UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Commission
File No.
(Exact Name of Registrant as Specified in Its Charter)
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| (Address of Principal Executive Offices) | (Zip Code) |
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Copies to:
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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
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Indicate
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Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-3 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Emerging
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| ☒ | Smaller reporting company |
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Securities registered to Section 12(b) of the Act: None.
As of November 14, 2021, there were shares of the registrant’s common stock issued and outstanding.
INCEPTION MINING INC.
FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Inception Mining, Inc.
Condensed Consolidated Balance Sheets
| September 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Marketable securities | - | |||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Right of use asset | - | |||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest - related parties | ||||||||
| Secured borrowings, net | - | |||||||
| Lease liability - current portion | - | |||||||
| Note payable - current portion | - | |||||||
| Notes payable - related parties | ||||||||
| Convertible notes payable | ||||||||
| Derivative liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long-term note payable | ||||||||
| Lease liability, net of current portion | - | |||||||
| Convertible notes payable, net of current portion | - | |||||||
| Mine reclamation obligation | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized, and shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Controlling Interest | ( | ) | ( | ) | ||||
| Non-Controlling Interest | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-1 |
Inception Mining, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| Precious Metals Income | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Income (Loss) from Operations | ( | ) | ||||||||||||||
| Other Income/(Expenses) | ||||||||||||||||
| Other income (expense) | ||||||||||||||||
| Gain on sale of mine property | ||||||||||||||||
| Change in derivative liability | ||||||||||||||||
| Change in marketable securities | ||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income/(Expenses) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) from Operations before Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for Income Taxes | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) - Non-Controlling Interest | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) - Controlling Interest | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) per share - Basic | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) per share - Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding during the period - Basic | ||||||||||||||||
| Weighted average number of shares outstanding during the period - Diluted | ||||||||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Other Comprehensive Income (Loss) | ||||||||||||||||
| Exchange differences arising on translating foreign operations | ( | ) | ( | ) | ||||||||||||
| Total Comprehensive Income (Loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total Comprehensive Income - Non-Controlling Interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Comprehensive Income (Loss) - Controlling Interest | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-2 |
Inception Mining, Inc.
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)
| Preferred stock | Common stock | Additional | Other | Non- | Total | |||||||||||||||||||||||||||||||
| ($0.00001 Par) | ($0.00001 Par) | Paid-in | Accumulated | Comprehensive | Controlling | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, March 31, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net income for the period | - | - | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Preferred stock | Common stock | Additional | Other | Non- | Total | |||||||||||||||||||||||||||||||
| ($0.00001 Par) | ($0.00001 Par) | Paid-in | Accumulated | Comprehensive | Controlling | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Deficit | ||||||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net income (loss) for the period | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Share cancellation | - | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net income (loss) for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued with note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net income for the period | - | - | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-3 |
Inception Mining, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, 2021 | September 30, 2020 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operations | ||||||||
| Depreciation and amortization expense | ||||||||
| Common stock issued for services | - | |||||||
| Loss on extinguishment of debt | ||||||||
| Change in derivative liability | ( | ) | ( | ) | ||||
| Change in marketable securities | ( | ) | ( | ) | ||||
| Gain on sale of mine property | - | ( | ) | |||||
| Amortization of debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Accounts payable and accrued liabilities - related parties | ||||||||
| Secured borrowings | ( | ) | ||||||
| Net Cash Provided By (Used In) Operating Activities | ( | ) | ||||||
| Cash Flows From Investing Activities: | ||||||||
| Proceeds on sale of mine property | - | |||||||
| Proceeds on sale of marketable securities | ||||||||
| Purchase of marketable securities | - | ( | ) | |||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Net Cash Provided By Investing Activities | ||||||||
| Cash Flows From Financing Activities: | ||||||||
| Repayment of notes payable | ( | ) | - | |||||
| Repayment of notes payable-related parties | ( | ) | ( | ) | ||||
| Repayment of convertible notes payable | ( | ) | ( | ) | ||||
| Repayment of secured borrowings | ( | ) | - | |||||
| Proceeds from notes payable | ||||||||
| Proceeds from notes payable-related parties | ||||||||
| Net Cash Used In Financing Activities | ( | ) | ( | ) | ||||
| Effects of exchange rate changes on cash | ||||||||
| Net Change in Cash | ||||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
| Marketable securities received from sale of mine property | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-4 |
Inception Mining, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2021
1. Nature of Business
Inception Mining, Inc. (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.
On March 5, 2010, the Company amended its articles of incorporation to (1) change its name to Silver America, Inc. and (2) increase its authorized common stock from to .
On June 23, 2010, the Company amended its articles of incorporation to change its name to Gold American Mining Corp.
On
November 21, 2012, the Company implemented a
On
February 25, 2013, Gold American Mining Corp. and its majority shareholder (the “Majority Shareholder”), and its wholly owned
subsidiary,
On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. (“Inception” or the “Company”).
On
October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks
and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through
its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V.
and holds other mining concessions. Pursuant to the agreement, the Company issued shares of common stock of Inception and
assumed promissory notes in the amount of $
| F-5 |
The
Company’s primary mine is located on the 200-hectare Clavo Rico Concession, located in southern Honduras. This mine was originally
explored and exploited in the 16th century by the Spanish, and more recently has been operated by Compañía Minera Cerros
del Sur, S.A. de C.V. as a small family business. In 2003, Clavo Rico’s predecessor purchased a
COVID-19 - The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the first quarter of 2020 progressed. COVID-19 has spread across the globe during 2020 and is impacting economic activity worldwide. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. Based on management’s assessment as of September 30, 2021, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
2. Summary of Significant Accounting Policies
Going
Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated
financial statements, the Company had net loss of $
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Basis of Presentation - The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Condensed Financial Statements - The interim consolidated financial statements included herein have been prepared by Inception Mining Inc. (“Inception Mining” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in this filing.
In the opinion of management, all adjustments have been made consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the consolidated financial position of the Company and subsidiaries as of September 30, 2021, the results of its consolidated statements of operations and comprehensive income (loss) for the three and nine-month periods ended September 30, 2021, and its consolidated cash flows for the nine-month period ended September 30, 2021. The results of consolidated operations for the interim periods are not necessarily indicative of the results for the full year.
| F-6 |
Cash
and Cash Equivalents - The Company considers all highly liquid temporary cash investments with an original maturity of three months
or less to be cash equivalents. At September 30, 2021 and December 31, 2020, the Company had $
Inventories, Stockpiles and Mineralized Material on Leach Pads - Inventories, including stockpiles and mineralized material on leach pads are carried at the lower of cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, mineralized material on leach pads and inventories to net realizable value are reported as a component of costs applicable to mining revenue. Cost is comprised of production costs for mineralized material produced and processed. Production costs include the costs of materials, costs of processing, direct labor, mine site and processing facility overhead costs and depreciation, amortization and depletion.
Stockpiles - Stockpiles represent mineralized material that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile. Stockpile tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the material, including applicable overhead, depreciation, and depletion relating to mining operations, and removed at each stockpile’s average cost per ton.
Mineralized Material on Leach Pads - The Company utilizes a heap leaching process to recover gold from its mineralized material. Under this method, the mineralized material is placed on leach pads where it is treated with a chemical solution that dissolves the gold contained in the material. The resulting gold-bearing solution is further processed in a facility where the gold is recovered. Costs are added to mineralized material on leach pads based on current mining and processing costs, including applicable depreciation relating to mining and processing operations. Costs are transferred from mineralized material on leach pads to subsequent stages of in-process inventories as the gold-bearing solution is processed. The value of such transferred costs of mineralized material on leach pads is based on the average cost per estimated recoverable ounce of gold on the leach pad.
The estimates of recoverable gold on the leach pads are calculated from the quantities of material placed on the leach pads (measured tons added to the leach pads), the grade of material placed on the leach pads (based on assay data) and a recovery percentage.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the quantities and grades of material placed on leach pads to the quantities and grades quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored, and estimates are refined based on actual results over time. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
In-process Inventories - In-process inventories represent mineralized materials that are currently in the process of being converted to a saleable product through the absorption, desorption, recovery (ADR) process. The value of in-process material is measured based on assays of the material fed into the process and the projected recoveries of material. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.
Finished Goods Inventories - Finished goods inventories include gold that has been processed through the Company’s ADR facility and are valued at the average cost of their production.
| F-7 |
Exploration and Development Costs - Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
Mineral Rights and Properties - We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
Settlement of Contracts in Company’s Equity – In accordance with ASC 815-40-25, the Company must meet certain requirements in order to report contracts as equity versus liabilities. These requirements must be met by the Company or the contracts need to be reported as liabilities. The Company has adopted the sequencing approach as guidance on contracts that permit partial net share settlement. The Company evaluates the contracts based on the earliest issuance date. Currently, the Company doesn’t have any items that are reported as equity instead of liabilities.
Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
| F-8 |
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
| Level 1: Quoted market 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 by observable market data for substantially the full term of the assets or liabilities. | |
| Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. |
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on September 30, 2021 are summarized below:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Debt derivative liabilities | ||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
The fair value of financial instruments on December 31, 2020 are summarized below:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Debt derivative liabilities | ||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.
| F-9 |
Marketable Securities - We measure the fair value of marketable securities in accordance with ASC 825-10 – Financial Instruments. Any change in the fair value is recognized in net income in the period being reported.
Long-Lived Assets - We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment - We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
| Building | |
| Vehicles and equipment | |
| Processing and laboratory | |
| Furniture and fixtures |
Reclamation Liabilities and Asset Retirement Obligations - Minimum standards for site reclamation and closure have been established for us by various government agencies. Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site.
Revenue Recognition - In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.
| F-10 |
Stock Issued for Goods and Services - Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received, whichever is the most reliably measurable on the date of issue.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| 9/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||
| Numerator | ||||||||||||||||
| Net Income (Loss) - Controlling Interest | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Amortization of Debt Discounts | - | - | - | |||||||||||||
| Interest Expense | - | - | - | |||||||||||||
| Change in Derivative Liabilities | - | ( | ) | - | - | |||||||||||
| Adjusted Net Loss - Controlling Interest | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Shares | Shares | Shares | Shares | |||||||||||||
| Denominator | ||||||||||||||||
| Basic Weighted Average Number of Shares Outstanding during Period | ||||||||||||||||
| Dilutive Shares | - | - | - | |||||||||||||
| Diluted Weighted Average Number of Shares Outstanding during Period | ||||||||||||||||
| Diluted Net Loss per Share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other Comprehensive Loss – Other Comprehensive loss is made up of the exchange differences arising on translating foreign operations, unrealized losses on marketable securities and the net loss for the three and nine-months ending September 30, 2021 and 2020.
Derivative Liabilities - Derivative liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations.
Income Taxes - The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
| F-11 |
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Business
Segments – The Company operates in
Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
3. Inventories, Stockpiles and Mineralized Materials on Leach Pads
Inventories, stockpiles and mineralized materials on leach pads at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Supplies | $ | $ | ||||||
| Mineralized Material on Leach Pads | ||||||||
| ADR Plant | ||||||||
| Finished Ore | ||||||||
| Total Inventories | $ | $ | ||||||
There
were
4. Marketable Securities Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
| F-12 |
The following table provides a summary of changes in fair value of the Company’s Level 1 financial assets as of September 30, 2021:
| Marketable Securities | ||||
| Balance, December 31, 2020 | $ | |||
| Change in fair value of marketable securities | ||||
| Sale of marketable securities | ( | ) | ||
| Balance, September 30, 2021 | $ | |||
5. Derivative Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2021:
| Derivative Liabilities | ||||
| Balance, December 31, 2020 | $ | |||
| Change in fair value of derivative liabilities and warrant liability | ( | ) | ||
| Balance, September 30, 2021 | $ | |||
Derivative Liabilities – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
At
September 30, 2021, the Company marked to market the fair value of the debt derivatives and determined a fair value of $
| F-13 |
Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.
Warrant Liabilities – Prior to the periods being reported, the Company issued warrants in conjunction with the issuance of three Crown Bridge Convertible Notes and a Convertible Note with an investor. These warrants contained certain reset provisions. The accounting treatment of derivative financial instruments required that the Company record fair value of the derivatives as of the inception date (issuance date) and to fair value as of each subsequent reporting date.
At
September 30, 2021, the Company had a warrant liability of $
6. Properties, Plant and Equipment, Net
Properties, plant and equipment at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Land | $ | $ | ||||||
| Buildings | ||||||||
| Machinery and Equipment | ||||||||
| Office Equipment and Furniture | ||||||||
| Vehicles | ||||||||
| Construction in Process | ||||||||
| Less Accumulated Depreciation | ( | ) | ( | ) | ||||
| Total Property, Plant and Equipment | $ | $ | ||||||
During
the nine months ended September 30, 2021 and 2020, the Company recognized depreciation expense of $
| Depreciation Allocation | September 30, 2021 | September 30, 2020 | ||||||
| Cost of Goods Sold | $ | $ | ||||||
| General and Administrative | ||||||||
| Total | $ | $ | ||||||
7. Mineral Properties
On
February 25, 2013, the Company acquired certain real property and the associated exploration permits and mineral rights commonly known
as the U.P. and Burlington Gold Mine (“UP & Burlington” or the “Mine”) pursuant to that certain asset purchase
agreement entered between the Company, its majority shareholder (the “Majority Shareholder”), and its wholly owned subsidiary,
Inception Development Inc. (the “Subsidiary”) on one hand, and Inception Resources on the other hand, dated February 25,
2013 (the “Asset Purchase Agreement”). UP & Burlington contains two Federal patented mining claims which Inception Resources
acquired for the purpose of the exploration and potential development of gold on the
| F-14 |
8. Mine Reclamation Obligation
The Company is required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping, and revegetating various portions of our site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with plans reviewed and approved by the appropriate regulatory agencies.
