GTOR GGToor Inc (CE)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements relate to future events or our future financial performance and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited interim financial statements for the three months ended September 30, 2016 are expressed in US dollars and are prepared in accordance with generally accepted accounting principles in the United States of America. They reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of our interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for our fiscal year ending March 31, 2017. Our unaudited financial statements and notes included therein have been prepared on a basis consistent with and should be read in conjunction with our audited financial statements and notes for the year ended March 31, 2016, as filed in our annual report on Form 10-K.

The following discussion should be read in conjunction with our interim financial statements and the related notes that appear elsewhere in this quarterly report.

Business Overview

Gold Torrent, Inc. (the “Company”) was incorporated in Nevada as Celldonate Inc. on August 15, 2006. Historically we were in the business of developing mobile monetization solutions and applications. On September 10, 2013, certain shareholders, including the Company’s current Chief Executive Officer and its President, acquired approximately 53% of the Company’s issued and outstanding common stock resulting in a change of control. In connection with the transaction, Daniel Kunz was appointed Executive Chairman and Ryan Hart was appointed Chief Executive Officer and President. Thereafter the Company began to focus on acquiring ownership in late-stage exploration to development stage gold mining projects and/or royalty or streaming interests in low capital intensity, late-stage mining projects in North America. On January 16, 2014, the Company changed its name to “Gold Torrent, Inc.” in order to better reflect the direction and business of the Company. On that date, the Company also amended its Articles of Incorporation to (i) effectuate a reverse split of the Company’s common stock on a 1 for 5 basis; and (ii) increase the number of the Company’s authorized capital stock to 220,000,000 of which 200,000,000 were classified as common stock and 20,000,000 were classified as “blank check” preferred stock. On November 19, 2014, the Company entered into a Spin-off Agreement (the “Agreement”) with a company controlled by a former shareholder to sell all intellectual property and assets associated with the previous business of the Company, pursuant to which the Company was released from certain liabilities amounting to $420,653.

Going forward, the Company plans to focus on acquiring ownership in late-stage exploration to development-stage gold mining projects and/or royalty or streaming interests in low capital intensity, late-stage mining projects in North America but may pursue other profitable business opportunities that are available to us. Our main focus will be on identifying solid resources, and then utilize funding to bring a distressed asset into production, while either securing equity ownership or rights of title in the form of royalties. We are targeting pre-production resource projects that are well understood and show strong financial projections and low capital intensity, where we can apply capital to take the projects into production within 12-36 months.

On November 5, 2014, the Company signed an Exploration and Option to Enter Joint Venture Agreement with Miranda U.S.A., Inc. (“Miranda”) for the Willow Creek project in Alaska (the “Exploration and Option Agreement”). The Exploration and Option Agreement provides the Company with the right to earn up to 70% interest in a joint venture with Miranda Gold Corp. by making certain expenditures over the next three years totaling US$10 million. The initial principal terms of the Exploration and Option Agreement provided that the Company could earn an initial 20% interest in the Willow Creek gold project by incurring an initial work commitment of $1,070,000 before November 5, 2015 in costs related to exploration and development of the project. On September 2, 2015 Miranda granted the Company a six-month extension to the dates related to the earn-in. Therefore the Company could earn an initial 20% interest in the Willow Creek gold project by incurring an initial work commitment of $1,070,000 before May 5, 2016 in costs related to exploration and development of the project. While the Company shall be the manager of the initial joint venture, the management committee during the initial earn–in period shall be comprised of one nominee from the Company and one nominee from Miranda.

Upon completion of the initial work commitment, the Company can then either terminate the agreement or exercise an option to enter into a limited liability company (“JV”) with Miranda under the following terms:

The Company plans to complete initial engineering, resource, permitting, and economic studies during the initial earn-in period with a goal to bring the Lucky Shot project, beginning initially in the Coleman area gold resource area, into production as soon as possible. Expansion and exploration drilling is planned during construction and during commercial production and is expected to expand the initial known mineralization well beyond the current levels.

On January 15, 2015, and January 6, 2016 the Company paid $150,000 for a Lease Agreement between Miranda USA Inc. and a private company, and the amount was included in prepaid expenses and expensed over 12 months. In addition, the Company is committed to paying $150,000 every year on January 15. The purpose of this lease is to afford Miranda USA Inc. the opportunity to enter onto and produce minerals from certain patented and State of Alaska mining claims located in the State of Alaska. This lease is to be transferred by Miranda to the joint venture upon the Company earning its initial 20% interest.

On May 25, 2016, the Company received formal notice from Miranda that the Company has acquired a permanent 20% interest in the Lucky Shot project by virtue of meeting the initial earning required expenditures. The parties have agreed to postpone forming the joint venture company until the project finance discussions have been advanced to a point where the security and other requirements of the project investor can be determined.

