UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





FORM 10- Q


(Mark One)




x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2014o
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: 000-51203


First Colombia Gold Corp.


(Exact name of registrant as specified in its charter)





Nevada
98-0425310(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)Paseo de Bernardez #59 FRACC, Lomas de Bernadez,Guadalupe 98610, Zacatecas,Mexico

(Address of principal executive offices)888-224-6561(Registrant’s telephone number, including area code)__________________________________________________________________(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). xYes o No





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “a smaller reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer   o
Accelerated filer                    oNon-accelerated filer     o

(Do not check if a smaller reporting company)
Smaller reporting company  x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes  xNo





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




Class

Outstanding at March 3,2014Common Stock, $0.00001 par value

1,075,021














Table of Contents
















FORM 10-Q

FIRST COLOMBIA GOLD CORP.

March 31,2014

TABLE OF CONTENTS
PagePART I – FINANCIAL INFORMATIONItem 1.
Interim Consolidated Financial Statements.
3Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
4Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
27Item 4.
Controls and Procedures.
27PART II – OTHER INFORMATIONItem 1.
Legal Proceedings.
29Item 1A.
Risk Factors.
29Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
29Item 3.
Defaults Upon Senior Securities.
29Item 4.
Mine Safety Disclosures.
29Item 5.
Other Information.
29Item 6.
Exhibits.
30SignaturesCertifications


















- 2 -
 Table of Contents















PART I - FINANCIAL INFORMATION





Item 1. Interim Consolidated Financial Statements





Our unaudited interim consolidated financial statements included in this Form 10-Q for the three months ended March 31, 2014 are as follows:F-1
Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013.F-2
Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013 and from inception on September 5, 1997 to March 31, 2014.F-3
Condensed Consolidated Statements of Cash Flows for the three  months ended March 30, 2014 and 2013 and from inception on September 5, 1997 to March 31, 2014.F-4
Notes to Condensed Consolidated Financial Statements.





These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2014 are not necessarily indicative of the results that can be expected for the full year.

















- 3 -
 Table of Contents














FIRST COLOMBIA GOLD CORP.(An Exploration Stage Company)Condensed Consolidated Balance SheetsAs at


As at31 March


31 December2014


2013(Unaudited)$


$AssetsCurrent AssetsPrepaid expenses

$
1,145


$
1,145Other receivable


13,500



16,500Total current assets


14,645



17,645Property and Equipment


3,672



4,113Total Assets

$
18,317


$
21,758Liabilities and Stockholders' Equity (Deficit)Current LiabilitiesAccounts payable and accrued liabilities

$
247,252


$
230,855Accounts payable, related parties


18,346



38,346Convertible notes payable, net of discounts of $32,080 and $38,697, respectively


54,135



39,798Derivative liabilities


390,250



671,998Total Current Liabilities


709,983



980,997Notes payable


241,100



241,100Total Liabilities

$
951,083


$
1,222,098Stockholders' DeficitAuthorized850,000,000 common shares, par value $0.00001 and150,000,000 blank check preferred shares, no par value50,000,000 designated class A preferred shares, par value $0.001

$
-


$
-33,181,818 designated class B preferred shares, par value $0.001Issued and outstanding31 March 2014 - Series B Preferred  2,000,000 shares issued and outstanding


2,00031 March 2014 – 47,568,500 class A convertible preferred shares, par value $0.001


47,569



47,56931 December 2013 – 47,568,500 class A convertible preferred shares, par value $0.00131 March 2014 – 116,758,029 common shares, par value $0.00001


1,168



1231 December 2013 – 1,158,029 common shares, par value $0.00001Additional paid-in capital


19,014,901



18,958,991Deficit accumulated during the exploration stage


(19,998,413
)


(20,212,689
)Total Stockholders' Deficit


(932,766
)


(1,206,117
)Total liabilities and stockholders' deficit

$
18,317


$
21,758The accompanying notes are an integral part of these condensed consolidated financial statements













F - 1
 Table of Contents














FIRST COLOMBIA GOLD CORP.(Exploration Stage Company)Condensed Consolidated Statements of Operations(Unaudited)For the periodfrom the date ofFor the


For the


inception onthree month


three month


5 Septemberperiod ended


period ended


1997 to31 March


31 March


31 March2014


2013


2014$


$


$(restated)ExpensesDepreciation and amortization


441



441



85,938General and administrative


25,619



50,844



7,885,413Impairment loss on mineral properties


-



-



5,069,650Mineral property exploration expenditures


2,500



13,000



5,157,174Total Operating Expense


28,560



64,285



18,198,175Loss from operations


(28,560
)


(64,285
)


(18,198,175
)Other ItemsGain on extinguishment of debt


-



45,357



89,730Gain on sale of oil and gas property


-



-



10,745Interest income


-



-



102,561Interest expense


(40,619
)


(80,036
)


(2,138,830
)Gain/(Loss) on derivative liabilities


283,455



(315,402
)


(162,728
)Recovery of expenses


-



-



4,982Write-down of incorporation cost


-



-



(12,500
)Write-down of assets


-



-



(14,111
)Total Other Items


242,836



(350,081
)


(2,120,151
)Net operating income (loss) before income taxes


214,276



(414,366
)


(20,318,326
)Future income tax recovery


-



-



2,319,871Net operating income (loss) from continuing operations


214,276



(414,366
)


(17,998,455
)Discontinued operations of Beardmore Holdings, Inc.


-



-



(1,999,958
)Net operating income (loss) and comprehensive income (loss) for the period


214,276



(414,366
)


(19,998,413
)Income (loss) per common share - basic and dilutedContinuing operations


0.00



(2.03
)Discontinued operations


-



-Income (loss) and comprehensive income (loss)


0.00



(0.00
)Weighted average shares outstanding of common - basic


33,911,362



204,162Weighted average shares outstanding of common - diluted


115,486,987



204,162The accompanying notes are an integral part of these condensed consolidated financial statements














F - 2
 Table of Contents














FIRST COLOMBIA GOLD CORP.(Exploration Stage Company)Condensed Consolidated Statement of Cash Flows(Unaudited)For the periodfrom the date ofFor the


For the


inception onthree month


three month


5 Septemberperiod ended


period ended


1997 to31 March


31 March


31 March2014


2013


2014$


$


$(restated)Cash Flows Used in Operating Activities:Net Income (Loss)


214,276



(414,366
)


(17,998,455
)Adjustments:Amortization


441



441



85,938Accrued interest


-



-



-Consulting fees


-



-



40,200Debt discount amortization and origination interest


35,841



63,297



480,228Gain on extinguishment of debt


-



(45,357
)


(74,730
)Future income tax recovery


-



-



(2,319,871
)Gain on sale of oil and gas property


-



-



(10,745
)Gain/(Loss) on derivative liabilities


(283,455
)


315,402



162,728Stock-based compensation (recovery)


-



-



3,609,399Write-down of mineral property interests


-



-



5,069,650Changes in operating assets and liabilitiesOther Receivable & Prepaid Expenses


3,000



27,500



(14,645
)Increase (decrease) in accounts payable and accrued liabilities


16,397



27,983



2,305,319Net Cash used in Continuing Operating Activities


(13,500
)


(25,100
)


(8,664,984
)Net cash used in discontinued operations


-



-



(186,440
)Net Cash used in Operating Activities


-



(25,100
)


(8,851,424
)Net Cash Used In Investing ActivitiesProceeds from sale of oil and gas property


-



-



46,200Oil and gas property acquisitions


-



-



(2,846
)Oil and gas exploration


-



-



(22,609
)Mineral property acquisition


-



(2,400
)


1,763,241Purchase of equipment


-



-



(53,550
)Website development cost


-



-



(40,000
)Net Cash Provided by (Used In) Investing Activities


-



(2,400
)


1,690,436Cash Flows From Financing Activities:Proceeds from notes payable


13,500



27,500



249,495Cost of repurchase of common stock


-



-



(1,000
)Warrants excercised


-



-



100,000Issuance of common stock, net of share issue costs


-



-



8,311,915Net Cash Provided by (Used In) Continuing Financing Activities


13,500



27,500



8,660,410Net cash used in discontinued operations


-



-



(1,499,422
)Net Cash Provided by (Used In) Financing Activities


-



-



7,160,988Net Increase (Decrease) in Cash


-



-



-Cash at Beginning of Period


-



-



-Cash at End of Period


-



-



-Supplemental disclosure of cash flow information:Foreign exchange loss










21,787Common shares issued for oil and gas property










10,000Common shares issued for services










50,000Donated consulting services










16,200Common shares issued for acquisition of Finmetal










1,280,000Restricted sares issued for stock-based compensaton







2,418,000Common shares issued for finders fee










254,500Notes payable issued for settlement of note payable










241,200Common shares issued upon conversion of promissory notes


5,780







187,490Preferred A shares issued for settlement of accounts payable







104,651Preferred B shares issued for settlement of accounts payable


20,000







48,000The accompanying notes are an integral part of these condensed consolidated financial statements












F - 3
 Table of Contents














First Colombia Gold Corp.


(An Exploration Stage Company)


Notes to Consolidated Financial Statements


31 March 2014








1. Nature, Basis of Presentation and Continuance of Operations





First Colombia Gold Corp. (the “Company”) was incorporated under the laws of the State of Nevada, U.S.A. under the name “Gondwana Energy, Ltd.” on 5 September 1997. On 23 January 2007, the Company changed its name to “Finmetal Mining Ltd.”. On 27 November 2006, the Company completed the acquisition of 100% of the shares of Finmetal Mining OY (“Finmetal OY”), a company incorporated under the laws of Finland. During the fiscal year ended 31 December 2006, the Company changed its operational focus from development of oil and gas properties, to acquisition of, exploration for and development of mineral properties in Finland.





On 22 May 2008, the Company changed its name to “Amazon Goldsands Ltd.” and on 18 September 2008, the Company entered into a Mineral Rights Option Agreement and concurrently re-focused on the acquisition of, exploration for and development of mineral properties located in Peru. On 29 November 2010, the Company changed its name to “First Colombia Gold Corp.”. The Company changed its name pursuant to a parent/subsidiary merger between the Company (as Amazon Goldsands Ltd.) and its wholly-owned non-operating subsidiary, First Colombia Gold Corp., which was established for the purpose of giving effect to this name change. In 2011 the Company expanded geographic focus to include North America, acquiring two mineral property interests while terminating its agreements related to the mineral property located in Peru in September 2011.





The Company is an exploration stage enterprise, as defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. The Company is devoting all of its present efforts in securing and establishing a new business. Its planned principal operations have not commenced and no revenue has been derived during the organization period.





The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The recoverability of the carrying value of exploration properties and the Company’s continued existence are dependent upon the preservation of its interest in the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable operations, or the ability of the Company to raise alternative financing, if necessary, or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis. Changes in future conditions could require material write downs of the carrying values.





Although the Company has taken steps to verify the title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.





The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to exploration stage enterprises, and are expressed in U.S. dollars. The Company’s fiscal year end is 31 December.





The Company’s consolidated financial statements as at 31 March  2014 and the three months then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.





The Company had net income of $214,276 for the quarter ended 31 March 2014 (2013– Net loss of $414,366, cumulative – $17,998,455) and has a working capital deficit of $695,338 at 31 March 2014 (31 December 2013 – $963,252), but management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. The Company’s solvency, ability to meet its liabilities as they become due and to continue its operations, is essentially solely dependent on funding provided by Asher Enterprises, Inc. (“Asher”). If Asher is unwilling to provide ongoing funding to the Company and/or if the Company is unable to raise additional capital in the immediate future, the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures or cease operations. This material uncertainty may cast significant doubt about the ability of the Company to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern including adjustments related to employee severance pay and other costs related to ceasing operations.











F - 4
 Table of Contents












Company and/or if the Company is unable to raise additional capital in the immediate future, the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures or cease operations. This material uncertainty may cast significant doubt about the ability of the Company to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern including adjustments related to employee severance pay and other costs related to ceasing operations.





These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2014 are not necessarily indicative of the results that can be expected for the full year.





2. Significant Accounting Policies





The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.





