While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. These interim consolidated financial statements follow the same accounting policies and methods of their application as the Company’s April 30, 2007 annual financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s April 30, 2007 annual financial statements.
These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At January 31, 2008, the Company had not yet achieved profitable operations, has accumulated a deficit of $7,854,964 since its inception, has a working capital deficiency of $167,954 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.
By an acquisition agreement dated March 1, 2004, the Company agreed to acquire 100% ownership of the unpatented mining claims and the net smelter royalties throughout five properties (the Dun Glen (28 claims), Debut (16 claims), SMH (20 claims) and Gold View properties (76 claims)) located in Pershing and Eureka Counties, Nevada, in consideration for $10,000 (paid) and 1,000,000 common shares (issued) valued at $441,200. The vendor is a related party by virtue of a former common director.
By an option agreement dated October 26, 2004, the Company granted Minterra Resources Corp. (“Minterra”) the option to earn a 50% ownership interest in the Gold View and Dun Glen properties (including the Sierra claims). As consideration Minterra was required to reimburse the Company its costs up to $30,000 per property or $60,000 (paid), issue to the Company 100,000 common shares per property or 200,000 common shares valued at $46,940 (issued) and incur Cdn$1,000,000 of exploration costs per property or Cdn$2,000,000 of exploration costs within three years. Minterra was also responsible for all of the advance royalty payments and net smelter return royalties on these properties. Minterra terminated its option in the Dun Glen property during the year ended April 30, 2006 and terminated the Gold View claims during the year ended April 30, 2007. The Company has also abandoned its interest in these claims.
By an option agreement dated November 3, 2006, the Company granted Canasia Industries Corporation the option to earn an undivided 50% interest in the Debut Prospect for consideration of the Optionor incurring exploration expenditures aggregating Cdn$1,000,000 over ten years from the execution of the agreement and to make all necessary payments to keep the property in good standing. The optionor is a related party by virtue of a common director and a common officer.
Lucky Boy Project
By an option agreement dated March 17, 2005 and amended March 17, 2006, the Company was granted the option to acquire a 100% interest in 14 mineral claims and an 80 acre State Lease (the Lucky Boy Uranium Project) located in Gila County, Arizona in consideration for property payments of $75,000 and incurring exploration and development costs totalling $925,000 as follows:
|
|
|
|
|
|
Exploration and
|
|
|
Property Payments
|
Development Costs
|
Due Date
|
|
|
|
|
|
$
25,000 (paid)
|
$
-
|
On execution
|
|
25,000 (paid)
|
-
|
April 17, 2006
|
|
25,000
|
500,000 (incurred)
|
March 17, 2007
|
|
-
|
425,000
|
March 17, 2008
|
|
|
|
|
|
$
75,000
|
$
925,000
|
|
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 3
Note 3
Mineral Properties
– (cont’d)
Lucky Boy Project
– (cont’d)
Once the Company spends a cumulative amount of $500,000 on the Lucky Boy project, it has the right to earn up to a 60% interest on the property and the right to earn an additional 8% for each $100,000 spent on the project.
As of January 31, 2008, the Company has paid $50,000 in property payments and in excess of $500,000 in exploration and development costs toward this project. After accumulating the required $500,000 on the Lucky Boy Project, the Company exercised its option to acquire a 60% interest on the property. The property payment due on March 17, 2007 was not paid and therefore the Company does not have the right to earn any further interest in this property, nor does it have the requirement for maintaining the option to spend the final $425,000.
On January 29, 2008, the Company disposed of its right to acquire the remaining 40% interest in the Lucky Boy Project to Rodinia Minerals Inc. (“Rodinia”). In consideration, Rodinia agreed to pay the balance of $125,000 owing by the Company for exploration costs on the project. As part of this agreement, the Company also received a refund of $9,797 from reclamation bonds and expects the balance of the bonds outstanding, totalling $13,362, to be refunded. These amounts have been recorded as a cost recovery.
The agreement is subject to a 3% uranium oxide royalty.
By an option agreement dated March 17, 2005, the Company granted Rodinia the option to acquire up to a 40% interest of the Company’s interest in the Lucky Boy Project in consideration of Rodinia deferring its acquisition of an interest in the Lucky Boy Project in favour of the Company. The option shall be exercisable from time to time, as to 40% of the interest in respect of which the Company has exercised its right to acquire pursuant to the terms of the above-noted option agreement.
