XML 51 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
Notes Payable
12 Months Ended
Jan. 31, 2014
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

Note 4.  Notes Payable


Shareholders


In 2005, a shareholder advanced $30,000 to the Company for working capital purposes and to assist in identification of new mining properties.  This loan is due on demand and bore interest at 5% per annum through January 31, 2009, at which time the interest rate increased to 10% per annum.  During the years ended January 31, 2010 and 2009, the shareholder advanced an additional $50,000 and $80,000, respectively, under substantially identical terms. On August 31, 2011, the shareholder advanced a further $150,000 and added an additional $30,000 on October 27, 2011, for a loan total of $340,000 at January 31, 2012. The additional loans were drafted under identical terms of previous loans advanced to the Company. Payments of $180,000 were made on these loans during the year ended January 31, 2013.  Principal and interest due for the years ended January 31, 2014 and January 31, 2013 respectively were $266,273 and $242,067.


On January 7, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $35,000. The terms of the note include an interest rate of 15% that is accrued and due upon maturity. The note and accrued interest was due and payable July 7, 2013. As of January 31, 2014, the Company had recorded $5,610 in accrued interest. In connection with the note payable, the Company issued a warrant to purchase 1,000,000 shares of common stock, exercisable on or before January 7, 2016 at $0.02 per share.  The fair value of the warrant at the date of grant was $25,417 using a Black Scholes option pricing model using inputs described in Note 7, and the full expense was recorded as of the date of issuance.  As of January 31, 2014, the Company has been unable to repay the note.  On January 31, 2014 the balance due, including interest is $39,286.  We are currently engaged in discussions with the lender to extend the note.


On August 30, 2013, the Company entered into an agreement with a shareholder in the form of a promissory note payable, in the amount of $150,000. The terms of the note include an interest rate of 30% per annum. The note was due and payable 120 days from August 30, 2013. In addition, the Note was secured by a pledge of certain shares of common stock owned by James Baughman. In connection with the financing agreement, on August 30, 2013 the Company issued a warrant to purchase 5,000,000 shares of common stock, exercisable on or before August 30, 2016 at $0.02 per share. The fair value of the warrant at the date of grant was $119,698 using a Black Scholes option pricing model using inputs described in Note 7. The proceeds from the note were allocated to notes payable and warrants based on the relative fair value of the debt and warrants. The full discount to the note of $66,573 was amortized and expensed over the life of the note which matured on December 30, 2013. We are currently engaged in discussions with the lender with regard to settlement of the note.


Non-affiliated


On August 31, 2012 the Company entered into a $300,000 bridge loan financing arrangement with an unaffiliated accredited investor, the proceeds of which were used to pay maintenance fees to the Bureau of Land Management and general operating expenses of the Company. The note payable bears interest at a rate of 15% per annum and was due and payable on or before October 30, 2012. The Note is secured by all of the property of the Company in addition to a pledge of certain shares of common stock owned by James Baughman, Maria Baughman, Purcell Group LLC and Publican Capital Corporation. As of January 31, 2013, the Company was unable to repay the note, thus, the Company is in default on the note. The default interest rate is 45%. Principal and interest due for the years ended January 31, 2014 and January 31, 2013 respectively were $343,073 and $481,422. In addition, the note is secured by all of the property of the Company. We are currently engaged in discussions with the lender with regard to negotiating an extension on the note.  


In connection with the financing agreement, the Company issued a Warrant to purchase 6,814,000 shares of common stock, exercisable on or before August 31, 2017 at $0.02 per share.  The fair value at the date of grant was $132,332 using a Black Scholes option pricing model using inputs described in Note 7, and the full expense was recorded as of the date of issuance.