Principles of consolidation





The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Finmetal OY, a company incorporated under the laws of Finland, since its date of acquisition on 27 November 2006 and the results of Beardmore Holdings, Inc. (“Beardmore”), a company incorporated under the laws of Panama, to the date of disposal on 21 September 2011. All inter-company balances and transactions have been eliminated in these consolidated financial statements.





Cash and cash equivalents





The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at 31 March 2014 and as at 31 December 2013, the Company had -0- cash and cash equivalents.





Property and equipment





Furniture, computer equipment, office equipment and computer software are carried at cost and are amortized over their estimated useful lives of three to five years at rates as follows:





Furniture, computer and office equipment
Five yearsComputer software
Three Years





The property and equipment is written down to its net realizable value if it is determined that its carrying value exceeds estimated future benefits to the Company.





Mineral property costs





Mineral property acquisition costs are initially capitalized as tangible assets when purchased. At the end of each fiscal quarter, the Company assesses the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.













F - 5
 Table of Contents










Mineral property exploration costs are expensed as incurred.





Estimated future removal and site restoration costs, when determinable, are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.





As of the date of these consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs.





Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.





Environmental costs





Environmental expenditures that are related 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 a plan of action based on the then known facts.





Stock-based compensation





Effective 1 January 2006, the Company adopted the provisions of ASC 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant).





Basic and diluted loss per share





The Company computes net loss per share in accordance with ASC 260, “Earnings per Share”. ASC 260 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 loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted 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 excluded all dilutive potential shares if their effect was anti-dilutive. As of March 31, 2013, the Company had 48,275,166 potential common shares, from its convertible debt and convertible preferred stock.


Financial instruments





The carrying value of amounts receivable, bank indebtedness, accounts payable and convertible promissory notes approximates their fair value because of the short maturity of these instruments. The Company’s financial risk is the risk that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.













F - 6
 Table of Contents












Income taxes





Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.





Long-lived assets impairment





Long-term assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”. Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis. The company recorded an impairment loss of $0 and $0 for the three months ended March 31, 2014 and 2013, respectively.


Asset retirement obligations





The Company has adopted ASC 410, “Assets Retirement and Environmental Obligations”, which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC 410 requires the Company to record a liability for the present value of the estimated site restoration costs with a corresponding increase to the carrying amount of the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As at 31 March 2014 and 31 December 2013, the Company did not have any asset retirement obligations.





Convertible debt





The Company has adopted ASC 470-20, “Debt with Conversion and Other Options” and applies this guidance retrospectively to all periods presented upon those fiscal years. The Company records a beneficial conversion feature related to the issuance of convertible debts that have conversion features at fixed or adjustable rates. The beneficial conversion feature for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features. The beneficial conversion feature will be accreted by recording additional non-cash interest expense over the expected life of the convertible notes.





As of January 1, 2013, it was determined that the conversion features in the convertible debt were derivative liabilities. Accordingly, we have separately measured and accounted for these derivative liabilities, in accordance with ASC 815-15.





Use of estimates





The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from those estimates.













F - 7
 Table of Contents








Reclassifications





Certain prior period amounts have been reclassified to conform to current period presentation.





Recent Accounting Pronouncements





The Company does not expect the adoption of any recent accounting pronouncements to have a significant impact on its financial statements.





3. Mineral Property Interests





Boulder Hill Claims





On 16 December 2011, the Company entered into a Purchase and Sale Agreement (the “BHM Purchase”) with Boulder Hill Mines, Inc., an Idaho corporation (“Boulder Hill”), to purchase from Boulder Hill three unpatented mining claims situated in Lincoln County, Montana (the “Boulder Hill Claims”) by making the following considerations to Boulder Hill:





·
Issue 500,000 restricted shares of the Company’s common stock by 21 December 2011 (issued on 16 December 2011 and valued at $15,000);





·
Pay $25,000 in cash by 5 May 2013 (unpaid); and





·
Pay $25,000 in cash by 16 December 2013.





On 15 January 2013, the Company amended the agreement entered into on 12 October 2012 with Boulder Hill to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Claims until 5 May 2013.





During the year ended 31 December 2012, the Company was in default related to certain obligations related to the Boulder Hill Claims. As of December 31, 2013, the Company recorded a write-down of mineral property in the amount of $15,000 related to the Boulder Hill Claims.





Boulder Hill Project





On 30 September 2011, the Company entered into a non-binding letter of intent (“LOI”) with Boulder Hill to acquire by way of an assignment from Boulder Hill all of its rights, responsibilities and obligations under a state mineral lease and agreement (the “Option Agreement”) dated 15 July 2008 by and among Boulder Hill, James Ebisch (“James E”) and Ryan Riech (“Riech”).





James E and Riech, under the terms of the Option Agreement, hold the mining and mineral rights to a certain Montana State Metallferrous Gold Lease entered into with the State of Montana (the “Montana Gold Lease”) under which Boulder Hill was granted the exclusive right to prospect, explore, develop and mine for gold, silver and other minerals on a property situated in Lincoln County, Montana (the “Boulder Hill Property”). The Montana Gold Lease is for a 10-year term and is subject to the 5% net smelter return (“NSR”) due to the State of Montana. The Option Agreement was amended on 1 August 2011 to reflect James E as the sole owner of the Montana Gold Lease.





On 16 December 2011 (the “Effective Date”), the Company entered into an Assignment and Assumption Agreement (“BHM Assignment”) with Boulder Hill and James E, whereby Boulder Hill transferred and assigned the Company all of its right, title and interest, in, to and under the Option Agreement and the Company assumed the assignment of the Option Agreement agreeing to be bound, the same extent as Boulder Hill, to the terms and conditions of the Option Agreement.











F - 8
 Table of Contents














The BHM Assignment required the Company to make the following considerations to Boulder Hill:





·
Issue 500,000 restricted shares of the Company’s common stock by 21 December 2011 (issued on 16 December 2011 and valued at $15,000);





·
Pay $25,000 in cash by 30 September 2013 (unpaid); and





·
Pay $25,000 in cash by 16 December 2013.





The Option Agreement and the BHM Assignment provide that the Company will have exercised the option to acquire an undivided 100% of James E’s right, title and interest in and to the Montana Gold Lease after incurring an aggregate of $210,000 in exploration expenditures, paying James E an aggregate of $80,000 plus 5% of any joint-venture and buyout payments (the “JVBP”) and paying filing fees over the term of the Option Agreement.





The Option Agreement provides that the cash payments payable to James E shall be made according to the following schedule:





·
$20,000 on or before 30 September 2013 plus 5% of any JVBP, of which an initial payment of $3,000 is to be made on or before 30 October 2011 ($3,000 paid on 12 January 2012);





·
$15,000 on or before 30 September 2013 plus 5% of any JVBP (unpaid);





·
$20,000 on or before 15 July 2014 plus 5% of any JVBP; and





·
$25,000 on or before 15 July 2015 plus 5% of any JVBP.





The Option Agreement and claim purchase agreement require that the exploration expenditures of an aggregate of not less than $210,000 on the Property shall be incurred as follows:





·
On or before 30 September 2013, incur not less than an aggregate of $49,000 in exploration expenditures (an aggregate of $34,769 incurred); and





·
On or before 13 December 2013, incur not less than an aggregate of $210,000 in exploration expenditures.





In addition to the foregoing cash payments and exploration expenditures, in order to maintain James E’s leasehold interest in the Boulder Hill Property the Company will be responsible for paying filing fees over the term of the Option Agreement and Boulder Hill Agreement and the following:





·
Make advance royalty payments to James E of $25,000 per year, commencing on 15 July 2015 and continuing on 15 July each and every year thereafter for so long as the Company retains its leasehold interest in the Boulder Hill Property; and





·
Incur a minimum of $100,000 of annual exploration expenditures on the Boulder Hill Property on or before 15 July each and every year after 15 July 2011 (not incurred), which could be offset by exploration expenditures in excess of $100,000 in any prior annual period.





On 15 January 2013, the Company amended the agreement entered into on 12 October 2012 with Boulder Hill and James E to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Property until 5 May 2013.





On 5 May 2013, the Company amended the waiver entered into on 15 January 2013 with Boulder Hill and James E to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Property until 30 September 2013 (not completed).













F - 9
 Table of Contents










During the year ended 31 December 2012, the Company was in default related to certain obligations related to the Boulder Hill Project and as a result, the Company recorded a write-down of mineral property in the amount of $18,000 related to the Boulder Hill Project, as of December 31, 2012.





During the year ended 31 December 2013, the Company decided to cancel the portion of the Boulder Hill project involving the state lease, and is in the process of re-staking unpatented mining claims. During the three month period ended 31 March 2014 the Company spent $1,250 in consulting fees related to preparation for the re-staking ($0 exploration costs during three month period ended 31 March 2013).


South Idaho Silver Project





On 7 December 2011 (the “Effective Date”), the Company entered into an Assignment and Assumption Agreement (the “CCS Assignment”) with Castle Creek Silver Inc. (“Castle Creek”), an Idaho corporation, and Robert Ebisch (“Robert E”) to acquire by way of assignment from Castle Creek all of its rights, responsibilities and obligations under an Option to Purchase and Royalty Agreement (the “Purchase Agreement”) dated 15 July 2011, by and between Castle Creek and Robert E. Castle Creek, under the Purchase Agreement, had the option to acquire an undivided 100% of the right, title and interest of Robert E in the unpatented mining claims owned and situated in Owyhee County, Idaho (the “South Idaho Property”).





Pursuant to the terms of the CCS Assignment, Castle Creek transferred and assigned the Company all of its right, title and interest, in, to and under the Purchase Agreement and the Company assumed the assignment of the Purchase Agreement agreeing to be bound, the same extent as Castle Creek, to the terms and conditions of the Purchase Agreement. The Company agreed to make the following considerations to Castle Creek:





·
Issue 1,000,000 restricted shares of the Company’s common stock by 12 December 2011 (issued on 7 December 2011 and valued at $30,000);





·
Pay $50,000 by 15 July 2013 (unpaid); and





·
Castle Creek will be entitled to a 1% net smelter return (“NSR”) from any ore produced from the South Idaho Property.At any time from the Effective Date, the Company has the right to acquire the 1% NSR payable to Castle Creek for $250,000.





The Purchase Agreement and assignment of Castle Creek’s right, title and interest, in, to and under the Purchase Agreement provide that the Company will have exercised the option to acquire an undivided 100% of Robert E’s right, title and interest in and to the Property after incurring an aggregate of $210,000 in exploration expenditures, paying Robert E an aggregate of $80,000 plus 5% of any JVBP. The Purchase Agreement provides that the cash payments payable to Robert E shall be made according to the following schedule:





·
$2,500 on or before 31 January 2012 plus 5% of any JVBP (paid);





·
$2,500 on or before 20 June 2013 plus 5% of any JVBP (paid);





·
$5,000 on or before 15 September 2013 plus 5% of any JVBP (unpaid);





·
$10,000 on or before 15 September 2014 plus 5% of any JVBP;





·
$15,000 on or before 15 September 2015 plus 5% of any JVBP;





·
$20,000 on or before 15 September 2016 plus 5% of any JVBP; and





·
$25,000 on or before 15 September 2017 plus 5% of any JVBP.












F - 10
 Table of Contents












The Purchase Agreement provides that the exploration expenditures of an aggregate of not less than $210,000 on the South Idaho Property shall be incurred as follows:





·
On or before 15 April 2012, incur not less than an aggregate of $10,000 in exploration expenditures (an aggregate of $10,000 incurred);





·
On or before 15 July 2013, incur not less than an aggregate of $20,000 in exploration expenditures (an aggregate of $30,620 incurred);





·
On or before 15 September 2013, incur not less than an aggregate of $100,000 in exploration expenditures (not incurred); and





·
On or before 15 September 2014, incur not less than an aggregate of $210,000 in exploration expenditures.





In addition to the foregoing cash payments, exploration expenditures and filing fees, in order to maintain its interest in the South Idaho Property the Company will be responsible for the following:





·
Make advance royalty payments to Robert E of $25,000 per year, commencing on 15 September 2015 and continuing on 15 September each and every year thereafter for so long as the Company retains its interest in the South Idaho Property; and





·
Incur a minimum of $100,000 of annual exploration expenditures on the South Idaho Property on or before 15 September each and every year after 15 September 2015, which could be offset by exploration expenditures in excess of $100,000 in any prior annual period.





