0001683168-19-003609.txt : 20191114 0001683168-19-003609.hdr.sgml : 20191114 20191114142232 ACCESSION NUMBER: 0001683168-19-003609 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191114 DATE AS OF CHANGE: 20191114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATRIOT GOLD CORP CENTRAL INDEX KEY: 0001080448 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 860947048 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-32919 FILM NUMBER: 191218927 BUSINESS ADDRESS: STREET 1: 3651 LINDELL ROAD SUITE D165 CITY: LAS VEGAS STATE: NV ZIP: 89103 BUSINESS PHONE: 702-456-9565 MAIL ADDRESS: STREET 1: 3651 LINDELL ROAD SUITE D165 CITY: LAS VEGAS STATE: NV ZIP: 89103 FORMER COMPANY: FORMER CONFORMED NAME: NORTHERN OSTRICH CORP DATE OF NAME CHANGE: 20010612 10-Q 1 pgold_10q-093019.htm FORM 10-Q

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the Quarterly Period Ended September 30, 2019

OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the transition period from _____________ to _____________

Commission file number 000-32919

 

PATRIOT GOLD CORP.

(Exact name of registrant as specified in its charter)

 

3651 Lindell Road, Suite D165

Las Vegas, Nevada 89103

(Address of principal executive offices) (Zip Code)

 

(702) 456-9565

(Registrant's telephone number, including area code)

 

________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
N/A N/A N/A

 

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

 

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. [X] Yes   [_] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).     [X] Yes [_] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

  Large accelerated filer  o Accelerated filer  o
  Non-accelerated filer  x Smaller reporting company  x
  Emerging growth company  o  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  [_]  No [X]

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 74,380,354 shares of common stock, $0.001 par value, issued and outstanding as of November 13, 2019.

 

 

 

 

   

 

 

TABLE OF CONTENTS

 

PART I –   FINANCIAL INFORMATION   1
         
Item 1.   Financial Statements   2
         
    Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018 (Unaudited)   2
         
    Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2019 (Unaudited)   3
         
    Consolidated Statements of Stockholders’ Equity (Unaudited) for the nine months ended September 30, 2019 and the year ended December 31, 2018 (Unaudited)   4
         
    Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018   5
         
    Condensed Notes to (Unaudited) Financial Statements   6
         
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   20
         
Item 3.   Quantitative and Qualitative Disclosures about Market Risk   26
         
Item 4.   Controls and Procedures   26
         
PART II-   OTHER INFORMATION   27
         
Item 1.   Legal Proceedings   27
         
 Item 1A.   Risk Factors (not applicable)   27
         
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds   27
         
Item 3.   Defaults Upon Senior Securities   27
         
Item 4.   Mine Safety Disclosures   27
         
Item 5.   Other Information   27
         
Item 6.   Exhibits   28
         
Signatures       29

 

 

 

 i 

 

 

PART I

 

FINANCIAL INFORMATION

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,” “ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K. WE ASSUME NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW INFORMATION, ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 1 

 

 

Item 1. Financial Statements

 

PATRIOT GOLD CORP.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

   September 30,
2019
  

December 31,

2018

 
ASSETS          
Current assets:          
Cash  $201,354   $115,753 
Marketable securities   123,679    167,617 
Royalties receivables   435,934    244,678 
Prepaid expenses   169,500    9,066 
Total current assets   930,467    537,114 
           
Noncurrent assets:          
Royalty interest – related party (see Note 4)   300,000    110,000 
Note receivable – related party, net (see Note 7)   705,000     
Total long-term assets   1,005,000    110,000 
           
Total assets  $1,935,467   $647,114 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities  $23,726   $139,832 
Accounts payable and accrued liabilities – related parties   202,045    14,938 
Total current liabilities   225,771    154,770 
           
Commitments and contingencies        
           
Stockholders' equity:          
Preferred stock, par value $.001; 6,500,000 shares authorized; no shares issued at September 30, 2019 and December 31, 2018, respectively        
Series A Preferred stock, par value $.001; 13,500,000 shares authorized; 290,000 shares issued at September 30, 2019 and December 31, 2018, respectively   290    290 
Common stock, par value $.001; 400,000,000 shares authorized; 74,380,354 and 58,408,854 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively   74,380    58,409 
Treasury stock (100,000 shares)   (9,093)   (9,093)
Additional paid-in capital   29,871,087    28,815,798 
Accumulated other comprehensive income   (16,361)   (16,361)
Accumulated deficit   (28,210,607)   (28,356,699)
Total stockholders' equity   1,709,696    492,344 
           
Total liabilities and stockholders' equity  $1,935,467   $647,114 

 

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

 

 

 

 2 

 

 

PATRIOT GOLD CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   For the Three Months Ended September 30,   For the Nine Months Ended September 30, 
   2019   2018   2019   2018 
                 
Revenues  $435,934   $201,909   $973,271   $293,472 
                     
Expenses:                    
Mineral costs   89,168    274,382    126,396    267,663 
Consulting expense   78,356    42,631    249,006    173,538 
Stock based compensation   24,058        149,260    374,424 
Directors Fees   52,500        157,500     
General and administrative   37,529    42,102    120,530    128,127 
Total operating expense   281,611    359,115    802,692    943,752 
                     
Net income (loss) from operations   154,323    (157,206)   170,579    (650,280)
                     
Other income (expense):                    
Unrealized holding gain (loss) on marketable securities   10,099    (75,464)   (25,663)   (74,576)
Currency exchange   1,113    (3,465)   2,988    (295,600)
Realized loss on sale of marketable securities           (1,894)    
Other miscellaneous income   28    10    82    12,260 
Total other income (expense)   11,240    (78,919)   (24,487)   (357,916)
                     
Net income (loss)  $165,563   $(236,125)  $146,092   $(1,008,196)
                     
Earnings per share, basic and diluted:                    
Income (loss) per common share - basic  $0.00   $(0.00)  $0.00   $(0.02)
Income (loss) per common share - diluted  $0.00   $(0.00)  $0.00   $(0.02)
                     
Weighted average shares outstanding - basic   74,316,224    57,679,687    68,309,830    57,679,687 
Weighted average shares outstanding - diluted   74,355,625    57,679,687    68,349,232    57,679,687 

 

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

 

 

 

 3 

 

 

PATRIOT GOLD CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

 

  Preferred Stock  

Series A

Preferred Stock

  Common Stock   Treasury   Additional Paid-In   Accumulated Other Comprehensive     Retained       
  Shares   Par Value   Shares   Par Value   Shares   Par Value   Stock   Capital   Income     Deficit   Total  
For the 3 months ended September 30, 2018                                                          
Balance June 30, 2018     $     290,000   $ 290     58,408,854   $ 58,409   $ (9,093 ) $ 28,815,798   $ (16,361 )   $ (28,085,245 ) $ 763,798  
                                                                     
Net income                                         (236,125 )   (236,125 )
                                                                     
Balance September 30, 2018     $     290,000   $ 290     58,408,854   $ 58,409   $ (9,093 ) $ 28,815,798   $ (16,361 )   $ (28,321,370 ) $ 527,673  
                                                                     
For the 9 months ended September 30, 2018                                                          
Balance December 31, 2017     $     -   $ -     55,877,604   $ 55,878   $ -   $ 28,429,695   $ (16,361 )   $ (27,313,174 ) $ 1,156,038  
                                                                     
Common stock options grants   -     -     -     -     -     -     -     273,174     -       -     273,174  
                                                                     
Sale of preferred stock   -     -     290,000     290     -     -     -     14,210     -       -     14,500  
                                                                     
Issuance of restricted common stock   -     -     -     -     2,531,250     2,531     -     98,719     -       -     101,250  
                                                                     
Treasury stock   -     -     -     -     -     -     (9,093 )   -     -       -     (9,093 )
                                                                     
Net income   -     -     -     -     -     -     -     -     -       (1,008,196 )   (1,008,196 )
                                                                     
Balance September 30, 2018     $     290,000   $ 290     58,408,854   $ 58,409   $ (9,093 ) $ 28,815,798   $ (16,361 )   $ (28,321,370 ) $ 527,673  
                                                                     
For the 3 months ended September 30, 2019                                                          
Balance June 30, 2019     $     290,000   $ 290     74,280,354   $ 74,280   $ (9,093 ) $ 29,842,129   $ (16,361 )   $ (28,376,170 ) $ 1,515,075  
                                                                     
Issuance of restricted common stock                   100,000     100         4,900               5,000  
                                                                     
Vesting of stock options                               24,058               24,058  
                                                                     
Net income                                         165,563     165,563  
                                                                     
Balance September 30, 2019     $     290,000   $ 290     74,380,354   $ 74,380   $ (9,093 ) $ 29,871,087   $ (16,361 )   $ (28,210,607 ) $ 1,709,696  
                                                                     
                                                                     
For the 9 months ended September 30, 2019                                                          
Balance December 31, 2018               290,000   $ 290     58,408,854   $ 58,409   $ (9,093 ) $ 28,815,798   $ (16,361 )   $ (28,356,699 ) $ 492,344  
Exercise of warrants                   8,000,000     8,000         697,000               705,000  
                                                                     
Exercise of stock options                   20,000     20         1,980               2,000  
                                                                     
Issuance of restricted common stock                   7,951,500     7,951         311,109               319,060  
                                                                     
Vesting of stock options                               45,200               45,200  
                                                                     
Net income                                         146,092     146,092  
                                                                     
Balance September 30, 2019     $     290,000   $ 290     74,380,354   $ 74,380   $ (9,093 ) $ 29,871,087   $ (16,361 )   $ (28,210,607 ) $ 1,709,696  

 

 

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

 

 4 

 

 

PATRIOT GOLD CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

   For the Nine Months Ended September 30, 
   2019   2018 
         
Net Income (Loss)  $146,092   $(1,008,196)
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Compensation expense of stock options   45,200    273,185 
Restricted Common stock issued for services   161,560    101,239 
Fair value adjustment for marketable securities   23,104    371,645 
Change in operating assets and liabilities:          
Royalties receivables   (191,255)   (201,909)
Prepaid expenses   (2,935)   3,304 
Accounts payable and accrued liabilities   (116,105)   209,362 
Accounts payable and accrued liabilities – related parties   187,107     
Net cash flows provided by (used in) operating activities   252,768    (251,370)
           
Cash flows from investing activities:          
Purchase of royalty interest – related party   (190,000)   (30,000)
Proceeds from the sale of marketable securities   20,833    3,401 
Purchase of marketable securities       (100,000)
Net cash flows used in investing activities   (169,167)   (126,599)
           
Cash flows from financing activities:          
Proceeds from exercise of stock options   2,000     
Proceeds from sale of preferred stock       14,500 
Purchase of treasury stock       (9,093)
Net cash flows provided by financing activities   2,000    5,407 
           
Net increase (decrease) in cash   85,601    (372,562)
Cash, beginning of period   115,753    634,428 
Cash, end of period  $201,354   $261,866 
           
Supplemental disclosure of cash paid for:          
Interest  $   $ 
Income taxes  $   $ 
           
Non-cash financing activities:          
Exercise of warrants in exchange for note receivable  $705,000   $ 
Issuance of restricted stock for prepaid director fees  $210,000   $ 

 

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

 

 

 

 5 

 

 

PATRIOT GOLD CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

Unaudited

 

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

 

Patriot Gold Corp. (“Company”) was incorporated in the State of Nevada on November 30, 1998. The Company is engaged in natural resource exploration and anticipates acquiring, exploring, and developing natural resource properties. Currently the Company is undertaking programs in Arizona and Nevada. The Company’s common stock trades on the Canadian Securities Exchange under the symbol PGOL, and also on the Over-The-Counter (“OTCQB”) market under the symbol PGOL.

 

On May 23, 2017, the Company caused the incorporation of its wholly owned subsidiary, Patriot Gold Canada Corp (“Patriot Canada”), under the laws of British Columbia, Canada.

 

On April 16, 2010, the Company caused the incorporation of its wholly owned subsidiary, Provex Resources, Inc., (“Provex”) under the laws of Nevada. Effective May 7, 2018, Provex’s name was changed to Goldbase, Inc. (“Goldbase”).

 

Subsequent to the Company’s most recent fiscal year-end of May 31, 2019, the Company elected to change its fiscal year-end to coincide with a calendar year-end of December 31, 2019. All information related to the periods ended September 30, 2018 and December 31, 2018 are unaudited.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Goldbase and Patriot Canada. Collectively, they are referred to herein as “the Company”. Inter-company accounts and transactions have been eliminated.

 

Management’s Estimates and Assumptions

 

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.

 

Going Concern

 

Management believes they will have sufficient funds to support their business based on the following: (a) revenues derived from the Moss royalty, given the Moss mine is now in production; (b) the Company’s marketable securities are relatively liquid; (c) the Company believes it can raise additional funds if needed to support our business plan, although there can be no assurance that the Company can raise any additional funds, or if it can, that such funds will be on terms acceptable to the Company.

 

 

 

 6 

 

 

Exploration and Development Costs

 

Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through September 30, 2019.

  

Cash and Cash Equivalents

 

The Company considers all investment instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company has no cash equivalents as of September 30, 2019 and December 31, 2018.

