UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q/A
(Amendment number 2)
_________________
? QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30th 2012
or
? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _ to __
_________________
ELRAY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
_________________
Nevada | 000-52727 | 98-0526438 |
(State or Other Jurisdiction | (Commission | (I.R.S. Employer |
of Incorporation or Organization) | File Number) | Identification No.) |
575 Madison Avenue, Suite 1006, New York, NY 10022
(Address of Principal Executive Offices) (Zip Code)
(917) 775-9689
(Registrant’s telephone number, including area code)
N/A
(Former name or former address and former fiscal year, if changed since last report)
_________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ? No ?
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ? 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.
Large accelerated filer ? | Accelerated filer ? | Non-accelerated filer ? | Smaller reporting company ? |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ? No ?
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ? Yes ? No
On June 30, 2012, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $4,537,140, based upon the closing price on that date of the Common Stock of the registrant on the OTC Bulletin Board system of $0.006. For purposes of this response, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The issuer had 948,078,879, 211,018,516, and 88,000,000 shares of common stock, Series A preferred stock, and Series B preferred stock, respectively, issued and outstanding as of August 1, 2012.
EXPLANATORY NOTE
Elray Resources, Inc. (the “Company”) is filing this Amendment No. 2 on Form 10-Q/A (this “Amendment No. 2”) to reflect the effects of reporting errors. These errors related to the discussion related to the transaction with Mr. Lao Sio I. The disclosure was stated in three different sections of the Form 10-Q as filed. In Part II. Other Information. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. The discussion was incorrectly stated.
The disclosure was incorrectly stated in one of the sections, In Part II. Other Information. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Additional clarification has also been included in ‘Part II. Other Information, Item 1. Legal Proceedings’, ‘Part I. Financial Information, Item 1. Note 7. Equity and Part I. Financial Information’, and ‘Part I. Item 2. Overview’, which is related to the transaction with Mr. Lao Sio I.
In addition, as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the Company's principal executive officer and principal financial officer have provided new Rule 13a-14(a) certifications and Section 1350 certifications in connection with this Amendment No. 2.
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TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ELRAY REOUSRCES, INC. |
(A Development Stage Company) |
Consolidated Balance Sheets |
(Unaudited) |
| | June 30, | | December 31, |
| | 2012 | | 2011 |
| | | | |
ASSETS | | | | | | | | |
| | | | | | | | |
Current assets: | | | | | | | | |
Cash | | $ | 1,681,234 | | | $ | 16,762 | |
Total assets | | $ | 1,681,234 | | | $ | 16,762 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | | | |
| | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 803,215 | | | $ | 587,073 | |
Accounts payable – related parties | | | 309,209 | | | | 314,298 | |
Notes payable | | | 292,929 | | | | 292,929 | |
Convertible notes payable, net of discounts | | | 2,069,116 | | | | 25,844 | |
Loans from shareholders | | | 55,991 | | | | 55,991 | |
Derivative liabilities - note conversion feature | | | 138,409 | | | | 28,595 | |
Total current liabilities | | | 3,668,869 | | | | 1,304,730 | |
Long-term note payable | | | 10,000 | | | | — | |
Total liabilities | | | 3,678,869 | | | | 1,304,730 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
| | | | | | | | |
Shareholders' deficit: | | | | | | | | |
Series A preferred stock, par value $0.001, 300,000,000 shares authorized, 211,018,516 shares issued and outstanding | | | 211,019 | | | | — | |
Common stock, par value $0.001, 1,500,000,000 shares authorized, 888,078,879 and 844,092,578 shares issued, and outstanding, respectively | | | 888,079 | | | | 844,093 | |
Additional paid-in capital | | | 5,081,853 | | | | 4,888,278 | |
Subscription receivable | | | (239,286 | ) | | | — | |
Accumulated deficit during the development stage | | | (7,939,300 | ) | | | (7,020,339 | ) |
Total shareholders' deficit | | | (1,997,635 | ) | | | (1,287,968 | ) |
Total liabilities and shareholders' deficit | | $ | 1,681,234 | | | $ | 16,762 | |
| | | | | | | | |
See accompanying notes to unaudited consolidated financial statements. | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
4
ELRAY RESOURCES, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
