ATLDF Atlanta Gold Inc (CE)

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   FOR THE QUARTERLY PERIOD ENDED January 31, 2015.

£	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: 001-33125

(Exact name of registrant as specified in its charter)

Nevada	91-1766677
State or other jurisdiction of	(I.R.S. Employer
incorporation or organization	Identification No.)

925 West Georgia Street, Suite 1908

 (Address of principal executive offices, including zip code)

Registrant's telephone number: 604-687-5800

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 RNo ☐

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 R   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company:

 

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

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

Yes o No R

As of March 13, 2015, there were 159,072,657 shares of the Registrant's $0.01 par value Common Stock ("Common Stock"), the Registrant's only outstanding class of voting securities.

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SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		2
Item 1.	Financial Statements (Unaudited)	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	24
PART II - OTHER INFORMATION		25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
	Signatures	27

 

[The balance of this page has been intentionally left blank.]

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

		January 31, 2015				October 31, 2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	2,561,395			$	1,879,318
Value-added tax receivable, net of allowance for uncollectible taxes of $106,077 and $116,274 respectively (Note 6)			161,002				163,032
Income tax receivable			3,763				2,027
Other receivables			25,615				28,637
Prepaid expenses and deposits			187,216				219,717
Assets of discontinued operations held for sale (Note 4)			—				1,281,518
Total Current Assets			2,938,991				3,574,249
Office and mining equipment, net (Note 7)			345,442				363,519
Property concessions (Note 8)			5,563,263				5,563,263
Goodwill (Note 9)			18,495,031				18,495,031
TOTAL ASSETS		$	27,342,727			$	27,996,062
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	207,763			$	253,419
Accrued liabilities and expenses			388,949				354,792
Income tax payable			12,000				10,000
Liabilities of discontinued operations held for sale (Note 4)			—				8,894
Total Current Liabilities			608,712				627,105
COMMITMENTS AND CONTINGENCIES (Notes 1, 10 and 14)
STOCKHOLDERS' EQUITY (Notes 10, 11 and 12)
Common stock, $0.01 par value; 300,000,000 shares authorized, 159,072,657 and 159,072,657 shares issued and outstanding, respectively			1,590,726				1,590,726
Additional paid-in capital			124,952,339				124,921,150
Deficit accumulated during exploration stage			(100,024,748	)			(99,301,107	)
Other comprehensive income			215,698				158,188
Total Stockholders' Equity			26,734,015				27,368,957
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	27,342,727			$	27,996,062

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SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

		Three Months Ended January 31,
		2015				2014
REVENUES		$	—			$	—
EXPLORATION AND PROPERTY HOLDING COSTS
Exploration and property holding costs			272,097				484,992
Depreciation and asset impairment			17,632				31,628
TOTAL EXPLORATION AND PROPERY HOLDING COSTS			289,729				516,620
GENERAL AND ADMINISTRATIVE EXPENSES
Personnel			154,050				180,943
Office and administrative			160,259				176,134
Professional services			100,382				100,735
Directors' fees			56,043				58,555
(Recovery of) provision for uncollectible value-added taxes			(250	)			8,262
Depreciation			445				917
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES			470,929				525,546
LOSS FROM OPERATIONS			(760,658	)			(1,042,166	)
OTHER (EXPENSES)  INCOME
Interest and investment income			258				2,429
Foreign currency transaction loss			(98,762	)			(15,271	)
Miscellaneous income			—				43,285
TOTAL OTHER (EXPENSES) INCOME			(98,504	)			30,443
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE			(859,162	)			(1,011,723	)
INCOME TAX EXPENSE			1,571				3,547
LOSS FROM CONTINUING OPERATIONS			(860,733	)			(1,015,270	)
Loss from discontinued operations, net of income taxes (Note 4)			(159,277	)			(62,119	)
Gain on sale of assets of discontinued operations, net of income taxes (Note 4)			296,369				—
NET LOSS		$	(723,641	)		$	(1,077,389	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments			50,347				(1,100	)
Realized foreign currency translation gain on sale of assets of discontinued operations (Note 4)			7,163				—
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		$	57,510			$	(1,100	)
COMPREHENSIVE LOSS		$	(666,131	)		$	(1,078,489	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE
Loss from continuing operations		$	—			$	(0.01	)
Loss from discontinued operations			—				—
Net loss		$	—			$	(0.01	)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING			159,072,657				159,072,657

The accompanying notes are an integral part of these condensed consolidated financial statements

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SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

		Common Stock								Additional				Deficit Accumulated During				Other
		Number of Shares				Amount				Paid-in Capital				Exploration Stage				Comprehensive Income				Total
Balance, October 31, 2014			159,072,657			$	1,590,726			$	124,921,150			$	(99,301,107	)		$	158,188			$	27,368,957
Stock option activity as follows: - stock based compensation for options issued to officers, employees, consultants and directors			—				—				31,189				—				—				31,189
Other Comprehensive Income – Foreign Currency Translation Adjustment			—				—				—				—				57,510				57,510
Net loss			—				—				—				(723,641	)			—				(723,641	)
Balance, January 31, 2015			159,072,657			$	1,590,726			$	124,952,339			$	(100,024,748	)		$	215,698			$	26,734,015

 

 

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SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

		Three Months Ended January 31,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(723,641	)		$	(1,077,389	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and asset impairment			21,383				36,223
(Recovery of) provision for uncollectible value-added taxes			(250	)			8,262
Gain on sale of assets of discontinued operations (Note 4)			(296,369	)			—
Other income			—				(40,977	)
Foreign currency transaction loss			172,002				7,169
Stock options issued for compensation			31,189				64,011
Changes in operating assets and liabilities:
Value-added tax receivable			(13,453	)			(6,145	)
Income taxes receivable			(2,003	)			—
Other receivables			855				19,210
Prepaid expenses and deposit			30,788				34,604
Accounts payable			(53,119	)			(207,590	)
Accrued liabilities and expenses			71,484				54,480
Income tax payable			2,000				6,180
Net cash used by operating activities			(759,134	)			(1,101,962	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets			80,238				—
Proceeds from sale of equipment			—				83,960
Net proceeds from sale of discontinued operations (Note 4)			1,373,846				—
Net cash provided by investing activities			1,454,084				83,960
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by financing activities			—				—
Effect of exchange rates on cash and cash equivalents			(19,724	)			12,836
Net increase (decrease) in cash and cash equivalents			675,226				(1,005,166	)
Cash and cash equivalents beginning of period			1,886,169	*			5,251,003
Cash and cash equivalents end of period		$	2,561,395			$	4,245,837

* Cash and cash equivalents at October 31, 2014 included $6,851 recognized in assets of discontinued operations held for sale.

