UNITED STATES

SECURITIES AND EXCHANGE COMMIS SION

Washington, D.C. 20549


FORM 10-Q


   X .

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

For the quarterly period ended June 30, 2014


        .

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: 000-53661


NORTHSIGHT CAPITAL, INC.

(Exact name of issuer as specified in its charter)


Nevada

 

26-2727362

(State or Other Jurisdiction of incorporation or organization)

 

(I.R.S. Employer I.D. No.)


 

7740 East Evans Rd.

 

 

Scottsdale, AZ 85260

 

(Address of Principal Executive Offices)


 

(480) 385-3893

 

(Registrant’s Telephone Number, Including Area Code)


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  X . No       .


Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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  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 the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       . No  X .


APPLICABLE ONLY TO CORPORATE ISSUERS


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:


Class

 

Outstanding as of August 14, 2014

Common Capital Voting Stock, $0.001 par value per share

 

98,178,196 shares




FORWARD LOOKING STATEMENTS


This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.



PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.


June 30, 2014


C O N T E N T S


Condensed Balance Sheets

3

Condensed Statements of Operations

4

Condensed Statements of Cash Flows

5

Notes to Unaudited Condensed Financial Statements

6




2


NORTHSIGHT CAPITAL, INC.

(A Development Stage Company)

CONDENSED BALANCE SHEETS


 

June 30, 2014

 

 

 

 

(unaudited)

 

December 31, 2013

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

$

258,175

 

$

-

Prepaid expenses

 

22,000

 

 

-

Total Current Assets

 

280,175

 

 

-

 

 

 

 

 

 

Property and equipment, net of $-210- depreciation

 

4,005

 

 

 -

Web Development Costs, net of $-0- amortization

 

105,000

 

 

-

Domain Registrations, net of $-0- amortization

 

180,544

 

 

-

Total Assets

$

569,724

 

$

-

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued expenses

$

15,220

 

$

61,730

Accounts payable and accrued expenses – related party

 

35,784

 

 

-

Notes payable - related party

 

100,000

 

 

-

Total Current Liabilities

 

151,004

 

 

61,730

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

Preferred stock - 10,000,000 shares authorized having a par value of $.001 per share; 0 shares issued and outstanding (see Note 11)

 

-

 

 

-

Common stock - 200,000,000 shares authorized having a par value of

 

 

 

 

 

$.001 per share; 96,450,196 and 12,500,000 shares issued and

 

 

 

 

 

outstanding as of June 30, 2014 and December 31, 2013, respectively

 

96,450

 

 

12,500

Subscription receivable

 

 (20,000)

 

 

 (50,000)

Additional paid-in capital

 

2,280,069

 

 

717,419

Accumulated deficit during the development stage

 

 (1,937,799)

 

 

 (741,649)

Total Stockholders' Equity (Deficit)

 

418,720

 

 

 (61,730)

Total Liabilities and Stockholders' Equity (Deficit)

$

569,724

 

$

-


See accompanying notes to condensed financial statements.



3


NORTHSIGHT CAPITAL, INC.

(A Development Stage Company)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

From Inception

 

 

 

 

 

 

 

 

 

 

 

 

 

(May 21, 2008)

 

For the Three Months Ended

 

For the Six Months Ended

 

Through

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

2014

 

2013

 

2014

 

2013

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General administrative

 

101,534

 

 

497

 

 

109,668

 

 

1,679

 

 

175,670

Settlement Expense

 

932,500

 

 

-

 

 

932,500

 

 

-

 

 

932,500

Business plan development - related party

 

-

 

 

-

 

 

-

 

 

-

 

 

10,000

Consulting expense - related party

 

9,500

 

 

-

 

 

9,500

 

 

-

 

 

389,850

Executive compensation

 

6,000

 

 

-

 

 

6,000

 

 

-

 

 

11,100

Professional fees

 

88,676

 

 

8,421

 

 

121,324

 

 

19,824

 

 

370,928

Rent - related party

 

7,000

 

 

-

 

 

7,000

 

 

-

 

 

45,200

Research and development - related party

 

-

 

 

-

 

 

-

 

 

-

 

 

10,850

Travel

 

3,486

 

 

-

 

 

7,416

 

 

-

 

 

18,528

Total operating expenses

 

1,148,696

 

 

8,918

 

 

1,193,408

 

 

21,503

 

 

1,964,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(1,148,696)

 

 

(8,918)

 

 

(1,193,408)

 

 

(21,503)

 

 

(1,964,626)

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(2,671)

 

 

-

 

 

(2,742)

 

 

-

 

 

(5,441)

Forgiveness of debt

 

-

 

 

-

 

 

-

 

 

-

 

 

32,268

Total Other Income (Expense)

 

(2,671)

 

 

-

 

 

(2,742)

 

 

-

 

 

26,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(1,151,367)

 

$

(8,918)

 

$

(1,196,150)

 

$

(21,503)

 

$

(1,937,799)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding - Basic and Diluted

44,113,549

 

12,500,000

 

28,631,530

 

12,500,000

 

 

 

Loss per Common Share - Basic and Diluted

$

(0.03)

 

$

(0.01)

 

$

(0.04)

 

$

(0.01)

 

 

 


See accompanying notes to condensed financial statements.



