CNXS Connexus Corporation (CE)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

   X . QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

        . 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 333-119566

BRAZIL GOLD CORP.

(Exact name of registrant as specified in its charter)

Nevada	98-0430746
State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

242 West Main Street, Hendersonville, TN 37075

 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code : 888-613-7164

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X . 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 definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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

Yes       . No  X .

Number of shares outstanding of the registrant’s class of common stock as of May 14, 2014:  160,252,446

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	Page
PART I – FINANCIAL INFORMATION	3
Item 1. Interim Financial Statements (Unaudited)	3
Balance Sheets	4
Interim Statements of Operations	5
Interim Statement of Stockholders’ (Deficit)	7
Interim Statements of Cash Flows	8
Notes to Interim Financial Statements	9
Item 2. Management’s Discussion and Analysis	27
Item 3. Quantitative and Qualitative Disclosure about Mark Rise	29
Item 4. Controls and Procedures	29
Item 4(A) T. Controls and Procedures	29
PART II – OTHER INFORMATION	30
Item 1. Legal Proceedings- Not Applicable	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds –  Not Applicable	30
Item 3. Defaults upon Senior Securities – Not Applicable	30
Item 4. Removed and Reserved	30
Item 5. Other Information	30
Item 6. Exhibits	30
SIGNATURES	31

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Brazil Gold Corp.

March 31, 2014 and 2013

Index to the financial statements

Contents	Page(s)
Balance Sheets at March 31, 2014 (Unaudited) and June 30, 2013	4
Statements of Operations for the Three Months Ended March 31, 2014 and 2013 (Unaudited)	5
Statements of Operations for the Nine Months Ended March 31, 2014 and 2013 (Unaudited)	6
Statement of Stockholders’ Deficit for the Period from June 30, 2013 through March 31, 2014 (Unaudited)	7
Statements of Cash Flows for the Nine Months Ended March 31, 2014 and 2013 (Unaudited)	8
Notes to the  Financial Statements (Unaudited)	9

3

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Brazil Gold Corp.
Balance Sheets
				March 31, 2014			June 30, 2013
				(unaudited)
ASSETS
CURRENT ASSETS:
	Cash			$	10,127		$	5,552
	Prepaid expenses				-			-
	Other current assets				-			-
		Total Current Assets			10,127			5,552
NON-CURRENT ASSETS
	Investment in Minority Interest- at cost				55,000			-
	Property and equipment				1,524			1,524
	Accumulated depreciation				(1,524)			(1,332)
		Property and Equipment, net			-			192
		Total Non-current assets			55,000			192
			Total Assets	$	65,127		$	5,744
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
	Accounts payable			$	115,828		$	115,828
	Accrued expenses				28,262			19,007
	Advances payable				42,940			42,940
	Derivative liability				652,257			565,007
	Convertible debentures, net				630,900			278,961
		Total Current Liabilities			1,470,187			1,021,743
	Note payable - related party				186,568			185,116
		Total Long-Term Liabilities			186,568			185,116
		Total Liabilities			1,656,755			1,206,859
STOCKHOLDERS' DEFICIT:
	Preferred stock at $0.001 par value: 10,000,000 shares authorized;     none issued or outstanding				-			-
	Common stock at $0.001 par value: 10,000,000,000 shares authorized;     66,220,431 and 128,790 shares issued and outstanding, respectively				66,220			129
	Additional paid-in capital				9,644,363			5,867,002
	Accumulated deficit				(11,302,212)			(7,068,246)
	Accumulated other comprehensive income (loss):
		Foreign currency translation gain (loss)			-			-
		Total Stockholders' Deficit			(1,591,628)			(1,201,115)
			Total Liabilities and Stockholders' Deficit	$	65,127		$	5,744
See accompanying notes to the financial statements.

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Brazil Gold Corp.
Statements of Operations
			For the Three Months		For the Three Months
			Ended		Ended
			March 31, 2014		March 31, 2013
			(unaudited)		(unaudited)
NET REVENUES			$	-	$	-
OPERATING EXPENSES:
	Consulting fees			60,000		60,000
	Rent Expense			6,831		-
	Professional fees			22,750		23,000
	Compensation			30,725		8,000
	General and administrative expenses			6,406		111
		Total operating expenses		126,712		91,111
LOSS FROM OPERATIONS				(126,712)		(91,111)
OTHER (INCOME) EXPENSE:
	Derivative expense			74,644		29,210
	Interest expense			212,600		116,702
	Loss on settlement of debt			2,815,382		59,163
	Change in fair value of derivative liability			309,151		205,482
		Other (income) expense, net		3,411,778		410,557
LOSS FROM OPERATIONS
	BEFORE INCOME TAX PROVISION			(3,538,490)		(501,668)
INCOME TAX PROVISION				-		-
NET LOSS				(3,538,490)		(501,668)
COMPREHENSIVE LOSS			$	(3,538,490)	$	(501,668)
NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:		$	(.10)	$	(5.34)
	Weighted average common shares outstanding
		- basic and diluted		35,830,050		93,868
See accompanying notes to the financial statements.

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Brazil Gold Corp.
Statements of Operations
			For the Nine months		For the Nine months
			Ended		Ended
			March 31, 2014		March 31, 2013
			(unaudited)		(unaudited)
NET REVENUES			$	-	$	-
OPERATING EXPENSES:
	Consulting fees			180,000		120,000
	Rent Expense			25,135		-
	Professional fees			49,105		145,277
	Compensation			53,225		8,000
	General and administrative expenses			100,503		9,833
		Total operating expenses		407,968		283,110
LOSS FROM OPERATIONS				(407,968)		(283,110)
OTHER (INCOME) EXPENSE:
	Derivative expense			216,780		153,679
	Interest expense			518,660		235,522
	Loss on settlement of debt			3,118,545		66,885
	Change in fair value of derivative liability			(27,986)		(206,301)
		Other (income) expense, net		3,825,998		249,785
LOSS FROM OPERATIONS
	BEFORE INCOME TAX PROVISION			(4,233,966)		(532,895)
INCOME TAX PROVISION				-		-
NET LOSS				(4,233,966)		(532,895)
COMPREHENSIVE LOSS			$	(4,233,966)	$	(532,895)
NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:		$	(.35)	$	(7.41)
	Weighted average common shares outstanding
		- basic and diluted		11,992,718		71,888
See accompanying notes to the financial statements.