| | | | | | | | | | |
| | For the three months ended June 30, | | For the six months ended June 30, | | Inception (June 26, 2006) through June 30, |
| | 2012 | | 2011 | | 2012 | | 2011 | | 2012 |
| | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | |
General and administrative expenses | | $ | 444,640 | | | $ | 726,667 | | | $ | 732,245 | | | $ | 751,136 | | | $ | 2,053,345 | |
Impairment of intangibles | | | — | | | | — | | | | — | | | | — | | | | 3,463,668 | |
Compensation expense to related party for extinguishment of debt | | | — | | | | 161,000 | | | | — | | | | 1,177,000 | | | | 1,184,000 | |
Depreciation | | | — | | | | 6,936 | | | | — | | | | 13,896 | | | | 125,537 | |
Exploration | | | — | | | | — | | | | — | | | | — | | | | 857,738 | |
Loss on disposal of assets | | | — | | | | — | | | | — | | | | — | | | | 39,044 | |
Total operating expenses | | | 444,640 | | | | 894,603 | | | | 732,245 | | | | 1,942,032 | | | | 7,723,332 | |
Loss from operations | | | (444,640 | ) | | | (894,603 | ) | | | (732,245 | ) | | | (1,942,032 | ) | | | (7,723,332 | ) |
| | | | | | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | (111,431 | ) | | | — | | | | (179,967 | ) | | | — | | | | (201,786 | ) |
Interest income | | | 790 | | | | — | | | | 790 | | | | — | | | | 790 | |
Unrealized gain on derivative liability - note conversion feature | | | 1,948 | | | | — | | | | (7,539 | ) | | | — | | | | 1,028 | |
Loss on settlement of accounts payable | | | — | | | | — | | | | — | | | | — | | | | (16,000 | ) |
Total other income (expense) | | | (108,693 | ) | | | — | | | | (186,716 | ) | | | — | | | | (215,968 | ) |
Net loss | | $ | (553,333 | ) | | $ | (894,603 | ) | | $ | (918,961 | ) | | $ | (1,942,032 | ) | | $ | (7,939,300 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net loss per common share - basic and diluted | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding - basic and diluted | | | 873,622,308 | | | | 215,413,739 | | | | 858,857,443 | | | | 192,897,260 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements.
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ELRAY RESOURCES, INC. |
(A Development Stage Company) |
Consolidated Statements Of Cash Flows |
(Unaudited) |
| | | | | | |
| | | | | | Inception |
| | For the six Months Ended | | (June 26,2006) through |
| | June 30, | | June 30, |
| | 2012 | | 2011 | | 2012 |
Cash flows from operating activities: | | | | | | | | | | | | |
Net loss | | $ | (918,961 | ) | | $ | (1,942,032 | ) | | $ | (7,939,300 | ) |
Adjustments to reconcile net loss to cash used in operations activities: | | | | | | | | | | | | |
Depreciation | | | — | | | | 13,896 | | | | 125,537 | |
Loss on disposal of asset | | | — | | | | — | | | | 39,044 | |
Impairment of intangibles | | | — | | | | — | | | | 3,463,668 | |
Compensation expense to related party for extinguishment of debt | | | — | | | | 1,177,000 | | | | 1,184,000 | |
Stock-based compensation | | | 138,282 | | | | 720,000 | | | | 996,453 | |
Loss on settlement of accounts payable | | | — | | | | — | | | | 16,000 | |
Amortization of debt discount | | | 68,272 | | | | — | | | | 74,297 | |
Interest expense incurred on issuance of convertible debt | | | 37,465 | | | | — | | | | 49,627 | |
Unrealized gain on derivative liabilities - note conversion feature | | | 7,539 | | | | — | | | | (1,028 | ) |
Changes in operating assets and liabilities: | | | | | | | | | | | | |
Accounts payable and accrued liabilities | | | 216,964 | | | | 500 | | | | 417,196 | |
Accounts payable – related parties | | | (5,089 | ) | | | — | | | | 129,209 | |
Net cash used in operating activities | | | (455,528 | ) | | | (30,636 | ) | | | (1,445,297 | ) |
| | | | | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | | | | |
Purchase of mineral properties | | | — | | | | — | | | | (209,122 | ) |
Purchase of property and equipment | | | — | | | | — | | | | (164,538 | ) |
Cash acquired from share exchange transaction | | | — | | | | — | | | | 1,694 | |
Net cash used in investing activities | | | — | | | | — | | | | (371,966 | ) |
| | | | | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | | | | |
Proceeds from convertible notes payable | | | 2,100,000 | | | | — | | | | 2,125,000 | |
Proceeds from long-term notes payable | | | 10,000 | | | | — | | | | 10,000 | |
Proceeds from notes payable - related parties | | | — | | | | 46,000 | | | | 155,991 | |
Common stock issued for cash | | | 10,000 | | | | — | | | | 25,000 | |
Contributed capital | | | — | | | | — | | | | 1,182,506 | |
Net cash provided by financing activities | | | 2,120,000 | | | | 46,000 | | | | 3,498,497 | |
Net increase in cash | | | 1,664,472 | | | | 15,364 | | | | 1,681,234 | |
Cash at beginning of period | | | 16,762 | | | | — | | | | — | |
Cash at end of period | | $ | 1,681,234 | | | $ | 15,364 | | | $ | 1,681,234 | |
| | | | | | | | | | | | |