4


NORTHSIGHT CAPITAL, INC.

(A Development Stage Company)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


 

 

 

 

 

 

 

From Inception

 

 

 

 

 

 

 

(May 21, 2008)

 

 

 

 

 

 

 

Through

 

Six Months Ended June 30,

 

June 30,

 

 

2014

 

2013

 

2014

Cash Flows From Operating Activities

 

 

 

 

 

 

 

 

Net loss

$

(1,196,150)

 

$

 (21,503)

 

$

 (1,937,799)

Adjustments to reconcile net loss to net cash used in

 

 

 

 

 

 

 

 

      operating activities:

 

 

 

 

 

 

 

 

Depreciation of property and equipment

 

210

 

 

-

 

 

210

Gain on forgiveness of debt

 

-

 

 

-

 

 

 (32,268)

Stock issued for release

 

932,500

 

 

-

 

 

932,500

Shares issued for services

 

-

 

 

-

 

 

10,000

Corporate expenses paid by shareholders

 

71

 

 

17,252

 

 

97,881

Warrants issued for payment of services

 

-

 

 

-

 

 

10,900

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 (22,000)

 

 

2,363

 

 

 (22,000)

Accounts payable and accrued expenses

 

(16,560)

 

 

1,888

 

 

77,438

Accounts payable - related party

 

63,113

 

 

-

 

 

153,540

Interest payable - related party

 

2,671

 

 

-

 

 

5,370

Net Cash Used In Operating Activities

 

 (236,145)

 

 

-

 

 

 (704,228)

Cash Flows From Investing Activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(4,215)

 

 

-

 

 

(4,215)

Purchase of web development costs

 

(105,000)

 

 

-

 

 

(105,000)

Purchase of domain registrations

 

(149,265)

 

 

-

 

 

(149,265)

Net Cash Used In Investing Activities

 

(258,480)

 

 

-

 

 

(258,480)

Cash Flows From Financing Activities

 

 

 

 

 

 

 

 

Proceeds from sale of common stock, net of offering costs

 

752,800

 

 

-

 

 

1,088,800

Proceeds from donated capital

 

-

 

 

-

 

 

121,994

Proceeds from notes payable

 

-

 

 

-

 

 

65,000

Payments on notes payable

 

-

 

 

-

 

 

(55,000)

Proceeds from notes payable - related party

 

-

 

 

-

 

 

29,340

Payments to notes payable - related party

 

-

 

 

-

 

 

(29,251)

Net Cash Provided by Financing Activities

 

752,800

 

 

-

 

 

1,220,883

Net Increase In Cash

 

258,175

 

 

-

 

 

258,175

Cash, Beginning of Period

 

-

 

 

-

 

 

-

Cash, End of Period

$

258,175

 

$

-

 

$

258,175

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

$

-

 

$

-

 

$

-

Cash paid for income taxes

$

-

 

$

-

 

$

-

Non-Cash Activities

 

 

 

 

 

 

 

 

Issuance of common stock for domain names

$

31,279

 

$

-

 

$

31,279

Issuance of note payable for domain names

$

100,000

 

$

-

 

$

100,000

Cancellation of shares returned to company

$

1,676

 

$

-

 

$

1,676

Finders fees settled with stock

$

29,950

 

$

-

 

$

29,950

Subscriptions receivable – related party

$

30,000

 

$

-

 

$

30,000

Conversion of debt to equity

$

-

 

$

-

 

$

26,681

Forgiveness of debt by principal owner credited to additional paid-in capital

$

-

 

$

-

 

$

93,215

Subscription receivable from Parent company

$

-

 

$

-

 

$

50,000


See accompanying notes to condensed financial statements.