 

6

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Brazil Gold Corp.

Statement of Stockholders' Deficit

For the Interim Period Ended March 31, 2014

(Unaudited)

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Brazil Gold Corp.
Statements of Cash Flows
				For the Nine Months		For the Nine Months
				Ended		Ended
				March 31, 2014		March 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$	(4,233,966)	$	(532,895)
						-
Adjustments to reconcile net loss to net cash used in operating activities						-
	Depreciation expense			192		333
	Convertible notes issued for services			242,000		208,000
	Amortization of discount on convertible debt			490,713		225,481
	Accretion of original issue discount			12,327		66,885
	Loss on settlement of debt			3,118,545		-
	Stock based compensation			-		153,679
	Derivative expense			216,780		(206,301)
	Change in fair value of derivative liabilities			(27,986)		-
	Common stock issued for interest			-		-
	Changes in operating assets and liabilities:					167
		Prepaid expenses		-		-
		Other current assets		-		738
		Accounts payable		-		(2,025)
		Accrued expenses		9,255		-
						-
NET CASH USED IN OPERATING ACTIVITIES				(172,141)		(85,937)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Investment in unconsolidated subsidiary			(55,000)		-
NET CASH PROVIDED BY INVESTING ACTIVITIES				(55,000)		-
CASH FLOWS FROM FINANCING ACTIVITIES:
	Amounts from (repayments to) related parties					-
	Accrued interest on notes payable converted			4,064		-
	Interest expense to related party			1,452		1,386
	Proceeds from convertible debentures			226,200		84,551
NET CASH PROVIDED BY FINANCING ACTIVITIES				231,716		85,937
EFFECT OF EXCHANGE RATE CHANGES ON CASH				-		-
NET CHANGE IN CASH				4,575		(0)
Cash at beginning of period				5,552		-
Cash at end of period			$	10,127	$	(0)
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
	Interest paid		$	-	$	-
	Income tax paid		$	-	$	-
See accompanying notes to the financial statements.

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Brazil Gold Corp.

March 31, 2014 and 2013

Notes to the Financial Statements

(Unaudited)

Note 1 - Organization and Operations

Brazil Gold Corp. (Formerly " Dynamic Alert Limited")

Dynamic Alert Limited (“the Company”) was incorporated in the State of Nevada, on June 17, 2004.  On December 22, 2009, as amended on February 25, 2010, pursuant to the provisions of Articles of Merger, Dynamic Alert Limited, and its wholly-owned subsidiary, Brazil Gold Corp., a Nevada Corporation which was incorporated on November 3, 2009, were merged, with Dynamic Alert Limited being the surviving entity. In connection with such merger, on March 15, 2010, the Company’s name was changed from Dynamic Alert Limited to Brazil Gold Corp.

Since inception up until November 2009 the Company engaged in the business of providing its customers with security professionals, who in turn would provide personal protection as needed, as well as selling a selection of personal security products. The Company changed its status from a development stage company to an operating company on June 30, 2008. Management realized that the results of operations from security products and services were lackluster, and it was decided to change the Company’s business focus and plan for other strategic opportunities and discontinue the security operations with effect from January 1, 2010. Effective January 1, 2010, the Company started reviewing mineral exploration and other opportunities with the objective of generating revenue for the Company.

On April 7, 2014, the Company made a change in business direction which were disclosed in a Form 8-K filing with the Securities and Exchange Commission (“SEC”) on April 11, 2014 (the “April 11 8-K.”)    The April 11 8-K disclosed, among other recent developments, the following:

·

the filing of Certificates of Designation with the Nevada Secretary of State creating two new classes of preferred stock, series B 8% convertible preferred stock and series C 8% convertible preferred stock;

·

the resignation of Conrad Huss as the Company’s Chief Executive Officer and Secretary, but remaining as a director and the Company’s President;

·

the election of Stephen Price and Gerard Daignault as directors of the Company and their appointments as the Chief Executive Officer and the Chief Financial Officer and Secretary of the Company, respectively;

·

the issuance of shares of series B preferred stock to Messrs. Price and Daignault for serving as officers and directors of the Company;

·

the entry into consulting agreements with an institutional investor and Adirondack Partners LLC to provide advisory services to the Company in exchange for shares of series C preferred stock;

·

the entry into an Equity Purchase Agreement and Registration Rights Agreement with an institutional investor in connection with a future financing of up to $5.0 million in shares of the Company’s common stock;

·

the retirement of the Company’s existing shares of series A preferred stock;

·

the authorization to form a subsidiary to participate in the livestock industry;

·

the authorization to change the corporate name of the Company to Conexus Corp.; and

·

the authorization to move the Company’s principal executive office to Hendersonville, Tennessee.

The Company subsequently filed a current report on Form 8-K on May 4, 2014 to report a change in the Company’s certifying accountant and a current report on Form 8-K on May 5, 2014 to provide more information about the Company’s proposed beef cattle operations.   

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Note 2 - Summary of Significant Accounting Policies

Basis of Presentation – Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year.  These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended June 30, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on September 30, 2013.

Fiscal Year End

The Company elected June 30 ^th as its fiscal year end date upon its formation.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

Use of Estimates and Assumptions

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

The Company’s significant estimates and assumptions include the fair value of financial instruments; income tax rate, income tax provision, deferred tax assets and the valuation allowance of deferred tax assets, and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and advances payable approximate their fair values because of the short maturity of these instruments.

The Company’s Level 3 financial liabilities consist of the derivative liability of the Company’s secured convertible promissory notes issued to institutional investors, and the derivative warrants issued in connection with these convertible promissory notes. There is no current market for these securities such that the determination of fair value requires significant judgment or estimation.  The Company valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies.  These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Level 3 Financial Liabilities – Derivative Warrant Liabilities

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative warrant liability.