On 7 December 2012, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until renegotiation after 31 March 2013 and before 30 June 2013, provided that a cash payment of $1,200 is paid prior to 31 March 2013 (paid).





On 31 May 2013, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until 15 July 2013, provided that a cash payment of $3,500 is paid prior to 15 July 2013 (unpaid). Further, the Company may secure a waiver at any time during the year ended 31 December 2013 for the requirements that become due in 2014 in exchange for cash payment of or issuance of common shares valued at $50,000.





The Company is currently in default with regards to certain obligations related to the South Idaho Property and is in the process of renegotiating the terms with Castle Creek, or determining to re-stake the mining claims. During 2013, the Company recorded a provision for write-down of mineral property interests of in the amount of $36,650 related to the South Idaho Property. During the three month period ended 31 March 2014, the Company paid $1,250 for a review and update of its database in preparation of re-staking (no exploration costs incurred during the three month period ended 31 March 2013).


Uranium Claim Prospect
 
 The Company acquired through location two unpatented mining claims in eastern Washington state in July 2013 comprising approximately forty acres, which the company relinquished in the three month period ended 31 March 2014.


4. Property and Equipment





Cost

$


Accumulated

Depreciation

$


Net Book

Value

$As of March 31, 2014 :Furniture, computer and office equipment


47,433



43,761



3,672As of December 31, 2013 :

Furniture, computer and office equipment


47,433



43,320



4,113














F - 11
 Table of Contents












During the period ending March 31, 2014 total additions to property and equipment were $Nil.





5. Convertible Promissory Notes





On 29 April 2013, the Company issued a convertible note to Asher in the amount of $32,500, bearing interest at a rate of 8% per annum on any unpaid principal balance, unsecured, with principal and interest amounts due and payable upon maturity on 31 January 2014 (the “Asher Note #6”). Any amount of principal or interest amount not paid on 31 January 2014 (the “Default Amount #6”) shall bear interest of 22% per annum commencing on 31 January 2013 to the date the amount is paid.





Asher has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time commencing 6 months after the date of issuance up to the later of 31 January 2014 or the date of the Default Amount #6 is paid, at a conversion price equal to 45% of the average of the lowest 3 trading prices for the common stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date.





The Asher Note #6 contains a provision limiting the number of shares of common stock into which the Asher Note #3 is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the provision in the Asher Note #6 may be waived by Asher upon 61 days’ prior notice. The Company has a right of prepayment of the Asher Note #6 anytime from the date of the Asher Note #5 until 180 days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Asher Note #6 based on the date of prepayment.





The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .01% to .10%; Dividend rate of 0%; and, historical volatility rates ranging from 353.55% to 852.32%. Based on this calculation, the Company recorded a derivative liability of $97,733, and loss on derivative liability of $174,610. The Company also recorded a debt discount of $32,500 (to be amortized over the term of the debt). During the periods ended 31 March 2014 and 2013, the Company recorded gain on derivative liability of $115,097 and $0, respectively.





During the periods ended 31 March 2014 and 2013, the Company recorded interest expense of $5,315 and $0, respectively, of which $3,637 and $0, respectively, related to the amortization of debt discount





During the periods ended 31 March 2014 and 2013, the Company issued 115,600,000 and 0 common shares, respectively, for the conversion of $5,780 in debt related to Asher #6.





On 8 August 2013, the Company issued a convertible note to Asher in the amount of $12,995, bearing interest at a rate of 8% per annum on any unpaid principal balance, unsecured, with principal and interest amounts due and payable upon maturity on May 12 2014 (the “Asher Note #7”). Any amount of principal or interest amount not paid on 12 May 2014 (the “Default Amount #7”) shall bear interest of 22% per annum commencing on 12 May 2014 to the date the amount is paid.





Asher has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time commencing 6 months after the date of issuance up to the later of 12 May or the date of the Default Amount #7 is paid, at a conversion price equal to 45% of the average of the lowest 3 trading prices for the common stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date.





The Asher Note #7 contains a provision limiting the number of shares of common stock into which the Asher Note #3 is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the provision in the Asher Note #7 may be waived by Asher upon 61 days’ prior notice. The Company has a right of prepayment of the Asher Note #7 anytime from the date of the Asher Note #7 until 180 days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Asher Note #7 based on the date of prepayment.













F - 12
 Table of Contents














The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rate of 0.07%; Dividend rate of 0%; and, historical volatility rates ranging from 248,45% to 267,73%. Based on this calculation, the Company recorded a derivative liability of $71,766 and gain on derivative liability of $20,948. The Company also recorded a debt discount was $12,995 (to be amortized over the term of the debt). During the periods ended 31 March 2014 and 2013, the Company recorded gain on derivative liability of $58,695 and $0, respectively.





During the periods ended 31 March 2014 and 2013, the Company recorded interest expense of $4,478 and $0, respectively, of which $4,222 and $0, respectively, related to the amortization of debt discount.





On 30 October 2013, the Company issued a convertible note to Asher in the amount of $16,500, bearing interest at a rate of 8% per annum on any unpaid principal balance, unsecured, with principal and interest amounts due and payable upon maturity on 1 August 2014 (the “Asher Note #8”). Any amount of principal or interest amount not paid on 1August 2014 (the “Default Amount #8”) shall bear interest of 22% per annum commencing on August 1,2014 to the date the amount is paid.





Asher has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time commencing 6 months after the date of issuance up to the later of 1 August 2014 or the date of the Default Amount #8 is paid, at a conversion price equal to 45% of the average of the lowest 3 trading prices for the common stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date.





The Asher Note #8 contains a provision limiting the number of shares of common stock into which the Asher Note #8 is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the provision in the Asher Note #8 may be waived by Asher upon 61 days’ prior notice. The Company has a right of prepayment of the Asher Note #8 anytime from the date of the Asher Note #8 until 180 days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Asher Note #8 based on the date of prepayment.





The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rate of .12%; Dividend rate of 0%; and, historical volatility rates ranging from 412.87% to 425.91%. Based on this calculation, the Company recorded a derivative liability of $62,095, and loss on derivative liability of $81,235. The Company also recorded a debt discount was $16,500 (to be amortized over the term of the debt). During the periods ended 31 March 2014 and 2013, the Company recorded gain on derivative liability of $69,931 and $0, respectively.





During the periods ended 31 March 2014 and 2013, the Company recorded interest expense of $5,725 and $0, respectively, of which $5,400 and $0, respectively, related to the amortization of debt discount.





On 24 December 2013, the Company issued a convertible note to Asher in the amount of $16,500, bearing interest at a rate of 8% per annum on any unpaid principal balance, unsecured, with principal and interest amounts due and payable upon maturity on 30 August 2014 (the “Asher Note #9”). Any amount of principal or interest amount not paid on 30 September 2014 (the “Default Amount #9”) shall bear interest of 22% per annum commencing on September 30,2014 to the date the amount is paid.





Asher has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time commencing 6 months after the date of issuance up to the later of 30 September 2014 or the date of the Default Amount #9 is paid, at a conversion price equal to 45% of the average of the lowest 3 trading prices for the common stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date.





The Asher Note #9 contains a provision limiting the number of shares of common stock into which the Asher Note #8 is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the provision in the Asher Note #9 may be waived by Asher upon 61 days’ prior notice. The Company has a right of prepayment of the Asher Note #9 anytime from the date of the Asher Note #9 until 180 days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Asher Note #9 based on the date of prepayment.















F - 13
 Table of Contents










The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .09% to .10%; Dividend rate of 0%; and, historical volatility rates ranging from 283.69% to 461.93%. Based on this calculation, the Company recorded a derivative liability of $180,020, and gain on derivative liability of $36,192. The Company also recorded a debt discount was $16,500 (to be amortized over the term of the debt).  During the periods ended 31 March 2014 and 2013, the Company recorded gain on derivative liability of $70,089 and $0, respectively.





During the periods ended 31 March 2014 and 2013, the Company recorded interest expense of $5,629 and $0, respectively, of which $5,304 and $0, respectively, related to the amortization of debt discount.





On 27 February 2014, the Company issued a convertible note to Asher in the amount of $13,500, bearing interest at a rate of 8% per annum on any unpaid principal balance, unsecured, with principal and interest amounts due and payable upon maturity on 3 December 2014 (the “Asher Note #10”). Any amount of principal or interest amount not paid on 30 September 2014 (the “Default Amount #10”) shall bear interest of 22% per annum commencing on 3 December 2014, to the date the amount is paid.





Asher has the option to convert any portion of the unpaid principal balance into the Company’s common shares at any time commencing 6 months after the date of issuance up to the later of 30 September 2014 or the date of the Default Amount #9 is paid, at a conversion price equal to 45% of the average of the lowest 3 trading prices for the common stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date.





The Asher Note #10 contains a provision limiting the number of shares of common stock into which the Asher Note #8 is convertible to 4.99% of the outstanding shares of the Company’s common stock. However, the provision in the Asher Note #10 may be waived by Asher upon 61 days’ prior notice. The Company has a right of prepayment of the Asher Note #10 anytime from the date of the Asher Note #10 until 180 days thereafter, subject to a prepayment penalty in the amount of 140% to 150% of the outstanding principal and interest of the Asher Note #10 based on the date of prepayment.





The Company has determined that the conversion feature in this note is not indexed to the Company’s stock, and is considered to be a derivative that requires bifurcation. The Company calculated the fair value of this conversion feature using the Black-Scholes model and the following assumptions: Risk-free interest rates ranging from .09% to .10%; Dividend rate of 0%; and, historical volatility rates ranging from 283.69% to 461.93%. Based on this calculation, the Company recorded a derivative liability of $29,224. The Company also recorded a debt discount was $13,500 (to be amortized over the term of the debt). During the periods ended 31 March 2014 and 2013, the Company recorded loss on derivative liability of $30,357 and $0, respectively.





During the periods ended 31 March 2014 and 2013, the Company recorded interest expense of $17,372 and $0, respectively, of which $15,724 and $0, respectively, related to origination interest and $1,554 and $0, respectively, related to the amortization of debt discount.





The following is the summary of convertible promissory notes that are issued and outstanding as at 31 March 2014 and as at 31December 2013:


2014                            2013
 Asher Note #6            Principal                                                                                       26,720                         32,500
 Asher Note #7                                                                                                                  12,995                          12,995
 Asher  Note #8                                                                                                                 16,500                         16,500
 Asher  Note #9                                                                                                                 16,500                                  -
 Asher Note#10                                                                                                                 13,500                                  -
 
 Total                                                                                                                                   86,215                         61,995
 Unamortized Discount                                                                                                   (32,080)                       (38,697)
 Net                                                                                                                                      54,135                         39,978





F - 14
 Table of Contents








6. Related Party Transactions





During the periods ended 31 March 2014 and 2013, the Company paid or accrued $NIL and $13,000 for management fees to officers and directors of the Company.





During the year ended 31 December 2013 the Company settled $23,200 in liabilities accrued to officers and directors through the issuance of Preferred A convertible stock.





During the period ended 31 March 2014 the Company settled $20,000 in liabilities accrued to officers and directors through the issuance of 2,000,000 shares of Preferred B convertible stock. The stock was valued on an “if-converted” basis using the quoted price of the Company’s common stock. This method generated a fair value of $28,000. Therefore, $8,000 was recorded as a contribution to additional paid-in capital.


7. Stockholders’ Deficit





Authorized





The total authorized capital consists of





·
850,000,000 common shares with par value of $0.00001 (Note 15)





·
116,818, 182 blank check preferred shares with no par value





·



●
50,000,000 designated class A preferred shares with par value of $0.001



33,181,818 designated class B preferred shares with par value of $0.001





Issued and outstanding





Common Stock





As at 31 March 2014, the total issued and outstanding capital stock was 116,758,029 common shares with a par value of $0.00001 per share.





As at 31 December 2013, the total issued and outstanding capital stock was 1,158,029 common shares with a par value of $0.00001 per share.
 
 Issuances of Common Stock
 
 In the period ended March 31, 2014 the Company issued 115,600,000 shares upon conversion of $5,780 of debt.
 
