “Dutch Mining Shareholders”) in exchange for the issuance by the company to the Dutch Mining Shareholders of an aggregate of 24,000,000 newly issued shares of common stock (“the Exchange Shares”). The Exchange shares were issued to the Dutch Mining Shareholders on a pro rata basis , in proportion to the ratio that the percentage of Dutch Mining Interest held by such  Dutch Mining Shareholder bears to the number of shares of Dutch Mining Interests held by all the Dutch Mining Shareholders as of the contract closing date.





The transactions was accounted for as a recapitalization, with the shares issued as consideration being recorded at $3,936,480 that being value given up after considering price fluctuations and liquidity issues.





NOTE 8—CAPITAL STOCK


Common Stock





As of June 30, 2009, the Company has 84,979,042 shares of its $0.001 par value common stock issued and outstanding.





Warrants





As of June 30, 2009 the Company had the following warrants for the purchase of shares of common stock issued and outstanding:





Warrants Outstanding


Weighted Average Exercise Price


Aggregate Intrinsic ValueOutstanding, December 31, 2008


1,916,667



-



-Granted


3,833,333




-



-Forfeited


-




-



-Exercised


-



-



-Outstanding, June 30, 2009


5,750,000


$
0.84


$
0





The fair value of the warrants is measured at the end of the reporting period with changes in fair value recognized in net income. None was recognized in the period ending June 30, 2009. The value determined for these warrants at June 30, 2009 was $ $1,824,059.  Using the Black-Scholes valuation model and the market price and volatility of the Company’s shares of common stock as quoted on the OTCBB as of June 30, 2009, the value of these warrants at June 30, 2009 is determined to be zero. The warrants do not confer upon the holders any rights or interest as a shareholder of the Company.





As at June 30, 2009, the following share purchase warrants were outstanding:





Warrants Outstanding


Exercise Price

Expiration Date500,000


$
1.15

January 5, 2013250,000



1.15

January 5, 201341,667



0.60

February 27, 2010100,000



0.97

February 27, 201012,500



0.95

April 14, 201312,500



0.95

April 14, 2013833,333



1.00

September 4, 2010166,667



1.00

September 4, 20103,333,333



0.50

March 12, 201162,500



0.50

June 9, 2012437,500



0.50

June 9, 20125,750,000


F-11
 Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 9—RELATED PARTY TRANSACTIONS


The Company assumed a note issued by Dutch Mining, LLC in the amount of $1.2M to Embassy International, LLC, and Florida limited liability company controlled by the family of the Chairman of the Board, Ewald Dienhart. The note is dated December 31, 2006 and carries an interest rate of 10.0%.  The note is unsecured and may be converted into shares of the Company. The related parties have agreed not to demand the loans through December 31, 2012 therefore the loans are recorded as long-term liabilities





The Company assumed notes issued by Dutch Mining, LLC in the amount of $250K to Gabriela Dienhart-Engel, who is the daughter of the Chairman of the Board, Ewald Dienhart. The note is dated July 31, 2006 and carries an interest rate of 6.0%. The note is partially secured by the title to the Gold Bug Mine, and may be converted into shares of the Company. The related parties have agreed not to demand the loans through December 31, 2012 therefore the loans are recorded as long-term liabilities





The Company assumed notes issued by Dutch Mining, LLC in the amount of $100,000 to Dienhart-Caruso TBE Family LLC, a Florida limited liability company that is controlled by the wife of the Chairman of the Board, Ewald Dienhart. The note is dated July 31, 2006 and carries an interest rate of 6.0%.  The note is partially secured by the title to certain equipment used by the Company, and may be converted into shares of the Company. The related parties have agreed not to demand the loans through December 31, 2012 therefore the loans are recorded as long-term liabilities.





The Company assumed a note issued by Dutch Mining LLC in the amount of $950,000 to Josef Bauer for working capital. The note is guaranteed by Ewald Dienhart and carries an interest rate of 13.0%. The related parties have agreed not to demand the loans through December 31, 2012 therefore the loans are recorded as long-term liabilities.