 

The accompanying notes are an integral part of these condensed consolidated financial statements

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SILVER BULL RESOURCES, INC.

(AN EXPLORATION STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (CONTINUED)

		Three Months Ended January 31,
		2015				2014
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid		$	1,541			$	—
Interest paid		$	—			$	—

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

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NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND LIQUIDITY

Silver Bull Resources, Inc. (the "Company") was incorporated in the State of Nevada on November 8, 1993 as the Cadgie Company for the purpose of acquiring and developing mineral properties. The Cadgie Company was a spin-off from its predecessor, Precious Metal Mines, Inc. On June 28, 1996, the Company's name was changed to Metalline Mining Company. On April 21, 2011, the Company's name was changed to Silver Bull Resources, Inc. The Company's fiscal year-end is October 31. The Company has not realized any revenues from its planned operations and is considered an Exploration Stage Company. The Company has not established any reserves with respect to its exploration projects and may never enter into the development stage with respect to any of its projects.

The Company engages in the business of mineral exploration. The Company currently owns or has the option to acquire a number of property concessions in Mexico (collectively known as the "Sierra Mojada Property"). The Company conducts its operations in Mexico through its wholly-owned subsidiary corporations, Minera Metalin S.A. de C.V. ("Minera") and Contratistas de Sierra Mojada S.A. de C.V. ("Contratistas") and through Minera's wholly-owned subsidiary Minas de Coahuila SBR S.A. de C.V. ("Minas").

On April 16, 2010, Metalline Mining Delaware, Inc., a wholly-owned subsidiary of the Company, was merged with and into Dome Ventures Corporation ("Dome").  As a result, Dome became a wholly-owned subsidiary of the Company. Dome has a wholly-owned subsidiary Dome Asia Inc. ("Dome Asia"), which is incorporated in the British Virgin Islands. Dome Asia has a wholly-owned subsidiary incorporated in Gabon, African Resources SARL Gabon ("African Resources"), as well as a 99.99%-owned subsidiary, Dome Minerals Nigeria Limited, incorporated in Nigeria. In January 2015 the Company completed the sale of its subsidiary Dome International Global Inc. ("Dome International") including Dome International's wholly-owned subsidiary Dome Ventures SARL Gabon ("Dome Gabon") which held the Ndjole Prospect in Gabon (Note 4).

The Company's efforts have been concentrated in expenditures related to exploration properties, principally in the Sierra Mojada Property located in Coahuila, Mexico. The Company has not determined whether its exploration properties contain ore reserves that are economically recoverable. The ultimate realization of the Company's investment in exploration properties is dependent upon the success of future property sales, the existence of economically recoverable reserves, and the ability of the Company to obtain financing or make other arrangements for exploration, development, and future profitable production activities. The ultimate realization of the Company's investment in exploration properties cannot be determined at this time. Accordingly, no provision for any asset impairment that may result, in the event the Company is not successful in developing or selling these properties, has been made in the accompanying condensed consolidated financial statements.

Since its inception in November 1993, the Company has not generated revenue and has incurred a deficit of $100,024,748.  Accordingly, the Company has not generated cash flow from operations, and since inception the Company has relied primarily upon proceeds from private placements and registered direct offerings of the Company's equity securities and warrant exercises as the primary sources of financing to fund the Company's operations. As of January 31, 2015, the Company had working capital of $2,330,279 and cash and cash equivalents of $2,561,395. Management will continue to evaluate the Company's ability to raise additional capital, and if it determines that additional capital is unavailable or available on terms that the Company determines are unacceptable then the Company will reduce exploration expenditures on the Company's property concessions and reduce general and administrative expenditures.

NOTE 2 – BASIS OF PRESENTATION

The Company's unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and applicable rules of the U.S. Securities and Exchange Commission ("SEC") regarding interim reporting. All intercompany transactions and balances have been eliminated during consolidation. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at October 31, 2014 was derived from the audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended October 31, 2014.

 

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The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, except as disclosed in Note 3. In the opinion of management, these unaudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. Uncertainties with respect to estimates and assumptions are inherent in the preparation of the Company's condensed consolidated financial statements; accordingly, operating results for the three months ended January 31, 2015 are not necessary indicative of the results that may be expected for the fiscal year ending October 31, 2015.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies are defined in the Company's Form 10-K for the year ended October 31, 2014 filed on January 26, 2015, except as follows.

Effective November 1, 2014, the Company adopted Accounting Standards Update ("ASU") 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry Forward, a Similar Tax Loss, or a Tax Credit Carry Forward Exists." The updated guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss carry forwards, a similar tax loss, or tax credit carry forwards. A gross presentation will be required only if such carry forwards are not available or would not be used by the entity to settle any additional income taxes resulting from disallowance of the uncertain tax provision. The adoption of this update did not have a material impact on the Company's financial position, results of operations or cash flows and disclosures at this time.

Effective November 1, 2014, the Company adopted ASU 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment." The updated standard clarifies the applicable guidance for a parent company's accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The adoption of this update did not have a material impact on the Company's financial position, results of operations or cash flows and disclosures at this time.

In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." Under ASU 2014-08, only disposals of a component or group of components of an entity representing a strategic shift that has (or will have) a major effect on an entity's operations and financial results are presented as discontinued operations. In addition, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide additional information about the assets, liabilities, income, and expenses of discontinued operations. ASU 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The update is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Company has not determined the effects of this update on the Company's financial position, result of operations or cash flows and disclosures at this time.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The updated guidance provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The update is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. The Company has not determined the effects of this update on the Company's financial position, result of operations or cash flows and disclosures at this time.