 

Marketable Securities

 

Investment securities are classified in one of three categories: held to maturity, available for sale, or trading. Management determines the appropriate classification of securities at the time of purchase. Investment securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. As of September 30, 2019, and December 31, 2018, the Company has no investments in held to maturity securities. 

 

Investment securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

 

Investment securities that are not considered to be held to maturity or trading are classified as available for sale. This type of investment is stated at fair value with unrealized gains and losses, net of tax, reported in a separate component of shareholders’ equity (“accumulated other comprehensive income”). Gains and losses from sales of investments classified as available for sale are determined using the specific identification method. As of September 30, 2019, and December 31, 2018, the Company has no investments classified as available for sale.

 

The Company’s short-term marketable securities classified as trading securities are comprised of Northern Vertex Mining Corp. and Strata Power Corporation (“Strata”) stock. The Company acquired the Northern Vertex stock on May 26, 2016 as part of the Moss Property sale. The Company purchased Strata common stock through multiple private placement offerings as an investment in lithium mining extraction technologies (see Note 9).

 

Reclamation Deposits

 

Various mining laws and permits require that financial assurances be in place for certain environmental and reclamation obligations. Accordingly, the Company pays cash bonds to the Bureau of Land Management (“BLM”) upon acquisition of mining rights for estimated potential reclamation obligations. Any residual funds after reclamation obligations have been paid, are refunded to the Company. Upon payment of a cash bond, the Company recognizes a reclamation deposit as a long-term asset on its Consolidated Balance Sheets. As of September 30, 2019, and December 31, 2018, there were no reclamation deposits recorded.

 

 

 

 7 

 

 

Foreign Currency Translation

 

The Company’s functional currency and reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired, or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in the consolidated statements of operations.

 

Concentration of Credit Risk

 

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with two financial institutions in the form of demand deposits.

  

Income/Loss per Share

 

Basic earnings per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares plus dilutive potential common shares outstanding during the period.

 

The following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings per share:

 

   For the period ended September 30, 
   2019   2018 
Numerator:        
Net income (loss) available to common stockholders  $146,092   $(1,008,196)
           
Denominator:          
Weighted-average shares, basic   68,309,830    57,679,687 
Effect of dilutive shares:          
Incremental shares from the assumed exercise of dilutive stock warrants   39,402     
Weighted-average shares diluted   68,349,232    57,679,687 
           
Net income (loss) per common share, basic  $0.00   $(0.02)
Net income (loss) per common share, diluted  $0.00   $(0.02)

 

The following were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s loss from continuing operations and loss from discontinued operations. In periods where the Company has a net loss, all dilutive securities are excluded.

 

   For the period ended September 30, 
   2019   2018 
Common stock equivalents:          
Stock options   7,465,000    7,485,000 
Stock warrants   11,460,000    32,246,957 
Total   18,925,000    39,731,957 

 

 

 

 8 

 

 

Comprehensive Income

 

Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net income. For the Company, such items consist primarily of foreign currency translation gains and losses.

 

Accumulated other comprehensive income at September 30, 2019 and December 31, 2018, consists of foreign currency adjustments related to the Company changing its functional currency from Canadian to U.S. dollar in 2003.

 

Stock Options

 

The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

 

The Company accounts for non-employee stock-based awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Under the new standard, the Company will value all equity classified awards at their grant-date under ASC718 and no options were required to be revalued at adoption.

 

The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

 

Stock-based Compensation

 

We account for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

 

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

  

The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

 

 

 

 9 

 

 

Fair Value of Financial Instruments

 

The carrying value of the Company's financial instruments, including prepaids, accounts payable and accrued liabilities, at September 30, 2019 and December 31, 2018 approximates their fair values due to the short-term nature of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company carries other company’s equity instruments at fair value as required by U.S. GAAP, which are valued using level 1 inputs under the fair value hierarchy.

 

In general, investments with original maturities of greater than 90 days and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may also be classified as short-term based on their highly liquid nature and can be sold to fund current operations.

 

Fair Value Hierarchy

 

Fair value is defined within the accounting rules as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The rules established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

 

Level 1. Quoted prices in active markets for identical assets or liabilities.

 

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.

 

Level 3. Unobservable inputs to the valuation methodology are significant to the measurement of the fair value of assets or liabilities. These Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we were unable to corroborate with observable market data.

 

Assets measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

 

   Fair Value Measurement at  Fair Value Measurement at
   September 30, 2019  December 31, 2018
   Using
Level 1
  Total   Using
Level 1
  Total 
Assets:              
Marketable securities  $ 123,679  $123,679   $ 167,617  $167,617 

 

 

 

 10 

 

 

Revenue Recognition

 

On June 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty from Golden Vertex of 3% of net smelter returns (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss mine. The Company’s revenue recognition policy standards include the following elements under ASU 606:

 

  1. Identify the contract with the customer. The contract with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16.

 

  2. Identify the performance obligations in the contract. The performance obligation in the contract required Patriot to relinquish its 30% interest in the Moss gold/silver mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest.

 

  3. Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss mine. See Note 3 for definition of Net Smelter Returns.

 

  4. Allocate the transaction price to the performance obligations in the contract. The Company only has one performance obligation, the transfer of the rights to the Moss mine, which has already been fulfilled.

  

  5. Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method applied to contracts not yet completed as of the date of adoption.

 

Related Party Transactions

 

A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) an entity or person who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

 

 

 

 11 

 

 

Income Taxes

 

The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.

 

The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

 

New Accounting Pronouncements

 

In May 2017, the FASB issued ASU 2017-09 which clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is only required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective for the Company on June 1, 2018, with early adoption permitted. The new guidance must be applied prospectively to awards modified on or after the adoption date. The future impact of ASU 2017-09 will be dependent on the nature of future stock award modifications, however no significant impact is expected.

 

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on it consolidated financial statements.

 

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

 

NOTE 3 - MINERAL PROPERTIES

 

Bruner and Vernal Properties

 

On May 28, 2010 the Company entered into an exclusive right and option agreement with Canamex Resources Corp. (“Canamex”) whereby Canamex could earn a 70% (or up to 75% if a bankable feasibility study is performed) undivided interest in the Bruner, and Bruner Expansion properties, herein after collectively referred to as the “Bruner Properties”. Upon the completion of the terms of the Agreement by Canamex, and upon earning its initial interest, the parties agreed to negotiate a definitive joint venture agreement in good faith to supersede the agreement.

 

 

 

 12 

 

 

During the first half of 2016, it was determined by the Company that Canamex had successfully earned a 70% interest in the Bruner Property according to the terms of the Bruner Option Agreement.

  

On April 25, 2017, the Company and Canamex Resources Corp. entered into a purchase and sale agreement (“Bruner Purchase and Sale Agreement”) whereby Canamex Resources purchased Patriot Gold's 30% working interest in the Bruner gold/silver mine for US$1,000,000 cash. The Company retains a two percent net smelter return (“NSR”) royalty on the Bruner properties including any claims acquired within a two-mile area of interest around the existing claims. Additionally, Canamex has the option to buy-down half of the NSR royalty retained by Patriot for US$5 million any time during a five-year period following closing of the purchase and sale agreement. 

 

As of September 30, 2019, the Company has incurred approximately $89,616 of accumulated option and exploration expenses on the Vernal property.

 

During the nine months ended September 30, 2019 and 2018, the Company incurred exploration expenses of $0 and $(665) on the Vernal property, respectively.

 

Moss Property

 

On March 4, 2004 the Company signed a Letter Agreement (the “Agreement”) that earned it a 100% interest in a number of patented and unpatented mining claims known as the Moss Mine property located in the Oatman Mining District of Mohave county Arizona by paying MinQuest Inc. a one-time fee of $50,000. This $50,000 fee was paid on July 7, 2004. Subject to the terms and conditions of the Agreement, MinQuest would retain a 3% NSR on any and all production derived from the unpatented mining claims listed under the Agreement and on public lands within 1 mile of MinQuest, Inc.’s outside perimeter of the present claim boundary; a 1.0% NSR on patented claims with no other royalty within the property; and a 0.5% overriding NSR on all production within the property derived from patented claims with other royalty interests.

 

On February 28, 2011, the Company entered into an Exploration and Option to Enter Joint Venture Agreement (the “Moss Agreement”), with Idaho State Gold Company, LLC, (“ISGC”) whereby the Company granted the option and right to earn a vested seventy percent (70%) interest in the property and the right and option to form a joint venture for the management and ownership of the properties called the Moss Property, Mohave County, Arizona. Pursuant to the Moss Agreement, ISGC paid US $500,000 upon execution, and agreed to spend an aggregate total of US $8 million on exploration and related expenditures over the next five years and subsequent to exercise the earn-in, ISGC and Patriot Gold would form a 70/30 joint venture. Under this agreement financing of future work on the property would be on a proportional basis under the direction of a management committee with voting rights proportional to ownership percentage. Either party could be diluted on the basis of a standard formula if it did not contribute to the planned programs. If either party was diluted below 10 percent, their interest would convert to a three percent NSR (net smelter return) royalty. An existing 3-3.5 percent NSR existed on the Moss Mine Property.

 

In March 2011, ISGC transferred its rights to the Exploration and Option Agreement dated February 28, 2011, to Northern Vertex Mining Corp. (“Northern Vertex”).

 

On January 21, 2016, an arbitrator ruled that Northern Vertex met the required expenditures, successfully carried out pilot production, and produced a feasibility study thereby fulfilling the Exploration and Option Agreement terms entitling them to have earned an undivided 70% interest in the Moss Property.

 

On May 12, 2016, the Company entered into a material definitive Agreement for Purchase and Sale of Mining Claims and Escrow Instructions (the “Purchase and Sale Agreement”) with Golden Vertex Corp., an Arizona corporation (“Golden Vertex,” a wholly-owned Subsidiary of Northern Vertex) whereby Golden Vertex agreed to purchase the Company’s remaining 30% working interest in the Moss Gold/Silver Mine for $1,155,600 (C$1,500,000) plus a 3% net smelter return royalty. Specifically, the Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto and in which the Company had any interest. The purchase price consisted of $924,479 (C$1,200,000) in cash payable at closing and the remaining $231,120 (C$300,000) was paid by the issuance of Northern Vertex common shares to the Company valued at $0.26 (C$0.35) (857,140 shares), issued pursuant to the terms and provisions of an investment agreement entered between the Company and Northern Vertex contemporaneous to the Purchase and Sale Agreement. The investment agreement prohibited the resale of the shares during the four-month period following the date of issuance and thereafter, the Company agreed to not sell the shares in an amount exceeding 100,000 shares per month.

 

 

 

 13 

 

 

Windy Peak Property

 

The Windy Peak Property, (“Windy Peak”) consists of 114 unpatented mineral claims covering approximately 2,337 acres, 3 miles NNE of the Bell Mountain and 7 miles east of the Fairview mining district in southwest Nevada.

 

As of September 30, 2019, the company has incurred approximately $616,143 of exploration expenses on the Windy Peak Property, and $124,056 and $239,917 were spent for the nine months ended September 30, 2019 and 2018, respectively.

 

Rainbow Mountain Property

 

In the fall of 2018, after conducting initial reconnaissance of the Rainbow Mountain, the Company acquired the Rainbow Mountain Property (“Rainbow Mountain”). This early-stage exploration project was secured through staking and filing the associated paperwork and fees with the BLM and County.

 

The Rainbow Mountain gold project consists of 81 unpatented lode claims totaling approximately 1,620 contiguous acres, located approximately 23 km southeast of Fallon, in the state of Nevada. Access to the project area is by paved highway, followed by a short stretch of gravel road.

 

Annual maintenance fees paid to the BLM and recording fees must be paid to the respective county on or before September 1 of each year to keep the claims in good standing, provided the filings are kept current these claims can be kept in perpetuity. As of September 30, 2019, the company has incurred approximately $31,472 of fees and exploration expenses on the Rainbow Mountain Property, and $2,160 and $28,412 were spent for the nine months ended September 30, 2019 and 2018, respectively.

 

NOTE 4 – ROYALTY INTERESTS

 

Pursuant to the Purchase and Sale Agreement with Golden Vertex, the Company has a 3% net smelter return royalty on the Moss Gold/Silver Mine in Arizona. For the nine months ended September 30, 2019 and 2018, the Company earned royalties of $973,271 and $293,472, respectively. As of September 30, 2019 and December 31, 2018, the Company had Royalties Receivables of $435,934 and 244,678, respectively.

 

Pursuant to the Bruner Purchase and Sale Agreement with Canamex Resources, the Company has a 2% net smelter return royalty on the Bruner Gold/Silver mine in Nevada. As of September 30, 2019, no royalties have yet been earned.

 

In March 2019, the Company purchased a Vanadium Oxide royalty interest from a related party. In exchange for a non-refundable payment of $300,000, the Company will receive royalties based on the gross production of Vanadium Oxide (“Vanadium”) from a bitumen deposit covering 19 oil sands leases in Alberta. For each barrel of bitumen produced from the specified oil sands until March 21, 2039, or upon termination of mining, whichever is earlier, the Company will be paid a royalty equal to 25 grams of Vanadium per barrel of bitumen produced, multiplied by the price of Vanadium Pentoxide 98% min in-warehouse Rotterdam published on the last business day of the month in which the gross production of bitumen occurred. As of September 30, 2019, $240,000 has been paid, and the remaining $60,000 will be paid in installments through March 30, 2020 and is reflected in Accounts Payable and Accrued Liabilities – Related Parties. As of September 30, 2019, no royalties have yet been earned.