The Company leases space from Rendata Industrial Park, LLC and Rendata is substantially controlled by Ewald Dienhart, the company’s Chairman. For the period ended June 30, 2009 the Company accrued rent and related expenses in the amount of $84,966 and had a payable balance accrued of $253,616 at June 30, 2009.





The Company had an agreement with HPUs, LLC, whose Managing Member Patrick Engel, is related to the Company’s Chairman, effective November 30, 2007 to provide management services. The contract was for one year, automatically renewable unless terminated for a monthly amount of $9,500. The Company had a payable balance accrued of $183,838 at June 30, 2009.





The company owed $69,683 to Ewald J. Dienhart for short term advances at June 30, 2009.





NOTE 10—FINANCIAL CONDITION AND GOING CONCERN


The Company's continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered into discussions to do so with certain individuals and companies. However, as of the date of these consolidated financial statements, no formal agreement exists.





The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to secure the necessary capital and continue as a going concern.





NOTE 11—SUBSEQUENT EVENTS





Acquisition of Control of Aultra Gold, Inc.


On December 31, 2009, pursuant to a Stock Purchase Agreement by and among the Company, Rauno Perttu, Strategic Minerals Inc., a Nevada corporation, and Aultra Gold Capital Inc., a Turks and Caicos corporation, the Company acquired controlling interest of Aultra Gold for a purchase price of One Million newly-issued shares of the Company’s common stock, par value $0.001 per share.





Employment Agreements


On December 31, 2009 the Company entered into an employment agreement with Mr. Daniel Hollis the Company’s Chief Executive Officer for an initial one year period. The agreement may be renewed at the option of the Corporation for successive one year periods. The agreement provides for an annual salary of $96,000.





On December 31, 2009 the Company entered into an employment agreement with Mr. Rauno Perttu the Company’s Chief Operating Officer for an initial one year period. The agreement may be renewed at the option of the Corporation for successive one year periods. The agreement provides for an annual salary of $96,000.





Acquisition of Aultra Gold, Inc.’s Assets


On January 6, 2010, the Company entered into an Asset Purchase Agreement with Aultra Gold, Inc. effective as of December 31, 2009.  Pursuant to the Agreement, the Company acquired all of Aultra Gold’s assets. As consideration for these assets, the Company issued 9,614,667 shares of its common stock, par value $0.001 per share, to Aultra Gold.





In accordance with the transaction, the Company acquired substantially all of the assets related to Aultra Gold’s gold and mineral business, including inventory, accounts receivable, certain supply and distribution and other vendor contracts, good will and other various assets and intangibles. The parties made customary representations, warranties and indemnities that are typical and consistent for a transaction of this size and scope.





In January 2010, the Company announced that an independent consulting geologist conducted an NI 43-101 compliant report, indicating the mineral resource at the Basin Gulch property was sizeable. That report is available as a Form 8K at www.sec.gov and on the Company website, www.dutchgold.com


Table of Contents


DUTCH GOLD RESOURCES, INC.


(Formerly SMALL TOWN RADIO, INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 12–MINING LEASE AND OPTION TO PURCHASE





In 1996, the Company entered into a lease agreement for the Benton Mine, the agreement provides for a monthly minimum advance royalty payment of $5,000. The production royalty provides that the lessor pay 4% of the value of ores, minerals, metals, bullion and mineral products derived from the property to the lessee. In addition, lessee will pay 1% of the value of ores, minerals, metals, bullion and mineral products derived within one mile of the leased property.   This lease was last amended January 25, 2006.  The Company has an option to acquire the Benton Mine for $10 million.  The Company is currently working on a commercials permit and reclamation plan for the Benton Mine. There are disagreements with the owners of Benton Mine and Dutch Mining LLC as to the amount of royalties due to the lessor. Dutch Mining LLC does not and will not operate under the aforementioned lease until a reclamation plan is completed and a full commercial permit is obtained.  At such time, the Benton Mine, Inc. and the Company will have to agree on new terms of the lease, resolving any and all disputed amounts.