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  At the balance sheet date, the Company has an immaterial amount of these assets.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Investments

All liquid investments are measured at fair value in the balance sheets. Unrealized gains or losses, if any, are included in the statements of operations.

The Company has no investment income.

The Company’s Investment in Minority Interest is discussed in Note 4 to the Financial Statements.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) to five (5) years. Upon sale or retirement of furniture and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

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Derivative Instruments

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 810-10-05-4 of the Codification and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

The Company utilizes the Lattice model that values the liability of the derivatives based on a probability weighted discounted cash flow model with the assistance of the third party valuation firm.  The reason the Company picks the Lattice model is that in many cases there may be multiple embedded features or the features of the bifurcated derivatives may be so complex that a Black-Scholes valuation does not consider all of the terms of the instrument.  Therefore, the fair value may not be appropriately captured by simple models.  In other words, simple models such as Black-Scholes may not be appropriate in many situations given complex features and terms of conversion option (e.g., combined embedded derivatives).  The Lattice model is based on future projections of the various potential outcomes. The Lattice model analyzed the underlying economic factors that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. stock price, exercise price, volatility, etc.).  Projections were then made on the underlying factors which led to potential scenarios.  Probabilities were assigned to each scenario based on management projections.  This led to a cash flow projection and a probability associated with that cash flow.  A discounted weighted average cash flow over the various scenarios was completed to determine the value of the derivatives.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. adescription of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the  financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitment and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the  financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

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If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Revenue Recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Stock-Based Compensation for Obtaining Employee Services

The Company accounts for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

The fair value of options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

·

Expected term of share options and similar instruments: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding.  Pursuant to Paragraph 718-10-50-2 of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments.  Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the    simplified method   ,    i.e., expected term = ((vesting term + original contractual term) / 2)   , if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

·

Expected volatility of the entity’s shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

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·

Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company ’ s current dividend yield as the best estimate of projected dividend yield for periods within the expected contractual life of the option and similar instruments.

·

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option and similar instruments.

The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Equity Instruments Issued to Parties other than Employees for Acquiring Goods or Services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Subtopic 505-50 of the FASB Accounting Standards Codification (“Subtopic 505-50”).

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of

equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.  If shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

The fair value of option or warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for inputs are as follows:

·

Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.  The Company uses historical data to estimate holder’s expected exercise behavior.  If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

·

Expected volatility of the entity’s shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

·

Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Company ’ s current dividend yield as the best estimate of projected dividend yield for periods within the expected contractual life of the option and similar instruments.

·

Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option and similar instruments.

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Pursuant to Paragraphs 505-50-25-8, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached.  A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments).  Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions.  Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

Income Tax Provision

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Uncertain Tax Positions

The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the interim period ended March 31, 2014 or 2012.

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Tax Returns Remaining subject to IRS Audits

It is not practicable to determine amounts of interest and/or penalties related to income tax matters that will be due as of March 31, 2014 as a result of non-filing of federal and state income tax returns and examination that may be conducted by federal and state tax authorities in the future. Accordingly, the Company had no accrual for interest or penalties on the Company’s balance sheet at March 31, 2014, and has not recognized interest and/or penalties in the accompanying statement of operations for the year ended March 31, 2014. However, management believes that the Company will not have a significant impact on its financial position and results of its operations and cash flows as a result of this uncertainty.

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.

The following table shows the potentially outstanding dilutive common shares excluded from the diluted net loss per share calculation as they were anti-dilutive:

	Potentially Outstanding Dilutive Common Shares
	For the Interim Period Ended March 31, 2014		For the Interim Period Ended March 31, 2013
Convertible debentures	629,340,843		217,095
Stock options	2,308		-
Warrants issued with convertible debentures	-		-
Total potentially outstanding dilutive common shares	629,343,151		217,095

Cash Flows Reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent Events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently Issued Accounting Pronouncements

In January 2013, the FASB issued ASU No. 2013-01, " Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities  ". This ASU clarifies that the scope of ASU No. 2011-11, "  Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.  " applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in FASB Accounting Standards Codification or subject to a master netting arrangement or similar agreement. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.

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In February 2013, the FASB issued ASU No. 2013-02, " Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other   Comprehensive   Income.  " The ASU adds new disclosure requirements for items reclassified out of accumulated other comprehensive income by component and their corresponding effect on net income. The ASU is effective for public entities for fiscal years beginning after December 15, 2013.

In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU No. 2013-04, " Liabilities (Topic 405): Obligations Resulting from Joint   and   Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date ."  This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013.

In March 2013, the FASB issued ASU No. 2013-05, " Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity  ." This ASU addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.

In March 2013, the FASB issued ASU 2013-07, “Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting.”   The amendments require an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity’s governing documents from the entity’s inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity’s inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity’s expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Note 3 – Going Concern

The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the financial statements, the Company had an accumulated deficit at March 31, 2014, a net loss and net cash used in operating activities for the fiscal year then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to commence operations and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations.  Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Note 4 – Investment in Minority Interest

Effective July 22, 2013 the Company entered into a Securities Purchase Agreement (the “Agreement”) with FAL Minerals LLC (“FAL”).  Pursuant to the Agreement the Company agreed to purchase from FAL, newly issued membership interests of FAL, representing twenty percent (20%) of the issued and outstanding membership interests of FAL (post issuance) (the “Interests”).  The purchase price for the Interests is One Hundred Thousand ($100,000) Dollars, payable in twelve equal installments of $8,333 commencing August 1, 2013.  The Interests will be issued pro rata (1/12 each month) by FAL to the Company upon each month closing.  Pursuant to the Agreement the Company will receive fifteen (15%) percent of the gross proceeds from all royalty payments made to FAL.  Such royalty payments are payable quarterly.

The Company accounts for its investment in FAL under the cost method and values its investment at the lower of cost or market. Upon investing $100,000, the Company will account for its investment under the equity method and will record its proportionate share of net income as gain or loss.