 

 

 

 14 

 

 

NOTE 5 - STOCK OPTIONS

 

The Company’s Board of Directors adopted the 2019 Stock Option Plan (the “2019 Plan”) in July 2019, the 2014 Stock Option Plan (the “2014 Plan”) in June 2014, the 2012 Stock Option Plan (the “2012 Plan”) in July 2012 and the 2005 Stock Option Plan (the “2005 Plan”) in November 2005. The combined compensation costs charged against those plans was $45,200 and $273,185 for the nine months ended September 30, 2019 and 2018, respectively.

 

The 2019 Plan, the 2014 Plan, the 2012 Plan and the 2005 Plan reserve and make available for grant common stock shares of up to 9,500,000, 5,000,000, 3,900,000 and 2,000,000, respectively. In November 2015, the 2005 Stock Option Plan expired so that no share may be granted pursuant to this Plan. No option can be granted under the plans 10 years after the plan inception date.

 

Options granted to officers or employees under the plans may be incentive stock options or non-qualified stock options. Options granted to directors, consultants, and independent contracts are limited to non-qualified stock options.

  

The plans are administered by the Board of Directors or a committee designated by the Board of Directors. Subject to specified limitations, the Board of Directors or the Committee has full authority to grant options and establish the terms and conditions for vesting and exercise thereof. However, the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000.

 

Options granted pursuant to the plans are exercisable no later than ten years after the date of grant. The exercise price per share of common stock for options granted shall be determined by the Board of Directors or the designated committee, except for incentive stock options granted to a holder of ten percent or more of Patriot's common stock, for whom the exercise price per share will not be less than 110% of the fair market value.

 

As of September 30, 2019, there were 9,500,000, 535,000 and 2,680,000 shares available for grant under the 2019 Plan, 2014 Plan and 2012 Stock Option Plan, respectively.

 

Stock Option Activity

 

The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. No options were granted in 2019. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding. The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below:

 

    2019     2018  
Risk-free interest rate     N/A       2.07% - 2.9%  
Expected life in years     N/A       10  
Volatility     N/A       425.9% - 438.5%  
Expected dividend yield     N/A       $0  
Exercise Price     N/A       $0.10  

 

 

 

 15 

 

 

The following table summarizes stock option activity and related information for the period ended September 30, 2019:

 

   Number of
Stock Options
Outstanding
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Life (Years)
   Aggregate
Intrinsic
Value
 
Balance December 31, 2017   5,915,000   $0.10    8.04    0.00 
Option granted   1,570,000    0.10           
Options cancelled / expired                  
Options exercised                  
Balance December 31, 2018   7,485,000   $0.10    7.48    0.00 
Option granted                  
Options cancelled / expired                  
Options exercised   (20,000)   0.10           
Balance September 30, 2019   7,465,000   $0.10    6.74    0.00 
                     
Exercisable at September 30, 2019   7,465,000   $0.10    6.74    0.00 

  

The following table summarized information pertaining to unvested stock options for the period ended September 30, 2019:

 

   Shares   Weighted
Average
Grant Date
Fair Value
 
Unvested at December 31, 2017   675,000   $0.112 
Granted        
Vested   (325,000)   0.110 
Exercised / forfeited        
Unvested at December 31, 2018   350,000   $0.113 
Granted        
Vested   (350,000)   0.113 
Exercised / forfeited        
Unvested at September 30, 2019      $ 

  

The Company issues new stock when options are exercised.

 

 

 

 16 

 

 

NOTE 6 - COMMON STOCK

 

The Company may issue up to 400,000,000 shares of $.001 par value common stock. As of September 30, 2019, the Company had 74,380,354 of common shares outstanding.

 

During the three months ended September 30, 2019, the Company granted 100,000 restricted shares of the Company’s common stock at $0.05 per share to an unrelated third party as partial payment for the acquisition of exploration data, for a total non-cash expense of $5,000. In addition, during the nine months ended September 30, 2019 and 2018, the company granted 7,851,500 and 2,531,250 restricted shares of the Company’s common stock at $0.04 per share in payment for services provided to the Company, for total non-cash expense of $174,060 and $101,239. The Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

 

During the year ended December 31, 2018, the Company bought back 100,000 shares of its stock. The shares have been credited to the treasury stock account at cost of $9,093.

 

NOTE 7 - WARRANTS

 

The following table summarizes warrant activity during the period ended September 30, 2019. All outstanding warrants were exercisable during this period.

 

   Number of
Warrants
   Weighted Average
Exercise Price
 
Outstanding December 31, 2017   33,009,457   $0.09 
Issued        
Canceled / exercised   (562,500)   0.12 
Expired        
Outstanding December 31, 2018   32,446,957   $0.09 
Issued        
Canceled / exercised   (8,000,000)   0.09 
Expired   (12,786,957)   0.06 
Outstanding September 30, 2019   11,660,000   $0.12 

 

In April 2019, warrants for 8,000,000 shares were exercised in exchange for a note receivable for $705,000. The note is non-interest bearing and can be repaid at any time with 15 days advance notice to the Company. This receivable has been reviewed for collectability by management and has determined no allowance is necessary.

 

 

 

 17 

 

 

The following tables summarizes outstanding warrants as of September 30, 2019 all of which are exercisable:

 

      Warrants Outstanding and Exercisable  
  Range of Exercise Prices       Number of
Warrants
      Weighted
Avg Exercise
Price
      Remaining Contractual Life (years)  
  $0.05 - $0.08       2,340,000       $0.08       1.11  
  $0.09 - $0.14       6,320,000       $0.11       4.54  
  $0.15 - $0.21       3,000,000       $0.16       5.97  
                             
  Total Outstanding September 30, 2019       11,660,000                  

 

NOTE 8 - PREFERRED STOCK

 

During the year ended December 31, 2018 the company sold 290,000 shares of Series A preferred stock to a related party for total proceeds of $14,500. The holders of the Series A Preferred stock shall be entitled to receive non-cumulative dividends in preference to the declaration or payments of dividends on the Common Stock. In the event of liquidation of the Company, the holders of the Series A Preferred Stock shall receive any accrued and unpaid dividends before distribution or payments to the holders of the Common Stock. Series A Preferred Stock carries the same right to vote and act as Common stock, except that it carries super-voting rights entitling it to One Hundred (100) votes per share.

 

NOTE 9 - RELATED PARTY TRANSACTIONS

 

For each of the nine months ended September 30, 2019 and 2018, Mr. Zachary Black, a Board Member, received 250,000 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $10,000. For the nine months ended September 30, 2019 and 2018, Mr. Black was paid fees in the amount of $32,530 and $9,124, respectively. Mr. Black provides geological consulting services to the Company pursuant to a consulting agreement.

 

For the nine months ended September 30, 2019 and 2018, Mr. Robert Coale, Chairman of the Board, received 250,000 and 281,250 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $10,000 and $11,239, respectively. For the nine months ended September 30, 2019 and 2018, Mr. Coale was paid fees in the amount of $29,167 and $11,303, respectively. Mr. Coale provides geological consulting services to the Company pursuant to a consulting agreement.

 

For the nine months ended September 30, 2019 and 2018, Mr. Trevor Newton, President, Chief Financial Officer, Secretary, Treasurer and Director of the Company, received 2,101,500 and 2,000,000 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $84,060 and $80,000, respectively. For the nine months ended September 30, 2019 and 2018, Mr. Newton was paid fees in the amount of $161,313 and $116,168, respectively. Mr. Newton provides consulting services to the Company pursuant to a consulting agreement.

 

 

 

 18 

 

 

During the year ended December 31, 2018, the company sold 290,000 shares of Series A preferred stock to Mr. Newton for total proceeds of $14,500.

 

Prior to 2019, Board Members were not paid directors’ fees. However, in an effort to keep expenses down and avoid hiring additional staff, Board Members have become more active in the provision of services as the Company has become more active in developing its projects, vetting new properties, and managing its corporate affairs. Based on the recommendation from legal counsel, and pursuant to a resolution adopted by the Board, each director will now be paid fees of $70,000 per calendar year. Each director term is three years. As of September 30, 2019, the fees for January through September of $52,500 for Mr. Coale and Mr. Black are reflected in Accounts Payable and Accrued Liabilities – Related Parties. In lieu of cash, Mr. Newton opted to receive his director fees in restricted shares of the Company, totaling 5,250,000 shares. The shares were valued at $0.04 for total non-cash expense of $52,500 for the nine months ended September 30, 2019, recorded as Directors Fees Expense, and the fees for the remainder of calendar year 2019 and calendar years 2020 and 2021 are recorded as Prepaid Expenses, in the amount of $157,500. The Company recognizes these consulting fees as general and administrative expenses in the Consolidated Statements of Operations.

  

As discussed in Note 7 above, in April 2019, an unrelated third party exercised warrants for 8,000,000 shares in exchange for a note receivable for $705,000. As a result of this transaction, the owner of the stock is now a related party. The note is non-interest bearing and can be repaid at any time with 15 days advance notice to the Company. This receivable has been reviewed for collectability by management and has determined no allowance is necessary.

 

During the year ended December 31, 2018, the Company acquired 1,000,000 shares of common stock of Strata Power Corporation (“Strata”) through a series of private placements for a total cost of $100,000 as an investment in lithium mining extraction technologies. The purchase was accounted for as a marketable security in available for sale securities. Strata is a related party through Trevor Newton, who is President and a member the Board of Directors of both Patriot and Strata. Management has considered the guidance that is used to evaluate whether the Company has significant influence over Strata and has determined that no such significant influence exists.

 

NOTE 10 - SUBSEQUENT EVENTS

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 19 

 

 

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

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking information. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management of Patriot Gold Corp. (hereinafter referred to as the “Company,” “Patriot Gold” or “we”) and other matters. Forward-looking information may be included in this Annual Report on Form 10-K or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by the Company. One can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Annual Report on Form 10-K or in documents incorporated by reference in this Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

 

The Company has based the forward-looking statements relating to the Company’s operations on management’s current expectations, estimates and projections about the Company and the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.

 

General Overview

 

As a natural resource exploration company, our focus is to acquire, explore and develop natural resource properties which may host mineral reserves which may be economical to extract commercially. With this in mind, we have identified and secured interests in mining claims with respect to properties in Nevada. Current cash on hand plus anticipated royalty revenue is sufficient to fund planned operations for FY 2019 after payment of accounts payable outstanding at September 30, 2019. Our officers and directors and advisors, attorneys and consultants will continue to be utilized to support all operations.

 

Results of Operations

 

Comparison of the Three and Nine Months Ended September 30, 2019 to the Three and Nine Months Ended September 30, 2018

 

During the three months ended September 30, 2019 and 2018, we had revenues of $435,934 and $201,909, respectively, resulting from the Moss royalty. During the nine months ended September 30, 2019 and 2018, we had revenues of $973,271 and $293,472, respectively. We are currently exploring and developing our properties and are actively reviewing new projects.

 

Net profit for the three months ended September 30, 2019 was $165,563 compared to net loss of $236,125 for the three months ended September 30, 2018. Net profit for the nine months ended September 30, 2019 was $146,092 compared to net loss of $1,008,196 for the nine months ended September 30, 2018. The change in profitability is primarily due to the $973,271 of royalty revenue received from the Moss Gold/Silver mine, compared to $293,472 in the prior year. In addition, the net profit is comprised of an approximate $141,000 decrease in mineral and exploration expenses, a $225,000 decrease in stock-based compensation and a $333,000 decrease in the unrealized holding loss on marketable securities. This was offset by an approximate $157,000 increase of director fees, and an approximate $75,000 increase of consulting expense.

 

For the three months ended September 30, 2019 and 2018, mineral and exploration expenses were $89,168 and $274,382, respectively. For the nine months ended September 30, 2019 and 2018, mineral and exploration expenses were $126,396 and $267,663, respectively for an approximate $141,000 decrease. The decrease in 2019 is primarily due to $152,000 of drilling expenditures on the Windy Peak project incurred in 2018.

 

 

 

 20 

 

 

For the three months ended September 30, 2019 and 2018, general and administrative expenses were $37,529 and $42,102, respectively. For the nine months ended September 30, 2019 and 2018, general and administrative expenses were $120,530 and $128,127, respectively, for an approximate $8,000 decrease.

 

For the three months ended September 30, 2019 and 2018, other income (expenses) were $11,240 and ($78,919), respectively. For the nine months ended September 30, 2019 and 2018, other expenses were $24,487 and $357,916, respectively. The change in other income/expense is due to an approximated $333,000 decrease in unrealized holding losses on marketable securities.