 In 2013 the Company issued 990,656 common shares issued upon conversion of $141,030 upon conversion of debt.









F - 15
 Table of Contents











Preferred Stock





Preferred A





On November 15, 2012, the Company filed a Certificate of Designation for its Class Series A Preferred Convertible Stock with the Secretary of State of Nevada designating 50,000,000 shares of its authorized Preferred Stock as Class A Preferred Convertible Stock. The Class A Preferred Shares have a par value of $.001 per share. The Class A Preferred Shares are convertible into shares of the Company’s common stock at a rate of 1 preferred share equals 1 common share. In addition, the Class A Preferred Shares rank senior to the Company’s common stock. The Class A Preferred Shares have voting rights equal to that of the common stockholders and may vote on any matter that common shareholders may vote. One Class A Preferred Shares is the voting equivalent of one common share.





The Company does have the right, at its discretion, to redeem the Class A Preferred Shares at a price of $.01 per share.





On February 1, 2013 the Company agreed to issue 47,568,500 shares of its Class A Preferred Convertible Stock, in exchange for the settlement of debt of approximately $104,651 to both unrelated parties and certain officers and directors of the Company. The Class A Preferred shares were issued at a price of $0.0022 per share. Related forgiveness of debt income was recorded of $50,730 as of 31 December 2013.





Preferred B





On 13 December 2013, the Company designated 33,181,818 of the 200,000,000 authorized preferred shares as class B preferred shares with a par value of $0.001 per share. The conversion price for each class B preferred share is $.01 divided by the average 5 days closing price of the Company’s common stock, and is convertible at the option of the holder. On January 20, 2014, the Company issued 2,000,000 shares of series B preferred convertible stock to 2 directors to extinguish accounts payable of $20,000. The if-converted value of these shares (based on the closing price of the Company’s common stock on January 20, 2014) was $28,000. Therefore, the Company has recorded $6,000 as a reduction to additional paid-in capital.





Stock options





The following stock options are outstanding as at 31 March 2014:





Number of

options


Exercise

price

Remaining life

(years)Options


75,000



0.15

8.59





During the year ended 31 December 2007, the Company adopted the Stock Incentive Plan (the “Plan”), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance shares and performance units, and stock awards to officers, directors or employees of, as well as advisers and consultants to, the Company.





All stock options and rights are to vest over a period determined by the Board of Directors and expire not more than ten years from the date granted. Pursuant to the Plan, the maximum aggregate number of shares that may be issued for awards is 500,000 and the maximum aggregate number of shares that may be issued for incentive stock options is 500,000.













F - 16
 Table of Contents








During the year ended 31 December 2011 the Company granted 250,000 options at a price of $0.07 per share expiring 10 December 2013, 75,000 options at a price of $0.07 per share expiring at 28 November 2012 and 75,000 options at a price of $0.15 per share expiring 31 October 2021. All of these stock options vested immediately.





During the year ended 31 December 2012 75,000 options at a price of $0.07 per share expired.





During the year ended 31 December 2013 250,000 options at a price of $0.07 per share expired.





The following is a summary of stock option activities during the year ended 31 December 2013 and period ended Mach 31, 2014 :


Number of

stock options


Weighted

average

exercise

price

$Outstanding and exercisable at 1 January 2014

75,000



0.15Granted

-



-Exercised

-



-Expired

-



-Outstanding and exercisable at 31 March 2014

75,000



0.15Weighted average fair value of options granted during the period


-



-Weighted average fair value of options granted during the period


-



0.00 
 The aggregate intrinsic value of options outstanding and exercisable at 31 March 2014 was $nil.





8. Commitments and Contingencies





The Company is committed to making repayments related to the convertible promissory notes payable to Asher .





9. Fair Value of Financial Instruments





A fair value hierarchy was established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements).





The fair values of the financial instruments were determined using the following input levels and valuation techniques:





Level 1:
classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price.





Level 2:
classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market.





Level 3:
classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would price the asset or liability.














F - 17
 Table of Contents












Our financial assets and (liabilities) carried at fair value measured on a recurring basis as of March 31, consisted of the following:




Fair Value Measurements UsingTotal Fair


Quoted prices in


Significant other


SignificantValue at


active markets


observable inputs


Unobservable inputsDescription


March 31, 2014


(Level 2)


(Level 2)


(Level 3)Derivative liabilities

$
390,250

$
-

$
390,250

$
-
 As at 31 March 2014, the carrying amounts of amounts receivable and accounts payable and accrued liabilities approximated their estimated fair values because of the short maturity of these financial instruments.





Credit Risk





Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents. The Company manages its credit risk relating to cash and cash equivalents by dealing only with highly-rated United States financial institutions. As a result, credit risk is considered insignificant.





Currency Risk





The majority of the Company’s cash flows and financial assets and liabilities are denominated in US dollars, which is the Company’s functional and reporting currency. Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the US dollar.





The Company monitors and forecasts the values of net foreign currency cash flow and balance sheet exposures and from time to time could authorize the use of derivative financial instruments such as forward foreign exchange contracts to economically hedge a portion of foreign currency fluctuations. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.





Liquidity Risk





Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by continuously monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. The Company had a working capital deficit of $963,352 at 31 December 2013,and $695,338 as at 31 Mach 2014, but management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.





Other Risks





Unless otherwise noted, the Company is not exposed to significant interest rate risk and commodity price risk.





14. Other receivable





As of 31 March 2014 and 31 December 2013, the Company has recorded other receivable for loan proceeds, where the debt instrument was finalized, but proceeds were not received until after period end.











F - 18
 Table of Contents













15. Restatement


The Company has identified that its March 31, 2013 statement of operations and cash flows needed to be restated due to its requirement to record and remeasure derivative liabilities associated with its convertible debt. See the restatement adjustments below.
 
 Statement of Operations
  As originally reported


Adjustments


RestatedInterest expense

$
22,229


$
57,807


$
80,036Loss on derivative liabilities

$
0


$
315,402


$
315,402Net loss

$
41,157


$
373,209


$
414,366Net loss per share

$
.21


$
1.82


$
2.03
 
 Statement of Cash Flows
  As originally reported


Adjustments


RestatedNet loss

$
41,157


$
373,209


$
414,366Debt discount amortization and origination interest

$
0


$
63,297


$
63,297Loss on derivative liabilities

$
0


$
315,402


$
315,402Net cash used in operating activities

$
25,087


$
13


$
25,100
 16. Subsequent Events





From April 1, 2014 through May 9,2014, the Company issued a total of 415,930  common shares to Asher valued at $3,047 upon various conversions of principal amount of Asher Notes, of which $3,047 was applied to reduce the principal.





On April 1, 2014 the Company borrowed $35,000 from a private party due within nine months at eight percent annual interest,due on December 31,2014.





On April 22, 2014 the Company received notice of FNRA approval of a 1 for 500 reverse stock split of its Common Stock. All share references have been adjusted for the reverse split.





On May15,2014 the company borrowed unsecured $23,000 on a ninety day note at ten percent simple interest per annum,





























F - 19
 Table of Contents











Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.





This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.





Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:





●
risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures;●
risk that we are not able to meet the requirements of agreements under which we acquired our options to acquire mineral property interests, including any cash payments to on the option or any exploration obligations that we have regarding these properties, which could result in the loss of our right to exercise these options to acquire certain mining and mineral rights underlying these properties;●
the risk that we will be unable to pay our debt obligations as they become due or comply with the covenants contained in agreements with debt holders;●
risk that we will be unable to secure additional financing in the near future in order to commence and sustain our planned exploration work and be forced to cease our exploration and development program;●
risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations in the United States;●
risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;●
results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;●
mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;●
the potential for delays in exploration or development activities or the completion of feasibility studies;●
risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;●
risks related to commodity price fluctuations;●
the uncertainty of profitability based upon our history of losses;●
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;●
risks related to environmental regulation and liability;●
risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;●
risks related to tax assessments;●
political and regulatory risks associated with mining development and exploration; and●
other risks and uncertainties related to our prospects, properties and business strategy.
















- 4 -
 Table of Contents











The foregoing list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.





As used in this Quarterly Report, the terms “we,” “us,” “our,” “the Company”, and “First Colombia” mean First Colombia Gold Corp. and our subsidiaries unless otherwise indicated.





Corporate History





We were incorporated in the State of Nevada under the name Gondwana Energy, Ltd. on September 5, 1997, and previously operated under the name Finmetal Mining Ltd. and Amazon Goldsands Ltd. Our operations have historically focused on the acquisition and development of mineral property interests in varying locations, including Finland and Peru. The current focus of our business and operations is on the development of our mineral property interests on properties located in the western United States and we are evaluating mineral property interests and seeking opportunities in other geographical areas, including Colombia and Bolivia, to potentially acquire.





As described in more detail below, we no longer have any interest in any properties located in northeastern Peru. For reasons which include our inability to secure sufficient financing to be able to cure our default on notes we used to finance our acquisition of the property interests in Peru, we reached an agreement to relinquish our entire interest in the property interests in Peru in exchange for the cancellation of such notes and related outstanding obligations.





In 2011, we reviewed potential properties for acquisition in Colombia, and expanded our focus to North America which resulted in our acquiring certain mineral property interests in Montana and Idaho in late 2011. Company personnel and consultants are planning our exploration plans, conducting site visits, and reviewing several projects for potential acquisition, and in 2012 we added to our mineral property position through the acquisition of the Skip claims in Montana. We also in 2011 entered into agreements to acquire mineral property interest in the South Idaho Silver and Boulder Hill projects, conductive active due diligence and exploration acquisition work in Croatia, and in 2013 signed a memorandum of understanding on the Nile Mine project in Montana.





On November 15, 2012, the Company filed a Certificate of Designation for its Class Series A Preferred Convertible Stock with the Secretary of State of Nevada designating 50,000,000 shares of its authorized Preferred Stock as Class A Preferred Convertible Stock. The Class A Preferred Shares have a redeemable purchase price of $0.01 per share. The Class A Preferred Shares are convertible into shares of the Company’s common stock at a rate of 1 preferred share equals 2 common shares.





In addition, the Class A Preferred Shares rank senior to the Company’s common stock. The Class A Preferred Shares have voting rights equal to that of the common stockholders and may vote on any matter that common shareholders may vote. One Class A Preferred Shares is the voting equivalent of two common shares.





The Company does have the right, at its discretion, to redeem the Class A Preferred Shares at a price of $0.01 per share.












- 5 -
 Table of Contents












On January 31, 2013, the Company issued 47,568,500 shares of its Class A Preferred Convertible Stock (“Class A Preferred”), in exchange for the settlement of debt of approximately $104,651 to both unrelated parties and certain officers and directors of the Company. The Class A Preferred shares were issued at a price of $0.0022 per share.





The Company’s Chief Executive Officer, Mr. Sutti-Kyser and its directors, Mr. Zapata and Sredl, received a total of 10,545,600 shares with a deemed market value of $23,200 to settle liabilities of approximately $32,300.





On January 31, 2013, the Majority Stockholders of the Company, of record, held 300,000 shares of the Company's common stock and 47,568,500 shares of the Company’s Class A Preferred Convertible Preferred stock representing the voting equivalent of 95,137,000 shares of common stock or approximately 50.48% of the Company's voting stock. As such they approved an amendment to the Company’s Articles of Incorporation to increase in the authorized common stock from 200,000,000 shares of common stock to 850,000,000 shares of common stock. The Articles were amended and the increase took effect twenty days after filing with the Nevada Secretary of State.





On December13, 2013_, the Company filed a Certificate of Designation for its Class Series B Preferred Convertible Stock with the Secretary of State of Nevada designating 33,181,818 shares of its authorized Preferred Stock as Class A Preferred Convertible Stock. The Class B Preferred Shares have a redeemable purchase price of $0.01 per share. The Class A Preferred Shares are convertible into shares of the Company’s common stock at a rate of 1 preferred share equals 1 common share.





On January 20, 2014, the Majority Stockholders of the Company, of record, held 100,000 shares of the Company's common stock and 10,545,600 shares of the Company’s Class A Preferred Convertible Preferred stock, 2,000,000 shares of the Company’s Class B Preferred stock representing the voting equivalent of 61.26% of the voting stock, in total. As such they approved an amendment to the Company’s Articles of Incorporation to decrease in the issued common stock from 500 old shares to 1 new share of common stock. The Articles were amended and the reverse stock split was effective April 22, 2014.