As of March 31, 2014, the Company had a total of $55,000 investment in FAL.

Note 5 – Property and Equipment

Property and equipment was fully depreciated as of the end of the calendar quarter.

Depreciation expense was $-0- and $111 for the three month interim period ended March 31, 2014 and 2013, respectively.

Depreciation expense was $192 and $333 for the six month interim period ended March 31, 2014 and 2013, respectively.

Note 6 – Advances Payable

As of   March 31, 2014 and June 30, 2013, the Company had a total of $42,940 in advances payable to unrelated third parties for expenses paid on behalf of the Company in conjunction with the rescinded acquisition agreement.  These balances are non-interest bearing and due on demand.

Note 7 – Convertible Debentures

Convertible debentures to related parties consisted of the following:

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The June 20, 2012, July 23, 2012, August 1, 2012, August 21, 2012 September 26, 2012, October 18, 2012, November 1, 2012, November 18, 2012 and December 1, 2012 notes are convertible into common stock of the Company at sixty percent (60%) of the average of two (2) low closing bid prices for the five (5) trading days prior to conversion of the Notes.

The January 1, 2013, January 25, 2013, February 1, 2013 $20,000, February 20, 2013, March 1, 2013 $20,000, March 8, 2013, April 1, 2013 $20,000, April 9, 2013, May 1, 2013 $20,000, June 1, 2013 $20,000, June 13, 2013, July 1, 2013, July 2, 2013, July 24, 2013, August 1, 2013, August 15, 2013, September 1, 2013, September 17, 2013, October 1, 2013, October 6, 2013 and October 23, 2013 are convertible into common stock of the Company at fifty percent (50%) of the average of the low closing bid prices for the twenty (20) or thirty (30) trading days prior to conversion of the Notes.

The November 1, 2013, November 5, 2013, December 1, 2013, December 6, 2013, December 19, 2013, January 1, 2014, Febraury 1, 2014, February 20, 2014, March 1, 2014 and March 17, 2014 notes are convertible into common stock of the Company at fifty percent (50%) of the average of the low closing bid prices for the thirty (30) trading days prior to conversion of the Notes.

Note 8 – Derivative Financial Instruments

The Company’s derivative financial instruments are embedded derivatives associated with the Company’s convertible debentures. The Company’s convertible debentures issued to institutional investors are hybrid instruments which contain an embedded derivative feature which would individually warrant separate accounting as a derivative instrument under Paragraph 815-10-05-4.  The embedded derivative feature includes the conversion feature and the warrants attached to certain Notes. Pursuant to Paragraph 815-10-05-4, the value of the embedded derivative liability have been bifurcated from the debt host contract and recorded as a derivative liability resulting in a reduction of the initial carrying amount (as unamortized discount) of the notes, which are amortized as debt discount to be presented in other (income) expenses in the statements of operations using the effective interest method over the life of the notes.

The compound embedded derivatives within the notes have been valued using a layered discounted probability-weighted cash flow approach, recorded at fair value at the date of issuance; and marked-to-market at each reporting period end date with changes in fair value recorded in the Company’s statements of operations as “change in the fair value of derivative instrument”.

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Summary of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets:

	Carrying			Fair Value Measurement Using
	Value			Level 1			Level 2			Level 3			Total
Derivative liabilities on conversion feature	$	648,334		$	-		$	-		$	648,334		$	648,334
Derivative liabilities on warrants		3,923			-			-			3,923			3,923
Total derivative liabilities	$	652,257		$	-		$	-		$	652,257		$	652,257

Summary of the Changes in Fair Value of Level 3 Financial Liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the fiscal year ended March 31, 2014:

		Fair Value Measurement Using Level 3 Inputs
		Derivative liability			Total
Balance, June 30, 2013		$	565,007		$	565,007
Purchases, issuances and settlements			(101,544)			(101,544)
Total gains or losses (realized/unrealized)
Included in net (income) loss			188,794			188,794
Included in other comprehensive income			-			-
Transfers in and/or out of Level 3			-			-
Balance, March 31, 2014		$	652,257		$	652,257

Note 9 – Notes Payable - Related Party

Between April 1, 2011 and June 24, 2011, the President and Chief Operating Officer of the Company, Phillip Jennings, advanced the Company $77,884 in eight installments in the form of a promissory note (“Jennings Note”).  The Jennings Note was due on demand and had borne interest at 8% per annum.  On November 8, 2012, the Company issued promissory notes with its then Chief Executive Officer, Chief Financial Officer, Legal Counsel and Accountant totaling $105,380, which were originally recorded as accounts payable. In addition, the Jennings Note was converted into these notes. With accrued interest included, the notes total $186,043 at March 31, 2014. The notes mature on December 31, 2014 and bear interest at 1% per annum.

On July 1, 2013 the Company issued to its former Chief Executive Officer a Promissory Note in the principal amount of Twenty Four Thousand Dollars ($24,000), with no interest. Principal is payable on demand.

On January 28,2014 the Company issued to its former Chief Executive Officer a Promissory Note in the principal amount of Twelve Thousand Dollars ($12,000), with no interest. Principal is payable on demand.

On January 28, 2014, the former Chief Executive Officer converted the entire note balance into 36,000,000 shares of common stock

The Notes, including accrued interest total $186,568.

Note 10 – Equity Purchase Agreement

Equity Purchase Agreement

On April 7, 2014 the Company entered into an Equity Purchase Agreement with the institutional investor.  The following is a summary of the material terms of the Equity Purchase Agreement, and does not purport to be complete, and is qualified in its entirety by reference to the full text of the Equity Purchase Agreement, a copy of which is filed as an Exhibit to the April 11 Form 8-K and is incorporated herein by reference. Pursuant to the Equity Purchase Agreement the Company agreed to sell and the institutional investor agreed to purchase up to $5,000,000 of the Company’s Common Stock at a price equal to ninety percent (90%) of the lowest closing price of the Company’s common stock on any trading day during the ten trading days immediately following the clearing date associated with the applicable put notice.  The Company also issued the institutional investor  a promissory note in the principal amount of $25,000 payable in six months.