1995, the Company purchased the mining property known as Mineral Lot no. 351 final certificate No. 83 consisting of the Gold Bug, Silver State, Silver Dollar, Oregonian, Bimetallist and US Lode Claims in Joseph County, Oregon.  These claims are collectively referred to as the Gold Bug, which had gold production until 1942, when mining ceased as a result of World War II.  Historic production and current geochemical studies indicate the presence of minerals associated with gold formations.  The Company intends to permit the Gold Bug Mine after completing a thorough and diligent study to assess the economic potential of the properties.  The ore grade and composition can be processed at the Company’s mill in Grants Pass, OR.


Table of Contents


Item2.     Management’s Discussion and Analysis of Results of Operations and Financial Condition





Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.





ForwardLooking Statements





This Quarterly Report on Form 10-QSB and the information incorporated by reference may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Various statements, estimates, predictions, and projections stated under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," and elsewhere in this Quarterly Report are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements appear in a number of places in this Quarterly Report and include statements regarding the intent, belief or current expectations of Dutch Gold Resources, Inc. or our officers with respect to, among other things, the ability to successfully implement our operating and acquisition strategies, including trends affecting our business, financial condition and results of operations. While these forward-looking statements and the related assumptions are made in good faith and reflect our current judgment regarding the direction of the related business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. These statements are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control and reflect future business decisions, which are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect our results. Some important factors (but not necessarily all factors) that could affect our revenues, growth strategies, future profitability and operating results, or that otherwise could cause actual results to differ materially from those expressed in or implied by any forward-looking statement, include the following:





These statements include, but are not limited to, comments regarding:




•           the establishment and estimates of mineral reserves and resources;


•           grade;


•           expenditures;


•           exploration;


•           permits;


•           closure costs;


•           future financing;


•           liquidity;


•           estimates of environmental liabilities;


•           our ability to obtain financing to fund our estimated expenditure and capital requirements;


1
 Table of Contents


•           factors impacting our results of operations;


•           application of Sarbanes-Oxley 404 reporting requirements and our ability to meet those reporting requirements; and


•           the impact of adoption of new accounting standards.




Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:




•           unexpected changes in business and economic conditions;


•           significant increases or decreases in gold prices;


•           unanticipated grade changes;


•           metallurgy, processing, access, availability of materials, equipment, supplies and water;


•           determination of reserves;


•           results of current and future exploration activities;


•           results of pending and future feasibility studies;


•           joint venture relationships;


•           local and community impacts and issues;


•           timing of receipt of government approvals;


•           accidents and labor disputes;


•           environmental costs and risks;


•           competitive factors, including competition for property acquisitions;


•           availability of external financing at reasonable rates or at all; and


•           the factors discussed in this Quarterly Report on Form 10-QSB under the heading “Risk Factors.”




This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Risk Factors and Uncertainties”, “Description of the Business” and “Management’s Discussion and Analysis” of this Quarterly Report.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.





Stockholders and other users of this Quarterly Report on Form 10-QSB are urged to carefully consider these factors in connection with the forward-looking statements. We do not intend to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.





Overviewand Results of Operations





DESCRIPTION OF BUSINESS





Overview





Dutch Gold Resources, Inc. is a junior gold miner focused in North America.  The Company’s mission is to become a recognized gold producer within two years.  A key to this plan is the acquisition of late stage exploration and development projects that can be quickly advanced to production. Our objective is to focus on low-risk and proven reserves that will be economical and profitable for the shareholders of DGRI.





We are reviewing engineering and feasibility studies of the Benton Mine. The Benton Mine in Southern Oregon, which had been in test production, is now in a Care and Maintenance program.  The Company commissioned a drilling program, the results of which are being used as the basis to form a long-term mining plan.