 

Change in Fiscal Year-end

 

Subsequent to the Company’s most recent fiscal year-end of May 31, 2019, the Company elected to change its fiscal year-end to coincide with a calendar year-end of December 31, 2019. The operations related to the period from June 1, 2019 to September 30, 2019 are as follows:

 

Consolidated Statement of Operations

 

   

For the one

month ended

June 30,

2019

   

For the three

months ended

September 30,

2019

 

For the four

months ended

September 30,

2019

                       
Revenues $ 108,590     $ 435,934     $ 544,524  
                       
Expenses:                      
Mineral costs   3,293       89,168       92,461  
Consulting expense   25,928       78,356       104,284  
Stock based compensation   -       24,058       24,058  
Directors Fees   17,500       52,500       70,000  
General and administrative   19,365       37,529       56,894  
Total operating expense   66,086       281,611       347,697  
                       
Net income from operations   42,504       154,323       196,827  
                       
Other income (expense):                      
Unrealized holding gain (loss) on marketable securities   -       10,099       10,098  
Currency exchange   (31 )     1,113       1,082  
Realized loss on sale of marketable securities   -       -       -  
Other miscellaneous income   7       28       35  
Total other income (expense)   (24 )     11,240       11,216  
                       
Net income $ 42,480     $ 165,563     $ 208,043  
                       
Earnings per share, basic and diluted:                      
Income per common share - basic $ 0.00     $ 0.00     $ 0.00  
Income per common share - diluted $ 0.00     $ 0.00     $ 0.00  
                       
Weighted average shares outstanding - basic   74,280,354       74,316,224       74,307,403  
Weighted average shares outstanding - diluted   74,280,354       74,316,224       74,307,403  

 

 

 

 21 

 

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

           Series A                   Accumulated         
   Preferred Stock   Preferred Stock   Common Stock       Additional   Other         
       Par       Par       Par   Treasury   Paid-In   Comprehensive   Retained     
   Shares   Value   Shares   Value   Shares   Value   Stock   Capital   Income   Deficit   Total 
For the 4 months ended September 30, 2019                               
       $    290,000   $290    74,280,354   $74,280   $(9,093)  $29,842,129   $(16,361)  $(28,418,650)  $1,472,595 
                                                        
Issuance of restricted common stock                   100,000    100        4,900            5,000 
                                                        
Vesting of stock options                               24,058            24,058 
                                                        
Net income                                       208,043    208,043 
                                                        
Balance September 30, 2019      $    290,000   $290    74,380,354   $74,380   $(9,093)  $29,871,087   $(16,361)  $(28,210,607)  $1,709,696 

 

 

 

 

 22 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  

For the Four Months Ended September 30,

2019

 
     
Net Income  $208,043 
Adjustments to reconcile net loss to net cash used in operating activities:     
Compensation expense of stock options   24,058 
Restricted Common stock issued for services   5,000 
Fair value adjustment for marketable securities   (11,407)
Change in operating assets and liabilities:     
Other receivables   (145,826)
Prepaid expenses   15,333 
GST receivable   108 
Accounts payable and accrued liabilities   (70,915)
Accounts payable and accrued liabilities – related parties   63,610 
Net cash flows provided by operating activities   88,004 
      
Net cash flows used in investing activities    
      
Net cash flows provided by financing activities    
      
Net increase in cash   88,004 
Cash, beginning of period   113,350 
Cash, end of period  $201,354 
      
Supplemental disclosure of cash paid for:     
Interest  $ 
Income taxes  $ 

 

 

 

 23 

 

 

Liquidity and Capital Resources

 

We had total assets of $1,935,467 at September 30, 2019 consisting primarily of $201,354 of cash, $123,679 of marketable securities, $435,934 of other receivables, $169,500 of Prepaid Expenses, a $300,000 royalty interest, and a note receivable for $705,000. We had total liabilities of $225,771 at September 30, 2019, consisting primarily of accounts payable and accrued expenses.

 

We anticipate that we will incur the following during the year ended December 31, 2020:

 

  · $350,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934 and compliance with Canadian regulatory authorities.

 

Cash provided by (used in) operations was $252,769 and ($251,370) for the nine months ended September 30, 2019 and 2018, respectively. The $504,139 increase in cash provided by operations was primarily due to the increase in royalty revenue.

 

Investing activities for the nine months ended September 30, 2019 and 2018 used cash of $169,167 and $126,599, respectively. Cash used in 2019 related to the purchase of a royalty interest for Vanadium Oxide, offset by cash received from the sale of marketable securities. Cash used in 2018 related to the purchase of a royalty interest and marketable securities.

 

Financing activities during the nine months ended September 30, 2019 and 2018 generated cash of $2,000 and $5,407, respectively. During the nine months ended September 30, 2019, we generated cash of $2,000 from the exercise of stock options. During the nine months ended September 30, 2018, we issued Series A Preferred Stock generating cash of $14,500 which was offset by the purchase of treasury stock for $9,093. For further information regarding common stock activity see Note 6 - Common Stock in the financial statements included in this 10-Q filing.

 

Management estimates that the Company will not need additional funding for the next twelve months.

 

We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.

 

 

 

 24 

 

 

Revenue Recognition

 

On June 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty from Golden Vertex of 3% of net smelter returns (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss mine. The Company’s revenue recognition policy standards include the following elements under ASU 606:

 

  1. Identify the contract with the customer. The contract with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16.

 

  2. Identify the performance obligations in the contract. The performance obligation in the contract required Patriot to relinquish its 30% interest in the Moss gold/silver mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest.

 

  3. Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss mine. See Note 3 for definition of Net Smelter Returns.

 

  4. Allocate the transaction price to the performance obligations in the contract. The Company only has one performance obligation, the transfer of the rights to the Moss mine, which has already been fulfilled.

  

  5. Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method applied to contracts not yet completed as of the date of adoption.

 

Mineral Property Acquisition and Exploration Costs

 

Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through September 30, 2019.

 

 

 

 25 

 

 

Deferred Taxes

 

The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.

 

Stock-Based Compensation

 

We account for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

 

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

  

The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

 

Item 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Under the supervision and with the participation of our management, including our principal executive, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2019. Based on this evaluation, the Company’s Chief Executive Officer, who also serves as its Principal Financial Officer, concluded that our disclosure controls and procedures were effective.

 

Changes in internal controls

 

During the quarter covered by this report, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 26 

 

 

PART II

 

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None  

 

ITEM 1A. RISK FACTORS

 

N/A

 

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

 

N/A

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K require certain mine safety disclosures to be made by companies that operate mines regulated under the Federal Mine Safety and Health Act of 1977. However, the requirements of the Act and Item 104 of Regulation S-K do not apply as the Company does not engage in mining activities. Therefore, the Company is not required to make such disclosures.

 

ITEM 5. OTHER INFORMATION

 

None

 

 

 

 

 

 

 

 27 

 

 

ITEM 6. EXHIBITS

 

 

 

INDEX TO EXHIBITS

 

Exhibit

No.

  Description
     
31.1   Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.
     
32.1   Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 28 

 

 

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.

 

 

Dated: November 14, 2019

 

PATRIOT GOLD CORP.

 

By:   /s/ Trevor Newton

       Trevor Newton

       Chief Executive Officer and President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 29 

 

EX-31.1 2 pgold_ex3101.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER

EXHIBIT 31.1

 

Certification of Chief Financial Officer

and Chief Executive Officer Pursuant to  

Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d –14(a)

 

 

I, Trevor Newton, certify that:

 

1.   I have reviewed this quarterly report on Form 10-Q of Patriot Gold Corp.;

 

2.   Based on my knowledge, this quarterly 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 quarterly 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.        I am 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 Rules 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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.        I have disclosed, based on my 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.
           

 

 

Dated: November 14, 2019

 

 

       
           
By: /s/ Trevor Newton                           
  Trevor Newton        
 

Chief Executive Officer,

President, Treasurer and Secretary

(Principal Executive Officer and Principal Financial Officer)

     

 

EX-32.1 3 pgold_ex3201.htm CERTIFICATION

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Section 1350 Certification

 

In connection with the Quarterly Report of Patriot Gold Corp. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trevor Newton, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C 78m(a) or 78o(d)); and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

 

Dated: November 14, 2019

 

By: /s/ Trevor Newton                       
  Trevor Newton  
 

Chief Executive Officer,

President, Treasurer and Secretary

(Principal Executive Officer and Principal Financial Officer)

 

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Based on the recommendation from legal counsel, and pursuant to a resolution adopted by the Board, each director will now be paid fees of $70,000 per calendar year. Each director term is three years. As of September 30, 2019, the fees for January through September of $52,500 for Mr. Coale and Mr. Black are reflected in Accounts Payable and Accrued Liabilities &#8211; Related Parties. In lieu of cash, Mr. Newton opted to receive his director fees in restricted shares of the Company, totaling 5,250,000 shares. The shares were valued at $0.04 for total non-cash expense of $52,500 for the nine months ended September 30, 2019, recorded as Directors Fees Expense, and the fees for the remainder of calendar year 2019 and calendar years 2020 and 2021 are recorded as Prepaid Expenses, in the amount of $157,500. The Company recognizes these consulting fees as general and administrative expenses in the Consolidated Statements of Operations.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;&#160;</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As discussed in Note 7 above, in April 2019, an unrelated third party exercised warrants for 8,000,000 shares in exchange for a note receivable for $705,000. As a result of this transaction, the owner of the stock is now a related party. The note is non-interest bearing and can be repaid at any time with 15 days advance notice to the Company. This receivable has been reviewed for collectability by management and has determined no allowance is necessary.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2018, the Company acquired 1,000,000 shares of common stock of Strata Power Corporation (&#8220;Strata&#8221;) through a series of private placements for a total cost of $100,000 as an investment in lithium mining extraction technologies. The purchase was accounted for as a marketable security in available for sale securities. Strata is a related party through Trevor Newton, who is President and a member the Board of Directors of both Patriot and Strata. 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2. SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Reconciliation of income (loss) per share
   For the period ended September 30, 
   2019   2018 
Numerator:        
Net income (loss) available to common stockholders  $146,092   $(1,008,196)
           
Denominator:          
Weighted-average shares, basic   68,309,830    57,679,687 
Effect of dilutive shares:          
Incremental shares from the assumed exercise of dilutive stock warrants   39,402     
Weighted-average shares diluted   68,349,232    57,679,687 
           
Net income (loss) per common share, basic  $0.00   $(0.02)
Net income (loss) per common share, diluted  $0.00   $(0.02)
Schedule of antidilutive shares
   For the period ended September 30, 
   2019   2018 
Common stock equivalents:          
Stock options   7,465,000    7,485,000 
Stock warrants   11,460,000    32,246,957 
Total   18,925,000    39,731,957 
Schedule of assets measured on a recurring basis
   Fair Value Measurement at  Fair Value Measurement at
   September 30, 2019  December 31, 2018
   Using
Level 1
  Total   Using
Level 1
  Total 
Assets:              
Marketable securities  $ 123,679  $123,679   $ 167,617  $167,617 
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8. PREFERRED STOCK
9 Months Ended
Sep. 30, 2019
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]  
PREFERRED STOCK

NOTE 8 - PREFERRED STOCK

 

During the year ended December 31, 2018 the company sold 290,000 shares of Series A preferred stock to a related party for total proceeds of $14,500. The holders of the Series A Preferred stock shall be entitled to receive non-cumulative dividends in preference to the declaration or payments of dividends on the Common Stock. In the event of liquidation of the Company, the holders of the Series A Preferred Stock shall receive any accrued and unpaid dividends before distribution or payments to the holders of the Common Stock. Series A Preferred Stock carries the same right to vote and act as Common stock, except that it carries super-voting rights entitling it to One Hundred (100) votes per share.

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4. ROYALTY INTERESTS
9 Months Ended
Sep. 30, 2019
Royalty Interests  
ROYALTY INTERESTS

NOTE 4 – ROYALTY INTERESTS

 

Pursuant to the Purchase and Sale Agreement with Golden Vertex, the Company has a 3% net smelter return royalty on the Moss Gold/Silver Mine in Arizona. For the nine months ended September 30, 2019 and 2018, the Company earned royalties of $973,271 and $293,472, respectively. As of September 30, 2019 and December 31, 2018, the Company had Royalties Receivables of $435,934 and 244,678, respectively.

 

Pursuant to the Bruner Purchase and Sale Agreement with Canamex Resources, the Company has a 2% net smelter return royalty on the Bruner Gold/Silver mine in Nevada. As of September 30, 2019, no royalties have yet been earned.

 

In March 2019, the Company purchased a Vanadium Oxide royalty interest from a related party. In exchange for a non-refundable payment of $300,000, the Company will receive royalties based on the gross production of Vanadium Oxide (“Vanadium”) from a bitumen deposit covering 19 oil sands leases in Alberta. For each barrel of bitumen produced from the specified oil sands until March 21, 2039, or upon termination of mining, whichever is earlier, the Company will be paid a royalty equal to 25 grams of Vanadium per barrel of bitumen produced, multiplied by the price of Vanadium Pentoxide 98% min in-warehouse Rotterdam published on the last business day of the month in which the gross production of bitumen occurred. As of September 30, 2019, $240,000 has been paid, and the remaining $60,000 will be paid in installments through March 30, 2020 and is reflected in Accounts Payable and Accrued Liabilities – Related Parties. As of September 30, 2019, no royalties have yet been earned.