5


NORTHSIGHT CAPITAL, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2014


NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION


Northsight Capital Inc. (“Northsight” or “the Company”) is a development stage company incorporated in the State of Nevada on May 21, 2008. In May, 2011, Safe Communications, Inc. (n/k/a Kuboo, Inc.) acquired 80% of the Company’s issued and outstanding common stock, and, as a result became its parent company. On June 25, 2014, the Company completed the acquisition of approximately 7500 cannabis related Internet domain names, in exchange for which the Company issued 78.5 million shares of its common stock and a promissory note in the principal amount of $500,000. As a result of this transaction, the seller of the domain names became an 81% stockholder of the Company. See Note 9 - Related Party Transactions.


The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The interim financial statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the period.


Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for the three and six month periods ended June 30, 2014, are not necessarily indicative of the operating results for the full year.


NOTE 2 – LIQUIDITY/GOING CONCERN


The Company is a development stage enterprise and has accumulated losses of $1,937,799 and has had negative cash flows from operating activities of $704,228 since inception (May 2008). These factors raise substantial doubt about the Company’s ability to continue as a going concern.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since the Company recently raised capital through the sale of equity, the Company has cash available for the payment of operating expenses for the near term. Management plans to fund continued operations of the Company by eventually generating profits from operations and raising sufficient capital through placement of additional shares of its common stock or issuance of debt securities.

 

In the event the Company does not generate sufficient funds from revenues or financing through the issuance of its common stock or from debt financing, the Company may be unable to fully implement its business plan and pay its obligations as they become due, any of which circumstances would have a material adverse effect on its business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.


NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS


On June 10, 2014, the Financial Accounting Standards Board (FASB) issued a new accounting standard that reduces some of the disclosure and reporting requirements for development stage entities. The change will be effective for interim and annual reporting periods beginning after December 15, 2014. As of such date, among other things, development stage entities will no longer be required to report inception-to-date information.




6


NOTE 4 – WEB DEVELOPMENT COSTS AND DOMAIN NAMES ASSETS


In accordance with ASC 350.50, during the six months ended June 30, 2014, the Company capitalized $105,000 towards the development of a website on which third parties can advertise the sale and distribution of cannabis related products and services: an online “yellow pages.” The Company also capitalized $180,544 towards the purchase of rights for internet domain names, during the six months ended June 30, 2014. The Company does not intend to engage in the sale or distribution of marijuana or related products. The Company recorded website development expenses of $79,480 which is included in general and administrative expenses during the six months ended June 30, 2014.


The Company amortizes these assets over their related useful lives (approximately 1 to 5 years), using a straight-line basis. Assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable, or at least annually. Measurement of the amount of impairment, if any, is based upon the difference between the asset's carrying value and estimated fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary. As of the date of these financial statements, the assets have not been put into service. Therefore, the Company recorded no amortization during the six months ended June 30, 2014.


NOTE 5 – PROPERTY AND EQUIPMENT


Property and equipment consisted of the following at June 30, 2014 and December 31, 2013:


 

 

As of June 30, 2014

 

 

As of December 31, 2013

 

 

Estimated Useful Life

Furniture and equipment

 

 

4,215

 

 

 

-

 

 

3 years

Total

 

 

4,215

 

 

 

-

 

 

 

Less: Accumulated depreciation

 

 

(210)

 

 

 

-

 

 

 

 

 

$

4,005

 

 

$

-

 

 

 


The Company records depreciation expense on a straight-line basis over the estimated life of the related asset (approximately 3 years). The company recorded depreciation expense of $210 for the six months ended June 30, 2014.


NOTE 6 – NOTES PAYABLE RELATED PARTY


On June 23, 2014, the Company issued a $500,000 promissory note in conjunction with the purchase of approximately 7,500 cannabis-related internet domain names. The note bears interest at the rate of 3.25% per annum and is payable as follows: upon the Company’s receipt of an aggregate of $1,000,000 in funding (whether debt or equity), $100,000 shall be paid to the note holder. The remaining $400,000 is payable in thirty-six equal monthly installments, commencing on the fifteenth day following the first month the Company realizes at least $150,000 in gross revenue. Since the $400,000 represents a contingency, such amount has not been recorded as debt (see Note 10 - Commitments and Contingencies). The Company incurred interest expense of $2,671 on the note during the three ended June 30, 2014. The note was amended and restated on July 25, 2014. See Note 11 - Subsequent Events.


NOTE 7 - EQUITY


During the three months ended March 31, 2014, the Company sold 2,426,000 shares of its common stock for $592,750 in cash proceeds. The Company incurred a finder’s fee of $24,450, which the company has satisfied through the issuance of 97,800 shares of common stock.


During the three months ended June 30, 2014, the Company sold 400,000 shares of its common stock for $100,000 in gross cash proceeds. The Company incurred a finder’s fee of $5,500, which the company has satisfied through the issuance of 22,000 shares of common stock.