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Registration Rights Agreement

On April 7, 2014 the Company entered into a Registration Rights Agreement with the institutional investor.  The following is a summary of the material terms of the Registration Rights Agreement, and does not purport to be complete, and is qualified in its entirety by reference to the full text of the Equity Purchase Agreement, a copy of which is filed as an Exhibit to the April 11 Form 8-K  Pursuant to this agreement the Company agreed, within one hundred twenty (120) days to file a registration statement with the Securities and Exchange Commission with respect to the securities set forth in the Equity Purchase Agreement.

Note 11 – Stockholders’ Deficit

Shares Authorized

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Two Hundred and Sixty Million (260,000,000) shares of which Ten Million (10,000,000) shares shall be Preferred Stock, par value $0.001 per share, and Two Hundred and Fifty Million (250,000,000) shares shall be Common Stock, par value $0.001 per share.

During the current fiscal year, a majority of the shareholders amended ARTICLE FOUR of the Amended Articles of Incorporation of the Corporation in order to increase the number of shares of authorized capital stock to 10,010,000,000 shares, of which 10,000,000,000 shall be common stock and 10,000,000 shall be preferred stock of the Corporation, and (ii) effect a reverse stock split (the “ Reverse Stock Split ”) of our common stock at a ratio determined by our Board of Directors up to 1 for 1,000 such number consisting of only whole shares by filing with the Secretary of State of Nevada the Amended Articles of Incorporation.

Common Stock

The following stock issuances are listed taking into account the 1:1,000 reverse split.

In connection with the issuance of the convertible debentures during the fiscal year ended June 30, 2012, the Company issued 450 shares of its common stock valued at $0.08 per share, the price of the Company’s common stock on the date of issuance or $36,000, which was recorded as interest expense.

On August 2, 2012, the Company issued 4,372 shares of its common stock for the conversion of $26,300 of convertible debt and $4,307 of accrued interest.

On November 1, 2012, the Company issued 4,373 shares of its common stock for the conversion of $7,880 of convertible debt and $997 of accrued interest.

On November 21, 2012, the Company issued 4,371 shares of its common stock for the conversion of $3.300 of convertible debt and $219 of accrued interest.

On December 12, 2012, the Company issued 4,373 shares of its common stock for the conversion of $2,525 of convertible debt and $230 of accrued interest.

On January 3, 2013, the Company issued 4,371 shares of its common stock for the conversion of $1,912 of convertible debt and $230 of accrued interest.

On January 14, 2013, the Company issued 4,350 shares of its common stock for the conversion of $2,000 of convertible debt and $132 of accrued interest.

On January 29, 2013, the Company issued 6,582 shares of its common stock for the conversion of $2,600 of convertible debt and $164 of accrued interest.

On February 13, 2013, the Company issued 7,655 shares of its common stock for the conversion of $2,515 of convertible debt and $164 of accrued interest.

On February 26, 2013, the Company issued 792 shares of its common stock for the conversion of $968 of convertible debt and $3 of accrued interest.

On February 26, 2013, the Company issued 6,871 shares of its common stock for the conversion of $5,250 of convertible debt and $3,167 of accrued interest.

On March 7, 2013, the Company issued 7,439 shares of its common stock for the conversion of $19,750 of convertible debt and $39 of accrued interest.

On March 25, 2013, the Company issued 9,918 shares of its common stock for the conversion of $15,925 of convertible debt and $3,167 of accrued interest.

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On April 8, 2013, the Company issued 8,669 shares of its common stock for the conversion of $9,075 of convertible debt and $27.85 of accrued interest.

On July 11, 2013, the Company issued 11,756 shares of its common stock for the conversion of $7,055 of convertible debt and $2,115 of accrued interest.

On July 18, 2013, the Company issued 11,851 shares of its common stock for the conversion of $9,200 of convertible debt and $44 of accrued interest.

On July 26, 2013, the Company issued 13,308 shares of its common stock for the conversion of $8,745 of convertible debt and $38 of accrued interest.

On August 27, 2013, the Company issued 6,293 shares of its common stock for the conversion of $1,875 of convertible debt and $328 of accrued interest.

On September 16, 2013, the Company issued 17,581 shares of its common stock for the conversion of $6,125 of convertible debt and $28 of accrued interest.

On October 2, 2013, the Company issued 32,000 shares of its common stock for the conversion of $8,000 of convertible debt.

On October 7, 2013, the Company issued 19,092 shares of its common stock for the conversion of $4,477 of convertible debt, $11 of accrued interest and $275 in legal fees.

On October 7, 2013, the Company issued 14,600 shares of its common stock for the conversion of $3,275 of convertible debt and $275 in legal fees.

On October 8, 2013, the Company issued 20,000 shares of its common stock for the conversion of $5,000 of convertible debt.

On October 16, 2013, the Company issued 25,000 shares of its common stock for the conversion of $2,500 of convertible debt.

On October 16, 2013, the Company issued 15,000 shares of its common stock for the conversion of $1,500 of convertible debt.

On October 16, 2013, the Company issued 23,950 shares of its common stock for the conversion of $2,120 of convertible debt and $275 in legal fees.

On October 22, 2013, the Company issued 50,000 shares of its common stock for the conversion of $5,000 of convertible debt.

On October 24, 2013, the Company issued 48,800 shares of its common stock for the conversion of $4,605 of convertible debt and $275 in legal fees.

On October 28, 2013, the Company issued 25,000 shares of its common stock for the conversion of $2,500 of convertible debt.

On November 1, 2013, the Company issued 48,800 shares of its common stock for the conversion of $5,275 of convertible debt and $375 in legal fees.

On November 13, 2013, the Company issued 50,000 shares of its common stock for the conversion of $4,725 of convertible debt and $275 in legal fees.

On December 6, 2013, the Company issued 94,000 shares of its common stock for the conversion of $4,700 of convertible debt.