During the period ending January 31, 2008, Rodinia exercised this option and now holds a 24% interest in the property with an option to acquire a further 40% interest (total 64% interest) leaving the Company a 36% interest.
The Company staked an additional 12 mineral claims that are not subject to either option agreement referred to above. A company has indicated it holds an interest in these claims, which is disputed by the Company. The Company is unable to determine the amount of loss, if any, which would result from the dispute.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 4
Note 4
Callable Secured Convertible Notes
a)
Callable Secured Convertible Notes
On April 12, 2006, the Company entered into a Securities Purchase Agreement to sell callable secured convertible notes (the “notes”) having an aggregate principal amount of $2,000,000. On the same day the Company issued notes totalling $700,000, maturing on April 12, 2009, and warrants to purchase 11,000,000 shares of the common stock at $0.30 per share, subject to adjustment for the effects of dilutive issuance, exercisable until April 12, 2013. On May 19, 2006, the Company issued notes totalling $600,000, maturing on May 19, 2009, and warrants to purchase 11,000,000 shares of common stock at $0.30 per share, subject to adjustment for the effects of dilutive issuance, exercisable until May 19, 2013. On August 22, 2006, the Company issued notes totalling $700,000 with terms identical to the above-noted notes except that there were no warrants attached.
The notes bear interest at 6% payable quarterly provided that no interest shall be due and payable for any month in which the trading price of the Company’s common stock on the OTC Bulletin Board is greater than $0.1125 per share for each trading day of the month, are secured by all of the assets of the Company and are convertible into shares of common stock of the Company at the rate of the Applicable Percentage multiplied by the Market Price which is defined as the average of the lowest three trading prices for the common stock during the 20 day period prior to conversion. The Applicable Percentage is 60% as a registration statement was declared effective by the SEC on August 18, 2006. Any amount of principal or interest on the notes which is not paid when due shall bear interest at 15%.
In the event of default, the notes will become due and payable and the Company shall pay to the holder the greater of 140% of the principal and interest and the highest number of common shares issued on conversion multiplied by the highest closing price of the Company’s stock during the default period. If the Company does not pay the above-noted amount within 5 days of notice, then the holder may cause the Company, upon written notice, to immediately issue the number of common shares equal to the default amount divided by the conversion price then in effect.
The notes contain a provision whereby no holder is able to convert any part of the note into shares of the Company’s common stock, if such conversion would result in beneficial ownership of the holder and its affiliates of more than 4.99% of the Company’s then outstanding shares of common stock. The convertible feature of the notes provide for a rate of conversion that is below market value.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 5
Note 4
Callable Secured Convertible Notes
– (cont’d)
a)
Callable Secured Convertible Notes – (cont’d)
A finder’s fee of 10% cash was paid on the sale of the notes. In addition, warrants to purchase up to 1,000,000 shares, exercisable at $0.30 per share for a five-year term, were issued to the finder. The warrants were recorded at their fair value upon issuance and recorded as a deferred financing charge (Note 4(b)).
On December 19, 2007, the Company entered into a Securities Purchase Agreement to sell callable secured convertible notes (the “notes”) having an aggregate principal amount of $200,000. On the same day the Company issued notes totalling $200,000, maturing on December 19, 2010, and warrants to purchase 15,000,000 shares of the common stock at $0.003 per share, subject to adjustment for the effects of dilutive issuance, exercisable until December 19, 2014. Legal costs of $10,000 and a finder’s fee of $20,000 were paid in cash pursuant to this note.
These December 19, 2007 notes bear interest at 8% payable quarterly provided that no interest shall be due and payable for any month in which the trading price of the Company’s common stock on the OTC Bulletin Board is greater than $0.1125 per share for each trading day of the month, are secured by all of the assets of the Company and are convertible into shares of common stock of the Company at the rate of the Applicable Percentage multiplied by the Market Price which is defined as the average of the lowest three trading prices for the common stock during the 20 day period prior to conversion. The Applicable Percentage is 60% as defined in the amendment. Any amount of principal or interest on the notes which is not paid when due shall bear interest at 15%.