2
 Table of Contents


Operating Strategy





Our business strategy is to acquire and develop gold properties in North America. To achieve these goals, we intend to:





•  evaluate the Benton mine for optimization


•  upgrade the resource and mining operations at the Benton mine


•  acquire such additional projects and properties that fit the company’s acquisition profile





Benton Mine





Dutch Gold Resources, Inc. has leased the Benton Mine consisting of 24 gold mining claims on 480 acres; which are all in good standing including eight patented claims and 16 claims located on US Forest Service Land. Dutch Gold also owns the adjacent Gold Bug Mine on 110 acres with 5.5patented claims. Dutch Gold Resources, Inc. acquired these interests in a share exchange agreement with Dutch Mining, LLC. The mines are located near Grants Pass, OR. The Benton Mine was the largest gold mine in southwest Oregon during the late 1930’s. It was founded in 1893 and was the largest underground mine in Oregon.




The Benton mine is an advanced stage development and production project with a substantial investment already made in recent exploration and development that has started delivering gold concentrate in 2007. Dutch Gold recently completed the construction and fine-tuning of its ore mill. This is the only permitted, commercial scale gold mill in Oregon.




From 1994 to 1996 Dutch Mining LLC worked to explore and develop the Benton Mine and undertook a baseline study for all the necessary permits to operate the mine and build an ore mill to produce gold ore concentrate. While mining the known ore bodies, the Company feels there is also the potential to significantly upgrade the resource base of Benton by drilling out areas untapped by historic mining and drilling. In January 2005 Dutch Mining reopened the Benton Mine and performed a full rehabilitation of the mine, and built a new gold ore mill to process 330 tons of ore per day that can be increased to 450 tons as needed.






Results of Operations





Three Months ended June 30, 2009 and 2008





During the three-month period ended June 30, 2009 the Company incurred operating expenses of $2,216,917 and interest expenses of $612,550 as compared to operating expenses of $1,351,170 and interest expenses of $237,700 for the period ended June 30, 2008.  The Company's net loss during the three-month period ended June 30, 2009 was $2,829,467 as compared to a net loss of $1,608,256 during the three-month period ended June 30, 2008.





The decrease in income from operations for the quarter ended June 30, 2009 as compared to the quarter ended June 30, 2008 is primarily attributable to reduction in mining activities on the Benton Mine due to a reduction in mining activities due to restricted capital available to fund the business as a result of the weakness in capital markets.





Nine Months ended June 30, 2009 and 2008





During the nine-month period ended June 30, 2009 the Company incurred operating expenses of $3,094,227 and interest expenses of $677,429 as compared to operating expenses of $1,775,865 and interest expenses of $312,658 for the period ended June 30, 2008.  The Company's net loss during the nine-month period ended June 30, 2009 was $3,771,656 as compared to a net loss of $2,873,371 during the nine-month period ended June 30, 2008.





Twelve-Month Business Outlook





We do not currently have funds sufficient to carry out any of our operations, or to execute our plan of becoming a natural resource company.  In order to act upon our operating plan discussed herein, we must be able to raise sufficient funds from (i) debt financing; or, (ii) new investments from private investors. There can be no assurance that we will be able to obtain debt or equity financing or generate sufficient revenue to produce positive cash flow from operations.


3
 Table of Contents


OperatingExpenses and Capital Expenditures





Operating Expenses





Assuming that the Company is successful raising funds, we anticipate incurring operating expenses of approximately $2,000,000 during the next twelve months.





The primary operating expenses incurred include management and consulting fees associated with fundraising and the transition to a natural resources company.





Sourceof Revenue





The Company sells gold concentrates and dore to buyers throughout the world as production warrants.  The company’s revenue fluctuates as a function of the spot price of gold and the amount of gold that is produced from its properties. The Company expects limited production from the Benton mine and limited revenues throughout the year.





OperatingLosses





Assuming that the Company is successful continuing to pursue it’s plan to change to a natural resources company we plan realize an operating loss of approximately $2,000,000 during the next twelve months.





Liquidityand Capital Resources





We currently have limited sources of capital, including the public and private placement of equity securities and the possibility of debt. With limited liquid assets and depreciating fixed assets the availability of funds from traditional sources of debt will be limited, and we cannot assure you that there will be a source of funds in the future.