Effective, April 9, 2014, certain shareholders of the Company surrendered to the Company for cancellation 1,675,604 shares of the Company’s common stock in accordance with the April 2014 Agreement described in the Company’s Current Report on Form 8-K filed with the Commission April 15, 2014.



7


On April 14, 2014, the Company issued an aggregate of 3,730,000 restricted shares of its common stock to the shareholders of NCAP Security Systems, Inc. (other than Kuboo, Inc., its parent company), in cancellation of an equal number of shares of NCAP Security Systems, Inc. The Company’s common shares were issued in full and complete satisfaction of any and all amounts that could be claimed in relation to the shareholders’ investment in NCAP Security Systems, Inc. The Company recorded settlement expense of $932,500 in connection with this transaction.


In April, 2014, the Company received $90,000 from the exercise of outstanding warrants to purchase 450,000 shares of common stock, at an exercise price of $.20 per share.


In May 2014, the Company entered into an asset purchase agreement to acquire approximately 7,500 cannabis-related internet domain names in exchange for 78.5 million shares of the Company’s restricted common stock and other considerations (see Note 9 – Related Party Transactions).


NOTE 8 – WARRANTS


At June 30, 2014, there were 775,000 warrants outstanding to purchase a like number of shares of the Company’s common stock at an exercise price of $0.20 per share. These warrants have a term of three years and were issued in connection with the payment of certain Company expenses by Kuboo during the quarter ended September 30, 2011. These warrants are no longer held by Kuboo, as they were subsequently transferred to certain investors.


A summary of the status of the Company’s outstanding stock warrants as of June 30, 2014 and changes during the six month period then ended is presented below:


 

 

Warrants

 

Weighted Average Exercise Price

 

Weighted Remaining Contractual Life

Outstanding, December 31, 2013

 

1,225,000

 

$

.20

 

0.75

Granted

 

-

 

 

-

 

-

Expired/Cancelled

 

-

 

 

-

 

-

Exercised

 

(450,000)

 

 

.20

 

-

Outstanding, June 30, 2014

 

775,000

 

$

.20

 

0.25

Exercisable, June 30, 2014

 

775,000

 

$

.20

 

0.25


NOTE 9 – RELATED PARTY TRANSACTIONS


Effective May 2, 2014, the Company entered into an asset purchase agreement with Kae Park (the “Seller”), a related party. The acquisition was closed on June 23, 2014.


Under this agreement, the Company agreed to acquire approximately 7,500 cannabis related Internet domain names, in exchange for which, the Company:


(a) Issued to the Seller on the closing date 78.5 million shares of the Company’s restricted common stock which represents approximately 81% of the Company’s issued and outstanding common stock;


(b) Issued to the Seller a promissory note in the principal amount of $500,000. The note bears interest at the rate of 3.25% per annum and is payable as follows: upon the Company’s receipt of an aggregate of $1,000,000 in funding (whether debt or equity), $100,000 shall be paid, and the Company shall pay the remaining balance of $400,000 in thirty-six equal monthly installments, commencing on the fifteenth day following the first month the Company realizes at least $150,000 in gross revenue; and


(c) Is obligated to pay a monthly royalty to the Seller equal to the product of (i) six percent (6%) and (ii) the excess of the Company’s gross monthly revenue over $150,000 (“Royalty Payment”). The Royalty Payment shall be payable for a period of thirty six months from and after the first month in which the Company has gross revenues in excess of $150,000.



8


The above referenced Promissory Note was amended and restated on July 25, 2014, see Note 11 - Subsequent Events.


In addition, the Seller is required to provide such consulting services as the Company may require during the twelve month period following the closing of the acquisition. In consideration for these services, the Company is required to pay the Seller $9,500 per month, for a period of twelve months, commencing on the closing date and, on the first of each month thereafter.


The Company is headquartered in Scottsdale, Arizona where it rents space from Kuboo, Inc., its former parent company and a significant shareholder. Currently, the Company is renting approximately 1,150 square feet of space on a month-to-month basis. The monthly rent for this facility is $3,500. This is an arrangement under which the landlord pays taxes, utilities and maintenance and repairs. The monthly rent also includes internet, a receptionist, and a shared conference room and employee lounge area.


During the quarter ended June 30, 2014, the Company paid an aggregate of $59,525 to the spouse of the Company’s controlling shareholder, Kae Yong Park, in consideration for the purchase of cannabis related internet domain names and related services rendered.


