UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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MAGELLAN GOLD CORPORATION
Form 10-Q September 30, 2023
Table of Contents
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Magellan Gold Corporation
Consolidated Balance Sheets
(Unaudited)
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Mineral rights and properties | ||||||||
| Development costs | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Accrued liabilities | ||||||||
| Convertible note payable, net - related party | ||||||||
| Convertible note payable, net | ||||||||
| Accrued interest - related parties | ||||||||
| Accrued interest | ||||||||
| Advances payable - related party | ||||||||
| Advances payable | ||||||||
| Notes payable | ||||||||
| Notes payable - related party | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders' deficit: | ||||||||
| Preferred shares, shares Series A preferred stock - $ stated value; authorized; shares issued and outstanding | ||||||||
| Common shares, $ par value; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Shareholders' deficit: | ( | ) | ( | ) | ||||
| Total liabilities and shareholders' deficit | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 3 |
Magellan Gold Corporation
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | $ | $ | $ | ||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ||||||||||||||||
| Other expense: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) on change in derivative liability | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic weighted average | ||||||||||||||||
| Diluted weighted average | ||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements
| 4 |
Magellan Gold Corporation
Consolidated Statements of Shareholders' Deficit
For the nine months ended September 30, 2023 and 2022
(Unaudited)
| Additional | ||||||||||||||||||||
| Common Stock | Paid - in | Accumulated | ||||||||||||||||||
| Shares | Par Value | Capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Shares issued for the acquisition of mineral properties | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Shares issued as deferred finance costs | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||
| Shares issued as deferred finance costs | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||
| Shares issued as deferred finance costs | ||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) |
See accompanying notes to the unaudited consolidated financial statements
| 5 |
Magellan Gold Corporation
Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Accretion of discounts on notes payable | ||||||||
| Stock based compensation | ||||||||
| Loss on change in derivative liability | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Accounts payable - related party | ||||||||
| Accrued interest | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Cash paid for development costs | ( | ) | ||||||
| Cash paid for mineral rights | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from notes payable from third parties | ||||||||
| Proceeds from notes payable from related parties | ||||||||
| Repayment of advances from related parties | ( | ) | ||||||
| Repayment of convertible debt | ( | ) | ||||||
| Proceeds from sale of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| 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 income taxes | $ | $ | ||||||
| Non-cash financing and investing activities: | ||||||||
| Expenses paid on behalf of the Company | $ | $ | ||||||
| Shares issued for the acquisition of mineral properties | $ | $ | ||||||
| Conversion of Series A preferred stock and accrued dividend | $ | $ | ||||||
See accompanying notes to the consolidated financial statements
| 6 |
MAGELLAN GOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization, Basis of Presentation, and Nature of Operations
Organization and Nature of Operations
Magellan Gold Corporation (“we” “our”, “us”, the “Company” or “Magellan”) was incorporated on September 28, 2010, under the laws of the State of Nevada. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto contained in our annual report on Form 10-K for the year ended December 31, 2022.
Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiaries, Clearwater and M Gold. All intercompany transactions and balances have been eliminated. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
We compute basic net loss per common share by dividing our net loss attributable to common shareholders by our weighted-average number of common shares outstanding during the period. Computation of diluted net loss per common share adds the weighted-average number of potential common shares outstanding to the weighted-average common shares outstanding, as calculated for basic net loss per share, except for instances in which there is a net loss. For the nine months ended September 30, 2023, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects. For the nine months ended September 30, 2022, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects.
| 7 |
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company’s sequencing policy is to evaluate for reclassification contracts with the earliest maturity date first.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Recent Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Liquidity and Going Concern
Our consolidated financial statements have been
prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next
fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements
and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to
continue as a going concern. At September 30, 2023, we had a working capital deficit of $
We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financing will occur.
