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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**______________________**

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**FORM 10-Q**

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**[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

For the quarterly period ended March 31, 2013

 

OR

 

**[ ] Transition Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

For the transition period from ________ to ___________

 

Commission file number: 000-53675

 

**HELMER DIRECTIONAL DRILLING CORP**

(Name of Small Business Issuer in Its Charter)

 

 

 

 

 

 

 

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 past 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [X] No [ ]

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto 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). Yes [ X] No [ ]

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Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer,”“accelerated filer,” and “smaller reporting company in Rule 12b-2 of the Exchange Act.(Check one):

 

Large Accelerated Filer [ ]	Accelerated Filer[ ]	Non-Accelerated Filer [ ]

Smaller reporting company [X]

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Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

 

**APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS DURING THE PRECEDING FIVE YEARS**

 

Check whether the registrant has filed all documentsand reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securitiesunder a plan confirmed by a court. Yes [ ] No [ ]

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

State the number of shares outstanding of eachof the issuer’s classes of common equity, as of the latest practicable date. As of May 13, 2013, the Company had outstanding106,000,078 shares of common stock, par value $0.001 per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**PARTI**

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**FINANCIALINFORMATION**

 

The CondensedFinancial Statements of the Company are prepared as of March 31, 2013. 

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**ITEM1.	FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q**

 

 

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**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE 1 -	ORGANIZATION AND DESCRIPTIONOF BUSINESS

 

Excelsior Gold Corporation (the“Company”) was incorporated in the State of Utah on November 21, 2012. The Company is an Exploration Stage Company,as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915,*Development Stage Entities*. The Company’s principal business is the acquisition and exploration of mineral resources.The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.

 

NOTE 2 -	SIGNIFICANTACCOUNTING POLICIES

 

This summary of significant accountingpolicies of the Company is presented to assist in understanding the Company’s financial statements. The financial statementsand notes are representations of the Company’s management who are responsible for their integrity and objectivity. Theseaccounting policies conform to accounting principles generally accepted in the United States of America and have been consistentlyapplied in the preparation of the financial statements. The following policies are considered to be significant:

 

a.	Accounting Method

 

The Company recognizes income andexpenses based on the accrual method of accounting. The Company has elected a December 31 year-end.

 

b.	Consolidation Policy

 

The condensed consolidated financialstatements include the accounts of Helmer Directional Drilling Corp. and Excelsior Gold Corp. All intercompany transactions havebeen eliminated in these condensed consolidated financial statements.

 

c.	Cash and Cash Equivalents

 

Cash equivalents are generallycomprised of certain highly liquid investments with original maturities of less than three months.

 

d.	Use of Estimates in the Preparationof Financial Statements

 

The preparation of financial statementsin conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.

 

e.	Basic and Fully Diluted NetLoss per Share of Common Stock

 

In accordance with Financial AccountingStandards No. ASC 260, “Earnings per Share,” basic net loss per common share is based on the weighted average numberof shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number ofcommon shares plus dilutive common share equivalents outstanding during the period. There are no common stock equivalents as ofMarch 31, 2013.

**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE 2 -	SIGNIFICANTACCOUNTING POLICIES (Continued)

 

f.	Property and Equipment

 

Property and equipment are statedat cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful livesof the assets. When assets are disposed of, the cost and accumulated depreciation (net book value of the assets) are eliminatedand any resultant gain or loss reflected accordingly. Betterments and improvements are capitalized over their estimated usefullives whereas repairs and maintenance expenditures on the assets are charged to expense as incurred.

 

g.	Mining Assets

 

The Company has been in the explorationstage since its formation on November 21, 2012 and has not yet realized any revenues from its planned operations. It is primarilyengaged in the acquisition, exploration and development of mineral properties. Mineral property acquisition costs are capitalizedwhen management has determined that probable future benefits consisting of a contribution to future cash inflows have been identifiedand adequate financial resources are available or are expected to be available as required to meet the terms of property acquisitionand budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteriafor capitalization are not met. In the event that a mineral property is acquired from an unrelated third party through the issuanceof the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair valueof the shares, whichever is more readily determinable.

 

h.	Recent Accounting Pronouncements

 

We have reviewed accounting pronouncementsissued during the past two years and have adopted any that are applicable to the Company. We have determined that none had a materialimpact on our financial position, results of operations, or cash flows for the period ended March 31, 2013.