In the event of default, the notes will become due and payable and the Company shall pay to the holder the greater of 140% of the principal and interest and the highest number of common shares issued on conversion multiplied by the highest closing price of the Company’s stock during the default period. If the Company does not pay the above-noted amount within 5 days of notice, then the holder may cause the Company, upon written notice, to immediately issue the number of common shares equal to the default amount divided by the conversion price then in effect.
The notes contain a provision whereby no holder is able to convert any part of the note into shares of the Company’s common stock, if such conversion would result in beneficial ownership of the holder and its affiliates of more than 4.99% of the Company’s then outstanding shares of common stock. The convertible feature of the notes provide for a rate of conversion that is below market value.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 6
Note 4
Callable Secured Convertible Notes
– (cont’d)
a)
Callable Secured Convertible Notes – (cont’d)
During the nine months ended January 31, 2008, $240,550 of the convertible notes were converted into shares of the Company’s common stock at prices ranging between $0.0024 per share and $0.0259 per share for a total of 22,100,000 common shares issued.
At January 31, 2008, the principle balance of the convertible notes was $1,291,527 after giving consideration to the conversions noted above and the repayment of $109,982 in principle and $35,574 in interest during the year ended April 30, 2007.
b)
Deferred Financing Costs
Deferred financing costs with respect to the above-noted convertible debentures totalling $313,730 ($60,000 for legal fees and $253,730 for finders’ fees including warrants issued with a fair value of $33,730) have been capitalized and are being amortized over three years, being the term of the convertible notes. If the convertible note, or any part thereof, is converted or repaid, then the unamortized deferred financing charges related to the extinguished debt are expensed at the date of conversion or repayment.
|
|
|
|
|
|
January 31,
|
April 30,
|
|
|
2008
|
2007
|
|
|
|
|
|
Total deferred finance costs
|
$
313,730
|
$
275,269
|
|
Less:
amortization
|
(109,556)
|
(70,793)
|
|
converted notes
|
(85,723)
|
(51,839)
|
|
repayment
|
(9,489)
|
(9,489)
|
|
|
|
|
|
|
108,962
|
143,148
|
|
Less: current portion
|
(47,561)
|
(76,125)
|
|
|
|
|
|
Long-term portion of deferred finance costs
|
$
61,401
|
$
67,023
|
The amortization of deferred finance costs is included in finance charges in the consolidated statement of operations.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 7
Note 4
Callable Secured Convertible Notes
– (cont’d)
c)
Summary of Callable Secured Convertible Notes
The accompanying financial statements comply with current requirements relating to warrants and embedded derivatives as described in EITF 98-5, EITF 00-19 and APB 14 as follows:
·
The Company allocated the proceeds received between convertible debt and detachable warrants based upon the relative fair values on the date the proceeds were received. The discount on the debt recorded as a result of allocating the proceeds to the detachable warrants is netted against the face value of the debt for financial statement presentation purposes.
·
The Company recorded beneficial conversion features on the remaining amount allocated to the convertible debt based on an evaluation in accordance with EITF 00-27 using the effective conversion price.
·
The Company accreted debt principal of $184,707 during the nine months ended January 31, 2008, which is included in interest expense.
The following table summarizes the various components of convertible debentures as at January 31, 2008:
|
|
|
|
|
|
January 31,
|
April 30,
|
|
|
2008
|
2007
|
|
|
|
|
|
Callable secured convertible notes
|
$
2,200,000
|
$
2,000,000
|
|
Less:
repayment
|
(109,982)
|
(109,982)
|
|
conversions
|
(798,490)
|
(557,940)
|
|
debt discounts
|
(956,497)
|
(893,754)
|
|
|
|
|
|
|
335,031
|
438,324
|
|
Accretion of discount
|
624,144
|
439,438
|
|
|
|
|
|
Balance January 31, 2008
|
$
959,175
|
$
877,762
|
Note 5
Capital Stock
– Notes 4, 7 and 9
On March 24, 2003, the Company consolidated its common stock on a 150 old for 1 new basis. On September 29, 2003, the Company forward split its common stock on a 5 new for 1 old basis and increased its authorized capital from 50,000,000 to 150,000,000 common shares with a par value of $0.001. The number of shares issued and outstanding has been restated to give retroactive effect to this forward split of common stock.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 8
Note 5
Capital Stock
– Notes 4, 7 and 9 – (cont’d)
By amended consulting agreements dated August 1, 2003, the Company retained the services of two consultants for a twelve-month period to provide technical, business and/or management services to the Company. In consideration for these services, the Company issued a total of 12,500,000 common shares to these consultants, which are recorded at a fair value of $250,000.