The Company engaged third party consultants to complete a Preliminary Feasibility Study on its Lucky Shot Project. The Preliminary Feasibility Study for the Lucky Shot Project was completed June 30, 2016. The study concludes, “The Project is projected to have robust economics at the base case gold and silver prices of $1,175/oz and $15.00/oz respectively. The Project would be economically viable based on the parameters considered in this study. The base case scenario produces approximately 79,100 salable ounces of gold and 7,700 salable ounces of silver over a 4.5-year period. The Project is most sensitive to the gold price and to operating costs, but not as sensitive to capital costs. The base case economic analysis of the Project shows an After-Tax NPV-10 of $5.28 million using a 200-tonne/day crushing/grinding/gravity separation plant. The total required initial and working capital is $16.2 million and reaches pay-back in 1.9 years at an after tax IRR of 21.8%.”

On July 8, 2016, the Company purchased for $100,507 a 30-acre parcel of private, undeveloped land in Alaska near the Lucky Shot project for the siting of a gold recovery plant.

During the current quarter the Company was engaged in project finance efforts culminating in three project finance term sheets. On September 16, 2016 management entered into a 45-day exclusivity period with one of the short-listed prospective investors. The Company inspected the Coleman underground works with one prospective project investor at the Lucky Shot project as part of their due diligence period.

During August the Company conducted assessment work on the project’s State of Alaska claim blocks. One 640-foot surface core drill hole was completed in an area underlain by the eastern extension of the Murphy Vein block. This drill hole was designed to test the concept that the zone encountered in the 2005 – 2009 prior owner drilling program extends across the valley floor at a depth of about 350 feet. The success of the drill hole provides a much larger resource target area for future exploration drilling. Following are interval assays:

During August and September a third party consulting and engineering firm completed geotechnical and environmental baseline assessment work on the gold plant mill site including:

Detailed design and engineering work for the gold recovery plant was continued through the reporting period. The gravity only gold recovery plant design and final engineering is near complete and ready for construction drawings and plant to be completed. Logistics analyses have been completed for shipment of required plant equipment, materials and supplies from various vendors to the project site. The mine engineering work continued for the period on portal and surface logistics and requirements.

Planning continues for project permitting, staffing, training and project initiation and startup.

During the current period, we retained new legal counsel and terminated the services of our previous legal counsel. The termination resulted in the Company receiving a settlement of all past and current debt invoices, a mutual release from certain liabilities and obligations, and a $66,000 gain on the settlement of debt due to a negotiated discount.

The total of the $1,508,549 expended exploration and development costs, consists of the exploration and evaluation cost of $949,932 as of March 31, 2016, and the $558,617 development cost during the six months ending at September 30, 2016, consisting of: Mine Engineering cost (including prepaid) $142,355, Mill Engineering cost $97,133, Metallurgy cost $55,623, Geology cost $40,240, Exploration drilling cost $50,591, Permitting cost 14,843, development related travel cost $19,349, development related administration cost $14,787, development related rent cost $8,248, property lease cost $14,917, and Property Acquisition cost $100,531

Since our inception, we have incurred operational losses. We have also accumulated net losses since our inception and incurred a net loss for the most recent audited and interim periods. To finance our operations, we have received advances from related parties, loan payables and completed several rounds of financing, raising $2,595,350 through private placements of our common stock.

Results of Operations

For the Three Months ended September 30, 2016

During the three months ended September 30, 2016, we recognized $66,000 gain on settlement of debt, compared to $nil during the same period in the prior year.

During the three month period ended September 30, 2016, we recognized a loss from continuing operations of $403,245, compared to a loss of $268,617 during the same period in the prior year.

Our net loss per share for the three months ended September 30, 2016 was $0.03. Our net loss per share for the three months ended September 30, 2015 was $0.03,

During the three months ended September 30, 2016, we incurred total expenses of $469,245, compared to total expenses of $268,617 during the same period in the prior year.

Our total expenses during the three months ended September 30, 2016 consisted of $40,253 in accounting and legal fees, $251,778 in development costs, $121,250 in executive compensation, $45,139 in licenses and fees, $347 in bank charges and finance fees, $9,505 in travel costs, and $973 in office expenses. For the same period ended September 30, 2015, we incurred expenses of $28,000 in accounting and legal fees, $3,744 in advertising and promotion, $53,609 in exploration and evaluation costs, $121,250 in executive compensation, $43,854 in licenses and fees, $2,578 in bank charges and finance fees, $1,265 in travel costs, $8,850 in share-based payments, and $5,467 in office expenses. Our total expenses are significantly lower. The variation in expenses is mainly due to the higher development and exploration fees related to the Lucky Shot property start up.

For the Six Months ended September 30, 2016

During the six months ended September 30, 2016, we recognized $66,000 gain on settlement of debt, compared to $nil during the same period in the prior year.

During the six month period ended September 30, 2016, we recognized a loss from continuing operations of $748,010, compared to a loss of $700,134 during the same period in the prior year.

Our net loss per share for the six months ended September 30, 2016 was $0.06. Our net loss per share for the six months ended September 30, 2015 was $0.09,

During the six months ended September 30, 2016, we incurred total expenses of $814,010, compared to total expenses of $700,134 during the same period in the prior year.