| 8 |
Note 3 – Mineral Rights and Properties
Center Star Gold Mine
On July 1, 2020, the Company entered into a Stock
Purchase Agreement to acquire Clearwater Gold Mining Corporation (“Clearwater”) which owns certain unpatented mining claims
in Idaho County, Idaho that include the historic Center Star Gold Mine (“Center Star”) near Elk City, Idaho. As a result of
the Clearwater acquisition, Gregory Schifrin, the sole shareholder of Clearwater, was appointed to serve as a member of the Company’s
Board on July 1, 2020. In consideration for 100% of the issued and outstanding shares of Clearwater, the Company has agreed to pay Clearwater’s
sole shareholder 1,000,000 shares of Magellan common stock, $125,000 convertible note and $25,000 in cash. The 1,000,000 shares are to
be issued to the shareholder on and under the terms as follows: 250,000 shares at the time of closing, 250,000 shares at the time the
Center Mine receives its permit to reopen the main portal of the mine, 250,000 shares at the point the main portal have been reopened
and 250,000 shares two-years from closing concurrent the pay-off of the $125,000 convertible note. During the year ended December 31,
2022, the Company issued shares for the acquisition of Clearwater valued at $
As of September 30, 2023 and December 31, 2022,
the Company had $
Golden Idaho Project
On January 3, 2023, the Company entered into an
asset purchase agreement with Gold Express Mines, Inc (“Golden Express”). Pursuant to the agreement, the Seller sold the following
1) Golden, Idaho Project located in Idaho County, Idaho and consisting of seventy-two unpatented mining claims 2) Seafoam District - located
in Custer County, Idaho and consisting of five unpatented mining claims 3) Blacktail District - located in Lemhi County, Idaho and consisting
of eight unpatented mining claims 4) Big-it Project- located in Shoshone County, Idaho consisting of twenty-five unpatented mining claims
and a mineral lease over three unpatented mining claims and 94.86 acres of real property and 5) Terror Gulch (Capparelli Group) located
in Shoshone County, Idaho consisting of twelve unpatented mining claims. As of March 31, 2023, the total purchase price for the acquisition
was determined to be $
Kris Project
On June 6, 2023, the Company entered into a memorandum
of understanding for earn-in agreement(“MOU”) with Gold Express Mines, Inc. Per the MOU, the Company agreed to earn-in for
up to 50% working interest in Kris Project, which has 69 unpatented mining claims located in Plumus County, CA. In March 2023, the Company
paid Gold Express Mines, Inc. $
| 9 |
Note 4 – Fair Value of Financial Instruments
Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level 3 – Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The carrying values for cash and cash equivalents, prepaid assets, accounts payable and accrued liabilities, related party line of credit and notes payable approximate their fair value due to their short-term maturities.
Fair Value Measurements
The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy.
The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2023 and December 31, 2022:
| Level 1 | Level 2 | Level 3 | Fair value at September 30, 2023 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Level 1 | Level 2 | Level 3 | Fair value at December 31, 2022 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
There were no transfers between Level 1, 2 or 3 during the period.
| 10 |
The table below presents the change in the fair value of the derivative liability during the nine months ended September 30, 2023:
| Fair value as of December 31, 2022 | $ | |||
| Loss on change in fair value of derivatives | ( | ) | ||
| Fair value as of September 30, 2023 | $ | |||
Note 5 – Notes payable, Convertible Note Payable and Derivative Liability
Notes payable
During the year ended
December 31, 2022, the Company entered into unsecured promissory notes totaling $
Series 2019A 10% Unsecured Convertible Notes
In 2019, the Company sold $135,000 of Series 2019A
10% Unsecured Convertible Notes. The purchase price of the Note is equal to the principal amount of the Note. The Series 2019A Notes are
convertible into shares of Common Stock at a conversion price of $1.00 during the life of the Note. The lenders were issued 100,000 common
stock warrants with an exercise price of $2.00 per share. The Company evaluated the conversion option and concluded a beneficial conversion
feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a
debt discount and additional paid in capital in August and December 2019. The $135,000 debt discount is amortized over the term of the
loan. The Notes will accrue interest at the rate of 10% per annum, payable quarterly in arrears. The Notes mature twelve (12) months from
the date of issue. The maturity date can be extended at the option of the Company for an additional one (1) year. There are two Series
2019A 10% Unsecured Convertible Notes that were due and payable in August 2020 and are currently past due and in default. The default
interest rate on the notes is 12%. As of September 30, 2023 and December 31, 2022, the balance due under these notes is $
On October 1, 2019, the Company sold a 10% Unsecured
Convertible Note for $145,978 due on demand to settle accounts payable. The purchase price of the 10% Unsecured Convertible Note is equal
to the principal amount of the Note. The 10% Unsecured Convertible Note is convertible into shares of Common Stock at a conversion price
of $1.00 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present
at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital in October 2019.
The debt discount will be amortized over the term of the loan. The 10% Unsecured Convertible Note will accrue interest at the rate of
10% per annum payable quarterly, accruing from the date of issuance. As of September 30, 2023 and December 31, 2022, the balance due under
this note is $
Series 2020A 8% Unsecured Convertible Notes
In 2020, the Company sold $285,000 of Series 2020A
8% Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount
of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $0.50 during the life of the
Note. The lenders were issued 142,500 common stock warrants with an exercise price of $0.50 per share for a term of 5 years. Two related
parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature
was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as
of December 31, 2020. The $237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate
of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into
50,000 shares of common stock at a conversion price of $0.50 per share. The Series 2020A 8% Unsecured Convertible Notes that were due
and payable in November 2020 and are currently past due. If a default notice is received the interest rate will be 12%. As of September
30, 2023 and December 31, 2022, the balance due to a third party under these notes is $
| 11 |
AJB Convertible Note
On February 10, 2021, the Company entered into
a debt agreement to borrow $
As of September 30, 2023, the total derivative
liability on the above note was adjusted to a fair value of $
As of September 30, 2023 and December 31, 2022,
the balance on the loan was $
Note 6 – Stockholders’ Deficit
Common Stock
On January 12, 2023, the Company entered into
a subscription agreement with a related party to issue shares of common stock at $0.14 per share for total cash proceeds of $
On March 24, 2023, the Company entered into a
subscription agreement with Gold Express Mines, Inc. to issue shares of common stock at $0.14 for total cash proceeds of $
On September 19, 2023, the Company received proceeds
of $
| 12 |
Stock Warrants, Stock Options and the 2017 Equity Incentive Plan:
Under the 2017 Equity Incentive Plan, the Company is authorized to grant rights to acquire up to a maximum of shares of common stock. The 2017 Plan provides for the grant of (1) both incentive and nonstatutory stock options, (2) stock bonuses, (3) rights to purchase restricted stock and (4) stock appreciation rights. As of September 30, 2023, the Company had shares available for future grant.