NOTE 10 – COMMITMENTS AND CONTINGENCIES


In May 2014, The Company entered into an asset purchase agreement pursuant to which it agreed to pay the seller $9,500 per month for a period of 12 months, for consulting services to be provided. This agreement also requires, the Company to pay a monthly royalty equal to six percent of gross monthly revenues over $150,000. The royalty payment is payable for a period of thirty-six months from and after the first month in which the Company’s gross revenues are in excess of $150,000 (see Note 9 - Related Party Transactions).


On June 23, 2014, the Company issued a $500,000 promissory note in conjunction with the purchase of approximately 7,500 cannabis-related internet domain names. The note bears interest at the rate of 3.25% per annum and is payable as follows: upon the Company’s receipt of an aggregate of $1,000,000 in funding (whether debt or equity), $100,000 is required to be paid. The remaining $400,000 is payable in thirty-six equal monthly installments, commencing on the fifteenth day following the first month the Company realizes at least $150,000 in gross revenue. Since the $400,000 represents a contingency, such amount has not been recorded as debt.

 

The note was amended and restated on July 25, 2014. See Note 11 - Subsequent Events.


NOTE 11 - SUBSEQUENT EVENTS


On July 25, 2014, the Company amended and restated its promissory note in the principal amount of $500,000 owing to Kae Yong Park (the Company’s majority shareholder) to provide that it would make the first $100,000 installment payment due under the Note on July 25, 2014 (earlier than required), in exchange for which Kae Yong Park agreed to waive all interest due over the term of the note. Kae Yong Park has waived the requirement that the Company pay the $100,000 due under the Amended and Restated Note, until August 25, 2014.


Since June 30, 2014, the Company sold an additional 1,928,000 shares of common stock at a per-share price of $0.25, for aggregate consideration of $482,000.


On July 21, 2014, the Company amended its Certificate of Incorporation to increase the number of its authorized shares from 100,000,000 to 200,000,000. The Company also eliminated its authorized preferred shares.


On August 13, 2014, John Bluher became CEO of the Company. His agreement with the Company calls for a base salary of $25,000 per month, a non-accountable monthly expense allowance of $2,500, the issuance of 400,000 shares of Company common stock upon becoming CEO, and the issuance of an additional 750,000 shares of common stock in three equal installments of 250,000 each on October 1, 2014, January 1, 2015 and April 1 2015 (see Exhibit 10.6)


On August 15, 2014, the Company acquired 200,000 shares of its common stock for $50,000 (the original purchase price) from an investor who originally purchased 400,000 shares of common stock on July 21, 2014. The Company has canceled the shares and returned them to the status of authorized but unissued shares.




9


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


Forward-looking Statements


Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.


Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.


Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.


Plan of Operations


We commenced limited operations during the quarterly period ended March 31, 2014. We have since significantly expanded our operating related activities. Since March, 2014, we have raised capital of $1,121,000, hired employees, and entered into various agreements, including developing our website. We have also completed the acquisition of approximately 7,500 cannabis related internet domain names from Kae Yong Park. On August 13, 2014, we hired a new CEO.


Our plan of operation in the near term is to (i) complete the development and launch of our primary website (weeddepot.com) and (ii) continue to expand our business operations. As noted above, during the current year, we raised an aggregate of $1,171,000 from the sale of our common stock.


During the next 12 months, we expect that our cash requirements will increase significantly as we continue to expand our business operations. We may have to raise additional funds during the next 12 months to fund our basic operating expenses.


Our common stock is currently quoted on the Over-the-Counter Bulletin Board (OTCBB) under the symbol NCAP.OB.


Results of Operations


Three Months Ended June, 2014 compared to Three Months Ended June 30, 2013


We reported no sales during the three month periods ended June 30 and 2014 and 2013. For the three months ended June 30, 2014 and 2013 we incurred operating expenses of $1,148,696 and $8,918, respectively, an increase of approximately $1,140,000. Approximately $933,000 of this increase was due to non-cash stock based settlement expenses related to the Company’s issuance of 3,730,000 shares of common stock in cancellation of an equal number of shares in NCAP Security Systems, Inc. Of the remaining increase of approximately $207,000, approximately $79,000 was due to increased web development expense and approximately $128,000 was due primarily to increased professional fees of $80,000 and other general and administrative expenses. For the three months ended June 30, 2014 and 2013, the Company reported a net loss of $1,151,367 and $8,918, respectively, a change of approximately $1,142,000 due mainly to one time settlement expenses and web development costs. We expect our ordinary operating activities and expenses to continue to increase substantially in the coming quarters, as we continue to ramp up our business activity.