The Company also agreed to issue up to an additional 12,500,000 common shares as additional consideration for services should the Company and the consultants determine such consideration is appropriate. These shares were issued into escrow at that time. During the year ended April 30, 2004, 5,000,000 of these common shares have been released from escrow and were recorded at a fair value of $2,480,000. The balance of the escrow shares were cancelled during the year ended April 30, 2006.
As approved by the shareholders of the Company, effective June 6, 2006, the Company increased its authorized capital to 1,000,000,000 shares.
Share Purchase Options
The Company has share purchase option plans, which authorizes the board of directors to grant shares as incentive share purchase options to directors, officers, employees and consultants. The exercise price of the options is determined by the fair market value of the shares at the closing price on the date of the grant.
During the nine months ended January 31, 2008 and the year ended April 30, 2007, the change in share purchase options outstanding is as follows:
|
|
|
|
|
|
|
|
January 31, 2008
|
April 30, 2007
|
|
|
|
Weighted
|
|
Weighted
|
|
|
|
Average
|
|
Average
|
|
|
|
Exercise
|
|
Exercise
|
|
|
Shares
|
Price
|
Shares
|
Price
|
|
|
|
|
|
|
|
Options outstanding, beginning of period
|
2,100,000
|
$0.10
|
3,350,000
|
$0.10
|
|
Granted
|
2,500,000
|
$0.04
|
-
|
|
|
Forfeited
|
(1,000,000)
|
|
(1,250,000)
|
$0.10
|
|
|
|
|
|
|
|
Options outstanding and exercisable, end of the period
|
3,600,000
|
$0.06
|
2,100,000
|
$0.10
|
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 9
Note 5
Capital Stock
– Notes 4, 7 and 9 – (cont’d)
Share Purchase Options
– (cont’d)
At January 31, 2008 and April 30, 2007, the share purchase options were outstanding as follows:
|
|
|
|
|
|
|
|
|
|
January 31, 2008
|
April 30, 2007
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
|
Number
|
Price
|
Expiry
|
Number
|
Price
|
Expiry
|
|
|
|
|
|
|
|
|
|
Directors and employees
|
2,500,000
|
$0.04
|
Jun 19/08
|
1,000,000
|
$0.10
|
Jun 19/07
|
|
Consultant
|
1,100,000
|
$0.10
|
Mar 17/09
|
1,100,000
|
$0.10
|
Mar 17/09
|
|
|
|
|
|
|
|
|
|
|
3,600,000
|
|
|
2,100,000
|
|
|
At January 31, 2008, the weighted average contractual life remaining is 0.6 years relating to the 3,600,000 share purchase options.
All share purchase options vest immediately at the date of the grant with the exception of 1,100,000 share purchase options granted to a consultant. 200,000 of these share purchase options vest immediately with the remaining 900,000 share purchase options to vest at 100,000 shares per month until fully vested. At January 31, 2008 and April 30, 2007, these share purchase options have fully vested. On June 18, 2007, the 1,000,000 options to directors and employees were re-priced from $0.10 per share to $0.04 per share and the expiry date was extended to June 19, 2008. No additional stock-based compensation expense was recorded in this period since the fair value of the stock-based compensation determined using the Black-Scholes option valuation model was lower than the previous granted option. On the same date, 1,500,000 options to directors and employees were granted at $0.04 per share expiring on June 19, 2008. The company has recorded $30,000 of compensation expense for stock based compensation awarded to directors and employees during the period ended January 31, 2008.
The fair value of the stock-based compensation has been determined using the Black-Scholes option valuation model with the following assumptions:
|
|
|
|
|
|
January 31, 2008
|
|
|
and April 30, 2007
|
|
|
|
|
Expected dividend yield
|
0.0%
|
|
Expected volatility
|
124%
|
|
Risk-free interest rate
|
4.74%
|
|
Weighted average expected term in years
|
1 year
|
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 10
Note 5
Capital Stock
– Notes 4, 7 and 9 – (cont’d)
Share Purchase Options
– (cont’d)
The expected volatility was calculated based on the Company’s historical share prices.