The
fair value of the long-term liability of $
Changes to the asset retirement obligation were as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Balance, Beginning of Period | $ | $ | ||||||
| Liabilities incurred | ||||||||
| Change due to foreign currency translation | - | |||||||
| Balance, End of Period | $ | $ | ||||||
9. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Accounts Payable | $ | $ | ||||||
| Accrued Liabilities | ||||||||
| Accrued Salaries and Benefits | ||||||||
| Advances Payable | ||||||||
| Total Accounts Payable and Accrued Liabilities | $ | $ | ||||||
| F-15 |
10. Secured Borrowings
On
June 25, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $
| Secured Borrowings | September 30, 2021 | December 31, 2020 | ||||||
| Secured obligations | $ | $ | ||||||
| Guaranteed interest | - | |||||||
| Deferred interest | - | ( | ) | |||||
| - | ||||||||
| Gold held as security | - | ( | ) | |||||
| Secured Borrowings, net | $ | $ | ||||||
11. Notes Payable
Notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
| Notes Payable | September 30, 2021 | December 31, 2020 | ||||||
| Phil Zobrist | $ | $ | ||||||
| Small Business Administration | ||||||||
| Total Notes Payable | ||||||||
| Less Short-Term Notes Payable | ( | ) | - | |||||
| Total Long-Term Notes Payable | $ | $ | ||||||
Phil
Zobrist – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $
Small
Business Administration – On April 17, 2020, the Company issued an unsecured Promissory Note to the Small Business Administration
in the principal amount of $
| F-16 |
12. Notes Payable – Related Parties
Notes payable – related parties were comprised of the following as of September 30, 2021 and December 31, 2020:
| Notes Payable - Related Parties | Relationship | September 30, 2021 | December 31, 2020 | |||||||
| Clavo Rico, Inc. | $ | $ | ||||||||
| Claymore Management | ||||||||||
| Debra D’ambrosio | ||||||||||
| Francis E. Rich | - | |||||||||
| Francis E. Rich IRA | - | |||||||||
| Legends Capital | ||||||||||
| LWB Irrev Trust | ||||||||||
| MDL Ventures | ||||||||||
| Pine Valley Investments | - | |||||||||
| Total Notes Payable - Related Parties | $ | $ | ||||||||
Clavo
Rico, Incorporated – Between December 2011 and October 2012, the Company issued seven unsecured Promissory Notes to GAIA Ltd.
for a total principal amount of $
Between
March 2011 and February 2015, the Company issued 23 unsecured Promissory Notes to Silverbrook Corporation for a total principal amount
of $
On
April 5, 2019, GAIA Ltd and Silverbrook Corporation assigned
| F-17 |
Claymore
Management – On March 18, 2011, the Company issued an unsecured Promissory Note to Claymore Management in the principal amount
of $
D.
D’Ambrosio – On July 17, 2020, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the
principal amount of $
D.
D’Ambrosio – On January 5, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in
the principal amount of $
D.
D’Ambrosio – On February 1, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in
the principal amount of $
D.
D’Ambrosio – On February 25, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio
in the principal amount of $
D.
D’Ambrosio – On March 31, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in
the principal amount of $
D.
D’Ambrosio – On April 23, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in
the principal amount of $
D.
D’Ambrosio – On May 18, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the
principal amount of $
| F-18 |
D.
D’Ambrosio – On May 27, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the
principal amount of $
D.
D’Ambrosio – On June 21, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the
principal amount of $
D.
D’Ambrosio – On July 19, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the
principal amount of $
D.
D’Ambrosio – On August 20, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in
the principal amount of $
D.
D’Ambrosio – On September 2, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio
in the principal amount of $
Diamond
80, LLC – On April 3, 2017, the Company issued an unsecured Short-Term Promissory Note to Diamond 80, LLC in the principal
amount of $
Francis
E. Rich – On May 24, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount
of
Francis
E. Rich – On June 25, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal
amount of
Francis
E. Rich IRA – On October 23, 2020, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich IRA in the
principal amount of
Legends
Capital Group – Between October 2011 and September 2012, the Company issued eleven unsecured Promissory Notes to Legends Capital
Group for a total principal amount of $
LW
Briggs Irrevocable Trust – Between December 2010 and January 2013, the Company issued eight unsecured Promissory Notes to LW
Briggs Irrevocable Trust for a total principal amount of $
| F-19 |
MDL
Ventures – The Company entered into an unsecured convertible note payable agreement with MDL Ventures, LLC, which is
Pine
Valley Investments, LLC – On November 30, 2020, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments,
LLC in the principal amount of $
Cluff-Rich
PC – On January 29, 2021, the Company issued an unsecured Short-Term Promissory Note to WOC Energy, LLC in the principal amount
of $
13. Convertible Notes Payable
Convertible notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
| Convertible Notes Payable | September 30, 2021 | December 31, 2020 | ||||||
| Antczak Polich Law LLC | $ | $ | ||||||
| Investor | ||||||||
| Scotia International | ||||||||
| Total Convertible Notes Payable | ||||||||
| Less Unamortized Discount | ( | ) | ( | ) | ||||
| Total Convertible Notes Payable, Net of Unamortized Debt Discount | ||||||||
| Less Short-Term Convertible Notes Payable | ( | ) | ( | ) | ||||
| Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount | $ | $ | ||||||
Antczak
Polich Law, LLC – On August 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak
Polich Law, LLC (“Antczak”), in the principal amount of $
| F-20 |
Antczak
Polich Law, LLC – On December 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to
Antczak Polich Law, LLC (“Antczak”), in the principal amount of $
Investor
– On May 20, 2019, the Company issued a secured Convertible Promissory Note (“Note”) to Investor, in the principal
amount of $
Scotia
International of Nevada, Inc. – On January 10, 2019, the Company issued an unsecured Convertible Promissory Note (“Note”)
to Scotia International of Nevada, Inc. (“Scotia”), in the principal amount of $
| F-21 |
14. Stockholders’ Deficit
Common Stock
On
January 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
January 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
January 26, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 9, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 17, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 22, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
March 8, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
March 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 25, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
April 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
April 20, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
| F-22 |
On
April 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
May 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
May 21, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
June 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
July 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
July 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
Warrants
The following tables summarize the warrant activity during the nine months ended September 30, 2021 and the year ended December 31, 2020:
| Stock Warrants | Number of Warrants | Weighted Average Exercise Price | ||||||
| Balance at December 31, 2019 | $ | |||||||
| Forfeited | ( | ) | ||||||
| Balance at December 31, 2020 | ||||||||
| Forfeited | ||||||||
| Balance at September 30, 2021 | $ | |||||||
| 2021 Outstanding Warrants | Warrants Exercisable | |||||||||||||||||||||
| Range of Exercise Price | Number Outstanding at September 30, 2021 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at September 30, 2021 | Weighted Average Exercise Price | |||||||||||||||||
| $ | - | years | $ | $ | ||||||||||||||||||
15. Income Taxes
The
Company’s subsidiaries, Compania Minera Cerros del Sur and Compania Minera Clavo Rico, which are located in Honduras, are required
to pay income tax and solidarity tax on their income and/or assets annually. The annual report was completed during the nine-month period
ended September 30, 2021 and the company recognized a tax liability of $
| F-23 |
16. Related Party Transactions
Consulting
Agreement – In February 2014, the Company entered into a consulting agreement with a stockholder/director. The Company agreed
to pay $
Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
Employment
Agreements – The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment
agreement was effective as of April 1, 2019 and provides for compensation of $
Notes
Payable – The Company took several short-term notes payable from related parties during the nine months ended September 30,
2021. The Company received $
17. Commitments and Contingencies
Litigation
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
On
June 28, 2021, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., settled a labor dispute
brought in Honduras by one of the Company’s former employees for an amount of $
On
March 4, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with notice
of a civil litigation brought in Honduras by Empresa Agregados y Concretos S.A. (“Agrecon”) for an amount of approximately
$
18. Concentrations
We
generally sell a significant portion of our mineral production to a relatively small number of customers. For the nine months ended September
30, 2021, one hundred percent (
The Company currently is producing all of its precious metals from one mine located in Honduras. This location has most of the Company’s fixed assets and inventories. It would cause considerable disruption to the Company’s operations and revenue if this mine was disrupted or closed.
19. Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date which the financial statements were available to be issued and there are no material subsequent events, except as noted below:
On October 7, 2021, the Company issued to an Investor shares of its common stock under a conversion notice.
On October 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice.
| F-24 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
The statements contained in the following MD&A and elsewhere throughout this Quarterly Report on Form 10-Q, including any documents incorporated by reference, that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.
These forward-looking statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based on the best judgement of our management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings on Forms 10-K and 10-Q.
We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
This discussion should be read in conjunction with our financial statements on our 2020 Form 10-K, and our financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.
Introduction to Interim Consolidated Financial Statements.
The interim consolidated financial statements included herein have been prepared by Inception Mining Inc. (“Inception Mining” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in this filing.
In the opinion of management, all adjustments have been made consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the consolidated financial position of the Company and subsidiaries as of September 30, 2021, the results of its consolidated statements of operations and comprehensive loss for the three and nine month periods ended September 30, 2021 and 2020, and its consolidated cash flows for the nine-month periods ended September 30, 2021 and 2020. The results of consolidated operations for the interim periods are not necessarily indicative of the results for the full year.
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
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Overview and Plan of Operation
We are a mining company that was formed in Nevada on July 2, 2007. As a mining company, we are engaged in the production of precious metals. Our activities are not limited to production and they also include production, acquisition, exploration, and development of mineral properties, primarily for gold, from owned mining properties.
Clavo Rico Mine
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. and holds other mining concessions. Its workings include several historical underground mining operations dating back to the early Mayan and Spanish occupation.
The Company’s primary mine is located on the 200-hectare Clavo Rico Concession, located in southern Honduras. This mine was originally explored and exploited in the 16th century by the Spanish, and more recently has been operated by Compañía Minera Cerros del Sur, S. de R.L. as a small family business. In 2003, Clavo Rico’s predecessor purchased a 20% interest and later increased its ownership to 99.9%. This company has since invested over five million dollars in the expansion and development of the mine and surrounding properties. Today, the Company operates this mine through exploration of surface-level material.
Mining operations begin by crushing extracted material to approximately 3/8-inch size pebbles, which is then mixed with additional material and loaded on the recovery pad for processing. The pebble material is sprinkled with a solution that leaches the gold from the rock, and the solution is collected and processed on-site at Clavo Rico’s own ADR plant. The doré bars that result from this process are shipped to the USA for refining.
Prior to the expansion, the mine had only been processing approximately less than 500 tons of extracted material per day. The current recovery operational increase has been sized to handle from 500 to 750 tons of extracted material per day on a recovery bed that has the capacity to receive up to 750,000 tons of material. The Company commenced full operations on January 1, 2012 and believes that sufficiently high gold content ore bodies have been located and blocked out to load the leach pad to capacity by the end of September 30, 2022.
The Company has engaged in preliminary drilling of this area and the resulting assays of samples indicate that the material should have grades in the range of 0-5 grams of gold per ton.
| 4 |
Results of Operations
Nine months ended September 30, 2021 compared to the nine months ended September 30, 2020
We had a net loss of $817,294 for the nine-month period ended September 30, 2020, and a net loss of $2,983,072 for the nine-month period ended September 30, 2020. This change in our results over the two periods is primarily the result of an increase in revenue, the change in the derivative liabilities, the sale of the mine property in Idaho, the increase in the loss on extinguishment of debt and the increase in interest expense. The following table summarizes key items of comparison and their related increase (decrease) for the nine-month periods ended September 30, 2021 and 2020:
| Nine Months Ended September 30, | Increase/ | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| Revenues | $ | 4,006,115 | $ | 3,319,783 | $ | 686,332 | ||||||
| Cost of Sales | 2,582,987 | 2,422,670 | 160,317 | |||||||||
| Gross Profit | 1,423,128 | 897,113 | 526,015 | |||||||||
| General and Administrative | 897,283 | 987,781 | (90,498 | ) | ||||||||
| Depreciation and Amortization Expenses | 6,632 | 6,238 | 394 | |||||||||
| Total Operating Expenses | 903,915 | 994,019 | (90,104 | ) | ||||||||
| Income (Loss) from Operations | 519,213 | (96,906 | ) | 616,119 | ||||||||
| Other Income (expense) | 9,806 | 19,603 | (9,797 | ) | ||||||||
| Gain on Sale of Mine Property | - | 471,084 | (471,084 | ) | ||||||||
| Change in Derivative Liabilities | 2,894,387 | 74,284 | 2,820,103 | |||||||||
| Change in Marketable Securities | 328,970 | 541,267 | (212,297 | ) | ||||||||
| Loss on Extinguishment of Debt | (1,604,727 | ) | (383,946 | ) | (1,220,781 | ) | ||||||
| Interest Expense | (2,806,622 | ) | (3,608,458 | ) | 801,836 | |||||||
| Income (Loss) from Operations Before Taxes | (658,973 | ) | (2,983,072 | ) | 2,324,099 | |||||||
| Provisions for Income Taxes | (158,321 | ) | - | (158,321 | ) | |||||||
| Net Income (Loss) | $ | (817,294 | ) | $ | (2,983,072 | ) | $ | 2,165,778 | ||||
Revenues increased because of the Covid-19 mandated shut-down slowed the production in the second quarter of 2020 with no new material being placed on the leach pads for several weeks during the shutdown period, which slowed production in the third quarter of 2020 also.
Cost of sales decreased slightly in relation to the increase in revenue for the nine-month period ended September 30, 2021. Cost of sales were a higher percentage of revenues in the nine-month period ended September 30, 2020 because of the lower amounts of ore placed on the leach pad during the Covid-19 shutdown period. Many of the fixed costs of the Company remained the same. Even though most of the plant was closed during a portion of the nine-month period, the Company was still required to pay salaries and wages while the employees were not working, and no revenues were being produced. Cost of sales decreased as a percentage of revenue from 72.98% in the nine-month period ended September 30, 2020 to 64.48% in the nine-month period ended September 30, 2021 because of the increased revenues for the nine-month period ended September 30, 2021 compared to the revenues of the nine-month period ended September 30, 2020.