On January 6, 2014, the Company issued 720,000 shares of its common stock to its management team for compensation

On January 10, 2014, the Company issued 285,777 shares of its common stock for a prior conversion

On January 13, 2014, the Company issued 23,177 shares of its common stock for a prior conversion

On January 16, 2014, the Company issued 50,000 shares of its common stock for a prior conversion

On January 30, 2014, the Company issued 2,075,000 shares of its common stock for the conversion of $10,000 of convertible debt and $375 in legal fees.

On January 30, 2014, the Company issued 1,590,000 shares of its common stock for the conversion of $7,575 of convertible debt. and $375 in legal fees.

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On February 4, 2014, the Company issued 166,667 shares of its common stock for the conversion of $5,000 of convertible debt.

On February 11, 2014, the Company issued 3.242,857 shares of its common stock for the conversion of $5,400 of convertible debt and $275 in legal fees.

On February 20, 2014, the Company issued 4,171,429 shares of its common stock for the conversion of $7,025 of convertible debt and $275 in legal fees.

On February 20, 2014, the Company issued 1,428,571 shares of its common stock for the conversion of $2,500 of convertible debt.

On February 20, 2014, the Company issued 53,333 shares of its common stock for a prior conversion

On February 27, 2014, the Company issued 4,081,326 shares of its common stock for the conversion of $6,742.32 of convertible debt and $400 in legal fees.

On March 5, 2014, the Company issued 2,055,555 shares of its common stock for a prior conversion

On March 12, 2014, the Company issued 4,368,000 shares of its common stock for the conversion of $5,085 of convertible debt and $375 in legal fees.

On March 26, 2014, the Company issued 5,965,217 shares of its common stock for the conversion of $6,585 of convertible debt and $275 in legal fees.

2010 Stock Incentive and Compensation Plan as Amended

Adoption of 2010 Stock Incentive and Compensation Plan

On January 7, 2010, the Board of Directors of the Company adopted the 2010 Stock Incentive and Compensation Plan, whereby the Board of Directors authorized 8,000,000 shares of the Company’s common stock to be reserved for issuance (the “2010 Stock Incentive Plan”). The purpose of the 2010 Stock Incentive Plan is to advance the interests of the Company by providing an incentive to attract, retain and motivate highly qualified and competent persons who are important to the Company and upon whose efforts and judgment the success of the Company is largely dependent. Grants to be made under the 2010 Stock Incentive Plan are limited to the Company’s employees, including employees of the Company’s subsidiaries, the Company’s directors and consultants to the Company. The recipient of any grant under the 2010 Stock Incentive Plan, and the amount and terms of a specific grant, is, determined by the board of directors.  Should any option granted or stock awarded under the 2010 Stock Incentive Plan expire or become un-exercisable for any reason without having been exercised in full or fail to vest, the shares subject to the portion of the option not so exercised or lapsed will become available for subsequent stock or option grants.

January 7, 2010 Issuance

On January 7, 2010, the board approved and granted options for employees to purchase 2,750,00 shares of the Company's common stock with exercise price at $0.56 per share expiring two (2) years from the date of grant exercisable, in whole or in part, according to the following vesting schedule:

·

Twenty five percent (25%) of the total number of shares granted under the option scheme vested immediately as January 7, 2010, the date they were approved at the board meeting; a further twenty-five percent (25%) were vested on July 6, 2010.

·

The remaining Fifty percent (50%) of the shares granted under the option scheme shall vest pro rata every six (6) months, on the same date of the month as the date of grant of the option, over the following twelve (12) months of continuous service as a director, employee or consultant.

The Company estimated the fair value of option granted, estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions:

		January 7, 2010
Expected life (year)		2.00
Expected volatility (*)		110.00
Risk-free rate(s)		0.5
Expected dividends		0.00

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*As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price.  The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within gold mining industry which the Company plans to engage in to calculate the expected volatility.  The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

At the Balance Sheet date, these options had expired worthless

April 19, 2010 Issuance

On April 19, 2010, the board approved and granted an additional 50 common shares with an exercise price of $1.00 per share expiring two (2) years from the date of grant exercisable, in whole or in part, to the internal general counsel.

The April 2010 options shall be exercisable, in whole or in part, according to the following vesting schedule:

·

Twenty five percent (25%) of the total number of shares granted under the option plan on July 7, 2010, the date they were approved at the board meeting; a further twenty-five percent (25%) on October 19, 2011 and

·

The remaining fifty percent (50%) of the shares granted under the option plan shall vest pro rata every six (6) months, on the same date of the month as the date of grant of the option, over the following twelve (12) months of continuous service as a director.

At the Balance Sheet date, these options had expired worthless

July 1, 2010 Issuance

On July 1, 2010, the board approved and granted options for a director to purchase 500,000 shares of the Company's common stock with exercise price at $0.56 per share expiring two (2) years from the date of grant exercisable, in whole or in part, according to the following vesting schedule:

·

Twenty five percent (25%) of the total number of shares granted under the option scheme vested immediately as July 1, 2010, the date they were approved at the board meeting; a further twenty-five percent (25%) on January 1, 2011.

·

The remaining fifty percent (50%) of the shares granted under the option scheme shall vest pro rata every six (6) months, on the same date of the month as the date of grant of the option, over the following twelve (12) months of continuous service as a director.