 

 

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In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an entity's ability to continue as a going concern. ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. The update provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. The Company has not determined the effects of this update on the Company's financial position, result of operations or cash flows and disclosures at this time.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not believed to have a material impact on the Company's present or future consolidated financial statements.

NOTE 4 – DISCONTINUED OPERATIONS

On January 23, 2015, the Company closed the sale of 100% of the issued and outstanding securities of the Company's former subsidiary, Dome International, which holds, indirectly, a 100% interest in and to the Ndjole concession to BHK Mining Corp. (formerly BHK Resources, Inc.) ("BHK"). Under the terms of the share purchase agreement, the Company received cash consideration of $1,500,000 and reimbursement of the Company's expenses of $75,000 in cash. In addition, the Company incurred transaction costs of $201,154. As a result of this transaction, the Company realized a gain on the sale of assets of discontinued operation of $296,369, net of income taxes.

The following table details selected financial information included in the income (loss) from discontinued operations for the three months ended January 31, 2015 and 2014.

	For the Three Months Ended
	January 31,
	2015				2014
Exploration and property holding costs			85,542				53,042
Depreciation and asset impairment			3,305				3,677
Foreign currency transaction loss			70,430				5,400
Gain on sale of discontinued operations, net of taxes			(296,369	)			—
(Income) loss from discontinued operations, net of income taxes		$	(137,092	)		$	62,119

The major classes of assets and liabilities of Dome International and Dome Gabon presented as assets held for sale in the consolidated balance sheets are as follows:

		January 31,				October 31,
		2015				2014
Assets
Cash and cash equivalents		$	—			$	6,851
Restricted cash			—				1,417
Value-added tax receivable			—				8,053
Prepaid expenses and deposits			—				6,796
Other assets			—				80,238
Office and mining equipment, net			—				9,536
Property concession			—				1,168,627
Total assets of discontinued operations held for sale		$	—			$	1,281,518

Liabilities
Accounts payable		$	—			$	8,894
Total liabilities of discontinued operations held for sale		$	—			$	8,894

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NOTE 5 – LOSS PER SHARE

The Company had stock options and warrants to purchase common stock in the aggregate of 11,288,808 shares and 21,805,644 shares outstanding at January 31, 2015 and January 31, 2014, respectively. They were not included in the calculation of loss per share because they would have been considered anti-dilutive.

NOTE 6 – VALUE-ADDED TAX RECEIVABLE

Value-added tax ("VAT") receivable relates to VAT paid in Mexico and Gabon. The Company estimates net VAT of $161,002 will be received within twelve months of the balance sheet date. The allowance for uncollectible VAT taxes was estimated by management based upon a number of factors including the length of time the returns have been outstanding, responses received from tax authorities, general economic conditions in Mexico and Gabon and estimated net recovery after commissions. During the three months ended January 31, 2015, a recovery of uncollectible VAT of $250 has been recorded.

A summary of the changes in the allowance for uncollectible VAT taxes for the three months ended January 31, 2015 is as follows:

Allowance for uncollectible VAT taxes – October 31, 2014		$	116,274
Recovery of uncollectible VAT Taxes			(250	)
Foreign currency translation adjustment			(9,947	)
Allowance for uncollectible VAT taxes – January 31, 2015		$	106,077

NOTE 7 – OFFICE AND MINING EQUIPMENT

The following is a summary of the Company's office and mining equipment at January 31, 2015 and October 31, 2014, respectively:

		January 31,				October 31,
		2015				2014
Mining equipment		$	504,451			$	504,451
Vehicles			81,261				81,261
Buildings and structures			191,966				191,966
Computer equipment and software			84,989				84,989
Well equipment			39,637				39,637
Office equipment			52,931				52,931
			955,235				955,235
Less:  Accumulated depreciation			(609,793	)			(591,716	)
		$	345,442			$	363,519

 

 

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NOTE 8 – PROPERTY CONCESSIONS

The following is a summary of the Company's property concessions in Sierra Mojada, Mexico as at January 31, 2015 and October 31, 2014, respectively:

Property Concessions – October 31, 2014		$	5,563,263
Property Concessions – January 31, 2015		$	5,563,263

 

NOTE 9 – GOODWILL

Goodwill – October 31, 2014		$	18,495,031
Goodwill – January 31, 2015		$	18,495,031

NOTE 10 – SHAREHOLDER RIGHTS PLAN

On June 11, 2007, the Board of Directors adopted a Shareholders' Right Plan through the adoption of a Rights Agreement, which became effective immediately.  In connection with the adoption of the Rights Agreement, the Board of Directors declared a distribution of one Right for each outstanding share of the Company's common stock, payable to shareholders of record at the close of business on June 22, 2007.  In accordance with the Rights Plan, one Right is attached to each share of Company common stock issued since that date.  Each Right is attached to the underlying common stock and will remain with the common stock if the stock is sold or transferred.  As of January 31, 2015, there are 159,072,657 shares outstanding with Rights attached.

In certain circumstances, in the event that any person acquires beneficial ownership of 20% or more of the outstanding shares of the Company's common stock, each holder of a Right, other than the acquirer, would be entitled to receive, upon payment of the purchase price, which is initially set at $20 per Right, a number of shares of the Company's common stock having a value equal to two times such purchase price.  The Rights will expire on June 11, 2017.

NOTE 11 - COMMON STOCK

No common stock was issued during the three months ended January 31, 2015 and January 31, 2014.

NOTE 12 - STOCK OPTIONS

The Company has two active stock option plans. Under the 2006 Stock Option Plan (the "2006 Plan"), the Company may grant non-statutory and incentive options to employees, directors and consultants for up to a total of 5,000,000 shares of common stock. Under the 2010 Stock Option and Stock Bonus Plan (the "2010 Plan"), the lesser of (i) 30,000,000 shares or (ii) 10% of the total shares outstanding are reserved for issuance upon the exercise of options or the grant of stock bonuses.  