General and administrative expenses decreased for the nine-month period ended September 30, 2021 because of lower consulting, legal and investor relations expenses, compared to the nine-month period ended September 30, 2020.
Changes in derivative liabilities was due to the lower valuation of the derivative liabilities in the current year.
Interest expense decreased in 2021 because of the interest expense related to note debt discounts recorded in excess of the note proceeds and the decrease of amortization of existing debt discounts.
| 5 |
Three months ended September 30, 2021 compared to the three months ended September 30, 2020
We had net loss of $35,054 for the three-month period ended September 30, 2021, and a net income of $1,900,569 for the three-month period ended September 30, 2020. This change in our results over the two periods is primarily the result of the change in derivative liabilities during the current period. The following table summarizes key items of comparison and their related increase (decrease) for the three-month periods ended September 30, 2021 and 2020:
| Three Months Ended September 30, | Increase/ | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| Revenues | $ | 1,464,211 | $ | 1,387,470 | $ | 76,741 | ||||||
| Cost of Sales | 905,862 | 866,595 | 39,267 | |||||||||
| Gross Profit | 558,349 | 520,875 | 37,474 | |||||||||
| General and Administrative | 255,919 | 343,898 | (87,979 | ) | ||||||||
| Depreciation and Amortization Expenses | 2,033 | 1,811 | 222 | |||||||||
| Total Operating Expenses | 257,952 | 345,709 | (87,757 | ) | ||||||||
| Income (Loss) from Operations | 300,397 | 175,166 | 125,231 | |||||||||
| Other Income (expense) | 2,910 | 1,112 | 1,798 | |||||||||
| Change in Derivative Liabilities | 405,771 | 2,772,532 | (2,366,761 | ) | ||||||||
| Change in Marketable Securities | - | 162,325 | (162,325 | ) | ||||||||
| Loss on Extinguishment of Debt | (113,253 | ) | (29,384 | ) | (83,869 | ) | ||||||
| Interest Expense | (630,493 | ) | (1,181,182 | ) | 550,689 | |||||||
| Income (Loss) from Operations Before Taxes | (34,668 | ) | 1,900,569 | (1,935,237 | ) | |||||||
| Provisions for Income Taxes | (386 | ) | - | (386 | ) | |||||||
| Net Income (Loss) | $ | (35,054 | ) | $ | 1,900,569 | $ | (1,935,623 | ) | ||||
Revenues increased because of the Covid-19 mandated shut-down slowed the production in the second quarter of 2020 with no new material being placed on the leach pads for several weeks during the shutdown period, which slowed production in the third quarter of 2020 also.
Cost of sales were different in the three-month period ended September 30, 2020 because of the lower amounts of ore placed on the leach pad during the Covid-19 shutdown period, which carried into the third quarter production. Many of the fixed costs of the Company remained the same. Even though most of the plant was closed during a portion of the second quarter, the Company was still required to pay salaries and wages while the employees were not working, and no revenues were being produced. Cost of sales decreased as a percentage of revenue from 62.46% in the three-month period ended September 30, 2020 to 61.87% in the three-month period ended September 30, 2021 because of the increased revenue for the three-month period ended September 30, 2021 compared to the revenues of the three-month period ended September 30, 2020.
General and administrative expenses have decreased for the three-month period ended September 30, 2021 because of lower consulting, legal and investor relations expenses, compared to the three-month period ended September 30, 2020.
Changes in derivative liabilities was because of the lower valuation of the derivative liabilities in the current year.
Interest expense decreased in 2021 because of the interest expense related to note debt discounts recorded in excess of the note proceeds and the decrease of amortization of existing debt discounts.
Liquidity and Capital Resources
Our balance sheet as of September 30, 2021 reflects assets of $1,263,039. We had cash in the amount of $139,299 and working capital deficit in the amount of $28,325,935 as of September 30, 2021. Thus, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
Working Capital
| September 30, 2021 | December 31, 2020 | |||||||
| Current assets | $ | 638,356 | $ | 923,424 | ||||
| Current liabilities | 28,964,291 | 28,987,520 | ||||||
| Working capital deficit | $ | (28,325,935 | ) | $ | (28,064,096 | ) | ||
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We anticipate generating losses and, therefore, may be unable to continue operations in the future, if we don’t acquire additional capital and issue debt or equity or enter into a strategic arrangement with a third party.
Going Concern Consideration
As reflected in the accompanying unaudited condensed consolidated financial statements, the Company and has an accumulated deficit of $35,486,401. In addition, there is a working capital deficit of $28,325,935 as of September 30, 2021. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Net Cash Provided by (Used in) Operating Activities | $ | 240,760 | $ | (68,032 | ) | |||
| Net Cash Provided by (Used in) Investing Activities | 400,376 | 620,827 | ||||||
| Net Cash Provided by (Used in) Financing Activities | (536,391 | ) | (450,789 | ) | ||||
| Effects of Exchange Rate Changes on Cash | 196 | 69 | ||||||
| Net Increase (Decrease) in Cash | $ | 104,941 | $ | 102,075 | ||||
Operating Activities
Net cash flow provided by operating activities during the nine months ended September 30, 2021 was $240,760, an increase of $308,792 from the $68,032 net cash used during the nine months ended September 30, 2020. This increase in the cash provided by operating activities was primarily due to the decrease in net loss for 2021 that provided more cash from operations for the period.
Investing Activities
Investing activities during the nine months ended September 30, 2021 provided $400,376, a decrease of $220,451 from the $620,827 provided by investing activities during the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the Company purchased $46,760 in fixed assets but received proceeds of $447,136 from the sale of the marketable securities.
Financing Activities
Financing activities during the nine months ended September 30, 2021 used cash of $536,391, an increase of $85,602 from the $450,789 used in financing activities during the nine months ended September, 2020. During the nine months ended September 30, 2021, the Company received $869,900 in proceeds from notes payable - related parties and $31,667 in proceeds from a note payable. The Company made $1,020,500 in payments on notes payable – related parties, $188,816 in payments on convertible notes payable, $11,128 in payments on notes payable and payments of $217,514 on secured borrowings.
Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.
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Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist, and the property is a commercially mineable property. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain. Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
Recent Accounting Pronouncements
For recent accounting pronouncements, please refer to the notes to financial statements in Part I, Item 1 of this Quarterly Report.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to include disclosures under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act, as of the end of the period covered by this report. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were not effective as of September 30, 2021.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
On June 28, 2021, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., settled a labor dispute brought in Honduras by one of the Company’s former employees for an amount of $19,408.58. The settlement included the Company and all its related entities.
On March 4, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with notice of a civil litigation brought in Honduras by Empresa Agregados y Concretos S.A. (“Agrecon”) for an amount of approximately $930,000. The complaint alleges a dispute regarding the amounts owed by the Company to Agrecon under a certain Material Crushing Agreement. The Company has responded disputing the amount owed and placed $125,000 in a dedicated account while the case is being litigated and until the court makes its determination on any amounts owed.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to include disclosure under this item. We refer readers to our Form 10-K for additional risk factor disclosures.
An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 2, 2021, the Company issued to an Investor 4,665,219 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by the Investor, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
On July 21, 2021, the Company issued to an Investor 4,791,348 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by the Investor, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
On October 7, 2021, the Company issued to an Investor 5,602,192 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by the Investor, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
| 9 |
On October 28, 2021, the Company issued to an Investor 5,602,192 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by the Investor, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable as the Company conducts no mining operations in the U.S. or its territories.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Schema Document | |
| 101.CAL | XBRL Calculation Linkbase Document | |
| 101.DEF | XBRL Definition Linkbase Document | |
| 101.LAB | XBRL Label Linkbase Document | |
| 101.PRE | XBRL Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. | |
| (1) | Incorporated by reference from Form SB-2 filed with the SEC on October 31, 2007. | |
| (2) | Incorporated by reference from Form 8-K filed with the SEC on March 10, 2010. | |
| (3) | Incorporated by reference from Form 8-K filed with the SEC on June 28, 2010. | |
| (4) | Incorporated by reference from Form 10-Q filed with the SEC on May 20, 2013. | |
| (5) | Incorporated by reference from Form 8-K filed with the SEC on August 5, 2013. | |
| (6) | Incorporated by reference from Form 8-K filed with the SEC on March 1, 2013. | |
| (7) | Incorporated by reference from Form 8-K filed with the SEC on September 6, 2013. | |
| (8) | Incorporated by reference from Form 10-Q filed with the SEC on June 20, 2014. | |
| (9) | Incorporated by reference from Form 8-K filed with the SEC on March 12, 2014. | |
| (10) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2014. | |
| (11) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2015. | |
| (12) | Incorporated by reference from the Form 10-K filed with the SEC on May 3, 2016. | |
| (13) | Incorporated by reference from the Form 10-K filed with the SEC on April 17, 2017. | |
| (14) | Incorporated by reference from the Form 10-Q filed with the SEC on May 16, 2017. | |
| (15) | Incorporated by reference from the Form 8-K filed with the SEC on October 19, 2018. | |
| (16) | Incorporated by reference from the Form S-1 filed with the SEC on June 3, 2019. | |
| (17) | Incorporated by reference from the Form 10-Q filed with the SEC on May 29, 2020. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INCEPTION MINING INC. | ||
| Date: November 15, 2021 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer (Principal Executive Officer) | |
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
| 13 |
Exhibit 31.1
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Inception Mining Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | 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 my 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 my 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. |
| Date: November 15, 2021 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Inception Mining Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | 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 my 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 my 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. |
| Date: November 15, 2021 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Financial Officer (Principal Accounting Officer) |
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
In connection with the Quarterly Report on Form 10-Q of Inception Mining Inc. (the “Company”) for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, 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, to my knowledge:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 15, 2021 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Inception Mining Inc. (the “Company”) for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, Chief Financial 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, to my knowledge:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 15, 2021 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Financial Officer (Principal Accounting Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.00001 | $ 0.00001 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued | 51 | 51 |
| Preferred stock, shares outstanding | 51 | 51 |
| Common stock, par value | $ 0.00001 | $ 0.00001 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares issued | 145,055,055 | 78,664,420 |
| Common stock, shares outstanding | 145,055,055 | 78,664,420 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Income Statement [Abstract] | ||||
| Precious Metals Income | $ 1,464,211 | $ 1,387,470 | $ 4,006,115 | $ 3,319,783 |
| Cost of goods sold | 905,862 | 866,595 | 2,582,987 | 2,422,670 |
| Gross profit | 558,349 | 520,875 | 1,423,128 | 897,113 |
| Operating Expenses | ||||
| General and administrative | 255,919 | 343,898 | 897,283 | 987,781 |
| Depreciation and amortization | 2,033 | 1,811 | 6,632 | 6,238 |
| Total Operating Expenses | 257,952 | 345,709 | 903,915 | 994,019 |
| Income (Loss) from Operations | 300,397 | 175,166 | 519,213 | (96,906) |
| Other Income/(Expenses) | ||||
| Other income (expense) | 2,910 | 1,112 | 9,806 | 19,603 |
| Gain on sale of mine property | 471,084 | |||
| Change in derivative liability | 405,771 | 2,772,532 | 2,894,387 | 74,284 |
| Change in marketable securities | 162,325 | 328,970 | 541,267 | |
| Loss on extinguishment of debt | (113,253) | (29,384) | (1,604,727) | (383,946) |
| Interest expense | (630,493) | (1,181,182) | (2,806,622) | (3,608,458) |
| Total Other Income/(Expenses) | (335,065) | 1,725,403 | (1,178,186) | (2,886,166) |
| Net Income (Loss) from Operations before Income Taxes | (34,668) | 1,900,569 | (658,973) | (2,983,072) |
| Provision for Income Taxes | (386) | (158,321) | ||
| NET INCOME (LOSS) | (35,054) | 1,900,569 | (817,294) | (2,983,072) |
| NET INCOME (LOSS) - Non-Controlling Interest | (146) | (286) | (323) | 925 |
| NET INCOME (LOSS) - Controlling Interest | $ (35,200) | $ 1,900,283 | $ (817,617) | $ (2,982,147) |
| Net income (loss) per share - Basic | $ (0.00) | $ 0.03 | $ (0.01) | $ (0.04) |
| Net income (loss) per share - Diluted | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.04) |
| Weighted average number of shares outstanding during the period - Basic | 143,859,960 | 69,339,611 | 120,917,163 | 66,637,872 |
| Weighted average number of shares outstanding during the period - Diluted | 143,859,960 | 536,242,200 | 120,917,163 | 66,637,872 |
| Other Comprehensive Income (Loss) | ||||
| Exchange differences arising on translating foreign operations | $ 6,919 | $ (30,140) | $ 2,258 | $ (122,446) |
| Total Comprehensive Income (Loss) | (28,135) | 1,870,429 | (815,036) | (3,105,518) |
| Total Comprehensive Income - Non-Controlling Interest | (456) | (81) | (328) | (158) |
| Total Comprehensive Income (Loss) - Controlling Interest | $ (28,591) | $ 1,870,348 | $ (815,364) | $ (3,105,676) |
Nature of Business |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Business | 1. Nature of Business
Inception Mining, Inc. (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.
On March 5, 2010, the Company amended its articles of incorporation to (1) change its name to Silver America, Inc. and (2) increase its authorized common stock from to .
On June 23, 2010, the Company amended its articles of incorporation to change its name to Gold American Mining Corp.
On November 21, 2012, the Company implemented a 200 to 1 reverse stock split. Upon effectiveness of the stock split, each shareholder canceled 200 shares of common stock for every share of common stock owned as of November 21, 2012. This reverse stock split was effective on February 13, 2013. All share and per share references have been retroactively adjusted to reflect this 200 to 1 reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented.