The Company estimated the fair value of option granted, estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	July 1, 2010
Expected life (year)	1.99
Expected volatility (*)	110.00
Risk-free rate(s)	0.5
Expected dividends	0.00

* As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within gold mining industry which the Company plans to engage in to calculate the expected volatility.  The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

At the Balance Sheet date, these options had expired worthless

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Summary of the Company’s Stock Option Activities

The table below summarizes the Company’s stock option activities:

		Number of Option Shares		Exercise Price Range Per Share			Weighted Average Exercise Price			Fair Value at Date of Grant			Aggregate Intrinsic Value
Balance, June 30, 2012		500,000		$	0.56		$	0.56		$	-		$	-
Granted		-			-			-			-			-
Exercised		-			-			-			-			-
Expired		(500,00)			0.56			0.56			-			-
Balance, June 30, 2013		-		$	-		$	-		$	-		$	-
and March 31, 2014		-			-			-			-			-
Granted		-			-			-			-			-
Exercised		-			-			-			-			-
Expired		-			-			-			-			-
Balance, March 31, 2014		-		$	-		$	-		$	-		$	-
Vested and exercisable, March 31, 2014		-		$	-		$	-		$	-		$	-
Unvested, March 31, 2014		-		$	-		$	-		$	-		$	-

Note 12 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent events to be disclosed as follows:

Issuance of Common Stock Upon conversion of debt

Between the balance sheet date and the date of this report, the Company issued 94,032,015 shares for the conversion of $67,989 of convertible debt, $4,767 of accrued interest and $7,648 of legal and transfer agent fees

Issuance of Convertible Debt

On April 1, 2014, the Company issued a Convertible Promissory Note in the principal amount of Twenty Thousand Dollars ($20,000), without interest and a maturity date of September 30, 2014. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

On May 1, 2014, the Company issued a Convertible Promissory Note in the principal amount of Twenty Thousand Dollars ($20,000), without interest and a maturity date of  October 31, 2014. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

On May 3, 2014 the Company issued a Convertible Promissory Note in the principal amount of Four Thousand Five Hundred Dollars ($4,500), with and a maturity date of January 31, 2015. The Principal shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

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On May 5, 2014 the Company issued a Convertible Promissory Note in the principal amount of Fifteen Thousand Dollars ($15,000), with ten percent, 10%, interest and a maturity date of January 31, 2015. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

On May 13, 2014 the Company issued a Convertible Promissory Note in the principal amount of Twenty Five Thousand Dollars ($25,000), with ten percent, 10%, interest and a maturity date of January 31, 2015 for $22,500 in cash. The Company will amortize the $2,500 difference between cash received and the balance of the Note as an Original Issue Discount (“OID”) and will amortize the OID over the life of the Note. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Management's Discussion and Analysis of Financial Condition and Results of Operations

We incorporated as Dynamic Alert Limited (referred to herein as “Brazil Gold”, “we”, “us”, “our” and similar terms) on June 17, 2004, in the State of Nevada. On December 22, 2009, as amended on February 25, 2010, pursuant to the provisions of Articles of Merger, Dynamic Alert Limited, and its wholly-owned subsidiary, Brazil Gold Corp., a Nevada corporation which was incorporated on November 3, 2009, were merged, with Dynamic Alert Limited (“the Company”) being the surviving entity. In connection with such merger, our name was changed from Dynamic Alert Limited to Brazil Gold Corp. on March 15, 2010.  On March 15, 2010, the Company’s ticker symbol on OTCBB was changed to “BRZG”. Our principal executive offices are located at 850 3   ^rd    Avenue, NYC, Suite 16C, NY  10022.  Our telephone number is 212-994-9875.  Our fiscal year end is June 30.

Since inception until November 2009, we attempted to build a business that assisted consumers with their security needs.  Our goal had been to help our customers create and implement a personalized security plan by offering a three-fold service.  Our first focus was to assist our clients in developing personalized security plans.  Our second focus was to source and market personal security products.  Our third focus was to provide personal protection on an as-needed basis.  We were actively seeking to add new products and/or services that we could offer.  The results were lackluster, so it was decided to change our business focus and look for other opportunities and discontinue the security operation with effect from January 1, 2010.  Therefore, we started reviewing mineral exploration and other opportunities with the objective of bringing revenue to the Company.

On April 7, 2014, the Company made a change in business direction which were disclosed in a Form 8-K filing with the Securities and Exchange Commission (“SEC”) on April 11, 2014 (the “April 11 8-K.”)    The April 11 8-K disclosed, among other recent developments, the following:

·

the filing of Certificates of Designation with the Nevada Secretary of State creating two new classes of preferred stock, series B 8% convertible preferred stock and series C 8% convertible preferred stock;

·

the resignation of Conrad Huss as the Company’s Chief Executive Officer and Secretary, but remaining as a director and the Company’s President;

·

the election of Stephen Price and Gerard Daignault as directors of the Company and their appointments as the Chief Executive Officer and the Chief Financial Officer and Secretary of the Company, respectively;

·

the issuance of shares of series B preferred stock to Messrs. Price and Daignault for serving as officers and directors of the Company;

·

the entry into consulting agreements with An institutional investor and Adirondack Partners LLC to provide advisory services to the Company in exchange for shares of series C preferred stock;

·

the entry into an Equity Purchase Agreement and Registration Rights Agreement with An institutional investor in connection with a future financing of up to $5.0 million in shares of the Company’s common stock;

·

the retirement of the Company’s existing shares of series A preferred stock;

·

the authorization to form a subsidiary to participate in the livestock industry;

·

the authorization to change the corporate name of the Company to Conexus Corp.; and

·

the authorization to move the Company’s principal executive office to Hendersonville, Tennessee.

The Company subsequently filed a current report on Form 8-K on May 4, 2014 to report a change in the Company’s certifying accountant and a current report on Form 8-K on May 5, 2014 to provide more information about the Company’s proposed beef cattle operations.   

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Material Changes in Financial Condition

At March 31, 2014, we had a working capital deficit of ($1,460,060), compared to a working capital deficit of ($1,016,191), at June 30, 2013.  At March 31, 2014, our total assets consisted of cash of $10,127  and investment in an unconsolidated subsidiary of $55,000.  This compares with total assets at June 30, 2013 consisting of cash of $5,552, and capital assets of $192.  

At March 31, 2014, our total current liabilities increased to $1,470,187 from $1,021,743 at June 30, 2013, an increase of $448,444.  The increase was due to an increased balance of convertible debentures of $351,939, derivative liability of $87,250 and accrued expenses of $9,255.