 

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Options are typically granted with an exercise price equal to the closing market price of the Company's stock at the date of grant, have a graded vesting schedule over approximately 1 to 2 years and have a contractual term of 2 to 10 years.

No options were granted or exercised during the three months ended January 31, 2015 and January 31, 2014.

The following is a summary of stock option activity for the three months ended January 31, 2015:

Options		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (Years)				Aggregate Intrinsic Value
Outstanding at October 31, 2014			11,422,144			$	0.50				3.00				—
Forfeited or Cancelled			(133,336	)			0.32
Outstanding at January 31, 2015			11,288,808			$	0.51				2.60			$	—
Vested or Expected to Vest at January 31, 2015			11,288,808			$	0.51				2.60			$	—
Exercisable at January 31, 2015			9,165,479			$	0.56				2.24			$	—

The Company recognized stock-based compensation costs for stock options of $31,189 and $64,011 for the three months ended January 31, 2015 and 2014, respectively.  The Company typically does not recognize any tax benefits for stock options due to the Company's recurring losses. The Company currently expects all outstanding options to vest. Compensation cost is revised if subsequent information indicates that the actual number of options that will vest is likely to differ from previous estimates.

Summarized information about stock options outstanding and exercisable at January 31, 2015 is as follows:

Options Outstanding																Options Exercisable
Exercise Price				Number Outstanding				Weighted Ave. Remaining Contractual Life (Years)				Weighted Average Exercise Price				Number Exercisable				Weighted Average Exercise Price
$	0.26				2,808,332				4.32			$	0.26				1,183,333			$	0.26
	0.37				2,098,332				3.19				0.37				1,700,002				0.37
	0.44 – 0.73				5,520,000				1.76				0.58				5,420,000				0.58
	1.00 - 1.20				805,000				0.88				1.11				805,000				1.11
	2.18				57,144				2.24				2.18				57,144				2.18
$	0.26 - 2.18				11,288,808				2.60			$	0.51				9,165,479			$	0.56

As of January 31, 2015, there was $108,106 of total unrecognized compensation costs related to non-vested share based compensation arrangements granted under the qualified stock option plans. That cost is expected to be recognized over a weighted average period of 0.51 years.

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NOTE 13 – FINANCIAL INSTRUMENTS

All financial assets and financial liabilities are recorded at fair value on initial recognition. Transaction costs are expensed when they are incurred, unless they are directly attributable to the acquisition of qualifying assets, in which case they are added to the costs of those assets until such time as the assets are substantially ready for their intended use or sale.

The three levels of the fair value hierarchy are as follows:

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  As of January 31, 2015 and October 31, 2014, the Company had no financial assets or liabilities required to be reported for fair value purposes.

The carrying amounts of the Company's financial instruments, including cash and cash equivalents, other receivables, accounts payable and accrued liabilities and expenses approximate fair value at January 31, 2015 and October 31, 2014 due to the short maturities of these financial instruments.

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets the Company has established policies to ensure liquidity of funds and ensure counterparties demonstrate minimum acceptable credit worthiness.

The Company maintains its US Dollar and Canadian Dollar ("$CDN") cash and cash equivalents in bank and demand deposit accounts with major financial institutions with high credit standings.  Cash deposits held in the United States are insured by the Federal Deposit Insurance Corporation ("FDIC") for up to $250,000 and $CDN cash deposits held in Canada are insured by the Canada Deposit Insurance Corporation ("CDIC") for up to $CDN 100,000. Certain United States and Canadian bank accounts held by the Company exceed these federally insured limits or are uninsured as they related to US Dollar deposits held in Canadian financial institutions. As of January 31, 2015 and October 31, 2014, the Company's cash and cash equivalent balances held in United States and Canadian financial institutions included $2,432,698 and $1,681,759 respectively, which was not insured by the FDIC or CDIC. The Company has not experienced any losses on such accounts and management believes that using major financial institutions with high credit ratings mitigates the credit risk in cash and cash equivalents.

The Company also maintains cash in bank accounts in Mexico and Gabon.  These accounts are denominated in the local currency and are considered uninsured. As of January 31, 2015 and October 31, 2014, the U.S. dollar equivalent balance for these accounts was $26,973 and $115,686 respectively.

The Company holds substantially all of the Company's cash and cash equivalents in bank and demand deposit accounts with major financial institutions. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash and cash equivalent balances during the three months ended January 31, 2015, a 1% decrease in interest rates would have resulted in a reduction in interest income for the period of approximately $133.

 

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Certain purchases of labor, operating supplies and capital assets are denominated in $CDN, Mexican Peso ("$MXN"), Central African Francs ("$CFA") or other currencies.  As a result, currency exchange fluctuations may impact the costs of our operations.  Specifically, the appreciation of the $MXN, $CDN or $CFA against the U.S. dollar may result in an increase in operating expenses and capital costs in U.S. dollar terms. As of January 31, 2015, the Company maintained the majority of its cash balance in U.S. Dollars. The Company currently does not engage in any currency hedging activities.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

The Company's activities are subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays or affect the economics of a project, and cause changes or delays in the Company's activities.

To properly maintain property concessions in Mexico, the Company is required to pay a semi-annual fee to the Mexican government and complete annual assessment work.

In addition two of the concessions in the Sierra Mojada project are subject to options to purchase from existing third party concession owners. Pursuant to the option purchase agreements, the Company is required to make certain payments over the terms of these contracts to obtain full ownership of these concessions as set forth in the table below:

Nuevo Dulces Nombres (Centenario) and Yolanda III (2 concessions)
Payment Date	Payment Amount(1) (2)
May 2015	$30,000
Monthly payment beginning August 2016 and ending  July 2018	$20,000 per month

(1)	Until July 2018, the Company has the option of acquiring Nuevo Dulces Nombres (100% interest) for $4 million and Yolanda III (100% interest) for $2 million plus a lump sum payment equal to any remaining monthly payments.

(2)	If a change of control occurs prior to May 30, 2016 the Company is required to make a payment of $200,000 within 20 days of the change of control.