On February 25, 2013, Gold American Mining Corp. and its majority shareholder (the “Majority Shareholder”), and its wholly owned subsidiary, Inception Development Inc. (the “Subsidiary”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Inception Resources, LLC, a Utah corporation (“Inception Resources”), pursuant to which Inception purchased the U.P. and Burlington Gold Mine in consideration of shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net royalty. Inception Resources was an entity owned by and under the control of the majority shareholder. This transaction is deemed an asset purchase by entities under common control. The Asset Purchase Agreement closed on February 25, 2013 (the “Closing”). Inception was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior to our acquisition of the gold mine pursuant to the terms of the Asset Purchase Agreement. As a result of such acquisition, the Company’s operations were then focused on the ownership and operation of the mine acquired from Inception Resources and the Company then ceased to be a shell company as it no longer has nominal operations. On February 21, 2020, the Company sold the Up & Burlington property and mineral rights to Ounces High Exploration, Inc. in exchange for $250,000 in cash consideration and shares of common stock of Hawkstone Mining Limited, a publicly-trade Australian company.
On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. (“Inception” or the “Company”).
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. and holds other mining concessions. Pursuant to the agreement, the Company issued shares of common stock of Inception and assumed promissory notes in the amount of $5,488,980 and accrued interest of $3,434,426. Under this merger agreement, there was a change in control, and it has been treated for accounting purposes as a reverse recapitalization with Clavo Rico, Ltd. being the surviving entity. Its workings include several historical underground operations dating back to the early Mayan and Spanish occupation.
The Company’s primary mine is located on the 200-hectare Clavo Rico Concession, located in southern Honduras. This mine was originally explored and exploited in the 16th century by the Spanish, and more recently has been operated by Compañía Minera Cerros del Sur, S.A. de C.V. as a small family business. In 2003, Clavo Rico’s predecessor purchased a 20% interest and later increased its ownership to 99.9%.
COVID-19 - The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the first quarter of 2020 progressed. COVID-19 has spread across the globe during 2020 and is impacting economic activity worldwide. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. Based on management’s assessment as of September 30, 2021, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
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Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
Going Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company had net loss of $817,294 during the period ended September 30, 2021 and had a working capital deficit of $28,325,935 as of September 30, 2021. These factors among others indicate that the Company may be unable to continue as a going concern for a period of one year from the issuance of these financial statements.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Basis of Presentation - The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Condensed Financial Statements - The interim consolidated financial statements included herein have been prepared by Inception Mining Inc. (“Inception Mining” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in this filing.
In the opinion of management, all adjustments have been made consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the consolidated financial position of the Company and subsidiaries as of September 30, 2021, the results of its consolidated statements of operations and comprehensive income (loss) for the three and nine-month periods ended September 30, 2021, and its consolidated cash flows for the nine-month period ended September 30, 2021. The results of consolidated operations for the interim periods are not necessarily indicative of the results for the full year.
Cash and Cash Equivalents - The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2021 and December 31, 2020, the Company had $0 and $0 in cash equivalents, respectively. The aggregate cash balance on deposit in these accounts is insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts.
Inventories, Stockpiles and Mineralized Material on Leach Pads - Inventories, including stockpiles and mineralized material on leach pads are carried at the lower of cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, mineralized material on leach pads and inventories to net realizable value are reported as a component of costs applicable to mining revenue. Cost is comprised of production costs for mineralized material produced and processed. Production costs include the costs of materials, costs of processing, direct labor, mine site and processing facility overhead costs and depreciation, amortization and depletion.
Stockpiles - Stockpiles represent mineralized material that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile. Stockpile tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the material, including applicable overhead, depreciation, and depletion relating to mining operations, and removed at each stockpile’s average cost per ton.
Mineralized Material on Leach Pads - The Company utilizes a heap leaching process to recover gold from its mineralized material. Under this method, the mineralized material is placed on leach pads where it is treated with a chemical solution that dissolves the gold contained in the material. The resulting gold-bearing solution is further processed in a facility where the gold is recovered. Costs are added to mineralized material on leach pads based on current mining and processing costs, including applicable depreciation relating to mining and processing operations. Costs are transferred from mineralized material on leach pads to subsequent stages of in-process inventories as the gold-bearing solution is processed. The value of such transferred costs of mineralized material on leach pads is based on the average cost per estimated recoverable ounce of gold on the leach pad.
The estimates of recoverable gold on the leach pads are calculated from the quantities of material placed on the leach pads (measured tons added to the leach pads), the grade of material placed on the leach pads (based on assay data) and a recovery percentage.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the quantities and grades of material placed on leach pads to the quantities and grades quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored, and estimates are refined based on actual results over time. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
In-process Inventories - In-process inventories represent mineralized materials that are currently in the process of being converted to a saleable product through the absorption, desorption, recovery (ADR) process. The value of in-process material is measured based on assays of the material fed into the process and the projected recoveries of material. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.
Finished Goods Inventories - Finished goods inventories include gold that has been processed through the Company’s ADR facility and are valued at the average cost of their production.
Exploration and Development Costs - Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
Mineral Rights and Properties - We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
Settlement of Contracts in Company’s Equity – In accordance with ASC 815-40-25, the Company must meet certain requirements in order to report contracts as equity versus liabilities. These requirements must be met by the Company or the contracts need to be reported as liabilities. The Company has adopted the sequencing approach as guidance on contracts that permit partial net share settlement. The Company evaluates the contracts based on the earliest issuance date. Currently, the Company doesn’t have any items that are reported as equity instead of liabilities.
Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on September 30, 2021 are summarized below:
The fair value of financial instruments on December 31, 2020 are summarized below:
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.
Marketable Securities - We measure the fair value of marketable securities in accordance with ASC 825-10 – Financial Instruments. Any change in the fair value is recognized in net income in the period being reported.
Long-Lived Assets - We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment - We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Reclamation Liabilities and Asset Retirement Obligations - Minimum standards for site reclamation and closure have been established for us by various government agencies. Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site.
Revenue Recognition - In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.
Stock Issued for Goods and Services - Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received, whichever is the most reliably measurable on the date of issue.
Other Comprehensive Loss – Other Comprehensive loss is made up of the exchange differences arising on translating foreign operations, unrealized losses on marketable securities and the net loss for the three and nine-months ending September 30, 2021 and 2020.
Derivative Liabilities - Derivative liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations.
Income Taxes - The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Business Segments – The Company operates in one segment and therefore segment information is not presented.
Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
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Inventories, Stockpiles and Mineralized Materials on Leach Pads |
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories, Stockpiles and Mineralized Materials on Leach Pads | 3. Inventories, Stockpiles and Mineralized Materials on Leach Pads
Inventories, stockpiles and mineralized materials on leach pads at September 30, 2021 and December 31, 2020 consisted of the following:
There were no stockpiles at September 30, 2021 and December 31, 2020.
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Marketable Securities Financial Instruments |
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| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||
| Marketable Securities Financial Instruments | 4. Marketable Securities Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 1 financial assets as of September 30, 2021:
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Derivative Financial Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||
| Derivative Financial Instruments | 5. Derivative Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2021:
Derivative Liabilities – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
At September 30, 2021, the Company marked to market the fair value of the debt derivatives and determined a fair value of $4,669,848. The Company recorded a gain from change in fair value of debt derivatives of $2,871,545 for the period ended September 30, 2021. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model and the Company’s Enterprise Valuation Model. The Binomial Option Pricing Model was based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 110.43%, (3) weighted average risk-free interest rate of 0.04% (4) expected life of 0.28 years, and (5) the quoted market price of the Company’s common stock at each valuation date. The Company’s Enterprise Valuation Model was based on the following assumptions: (1) outstanding note balance at September 30, 2021 of $3,074,243, (2) outstanding shares of common stock at September 30, 2021 of shares and (3) closing stock price on September 30, 2021 of $ per share.
Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.
Warrant Liabilities – Prior to the periods being reported, the Company issued warrants in conjunction with the issuance of three Crown Bridge Convertible Notes and a Convertible Note with an investor. These warrants contained certain reset provisions. The accounting treatment of derivative financial instruments required that the Company record fair value of the derivatives as of the inception date (issuance date) and to fair value as of each subsequent reporting date.
At September 30, 2021, the Company had a warrant liability of $72. The Company recorded a loss from change in fair value of warrant liability of $22,842 for the period ended September 30, 2021. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model and the Monte Carlo Valuation Model. The Binomial Option Pricing Model was based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 118.23% to 142.61%, (3) weighted average risk-free interest rate of 0.09% to 0.28% (4) expected life of 0.86 to 2.07 years, and (5) the quoted market price of the Company’s common stock at each valuation date. The Monte Carlo Valuation Model was based on the following assumptions: (1) expected volatility of 131.00%, (2) weighted average risk-free interest rate of 0.06% and (3) expected life of 0.64 years.
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Properties, Plant and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Properties, Plant and Equipment, Net | 6. Properties, Plant and Equipment, Net
Properties, plant and equipment at September 30, 2021 and December 31, 2020 consisted of the following:
During the nine months ended September 30, 2021 and 2020, the Company recognized depreciation expense of $39,098 and $38,423, respectively. The following table summarizes the allocation of depreciation expense between cost of goods sold and general and administrative expenses.
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Mineral Properties |
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Sep. 30, 2021 | |
| Extractive Industries [Abstract] | |
| Mineral Properties | 7. Mineral Properties
On February 25, 2013, the Company acquired certain real property and the associated exploration permits and mineral rights commonly known as the U.P. and Burlington Gold Mine (“UP & Burlington” or the “Mine”) pursuant to that certain asset purchase agreement entered between the Company, its majority shareholder (the “Majority Shareholder”), and its wholly owned subsidiary, Inception Development Inc. (the “Subsidiary”) on one hand, and Inception Resources on the other hand, dated February 25, 2013 (the “Asset Purchase Agreement”). UP & Burlington contains two Federal patented mining claims which Inception Resources acquired for the purpose of the exploration and potential development of gold on the 40 acres which comprises UP & Burlington. The property was recorded at cost and the Company recognized $950,160 impairment expense on the property as of July 31, 2015. On February 21, 2020, the Company sold the Up & Burlington property and mineral rights to Ounces High Exploration, Inc. in exchange for $249,660 in cash consideration and shares of common stock of Hawkstone Mining Limited, a publicly-trade Australian company that was valued at $221,424, for a net gain of $471,084 on the sale of the mine property.
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Mine Reclamation Obligation |
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| Mine Reclamation Obligation | ||||||||||||||||||||||||||||||||||||||||||||||
| Mine Reclamation Obligation | 8. Mine Reclamation Obligation
The Company is required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping, and revegetating various portions of our site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with plans reviewed and approved by the appropriate regulatory agencies.
The fair value of the long-term liability of $642,312 and $602,337 as of June 30, 2021 and December 31, 2020, respectively, for our obligation to reclaim our mine facility is based on our most recent reclamation plan, as revised, submitted and approved by the Honduran Institute of Geology and Mines (INHGEOMIN) and Ministry of Natural Resources and Environment (SERNA). Such costs are based on management’s current estimate of then expected amounts for the remediation work, assuming the work is performed in accordance with current laws and regulations and using a credit adjusted risk-free rate of 18.00% and an inflation rate of 5.3%. It is reasonably possible that, due to uncertainties associated with the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology, the ultimate cost of reclamation and remediation could change in the future. We periodically review the accrued reclamation obligation for information indicating that our assumptions should change.
Changes to the asset retirement obligation were as follows:
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Accounts Payable and Accrued Liabilities |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities | 9. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
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Secured Borrowings |
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| Secured Borrowings | 10. Secured Borrowings
On June 25, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $172,663. The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $17,266, for a total expected remittance of $189,929. The maturity date of the notes is December 26, 2020. On December 26, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $118,757. The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $11,876, for a total expected remittance of $130,633. Also on that day, one of the lenders chose to liquidate a portion of his balance amounting to $83,006. This amount was paid to the lender in January 2021. The maturity date of the notes is June 26, 2021. In May 2021, the remaining agreements were liquidated for an amount totaling $134,508. The terms of repayment allow the Company to remit to the lender a certain quantity of gold to satisfy the liability though the Company expects to liquidate gold held and satisfy the liability in cash.
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Notes Payable |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable | 11. Notes Payable
Notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
Phil Zobrist – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $60,000 (the “Note”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $60,000. On October 2, 2015, the Company entered into a new convertible note with Phil Zobrist that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $29,412 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $121,337 for the remaining derivative liability and of $11,842 for the remaining debt discount. As of September 30, 2021, the gross balance of the note was $60,000 and accrued interest was $94,212.
Small Business Administration – On April 17, 2020, the Company issued an unsecured Promissory Note to the Small Business Administration in the principal amount of $100,000 (the “Note”) that matures on April 16, 2022 and bearing 1.00% per annum interest as part of the Covid-19 Cares Act. The total net proceeds the Company received was $100,000. On April 30, 2021, the Company issued an additional unsecured Promissory Note to the Small Business Administration in the principal amount of $31,667 that matures on April 30, 2023 and bears 3.75% per annum interest under additional funding of the Covid-19 Cares Act. The total net proceeds the Company received was $31,667. The Company is in the process of getting these loans forgiven under the Covid-19 Cares Act. On September 17, 2021, the Company made the first payment on the first loan amount of $11,128. As of September 30, 2021, the gross balance of the note was $120,539 and accrued interest was $1,455.
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Notes Payable – Related Parties |
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| Notes Payable – Related Parties | 12. Notes Payable – Related Parties
Notes payable – related parties were comprised of the following as of September 30, 2021 and December 31, 2020:
Clavo Rico, Incorporated – Between December 2011 and October 2012, the Company issued seven unsecured Promissory Notes to GAIA Ltd. for a total principal amount of $1,150,000 (the “Notes”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $1,150,000. On October 2, 2015, the Company entered into a new convertible note with GAIA Ltd. that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $724,463 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2019. The Company recognized a gain on the extinguishment of debt of $2,524,747 for the remaining derivative liability and of $226,974 for the remaining debt discount. On April 5, 2019, the entire outstanding balance of $1,150,000 and accrued interest was assigned to Clavo Rico, Incorporated.