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7. Warrants (Details - Warrants by exercise price) - Warrant [Member] - $ / shares
9 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Dec. 31, 2017
Warrants outstanding 11,660,000 32,446,957 33,009,457
Warrants exercisable, weighted average exercise price $ 0.12 $ 0.09 $ 0.09
$0.05 - $0.08 [Member]      
Warrants outstanding 2,340,000    
Warrants exercisable, weighted average exercise price $ 0.08    
Warrants exercisable, remaining contractual life 1 year 1 month 9 days    
$0.09 - $0.14 [Member]      
Warrants outstanding 6,320,000    
Warrants exercisable, weighted average exercise price $ 0.11    
Warrants exercisable, remaining contractual life 4 years 6 months 14 days    
$0.15 - $0.21 [Member]      
Warrants outstanding 3,000,000    
Warrants exercisable, weighted average exercise price $ 0.16    
Warrants exercisable, remaining contractual life 5 years 11 months 19 days    
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2. SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Goldbase and Patriot Canada. Collectively, they are referred to herein as “the Company”. Inter-company accounts and transactions have been eliminated.

 

Management’s Estimates and Assumptions

 

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.

 

Going Concern

 

Management believes they will have sufficient funds to support their business based on the following: (a) revenues derived from the Moss royalty, given the Moss mine is now in production; (b) the Company’s marketable securities are relatively liquid; (c) the Company believes it can raise additional funds if needed to support our business plan, although there can be no assurance that the Company can raise any additional funds, or if it can, that such funds will be on terms acceptable to the Company.

 

Exploration and Development Costs

 

Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through September 30, 2019.

  

Cash and Cash Equivalents

 

The Company considers all investment instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company has no cash equivalents as of September 30, 2019 and December 31, 2018.

 

Marketable Securities

 

Investment securities are classified in one of three categories: held to maturity, available for sale, or trading. Management determines the appropriate classification of securities at the time of purchase. Investment securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. As of September 30, 2019, and December 31, 2018, the Company has no investments in held to maturity securities. 

 

Investment securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

 

Investment securities that are not considered to be held to maturity or trading are classified as available for sale. This type of investment is stated at fair value with unrealized gains and losses, net of tax, reported in a separate component of shareholders’ equity (“accumulated other comprehensive income”). Gains and losses from sales of investments classified as available for sale are determined using the specific identification method. As of September 30, 2019, and December 31, 2018, the Company has no investments classified as available for sale.

 

The Company’s short-term marketable securities classified as trading securities are comprised of Northern Vertex Mining Corp. and Strata Power Corporation (“Strata”) stock. The Company acquired the Northern Vertex stock on May 26, 2016 as part of the Moss Property sale. The Company purchased Strata common stock through multiple private placement offerings as an investment in lithium mining extraction technologies (see Note 9).

 

Reclamation Deposits

 

Various mining laws and permits require that financial assurances be in place for certain environmental and reclamation obligations. Accordingly, the Company pays cash bonds to the Bureau of Land Management (“BLM”) upon acquisition of mining rights for estimated potential reclamation obligations. Any residual funds after reclamation obligations have been paid, are refunded to the Company. Upon payment of a cash bond, the Company recognizes a reclamation deposit as a long-term asset on its Consolidated Balance Sheets. As of September 30, 2019, and December 31, 2018, there were no reclamation deposits recorded.

 

Foreign Currency Translation

 

The Company’s functional currency and reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired, or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in the consolidated statements of operations.

 

Concentration of Credit Risk

 

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with two financial institutions in the form of demand deposits.

  

Income/Loss per Share

 

Basic earnings per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares plus dilutive potential common shares outstanding during the period.

 

The following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings per share:

 

   For the period ended September 30, 
   2019   2018 
Numerator:        
Net income (loss) available to common stockholders  $146,092   $(1,008,196)
           
Denominator:          
Weighted-average shares, basic   68,309,830    57,679,687 
Effect of dilutive shares:          
Incremental shares from the assumed exercise of dilutive stock warrants   39,402     
Weighted-average shares diluted   68,349,232    57,679,687 
           
Net income (loss) per common share, basic  $0.00   $(0.02)
Net income (loss) per common share, diluted  $0.00   $(0.02)

 

The following were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s loss from continuing operations and loss from discontinued operations. In periods where the Company has a net loss, all dilutive securities are excluded.

 

   For the period ended September 30, 
   2019   2018 
Common stock equivalents:          
Stock options   7,465,000    7,485,000 
Stock warrants   11,460,000    32,246,957 
Total   18,925,000    39,731,957 

 

Comprehensive Income

 

Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net income. For the Company, such items consist primarily of foreign currency translation gains and losses.

 

Accumulated other comprehensive income at September 30, 2019 and December 31, 2018, consists of foreign currency adjustments related to the Company changing its functional currency from Canadian to U.S. dollar in 2003.

 

Stock Options

 

The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

 

The Company accounts for non-employee stock-based awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Under the new standard, the Company will value all equity classified awards at their grant-date under ASC718 and no options were required to be revalued at adoption.

 

The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

 

Stock-based Compensation

 

We account for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

 

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

  

The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

 

Fair Value of Financial Instruments

 

The carrying value of the Company's financial instruments, including prepaids, accounts payable and accrued liabilities, at September 30, 2019 and December 31, 2018 approximates their fair values due to the short-term nature of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company carries other company’s equity instruments at fair value as required by U.S. GAAP, which are valued using level 1 inputs under the fair value hierarchy.

 

In general, investments with original maturities of greater than 90 days and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may also be classified as short-term based on their highly liquid nature and can be sold to fund current operations.

 

Fair Value Hierarchy

 

Fair value is defined within the accounting rules as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The rules established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

 

Level 1. Quoted prices in active markets for identical assets or liabilities.

 

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.

 

Level 3. Unobservable inputs to the valuation methodology are significant to the measurement of the fair value of assets or liabilities. These Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we were unable to corroborate with observable market data.

 

Assets measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

 

   Fair Value Measurement at  Fair Value Measurement at
   September 30, 2019  December 31, 2018
   Using
Level 1
  Total   Using
Level 1
  Total 
Assets:              
Marketable securities  $ 123,679  $123,679   $ 167,617  $167,617 

 

Revenue Recognition

 

On June 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty from Golden Vertex of 3% of net smelter returns (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss mine. The Company’s revenue recognition policy standards include the following elements under ASU 606:

 

  1. Identify the contract with the customer. The contract with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16.

 

  2. Identify the performance obligations in the contract. The performance obligation in the contract required Patriot to relinquish its 30% interest in the Moss gold/silver mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest.

 

  3. Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss mine. See Note 3 for definition of Net Smelter Returns.

 

  4. Allocate the transaction price to the performance obligations in the contract. The Company only has one performance obligation, the transfer of the rights to the Moss mine, which has already been fulfilled.

  

  5. Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method applied to contracts not yet completed as of the date of adoption.

 

Related Party Transactions

 

A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) an entity or person who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

 

Income Taxes

 

The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.

 

The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

 

New Accounting Pronouncements

 

In May 2017, the FASB issued ASU 2017-09 which clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is only required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective for the Company on June 1, 2018, with early adoption permitted. The new guidance must be applied prospectively to awards modified on or after the adoption date. The future impact of ASU 2017-09 will be dependent on the nature of future stock award modifications, however no significant impact is expected.

 

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on it consolidated financial statements.

 

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

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Statement [Abstract]        
Revenues $ 435,934 $ 201,909 $ 973,271 $ 293,472
Expenses        
Mineral costs 89,168 274,382 126,396 267,663
Consulting expense 78,356 42,631 249,006 173,538
Stock based compensation 24,058 0 149,260 374,424
Director Fees 52,500 0 157,500 0
General and administrative 37,529 42,102 120,530 128,127
Total operating expense 281,611 359,115 802,692 943,752
Net income (loss) from operations 154,323 (157,206) 170,579 (650,280)
Other income (expense)        
Unrealized holding gain (loss) on marketable securities 10,099 (75,464) (25,663) (74,576)
Currency exchange 1,113 (3,465) 2,988 (295,600)
Realized loss on sale of marketable securities 0 0 (1,894) 0
Other miscellaneous income 28 10 82 12,260
Total other income (expense) 11,240 (78,919) (24,487) (357,916)
Net income (loss) $ 165,563 $ (236,125) $ 146,092 $ (1,008,196)
Earnings per share - basic and diluted        
Income (loss) per common share - basic $ 0.00 $ (0.00) $ 0.00 $ (0.02)
Income (loss) per common share - diluted $ 0.00 $ (0.00) $ 0.00 $ (0.02)
Weighted average shares outstanding - Basic 74,316,224 57,679,687 68,309,830 57,679,687
Weighted average shares outstanding - Diluted 74,355,625 57,679,687 68,349,232 57,679,687
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4. Royalty Interests (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Royalties receivables $ 435,934   $ 244,678
Payment to acquire mineral interest 190,000 $ 30,000  
Accounts payable 23,726   $ 139,832
Vanadium Oxide [Member]      
Royalty income 0    
Payment to acquire mineral interest 240,000    
Accounts payable 60,000    
Moss Gold/Silver Mine [Member]      
Royalty income 973,271 293,472  
Royalties receivables 435,934 $ 244,678  
Bruner Gold/Silver Mine [Member]      
Royalty income $ 0    
Revenue From Rights Concentration Risk [Member] | Moss Gold/Silver Mine [Member]      
Royalty percentage 3.00%    
Revenue From Rights Concentration Risk [Member] | Bruner Gold/Silver Mine [Member]      
Royalty percentage 2.00%    
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2. Significant Accounting Policies (Details - Antidilutive Shares) - shares
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Antidilutive shares 18,925,000 39,731,957
Options [Member]    
Antidilutive shares 7,465,000 7,485,000
Warrant [Member]    
Antidilutive shares 11,460,000 32,246,957
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($)
Preferred Stock
Series A Preferred Stock
Common Stock
Treasury Stock
Additional Paid-In Capital
Other Comprehensive Income / Loss
Retained Deficit
Total
Beginning balance, shares at Dec. 31, 2017 0 0 55,877,604          
Beginning balance, value at Dec. 31, 2017 $ 0 $ 0 $ 55,878 $ 0 $ 28,429,695 $ (16,361) $ (27,313,174) $ 1,156,038
Common stock option grants         273,174     273,174
Sale of preferred stock, shares   290,000            
Sale of preferred stock, value   $ 290     14,210     14,500
Stock issued new, shares     2,531,250          
Stock issued new, value     $ 2,531   98,719     101,250
Stock repurchased, value       (9,093)       (9,093)
Net income             (1,008,196) (1,008,196)
Ending balance, shares at Sep. 30, 2018 0 290,000 58,408,854          
Ending balance, value at Sep. 30, 2018 $ 0 $ 290 $ 58,409 (9,093) 28,815,798 (16,361) (28,321,370) 527,673
Beginning balance, shares at Dec. 31, 2017 0 0 55,877,604          
Beginning balance, value at Dec. 31, 2017 $ 0 $ 0 $ 55,878 0 28,429,695 (16,361) (27,313,174) 1,156,038
Ending balance, shares at Dec. 31, 2018 0 290,000 58,408,854          
Ending balance, value at Dec. 31, 2018 $ 0 $ 290 $ 58,409 (9,093) 28,815,798 (16,361) (28,356,699) 492,344
Beginning balance, shares at Jun. 30, 2018 0 290,000 58,408,854          
Beginning balance, value at Jun. 30, 2018 $ 0 $ 290 $ 58,409 (9,093) 28,815,798 (16,361) (28,085,245) 763,798
Net income             (236,125) (236,125)
Ending balance, shares at Sep. 30, 2018 0 290,000 58,408,854          
Ending balance, value at Sep. 30, 2018 $ 0 $ 290 $ 58,409 (9,093) 28,815,798 (16,361) (28,321,370) 527,673
Beginning balance, shares at Dec. 31, 2018 0 290,000 58,408,854          
Beginning balance, value at Dec. 31, 2018 $ 0 $ 290 $ 58,409 (9,093) 28,815,798 (16,361) (28,356,699) 492,344
Exercise of warrants, shares issued     8,000,000          
Exercise of warrants, value     $ 8,000   697,000     705,000
Exercise of stock options, shares issued     20,000          
Exercise of stock options, value     $ 20   1,980     2,000
Stock issued new, shares     7,951,500          
Stock issued new, value     $ 7,951   311,109     319,060
Vesting of stock options         45,200     45,200
Net income             146,092 146,092
Ending balance, shares at Sep. 30, 2019 0 290,000 74,380,354          
Ending balance, value at Sep. 30, 2019 $ 0 $ 290 $ 74,380 (9,093) 29,871,087 (16,361) (28,210,607) 1,709,696
Beginning balance, shares at Jun. 30, 2019 0 290,000 74,280,354          
Beginning balance, value at Jun. 30, 2019 $ 0 $ 290 $ 74,280 (9,093) 29,842,129 (16,361) (28,376,170) 1,515,075
Stock issued new, shares     100,000          
Stock issued new, value     $ 100   4,900     5,000
Vesting of stock options         24,058     24,058
Net income             165,563 165,563
Ending balance, shares at Sep. 30, 2019 0 290,000 74,380,354          
Ending balance, value at Sep. 30, 2019 $ 0 $ 290 $ 74,380 $ (9,093) $ 29,871,087 $ (16,361) $ (28,210,607) $ 1,709,696
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Document and Entity Information - shares
9 Months Ended
Sep. 30, 2019
Nov. 13, 2019
Document and Entity Information    
Entity Registrant Name PATRIOT GOLD CORP  
Document Type 10-Q  
Document Period End Date Sep. 30, 2019  
Amendment Flag false  
Entity Central Index Key 0001080448  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   74,380,354
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Entity Shell Company false  
Entity Small Business true  
Entity Emerging Growth false  
Entity Interactive Data Current Yes  
Entity File Number 000-32919  
Entity Incorporation State NV  
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3. MINERAL PROPERTIES
9 Months Ended
Sep. 30, 2019
Extractive Industries [Abstract]  
MINERAL PROPERTIES

NOTE 3 - MINERAL PROPERTIES

 

Bruner and Vernal Properties

 

On May 28, 2010 the Company entered into an exclusive right and option agreement with Canamex Resources Corp. (“Canamex”) whereby Canamex could earn a 70% (or up to 75% if a bankable feasibility study is performed) undivided interest in the Bruner, and Bruner Expansion properties, herein after collectively referred to as the “Bruner Properties”. Upon the completion of the terms of the Agreement by Canamex, and upon earning its initial interest, the parties agreed to negotiate a definitive joint venture agreement in good faith to supersede the agreement.