10


Six Months Ended June, 2014 compared to Six Months Ended June 30, 2013


We reported no sales during the six month periods ended June 30 and 2014 and 2013. For the six months ended June 30, 2014 and 2013 we incurred operating expenses of $1,193,408 and $21,503, respectively, an increase of approximately $1,172,000. Approximately $933,000 of this increase was due to non-cash stock based settlement expenses related to the Company’s issuance of 3,730,000 shares of common stock in cancellation of an equal number of shares in NCAP Security Systems, Inc. Of the remaining increase of approximately $239,000, approximately $79,000 was due to increased web development expense and approximately $160,000 was due primarily to increased professional fees of $100,000 and other general and administrative expenses. For the six months ended June 30, 2014 and 2013, the Company reported a net loss of $1,196,150 and $21,503, respectively, a change of approximately $1,174,000 due mainly to one time settlement expenses and web development costs. We expect our ordinary operating activities and expenses to continue to increase substantially in the coming quarters, as we continue to ramp up our business activity.


Liquidity and Capital Requirements


As we continue to expand our business operations, our monthly operating cash requirements will increase significantly in the coming quarters, as compared to the prior two quarters. During the three months ended June 30, 2014, our operating activities used $192,645 in cash (or approximately $64,200 per month). We expect our operating activities to consume an increasing amount of cash as we continue to ramp up our operating activities.


As of August 14, 2014, we had approximately $552,000 in cash on hand. We believe that these funds should be sufficient to enable us to fund our business operations through the remainder of calendar 2014. If we are not able to generate positive operating cash flows in the near term , then we will likely need to raise additional funds during the latter part of 2014. If additional funds are required, we may raise funds from third parties, either in the form of debt or equity.


In the event the Company does not generate sufficient funds from revenues or financing through the issuance of its common stock or from debt financing, the Company may be unable to fully implement its business plan and pay its obligations as they become due, any of which circumstances would have a material adverse effect on its business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities. See Note 2 to the Financial Statements - Liquidity/Going Concern


Off-balance Sheet Arrangements


None.


Item 3. Quantitative and Qualitative Disclosures about Market Risk.


Not required.


Item 4. Controls and Procedures.


Evaluation of Disclosure Controls over Procedures


Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Secretary, to allow timely decisions regarding required disclosures.


Under the supervision and with the participation of our management, including our President and Treasurer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our President and Secretary/Treasurer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls were not effective.



11


Changes in Internal Control over Financial Reporting


During the fiscal quarter covered by this Quarterly Report, we hired a CPA as a part-time employee to oversee our books and records, as well as our internal accounting function. Subsequent to June 30, 2014, we hired a financial controller (part-time) to oversee our books and records, as well as our accounting function. Otherwise, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings


None.


Item 1A. Risk Factors


Not required.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


Previously reported on Form 8-K Current Reports.

 

Item 3. Defaults upon Senior Securities


None; not applicable.


Item 4. Mine Safety Disclosures


Not applicable.


Item 5. Other Information



12


Item 6. Exhibits


(a) Exhibits


Identification of Exhibit


3.1

Articles of Incorporation, as amended*

 

 

3.2

Bylaws(1)

 

 

4.1

Common Stock Purchase Warrant issued to Safe Communications, Inc. (2)

 

 

10.1

Common Stock Purchase Agreement dated as of May 27, 2011, by and between the Company, Safe Communications, Inc. and certain shareholders of the Company (3)

 

 

10.2

Principal Shareholders Agreement, dated as of May 27, 2011, by and between the Company and certain shareholders of the Company (4)

 

 

10.3

Agreement between the Company, Kuboo, Inc and the Principal Shareholders, dated as of April 9, 2014 (5)

 

 

10.4

Asset Purchase Agreement between the Company and Kae Park, dated May 2, 2014 (6)

 

 

10.5

Amended and Restated Promissory Note issued to Kae Yong Park July 25, 2014*

 

 

10.6

Agreement with John Bluher, CEO, dated August 13, 2014*

 

 

31

Certification of Principal Executive and Principal Financial Officer as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002

 

 

32

Certification of Principal Executive and Principal Financial Officer pursuant to 18 U.S.C section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

(1) Filed as Exhibits to our Form S-1 Registration Statement on July 11, 2008 and incorporated herein by reference.

(2) Filed as Exhibit 4.1 to our Form 10-Q filed November 21, 2011 and incorporated herein by reference.

(3) Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 2, 2011 and incorporated herein by reference.

(4) Filed as Exhibit 10.2 to our Current Report on Form 8-K filed on June 2, 2011 and incorporated herein by reference.

(5) Filed as Exhibit 10.3 to our Form 10-Q filed May 20, 2014 and Incorporated herein by reference.