The Company has agreed to pay a 2% net smelter return royalty on certain property concessions within the Sierra Mojada Property. Total payments under this royalty are limited to $6.875 million (the "Royalty").

 

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In July 2014 a local cooperative named Sociedad Cooperativa de Exploración Minera Mineros Norteños, S.C.L. ("Mineros Norteños") filed an action before the First Court in Civil Matters in Chihuahua City, Mexico against the Company's subsidiary, Minera Metalin, claiming that the Company breached an agreement regarding the development of the Sierra Mojada Project.  Mineros Norteños is seeking payment of the Royalty, including interest at a rate of 6% per annum from August 30, 2004, notwithstanding that no revenue has been produced from the applicable mining concessions, and it is also seeking payment of wages to the cooperative's members from August 30, 2004, notwithstanding that none of the individuals were ever hired or performed work for the Company. The Company and the Company's Mexican legal counsel believe this claim is without merit and have asserted all applicable defenses. The Company has not accrued any amounts in our financial statements with respect to this claim.

From time to time, the Company is involved in other disputes, claims, proceedings and legal actions arising in the ordinary course of business. The Company intends to vigorously defend all claims against the Company, and pursue our full legal rights in cases where the Company has been harmed. Although the ultimate outcome of these proceedings cannot be accurately predicted due to the inherent uncertainty of litigation, in the opinion of management, based upon current information, no other currently pending or overtly threatened proceeding is expected to have a material adverse effect on the Company's business, financial condition or results of operations.

The Company entered into a five-year office lease agreement from April 1, 2012 to March 31, 2017 for the Company's corporate office in Vancouver, Canada. The monthly lease payment is $CDN 7,743 until March 31, 2016, increasing to $CDN 7,981 on April 1, 2016. As of January 31, 2015, one U.S. dollar approximates $CDN 1.27.

NOTE 15 – SEGMENT INFORMATION

The Company operates in a single reportable segment: the exploration of mineral property interests. The Company has mineral property interests in Sierra Mojada, Mexico and Gabon, Africa.

Geographic information is approximately as follows:

		For the Three Months Ended
		January 31,
		2015				2014
Mexico		$	(287,000	)		$	(457,000	)
Canada			(474,000	)			(519,000	)
Gabon			(100,000	)			(39,000	)
Loss from Continuing Operations			(861,000	)			(1,015,000	)
Discontinued Operations			137,000				(62,000	)
Net Loss		$	(724,000	)		$	(1,077,000	)

The following table details allocation of assets included in the accompanying balance sheet at January 31, 2015:

		United States				Canada				Mexico				Gabon				Total
Cash and cash equivalents		$	-			$	2,534,000			$	7,000			$	20,000			$	2,561,000
Value-added tax receivable, net			-				-				159,000				2,000				161,000
Other receivables			-				5,000				25,000				-				30,000
Prepaid expenses and deposits			-				106,000				77,000				4,000				187,000
Office and mining equipment, net			-				-				346,000				-				346,000
Property concessions			-				-				5,563,000				-				5,563,000
Goodwill			-				-				18,495,000				-				18,495,000
		$	-			$	2,645,000			$	24,672,000			$	26,000			$	27,343,000

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The following table details allocation of assets included in the accompanying balance sheet at October 31, 2014:

 

		United States				Canada				Mexico				Gabon				Total
Cash and cash equivalents		$	-			$	1,770,000			$	96,000			$	13,000			$	1,879,000
Value-added tax receivable, net			-				-				160,000				3,000				163,000
Other receivables			-				5,000				25,000				-				30,000
Prepaid expenses and deposits			-				140,000				79,000				1,000				220,000
Assets of discontinued operations held for sale			-				-				-				1,282,000				1,282,000
Office and mining equipment, net			-				1,000				363,000				-				364,000
Property concessions			-				-				5,563,000				-				5,563,000
Goodwill			-				-				18,495,000				-				18,495,000
		$	-			$	1,916,000			$	24,781,000			$	1,299,000			$	27,996,000

The Company has significant assets in Coahuila, Mexico. Although Mexico is generally considered economically stable, it is always possible that unanticipated events in Mexico could disrupt the Company's operations.  Neither the Mexican government nor the Gabonese government requires foreign entities to maintain cash reserves in their respective country.

The following table details allocation of exploration and property holding costs for the exploration properties

		For the Three Months Ended
		January 31,
		2015				2014
Exploration and property holding costs for the period
Mexico Sierra Mojada		$	(273,000	)		$	(485,000	)
Gabon Mitzic			(17,000	)			(32,000	)
		$	(290,000	)		$	(517,000	)

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

When we use the terms "Silver Bull," "we," "us," or "our," we are referring to Silver Bull Resources, Inc. and its subsidiaries, unless the context otherwise requires.  We have included technical terms important to an understanding of our business under "Glossary of Common Terms" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the U.S. Private Securities Litigation Reform Act of 1995, and "forward-looking information" within the meaning of applicable Canadian securities legislation. We use words such as "anticipate", "continue", "likely", "estimate", "expect", "may", "will", "projection", "should", "believe", "potential", "could" or similar words suggesting future outcomes (including negative and grammatical variations) to identify forward-looking statements. These statements include, among other things, our planned activities at the Sierra Mojada Project in 2015, including our plan to progress in securing additional surface rights, internally remodeling the zinc resources and the potential for a standalone zinc project and internally studying a smaller open pit; the timing and scope of our exploration activities; the projections and estimates set forth in the PEA Technical Report; our expectations regarding future recovery of value-added tax paid in Mexico and Gabon; our proposed capital and operating budgets for the Sierra Mojada Project and general and administrative expenses and our ability to decrease those expenditure if circumstances warrant.

These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties and our actual results could differ from those express or implied in these forward-looking statements as a result of the factors described under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014, including:

 

 

 

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These factors are not intended to represent a complete list of the general or specific factors that could affect us.

All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. You should not place undue reliance on these forward-looking statements.