 

During the first half of 2016, it was determined by the Company that Canamex had successfully earned a 70% interest in the Bruner Property according to the terms of the Bruner Option Agreement.

  

On April 25, 2017, the Company and Canamex Resources Corp. entered into a purchase and sale agreement (“Bruner Purchase and Sale Agreement”) whereby Canamex Resources purchased Patriot Gold's 30% working interest in the Bruner gold/silver mine for US$1,000,000 cash. The Company retains a two percent net smelter return (“NSR”) royalty on the Bruner properties including any claims acquired within a two-mile area of interest around the existing claims. Additionally, Canamex has the option to buy-down half of the NSR royalty retained by Patriot for US$5 million any time during a five-year period following closing of the purchase and sale agreement. 

 

As of September 30, 2019, the Company has incurred approximately $89,616 of accumulated option and exploration expenses on the Vernal property.

 

During the nine months ended September 30, 2019 and 2018, the Company incurred exploration expenses of $0 and $(665) on the Vernal property, respectively.

 

Moss Property

 

On March 4, 2004 the Company signed a Letter Agreement (the “Agreement”) that earned it a 100% interest in a number of patented and unpatented mining claims known as the Moss Mine property located in the Oatman Mining District of Mohave county Arizona by paying MinQuest Inc. a one-time fee of $50,000. This $50,000 fee was paid on July 7, 2004. Subject to the terms and conditions of the Agreement, MinQuest would retain a 3% NSR on any and all production derived from the unpatented mining claims listed under the Agreement and on public lands within 1 mile of MinQuest, Inc.’s outside perimeter of the present claim boundary; a 1.0% NSR on patented claims with no other royalty within the property; and a 0.5% overriding NSR on all production within the property derived from patented claims with other royalty interests.

 

On February 28, 2011, the Company entered into an Exploration and Option to Enter Joint Venture Agreement (the “Moss Agreement”), with Idaho State Gold Company, LLC, (“ISGC”) whereby the Company granted the option and right to earn a vested seventy percent (70%) interest in the property and the right and option to form a joint venture for the management and ownership of the properties called the Moss Property, Mohave County, Arizona. Pursuant to the Moss Agreement, ISGC paid US $500,000 upon execution, and agreed to spend an aggregate total of US $8 million on exploration and related expenditures over the next five years and subsequent to exercise the earn-in, ISGC and Patriot Gold would form a 70/30 joint venture. Under this agreement financing of future work on the property would be on a proportional basis under the direction of a management committee with voting rights proportional to ownership percentage. Either party could be diluted on the basis of a standard formula if it did not contribute to the planned programs. If either party was diluted below 10 percent, their interest would convert to a three percent NSR (net smelter return) royalty. An existing 3-3.5 percent NSR existed on the Moss Mine Property.

 

In March 2011, ISGC transferred its rights to the Exploration and Option Agreement dated February 28, 2011, to Northern Vertex Mining Corp. (“Northern Vertex”).

 

On January 21, 2016, an arbitrator ruled that Northern Vertex met the required expenditures, successfully carried out pilot production, and produced a feasibility study thereby fulfilling the Exploration and Option Agreement terms entitling them to have earned an undivided 70% interest in the Moss Property.

 

On May 12, 2016, the Company entered into a material definitive Agreement for Purchase and Sale of Mining Claims and Escrow Instructions (the “Purchase and Sale Agreement”) with Golden Vertex Corp., an Arizona corporation (“Golden Vertex,” a wholly-owned Subsidiary of Northern Vertex) whereby Golden Vertex agreed to purchase the Company’s remaining 30% working interest in the Moss Gold/Silver Mine for $1,155,600 (C$1,500,000) plus a 3% net smelter return royalty. Specifically, the Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto and in which the Company had any interest. The purchase price consisted of $924,479 (C$1,200,000) in cash payable at closing and the remaining $231,120 (C$300,000) was paid by the issuance of Northern Vertex common shares to the Company valued at $0.26 (C$0.35) (857,140 shares), issued pursuant to the terms and provisions of an investment agreement entered between the Company and Northern Vertex contemporaneous to the Purchase and Sale Agreement. The investment agreement prohibited the resale of the shares during the four-month period following the date of issuance and thereafter, the Company agreed to not sell the shares in an amount exceeding 100,000 shares per month.

 

Windy Peak Property

 

The Windy Peak Property, (“Windy Peak”) consists of 114 unpatented mineral claims covering approximately 2,337 acres, 3 miles NNE of the Bell Mountain and 7 miles east of the Fairview mining district in southwest Nevada.

 

As of September 30, 2019, the company has incurred approximately $616,143 of exploration expenses on the Windy Peak Property, and $124,056 and $239,917 were spent for the nine months ended September 30, 2019 and 2018, respectively.

 

Rainbow Mountain Property

 

In the fall of 2018, after conducting initial reconnaissance of the Rainbow Mountain, the Company acquired the Rainbow Mountain Property (“Rainbow Mountain”). This early-stage exploration project was secured through staking and filing the associated paperwork and fees with the BLM and County.

 

The Rainbow Mountain gold project consists of 81 unpatented lode claims totaling approximately 1,620 contiguous acres, located approximately 23 km southeast of Fallon, in the state of Nevada. Access to the project area is by paved highway, followed by a short stretch of gravel road.

 

Annual maintenance fees paid to the BLM and recording fees must be paid to the respective county on or before September 1 of each year to keep the claims in good standing, provided the filings are kept current these claims can be kept in perpetuity. As of September 30, 2019, the company has incurred approximately $31,472 of fees and exploration expenses on the Rainbow Mountain Property, and $2,160 and $28,412 were spent for the nine months ended September 30, 2019 and 2018, respectively.

XML 24 R27.htm IDEA: XBRL DOCUMENT v3.19.3
5. Stock Options (Details - Assumptions) - Options [Member] - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Risk-free interest rate, minimum 2.07%
Risk-free interest rate, maximum 2.90%
Expected life in years 10 years
Volatility rate, minimum 425.90%
Volatility rate, maximum 438.50%
Expected dividend yield $ 0
Weighted average grant date fair value $ 0.10
XML 25 R23.htm IDEA: XBRL DOCUMENT v3.19.3
2. Significant Accounting Policies (Details - Fair value) - Fair Value, Inputs, Level 1 [Member] - Fair Value Measurements Recurring [Member] - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Fair Value of Marketable Securities $ 123,679   $ 167,617
Marketable Securiies [Member]      
Fair Value of Marketable Securities $ 123,679 $ 167,617  
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.3
9. RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 9 - RELATED PARTY TRANSACTIONS

 

For each of the nine months ended September 30, 2019 and 2018, Mr. Zachary Black, a Board Member, received 250,000 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $10,000. For the nine months ended September 30, 2019 and 2018, Mr. Black was paid fees in the amount of $32,530 and $9,124, respectively. Mr. Black provides geological consulting services to the Company pursuant to a consulting agreement.

 

For the nine months ended September 30, 2019 and 2018, Mr. Robert Coale, Chairman of the Board, received 250,000 and 281,250 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $10,000 and $11,239, respectively. For the nine months ended September 30, 2019 and 2018, Mr. Coale was paid fees in the amount of $29,167 and $11,303, respectively. Mr. Coale provides geological consulting services to the Company pursuant to a consulting agreement.

 

For the nine months ended September 30, 2019 and 2018, Mr. Trevor Newton, President, Chief Financial Officer, Secretary, Treasurer and Director of the Company, received 2,101,500 and 2,000,000 shares of restricted common stock, in lieu of cash, for services provided to the Company. The Restricted Common Stock is restricted for a period of three years following the date of grant. The shares were valued at $0.04 for total non-cash expense of $84,060 and $80,000, respectively. For the nine months ended September 30, 2019 and 2018, Mr. Newton was paid fees in the amount of $161,313 and $116,168, respectively. Mr. Newton provides consulting services to the Company pursuant to a consulting agreement.

 

During the year ended December 31, 2018, the company sold 290,000 shares of Series A preferred stock to Mr. Newton for total proceeds of $14,500.

 

Prior to 2019, Board Members were not paid directors’ fees. However, in an effort to keep expenses down and avoid hiring additional staff, Board Members have become more active in the provision of services as the Company has become more active in developing its projects, vetting new properties, and managing its corporate affairs. Based on the recommendation from legal counsel, and pursuant to a resolution adopted by the Board, each director will now be paid fees of $70,000 per calendar year. Each director term is three years. As of September 30, 2019, the fees for January through September of $52,500 for Mr. Coale and Mr. Black are reflected in Accounts Payable and Accrued Liabilities – Related Parties. In lieu of cash, Mr. Newton opted to receive his director fees in restricted shares of the Company, totaling 5,250,000 shares. The shares were valued at $0.04 for total non-cash expense of $52,500 for the nine months ended September 30, 2019, recorded as Directors Fees Expense, and the fees for the remainder of calendar year 2019 and calendar years 2020 and 2021 are recorded as Prepaid Expenses, in the amount of $157,500. The Company recognizes these consulting fees as general and administrative expenses in the Consolidated Statements of Operations.

  

As discussed in Note 7 above, in April 2019, an unrelated third party exercised warrants for 8,000,000 shares in exchange for a note receivable for $705,000. As a result of this transaction, the owner of the stock is now a related party. The note is non-interest bearing and can be repaid at any time with 15 days advance notice to the Company. This receivable has been reviewed for collectability by management and has determined no allowance is necessary.

 

During the year ended December 31, 2018, the Company acquired 1,000,000 shares of common stock of Strata Power Corporation (“Strata”) through a series of private placements for a total cost of $100,000 as an investment in lithium mining extraction technologies. The purchase was accounted for as a marketable security in available for sale securities. Strata is a related party through Trevor Newton, who is President and a member the Board of Directors of both Patriot and Strata. Management has considered the guidance that is used to evaluate whether the Company has significant influence over Strata and has determined that no such significant influence exists.

XML 27 R11.htm IDEA: XBRL DOCUMENT v3.19.3
5. STOCK OPTIONS
9 Months Ended
Sep. 30, 2019
Share-based Payment Arrangement [Abstract]  
STOCK OPTIONS

NOTE 5 - STOCK OPTIONS

 

The Company’s Board of Directors adopted the 2019 Stock Option Plan (the “2019 Plan”) in July 2019, the 2014 Stock Option Plan (the “2014 Plan”) in June 2014, the 2012 Stock Option Plan (the “2012 Plan”) in July 2012 and the 2005 Stock Option Plan (the “2005 Plan”) in November 2005. The combined compensation costs charged against those plans was $45,200 and $273,185 for the nine months ended September 30, 2019 and 2018, respectively.

 

The 2019 Plan, the 2014 Plan, the 2012 Plan and the 2005 Plan reserve and make available for grant common stock shares of up to 9,500,000, 5,000,000, 3,900,000 and 2,000,000, respectively. In November 2015, the 2005 Stock Option Plan expired so that no share may be granted pursuant to this Plan. No option can be granted under the plans 10 years after the plan inception date.

 

Options granted to officers or employees under the plans may be incentive stock options or non-qualified stock options. Options granted to directors, consultants, and independent contracts are limited to non-qualified stock options.

  

The plans are administered by the Board of Directors or a committee designated by the Board of Directors. Subject to specified limitations, the Board of Directors or the Committee has full authority to grant options and establish the terms and conditions for vesting and exercise thereof. However, the aggregate fair market value (determined at the time the option is granted) of the shares with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed $100,000.