(6) Filed as Exhibit 4.01 to our Current Report on Form 8-K filed on May 7, 2014 and incorporated herein by reference


*Filed herewith

** Furnished, not filed








13


SIGNATURES


Pursuant to the requirements 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.


NORTHSIGHT CAPITAL, INC.

(Issuer)


Date:

August 19, 2014

 

By:

/s/John Bluher

 

 

 

 

John Bluher, CEO




14


EXHIBIT 3.1

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[F10Q063014_EX3Z1002.JPG]



[F10Q063014_EX3Z1003.JPG]



[F10Q063014_EX3Z1004.JPG]



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[F10Q063014_EX3Z1006.JPG]



[F10Q063014_EX3Z1007.JPG]



[F10Q063014_EX3Z1008.JPG]



[F10Q063014_EX3Z1009.JPG]



[F10Q063014_EX3Z1010.JPG]



EXHIBIT 10.5


FIRST AMENDED AND RESTATED

PROMISSORY NOTE


Scottsdale, Arizona

July 23, 2014


Explanatory Note:


This First Amended and Restated Promissory Note, dated July 23, 2014, amends and restates in its entirety that certain promissory note dated as of June 23, 2014 (“Original Note”) issued by Maker (defined below) to Holder (defined below). This Amended and Restated Promissory Note supersedes in its entirety the Original Note.


FOR VALUE RECEIVED, the undersigned, Northsight Capital, Inc., a Nevada Corporation with a business address of 7740 E. Evans Road, Scottsdale, AZ 85260 (hereinafter referred to as the “Maker”), hereby promises to pay to the order of Kae Park, an individual with a mailing address of PO Box 14110, Scottsdale, AZ, 85267 (“Holder”), the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000). This Note arises under that certain asset purchase agreement of even date between Holder and Maker under which the Maker acquired approximately 7500 domain names from the Holder for consideration that included the delivery of a promissory note in the principal amount of $500,000 (the Original Note). Concurrent with the execution hereof, the Maker has paid to the Holder the sum of $100,000, leaving a principal balance as of the date hereof of $400,000.


Principal due hereunder shall be payable as follows: the remaining balance of $400,000 shall be paid in thirty-six equal monthly installments, commencing on the fifteenth day following the first month Maker realizes at least $150,000 in gross revenue; provided however, that in any case, the entire balance of outstanding principal and other fees and charges shall be due and payable upon an earlier Event of Default (as defined below)(“Maturity Date”). There shall be no prepayment penalty.


The unpaid principal balance from time to time outstanding under this note shall be non-interest bearing.


Each of the following shall constitute an “ Event of Default ” hereunder: (i) Maker’s failure to make any payment when due hereunder; (ii) with respect to Maker, the commencement of an action seeking relief under federal or state bankruptcy or insolvency statutes or similar laws, or seeking the appointment of a receiver, trustee or custodian for Maker or all or part of its assets, or the commencement of an involuntary proceeding against Maker under federal or state bankruptcy or insolvency statues or similar laws, which involuntary proceeding is not dismissed or stayed within thirty (30) days; or (iii) if Maker makes an assignment for the benefit of creditors. If an Events of Default occurs, the obligations under this note shall become immediately due and payable without notice or demand.


Maker agrees to pay all reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses incurred, or which may be incurred, by Holder in connection with the enforcement and collection of this note. Such costs and expenses shall be payable upon demand for the same and until so paid shall be added to the principal amount of the note.


Maker hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this note, and assent to extensions of the time of payment or forbearance or other indulgence without notice. No delay or omission of Holder in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. Acceptance by Holder of any payment after demand shall not be deemed a waiver of such demand. A waiver on one occasion shall not operate as a bar to or waiver of any such right or remedy on any future occasion.




This instrument, together with the Asset Purchase Agreement between Maker and Holder dated the date hereof contains the entire agreement among Maker and Holder with respect to the transactions contemplated hereby, and supersedes all negotiations, presentations, warranties, commitments, offers, contracts and writings prior to the date hereof relating to the subject matter hereof. This instrument may be amended, modified, waived, discharged or terminated only by a writing signed by Maker and accepted in writing by Holder.


This instrument shall be governed by Nevada law, without regard to the conflict of laws provisions thereof. For purposes of any action or proceeding involving this note, Maker hereby expressly submits to the jurisdiction of all federal and state courts located in the State of Arizona and consents to any order, process, notice of motion or other application to or by any of said courts or a judge thereof being served within or without such court’s jurisdiction by registered mail or by personal service, provided a reasonable time for appearance is allowed (but not less than the time otherwise afforded by any law or rule), and waives any right to contest the appropriateness of any action brought in any such court based upon lack of personal jurisdiction, improper venue or forum non conveniens.