Cautionary Note Regarding Exploration Stage Companies

We are an exploration stage company and do not currently have any known reserves and cannot be expected to have reserves unless and until a feasibility study is completed for the Sierra Mojada concessions that shows proven and probable reserves. There can be no assurance that our concessions contain proven and probable reserves and investors may lose their entire investment. See "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014.

Business Overview

Silver Bull, incorporated in Nevada, is an exploration stage company, engaged in the business of mineral exploration. Our primary objective is to define sufficient mineral reserves on the Sierra Mojada Property to justify the development of a mechanized mining operation. We conduct our operations in Mexico through our wholly-owned Mexican subsidiaries, Minera Metalin S.A. de C.V. ("Minera") and Contratistas de Sierra Mojada S.A. de C.V. ("Contratistas"), and through Minera's wholly-owned subsidiary, Minas de Coahuila SBR S.A. de C.V. ("Minas"). However, as noted above, we have not established any reserves at the Sierra Mojada Property, and are in the exploration stage and may never enter the development or production stage.

Our principal offices are located at 925 West Georgia Street, Suite 1908, Vancouver, BC, Canada V6C 3L2, and our telephone number is 604-687-5800. 

Properties Concessions and Property Concessions Outlook

In January 2015, our Board of Directors approved a calendar-year 2015 budget of $0.7 million for exploration and property holding costs for the Sierra Mojada Property. The focus of the 2015 calendar year program is continuing to progress in securing additional surface rights, maintenance of our property concessions, internally remodeling the zinc resource and the potential for a standalone zinc project and internally studying a smaller silver open pit.

During 2015 we intend to internally investigate the potential for a high grade underground zinc oxide mine. To this purpose we are completing an internal remodeling of the zinc resource, much of which was not included in the resource outlined in the PEA Technical Report described below.

We also intend to do an internal examination on the potential for a smaller silver open pit than the one proposed in the PEA Technical Report. The focus will be to target the "at-surface" silver mineralization with a smaller project. Although a smaller project would produce fewer ounces than proposed in the PEA Technical Report, the low strip and smaller plant would be expected to significantly reduce the overall capital costs needed to put the project into production.

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During 2015, and subject to favorable market conditions, we intend to examine the potential for fuming high grade zinc. Previous test work completed by Hazen Research Inc. in 2012 focused on roasting the zinc ore in a rotary kiln to fume off the zinc and collect it as a zinc oxide concentrate. Recoveries of up to 98% of the zinc were recorded.

The roasting of the zinc samples aims to simulate a "Waelz Kiln", a kiln which is used extensively to recycle zinc from steel dust and which regularly achieves recoveries in excess of 90%. In considering this process, the zinc mineralization at Sierra Mojada has a number of possible advantages: It lies in the state of Coahuila which is the largest coal producing state in Mexico, and it has an existing gas pipeline nearby which may be able to be extended to the project (as contemplated in the PEA Technical Report). Either option could provide the fuel to run the kiln. The project also has a functioning railway right to site to potentially allow for transport of coal to the site and of the zinc concentrate from the site.

Metallurgical Studies

In addition we previously conducted a metallurgical program to test the recovery of the silver mineralization using the agitation cyanide leach method and recovery of the zinc mineralization using the SART process (sulfidization, acidification, recycling, and thickening). The test work on the silver zone focused on cyanide leach recovery of the silver using "Bottle Roll" tests to simulate an agitation leach system and to determine the recovery of low grade zinc that occurs in the silver zone and high grade zinc from the zinc zone that had been blended with mineralization from the silver zone to the leach solution. The silver was recovered from the cyanide leach solution using the Merrill Crowe technique and the zinc was recovered from the leach solution using the SART process. The SART Process is a metallurgical process that regenerates and recycles the cyanide used in the leaching process of the silver and zinc and allows for the recovery of zinc that has been leached by the cyanide solution. The results showed an overall average silver recovery of 73.2% with peak values of 89.0% and an overall average zinc recovery of 44% in the silver zone.

Mineralized Material Estimate

On December 19, 2013, JDS Energy & Mining Inc. delivered Silver Bull's amended initial Preliminary Economic Assessment ("the PEA Technical Report") on the silver and zinc mineralization for the Sierra Mojada Project in accordance with Canadian National Instrument 43-101. The PEA Technical Report includes an update on the silver and zinc mineralization which was estimated from 1,372 diamond drill holes, 25 reverse circulation drill holes, 9,025 channel samples and 2,345 long holes.  At a cutoff grade of 25 grams/tonne of silver for mineralized material, the PEA Technical Report indicates mineralized material of 71.1 million tonnes at an average silver grade of 71.5 grams/tonne silver and an average zinc percentage of 1.34%.

"Mineralized material" as used in this Quarterly Report on Form 10-Q, although permissible under the Securities and Exchange Commission's Industry Guide 7, does not indicate "reserves" by SEC standards.  We cannot be certain that any part of the Sierra Mojada Project will ever be confirmed or converted into SEC Industry Guide 7 compliant "reserves."  Investors are cautioned not to assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that mineralized material can be economically or legally extracted.

 

On January 23, 2015, we closed the sale of 100% of the issued and outstanding securities of the Company's former subsidiary Dome International Global Inc. ("Dome International") (the "Gabon Sale"), which held, indirectly, a 100% interest in the Ndjole concession to BHK Mining Corp. (formerly BHK Resources, Inc.) ("BHK"). Under the terms of the share purchase agreement, we received cash consideration of $1,500,000 and reimbursement of the Company's expenses of $75,000 in cash. In addition, we hold the Mitzic exploration license in Gabon which we intend to return to the Gabon Government.

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Management Changes

Mr. Murry Hitzman informed the board of directors on February 26, 2015 of his decision not to stand for reelection as a director of Silver Bull at the 2015 annual meeting of shareholders (the "Annual Meeting"). Accordingly, Mr. Murry Hitzman will cease being a director at conclusion of the Annual Meeting.