Between March 2011 and February 2015, the Company issued 23 unsecured Promissory Notes to Silverbrook Corporation for a total principal amount of $2,227,980 (the “Notes”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $2,227,980. On October 2, 2015, the Company entered into a new convertible note with Silverbrook Corporation that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $1,209,606 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2019. The Company recognized a gain on the extinguishment of debt of $4,656,189 for the remaining derivative liability and of $439,733 for the remaining debt discount. On April 5, 2019, the entire outstanding balance of $2,227,980 and accrued interest was assigned to Clavo Rico, Incorporated.
On April 5, 2019, GAIA Ltd and Silverbrook Corporation assigned 100% of the outstanding principal balance of their notes and all accrued interest to Clavo Rico, Incorporated. The GAIA Ltd and Silverbrook Corporation notes had been extended until December 31, 2024 and bear 18% per annum interest. As of September 30, 2021, the gross balance of the notes was $3,377,980 and accrued interest was $5,582,287.
Claymore Management – On March 18, 2011, the Company issued an unsecured Promissory Note to Claymore Management in the principal amount of $185,000 (the “Note”) due on demand and bore 0% per annum interest. The total net proceeds the Company received was $185,000. On October 2, 2015, the Company entered into a new convertible note with Claymore Management that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from March 18, 2011 in the amount of $151,355 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $448,369 for the remaining derivative liability and of $36,513 for the remaining debt discount. As of September 30, 2021, the gross balance of the note was $185,000 and accrued interest was $351,155.
D. D’Ambrosio – On July 17, 2020, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $50,000 (the “Note”) due on January 15, 2021 and bears a 5.00% interest rate. The Company made a payment of $2,500 towards the principal balance of $2,500 on February 2, 2021. The Company made a payment of $47,500 towards the principal balance and accrued interest of $47,500 on February 22, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On January 5, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $145,000 (the “Note”) due on February 7, 2021 and bears a 5.00% interest rate. The Company made a payment of $152,250 towards the principal balance and accrued interest of $7,250 on February 2, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On February 1, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $88,000 (the “Note”) due on March 1, 2021 and bears a 5.00% interest rate. The Company made a payment of $92,400 towards the principal balance and accrued interest of $4,400 on March 1, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On February 25, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $70,000 (the “Note”) due on April 1, 2021 and bears a 5.00% interest rate. The Company made a payment of $73,500 towards the principal balance and accrued interest of $3,500 on March 23, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On March 31, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $40,000 (the “Note”) due on May 1, 2021 and bears a 5.00% interest rate. The Company made a payment of $42,000 towards the principal balance and accrued interest of $2,000 on May 1, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On April 23, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $72,000 (the “Note”) due on May 31, 2021 and bears a 5.00% interest rate. The Company made a payment of $75,600 towards the principal balance and accrued interest of $3,600 on May 14, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On May 18, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $72,000 (the “Note”) due on June 30, 2021 and bears a 5.00% interest rate. The Company made a payment of $75,600 towards the principal balance and accrued interest of $3,600 on June 16, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On May 27, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $71,000 (the “Note”) due on November 30, 2021 and bears a 5.00% interest rate. The Company made a payment of $74,550 towards the principal balance and accrued interest of $3,550 on September 10, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On June 21, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $54,500 (the “Note”) due on July 31, 2021 and bears a 5.00% interest rate. The Company made a payment of $57,225 towards the principal balance and accrued interest of $2,725 on August 3, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On July 19, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $61,000 (the “Note”) due on August 31, 2021 and bears a 5.00% interest rate. The Company made a payment of $64,050 towards the principal balance and accrued interest of $3,050 on August 11, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On August 20, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $37,000 (the “Note”) due on August 31, 2021 and bears a 5.00% interest rate. The Company made a payment of $38,850 towards the principal balance and accrued interest of $1,850 on August 30, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
D. D’Ambrosio – On September 2, 2021, the Company issued an unsecured Short-Term Promissory Note to D. D’Ambrosio in the principal amount of $29,400 (the “Note”) due on October 15, 2021 and bears a 5.00% interest rate. As of September 30, 2021, the outstanding balance of the Note was $29,400 and accrued interest was $1,470.
Diamond 80, LLC – On April 3, 2017, the Company issued an unsecured Short-Term Promissory Note to Diamond 80, LLC in the principal amount of $50,000 (the “Note”) due on December 31, 2019 and bears a 7.0% interest rate. The Company made a payment of $1,075 towards the principal balance of $1,000 and accrued interest of $75 on September 30, 2018. The Company made a payment of $49,000 towards the principal balance on May 21, 2019. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
Francis E. Rich – On May 24, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount of 50,000 (the “Note”) due on November 23, 2021 and bears a 5.0% interest rate. As of September 30, 2021, the outstanding balance of the Note was $50,000 and accrued interest was $5,000.
Francis E. Rich – On June 25, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount of 40,000 (the “Note”) due on July 31, 2021 and bears a 5.0% interest rate. The Company made two payments of $21,000 towards the principal balance and accrued interest of $1,000 during August 2021. As of September 30, 2021, the outstanding balance of the Note was $20,000 and accrued interest was $1,000.
Francis E. Rich IRA – On October 23, 2020, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich IRA in the principal amount of 50,000 (the “Note”) due on April 23, 2021 and bears a 5.0% interest rate. The Company made a payment of $52,500 towards the principal balance and accrued interest of $2,500 on April 23, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
Legends Capital Group – Between October 2011 and September 2012, the Company issued eleven unsecured Promissory Notes to Legends Capital Group for a total principal amount of $765,000 (the “Notes”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $765,000. On October 2, 2015, the Company entered into a new convertible note with Legends Capital Group that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $504,806 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $2,564,130 for the remaining derivative liability and of $150,987 for the remaining debt discount. As of September 30, 2021, the gross balance of the note was $715,000 and accrued interest was $1,317,272.
LW Briggs Irrevocable Trust – Between December 2010 and January 2013, the Company issued eight unsecured Promissory Notes to LW Briggs Irrevocable Trust for a total principal amount of $1,101,000 (the “Notes”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $1,101,000. On October 2, 2015, the Company entered into a new convertible note with LW Briggs Irrevocable Trust that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $814,784 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $2,564,130 for the remaining derivative liability and of $217,303 for the remaining debt discount. As of September 30, 2021, the gross balance of the note was $1,101,000 and accrued interest was $2,003,864.
MDL Ventures – The Company entered into an unsecured convertible note payable agreement with MDL Ventures, LLC, which is 100% owned by a Company officer, effective October 1, 2014, due on December 31, 2016 and bears 18% per annum interest, due at maturity. Principal on the convertible note is convertible into common stock at the holder’s option at a price of the lower of $0.99 (0.18 pre-split) or 50% of the lowest three daily volume weighted average prices of the Company’s common stock during the 20 consecutive days prior to the date of conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $1,487,158 for the remaining derivative liability. As of September 30, 2021, the gross balance of the note was $1,642,721 and accrued interest was $0.
Pine Valley Investments, LLC – On November 30, 2020, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments, LLC in the principal amount of $200,000 (the “Note”) due on December 31, 2020 and bears a 5.0% interest rate. The Company made a payment of $60,000 towards the principal balance and accrued interest of $10,000 on December 31, 2020. The Company made a payment of $25,000 towards the principal balance on January 29, 2021. The Company made a payment of $125,000 towards the principal balance on February 28, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
Cluff-Rich PC – On January 29, 2021, the Company issued an unsecured Short-Term Promissory Note to WOC Energy, LLC in the principal amount of $40,000 (the “Note”) due on February 28, 2021 and bears a 5.0% interest rate. The Company made a payment of $42,000 towards the principal balance and accrued interest of $2,000 on March 1, 2021. As of September 30, 2021, the outstanding balance of the Note was $0 and accrued interest was $0.
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Convertible Notes Payable |
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| Convertible Notes Payable | 13. Convertible Notes Payable
Convertible notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
Antczak Polich Law, LLC – On August 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $300,000 (the “Note”) due on August 1, 2019 and bears 8% per annum interest, due at maturity. This Note was issued for $300,000 in legal fees due to Antczak for its services related to several legal issues handled for the Company. The Note is convertible into common stock, at holder’s option, at a fixed conversion price of $0.75 per share. During the nine months ended September 30, 2021, the Company made payments amounting to $20,877. As of September 30, 2021, the gross balance of the note was $279,123 and accrued interest was $77,889.
Antczak Polich Law, LLC – On December 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $130,000 (the “Note”) due on December 1, 2019 and bears 8% per annum interest, due at maturity. This Note was issued for $130,000 in legal fees due to Antczak for its services related to several legal issues handled for the Company. The Note is convertible into common stock, at holder’s option, at a fixed conversion price of $0.75 per share. During the years ended December 31, 2020 and 2019 and the nine months ended September 30, 2021, the Company made several payments amounting to $130,000. As of September 30, 2021, the gross balance of the note was $0 and accrued interest was $15,148.
Investor – On May 20, 2019, the Company issued a secured Convertible Promissory Note (“Note”) to Investor, in the principal amount of $4,250,000 (the “Note”) due on May 20, 2022 and bears 20% (24% default) per annum interest, due at maturity. The total net proceeds the Company received was $3,000,000. The Note is convertible into common stock, at holder’s option, at 100% of market price less $0.01 per share. Market price means the mathematical average of the five lowest individually daily volume weighted average prices of the common stock from the period beginning on the issuance date and ending on the maturity date. The conversion price has a floor price of $0.01 per share of common stock. The Company issued 9,250,000 warrants to purchase shares of common stock in connection with this note. The warrants have a life and an exercise price as follows: 3,750,000 at an exercise price of $0.40 per share, 3,000,000 at an exercise price of $0.50 per share and 2,500,000 at an exercise price of $0.60 per share. The proceeds were allocated between the note for $1,788,038 and the warrants for $1,211,962. The note has an early payoff penalty of 140% of the then outstanding face value. On July 29, 2019, the investor converted $265,000 of the principal balance into 2,986,597 shares of common stock valued at $ per share. The Company recognized a loss on the extinguishment of debt of $40,350. During 2020, the investor converted $36,300 of the principal balance into shares of common stock. The Company recognized a loss on the extinguishment of debt of $531,194. The Company also made cash payments of $500,000 towards the principal balance of the note. The Company has required payments as follows: $2,400,000 in 2021 and the remaining balance due in 2022. During 2020, the Company experienced a triggering event. As a result, the interest rate increased to 20% for the life of the note. On April 14, 2020, the Company entered into a Forbearance Agreement with Investor in which Investor agreed to rescind its prior declaration of an Event of Default under the May 20, 2019 Note Purchase Agreement and the Company agreed to pay certain monthly and quarterly redemptions of the May 20, 2019 Note through 2022. Specifically, the Company has agreed to pay $900,000 during 2020, $2,400,000 during 2021 and $500,000 delivered during each quarter of 2022 until the Note is converted or redeemed in full. During the nine-months ended September 30, 2021, the investor converted $231,600 of the principal balance into shares of common stock. The Company recognized a loss on the extinguishment of debt of $1,604,727. The Company also made cash payments of $142,857 towards the principal balance of the note. The Company is not current with all payments due according to the agreement. For the nine months ended September 30, 2021, the Company amortized $727,700 of debt discount to current period operations as interest expense. As of September 30, 2021, the gross balance of the note was $3,074,243 and accrued interest was $2,176,317.
Scotia International of Nevada, Inc. – On January 10, 2019, the Company issued an unsecured Convertible Promissory Note (“Note”) to Scotia International of Nevada, Inc. (“Scotia”), in the principal amount of $400,000 (the “Note”) due on January 10, 2022 and bears 6% per annum interest, due at maturity. The Note was issued as part of a buyout agreement on the net smelter royalty due Scotia on the precious metals mined from the Company’s mining operation in Honduras. The Note is convertible into common stock, at holder’s option, at $0.50 per share as long as the Company’s common stock’s bid price is less than $0.75 per share. If the bid price is more than $0.75 per share, then Scotia may elect to convert at the average bid price of the common stock during the 10-trading day period prior to conversion. For the nine months ended September 30, 2021, the Company amortized $22,557 of debt discount to current period operations as interest expense. On September 1, 2021, the Company made a payment towards the principal balance of $4,958. As of September 30, 2021, the gross balance of the note was $395,042 and accrued interest was $65,359.
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Stockholders’ Deficit |
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| Stockholders’ Deficit | 14. Stockholders’ Deficit
Common Stock
On January 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,500 in principal. The shares were valued at $ per share for a total value of $54,857. The Company recognized a loss of extinguishment of debt of $46,971 on this conversion.
On January 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,900 in principal. The shares were valued at $ per share for a total value of $58,206. The Company recognized a loss of extinguishment of debt of $49,847 on this conversion.
On January 26, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,000 in principal. The shares were valued at $ per share for a total value of $62,993. The Company recognized a loss of extinguishment of debt of $54,409 on this conversion.
On February 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,900 in principal. The shares were valued at $ per share for a total value of $75,356. The Company recognized a loss of extinguishment of debt of $66,730 on this conversion.
On February 9, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,500 in principal. The shares were valued at $ per share for a total value of $96,458. The Company recognized a loss of extinguishment of debt of $87,254 on this conversion.
On February 17, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,200 in principal. The shares were valued at $ per share for a total value of $123,152. The Company recognized a loss of extinguishment of debt of $114,106 on this conversion.
On February 22, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,300 in principal. The shares were valued at $ per share for a total value of $144,635. The Company recognized a loss of extinguishment of debt of $135,434 on this conversion.
On March 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,200 in principal. The shares were valued at $ per share for a total value of $107,088. The Company recognized a loss of extinguishment of debt of $97,873 on this conversion.
On March 8, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,800 in principal. The shares were valued at $ per share for a total value of $113,104. The Company recognized a loss of extinguishment of debt of $103,264 on this conversion.