 

Options granted pursuant to the plans are exercisable no later than ten years after the date of grant. The exercise price per share of common stock for options granted shall be determined by the Board of Directors or the designated committee, except for incentive stock options granted to a holder of ten percent or more of Patriot's common stock, for whom the exercise price per share will not be less than 110% of the fair market value.

 

As of September 30, 2019, there were 9,500,000, 535,000 and 2,680,000 shares available for grant under the 2019 Plan, 2014 Plan and 2012 Stock Option Plan, respectively.

 

Stock Option Activity

 

The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. No options were granted in 2019. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding. The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below:

 

    2019     2018  
Risk-free interest rate     N/A       2.07% - 2.9%  
Expected life in years     N/A       10  
Volatility     N/A       425.9% - 438.5%  
Expected dividend yield     N/A       $0  
Exercise Price     N/A       $0.10  

 

The following table summarizes stock option activity and related information for the period ended September 30, 2019:

 

   Number of
Stock Options
Outstanding
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Life (Years)
   Aggregate
Intrinsic
Value
 
Balance December 31, 2017   5,915,000   $0.10    8.04    0.00 
Option granted   1,570,000    0.10           
Options cancelled / expired                  
Options exercised                  
Balance December 31, 2018   7,485,000   $0.10    7.48    0.00 
Option granted                  
Options cancelled / expired                  
Options exercised   (20,000)   0.10           
Balance September 30, 2019   7,465,000   $0.10    6.74    0.00 
                     
Exercisable at September 30, 2019   7,465,000   $0.10    6.74    0.00 

  

The following table summarized information pertaining to unvested stock options for the period ended September 30, 2019:

 

   Shares   Weighted
Average
Grant Date
Fair Value
 
Unvested at December 31, 2017   675,000   $0.112 
Granted        
Vested   (325,000)   0.110 
Exercised / forfeited        
Unvested at December 31, 2018   350,000   $0.113 
Granted        
Vested   (350,000)   0.113 
Exercised / forfeited        
Unvested at September 30, 2019      $ 

  

The Company issues new stock when options are exercised.

 

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.19.3
5. STOCK OPTIONS (Tables)
9 Months Ended
Sep. 30, 2019
Share-based Payment Arrangement [Abstract]  
Assumptions used for valuation of stock options
    2019     2018  
Risk-free interest rate     N/A       2.07% - 2.9%  
Expected life in years     N/A       10  
Volatility     N/A       425.9% - 438.5%  
Expected dividend yield     N/A       $0  
Exercise Price     N/A       $0.10  
Schedule of stock option activity
   Number of
Stock Options
Outstanding
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Life (Years)
   Aggregate
Intrinsic
Value
 
Balance December 31, 2017   5,915,000   $0.10    8.04    0.00 
Option granted   1,570,000    0.10           
Options cancelled / expired                  
Options exercised                  
Balance December 31, 2018   7,485,000   $0.10    7.48    0.00 
Option granted                  
Options cancelled / expired                  
Options exercised   (20,000)   0.10           
Balance September 30, 2019   7,465,000   $0.10    6.74    0.00 
                     
Exercisable at September 30, 2019   7,465,000   $0.10    6.74    0.00 
Schedule of unvested stock options
   Shares   Weighted
Average
Grant Date
Fair Value
 
Unvested at December 31, 2017   675,000   $0.112 
Granted        
Vested   (325,000)   0.110 
Exercised / forfeited        
Unvested at December 31, 2018   350,000   $0.113 
Granted        
Vested   (350,000)   0.113 
Exercised / forfeited        
Unvested at September 30, 2019      $ 
XML 29 R32.htm IDEA: XBRL DOCUMENT v3.19.3
7. Warrants (Details - Warrant activity) - Warrant [Member] - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Number of Warrants    
Warrants outstanding, beginning balance 32,446,957 33,009,457
Warrants issued 0 0
Warrants cancelled or exercised (8,000,000) (562,500)
Warrants expired (12,786,957) 0
Warrants outstanding, ending balance 11,660,000 32,446,957
Weighted Average Exercise Price    
Weighted average exercise price, beginning $ 0.09 $ 0.09
Weighted average exercise price, cancelled/exercised 0.09 0.12
Weighted average exercise price, expired 0.06  
Weighted average exercise price, ending $ 0.12 $ 0.09
XML 30 R29.htm IDEA: XBRL DOCUMENT v3.19.3
5. Stock Options (Details - Unvested options) - Unvested Stock Options [Member] - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Shares unvested, beginning balance 350,000 675,000
Shares unvested, granted 0 0
Shares unvested, vested/forfeited (350,000) (325,000)
Unvested, exercised 0  
Shares unvested, ending balance 0 350,000
Price per share, nonvested options, beginning balance $ 0.113 $ 0.112
Price per share nonvested options, vested/forfeited 0.113 0.110
Price per share nonvested options, outstanding $ 0.113
XML 31 R25.htm IDEA: XBRL DOCUMENT v3.19.3
3. Mineral Properties (Details Narrative)
9 Months Ended 11 Months Ended 190 Months Ended
Sep. 30, 2019
USD ($)
NumberOfClaims
Sep. 30, 2018
USD ($)
Apr. 25, 2017
USD ($)
May 31, 2019
USD ($)
Bruner Gold/Silver Mine [Member]        
Proceeds from sale of property     $ 1,000,000  
Gain on sale of mineral property     $ 1,000,000  
Vernal [Member]        
Accumulated exploration costs       $ 89,616
Exploration expenses $ 0 $ (665)    
Windy Peak Property        
Accumulated exploration costs 616,143      
Exploration expenses $ 124,056 239,917    
Unpatented mineral claims | NumberOfClaims 114      
Rainbow Mountain Property [Member]        
Accumulated exploration costs $ 31,472      
Exploration expenses $ 2,160 $ 28,412    
Unpatented mineral claims | NumberOfClaims 81      
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.19.3
2. Significant Accounting Policies (Details - Per Share Reconciliation) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Accounting Policies [Abstract]        
Net income (loss) available to common stockholders $ 165,563 $ (236,125) $ 146,092 $ (1,008,196)
Weighted-average shares, basic 74,316,224 57,679,687 68,309,830 57,679,687
Incremental shares from the assumed exercise of dilutive stock warrants     39,402 0
Weighted-average shares diluted 74,355,625 57,679,687 68,349,232 57,679,687
Net income (loss) per common share, basic $ 0.00 $ (0.00) $ 0.00 $ (0.02)
Net income (loss) per common share, diluted $ 0.00 $ (0.00) $ 0.00 $ (0.02)
XML 33 R7.htm IDEA: XBRL DOCUMENT v3.19.3
1. NATURE OF BUSINESS AND OPERATIONS
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF BUSINESS AND OPERATIONS

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

 

Patriot Gold Corp. (“Company”) was incorporated in the State of Nevada on November 30, 1998. The Company is engaged in natural resource exploration and anticipates acquiring, exploring, and developing natural resource properties. Currently the Company is undertaking programs in Arizona and Nevada. The Company’s common stock trades on the Canadian Securities Exchange under the symbol PGOL, and also on the Over-The-Counter (“OTCQB”) market under the symbol PGOL.

 

On May 23, 2017, the Company caused the incorporation of its wholly owned subsidiary, Patriot Gold Canada Corp (“Patriot Canada”), under the laws of British Columbia, Canada.

 

On April 16, 2010, the Company caused the incorporation of its wholly owned subsidiary, Provex Resources, Inc., (“Provex”) under the laws of Nevada. Effective May 7, 2018, Provex’s name was changed to Goldbase, Inc. (“Goldbase”).

 

Subsequent to the Company’s most recent fiscal year-end of May 31, 2019, the Company elected to change its fiscal year-end to coincide with a calendar year-end of December 31, 2019. All information related to the periods ended September 30, 2018 and December 31, 2018 are unaudited.

XML 34 R3.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2019
Dec. 31, 2018
Common Stock, shares authorized 400,000,000 400,000,000
Common Stock, shares issued 74,380,354 58,408,854
Common Stock, shares outstanding 74,380,354 58,408,854
Treasury shares 100,000 100,000
Preferred Stock [Member]    
Preferred Stock, par or stated value $ 0.001 $ 0.001
Preferred Stock, shares authorized 6,500,000 6,500,000
Preferred Stock, shares issued 0 0
Common Stock, par or stated value $ 0.001 $ 0.001
Preferred Stock Series A [Member]    
Preferred Stock, par or stated value $ 0.001 $ 0.001
Preferred Stock, shares authorized 13,500,000 13,500,000
Preferred Stock, shares issued 290,000 290,000
Common Stock, par or stated value $ 290,000 $ 290,000
XML 35 R30.htm IDEA: XBRL DOCUMENT v3.19.3
5. Stock Options (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Stock compensation expense $ 45,200 $ 273,185
2019 Plan [Member]    
Shares authorized under plan 9,500,000  
Shares available for grant 9,500,000  
2014 Plan [Member]    
Shares authorized under plan 5,000,000  
Shares available for grant 535,000  
2012 Plan [Member]    
Shares authorized under plan 3,900,000  
Shares available for grant 2,680,000  
2005 Plan [Member]    
Shares authorized under plan 2,000,000  
Shares available for grant 0  
XML 36 R34.htm IDEA: XBRL DOCUMENT v3.19.3
8. Preferred Stock (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Proceeds from sale of preferred stock $ 0 $ 14,500  
Series A Preferred Stock [Member]      
Stock issued new, shares     290,000
Proceeds from sale of preferred stock     $ 14,500
XML 37 R17.htm IDEA: XBRL DOCUMENT v3.19.3
2. SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Goldbase and Patriot Canada. Collectively, they are referred to herein as “the Company”. Inter-company accounts and transactions have been eliminated.

Management's Estimates and Assumptions

Management’s Estimates and Assumptions

 

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ from those estimates.

Going Concern

Going Concern

 

Management believes they will have sufficient funds to support their business based on the following: (a) revenues derived from the Moss royalty, given the Moss mine is now in production; (b) the Company’s marketable securities are relatively liquid; (c) the Company believes it can raise additional funds if needed to support our business plan, although there can be no assurance that the Company can raise any additional funds, or if it can, that such funds will be on terms acceptable to the Company.

Exploration and Development Costs

Exploration and Development Costs

 

Mineral exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through September 30, 2019.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all investment instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company has no cash equivalents as of September 30, 2019 and December 31, 2018.

Marketable Securities

Marketable Securities

 

Investment securities are classified in one of three categories: held to maturity, available for sale, or trading. Management determines the appropriate classification of securities at the time of purchase. Investment securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. As of September 30, 2019, and December 31, 2018, the Company has no investments in held to maturity securities. 

 

Investment securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

 

Investment securities that are not considered to be held to maturity or trading are classified as available for sale. This type of investment is stated at fair value with unrealized gains and losses, net of tax, reported in a separate component of shareholders’ equity (“accumulated other comprehensive income”). Gains and losses from sales of investments classified as available for sale are determined using the specific identification method. As of September 30, 2019, and December 31, 2018, the Company has no investments classified as available for sale.

 

The Company’s short-term marketable securities classified as trading securities are comprised of Northern Vertex Mining Corp. and Strata Power Corporation (“Strata”) stock. The Company acquired the Northern Vertex stock on May 26, 2016 as part of the Moss Property sale. The Company purchased Strata common stock through multiple private placement offerings as an investment in lithium mining extraction technologies (see Note 9).

Reclamation Deposits

Reclamation Deposits

 

Various mining laws and permits require that financial assurances be in place for certain environmental and reclamation obligations. Accordingly, the Company pays cash bonds to the Bureau of Land Management (“BLM”) upon acquisition of mining rights for estimated potential reclamation obligations. Any residual funds after reclamation obligations have been paid, are refunded to the Company. Upon payment of a cash bond, the Company recognizes a reclamation deposit as a long-term asset on its Consolidated Balance Sheets. As of September 30, 2019, and December 31, 2018, there were no reclamation deposits recorded.

Foreign Currency Translation

Foreign Currency Translation

 

The Company’s functional currency and reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired, or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in the consolidated statements of operations.

Concentration of Credit Risk

Concentration of Credit Risk

 

The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with two financial institutions in the form of demand deposits.

Income/Loss per Share

Income/Loss per Share

 

Basic earnings per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares plus dilutive potential common shares outstanding during the period.

 

The following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings per share:

 

   For the period ended September 30, 
   2019   2018 
Numerator:        
Net income (loss) available to common stockholders  $146,092   $(1,008,196)
           
Denominator:          
Weighted-average shares, basic   68,309,830    57,679,687 
Effect of dilutive shares:          
Incremental shares from the assumed exercise of dilutive stock warrants   39,402     
Weighted-average shares diluted   68,349,232    57,679,687 
           
Net income (loss) per common share, basic  $0.00   $(0.02)
Net income (loss) per common share, diluted  $0.00   $(0.02)

 

The following were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s loss from continuing operations and loss from discontinued operations. In periods where the Company has a net loss, all dilutive securities are excluded.

 

   For the period ended September 30, 
   2019   2018 
Common stock equivalents:          
Stock options   7,465,000    7,485,000 
Stock warrants   11,460,000    32,246,957 
Total   18,925,000    39,731,957 

 

Comprehensive Income

Comprehensive Income

 

Comprehensive income consists of net income and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded from net income. For the Company, such items consist primarily of foreign currency translation gains and losses.