 

Results of Operations

For the three months ended January 31, 2015, we experienced a net loss of $724,000, or approximately $nil per share, compared to a net loss of $1,077,000, or approximately $0.01 per share, during the comparable period last year. The $353,000 decrease in net loss was primarily due to a $227,000 decrease in exploration and property holding costs, a $55,000 decrease in general and administrative expenses and a gain on sale of assets of discontinued operations net of income taxes of $296,000 which was partially offset by a loss from discontinued operations net of income taxes of $159,000.

Exploration and Property Holding Costs

Exploration and property holding costs decreased $227,000 to $290,000 for the three months ended January 31, 2015, compared to $517,000 for the comparable period last year. This decrease was mainly the result of reduced employee and metallurgical costs at the Sierra Mojada Property in the three months ended January 31, 2015. In addition during the three months ended January 31, 2014 we incurred costs related to the PEA technical Report.

General and Administrative Costs

We recorded a general and administrative expense of $471,000 for the three months ended January 31, 2015 as compared to $526,000 for the comparable period last year. The $55,000 decrease was mainly the result of a $27,000 decrease in personnel cost, a $16,000 decrease in office and administrative cost and a $8,000 decrease in provision for uncollectible value-added taxes as described below.

Stock-based compensation was a factor in the fluctuations in general and administrative expenses. Overall stock-based compensation included in general and administrative expense decreased to $37,000 for the three months ended January 31, 2015 from $52,000 for the comparable period last year. This was mainly due to stock options vesting in the three months ended January 31, 2015 having a lower fair value than stock options vesting in the comparable period last year.

Personnel costs decreased $27,000 to $154,000 for the three months ended January 31, 2015 as compared to $181,000 for the same period last year. This decrease was mainly due to a decrease in stock-based compensation expense to $23,000 in the three months ended January 31, 2015 from $39,000 in the comparable period last year.

Office and administrative costs decreased $16,000 to $160,000 for the three months ended January 31, 2015 as compared to $176,000 for the same period last year. The decrease was mainly the result of a general decrease in investor relation activities in the three months ended January 31, 2015.

Professional fees of $100,000 for the three months ended January 31, 2015 was similar to $101,000 for the comparable period last year.

Directors' fees of $56,000 for the three months ended January 31, 2015 was similar to $59,000 for the comparable period last year.

Other (Expenses) Income

We recorded other expense of $99,000 for the three months ended January 31, 2015 as compared to other income of $30,000 for the comparable period last year. The significant factors were a $99,000 foreign currency transaction loss in the three months ended January 31, 2015 compared to a foreign currency transaction loss of $15,000 for the comparable period last year and a $nil miscellaneous income in the three months ended January 31, 2015 compared to $43,000 miscellaneous income for the comparable period last year.

 

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The foreign currency transaction loss in the three months ended January 31, 2015 and 2014 was primarily the result of the depreciation of the Central African Franc ("CFA") and the resulting impact on the intercompany loans between Silver Bull and our Gabonese subsidiaries. The miscellaneous income in the comparable period was primarily the result of a $41,000 gain on the sale of a piece of mining equipment at the Sierra Mojada Property.

Results of Discontinued Operations

Pursuant to generally accepted accounting principles in the United States of America ("GAAP"), Dome International and Dome International's wholly owned subsidiary, Dome Ventures SARL Gabon have been reported in discontinued operations for the three months ended January 31, 2015 and 2014.  Loss from discontinued operations, net of income tax expense for the three months ended January 31, 2015 was $159,000 which is mainly exploration and property holding costs of $86,000 and foreign currency translation loss of $70,000 due to the depreciation of the CFA and the resulting impact on intercompany loans between Silver Bull and our Gabonese subsidiaries. Loss from discontinued operations, net of income tax expense for the three months ended January 31, 2014 of $62,000 is mainly due to exploration and property holding costs of $53,000. In addition as a result of the Gabon Sale, we realized a gain on sale of assets of discontinued operations of $296,000, net of income taxes.

Material Changes in Financial Condition; Liquidity and Capital Resources

During the three months ended January 31, 2015, we primarily utilized cash and cash equivalents to fund exploration activities at the Sierra Mojada Property and for general and administrative expenses.  In addition, we received net proceeds of $1,374,000 in connection with the Gabon Sale. As a result of the Gabon Sale which was partially offset by the exploration activities and general and administrative expenses, cash and cash equivalents increased from $1,879,000 at October 31, 2014 to $2,561,000 at January 31, 2015.

Cash flows used in operations for the three months ended January 31, 2015 was $759,000 as compared to $1,102,000 for the comparable period in 2014.  This decrease was mainly due to the decreased exploration work at the Sierra Mojada Property. In addition, accounts payable decreased $53,000 in the three months ended January 31, 2015 compared to $208,000 in the comparable period last year.

Cash flows provided by investing activity for the three months ended January 31, 2015 was $1,454,000 as the Gabon Sale generated net proceeds of $1,374,000. Cash flows provided by investing activity in the comparable period last year was $84,000 as we sold a piece of mining equipment.

Cash flows provided by financing activities for the three months ended January 31, 2015 and 2014 were $nil.

On January 23, 2015, we closed the Gabon Sale for net proceeds of $1,374,000 including reimbursement of the Company's expenses of $75,000 in cash.

As of January 31, 2015, we had cash and cash equivalents of $2,561,000 and working capital of $2,330,000 as compared to cash and cash equivalents of $1,879,000 and working capital of $2,947,000 as of October 31, 2014. The increase in our liquidity was primarily the result of the cash proceeds received on the Gabon Sale which was partially offset by the exploration activities at the Sierra Mojada Property and general and administrative expense. The decrease in our working capital was primary the result of exploration activities at Sierra Mojada Property and general and administrative expenses.

 

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Since inception, we have relied primarily upon proceeds from sales of our equity securities and warrant exercises as our primary sources of financing to fund our operations. We anticipate that we will continue to rely on sales of our securities in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will be able to complete any additional sales of our equity securities or that we will be able to arrange for other financing to fund our planned business activities.

Our management and board of directors monitor our overall costs, expenses, and financial resources and, if necessary, will adjust our planned operational expenditures in an attempt to ensure we have sufficient operating capital. We continue to evaluate our costs and planned expenditures including for our Sierra Mojada Property as discussed below.