Exploration Stage Company





We are considered an exploration or exploratory stage company because we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on any of the properties underlying our mineral property interests, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral. To date, we have not discovered an economically viable mineral deposit on any of the properties underlying our mineral property interests, and there is no assurance that we will discover one. If we cannot acquire or locate mineral deposits, or if it is not economical to recover any mineral deposits that we do find our business and operations will be materially and adversely affected.





We consider ourselves a project generation company such that using our experience and industry contacts we acquire projects for exploration, development or advancing through joint-venture, or where management determines the better alternative is selling all or an interest in a project, it will consider such a possibility. As such the Company is regularly considering new projects through evaluation of historical records and discussions with industry contacts.












- 6 -
 Table of Contents














Description of our Mineral Property Interests





South Idaho Silver Project





On December 7, 2011 (the “Effective Date”), we entered into a Assignment and Assumption Agreement (“Assignment Agreement”) with Castle Creek Silver, Inc. (“Castle Creek”), a Idaho corporation, and Robert Ebisch (‘Ebisch”). Castle Creek and Ebisch are parties to an Option to Purchase and Royalty Agreement dated July 15, 2011 (the “Option Agreement”), for Castle Creek’s option to acquire an undivided 100% of the right, title and interest of Ebisch in and to the PB 7, 9, 11, 12, 23, 25, 27, and 29 lode mining claims (IMC #’s, respectively, 196852, 196854, 196856, 196857, 196866, 196867, 196868, and 196869), situated in Owyhee County, Idaho, (hereinafter together with any form of successor or substitute mineral tenure called the “South Idaho Silver Project”). Pursuant to the terms of the Assignment Agreement, Castle Creek transferred and assigned us all of its right, title and interest, in, to and under the Option Agreement and we assumed the assignment of the Option Agreement agreeing to be bound, the same extent as Castle Creek, to the terms and conditions of the Option Agreement. As consideration for the Assignment Agreement, we issued Castle Creek 1,000,000 restricted shares of our common stock and are obligated to pay Castle Creek $50,000 in cash within twelve (12) months of the Effective Date, which is December 7, 2012, and Castle Creek will be entitled to a 1% net smelter return (“NSR”) from any ore produced from the South Idaho Silver Project. At any time from the Effective Date, we have the right to acquire the 1% NSR payable to Castle Creek for $250,000.





We received a waiver on the payments of $2,500 to Castle Creek, making it due on March 31, 2013.





The Assignment Agreement includes customary representations and warranties. Under the terms of the Assignment Agreement, Castle Creek and Ebisch have agreed to indemnify us from claims resulting from any breach or inaccuracy of any representation or warranty made by Castle Creek or Ebisch in the Assignment Agreement and for any breaches of any representations, warranties, obligations, terms or covenants of either Castle Creek or Ebisch under or pursuant to the Option Agreement.





The Option Agreement and assignment of Castle Creek’s right, title and interest, in, to and under the Option Agreement provide that we will have exercised the option to acquire an undivided 100% of Ebisch’s right, title and interest in and to the South Idaho Silver Project after incurring an aggregate of $210,000 in exploration expenditures, paying Ebisch an aggregate of $80,000 plus five per cent (5%) of any joint-venture and buyout payments (hereafter referred to as “JV&BP”) and paying filing fees over the term of the Option Agreement. The Option Agreement provides that the cash payments payable to Ebisch shall be made according to the following schedule:





·
$2,500 on or before January 31, 2012 plus five per cent (5%) of any JV&BP;(paid)·
$2,500 on or before September 15, 2012 plus five per cent (5%) of any JV&BP;(waived until March 31,2013and by June 30,2013);(paid)·
$5,000 on or before September 15, 2013 plus five per cent (5%) of any JV&BP;plus as per the waiver an additional $1,500;(unpaid)·
$10,000 on or before September 15, 2014 plus five per cent (5%) of any JV&BP;·
$15,000 on or before September 15, 2015 plus five per cent (5%) of any JV&BP;·
$20,000 on or before September 15, 2016 plus five per cent (5%) of any JV&BP; and











- 7 -
 Table of Contents












●
$25,000 on or before September 15, 2013 plus five per cent (5%) of any JV&BP.





The Company (see below) has elected subsequent to September 30,2014, to either re-negotiate the agreement under similar terms outlined above and below, or to utilize the database of exploration information developed to target through re-staking and leasing from the Ebisch party a more favorable geological land position.





The Option Agreement provides that the exploration expenditures of an aggregate of not less than $210,000 on the Property shall be incurred as follows:





●
on or before April 15, 2012, incur not less than an aggregate of $10,000 in exploration expenditures;(in aggregate $10,000incurred)●
on or before September 15, 2012, incur not less than an aggregate of $20,000 in exploration expenditures;(waived until June 20,2013)(in aggregate $30,620 incurred within the time frame)





●
on or before September 15, 2013, incur not less than an aggregate of $100,000 in exploration expenditures; and( not incurred)





●
on or before September 15, 2014, incur not less than an aggregate of $210,000 in exploration expenditures.





In addition to the foregoing cash payments, exploration expenditures and filing fees, we will be responsible for the following, in order to maintain our interest in the South Idaho Silver Project:





●
make advance royalty payments to Ebisch, commencing on September 15, 2015 and continuing on the 15th day of September each and every year thereafter for so long as we or our assigns retains an interest in the South Idaho Silver Project, of $25,000 per year; and●
incur a minimum of $100,000 of annual exploration expenditures on the South Idaho Silver Project on or before September 15th each and every year after September 15, 2015, which could be offset by exploration expenditures in excess of $100,000 in any prior annual period.





On 7 December 2012, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until renegotiation after 31 March 2013 and before 30 June 2013, provided that a cash payment of $1,200 is paid prior to 31 March 2013 (paid).





On 31 May 2013, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until 15 July 2013, provided that a cash payment of $3,500 is paid prior to 15 July 2013 (unpaid). Further, the Company may secure a waiver at any time during the year ended 31 December 2013 for the requirements that become due in 2014 in exchange for cash payment of or issuance of common shares valued at $50,000 (Note 10).





The Company has elected to not continue this agreement under current financial terms, and use its database developed to guide exploration efforts to re-stake the mining claims to a more geologically advantageous location, and as described above look to considering negotiating a similar agreement with the Ebisch interests with less short term cash requirements, or re-target our area of operations in the district.





Description of South Idaho Silver Project





In connection with our consideration of entering into the Assignment Agreement, we conducted a diligence review of the South Idaho Silver Project. The description of property contained herein is the product of our due diligence of the South Idaho Silver Project underlying the Option Agreement.










- 8 -
 Table of Contents









Property Description and Location





The general location of the South Idaho Silver Project is indentified on the map below:


graphic1





Location, Area, and Type of Mineral Tenure





The South Idaho Silver Project lies about 49 miles south of Boise, Idaho on the flanks of the Snake River Plain, a vast graben-like physiographic region. The South Idaho Silver Project lies in Sections 14 and 15, Township 6 South, Range 1 West, Boise Meridian, Owyhee County, Idaho. Mineral rights are held by eight federal unpatented lode mining clams. These cover approximately 160 acres (65 hectares).













- 9 -
 Table of Contents










PROPERTY CORNER COORDINATES- UTM NAD 27 CONUS




NORTHING

EASTING4750115

5456504750115

5461004749755

5461004749755

5470004749215

5470004749215

5465504749125

5465504749125

5463704749575

5463704749575

545650





The eight unpatented mining claims are numbered PB 7 (IMC # 196852), PB 9 (IMC # 196854), PB 11 (IMC # 196856), PB 12 (IMC # 196857), PB 23 (IMC # 196866), PB 25 (IMC # 196867), PB 27 (IMC # 196868), and PB 29 (IMC # 196869).





Our ability to explore and mine the South Idaho Silver Project depends on the validity of title to the South Idaho Silver Project. The South Idaho Silver Project consists of unpatented mining claims. Maintenance of rights to unpatented mining claims contain certain requirements including sufficiency of mineral discovery, proper posting and marking of boundaries, failure to meet statutory guidelines, assessment work and possible conflicts with other claims. We have not obtained a title opinion nor title insurance on the underlying unpatented claims at this exploration stage.





Accessibility, Climate, Local resources, Infrastructure, Physiography





Topography, Elevation, and Vegetation





The South Idaho Silver Project is a steeply-incised drainage that drops about two hundred meters from the peneplain that lies to the immediate north. The elevation of the South Idaho Silver Project is about 3,937 feet above mean sea level. Vegetation consists primarily of sagebrush and short grasses.





Accessibility


The South Idaho Silver Project is readily accessed from Nampa, Idaho, which lies on Federal Interstate Highway 84. Nampa is the nearest large town that has services necessary for mineral exploration and mining. From Nampa, paved State Highway 78 is followed about 43 miles to the south to the Oreana turnoff. From there, about 3 miles of paved road and 6 miles of dirt road lead to the property. Unimproved tracks provide access to the claim group. Road access to the south side of the South Idaho Silver Project is limited. Mechanized work there may require construction of a temporary creek crossing, although one unimproved road crosses the South Idaho Silver Project at a ford.













- 10 -
 Table of Contents











Climate


The climate is semi-arid with roughly 5.9 inches per year precipitation. Summer temperatures may rise to 104 degrees Fahrenheit while winter temperatures may fall to as low as 14 degrees Fahrenheit. The South Idaho Silver Project is commonly subject to strong winds. The South Idaho Silver Project can be accessed year-round because of the mild climate, good road access, and low elevation of about 3,937 feet above mean sea level.





Water Rights, Power, and Mining Personnel


The status of water rights at the South Idaho Silver Project is uncertain. The amount of water in the vicinity of the South Idaho Silver Project is adequate for exploratory drilling, but probably not for mineral processing. The nearest power lines are about 6 miles. Mining personnel are not available locally.





The most important natural feature on the South Idaho Silver Project is a perennial stream called castle creek. During the summer, it has estimated that it flows at a minimum rate of several hundred gallons per minute. A temporary water withdrawal permit from the State of Idaho would be required for drill water. If such a permit would be granted, water might be pumped to any drill site, with a substantial cost savings on water truck rental and driver wages. There is no assurance such a permit would be granted, and if granted requirements to such a permit would be cost-effective.





Tailings Storage Areas, Waste Disposal Areas, and Plant Sites





We have not identified private land adjacent to the South Idaho Silver Project or within close proximity that could be used for potential storage areas, waste disposal or processing sites. There is public land in the vicinity, but it is unknown whether permits would be granted for such uses.





Previous Exploration History





There is no verifiable information that the South Idaho Silver Project was a producing property in the past. Prior site visits indicate that up to one hundred meters of historic underground workings exist on the South Idaho Silver Project. These may have been completed approximately 100 years ago. It is unknown the state of repair of these workings and the extent of accessibility. No mineralized material or reserves have been identified or quantified on the South Idaho Silver Project. No known production has come from the South Idaho Silver Project.





In 2008, two private individuals located various mining claims in the area including those described herein and leased to a private exploration company, Castle Creek, which retained a professional geologist whose site visits and data review, are the primary source of the historical information described herein.





Geological Setting and Local Geology





The South Idaho Silver Project lies upon the margins of the Snake River Plain, a vast graben-like, Cenozoic Age structure that covers a large part of southern Idaho. Regionally, several mineral districts lie along the margin of the Snake River Plain.





The geology consists primarily of a Late Cretaceous Age granodiorite which hosts veins and breccia bodies that contain gold, silver, lead, zinc, copper sulfide mineralization. The granodiorite and breccias are covered locally by Tertiary Age, post-mineral basalts. The breccia bodies are the primary target on the South Idaho Silver Project. What are believed to be high-grade veins are of secondary interest.





Property Geology





Granite is widespread and covered locally by post-mineral basalts. Faulting consists primarily of extensional block-faulting. The granite commonly contains large xenoliths of schist. Locally, the granite has undergone argillic and silicic alteration. Veins and breccias of interest on the Property are granite-hosted. A detailed geologic map has not yet been completed on the South Idaho Silver Project.