On March 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $11,100 in principal. The shares were valued at $ per share for a total value of $152,081. The Company recognized a loss of extinguishment of debt of $141,925 on this conversion.
On March 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $11,500 in principal. The shares were valued at $ per share for a total value of $117,718. The Company recognized a loss of extinguishment of debt of $107,137 on this conversion.
On March 25, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $12,000 in principal. The shares were valued at $ per share for a total value of $102,994. The Company recognized a loss of extinguishment of debt of $91,802 on this conversion.
On April 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $12,600 in principal. The shares were valued at $ per share for a total value of $104,175. The Company recognized a loss of extinguishment of debt of $92,252 on this conversion.
On April 20, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,000 in principal. The shares were valued at $ per share for a total value of $69,949. The Company recognized a loss of extinguishment of debt of $57,413 on this conversion.
On April 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,600 in principal. The shares were valued at $ per share for a total value of $74,962. The Company recognized a loss of extinguishment of debt of $61,717 on this conversion.
On May 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,900 in principal. The shares were valued at $ per share for a total value of $69,319. The Company recognized a loss of extinguishment of debt of $55,567 on this conversion.
On May 21, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $19,000 in principal. The shares were valued at $ per share for a total value of $91,261. The Company recognized a loss of extinguishment of debt of $72,261 on this conversion.
On June 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $18,900 in principal. The shares were valued at $ per share for a total value of $74,411. The Company recognized a loss of extinguishment of debt of $55,511 on this conversion.
On July 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,500 in principal. The shares were valued at $ per share for a total value of $69,978. The Company recognized a loss of extinguishment of debt of $60,478 on this conversion.
On July 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $5,200 in principal. The shares were valued at $ per share for a total value of $57,975. The Company recognized a loss of extinguishment of debt of $52,775 on this conversion.
Warrants
The following tables summarize the warrant activity during the nine months ended September 30, 2021 and the year ended December 31, 2020:
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Income Taxes |
9 Months Ended |
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Sep. 30, 2021 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 15. Income Taxes
The Company’s subsidiaries, Compania Minera Cerros del Sur and Compania Minera Clavo Rico, which are located in Honduras, are required to pay income tax and solidarity tax on their income and/or assets annually. The annual report was completed during the nine-month period ended September 30, 2021 and the company recognized a tax liability of $158,321 during the period and paid $ of this tax liability.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2021 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | 16. Related Party Transactions
Consulting Agreement – In February 2014, the Company entered into a consulting agreement with a stockholder/director. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of April 1, 2019 (see Employment Agreements below). As of September 30, 2021, the Company owed $1,035,000 to the stockholder/director in accrued consulting fees.
Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
Employment Agreements – The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually.
Notes Payable – The Company took several short-term notes payable from related parties during the nine months ended September 30, 2021. The Company received $869,900 in cash from related parties and paid out $1,020,500 in cash to related parties on notes payable (See Note 12 for more details).
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Commitments and Contingencies |
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Sep. 30, 2021 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 17. Commitments and Contingencies
Litigation
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
On June 28, 2021, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., settled a labor dispute brought in Honduras by one of the Company’s former employees for an amount of $19,408. The settlement included the Company and all its related entities.
On March 4, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with notice of a civil litigation brought in Honduras by Empresa Agregados y Concretos S.A. (“Agrecon”) for an amount of approximately $930,000. The complaint alleges a dispute regarding the amounts owed by the Company to Agrecon under a certain Material Crushing Agreement. The Company has responded disputing the amount owed and placed $125,000 in a dedicated account while the case is being litigated and until the court makes its determination on any amounts owed.
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Concentrations |
9 Months Ended |
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| Risks and Uncertainties [Abstract] | |
| Concentrations | 18. Concentrations
We generally sell a significant portion of our mineral production to a relatively small number of customers. For the nine months ended September 30, 2021, one hundred percent (100%) of our consolidated product revenues were attributable to A-Mark Precious Metals and to Asahi Refining, Inc., our current and only two customers as of September 30, 2021. We are not dependent upon any one purchaser and have alternative purchasers readily available at competitive market prices if there is a disruption in services or other events that cause us to search for other ways to sell our production.
The Company currently is producing all of its precious metals from one mine located in Honduras. This location has most of the Company’s fixed assets and inventories. It would cause considerable disruption to the Company’s operations and revenue if this mine was disrupted or closed.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 19. Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date which the financial statements were available to be issued and there are no material subsequent events, except as noted below:
On October 7, 2021, the Company issued to an Investor shares of its common stock under a conversion notice.
On October 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. |
Summary of Significant Accounting Policies (Policies) |
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| Going Concern | Going Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company had net loss of $817,294 during the period ended September 30, 2021 and had a working capital deficit of $28,325,935 as of September 30, 2021. These factors among others indicate that the Company may be unable to continue as a going concern for a period of one year from the issuance of these financial statements.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
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| Principles of Consolidation | Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
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| Basis of Presentation | Basis of Presentation - The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
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| Condensed Financial Statements | Condensed Financial Statements - The interim consolidated financial statements included herein have been prepared by Inception Mining Inc. (“Inception Mining” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in this filing.
In the opinion of management, all adjustments have been made consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the consolidated financial position of the Company and subsidiaries as of September 30, 2021, the results of its consolidated statements of operations and comprehensive income (loss) for the three and nine-month periods ended September 30, 2021, and its consolidated cash flows for the nine-month period ended September 30, 2021. The results of consolidated operations for the interim periods are not necessarily indicative of the results for the full year.
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| Cash and Cash Equivalents | Cash and Cash Equivalents - The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2021 and December 31, 2020, the Company had $0 and $0 in cash equivalents, respectively. The aggregate cash balance on deposit in these accounts is insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts.
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| Inventories, Stockpiles and Mineralized Material on Leach Pads | Inventories, Stockpiles and Mineralized Material on Leach Pads - Inventories, including stockpiles and mineralized material on leach pads are carried at the lower of cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiles, mineralized material on leach pads and inventories to net realizable value are reported as a component of costs applicable to mining revenue. Cost is comprised of production costs for mineralized material produced and processed. Production costs include the costs of materials, costs of processing, direct labor, mine site and processing facility overhead costs and depreciation, amortization and depletion.
Stockpiles - Stockpiles represent mineralized material that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile. Stockpile tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the material, including applicable overhead, depreciation, and depletion relating to mining operations, and removed at each stockpile’s average cost per ton.
Mineralized Material on Leach Pads - The Company utilizes a heap leaching process to recover gold from its mineralized material. Under this method, the mineralized material is placed on leach pads where it is treated with a chemical solution that dissolves the gold contained in the material. The resulting gold-bearing solution is further processed in a facility where the gold is recovered. Costs are added to mineralized material on leach pads based on current mining and processing costs, including applicable depreciation relating to mining and processing operations. Costs are transferred from mineralized material on leach pads to subsequent stages of in-process inventories as the gold-bearing solution is processed. The value of such transferred costs of mineralized material on leach pads is based on the average cost per estimated recoverable ounce of gold on the leach pad.
The estimates of recoverable gold on the leach pads are calculated from the quantities of material placed on the leach pads (measured tons added to the leach pads), the grade of material placed on the leach pads (based on assay data) and a recovery percentage.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the quantities and grades of material placed on leach pads to the quantities and grades quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored, and estimates are refined based on actual results over time. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
In-process Inventories - In-process inventories represent mineralized materials that are currently in the process of being converted to a saleable product through the absorption, desorption, recovery (ADR) process. The value of in-process material is measured based on assays of the material fed into the process and the projected recoveries of material. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines, stockpiles and/or leach pads plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.
Finished Goods Inventories - Finished goods inventories include gold that has been processed through the Company’s ADR facility and are valued at the average cost of their production.
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| Exploration and Development Costs | Exploration and Development Costs - Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
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| Mineral Rights and Properties | Mineral Rights and Properties - We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
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| Settlement of Contracts in Company’s Equity | Settlement of Contracts in Company’s Equity – In accordance with ASC 815-40-25, the Company must meet certain requirements in order to report contracts as equity versus liabilities. These requirements must be met by the Company or the contracts need to be reported as liabilities. The Company has adopted the sequencing approach as guidance on contracts that permit partial net share settlement. The Company evaluates the contracts based on the earliest issuance date. Currently, the Company doesn’t have any items that are reported as equity instead of liabilities.
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| Fair Value Measurements | Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on September 30, 2021 are summarized below:
The fair value of financial instruments on December 31, 2020 are summarized below:
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.
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| Marketable Securities | Marketable Securities - We measure the fair value of marketable securities in accordance with ASC 825-10 – Financial Instruments. Any change in the fair value is recognized in net income in the period being reported.
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| Long-Lived Assets | Long-Lived Assets - We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
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| Properties, Plant and Equipment | Properties, Plant and Equipment - We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
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| Reclamation Liabilities and Asset Retirement Obligations | Reclamation Liabilities and Asset Retirement Obligations - Minimum standards for site reclamation and closure have been established for us by various government agencies. Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site.
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| Revenue Recognition | Revenue Recognition - In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.
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| Stock Issued for Goods and Services | Stock Issued for Goods and Services - Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received, whichever is the most reliably measurable on the date of issue.
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| Stock-Based Compensation |
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| Income (Loss) per Common Share |
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| Other Comprehensive Loss | Other Comprehensive Loss – Other Comprehensive loss is made up of the exchange differences arising on translating foreign operations, unrealized losses on marketable securities and the net loss for the three and nine-months ending September 30, 2021 and 2020.