This First Amended and Restated Promissory Note shall inure to the benefit of Holder’s successors and assigns.


Executed as an instrument under seal, as of the date first above written.


MAKER:


WITNESS:

Northsight Capital, Inc.



/s/Kaylee Corbell/

/s/John Gorman

Witness

By: John Gorman, President

Print Name: Kaylee Corbell



2


EXHIBIT 10.6

[F10Q063014_EX10Z6001.JPG]


Endion Capital, L.L.C.


AGREEMENT FOR EMPLOYMENT

JOHN H. BLUHER


August 13, 2014


John R. Gorman, President,  Northsight Capital, Inc.

7740 East Evans Road

Scottsdale, AZ  85260


Mr. Gorman:


You and I recently sat down and discussed the need for Northsight Capital, Inc (the company) to have a full time CEO.  We have agreed to a one year contract for me to come into NCAP as CEO and build the company.  Either of us can terminate this contract for any reason upon thirty days written notice. The role we discussed was for me to take on the responsibility as a strategic CEO, managing the accounting department and insuring filings are made and signing SEC disclosure and 404 filings as needed.  My primary role is to manage the business and the staff as the company grows. I will also come in and assist with the corporate organization, corporate governance and SoX compliance.  I also work directly with the CFO (once hired) to organize the Board, put the Board Comp package together and put the executive contracts and compensation system in place that will meet NASDAQ governance standards.  In addition, I assist with the placement of the company D&O program and insure the D&O package matches the business, and the risk, so that the executives and directors have appropriate protection.  Finally, I work with the executive team to put in place a company omnibus incentive and stock option program with forms of award and a public company program for granting shares or options to employees. Along with this, I manage the comp expert and work with the Founder to develop a world class organization and content delivery platform for the cannabis industry.


As part of my services, I also provide editing and drafting on the legal documents and filings the company will be submitting. These advisory and consulting services have proven to be critical to


John R. Gorman

Page 2,

August 13 2014


companies that go through the exchange listing process. I will run the business to grow it quickly  and reduces the amount of time and expense from the outside legal counsel.



John H. Bluher

Endion Capital, LLC

PO Box 1369 Edwards, CO 81632

jbluher@endioncapital.com

303-618-0902



These services have proven to be of tremendous value to the Company.  I will be paid as a full time employee as follows:


1.

$25,000 per month before taxes and deductions--paid bi-monthly on the 1 st and 15 th .


2.

150,000 shares of NCAP to be issued at signing, and 50,000 of which are to be registered in the next S-1 filing.


3.

1,000,000 shares of NCAP as follows:


a.

250,000 issued at signing


b.

250,000 issued on October 1, 2014


c.

250,000 issued on January 1, 2015


d.

250,000 issued on April 1, 2015


4.

If during the first 120 days from July 15, 2014, John is terminated for any reason other than  reasonable cause, he will still own 500,000 shares, whether vested or unvested.


5.

After 120 days if John is terminated for any reason other than reasonable  cause, the full 1 million shares will vest immediately.


6.

$2500 in expenses per month


7.

John will be added to the bank accounts as a signatory and will be issued a corporate credit card for incidentals and business expenses.


All unissued shares will be issued immediately should the company be acquired or merge.


This Contract may be amended and altered during the year as discussed and agreed by the parties.


Agreement is signed on August 13, 2014.  


Best regards,


/s/John Bluher/

John H. Bluher

Agreed: /s/John Gorman

John R. Gorman, President




John H. Bluher

Endion Capital, LLC

PO Box 1369 Edwards, CO 81632

jbluher@endioncapital.com

303-618-0902


EXHIBIT 31


CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, John Bluher, certify that:


1.

I have reviewed this Quarterly Report on Form 10-Q of Northsight Capital, Inc. (the “Registrant”);


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.

The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.



Date:

August 19, 2014

 

By:

/s/John Bluher

 

 

 

 

John Bluher, CEO

 

 

 

 

Northsight Capital, Inc. (Principal Executive and Principal Financial Officer)




EXHIBIT 32


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Northsight Capital, Inc. (the “Registrant”) on Form 10-Q for the quarter ending June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, John Bluher, CEO and Director of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)

The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.



Date:

August 19, 2014

 

By:

/s/John Bluher

 

 

 

 

John Bluher, CEO

 

 

 

 

Northsight Capital, Inc. (Principal Executive and Principal Financial Officer)