As of June 30, 2009, we had a cash balance of $8,453. We estimate that, based upon our current business, we will require up to $4,000,000 over the next two years.  However, the Company cannot properly anticipate the capital expenditures and working capital needed in connection with the operations. Due to difficulties in the capital markets as a result of the credit crisis that began with the liquidation of Bear Stearns, inc., the Company has taken steps to reduce its cash requirements, resulting in a furlough of the mining operations personnel, and a temporary halt to production in the Benton Mine.




Our independent certified public accountants stated in their report dated 28 January 2010 for the fiscal year ending December 31, 2008 that we have incurred operating losses from our inception and that we are dependent upon our ability to meet our future financing requirements, and the success of future operations. These factors raise substantial doubt about our ability to continue as a going concern.





Item 3.Controls and Procedures





(a) Evaluation of Disclosure Controls and Procedures





The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.  Our Chief Executive and Financial Officer evaluated, with the participation of other members of management, the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)), as of the end of the period covered by this Annual Report on Form 10-KSB.





(b) Changes in Internal Controls





The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive and Financial Officer.


4
 Table of Contents


PART II — OTHER INFORMATION





Item1.    Legal Proceedings





The Company may from time to time be involved in litigation in the normal course of business.  The Company is a defendant in two labor actions:


Tellez vs Dutch Mining LLC and


Quimby vs Dutch Mining LLC


Both claims were related to actions taken prior to the acquisition of Dutch Mining LLC by Dutch Gold LLC and have been resolved.





We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.





Item2.   Risk Factors





Our independent auditors have expressed doubt about our ability to continue as a going concern.





Our independent public accountants have expressed doubt about our ability to continue as a going concern in their report on our December 31, 2008 and December 31, 2007 financial statements. Our independent public accountants have advised us that our continuance as a going concern is dependent upon our ability to raise capital. There is no assurance that we will be able to raise sufficient capital or generate sufficient cash from operations to continue as a going concern.





Because of our limited operations and the fact that we are currently generating limited revenue, we may be unable to service our debt obligations.





We currently have approximately $2,514,926 in debt pursuant to promissory notes issued by us. We are presently unable to meet our interest obligations in the amount of $618,629 under these notes. We are also trying to secure additional debt and equity financing. Our ability to satisfy our current debt service obligations, and any additional obligations we might incur will depend upon our future financial and operating performance, which, in turn, are subject to prevailing economic conditions and financial, business, competitive, legislative and regulatory factors, many of which are beyond our control. If our cash flow and capital resources continue to be insufficient to fund our debt service obligations, we may be forced to reduce or delay planned acquisitions, expansion and capital expenditures, sell assets, obtain additional equity capital or restructure our debt. We cannot assure you that our operating results, cash flow and capital resources will be sufficient for payment of our debt service and other obligations in the future.





If we lose our key personnel, we may be unable to successfully execute our business plan; because we currently only have one employee, he may be unable to successfully manage the business.





Our business is presently managed by a key employee, Chief Executive Officer, Daniel W. Hollis. If we lose Mr. Hollis, it could have a material adverse effect on our operations, and our ability to execute our business plan might be negatively impacted. We have entered into an employment agreement with Mr. Hollis, which include provisions restricting his ability to use our confidential information should he leave the company. However, Mr. Hollis may leave the company if he chooses to do so, and we cannot guarantee that he will not choose to do so, or that we would be able to hire similarly qualified executives if he should choose to leave.





Because our common stock is quoted on the "OTC Pink Sheets," your ability to sell your shares in the secondary trading market may be limited.





Our common stock is currently quoted on the OTC Pink Sheets. Consequently, the liquidity of our common stock is impaired, not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and coverage by security analysts and the news media, if any, of our company. As a result, prices for shares of our common stock may be lower than might otherwise prevail if our common stock was quoted and traded on NASDAQ or a national securities exchange.