- 11 -
 Table of Contents









Potential Deposit Type





Two potential deposit types are of interest at the South Idaho Silver Project. The first of these is the hydrothermal breccias that are found in several areas. The extent of this type of mineralization is uncertain. The second potential deposit type is high-grade quartz/sulfide veins that may be genetically associated to the breccias. An exploration program has been planned to identify steeply-dipping pipe-like bodies of quartz/sulfide mineralization. Both types of mineralization are probably of epithermal origin. Little data on the potential deposit types is available because the South Idaho Silver Project is in such an early stage of contemporary exploration.





Mineralization





Rock samples taken primarily from a sulfide-rich, siliceous hydrothermal breccia and associated rocks on the south side of the Property in 2008 by the prior owner give indication of the presence of gold and silver mineralization within a hydrothermal breccia. The breccia is hosted by altered granodiorite. The breccia contains locally massive pyrite, galena, sphalerite, arsenopyrite, chalcopyrite within a siliceous, sulfide-bearing matrix. Clasts within the breccia consist of dark grey rhyolite with semi-massive sulfides, massive pyrite with base metal sulfides and massive arsenopyrite, and light-grey quartz. Besides gold and silver, the mineralization contains anomalous arsenic, copper, lead, and zinc mineralization.





The geologic control on this breccia mineralization is uncertain. The breccia lies in the vicinity of the intersection of two topographic lineaments which control the orientation of the Property. The length, width, depth, and continuity of both the breccia mineralization and sporadic vein mineralization are uncertain.





Metallurgical





No metallurgical testing has been conducted.


Reserves





There are no established probable or proven reserves on the South Idaho Silver Project.


Exploration





Only a limited amount of work has been completed on the South Idaho Silver Project. This work has been confined primarily to rock sampling at historic prospects. The rock samples taken were grab samples indicating mineralization that are not representative of any specific length or width of mineralization. They do not reflect the average grade of mineralization on any of the mineralized zones sampled. The rock sampling completed thus far has shown primarily that mineralization of interest is found in several areas of the South Idaho Silver Project. The geologic and geochemical surveys completed on the South Idaho Silver Project have been done a professional geologist.





We are not aware of any drilling that has been completed on the South Idaho Silver Project.





Exploration Plan





Our primary exploration plan in this under-explored area is to discover and focus on areas of known gold/silver breccias mineralization; emphasizing exploration near the approximate intersection of northerly and easterly-trending topographic linears.





The above strategies would greatly limit the areas to be investigated by geophysics and possible subsequent drilling, which is anticipated to result in cost savings. However, all prospects in the area should have at least a cursory examination.











- 12 -
 Table of Contents











Comprehensive underground mapping and sampling of accessible historic mine workings is recommended. This will help determine the extent and average grade of mineralization on the property. Geophysics may also be necessary to enhance target definition. An Induced Polarization(IP) /Resistivity survey is recommended to delineate sub-surface sulfide mineral distribution. Gold/Silver mineralization found thus far often correlates positively with sulfide content.





On the eight-claim South Idaho Silver Project, several areas of structural intersections should be evaluated using electrical geophysical methods. These should be followed-up by drilling to test for any depth extension of the mineralization. An itemized budget for this work is shown below:





Proposed BudgetGeologist

$
45,000Geotech

$
20,000Geophysics

$
25,000Field Expenses

$
10,000Lease Payments

$
25,000Bond

$
10,000Site Prep/Reclamation

$
10,000Water Truck

$
18,000Assays

$
25,000Drilling (1,200 meters @ $135/meter)

$
162,000TOTAL

$
350,000





This work plan may be accomplished in a two-phase plan with the initial budget of $210,000 required meet work requirements required in the Option Agreement, for the period from 2012 to 2014. While the Company has determined it will re-stake the mining claims in a more geologically advantageous area, the forecast budget remains the same as the same tasks are rrquired,and the Company will consider working under the past agreement with the Ebisch interests provided either cash is available,or short term cash requirements are modified.





Our current cash on hand is insufficient to complete any of the planned exploration activities and the full implementation of any planned exploration program is dependent on our ability to secure sufficient financing. We can provide no assurance that we will secure sufficient financing. In the absence of such financing, we will not be able to pursue our planned exploration program and may not be able to maintain the option to acquire the South Idaho Silver Project or underlying mining claims in good standing. If we do not fulfill the terms of the Assignment Agreement or Option Agreement, then our ability to commence or continue operations could be materially limited. We also may be forced to abandon the South Idaho Silver Project. If we are unable to raise additional capital within the next twelve months, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. We may consider entering into a joint venture arrangement to provide the required funding to explore the South Idaho Silver Project. We have not undertaken efforts to locate a joint venture participant and there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of the South Idaho Silver Project. If we were to enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in South Idaho Silver Project to the joint venture participant.








- 13 -
 Table of Contents









In 2012 we completed our review and compilation of historical documents, and have revise dour exploration plan note above to two different phases splitting up the forecast drilling program. In 2013 our efforts focused on reviewing the required permits and land position of our claims,and it was determined that the Company should re-stake the claims to claim a more advantageous claim position. Wedid not re-stake the claims in the quarter ending March 31,2013due to our financial condition, and plans to re-stake in the subsequent quarter will depend on our financial status.








Boulder Hill Project





Purchase and Sale Agreement of Unpatented Mining Claims




On December 16, 2011, we entered into a Purchase and Sale Agreement (“Purchase Agreement”) with Boulder Hill Mines Inc., an Idaho corporation (“Boulder Hill”) relating to the purchase from Boulder Hill of three unpatented mining claims situated in Lincoln County, Montana (the “Boulder Hill Claims”). As consideration for the Boulder Hill Claims, we issued Boulder Hill 500,000 restricted shares of our common stock, are obligated to pay Boulder Hill $25,000 in cash within twelve (12) months of the Effective Date, which is December 16, 2012, and $25,000 in cash within twenty-four (24) months of the Effective Date, which is December 16, 2013. Boulder Hill sold, transferred and conveyed the Claims to us by executing and delivering quitclaim deeds to us.




We received a waiver of the $25,000 cash payment requirement, such payment was due in May 2013,and the Company was unable to make this payment, The Company has been in discussions with Boulder Hill in reference to the overall project, and plans in 2014 to re-stake the claims in a more favorable location, .




The Purchase Agreement includes customary representations and warranties. Under the terms of the Purchase Agreement, Boulder Hill has agreed to indemnify us from claims resulting from any breach or inaccuracy of any representation or warranty made by Boulder Hill in the Purchase Agreement. The Company has been unable to make the required payments.




Assignment and Assumption of Lease Agreement




On December 16, 2011 (the “Effective Date”), we entered into an Assignment and Assumption Agreement (“Boulder Hill Assignment Agreement”) with Boulder Hill, and Jim Ebisch (“Ebisch”). Boulder Hill and Ebisch are parties to an Option to Purchase and Royalty Agreement dated July 15, 2008, as amended on August 1, 2011 (the “ Boulder Hill Option Agreement”) which granted to Boulder Hill an option to acquire an undivided 100% of the right, title and interest of Ebisch in and to that certain Montana State Metal ferrous Gold Lease M-1974-06 dated August 21,2006 he entered into with the State of Montana (the “Montana Gold Lease”) under which Ebisch was granted the exclusive right to prospect, explore, develop and mine for gold, silver and other minerals on property situated in Lincoln County, Montana. The Montana Gold Lease is for a ten (10) year term and is subject to the 5% net smelter return due to the State of Montana. Pursuant to the terms of the Boulder Hill Assignment Agreement, Boulder Hill transferred and assigned us all of its right, title and interest, in, to and under the Option Agreement and we assumed the assignment of the Boulder Hill Option Agreement agreeing to be bound, the same extent as Boulder Hill, to the terms and conditions of the Boulder Hill Option Agreement. As consideration for the Boulder Hill Assignment Agreement, we issued Boulder Hill 500,000 restricted shares of our common stock and are obligated to pay Boulder Hill $25,000 in cash within twelve (12) months of the Effective Date, which is December 16, 2012,waived until May 2013, and $25,000 in cash within twenty-four (24) months of the Effective Date, which is December 16, 2013.




The Boulder Hill Assignment Agreement includes customary representations and warranties. Under the terms of the Boulder Hill Assignment Agreement, Boulder Hill and Ebisch have agreed to indemnify us from claims resulting from any breach or inaccuracy of any representation or warranty made by Boulder Hill or Ebisch in the Boulder Hill Assignment Agreement and for any breaches of any representations, warranties, obligations, terms or covenants of either Boulder Hill or Ebisch under or pursuant to the Boulder Hill Option Agreement.




The Boulder Hill Option Agreement and assignment of Boulder Hill’s right, title and interest, in, to and under the Boulder Hill Option Agreement provide that we will have exercised the option to acquire an undivided 100% of Ebisch’s right, title and interest in and to the Montana Gold Lease after incurring an aggregate of $210,000 in exploration expenditures, paying Ebisch an aggregate of $80,000 plus five per cent (5%) of any joint-venture and buyout payments (hereafter referred to as ”JV&BP”) and paying filing fees over the term of the Boulder Hill Option Agreement. Our responsibility for the foregoing exploration expenditures and cash payments is inclusive of exploration expenditures incurred by Boulder Hill to the present and payments previously made by Boulder Hill to Ebisch under the terms of the Boulder Hill Option Agreement.












- 14 -
 Table of Contents











The Boulder Hill Option Agreement provides that the cash payments payable to Ebisch shall be made according to the following schedule:




·
$20,000 on or before October 14, 2012 plus five per cent (5%) of any joint-venture and buyout payments (hereafter referred to as “JV&BP”), of which an initial payment of $3,000 is to be made on or before October 30, 2011 ($3,000 paid, with the balance of $17,000 waived until May 2013);




·
$15,000 on or before July 15, 2013 plus five per cent (5%) of any JV&BP; (unpaid and waived)




·
$20,000 on or before July 15, 2014 plus five per cent (5%) of any JV&BP; and




·
$25,000 on or before July 15, 2015 plus five per cent (5%) of any JV&BP.




The Option Agreement provides that the exploration expenditures of an aggregate of not less than $210,000 on the property underlying the Montana Gold Lease shall be incurred as follows:




·
on or before August 1, 2012, incur not less than an aggregate of $49,000 in exploration expenditures(this requirement has been waived until May 2013- and was not met); and




·
on or before August 1, 2013, incur not less than an aggregate of $210,000 in exploration expenditures (not incurred)





In addition to the foregoing cash payments and exploration expenditures, the company was  responsible for paying filing fees over the term of the Boulder Hill Option Agreement and the following in order to maintain Ebisch’s interest in the Montana Gold Lease:




In addition to the foregoing cash payments and exploration expenditures, we will be responsible for paying filing fees over the term of the Boulder Hill Option Agreement and the following in order to maintain Ebisch’s interest in the Montana Gold Lease:




·
make advance royalty payments to Ebisch, commencing on July 15, 2015 and continuing on the 15th day of July each and every year thereafter for so long as the Company or its assigns retains its interest in the in order to maintain Ebisch’s interest in the Montana Gold Lease, of $25,000 per year; and


·
incur a minimum of $100,000 of annual exploration expenditures on the property underlying the in order to maintain Ebisch’s interest in the Montana Gold Lease on or before July 15th each and every year after July 15, 2011, which could be offset by exploration expenditures in excess of $100,000 in any prior annual period.





Description of Boulder Hill Project




In connection with our consideration of entering into the foregoing agreements, we conducted a diligence review. The Claims and the property that is subject to the Montana Gold Lease are being referred to by us as the “Boulder Hill Project.” The description of the property underlying the Boulder Hill Project that is contained herein is the product of the Company’s due diligence review.












- 15 -
 Table of Contents

















Location




The general location of the Boulder Hill is indentified on the map below:









The Boulder Hill Project consists of approximately 60 acres comprised of three unpatented mining claims (the “Claims”) and an option to acquire certain rights under a contiguous lease with the State of Montana (Montana State Metalliferrous Gold Lease M-1974-06, the “Montana Gold Lease”) of approximately 114 acres located in Lincoln County, Montana. The property underlying the Claims and Montana Gold Lease lie in Township 29 North, Range 27 West, Montana Principal Meridian.