 

i.	Income Taxes

 

The Financial Accounting StandardsBoard (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting forUncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)).  FASB ASC 740-10 clarifies the accountingfor uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB StatementNo. 109, Accounting for Income Taxes.  This standard requires a company to determine whether it is more likely than not thata tax position will be sustained will be sustained upon examination based upon the technical merits of the position.  If themore-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financialstatements.  As a result of the implementation of this standard, the Company performed a review of its material tax positionsin accordance with recognition and measurement standards established by FASB ASC 740-10.  

 

Deferred taxes are provided ona liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax creditcarryforwards and

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**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE 2 -	SIGNIFICANTACCOUNTING POLICIES (Continued)

 

deferred tax liabilities are recognizedfor taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilitiesand their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is morelikely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilitiesare adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

j.	Concentrations of Credit Risk

 

Financial instruments that potentiallysubject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places cash and cash equivalentsat well known quality financial institutions. Cash and cash equivalents at banks are insured by the Federal Deposit Insurance Corporationfor up to $250,000. The Company did not have any cash or cash equivalents in excess of this amount at March 31, 2013.

 

k.	Basis of Financial StatementPresentation

 

The accompanying interim unauditedfinancial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certaininformation and footnote disclosures normally included in financial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, althoughmanagement believes that the disclosures are adequate to make the information presented not misleading. The interim financial statementsshould be read in conjunction with the Company's annual financial statements, notes and accounting policies included in the Company'sannual report on form 10 K for the year ended December 31, 2012 as filed with the SEC. In the opinion of management, all adjustments,consisting only of normal recurring adjustments, (consisting only of normal recurring adjustments and changes in estimates, whereappropriate) are necessary to present fairly the financial position of the Company as of March 31, 2013 and the related operatingresults and cash flows for the interim period presented have been made. The results of operations of such interim period are notnecessarily indicative of the results of the full year.

 

l.	Financial Instruments

 

The Company adopted FASB ASC 820-10-50,“*Fair Value Measurements.*”  This guidance defines fair value, establishes a three-level valuation hierarchyfor disclosures of fair value measurement and enhances disclosure requirements for fair value measures.  The three levelsare defined as follows:

 

Level 1 inputsto the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputsto the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observablefor the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE 2 -	SIGNIFICANTACCOUNTING POLICIES (Continued)

 

Level 3 inputsto valuation methodology are unobservable and significant to the fair measurement.

 

The carrying amounts reported inthe balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instrumentsand are a reasonable estimate of fair value because of the short period of time between the origination of such instruments andtheir expected realization and their current market rate of interest.  

 

NOTE 3 -	GOING CONCERN

 

The accompanying financial statementshave been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets andsatisfaction of liabilities in the normal course of business. The Company has an accumulated deficit at March 31, 2013 of $22,722and has experienced periodic cash flow difficulties, all of which raise substantial doubt regarding the Company’s abilityto continue as a going concern.

 

To date the Company has funded itsoperations through a combination of loans. The Company anticipates another net loss for the year ended December 31, 2013 and withthe expected cash requirements for the coming year, there is substantial doubt as to the Company’s ability to continue operations.

 

The Company is attempting to improvethese conditions by way of financial assistance through issuances of additional equity and by generating revenues through salesof products and services.

 

NOTE 4 -	RELATED PARTY TRANSACTIONS

 

During the quarter ended March31, 2013 and the year ended December 31, 2012, a shareholder advanced $-0- and $37,200, respectively, to the Company. These amountsare reflected as unsecured and non-interest bearing advances with no maturity date. As of March 31, 2013 and December 31, 2012,the balance of these amounts was $115,866. The Company has also recorded accounts payable due to a shareholder of the Company inthe amount of $14,388 as of March 31, 2013.

 

NOTE 5 -	PREFERRED STOCK

 

On March 14,2013, the Company authorized the designation of 1,500 shares of Series M Convertible Preferred Stock ("Series M Stock"). The Series M Stock has a par value of $0.001 per share. The Series M Preferred Stock shall be subordinate to and rank junior toall indebtedness of the Company now or hereafter outstanding. The Series M Preferred Stock shall notpay a dividend; provided that no cash dividends or distributions shall be declared or paid or set apart for payment on the CommonStock unless such cash dividend or distribution is likewise declared, paid or set apart for payment on the Series M Stock. Holders of the Series M Stock shall vote on an “as converted” basis, together as a single class, with the 

**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE 5 -	PREFERRED STOCK (Continued)

 