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| Derivative Liabilities | Derivative Liabilities - Derivative liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations.
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| Income Taxes | Income Taxes - The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
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| Business Segments | Business Segments – The Company operates in one segment and therefore segment information is not presented.
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| Use of Estimates | Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
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| Non-Controlling Interest Policy | Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. |
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of Financial Instruments | The fair value of financial instruments on September 30, 2021 are summarized below:
The fair value of financial instruments on December 31, 2020 are summarized below:
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| Schedule of Property and Equipment Useful Lives |
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| Schedule of Net Earnings Per Common Share |
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Inventories, Stockpiles and Mineralized Materials on Leach Pads (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventories | Inventories, stockpiles and mineralized materials on leach pads at September 30, 2021 and December 31, 2020 consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||
| Summary of Changes in Fair Value of Level 1 Financial Assets | The following table provides a summary of changes in fair value of the Company’s Level 1 financial assets as of September 30, 2021:
|
|||||||||||||||||||||||||
Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||
| Summary of Changes in Fair Value of Level 3 Financial Liabilities | The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of September 30, 2021:
|
||||||||||||||||||||
Properties, Plant and Equipment, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Properties and Equipment | Properties, plant and equipment at September 30, 2021 and December 31, 2020 consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Allocation of Depreciation Expense |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mine Reclamation Obligation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Mine Reclamation Obligation | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Changes in Assets Retirement Obligation | Changes to the asset retirement obligation were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Borrowings (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Secured Borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Secured Borrowings |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Payable | Notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable – Related Parties (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable Related Parties | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Payable Related Parties | Notes payable – related parties were comprised of the following as of September 30, 2021 and December 31, 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes Payable | Convertible notes payable were comprised of the following as of September 30, 2021 and December 31, 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Deficit (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity | The following tables summarize the warrant activity during the nine months ended September 30, 2021 and the year ended December 31, 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Outstanding and Exercisable |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business (Details Narrative) - USD ($) |
Feb. 21, 2020 |
Oct. 02, 2015 |
Feb. 25, 2013 |
Nov. 21, 2012 |
Sep. 30, 2021 |
Dec. 31, 2020 |
Mar. 05, 2010 |
Mar. 04, 2010 |
Dec. 31, 2003 |
|---|---|---|---|---|---|---|---|---|---|
| Restructuring Cost and Reserve [Line Items] | |||||||||
| Common stock authorized | 500,000,000 | 500,000,000 | 500,000,000 | 100,000,000 | |||||
| Reverse stock split description | 200 to 1 reverse stock split | ||||||||
| Cancellation of stock split shares, description | Upon effectiveness of the stock split, each shareholder canceled 200 shares of common stock for every share of common stock owned as of November 21, 2012. | ||||||||
| Stock issued during period for consideration of acquisition, shares | 16,000,000 | ||||||||
| Promissory note issued to related party | $ 950,000 | $ 7,121,101 | $ 7,105,019 | ||||||
| Percentage of net royalty | 3.00% | ||||||||
| Ounces High Exploration Inc [Member] | |||||||||
| Restructuring Cost and Reserve [Line Items] | |||||||||
| Cash consideration received in exchange of properties | $ 250,000 | ||||||||
| Number of shares sold in exchange of properties | 66,974,252 | ||||||||
| Gold American Mining Corp [Member] | |||||||||
| Restructuring Cost and Reserve [Line Items] | |||||||||
| Description of equity interests issued or issuable to acquire the entity | Inception Development Inc. (the “Subsidiary”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Inception Resources, LLC, a Utah corporation (“Inception Resources”), pursuant to which Inception purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net royalty. | ||||||||
| Clavo Rico Ltd [Member] | |||||||||
| Restructuring Cost and Reserve [Line Items] | |||||||||
| Shares issued for conversion of debt, shares | 240,225,901 | ||||||||
| Shares issued for conversion of debt | $ 5,488,980 | ||||||||
| Accrued interest | $ 3,434,426 | ||||||||
| Percentage of equity ownership interest rate | 99.90% | 20.00% |
Schedule of Fair Value of Financial Instruments (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Marketable Securities | $ 118,166 | |
| Total Assets | 118,166 | |
| Warrant liabilities | 29 | 22,914 |
| Debt derivative Liabilities | 4,669,891 | 7,541,393 |
| Total Liabilities | 4,669,920 | 7,564,307 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Marketable Securities | 118,166 | |
| Total Assets | 118,166 | |
| Warrant liabilities | ||
| Debt derivative Liabilities | ||
| Total Liabilities | ||
| Fair Value, Inputs, Level 2 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Marketable Securities | ||
| Total Assets | ||
| Warrant liabilities | ||
| Debt derivative Liabilities | ||
| Total Liabilities | ||
| Fair Value, Inputs, Level 3 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Marketable Securities | ||
| Total Assets | ||
| Warrant liabilities | 29 | 22,914 |
| Debt derivative Liabilities | 4,669,891 | 7,541,393 |
| Total Liabilities | $ 4,669,920 | $ 7,564,307 |
Schedule of Net Earnings Per Common Share (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Net Income (Loss) - Controlling Interest | $ (35,200) | $ 1,900,283 | $ (817,617) | $ (2,982,147) |
| Basic Weighted Average Number of Shares Outstanding during Period | 143,859,960 | 69,339,611 | 120,917,163 | 66,637,872 |
| Diluted Weighted Average Number of Shares Outstanding during Period | 143,859,960 | 536,242,200 | 120,917,163 | 66,637,872 |
| Diluted Net Loss per Share | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.04) |
| Earnings Per Common Share [Member] | ||||
| Net Income (Loss) - Controlling Interest | $ (35,200) | $ 1,900,283 | $ (817,617) | $ (2,982,147) |
| Amortization of Debt Discounts | 497,131 | |||
| Interest Expense | 187,525 | |||
| Change in Derivative Liabilities | (2,682,677) | |||
| Adjusted Net Loss - Controlling Interest | $ (35,200) | $ (97,738) | $ (817,617) | $ (2,982,147) |
| Basic Weighted Average Number of Shares Outstanding during Period | 143,859,960 | 69,339,611 | 120,917,163 | 66,637,872 |
| Dilutive Shares | 466,902,589 | |||
| Diluted Weighted Average Number of Shares Outstanding during Period | 143,859,960 | 536,242,200 | 120,917,163 | 66,637,872 |
| Diluted Net Loss per Share | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.04) |
Summary of Significant Accounting Policies (Details Narrative) |
3 Months Ended | 9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
|
Sep. 30, 2021
USD ($)
|
Jun. 30, 2021
USD ($)
|
Mar. 31, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
segment
shares
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
| Property, Plant and Equipment [Line Items] | |||||||||
| Net loss | $ 35,054 | $ (4,623,895) | $ 5,406,135 | $ (1,900,569) | $ 6,012,912 | $ (1,129,271) | $ 817,294 | $ 2,983,072 | |
| Working capital deficit | 28,325,935 | 28,325,935 | |||||||
| Cash equivalents | 0 | $ 0 | $ 0 | ||||||
| Common share equivalents excluded from calculation of diluted loss per share | shares | 430,404,987,016 | ||||||||
| Number of operating segment | segment | 1 | ||||||||
| Maximum [Member] | |||||||||
| Property, Plant and Equipment [Line Items] | |||||||||
| Cash deposit insured by fdic | $ 250,000 | $ 250,000 | |||||||
Schedule of Inventories (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Supplies | $ 45,783 | $ 69,768 |
| Mineralized Material on Leach Pads | 136,471 | 112,207 |
| ADR Plant | 113,005 | 153,307 |
| Finished Ore | 139,255 | 401,467 |
| Total Inventories | $ 434,514 | $ 736,749 |
Inventories, Stockpiles and Mineralized Materials on Leach Pads (Details Narrative) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Stockpiles | $ 0 | $ 0 |
Summary of Changes in Fair Value of Level 1 Financial Assets (Details) - Fair Value, Inputs, Level 1 [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Defined Benefit Plan Disclosure [Line Items] | |
| Balance, December 31, 2020 | $ 118,166 |
| Change in fair value of marketable securities | 328,970 |
| Sale of marketable securities | (447,136) |
| Balance, September 30, 2021 |
Summary of Changes in Fair Value of Level 3 Financial Liabilities (Details) - Fair Value, Inputs, Level 3 [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Defined Benefit Plan Disclosure [Line Items] | |
| Derivative liabilities, beginning balances | $ 7,564,307 |
| Change in fair value of derivative liabilities and warrant liability | (2,894,387) |
| Derivative liabilities, ending balances | $ 4,669,920 |
Schedule of Properties and Equipment (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Land | $ 290,967 | $ 273,248 |
| Buildings | 2,391,527 | 2,388,274 |
| Machinery and Equipment | 972,662 | 971,374 |
| Office Equipment and Furniture | 50,558 | 48,827 |
| Vehicles | 103,189 | 85,921 |
| Construction in Process | 19,407 | 9,015 |
| Total Property, Plant and Equipment | 3,828,310 | 3,776,659 |
| Less Accumulated Depreciation | (3,406,331) | (3,362,848) |
| Total Property, Plant and Equipment | $ 421,979 | $ 413,811 |
Summary of Allocation of Depreciation Expense (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Impaired Assets to be Disposed of by Method Other than Sale [Line Items] | ||
| Depreciation expense | $ 39,098 | $ 38,423 |
| Cost of Sales [Member] | ||
| Impaired Assets to be Disposed of by Method Other than Sale [Line Items] | ||
| Depreciation expense | 32,466 | 32,185 |
| General and Administrative Expense [Member] | ||
| Impaired Assets to be Disposed of by Method Other than Sale [Line Items] | ||
| Depreciation expense | $ 6,632 | $ 6,238 |
Properties, Plant and Equipment, Net (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 39,098 | $ 38,423 |
Mineral Properties (Details Narrative) |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
|
Feb. 21, 2020
USD ($)
shares
|
Jul. 31, 2015
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Feb. 25, 2013
ft²
|
|
| Reserve Quantities [Line Items] | |||||||
| Gain on sale of mine property | $ 471,084 | ||||||
| Ounces High Exploration Inc [Member] | |||||||
| Reserve Quantities [Line Items] | |||||||
| Cash consideration received | $ 249,660 | ||||||
| Gain on sale of mine property | 471,084 | ||||||
| Hawkstone Mining Limited [Member] | |||||||
| Reserve Quantities [Line Items] | |||||||
| Cash consideration received | $ 221,424 | ||||||
| Sale of shares of common stock | shares | 66,974,252 | ||||||
| Asset Purchase Agreement [Member] | UP And Burlington [Member] | |||||||
| Reserve Quantities [Line Items] | |||||||
| Area of Land | ft² | 40 | ||||||
| Impairment expense | $ 950,160 | ||||||
Schedule of Changes in Assets Retirement Obligation (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Mine Reclamation Obligation | ||
| Balance, Beginning of Period | $ 602,337 | $ 513,051 |
| Liabilities incurred | 39,509 | 89,286 |
| Change due to foreign currency translation | 466 | |
| Balance, End of Period | $ 642,312 | $ 602,337 |
Mine Reclamation Obligation (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
| Long-term Debt, Fair Value | $ 642,312 | $ 602,337 | |
| Inflation Rate [Member] | |||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
| Derivative, Variable Interest Rate | 5.30% | ||
| Measurement Input, Risk Free Interest Rate [Member] | |||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
| [custom:FairValueOfAssumptionsPercentage] | 18.00% |
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts Payable | $ 600,626 | $ 719,070 |
| Accrued Liabilities | 2,659,385 | 1,619,763 |
| Accrued Salaries and Benefits | 659,815 | 618,257 |
| Advances Payable | 149,532 | 497,395 |
| Total Accounts Payable and Accrued Liabilities | $ 4,069,358 | $ 3,454,485 |
Schedule of Secured Borrowings (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Secured Borrowings | ||
| Secured obligations | $ 201,763 | |
| Guaranteed interest | 11,876 | |
| Deferred interest | (11,550) | |
| Secured Borrowings, gross | 202,089 | |
| Gold held as security | (52,499) | |
| Secured Borrowings, net | $ 149,590 |
Secured Borrowings (Details Narrative) - USD ($) |
Dec. 26, 2020 |
Jun. 25, 2020 |
May 31, 2021 |
|---|---|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Secured borrowings | $ 134,508 | ||
| Two New Arrangements [Member] | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Debt instrument face amount | $ 118,757 | $ 172,663 | |
| Debt instrument description | The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $11,876, for a total expected remittance of $130,633. Also on that day, one of the lenders chose to liquidate a portion of his balance amounting to $83,006. This amount was paid to the lender in January 2021. | The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $17,266, for a total expected remittance of $189,929. The maturity date of the notes is December 26, 2020. | |
| Guaranteed return, amount | $ 11,876 | $ 17,266 | |
| Payments of expected remittance | $ 130,633 | $ 189,929 | |
| Debt instrument, maturity date | Jun. 26, 2021 | Dec. 26, 2020 | |
| Repayment of secured borrowing | $ 83,006 |
Schedule of Notes Payable (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Total Notes Payable | $ 180,539 | $ 160,000 |
| Less Short-Term Notes Payable | (88,872) | |
| Total Long-Term Notes Payable | 91,667 | 160,000 |
| Phil Zobrist [Member] | ||
| Total Notes Payable | 60,000 | 60,000 |
| Small Business Administration [Member] | ||
| Total Notes Payable | $ 120,539 | $ 100,000 |
Schedule of Notes Payable Related Parties (Details) - USD ($) |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
Feb. 25, 2013 |
|
| Total Notes Payable - Related Parties | $ 7,121,101 | $ 7,105,019 | $ 950,000 |
| Clavo Rico Incorporated [Member] | |||
| Total Notes Payable - Related Parties | $ 3,377,980 | $ 3,377,980 | |
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director | |