5
 Table of Contents


Because our shares are "penny stocks," you may have difficulty selling them in the secondary trading market.





Federal regulations under the Securities Exchange Act of 1934 regulate the trading of so-called "penny stocks," which are generally defined as any security not listed on a national securities exchange or NASDAQ, priced at less than $5.00 per share and offered by an issuer with limited net tangible assets and revenues. Since our common stock currently is quoted on the Pink Sheets at less than $5.00 per share, our shares are "penny stocks" and may not be quoted unless a disclosure schedule explaining the penny stock market and the risks associated therewith is delivered to a potential purchaser prior to any trade.





In addition, because our common stock is not listed on NASDAQ or any national securities exchange and currently is quoted at and trades at less than $5.00 per share, trading in our common stock is subject to Rule 15g-9 under the Securities Exchange Act. Under this rule, broker-dealers must take certain steps prior to selling a "penny stock," which steps include:





• obtaining financial and investment information from the investor;


• obtaining a written suitability questionnaire and purchase agreement signed by the investor; and


• providing the investor a written identification of the shares being offered and the quantity of the shares.





If these penny stock rules are not followed by the broker-dealer, the investor has no obligation to purchase the shares. The application of these comprehensive rules will make it more difficult for broker-dealers to sell our common stock and our shareholders, therefore, may have difficulty in selling their shares in the secondary trading market.





The requirements of complying with the Sarbanes-Oxley act may strain our resources and distract management





We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002. The costs associated with these requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Historically, as a private company we have maintained a small accounting staff, but in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant additional resources and management oversight will be required. This includes, among other things, retaining independent public accountants. This effort may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we may need to hire additional accounting and financial persons with appropriate public company experience and technical accounting knowledge, and we cannot assure you that we will be able to do so in a timely fashion.





It is our policy not to pay dividends.





We have never declared or paid cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, for use in our business and therefore do not anticipate paying any cash dividends on our common stock in the foreseeable future.





Existing shareholders may face dilution from our financing efforts





We are dependent on raising capital from external sources to execute our business plan. We plan to issue debt securities, capital stock, or a combination of these securities. We may not be able to sell these securities, particularly under the current market conditions. Even if we are successful in finding buyers for our securities, the buyers could demand high interest rates or require us to agree to onerous operating covenants, which could in turn harm our ability to operate our business by reducing our cash flow and restricting our operating activities. If we were to sell our capital stock, we might be forced to sell shares at a depressed market price, which could result in substantial dilution to our existing shareholders. In addition, any shares of capital stock we may issue may have rights, privileges, and preferences superior to those of our common shareholders.


6
 Table of Contents


Our future earnings may be adversely affected because of charges resulting from acquisitions, or an acquisition could reduce shareholder value.





We may be required to amortize, over a period of years, certain identifiable intangible assets. The resulting amortization expense could reduce our overall net income and earnings per share. Changes in future markets or technologies may require us to amortize intangible assets faster and in such a way that our overall financial condition or results of operations are harmed. If changes in economic and/or business conditions cause impairment of goodwill and other intangibles acquired by acquisition, it is likely that a significant charge against our earnings would result. If economic and/or business conditions did not improve, we could incur additional impairment charges against any earnings we might have in the future. An acquired business could reduce shareholder value if it should generate a net loss or require invested capital.





Item3.Changes in Securities and Use of Proceeds





Not applicable.





Item4.Defaults Upon Senior Securities





Not applicable.





Item5.Submission of Matters to a Vote of Security Holders





Not applicable.





Item6.Other Information





Not applicable




Item7.Exhibits and Reports on Form 8-K





Exhibits.





31.1
Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934





32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





Reports on Form 8-K.During the fiscal quarter ended June 30, 2009, the Company filed the following Current Reports on Form 8-K:





None.





SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





DUTCH GOLD RESOURCES, INC.By:
/s/Daniel W. HollisDaniel W. Hollis, Chief Executive OfficerBy:
/s/Daniel W. HollisDaniel W. Hollis, Chief Financial Officer





Date:March 17, 2010







7