- 16 -
 Table of Contents










Land Status




Mineral rights on federal unpatented lode mining claims can be held indefinitely as long as the annual claim maintenance payments are current. At the present time, all of the required annual claim maintenance payments for the Claims have been made. The initial term on the Montana Gold Lease is for a ten-year period commencing on August 21, 2006, which may be renewable. The total area consisting of the Boulder Hill Project consists of approximately 174 acres. The total annual property maintenance costs due the state and federal government for the Boulder Hill Project is currently about $800/year.The Company is in the process of reviewing prior exploration work to determine a re-staking of the claims for improved geological prospects.




History




The Boulder Hill Project contains several historic prospect pits and adits, which we believe were excavated in the late 19th century or early 20th century. Bright white quartz veins with low gold contents attracted early prospectors to the Boulder Hill Project area. In 1995, during a regional reconnaissance conducted by Jim Ebisch, these original mine workings were sampled. Quartz vein samples from these historic workings were found in 1995 to contain low-grade gold; however, one prospect pit further down the hill, also originally sampled at the same time, contained altered, siliceous metasediments that have a far different appearance than that of the bright white quartz veins. These metasediments, poorly exposed in the prospect pit, were found to contain gold grades much higher than that of the bright white quartz veins that attracted historic attention. We have not independently verified this information and can provide no assurance that any of our exploration work will result in similar results.




Regional Geology




The Boulder Hill Project is located within an area that includes the Belt Basin of the northwestern United States. Mineralization is hosted by the Precambrian Age Prichard Formation. The Boulder Hill Project lies near the crest of the Wolf Creek Anticline. The rocks exposed in that area are thought to belong to the G Member of the Prichard Formation. The Boulder Hill Project also lies immediately south of the Wolf Creek Fault, an important regional structure.




Boulder Hill Project Geology




Structurally the Boulder Hill Project is on the downthrown side of the Wolf Creek fault, and the project is considered by us as a stratiform sulfide target within the Middle Prichard Formation in Lincoln County, Montana




Our exploration plan at the Boulder Hill Project is designed to target what are believed to be Stratabound gold occurrences. Poorly-exposed gold mineralization found during the aforementioned reconnaissance exploration at the Boulder Hill Project within a prospect trench in 1995 is in contrast to the bright white quartz veins that were of historic interest. The rocks containing the gold mineralization found in 1995 consisted of silicified, sericitized, and pyritic to locally gossanous metasediments. We have not independently verified this historical information and can provide no assurance that any of our exploration work will result in similar results.




Project Infrastructure, Access and Power




The Boulder Hill Project is located in an area of low-lying hills, away from residential areas. A paved road, a power line, and a railway line passes within one mile of the subject area. An improved gravel road passes by northwestern portion of the property. Skid trails lead to the area where the gold mineralization was found during the 1995 exploration and a subsequent follow-up site visit in 2008 by Mr. Ebisch. There are no accessible tunnels or shafts on the subject area. The source of water for proposed drilling is currently uncertain, which may require initially hauling of water for drilling purposes.




Reserves




There are no established probable or proven reserves on the property underlying the Boulder Hill Project. Our due diligence activities have been limited, and to a great extent, have relied upon information provided to us by third parties. We have not established and cannot provide any assurance that any of the properties underlying the Boulder Hill Project contain adequate, if any, amounts of gold or other mineral reserves to make mining economically feasible to recover those gold or other mineral reserves, or to make a profit in doing so.




Proposed Exploration Plan




Several phases of exploration work will be necessary to move forward this project. Each successive phase of work is contingent upon the results of previous phases. The first phase will require geological mapping and sampling. Concurrent with this work, excavation of trenches on the underlying property will be necessary to expose and sample mineralization of interest. Geophysics may also be done on the property if the mineralization found by trenching has characteristics that lend to detection by geophysical methods. The total cost of this work is estimated to be $49,500.




The second phase of work will involve limited drilling, consisting of 3-5 diamond drill holes. These will test for near-surface strata bound gold. The total cost of this work is estimated to be $214,500.




The third phase of work will involve the drilling of one-two deep drill holes, each with an estimated depth of 1,500 feet. These will test for deep strata bound gold close to the Wolf Creek Fault. The total cost of this work is estimated to be $338,000.











- 17 -
 Table of Contents











Our current cash on hand is insufficient to complete any of the activities set forth in our planned exploration program. We have postponed the commencement of any exploration and development program until such time that we are able to secure sufficient financing, however we continued review of historical records for revising the below plan in 2014. We can provide no assurance that we will be successful in securing sufficient financing. Provided we are able to secure sufficient financing, we anticipate that we will incur the following costs for the next twelve months:




Proposed Exploration Budget




Stage 1 (Trenching and Geophysics)




Permitting and Bonding

$
6,500Trench rehabilitation, new trenching, surveying and sampling

$
9,500Supervision, geologic mapping and reporting

$
10,000Analyses (100 samples @ $40 each)

$
4,000Geophysics & Reclamation

$
15,000Administration & overhead @ 10%

$
4,500Subtotal

$
49,500





Stage 2 (Shallow Drilling)




Permitting and Bonding

$
10,000Surface diamond drilling 3-5 holes @ 400 ft depth average @ $70/ft

$
140,000Site Preparation & Reclamation

$
10,000Supervision, core logging, sampling and reporting

$
25,000Analyses (100 samples @ $50 each)

$
5,000Core Handling/Storage

$
5,000Administration & overhead @ 10%

$
19,500Subtotal

$
214,500





Stage 3 (Deep Drilling)




Permitting and Bonding

$
5,000Surface diamond drilling 2 holes @ 1,500 feet each @$90/foot

$
270,000Site Preparation & Reclamation

$
3,000Supervision, core logging, sampling, and reporting

$
20,000Analyses (100 samples @$50/each)

$
5,000Core Handling/Storage

$
5,000Administration & overhead @ 10%

$
30,800Subtotal

$
338,800Grand Total

$
602,800















- 18 -
 Table of Contents













This exploration plan may change or be terminated depending on the results from each stage of exploration. We project that permitting activities will be prepared after the initial 2013 site visits. The Company is re-evaluating the proposed budget in light of its decision to not pursue the State Lease further , but to focus on unpatented mining claims in the area, which the Company believes may reduce the above exploration budget by ten percent, however the Company will if financially able to seek tore-instate the prior agreement with the Ebisch interests.The above exploration plan would be spread out over three years if implemented, but represents the Company’s best estimate of what is required to advance the project.



















- 19 -
 Table of Contents











Montana




Tthe Company conducted reconnaissance exploration in Jefferson County, Montana. This included reviewing historical data, and field site visits to areas of interest. These efforts are designed initially from surface examination to identify properties with geological characteristics that indicate further exploration and potential acquisition may be warranted.





We  acquired the Skip claims in Montanain 2013  through right of location. The Skip project is considered an early-stage silver exploration project, and we are seeking either a JV partner, or to develop an exploration plan for 2014. The project has no indicated reserves.We intend to focus primarily on the Nile Mine project.





Memorandum of Understanding to Earn-Interest in the Nile Mine Project





On May 1, 2013, the Company with GMRV, a branch of 4uX, LLC, a private Montana company (“GMRV”) entered into a Memorandum of Understanding (“MOU”) to enter into a Definitive Agreement within 180 days for the Company to earn a fifty percent interest in the Nile Mine project. The Company has not entered into a final and definitive agreement at this time.  In May 2014 GMRV waived 2013 cash payments in exchange for an agreed upon payment by June and September 30 of 2013, respectivey, and provided additional time for preparation and implementation of a definitive agreement.





Land Status





The project is owned/controlled by GMRV and private interests. The Company signed a Memorandum of Understanding (“MOU”) on the project effective May 1, 2013 containing the following terms and conditions for the Company to earn a 50% interest in the project:





Paying within 180 days of the signing of this MOU $2,500 which will be payable in cash or the issuance of restricted shares of the Company at the market bid price, or the equivalent in restricted preferred shares of the Company, subject to an subscription agreement signed by GMRV acceptable to the Company. The Company has agreed to an initial work commitment of $5,000 in 2013, and upon mutual agreement of an exploration plan for 2014, an increased work commitment of at least $10,000 for 2014.As described above this understanding has been extended eliminating cash payments during the extension period  and instead the Company may make cash payments or in restricted common stock.





The Company agreed that work commitment will include the consulting services that will be provided by GMRV. The parties in good faith agree to enter into a definitive agreement with duration of 10 years, with a work commitment for this period of $250,000 and annual minimum advance royalty payments of $5,000 per year in cash, common shares, or preferred shares, at First Colombia’s option, for First Colombia to earn a 50% interest in the project. Should a mutually agreed upon definitive agreement not be agreed on and implemented within the effective date of this agreement, the payment referred to above shall be non-refundable.As above this requirement is temporarily waived





On the effective Date: May 1, 2013, The Company was responsible for all property maintenance fees, estimated not to exceed $500 annuallyat the current BLM Maintenance Fee rate.












- 20 -
 Table of Contents












The foregoing description of the MOU does not purport to be complete and is qualified in its entirety by reference to the MOU, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company subsequent to the quarter end as described. The Company subsequent to quarter end negotiated an extension and modification of the MOU terms.





Description of Property





Location





The project is located in Marysville Mining District in the Marysville area, and is comprised of the Nile Mine and nearby Springer II Placer mining claim, comprising approximately fifty-five acres.





The Nile Mine Project consists of two unpatented lode claims covering the over 1,000 feet of the unpatented section of Nile and South Nile Veins and the Nile Cross-Cut located in Section 4, T11N, R6W.





The Springer_II Placer consists of one unpatented placer claim covering three tailing ponds and nearly 0.3 miles of old dredge piles in Section 32, T12N, R6W. The mill tailings are from the Empire Mill located further up the drainage.






















- 21 -
 Table of Contents


















History





The placer property contains evidence of production from a former gold-silver mill. Prior sampling identified about 13,000 cubic yards of mill tailings containing gold, silver, and copper values. The Company has not verified prior sampling results. The lead-silver-gold mine reported intermittent production from 1890's through 1940's.




Regional Geology





The Company is currently reviewing regional and project geology.





Project Infrastructure, Access and Power





There is evidence and historical information that indicates some level of production from the Nile Mine but the Company hasn’t completed a thorough review of this data.





Reserves





There are no established reserves on the project.





Permitting





In Montana an Exploration License or POO (Plan of Operation) may be required depending on the extent of planned surface disturbance or water discharge form exploration and development activities, and such permits can typically require bonding.





Exploration Plans





We are in discussions with GMRV for an initial exploration plan involving surface sampling , road building and other rehabilitation work to improve underground access, and possible bulk sampling, We estimate this plan would cost between $5,000 to $25,000 , and provided funding is available, we plan to embark on this plan in the summer of 2014.












- 22 -
 Table of Contents









Skip Claims





Land Status





The Skip unpatented mining claims comprise approximately forty acres and are considered a potential silver prospect.





Reserves





There are no established reserves on the property.





Exploration History





The Company has no documented information on prior exploration history. The Company has noticed evidence of trenching on the property.





Exploration Plans





The Company’s next step would be to prepare basic mapping, geologic mapping and taking surface samples. The Company believes that seeking a joint-venture partner would be the preferable approach to advancing the project.





Whatcom Uranium Claims





Land Status





The Company staked two unpatented mining claims in Washington state comprising approximately forty acres, with cost incurred of filing fees and outside geological consulting time related to the acquisition. Weather conditions precluded work on this property to determine whether the Company wishes to maintain this land position.





Reserves





There are no established reserves on the property.





Exploration History





The Company has no documented exploration history ion the property which formerly was owned by Utah-Idaho Consolidated Uranium,Inc.





Exploration Plans





The Company is evaluating costs and timing of conducting a survey using a spectrometer as an initial step to guide further exploration plans or holding of the property.





Other Exploration Areas





Our strategy is to advance projects we own, lease or option, and seek joint-venture partners where possible, and to acquire additional projects in different geographical areas though our concentration currently is in Montana and Idaho. We currently have two geologists performing work for the Company in database construction and review considering potential projects for the Company. There is no assurance this will result in additional projects for the Company, or if they do the Company will meet regulatory and financial requirements to acquire any projects identified.