The Black-Scholes option valuation model requires the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate and therefore the Black-Scholes valuation model does not necessarily provide a reliable single measure of the fair value of the Company’s share purchase options.
The compensation charge associated with consultant’s option in the amount of $Nil is included in the statement of operations for the nine months ended January 31, 2008 (January 31, 2007: $58,000).
Share Purchase Warrants
During the nine months ended January 31, 2008 and the year ended April 30, 2007, the change in share purchase warrants outstanding is as follows:
|
|
|
|
|
|
|
|
January 31, 2008
|
April 30, 2007
|
|
|
|
Weighted
|
|
Weighted
|
|
|
|
Average
|
|
Average
|
|
|
|
Exercise
|
|
Exercise
|
|
|
Shares
|
Price
|
Shares
|
Price
|
|
|
|
|
|
|
|
Options outstanding, beginning of period
|
26,000,000
|
$0.28
|
11,000,000
|
$0.30
|
|
Granted
|
16,500,000
|
$0.003
|
15,000,000
|
$0.26
|
|
|
|
|
|
|
|
Options outstanding and exercisable, end of the period
|
42,500,000
|
$0.17
|
26,000,000
|
$0.28
|
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 11
Note 5
Capital Stock
– Notes 4, 7 and 9 – (cont’d)
Share Purchase Warrants
– (cont’d)
At January 31, 2008 and April 30, 2007, the share purchase warrants were outstanding as follows:
|
|
|
|
|
|
|
|
January 31, 2008
|
April 30, 2007
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Number
|
Price
|
Expiry
|
Number
|
Price
|
Expiry
|
|
|
|
|
|
|
|
|
1,000,000
|
$0.30
|
March 31, 2012
|
1,000,000
|
$0.30
|
March 31, 2012
|
|
11,000,000
|
$0.30
|
April 12, 2013
|
11,000,000
|
$0.30
|
April 12, 2013
|
|
11,000,000
|
$0.30
|
May 19, 2013
|
11,000,000
|
$0.30
|
May 19, 2013
|
|
3,000,000
|
$0.10
|
March 28, 2014
|
3,000,000
|
$0.10
|
March 28, 2014
|
|
16,500,000
|
$0.003
|
December 19, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500,000
|
|
|
26,000,000
|
|
|
2,500,000 of the above share purchase warrants were issued as a finder’s fee. The 1,000,000 of the warrants were valued at $0.0253 per share and included in the financial statements for the year ended April 30, 2007, as a $25,269 financing expense. 1,500,000 of the warrants, issued on December 19, 2007 and valued at $.0056, were recorded as a $8,461 financing expense.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 12
Note 6
Related Party Transactions
– Note 3
The Company was charged the following amounts by directors of the Company or companies with directors or officers in common:
|
|
|
|
|
|
|
|
|
|
|
|
|
November 24,
|
|
|
|
|
|
|
1998 (Date of
|
|
|
|
|
|
|
Inception of
|
|
|
|
|
|
|
Exploration
|
|
|
Three Months Ended
|
Nine Months Ended
|
Stage) to
|
|
|
January 31,
|
January 31,
|
January 31,
|
|
|
2008
|
2007
|
2008
|
2007
|
2008
|
|
|
|
|
|
|
|
|
Accounting fees
|
$
1,767
|
$
-
|
$
11,045
|
$
-
|
$
11,045
|
|
Administration fees
|
-
|
-
|
-
|
-
|
14,527
|
|
Equipment
|
-
|
-
|
-
|
-
|
3,547
|
|
Consulting fees
|
5,600
|
10,500
|
25,450
|
44,900
|
268,487
|
|
Cost recovery
|
-
|
-
|
-
|
-
|
(4,000)
|
|
Exploration and
development costs
|
-
|
-
|
-
|
-
|
16,492
|
|
Management fees
|
35,000
|
24,999
|
85,000
|
95,332
|
496,161
|
|
Rent
|
1,931
|
4,502
|
13,737
|
9,890
|
30,099
|
|
Write-off of oil and gas
properties
|
-
|
-
|
-
|
-
|
45,000
|
|
|
|
|
|
|
|
|
|
$
44,298
|
$
40,001
|
$
135,232
|
$
150,122
|
$
881,358
|
At January 31, 2008, accounts payable includes $80,531 (April 30, 2007: $9,806) owing to companies with an officer in common.