 

Accumulated other comprehensive income at September 30, 2019 and December 31, 2018, consists of foreign currency adjustments related to the Company changing its functional currency from Canadian to U.S. dollar in 2003.

Stock Options

Stock Options

 

The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

 

The Company accounts for non-employee stock-based awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Under the new standard, the Company will value all equity classified awards at their grant-date under ASC718 and no options were required to be revalued at adoption.

 

The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk-free interest rates.

Stock-based Compensation

Stock-based Compensation

 

We account for equity-based transactions with nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): ASU 2018-07 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

 

We account for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

  

The Company has granted Restricted Common Stock, where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The carrying value of the Company's financial instruments, including prepaids, accounts payable and accrued liabilities, at September 30, 2019 and December 31, 2018 approximates their fair values due to the short-term nature of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company carries other company’s equity instruments at fair value as required by U.S. GAAP, which are valued using level 1 inputs under the fair value hierarchy.

 

In general, investments with original maturities of greater than 90 days and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may also be classified as short-term based on their highly liquid nature and can be sold to fund current operations.

Fair Value Hierarchy

Fair Value Hierarchy

 

Fair value is defined within the accounting rules as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The rules established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels:

 

Level 1. Quoted prices in active markets for identical assets or liabilities.

 

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.

 

Level 3. Unobservable inputs to the valuation methodology are significant to the measurement of the fair value of assets or liabilities. These Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we were unable to corroborate with observable market data.

 

Assets measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

 

   Fair Value Measurement at  Fair Value Measurement at
   September 30, 2019  December 31, 2018
   Using
Level 1
  Total   Using
Level 1
  Total 
Assets:              
Marketable securities  $ 123,679  $123,679   $ 167,617  $167,617 

 

Revenue Recognition

Revenue Recognition

 

On June 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company receives a royalty from Golden Vertex of 3% of net smelter returns (see Note 3) and recognizes revenue at the time minerals are produced and sold at the Moss mine. The Company’s revenue recognition policy standards include the following elements under ASU 606:

 

  1. Identify the contract with the customer. The contract with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16.

 

  2. Identify the performance obligations in the contract. The performance obligation in the contract required Patriot to relinquish its 30% interest in the Moss gold/silver mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest.

 

  3. Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss mine. See Note 3 for definition of Net Smelter Returns.

 

  4. Allocate the transaction price to the performance obligations in the contract. The Company only has one performance obligation, the transfer of the rights to the Moss mine, which has already been fulfilled.

  

  5. Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method applied to contracts not yet completed as of the date of adoption.

 

Related Party Transactions

Related Party Transactions

 

A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) an entity or person who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Income Taxes

Income Taxes

 

The Company follows ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.

 

The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

New Accounting Pronouncements

New Accounting Pronouncements

 

In May 2017, the FASB issued ASU 2017-09 which clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is only required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The standard is effective for the Company on June 1, 2018, with early adoption permitted. The new guidance must be applied prospectively to awards modified on or after the adoption date. The future impact of ASU 2017-09 will be dependent on the nature of future stock award modifications, however no significant impact is expected.

 

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The pronouncement revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on it consolidated financial statements.

 

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

XML 38 R13.htm IDEA: XBRL DOCUMENT v3.19.3
7. WARRANTS
9 Months Ended
Sep. 30, 2019
Warrants and Rights Note Disclosure [Abstract]  
WARRANTS

NOTE 7 - WARRANTS

 

The following table summarizes warrant activity during the period ended September 30, 2019. All outstanding warrants were exercisable during this period.

 

   Number of
Warrants
   Weighted Average
Exercise Price
 
Outstanding December 31, 2017   33,009,457   $0.09 
Issued        
Canceled / exercised   (562,500)   0.12 
Expired        
Outstanding December 31, 2018   32,446,957   $0.09 
Issued        
Canceled / exercised   (8,000,000)   0.09 
Expired   (12,786,957)   0.06 
Outstanding September 30, 2019   11,660,000   $0.12 

 

In April 2019, warrants for 8,000,000 shares were exercised in exchange for a note receivable for $705,000. The note is non-interest bearing and can be repaid at any time with 15 days advance notice to the Company. This receivable has been reviewed for collectability by management and has determined no allowance is necessary.

 

The following tables summarizes outstanding warrants as of September 30, 2019 all of which are exercisable:

 

      Warrants Outstanding and Exercisable  
  Range of Exercise Prices       Number of
Warrants
      Weighted
Avg Exercise
Price
      Remaining Contractual Life (years)  
  $0.05 - $0.08       2,340,000       $0.08       1.11  
  $0.09 - $0.14       6,320,000       $0.11       4.54  
  $0.15 - $0.21       3,000,000       $0.16       5.97  
                             
  Total Outstanding September 30, 2019       11,660,000                  

 

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6. Common Stock (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Payment to repurchase equity   $ 0 $ 9,093  
Common Stock        
Stock issued for services, shares   7,851,500 2,531,250  
Stock issued for services, value   $ 174,060 $ 101,239  
Stock repurchased, shares       100,000
Payment to repurchase equity       $ 9,093
Unrelated Third Party [Member] | Restricted Stock [Member]        
Stock issued for acquisition of asset, shares 100,000      
Stock issued for acquisition of asset, value $ 5,000      

XML 41 R35.htm IDEA: XBRL DOCUMENT v3.19.3
9. Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Consulting fees $ 78,356 $ 42,631 $ 249,006 $ 173,538  
Proceeds from sale of preferred stock     0 14,500  
Director fees 52,500 $ 0 157,500 0  
Director fees payable 202,045   202,045   $ 14,938
Prepaid director fees 169,500   $ 169,500   $ 9,066
Unrelated Third Party [Member]          
Warrants exercised     8,000,000    
Note receivable 705,000   $ 705,000    
Zachary Black [Member]          
Consulting fees     $ 32,530 $ 9,124  
Zachary Black [Member] | Restricted Stock [Member]          
Stock issued for services, shares     250,000 250,000  
Stock issued for services, value     $ 10,000 $ 10,000  
Robert Coale [Member]          
Consulting fees     $ 10,000 $ 11,239  
Robert Coale [Member] | Restricted Stock [Member]          
Stock issued for services, shares     250,000 281,250  
Stock issued for services, value     $ 10,000 $ 11,239  
Trevor Newton [Member]          
Stock issued for compensation, shares     5,250,000    
Stock issued for compensation, value     $ 52,500    
Consulting fees     $ 161,313 $ 116,168  
Stock issued new, shares     290,000    
Proceeds from sale of preferred stock     $ 14,500    
Prepaid director fees 157,500   $ 157,500    
Trevor Newton [Member] | Restricted Stock [Member]          
Stock issued for services, shares     2,101,500 2,000,000  
Stock issued for services, value     $ 84,060 $ 80,000  
Coale and Black [Member]          
Director fees payable $ 52,500   $ 52,500    
Strata Oil and Gas [Member]          
Investment shares received         1,000,000
Payment for investment       $ 100,000  
XML 42 R16.htm IDEA: XBRL DOCUMENT v3.19.3
10. SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2019
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements.

 

XML 43 R12.htm IDEA: XBRL DOCUMENT v3.19.3
6. COMMON STOCK
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
COMMON STOCK

NOTE 6 - COMMON STOCK

 

The Company may issue up to 400,000,000 shares of $.001 par value common stock. As of September 30, 2019, the Company had 74,380,354 of common shares outstanding.

 

During the three months ended September 30, 2019, the Company granted 100,000 restricted shares of the Company’s common stock at $0.05 per share to an unrelated third party as partial payment for the acquisition of exploration data, for a total non-cash expense of $5,000. In addition, during the nine months ended September 30, 2019 and 2018, the company granted 7,851,500 and 2,531,250 restricted shares of the Company’s common stock at $0.04 per share in payment for services provided to the Company, for total non-cash expense of $174,060 and $101,239. The Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance. The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of 10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%.

 

During the year ended December 31, 2018, the Company bought back 100,000 shares of its stock. The shares have been credited to the treasury stock account at cost of $9,093.

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2. Significant Accounting Policies (Details Narrative) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Accounting Policies [Abstract]    
Cash Equivalents $ 0 $ 0
Available for sale and held to maturity securities 0 0
Unrecognized tax benefits $ 0 $ 0

XML 47 R20.htm IDEA: XBRL DOCUMENT v3.19.3
7. WARRANTS (Tables)
9 Months Ended
Sep. 30, 2019
Warrants and Rights Note Disclosure [Abstract]  
Schedule of warrant activity
   Number of
Warrants
   Weighted Average
Exercise Price
 
Outstanding December 31, 2017   33,009,457   $0.09 
Issued        
Canceled / exercised   (562,500)   0.12 
Expired        
Outstanding December 31, 2018   32,446,957   $0.09 
Issued        
Canceled / exercised   (8,000,000)   0.09 
Expired   (12,786,957)   0.06 
Outstanding September 30, 2019   11,660,000   $0.12 
Warrants outstanding by exercise price
      Warrants Outstanding and Exercisable  
  Range of Exercise Prices       Number of
Warrants
      Weighted
Avg Exercise
Price
      Remaining Contractual Life (years)  
  $0.05 - $0.08       2,340,000       $0.08       1.11  
  $0.09 - $0.14       6,320,000       $0.11       4.54  
  $0.15 - $0.21       3,000,000       $0.16       5.97  
                             
  Total Outstanding September 30, 2019       11,660,000                  
XML 48 R28.htm IDEA: XBRL DOCUMENT v3.19.3
5. Stock Options (Details - Option activity) - Stock Options [Member] - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Options Outstanding    
Outstanding, beginning balance 7,485,000 5,915,000
Granted 0 1,570,000
Expired 0 0
Exercised (20,000) 0
Outstanding, ending balance 7,465,000 7,485,000
Exercisable 7,465,000  
Weighted Average Exercise Price    
Outstanding, beginning balance $ 0.10 $ 0.10
Granted   0.10
Exercised 0.10  
Outstanding, ending balance 0.10 $ 0.10
Exercisable $ 0.10  
Weighted Average Remaining Contractual Life (Years)    
Weighted average remaining contractual life (in years) 6 years 8 months 26 days 7 years 5 months 23 days
Weighted average remaining contractual life exercisable 6 years 8 months 26 days  
Aggregate Intrinsic Value    
Aggregate intrinsic value options outstanding $ 0  
Aggregate intrinsic value options exercisable $ 0  
XML 49 R6.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Statement of Cash Flows [Abstract]    
Net income (loss) $ 146,092 $ (1,008,196)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Compensation expense of stock options 45,200 273,185
Restricted common stock issued for services 161,560 101,239
Fair value adjustment for marketable securities 23,104 371,645
Change in operating assets and liabilities:    
Royalty receivables (191,255) (201,909)
Prepaid expenses (2,935) 3,304
Accounts payable and accrued liabilities (116,105) 209,362
Accounts payable and accrued liabilities - related parties 187,107 0
Net cash flows provided by (used in) operating activities 252,768 (251,370)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of royalty interest - related party (190,000) (30,000)
Proceeds from the sale of marketable securities 20,833 3,401
Purchase of marketable securities 0 (100,000)
Net cash flows used in investing activities (169,167) (126,599)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from exercise of stock options 2,000 0
Proceeds from sale of preferred stock 0 14,500
Purchase of treasury stock 0 (9,093)
Net cash flows provided by financing activities 2,000 5,407
Net increase (decrease) in cash 85,601 (372,562)
Cash, beginning of period 115,753 634,428
Cash, end of period 201,354 261,866
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:    
Interest 0 0
Income taxes 0 0
NON-CASH FINANCING ACTIVITIES:    
Exercise of warrants in exchange for note receivable 705,000 0
Issuance of restricted stock for prepaid director fees $ 210,000 $ 0
XML 50 R2.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Current assets    
Cash $ 201,354 $ 115,753
Marketable securities 123,679 167,617
Royalties receivables 435,934 244,678
Prepaid expenses 169,500 9,066
Total current assets 930,467 537,114
Long-term assets:    
Royalty interest - related party 300,000 110,000
Note receivable - related party 705,000 0
Total long-term assets 1,005,000 110,000
Total assets 1,935,467 647,114
Current liabilities    
Accounts payable and accrued liabilities 23,726 139,832
Accounts payable and accrued liabilities - related parties 202,045 14,938
Total current liabilities 225,771 154,770
Commitments and contingencies
Stockholders' equity:    
Common stock, par value $.001; 400,000,000 shares authorized; 74,380,354 and 58,408,854 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively 74,380 58,409
Treasury stock (100,000 shares) (9,093) (9,093)
Additional paid in capital 29,871,087 28,815,798
Accumulated other comprehensive income (16,361) (16,361)
Accumulated deficit (28,210,607) (28,356,699)
Total stockholders' equity 1,709,696 492,344
Total liabilities and stockholders' equity 1,935,467 647,114
Preferred Stock [Member]    
Stockholders' equity:    
Preferred stock value 0 0
Preferred Stock Series A [Member]    
Stockholders' equity:    
Preferred stock value $ 290 $ 290