CommonStock, on all matters requiring the approval, ratification or consent of holders of Common Stock of the Company. The CommonStock into which the Series M Preferred Stock is convertible shall, when issued, have all of the same voting rights as other issuedand outstanding Common Stock of the Company, and none of the rights of the Series M Stock.  On or after the Issuance Date,at such time when the Company amends its Articles of Incorporation to increase the number of authorized shares of Common Stockto such number that is equal to or greater than seven hundred million (700,000,000), the holder of any such shares of Series MStock shall automatically convert (a “Mandatory Conversion”) all of the shares of Series M Stock held by such personinto a number of fully paid and non-assessable shares of Common Stock equal to the product of (i) the number of shares of SeriesM Stock; and (ii) the Conversion Multiple of Three Hundred One Thousand Six Hundred Ninety Nine (301,699).  In other words,for every share of Series M Stock held, the holder will receive 301,699 shares of common stock of the Company.

 

NOTE 6  -	SHARE EXCHANGEAGREEMENT

 

On March 14, 2013 (the “ClosingDate”), the Company entered into a share exchange agreement (the “Exchange Agreement”) by and among the Company,Excelsior Gold Corporation, a Utah corporation (“Excelsior”), and the shareholders of Excelsior, pursuant to whichthe Company purchased all of the outstanding common stock of Excelsior in exchange for 1,000.999 shares of our Series M preferredstock, par value $0.001 per share (the “Series M Preferred Stock”) (such transaction is sometimes referred to hereinas the “Share Exchange”). The Series M Preferred Stock is convertible into 302,000,000 shares of common stock, conditionalupon the amendment of the Company’s Articles of Incorporation to increase the number of authorized shares to 700,000,000.As a result of the Share Exchange, we are now the holding company of Excelsior and operating a company in development of mininginterests by drilling and proving mineral reserves specifically in our first two properties located in Washington and Montana.As a condition to the Share Exchange, 155,466,645 shares of our common stock, par value $0.001 (the “Retired Stock”)then outstanding were cancelled and retired. The Company intends to change its name to Excelsior Gold Corp.

 

As of March 31, 2013, the Companyhas not amended its articles of incorporation and the preferred shares have not been converted. Due to insufficient authorizedshares, the preferred stock issued in the reorganization has been accounted for as a derivative liability. As part of the recapitalization,the derivative was valued at the net asset value of Excelsior at December 31, 2012. There are no significant changes in the valuationbetween the date of the share exchange (March 14, 2013) and March 31, 2013.

 

The effect of the Exchange Agreementis such that effectively a reorganization of the entities has occurred for accounting purposes and is deemed to be a reverse acquisition.Subsequent to the Closing pursuant to the Acquisition Agreement, Excelsior and its stockholders have effective control of Helmer,even though Helmer has acquired the Company. For accounting purposes, Excelsior will be deemed to be the accounting acquirer inthe transaction and, consequently, the transaction will be treated as a recapitalization of Excelsior, i.e., a capital transactioninvolving the issuance of shares by Helmer for the shares of Excelsior. Accordingly, the combined assets, liabilities and resultsof operations of the Excelsior will

 

**HELMER DIRECTIONAL DRILLING CORP.**

Notes to theCondensed Consolidated Financial Statements

March 31, 2013

(Unaudited)

 

NOTE  6-	SHARE EXCHANGE AGREEMENT (Continued)

 

become the historical financialstatements of Helmer at the closing of the Acquisition Agreement, and Helmer’s assets, liabilities and results of operationshave been consolidated with those of Excelsior commencing as of March 14, 2013, the date of the Closing. No step-up in basis orintangible assets or goodwill will be recorded in this transaction. As this transaction is being accounted for as a reverse acquisition,all direct costs of the transaction have been expensed as incurred. All professional fees and other costs associated with transactionhave been expensed as incurred.  The Company has determined to continue to utilize December 31 as the end of its fiscalyear.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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**ITEM 2.	MANAGEMENT'S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

The following discussion of the financial conditionand results of operations of Helmer Directional Drilling Corp. (hereafter, “EXLA”, the “Company,” “we,”“our,” or “us”) should be read in conjunction with the Unaudited Financial Statements and related Notesthereto included herein. This discussion may contain forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding the Company’sexpectations, beliefs, intentions, or future strategies that are signified by the words "expects," "anticipates,""intends," "believes," or similar language. Actual results could differ materially from those projected inthe forward looking statements. Prospective investors should carefully consider the information set forth herein, and the Companycautions investors that its business and financial performance is subject to substantial risks and uncertainties.

 

**Overview**

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Helmer DirectionalDrilling Corp. was incorporated in the State of Nevada on September 8, 2006. We were a developmental stage company that had aprincipal business objective of offering premium baseball cap type head wear for women with exquisite taste and extravagantappetites as exclusive accessories to differentiate themselves. However, due to lack of capital, the Company had not beenable to commence any business.