Since our existing cash balance is $10,127, we currently do not have sufficient funds to carry out normal operations over the next three (3) months.  Our short and long-term survival is dependent on funding from sales of securities as necessary or from shareholder loans, and thus, to the extent that we require additional funds to support our operations or the expansion of our business, we may attempt to sell additional equity shares or issue debt.  Any sale of additional equity securities will result in dilution to our stockholders.  Recent events in worldwide capital markets may make it more difficult for us to raise additional equity or capital.  There can be no assurance that additional financing, if required, will be available to us or on acceptable terms.

Result of Operations

We recognized nil revenue for the three-month and nine month periods ended March 31, 2014 and March 31, 2013

We have recognized $45,964 in revenue from inception.  Our short and long term survival is dependent on funding from sales of securities as necessary or from shareholder loans.

Material Changes in Results of Operations

For The Three Months Ended March 31, 2014, Compared To The Three Months Ended March 31, 2013

There were no revenues during the three months ending March 31, 2014 and the three months ended March 31, 2013.

For the three months ended March 31, 2014, operating expenses were $126,712 compared to $91,111 during the three months ended March 31, 2013.  The increase of $35,601 was principally due to the following:

a.

Rent expense was $6,831 higher due to the lease arrangement in New York City;

b.

Compensation expense was $22,725 higher due to payments to our former Chief Executive Officer, who was hired in January 2013;

c.

General and administrative expenses were $6,295 higher due principally to greater transfer agent fees, SEC filing fees and insurance expenses.

During the three month period ended March 31, 2014, we recognized a net loss of $3,538,490 compared to a net loss of $501,668 for the three-month period ended March 31, 2013.  The increased loss of $3,036,822 was due principally to an increased loss on the settlement of debt of $2,756,219, increased loss from the fair value of the derivative liability of $103,669, greater interest expense of $95,898 principally due to greater amortization of debt discount into interest expense and increased derivative expense on new debt issuances of $45,433.

For The Nine Months Ended March 31, 2014, Compared To The Nine Months Ended March 31, 2013

There were no revenues during the six months ending March 31, 2014 and the six months ended March 31, 2013.

For the nine months ended March 31, 2014, operating expenses were $407,968 compared to $283,110 during the nine months ended March 31, 2013.  The increase of $124,858 was principally due to the following:

a.

Consulting expense was $60,000 higher due to the beginning of the Consulting agreement in the second quarter of Fiscal 2013;

b.

Rent expense was $25,135 due to the lease arrangement in New York City;

c.

Professional fees were $96,172 lower due to reduced audit and legal fees;

d.

Compensation expense was $45,225 higher due to payments to our former Chief Executive Officer, who was hired in January 2013;

e.

General and administrative expenses were $90,670 higher due principally to fees for a financing transaction, greater transfer agent fees and other expenses.

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During the nine month period ended March 31, 2014, we recognized a net loss of $4,233,966 compared to a net loss of $532,895 for the nine month period ended March 31, 2013.  The increased loss of $3,701,071 was as a result of an increased loss on the settlement of debt of $3,051,659, greater interest expense of $283,138 principally due to greater amortization of debt discount into interest expense, reduced net income from the change in the fair value of the derivative liability of $178,315 and higher derivative expenses on new debt issuances of $63,101.  

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act).  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

ITEM 4T.  CONTROLS AND PROCEDURES

Management's Quarterly Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the quarter ended March 31, 2014.  We believe that our internal control over financial reporting was not effective due to material weaknesses in the system of internal control.  Specifically, management identified the following control deficiency:

·

The Company uses accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  REMOVED AND RESERVED

None.

ITEM 5.  OTHER INFORMATION

Entrance into a Material Agreement

On September 24, 2013, the Circuit Court in the Second Judicial District for Leon County, Florida entered an order approving the stipulation of the parties (the "Stipulation") in the matter of ASC Recap LLC ("ASC") v. Brazil Gold Corp . (the "Company"). Under the terms of the Stipulation, the Company agreed to issue to ASC, as settlement of certain liabilities owed by the Company in the aggregate amount of $298,602.10 (the "Claim Amount"), shares of common stock (the "Settlement Shares") as well as a promissory note in the principal amount of the $50,000.00 maturing six months from the date of issuance, as a fee to ASC (‘Fee Note”).  ASC had purchased the liabilities from the Company’s creditors (both affiliated and non-affiliated) with a face amount of $298,602.10. The total amount of liabilities, as reported by the Company in this Form 10-Q for the quarter ended March 31, 2014, was $1,656,755, inclusive of the $348,602.10 representing the Claim Amount and the Fee Note.

Pursuant to the Stipulation entered into by the parties, the Company agreed to issue to ASC, in one or more tranches as necessary, that number of shares of common stock sufficient to generate net proceeds (less a discount of twenty five percent (25%)) equal to the Claim Amount, as defined in the Stipulation.  The parties reasonably estimated that, should the Company issue Settlement Shares sufficient to satisfy the entire Claim Amount, the fair market value of such Settlement Shares and all other amounts to be received by ASC would equal approximately $465,000.  Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by ASC shall not exceed 9.99% of the Company's outstanding common stock at any one time.

In connection with the issuance of the Settlement Shares, the Company may rely on the exemption from registration provided by Section 3(a)(10) under the Securities Act.  To date, the Company has not issued any Settlement Shares to ASC.  As such, the full Claim Amount remains outstanding and payable to ASC.   Based upon the reported closing trading price of the Company’s common stock on April 30, 2014 of $0.0052 per share, if all $465,000 worth of liabilities were satisfied pursuant to the Stipulation through the issuance of  common stock, the Company would issue an aggregate of 89,423,077 shares.

Reverse Split

On January 7, 2014, the Company effectuated a 1:1,000 reverse split.  All information has been restated to reflect this reverse split.

ITEM 6.  EXHIBITS

Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein.

Exhibit Number		Description
31		CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. § 1350, SECTION 302
31.1		CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. § 1350, SECTION 302
32.1		CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. § 1350, SECTION 906
32.1		CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. § 1350, SECTION 906

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on this 14th day of  May, 2014.

BRAZIL GOLD CORP.

Date: May 14, 2014	By:	/s/ Steven Price
	Name:	Steven Price
	Title:	Chief Executive Officer

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