Other Geographic Locations





We are also considering further geographic locations for exploration projects including Mexico and Europe. This activity consists primarily of reviewing historical data to determine potential areas of interest, to be followed by a determination for requirements and potential for acquiring mineral property interest. We have not identified to date any particular properties that it may be interested in acquiring, but due to the experience of management in certain areas it is considering Zacatecas, Mexico and the Balkans as territories of current and future interest. These activities may not lead to future acquisitions absent future financing under terms deemed acceptable to, if any such financing is available, and determining properties that management believes are properties of merit to add to our portfolio of mineral interests.The Company has retained consulting assistancein south eastern Europe,and we forecast consulting expenditures of $5,000to $15,000 in 2014.









- 23 -
 Table of Contents











Please find attached certain mining terms that may not be familiar.





Glossary of Certain Mining Terms





Andesite
A gray, fine-grained volcanic rock, chiefly plagioclase and feldsparArgentite
A valuable silver ore, Ag2S, with a lead-gray color and metallic luster that is often tarnished a dull blackArsenic
A very poisonous metallic element that has three allotropic formsArsenopyrite
A silvery-gray mineral consisting of an arsenide and sulfide of ironBasalt
An extrusive volcanic rock composed primarily of plagioclase, pyroxene and some olivinebrecciated tuffs
Rocks in which angular fragments are surrounded by a mass of fine grained mineralsChalcopyrite
A sulphide mineral of copper and iron the most important ore mineral of copperCretaceous
Geologic period and system from circa 145.5 ± 4 to 65.5 ± 0.3 million years agoDiorite
An intrusive igneous rock composed chiefly of sodic plagioclase, hornblende, biotite or pyroxeneElectrum
An alloy of silver and goldEocene
the second epoch of the Tertiary PeriodEpithermal
Pertaining to mineral veins and ore deposits formed from warm waters at shallow depthFault
A break in the Earth’s crust caused by tectonic forces which have moved the rock on one side with respect to the other.Galena
Lead sulphide, the most common ore mineral of leadGranodiorite
a phaneritic igneous rock with greater than 20% quartzHornfels
A fine-grained metamorphic rock composed of quartz, feldspar, mica, and other mineralsHumus
organic component of soil, formed by the decomposition of leaves and other plant material by soil microorganismsIgneous
Formed by the solidificationkaolin-chlorite
A fine soft white clay, used for making porcelain and china, as a filler in paper and textiles, and in medicinal absorbentsmetamorphism
The process by which the form and structure of rocks is changed by heat and pressureMiocene
the fourth epoch of the Tertiary period.montmorillonite
An aluminum-rich clay mineral of the smectite group, containing sodium and magnesiumparagenesis
A set of minerals that were formed together, esp. in a rock, or with a specified mineralPiedrancha
A faultline in Colombia


Reserves
That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determinationsericite
a fine grained mica, either muscovite, illite, or paragoniteshale
Sedimentary rock formed by the consolidation of mud or siltsphalerite
A zinc sulphide metal; the most common ore mineral of zincTertiary
Stones deposited during the Tertiary period lasting from about 65 million to 1.6 million years agozinc
a silvery-white metal that is a constituent of brass and is used for coating (galvanizing)





Mine safety issues.: As we have no operating mines or mines under development at present we have no disclosures related to mine safety issues.








- 24 -
 Table of Contents












Results of Operations for the Three Months Ended March 31, 2014 and 2013





Revenues


We have not generated any revenues from our operations since our inception and we do not expect to generate revenues in the near future, due to the exploratory nature of operations at this time.





Operating Expenses





We reported operating expenses in the amount of $28,560 for the three months ended March 31, 2014, compared to operating expenses of $64,285 for the three months ended March 31, 2013. The decrease in operating expenses for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, was primarily a result of a decrease in general and administrative expenses and exploration expenses.





The company operating expenses were lower during the period as the Company did more administrative services in house, and exploration expenses were reduced as weather conditions precluded more work to be done in the Montana area.





Other Items





We incurred  interest of $40,619 for the three months ended March 31, 2014, as compared to $80,036 for the three months ended March 31, 2013. The decrease is mainly due to a decrease in origination interest associated with the initial recording of derivative liabilities.





The Company recorded gain on derivative liabilities of $283,455 for the quarter ended March 31,2014 compared  to a loss on derivative liabilities of $315,402 for the corresponding period ending March 31,2013. The derivative liability is remeasured quarterly.





Net Income( Loss)





As a result of the above, for the three months ended March 31, 2014, we reported a net income of $214,276. For the three months ended March 31, 2013, we reported a net loss of $414,366.





Liquidity and Capital Resources





At March 31, 2014, we had cash and cash equivalents of $0, compared to $0 at December 31, 2013.  At March 31, 2014, we had a working capital deficit of $695,338, compared to a working capital deficit of $963,352 at December 31, 2013. This reduction in our working capital deficit of $268,014 resulted primarily from the gain on the derivative liability in the quarter.





Our present capital resources are insufficient to commence and sustain any planned exploration activity. Our current cash on hand is insufficient to be able to make all cash payments that we estimate would be required in connection with our acquisition of the Boulder Hill Project and those cash payments and exploration expenditures which are required in order to exercise our option to acquire a 100% interest in mineral property interests proposed plan of exploration anticipates that we would have incurred aggregate exploration related expenditures of $260,000over the next twelve months; with minimum payments would amount to $125,000 in the next twelve months on exploration related expenses, with a total of $664,000 in exploration planned for the next thirty six months, subject to available funding. Accordingly the Company elected to abandon the current planned expenditures on the South Idaho Silver project, and is currently forecasting subject to financing being secured an exploration and acquisition budget of $240,000over the next 12 months.








- 25 -
 Table of Contents









In addition to any expenditures related to any exploration activity, our business plan provides for spending of approximately $15,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure for general and administrative expenses of $180,000 over the next twelve months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees and general office expenses.




Accordingly, we must obtain additional financing in order to continue our plan of operations during and beyond the next twelve months, which would include being able to sustain any exploration activity. We believe that debt financing will not be an alternative for funding additional phases of exploration as we have limited tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our complete exploration programs or any acquisition of additional property interests. Any issuance of common stock would dilute the interests of our existing stockholders. In the absence of such financing, we will not be able to pursue our exploration program and may not be able to maintain our mineral property interests in good standing. If we do not fulfill the terms of any of our option agreements according to our business plan, then our ability to commence or continue operations could be materially limited. We also may be forced to abandon our mineral property interests. If we are unable to raise additional capital in the near future, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.





We may consider entering into a joint venture arrangement to provide the required funding to explore the properties underlying our mineral property interests. We have not undertaken any efforts to locate a joint venture participant. Even if we determine to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of the properties underlying our mineral property interests. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral property interests to the joint venture participant.





The company has been dependent on convertible note financing which can be highly dilutive to existing shareholders, and there is no assurance the company can continue to receive such financing.





Cash Used in Operating Activities





Operating cash flows for the period ending march 31,2014 and 2013 respectively were a negative $13,500 and $25,100 .Our net income during the three month period ending March 31,2014 did not generate positive operating cash flow as the components of net income did not generate positive cash flow. Our net loss for the period ending March 31, 2013 though partially offset by an increase in accounts payable, generating negative operating cash flows.


Cash Used in Investing Activities





For the three months ended March 31 2014, we used $0 in investing activities, as compared to $2,400 used in investing activities during the three months ended  March 31, 2013.





Cash from Financing Activities





As we have had no revenues since inception, we have financed our operations primarily by using existing capital reserves and through private placements of our stock. Net cash flows provided by financing activities for the three months ended March 31, 2014 was $13,500. Net cash flows provided by financing activities for the three months ended March 31, 2013 was $27,500, which consisted entirely of proceeds of convertible notes issued to Asher Enterprises,Inc.





Commitments





Convertible Notes





As of December 31, 2013 the company had face value of convertible notes outstanding of $39,798, compared to $54,135 as of March 31,2014.








Cash Payments and Exploration Expenditures





Our obligations to make cash payments and incur exploration expenditures in connection with our acquisition of the Boulder Hill Project and the South Idaho Silver Project are described above in Part II of this Quarterly Report on Form 10-Q. These expenditures of property payments and exploration are required to maintain our mineral property interests. We have elected to not pay claim fees related to the South Idaho Silver project and have informed the owner Castle Creek Silver that the Company wishes to re-negotiate the terms of the existing mineral property agreements. We also have forecast expenditures on Montana and Croatia for exploration and consulting.












- 26 -
 Table of Contents











Off Balance Sheet Arrangements





We do not have any off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that may have material current or future effects on financial conditions, changes in the financial conditions, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses.





Going Concern





We have incurred an accumulated deficit for the period from inception on September 5, 1997 to March 31, 2014 of $19,998,413 and have no source of revenue. The continuity of our future operations is dependent on our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. These conditions raise substantial doubt about our ability to continue as a going concern.





Critical Accounting Policies





Our interim consolidated financial statements have been prepared in conformity with GAAP. For a full discussion of our accounting policies as required by GAAP, refer to our Annual Report on Form 10-K for the years ended December 31, 2013 and December 31,2012. We consider certain accounting policies to be critical to an understanding of our consolidated financial statements because their application requires significant judgment and reliance on estimations of matters that are inherently uncertain. The specific risks related to these critical accounting policies are unchanged at the date of this report and are described in detail in our Annual Report on Form 10-K.





Item 3. Quantitative and Qualitative Disclosures About Market Risk





Not Applicable.





Item 4. Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2013. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of September 30, 2013, our disclosure controls and procedures are not effective. Our conclusion is based primarily on the material weakness in internal control over financial reporting which was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012, where management identified material weaknesses, that were based on the size of our company and the fact that we have only one financial expert on our management team, no audit committee and no person on our board of directors that qualifies as an “audit committee financial expert”. We are in the process of considering changes to remediate these weaknesses.





Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.










- 27 -
 Table of Contents










Limitations on the Effectiveness of Internal Controls





Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.





Changes in Internal Control Over Financial Reporting





There have been no changes in our internal controls over financial reporting during the quarter ended March 31, 2014 that have materially affected or are reasonably likely to materially affect such controls.

















- 28 -
 Table of Contents














PART II – OTHER INFORMATION


Item 1. Legal Proceedings.





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





Item 1A. Risk Factors.





Not Applicable.





Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.





The Company during the quarter ending Mach 31, 2014 issued a total of 115,600,000 shares valued at $5,780, in settlement of convertible notes payable.





Exemption From Registration Claimed





All of the above sales by the Company of its unregistered securities were made by the Company in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). All of the individuals and/or entities that purchased the unregistered securities were primarily existing shareholders, known to the Company and its management, through pre-existing business relationships, as long standing business associates and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends (to be removed subject per rule 144), prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition. The issuances were not accompanied by advertising nor were any commissions paid on the sales.





Item 3. Defaults upon Senior Securities.





None.





Item 4. Mine Safety Disclosures.





None.





Item 5. Other Information.





None.














- 29 -
 Table of Contents













Item 6. Exhibits.





Exhibit

No.

Description

Filed

Herewith31.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X31.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X101.INS *

XBRL Instance Document

X101 SCH *

XBRL Taxonomy Extension Schema Document

X101.CAL *

XBRL Taxonomy Extension Calculation Linkbase Document

X101 LAB *

XBRL Extension Labels Linkbase Document

X101.PRE *

XBRL Taxonomy Extension Presentation Linkbase Document

X101.DEF *

XBRL Taxonomy Extension Definition Linkbase Document

X





* In accordance with SEC rules, this interactive data file is deemed “furnished” and not “filed” for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under those sections or acts.
















- 30 -
 Table of Contents




















SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





First Colombia Gold Corp.Date:   May 20, 2014
By: /s/ Piero Sutti-Keyser

Piero Sutti-Keyser

Title :  Chief Executive Officer (Principal Executive Officer)Date:  May 20, 2014
By: /s/  Gilberto Zapata

Gilberto Zapata

Title:Chief Financial Officer (Principal Accounting Officer)


















- 31 -
 Table of Contents