 

In late 2011, we consideredentering into the directional well drilling industry and changed our name from Exclusive Apparel, Inc. to Helmer Directional DrillingCorp. However, we were unable to attract the necessary capital and management to begin any operations.

 

As a result of the ShareExchange, we will cease our prior operations and, we will operate as a mining exploration and development company

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We are an exploration stagecorporation. An exploration stage corporation is one engaged in the search of mineral deposits or reserves which are not in eitherthe development or production stage.

 

On March 14, 2013 (the“Closing Date”), the Company entered into a share exchange agreement (the “Exchange Agreement”) by andamong the Company, Excelsior Gold Corporation, a Utah corporation (“Excelsior”), and the shareholders of Excelsior,pursuant to which the Company purchased all of the outstanding common stock of Excelsior in exchange for 1,000.999 shares of ourSeries M preferred stock, par value $0.001 per share (the “Series M Preferred Stock”) (such transaction is sometimesreferred to herein as the “Share Exchange”). The Series M Preferred Stock is convertible into 302,000,000 shares ofcommon stock, conditional upon the amendment of the Company’s Articles of Incorporation to increase the number of authorizedshares to 700,000,000. As a result of the Share Exchange, we are now the holding company of Excelsior and operating a company indevelopment of mining interests by drilling and proving mineral reserves specifically in our first two properties located in Washingtonand Montana. As a condition to the Share Exchange, 155,466,645 shares of our common stock, par value $0.001 (the “RetiredStock”) then outstanding were cancelled and retired. The Company intends to change its name to Excelsior Gold Corp.

 

*Vision, Mission, andGoals*. We believe that the price of precious metals, ores and other commodities will continue to move higher over the longterm, commensurate with increases in aggregate world demand and a sustained decline in the U.S. dollar resulting from looming

 

inflation and unsustainable government debtlevels. We expect these trends will drive investors to include more traditional "safe haven" investments in their portfolios,consisting of gold, precious metals and natural resource commodities. We seek to explore, develop and acquire mineral resourcesin favorable jurisdictions where exploration and exploitation is promoted by governments in mining "friendly" territories.In the short-term, we intend to identify, explore and develop concessions such that a resource calculation can be made under compliantengineering standards. Our near term goals include obtaining a series of studies from third-party engineers to “prove up”deposits in which we have an interest as financially viable, mineable ventures. Our mid-term goals include entering joint ventureswith larger companies with the goal of extraction and moving the Company into and ultimately creating an inviting target for mergeror acquisition by one of the world's top majors.

 

*Mining Concessions and Interests.*Wehold rights to certain mineral interests in Western Washington State and Montana, and seek to acquire additional interests in theUnited States and internationally. If we are able to successfully develop the interests we acquire, we may engage in (or contractwith third parties for the) extraction and production of the minerals involved, may sell these interests, or pursue a combinationof the foregoing.

 

We have not generated anyrevenues since the inception of the Company and we have been issued a “going concern” opinion from our auditors.

 

**Results of Operations**

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Following is management’s discussion ofthe relevant items affecting results of operations for the quarters ended March 31, 2013 and 2012.

 

*Revenues*. The Companygenerated net revenues of $-0- during both quarters ended March 31, 2013 and 2012.

 

*Professional fees.*The Company incurred$20,722 in professional fees during the quarter ended March 31, 2013 compared to $-0- during the quarter ended March 31, 2012.The professional fees were related to the Share Exchange Agreement with Excelsior Gold Corporation.

 

*General and Administrative Expenses*.General and administrative expenses were $-0- for both quarters ended March 31, 2013 and 2012. The Company expects general andadministrative expenses to increase in the future as a result of the Share Exchange Agreement with Excelsior Gold Corporation andthe related change in operations.

 

**Liquidity and Capital Resources**

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As of March 31, 2013, our primary source ofliquidity consisted of $-0- in cash and cash equivalents. Since inception, we have financed our operations through a combinationof short and long-term loans, and through the private placement of our common stock.

 

We have sustained net losses which have resultedin an accumulated deficit at March 31, 2013 of $22,722 and are currently experiencing a substantial shortfall in operating capitalwhich raises doubt about our ability to continue as a going concern. Without additional revenues, working capital loans, or equityinvestment, there is substantial doubt as to our ability to continue operations. We believe the Exchange Agreement with ExcelsiorGold Corporation will improve operations in the future.