Note 7
Non-cash Transactions
Investing and financing activities that do not have a direct impact on current cash flows are excluded from the investing and financing activities sections of the statements of cash flows.
During the nine months ended January 31, 2008:
-
the Company issued 22,100,000 common shares having a value of $303,293 pursuant to the conversion of callable secured notes.
-
the Company issued 1,500,000 warrants having a fair value of $8,461 in respect of fees associated with the issuance of callable secured convertible notes.
These transactions were excluded from the investing and financing sections of the statements of cash flows.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 13
Note 8
Comparative Figures
Certain of the comparative figures have been reclassified to conform with the presentation used in the current year.
Note 9
Subsequent Events
i)
Subsequent to January 31, 2008 the Company converted $5,270 of convertible debt into 2,550,000 common shares at prices of $0.0019 and $0.0024 per share.
ii)
On January 28, 2008, the Company entered into a Securities Purchase Agreement to sell callable secured convertible notes (the “notes”) having an aggregate principal amount of $350,000. Theses notes were funded on February 1, 2008 and are therefore subsequent to the period ending January 31, 2008. The Company issued notes totalling $350,000, maturing on January 28, 2011, and warrants to purchase 10,000,000 shares of the common stock at $0.006 per share, subject to adjustment for the effects of dilutive issuance, exercisable until January 28, 2015.
The notes bear interest at 8% payable quarterly provided that no interest shall be due and payable for any month in which the trading price of the Company’s common stock on the OTC Bulletin Board is greater than $0.1125 per share for each trading day of the month, are secured by all of the assets of the Company and are convertible into shares of common stock of the Company at the rate of the Applicable Percentage multiplied by the Market Price which is defined as the average of the lowest three trading prices for the common stock during the 20 day period prior to conversion. The Applicable Percentage is 40% as defined in these notes. Any amount of principal or interest on the notes which is not paid when due shall bear interest at 15%.
In the event of default, the notes will become due and payable and the Company shall pay to the holder the greater of 140% of the principal and interest and the highest number of common shares issued on conversion multiplied by the highest closing price of the Company’s stock during the default period. If the Company does not pay the above-noted amount within 5 days of notice, then the holder may cause the Company, upon written notice, to immediately issue the number of common shares equal to the default amount divided by the conversion price then in effect.
The notes contain a provision whereby no holder is able to convert any part of the note into shares of the Company’s common stock, if such conversion would result in beneficial ownership of the holder and its affiliates of more than 4.99% of the Company’s then outstanding shares of common stock. The convertible feature of the notes provide for a rate of conversion that is below market value.
Golden Patriot, Corp.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
January 31, 2008
(Unaudited)
(
Stated in US Dollars
) – Page 14
Note 9
Subsequent Events
– (cont’d)
iii)
Subsequent to January 31, 2008, the Company issued callable secured convertible notes having an aggregate principal amount of $117,947 in exchange for interest due on existing convertible notes. These notes are due January 31, 2011. These notes bear interest at 2% payable quarterly, are secured by all of the assets of the Company and are convertible into shares of common stock of the Company at the rate of the Applicable Percentage multiplied by the Market Price which is defined as the average of the lowest three trading prices for the common stock during the 20 day period prior to conversion. The Applicable Percentage is 50%. Any amount of principal or interest on the notes which is not paid when due shall bear interest at 15%.
In the event of default, the notes will become due and payable and the Company shall pay to the holder the greater of 130% of the principal and interest and the highest number of common shares issued on conversion multiplied by the highest closing price of the Company’s stock during the default period. If the Company does not pay the above-noted amount within 5 days of notice, then the holder may cause the Company, upon written notice, to immediately issue the number of common shares equal to the default amount divided by the conversion price then in effect.
The notes contain a provision whereby no holder is able to convert any part of the note into shares of the Company’s common stock, if such conversion would result in beneficial ownership of the holder and its affiliates of more than 4.9% of the Company’s then outstanding shares of common stock. The convertible feature of the notes provide for a rate of conversion that is below market value.
iv)
By a financial services agreement dated February 11, 2008, the Company agreed to pay a total fee of $250,000 ($125,000 was paid on signing of the agreement and the remaining is due on week ten of the contract) for financial and business consulting services.