| Claymore Management [Member] | |||
| Total Notes Payable - Related Parties | $ 185,000 | $ 185,000 | |
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director | |
| Debra D'ambrosio [Member] | |||
| Total Notes Payable - Related Parties | $ 29,400 | $ 50,000 | |
| Relationship | Immediate Family Member | Immediate Family Member | |
| Francis E. Rich [Member] | |||
| Total Notes Payable - Related Parties | $ 70,000 | ||
| Relationship | Immediate Family Member | Immediate Family Member | |
| Francis E Rich IRA [Member] | |||
| Total Notes Payable - Related Parties | $ 50,000 | ||
| Relationship | Immediate Family Member | Immediate Family Member | |
| Legends Capital [Member] | |||
| Total Notes Payable - Related Parties | $ 715,000 | $ 715,000 | |
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director | |
| LW Briggs Irrevocable Trust [Member] | |||
| Total Notes Payable - Related Parties | $ 1,101,000 | $ 1,101,000 | |
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director | |
| MDL Ventures LLC [Member] | |||
| Total Notes Payable - Related Parties | $ 1,642,721 | $ 1,476,039 | |
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director | |
| Pine Valley Investments [Member] | |||
| Total Notes Payable - Related Parties | $ 150,000 | ||
| Relationship | Affiliate - Controlled by Director | Affiliate - Controlled by Director |
Schedule of Convertible Notes Payable (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Short-term Debt [Line Items] | ||
| Total Convertible Notes Payable | $ 3,748,407 | $ 4,168,823 |
| Less Unamortized Discount | (8,428) | (774,431) |
| Total Convertible Notes Payable, Net of Unamortized Debt Discount | 3,739,979 | 3,394,392 |
| Less Short-Term Convertible Notes Payable | (3,739,979) | (2,176,677) |
| Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount | 1,217,715 | |
| Antczak Polich Law LLC [Member] | ||
| Short-term Debt [Line Items] | ||
| Total Convertible Notes Payable | 279,123 | 320,123 |
| Investors [Member] | ||
| Short-term Debt [Line Items] | ||
| Total Convertible Notes Payable | 3,074,243 | 3,448,700 |
| Scotia International [Member] | ||
| Short-term Debt [Line Items] | ||
| Total Convertible Notes Payable | $ 395,041 | $ 400,000 |
Convertible Notes Payable (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 01, 2021 |
Jul. 18, 2021 |
Jul. 02, 2021 |
Jun. 18, 2021 |
May 21, 2021 |
May 11, 2021 |
Apr. 28, 2021 |
Apr. 20, 2021 |
Apr. 05, 2021 |
Mar. 25, 2021 |
Mar. 15, 2021 |
Mar. 11, 2021 |
Mar. 08, 2021 |
Mar. 02, 2021 |
Feb. 22, 2021 |
Feb. 17, 2021 |
Feb. 09, 2021 |
Feb. 05, 2021 |
Jan. 26, 2021 |
Jan. 15, 2021 |
Jan. 05, 2021 |
Jul. 30, 2019 |
May 20, 2019 |
May 20, 2019 |
Jan. 10, 2019 |
Dec. 01, 2018 |
Aug. 01, 2018 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
May 20, 2021 |
Jul. 29, 2019 |
|
| Loss on extinguishment of debt | $ (113,253) | $ (29,384) | $ (1,604,727) | $ (383,946) | |||||||||||||||||||||||||||||||
| Amortized debt discount | 750,347 | $ 1,512,717 | |||||||||||||||||||||||||||||||||
| Investor [Member] | |||||||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 5,200 | $ 9,500 | $ 18,900 | $ 19,000 | $ 13,900 | $ 13,600 | $ 13,000 | $ 12,600 | $ 12,000 | $ 11,500 | $ 11,100 | $ 10,800 | $ 10,200 | $ 10,300 | $ 10,200 | $ 10,500 | $ 9,900 | $ 10,000 | $ 9,900 | $ 9,500 | |||||||||||||||
| Shares Issued, Price Per Share | $ 0.0121 | $ 0.015 | $ 0.015 | $ 0.0183 | $ 0.019 | $ 0.021 | $ 0.0205 | $ 0.0315 | $ 0.0327 | $ 0.039 | $ 0.0522 | $ 0.0399 | $ 0.04 | $ 0.0535 | $ 0.046 | $ 0.035 | $ 0.029 | $ 0.024 | $ 0.0224 | $ 0.022 | |||||||||||||||
| Loss on extinguishment of debt | $ 52,775 | $ 60,478 | $ 55,511 | $ 72,261 | $ 55,567 | $ 61,717 | $ 57,413 | $ 92,252 | $ 91,802 | $ 107,137 | $ 141,925 | $ 103,264 | $ 97,873 | $ 135,434 | $ 114,106 | $ 87,254 | $ 66,730 | $ 54,409 | $ 49,847 | $ 46,971 | 1,604,727 | ||||||||||||||
| Debt Conversion, Original Debt, Amount | $ 231,600 | ||||||||||||||||||||||||||||||||||
| Common stock issued | 66,386,635 | ||||||||||||||||||||||||||||||||||
| Repayments of Notes Payable | $ 142,857 | ||||||||||||||||||||||||||||||||||
| Unsecured Convertible Promissory Note [Member] | Antczak Polich Law LLC [Member] | |||||||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 130,000 | $ 300,000 | |||||||||||||||||||||||||||||||||
| Debt instruments maturity date | Dec. 01, 2019 | Aug. 01, 2019 | |||||||||||||||||||||||||||||||||
| Debt instruments interest rate | 8.00% | 8.00% | |||||||||||||||||||||||||||||||||
| Legal fees | $ 130,000 | $ 300,000 | 20,877 | $ 130,000 | |||||||||||||||||||||||||||||||
| Debt instruments conversion price per share | $ 0.75 | $ 0.75 | |||||||||||||||||||||||||||||||||
| Gross balance note | 279,123 | 279,123 | |||||||||||||||||||||||||||||||||
| Accrued interest | 77,889 | 77,889 | |||||||||||||||||||||||||||||||||
| Unsecured Convertible Promissory Note [Member] | Scotia International Of Nevada Inc [Member] | |||||||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 400,000 | ||||||||||||||||||||||||||||||||||
| Debt instruments maturity date | Jan. 10, 2022 | ||||||||||||||||||||||||||||||||||
| Debt instruments interest rate | 6.00% | ||||||||||||||||||||||||||||||||||
| Debt instruments conversion price per share | $ 0.50 | ||||||||||||||||||||||||||||||||||
| Gross balance note | 395,042 | 395,042 | |||||||||||||||||||||||||||||||||
| Accrued interest | 65,359 | 65,359 | |||||||||||||||||||||||||||||||||
| Description on conversion price | The Note is convertible into common stock, at holder’s option, at $0.50 per share as long as the Company’s common stock’s bid price is less than $0.75 per share. If the bid price is more than $0.75 per share, then Scotia may elect to convert at the average bid price of the common stock during the 10-trading day period prior to conversion. | ||||||||||||||||||||||||||||||||||
| Repayments of Notes Payable | $ 4,958 | ||||||||||||||||||||||||||||||||||
| Amortized debt discount | 22,557 | ||||||||||||||||||||||||||||||||||
| Unsecured Convertible Promissory Note [Member] | Antczak Polich Law LLC [Member] | |||||||||||||||||||||||||||||||||||
| Legal fees | 130,000 | $ 130,000 | |||||||||||||||||||||||||||||||||
| Gross balance note | 0 | 0 | |||||||||||||||||||||||||||||||||
| Accrued interest | 15,148 | 15,148 | |||||||||||||||||||||||||||||||||
| Secured Convertible Promissory Note [Member] | Warrant One [Member] | |||||||||||||||||||||||||||||||||||
| Warrants issued to purchase shares of common stock | 3,750,000 | 3,750,000 | |||||||||||||||||||||||||||||||||
| Exercise price of warrants | $ 0.40 | $ 0.40 | |||||||||||||||||||||||||||||||||
| Secured Convertible Promissory Note [Member] | Warrant Two [Member] | |||||||||||||||||||||||||||||||||||
| Warrants issued to purchase shares of common stock | 3,000,000 | 3,000,000 | |||||||||||||||||||||||||||||||||
| Exercise price of warrants | $ 0.50 | $ 0.50 | |||||||||||||||||||||||||||||||||
| Secured Convertible Promissory Note [Member] | Warrant Three [Member] | |||||||||||||||||||||||||||||||||||
| Warrants issued to purchase shares of common stock | 2,500,000 | 2,500,000 | |||||||||||||||||||||||||||||||||
| Exercise price of warrants | $ 0.60 | $ 0.60 | |||||||||||||||||||||||||||||||||
| Secured Convertible Promissory Note [Member] | Investor [Member] | |||||||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 4,250,000 | $ 4,250,000 | 36,300 | ||||||||||||||||||||||||||||||||
| Debt instruments maturity date | May 20, 2022 | ||||||||||||||||||||||||||||||||||
| Debt instruments interest rate | 20.00% | 20.00% | |||||||||||||||||||||||||||||||||
| Gross balance note | 3,074,243 | 3,074,243 | $ 265,000 | ||||||||||||||||||||||||||||||||
| Accrued interest | $ 2,176,317 | 2,176,317 | |||||||||||||||||||||||||||||||||
| Debt Instrument, Interest Rate, Effective Percentage | 24.00% | 24.00% | |||||||||||||||||||||||||||||||||
| Proceeds from Issuance of Debt | 500,000 | $ 3,000,000 | |||||||||||||||||||||||||||||||||
| Description on conversion price | The Note is convertible into common stock, at holder’s option, at 100% of market price less $0.01 per share. | ||||||||||||||||||||||||||||||||||
| Warrants issued to purchase shares of common stock | 9,250,000 | 9,250,000 | |||||||||||||||||||||||||||||||||
| Warrants term | 3 years | ||||||||||||||||||||||||||||||||||
| Proceeds from issuance of warrants | $ 1,788,038 | ||||||||||||||||||||||||||||||||||
| Fair value of warrants | $ 1,211,962 | ||||||||||||||||||||||||||||||||||
| Early payoff penalty percentage | 140.00% | ||||||||||||||||||||||||||||||||||
| Stock Issued During Period, Value, New Issues | $ 2,986,597 | ||||||||||||||||||||||||||||||||||
| Shares Issued, Price Per Share | $ 0.11 | ||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | $ 40,350 | $ 531,194 | |||||||||||||||||||||||||||||||||
| Stock Issued During Period, Shares, New Issues | 17,833,942 | ||||||||||||||||||||||||||||||||||
| Increased interest rate | 20.00% | ||||||||||||||||||||||||||||||||||
| Amortized debt discount | 727,700 | ||||||||||||||||||||||||||||||||||
| Secured Convertible Promissory Note [Member] | Investor [Member] | 2021 [Member] | |||||||||||||||||||||||||||||||||||
| Debt Instrument, Periodic Payment, Principal | $ 2,400,000 | ||||||||||||||||||||||||||||||||||
| Forbearance Agreement [Member] | Investor [Member] | |||||||||||||||||||||||||||||||||||
| Debt Instrument, Periodic Payment, Principal | 2,400,000 | $ 900,000 | |||||||||||||||||||||||||||||||||
| Forbearance Agreement [Member] | Investor [Member] | 2022 [Member] | |||||||||||||||||||||||||||||||||||
| Debt Instrument, Periodic Payment, Principal | $ 500,000 | ||||||||||||||||||||||||||||||||||
Schedule of Warrants Activity (Details) - Warrant [Member] - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Number of Warrants, Beginning Balance | 9,550,000 | 9,613,637 |
| Weighted Average Exercise Price, Beginning Balance | $ 0.53 | $ 1.12 |
| Number of Warrants, Forfeited | (63,637) | |
| Weighted Average Exercise Price, Forfeited | $ 0.49 | |
| Number of Warrants, Ending Balance | 9,550,000 | 9,550,000 |
| Weighted Average Exercise Price, Ending Balance | $ 0.49 | $ 0.53 |
Schedule of Warrants Outstanding and Exercisable (Details) - $ / shares |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| 2021 Outstanding Warrants [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Outstanding Warrants, Range of Exercise Price Minimum | $ 0.40 | ||
| Outstanding Warrants, Range of Exercise Price Maximum | $ 0.75 | ||
| Number of Warrants | 9,550,000 | ||
| Weighted Average Remaining Contractual Life | 7 months 28 days | ||
| Warrants Exercisable, Weighted Average Exercise Price | $ 0.49 | ||
| Warrant [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants | 9,550,000 | 9,550,000 | 9,613,637 |
| Warrants Exercisable, Weighted Average Exercise Price | $ 0.49 | ||
| Number of Warrants Exercisable | 9,550,000 |
Stockholders’ Deficit (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 18, 2021 |
Jul. 02, 2021 |
Jun. 18, 2021 |
May 21, 2021 |
May 11, 2021 |
Apr. 28, 2021 |
Apr. 20, 2021 |
Apr. 05, 2021 |
Mar. 25, 2021 |
Mar. 15, 2021 |
Mar. 11, 2021 |
Mar. 08, 2021 |
Mar. 02, 2021 |
Feb. 22, 2021 |
Feb. 17, 2021 |
Feb. 09, 2021 |
Feb. 05, 2021 |
Jan. 26, 2021 |
Jan. 15, 2021 |
Jan. 05, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||||||||||||||||||
| Loss on extinguishment of debt | $ (113,253) | $ (29,384) | $ (1,604,727) | $ (383,946) | ||||||||||||||||||||
| Investor [Member] | ||||||||||||||||||||||||
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||||||||||||||||||
| Common stock issued was converted | 4,791,348 | 4,665,219 | 4,960,711 | 4,986,959 | 3,648,354 | 3,569,612 | 3,412,130 | 3,307,141 | 3,149,658 | 3,018,422 | 2,913,434 | 2,834,692 | 2,677,209 | 2,703,456 | 2,677,209 | 2,755,951 | 2,598,468 | 2,624,715 | 2,598,468 | 2,493,479 | ||||
| Aggregate principal amount | $ 5,200 | $ 9,500 | $ 18,900 | $ 19,000 | $ 13,900 | $ 13,600 | $ 13,000 | $ 12,600 | $ 12,000 | $ 11,500 | $ 11,100 | $ 10,800 | $ 10,200 | $ 10,300 | $ 10,200 | $ 10,500 | $ 9,900 | $ 10,000 | $ 9,900 | $ 9,500 | ||||
| Issued shares per share price | $ 0.0121 | $ 0.015 | $ 0.015 | $ 0.0183 | $ 0.019 | $ 0.021 | $ 0.0205 | $ 0.0315 | $ 0.0327 | $ 0.039 | $ 0.0522 | $ 0.0399 | $ 0.04 | $ 0.0535 | $ 0.046 | $ 0.035 | $ 0.029 | $ 0.024 | $ 0.0224 | $ 0.022 | ||||
| Common stock issued was converted value | $ 57,975 | $ 69,978 | $ 74,411 | $ 91,261 | $ 69,319 | $ 74,962 | $ 69,949 | $ 104,175 | $ 102,994 | $ 117,718 | $ 152,081 | $ 113,104 | $ 107,088 | $ 144,635 | $ 123,152 | $ 96,458 | $ 75,356 | $ 62,993 | $ 58,206 | $ 54,857 | ||||
| Loss on extinguishment of debt | $ 52,775 | $ 60,478 | $ 55,511 | $ 72,261 | $ 55,567 | $ 61,717 | $ 57,413 | $ 92,252 | $ 91,802 | $ 107,137 | $ 141,925 | $ 103,264 | $ 97,873 | $ 135,434 | $ 114,106 | $ 87,254 | $ 66,730 | $ 54,409 | $ 49,847 | $ 46,971 | $ 1,604,727 | |||
Income Taxes (Details Narrative) |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Income Tax Disclosure [Abstract] | |
| Tax liability | $ 158,321 |
| Payment of tax liability | $ 33,832 |
Related Party Transactions (Details Narrative) - USD ($) |
1 Months Ended | |||
|---|---|---|---|---|
Apr. 02, 2019 |
Oct. 31, 2017 |
Feb. 28, 2014 |
Sep. 30, 2021 |
|
| Notes Payable [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due from related parties | $ 869,900 | |||
| Due to related parties | 1,020,500 | |||
| Consulting Agreement [Member] | Stockholder Director [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Accrued consulting fees | $ 1,035,000 | |||
| Consulting Agreement [Member] | Stockholder Director [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Payment of consulting fees per month | $ 25,000 | $ 18,000 | ||
| Employment Agreement [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Compensation | $ 300,000 | |||
Commitments and Contingencies (Details Narrative) - USD ($) |
1 Months Ended | |
|---|---|---|
Jun. 28, 2021 |
Mar. 04, 2020 |
|
| Agrecon [Member] | ||
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
| Litigation amount | $ 930,000 | |
| Litigation, awarded value | $ 125,000 | |
| Former Employees [Member] | ||
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
| Settlement amount | $ 19,408 |
Concentrations (Details Narrative) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |
| Concentration Risk [Line Items] | |
| Concentration risk, percentage | 100.00% |
Subsequent Events (Details Narrative) - Investor [Member] - shares |
Oct. 28, 2021 |
Oct. 07, 2021 |
Jul. 18, 2021 |
Jul. 02, 2021 |
Jun. 18, 2021 |
May 21, 2021 |
May 11, 2021 |
Apr. 28, 2021 |
Apr. 20, 2021 |
Apr. 05, 2021 |
Mar. 25, 2021 |
Mar. 15, 2021 |
Mar. 11, 2021 |
Mar. 08, 2021 |
Mar. 02, 2021 |
Feb. 22, 2021 |
Feb. 17, 2021 |
Feb. 09, 2021 |
Feb. 05, 2021 |
Jan. 26, 2021 |
Jan. 15, 2021 |
Jan. 05, 2021 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Subsequent Event [Line Items] | ||||||||||||||||||||||
| Common stock issued was converted | 4,791,348 | 4,665,219 | 4,960,711 | 4,986,959 | 3,648,354 | 3,569,612 | 3,412,130 | 3,307,141 | 3,149,658 | 3,018,422 | 2,913,434 | 2,834,692 | 2,677,209 | 2,703,456 | 2,677,209 | 2,755,951 | 2,598,468 | 2,624,715 | 2,598,468 | 2,493,479 | ||
| Subsequent Event [Member] | ||||||||||||||||||||||
| Subsequent Event [Line Items] | ||||||||||||||||||||||
| Common stock issued was converted | 5,602,192 | 5,602,192 |