Our total expenses during the six months ended September 30, 2016 consisted of $75,553 in accounting and legal fees, $414,360 in development costs, $242,500 in executive compensation, $50,499 in licenses and fees, $1,584 in bank charges and finance fees, $23,193 in travel costs, and $6,321 in office expenses. For the same period ended September 30, 2015, we incurred expenses of $42,500 in accounting and legal fees, $3,744 in advertising and promotion, $406,104 in exploration and evaluation costs, $121,250 in executive compensation, $85,015 in licenses and fees, $9,153 in bank charges and finance fees, $12,911 in travel costs, $8,850 in share-based payments, and $10,607 in office expenses. Our total expenses are similar. The variation in expenses is mainly due to the higher accounting and legal fees and decreased finance fees due to the payment of loans.

Liquidity and Capital Resources

We have limited operational history, and did not generate any revenues besides the gain on settlement of debt. As of September 30, 2016, we had $417,225 in cash and prepaid expenses, $502,341 in total liabilities and a working capital deficit of $85,116. As of September 30, 2016, we had an accumulated deficit of $2,791,267. We are dependent on funds raised through equity financing, related parties, and loan payables. Our operations were funded by equity financing and advances from shareholders and former and current related parties. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

During the six months ended September 30, 2016, we used $669,230 in cash on continuing operating activities, and paid back $93,793 in loans and received net $765,700 from cash provided by financing activities after the investment of land for $100,507 and gained cash of $96,470. During the same period in fiscal 2015 we used $381,149 in cash on continuing operating activities, and paid back $201,825 in loans and increased cash of $122,936

During the six months ended September 30, 2016, we received an additional $960,000 in proceeds from issuance of common stock, compared to proceeds of $705,900 in cash during the same period in fiscal 2015. For the period ending September 30, 2016 the Company has accrued interest of $936 (March 31, 2016 - $13,446).

During the six months ended September 30, 2016, our monthly cash requirements to fund our operating activities, including advances from former related parties, was approximately $111,538 compared to approximately $63,524 during the same period in fiscal 2015. In the absence of the continued sale of our common stock or advances from the former or new related parties, our cash of $361,785 as of September 30, 2016 is not sufficient to cover our current monthly burn rate for the foreseeable future and not enough to pay our current liabilities balance of $502,341. Until we are able to complete private and/or public financing as described below, we anticipate that we will rely on loans from shareholders to proceed with our plan of operations.

Our business strategy going forward is to acquire ownership in late-stage exploration to development-stage gold mining projects and/or royalty or streaming interests in low capital intensity, mining projects in North America. Our main focus will be on identifying solid resources, and then utilize funding to bring a distressed asset into production, while either securing equity ownership or rights of title in the form of royalties.

We expect to require approximately $5,000,000 in equity funds and up to $12 to $15 million in project funds to carry out our business strategy. Our plan of operations over the next 12 months is to obtain the necessary financing to earn at least an additional 25% interest in the Lucky Shot project by expending $2.44 million and advance the project to production. We also are seeking financing to earn the full 70% interest available. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.

Future Financings

We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our securities, loans and advances from current related parties to fund our operations. We anticipate that we will incur substantial losses for the foreseeable future, and we are dependent upon obtaining outside financing to carry out our operations. Our unaudited financial statements for the three months ended September 30, 2016 have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.

We will require approximately $5,000,000 over the next 12 months in order to enable us to proceed with our plan of operations, including paying our ongoing expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we intend to raise the balance of our cash requirements for the next 12 months from private placements, advances from related parties or possibly a registered public offering (either self-underwritten or through a broker-dealer), or from third party investors including streaming, royalty and lending investors. If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. On September 16, 2016 we signed a non-binding term sheet with a prospective project investor that has a 45-day exclusivity period ending October 31 for Lucky Shot project finance. On October 6 the Company accompanied a prospective investor to the Coleman underground workings and to the various surface sites on a due diligence visit in Alaska. There is no guarantee that any financing will be available to us or if available, on terms that will be acceptable to us.

If we are unable to obtain the necessary additional financing, then we plan to reduce the amounts that we spend on our operations so as not to exceed the amount of capital resources that are available to us. If we do not secure additional financing our current cash reserves and working capital will not be sufficient to enable us to sustain our operations for the next 12 months, even if we do decide to scale back our operations.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Critical Accounting Policies

Our unaudited interim financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our unaudited interim financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management.

Foreign Currency Translation

Our unaudited financial statements are presented in United States dollars. Transactions in currencies other than the U.S. dollar are translated into U.S. dollars at the exchange rate in effect at the balance sheet date for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Expenses are translated at the average rates for the period, excluding amortization, which is translated on the same basis as the related assets. Resulting translation gains or losses are reflected in net loss.

Share-Based Payments

The Company records all share-based payments at fair value. Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized through profit or loss over the vesting period, described as the period during which all the vesting conditions are to be satisfied.

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model.

At each balance sheet date, the amount recognized as an expense is adjusted to reflect the actual number of stock options expected to vest. On the exercise of stock options, common stock is recorded for the consideration received and for the fair value amounts previously recorded to contributed surplus. The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based payments.

Recent Accounting Guidance Adopted

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Inflation

The amounts presented in the unaudited interim financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.