The continued exploration of the Sierra Mojada Property will require significant amounts of additional capital. In January 2015, our board of directors approved a calendar year 2015 budget of $0.7 million for the Sierra Mojada Property and a $1.5 million budget for general and administrative expenses. As of February 28, 2015, we had approximately $2.4 million in cash on hand. If we do not raise additional capital during calendar year 2015 and if we expend the amount we have budgeted for the year, we will end calendar year 2015 with approximately $0.7 million in cash on hand. We will continue to evaluate our ability to raise additional capital, and we will reduce expenditures on the Sierra Mojada Property if we determine that additional capital is unavailable or available on terms that we determine are unacceptable. Also, the continued exploration and if warranted, development, of the Sierra Mojada Property ultimately will require us to raise additional capital, identify other sources of funding or identify another strategic transaction.  The on-going uncertainty and volatility in the global financial and capital markets have limited the availability of funding.  Debt or equity financing may not be available to us on acceptable terms, if at all. Equity financing, if available, will likely result in substantial dilution to existing stockholders.  If we are unable to fund future operations by way of financing, including public or private offerings of equity or debt securities, our business, financial condition and results of operations will be adversely impacted.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Critical Accounting Policies

The critical accounting policies are defined in our Form 10-K for the year ended October 31, 2014 filed on January 26, 2015 except as follows.

Effective November 1, 2014, we adopted Accounting Standards Update ("ASU") 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry Forward, a Similar Tax Loss, or a Tax Credit Carry Forward Exists." The updated guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss carry forwards, a similar tax loss, or tax credit carry forwards. A gross presentation will be required only if such carry forwards are not available or would not be used by the entity to settle any additional income taxes resulting from disallowance of the uncertain tax provision. The adoption of this update did not have a material impact on our financial position, results of operations or cash flows and disclosures at this time.

Effective November 1, 2014, we adopted ASU 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment." The updated standard clarifies the applicable guidance for a parent company's accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The adoption of this update did not have a material impact on our financial position, results of operations or cash flows and disclosures at this time.

 

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In April 2014, the Financial Accounting Standard Board ("FASB") issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." Under ASU 2014-08, only disposals of a component or group of components of an entity representing a strategic shift that has (or will have) a major effect on an entity's operations and financial results are presented as discontinued operations. In addition, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide additional information about the assets, liabilities, income, and expenses of discontinued operations. ASU 2014-08 also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The update is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2014. We have not determined the effects of this update on our financial position, result of operations or cash flows and disclosures at this time.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The updated guidance provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The update is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. We have not determined the effects of this update on our financial position, result of operations or cash flows and disclosures at this time.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an entity's ability to continue as a going concern. ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. The update provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. We have not determined the effects of this update on our financial position, result of operations or cash flows and disclosures at this time.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not believed to have a material impact on our present or future consolidated financial statements.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

We hold substantially all of our cash and cash equivalents in bank and demand deposit accounts with major financial institutions. The interest rates received on these balances may fluctuate with changes in economic conditions. Based on the average cash and cash equivalent balances during the three months ended January 31, 2015, a 1% decrease in interest rates would have resulted in a reduction in interest income for the period of approximately $133.

Foreign Currency Exchange Risk

Certain purchases of labor, operating supplies and capital assets are denominated in $CDN, Mexican Pesos ("$MXN"), Central African Francs ("$CFA") or other currencies.  As a result, currency exchange fluctuations may impact the costs of our operations.  Specifically, the appreciation of the $MXN, $CDN or $CFA against the U.S. dollar may result in an increase in operating expenses and capital costs in US dollar terms.  As of January 31, 2015, we maintained the majority of our cash balance in U.S. dollars. We currently do not engage in any currency hedging activities.

Commodity Price Risk

Our primary business activity is the exploration of properties containing silver, zinc, lead, copper and other minerals. As a result, decreases in the price of any of these metals have the potential to negatively impact our ability to establish reserves and continue our exploration plans. None of our properties are in production and we do not currently hold any commodity derivative positions.

ITEM 4. CONTROLS AND PROCEDURES.

(a)	Evaluation of Disclosure Controls and Procedures.

As of January 31, 2015, we have carried out an evaluation under the supervision of, and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).  Based on the evaluation as of January 31, 2015, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e)) under the Exchange Act) were effective.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b)   Changes in Internal Control Over Financial Reporting

During the quarter ended January 31, 2015 there have not been any changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION.

Item 1. LEGAL PROCEEDINGS.

See Note 14 – Commitments and Contingencies in the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for information regarding legal proceedings in which we are involved.

Item 1A. RISK FACTORS.

There were no material changes from the risk factors included in our Form 10-K for the year ended October 31, 2014.

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

No sales of unregistered equity securities occurred during the period covered by this report.

No purchases of equity securities were made by or on behalf of Silver Bull or any "affiliated purchaser" within the meaning of Rule 10b-18 under the Exchange Act during the period covered by this report.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4.  MINE SAFETY DISCLOSURES.

Not applicable.

Item 5.  OTHER INFORMATION.

None.

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Item 6.  EXHIBITS.

				Incorporated by Reference
Exhibit Number		Exhibit Description		Form	Date	Exhibit		Filed Herewith
31.1		Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.						X
31.2		Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.						X
32.1		Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.						X
32.2		Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.						X
101.INS*		XBRL Instance Document						X
101.SCH*		XBRL Schema Document						X
101.CAL*		XBRL Calculation Linkbase Document						X
101.DEF*		XBRL Definition Linkbase Document						X

101.LAB*

XBRL Labels Linkbase Document

X

101.PRE*

XBRL Presentation Linkbase Document

X

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

 

 

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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.

	SILVER BULL RESOURCES, INC.
Dated:  March 13, 2015	By	/s/ Timothy Barry
		Timothy Barry
		President and Chief Executive Officer
		(Principal Executive Officer)
Dated:  March 13, 2015	By	/s/ Sean Fallis
		Sean Fallis
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

 

 

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