Stock option activity within the 2017 Equity Incentive Plan and warrant activity outside the plan, for the nine months ended September 30, 2023 is as follows:
| Stock Options | Stock Warrants | |||||||||||||||
| Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||||||
| Granted | – | – | – | |||||||||||||
| Cancelled | – | – | – | |||||||||||||
| Expired | – | – | – | |||||||||||||
| Exercised | – | – | – | |||||||||||||
| Outstanding at September 30, 2023 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2023 | $ | $ | ||||||||||||||
As of September 30, 2023, the outstanding stock options have a weighted average remaining term of years and have intrinsic value, and the outstanding stock warrants have a weighted average remaining term of years and have intrinsic value.
Note 7 – Commitments and Contingencies
Mining Claims
As part of our acquisition of the Center Star gold mine project, we acquired 15 Bureau of Land Management (“BLM”) unpatented mining claims and subsequently staked another 16 unpatented mining claims. In order to maintain the BLM lode \ claims, annual payments are required before the end of August of each year. As of September 30, 2023, all of these claims are in good standing.
Note 8 – Executive Employment Agreement
Effective August 1, 2020, the Company and Michael Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of common stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of September 30, 2023, restricted stock units may be settled in shares of common stock. During the nine months ended September 30, 2023, the Company recognized $ of stock-based compensation related to the agreement.
Note 9 – Related Party Transactions
Notes Payable - Related Parties
During
the year ended December 31, 2022, the Company entered into unsecured promissory notes with related parties totaling $
| 13 |
Series 2020A 8% Unsecured Convertible Notes
In 2020, the Company sold $285,000 of Series 2020A
8% Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount
of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $0.50 during the life of the
Note. The lenders were issued 142,500 common stock warrants with an exercise price of $0.50 per share for a term of 5 years. Two related
parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature
was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as
of December 31, 2020. The $237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate
of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into
50,000 shares of common stock at a conversion price of $0.50 per share. The Series 2020A 8% Unsecured Convertible Notes that were due
and payable in November 2020 and are currently past due. If a default notice is received the interest rate will be 12%. As of September
30, 2023 and December 31, 2022, the balance due to a related party under these notes is $
3% Secured Convertible Note
On July 1, 2020, the Company issued a $125,000
Secured Convertible Note to a related party as part of the purchase of Clearwater Mining Corporation. The convertible note is secured
by common stock of the Company, matures on July 1, 2022 and will accrue interest at the rate of 3% per annum, payable yearly in arrears
beginning July 1, 2021. The Note is convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note.
The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized
the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in July 2019.
The $87,500 debt discount will be amortized over the term of the loan. Amortization expense of $21,815 was recognized during the year
ended December 31, 2022. As of September 30, 2023 and December 31, 2022, the balance due to a related party under this note was $
Advances- Related Parties
During the year ended December 31, 2022, the CEO
paid $
Accrued Interest - Related Parties
Accrued interest due to related parties is included in our consolidated balance sheets as follows:
| September 30, 2023 | December 31, 2022 | |||||||
| Accrued interest payable – Mr. Gibbs | $ | $ | ||||||
| Accrued interest payable – Mr. Schifrin | ||||||||
| Accrued interest payable – Mr. Malhotra | ||||||||
| Accrued interest payable – Mr. Lavigne | ||||||||
| $ | $ | |||||||
Consulting Agreement
On December 29, 2022, the Company entered into
a two-year consulting agreement with Rock Creek Mining Company commencing on December 1, 2022, to provide consulting and advisory services.
Michael Lavigne, the Company’s CEO, is an officer and a Director of Rock Creek Mining Company. The consulting agreement provides
for compensation of $6,000 per month, payable on demand. During the nine months ended September 30, 2023, the Company incurred consulting
fees of $
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We use the terms “Magellan,” “we,” “our,” and “us” to refer to Magellan Gold Corporation.
The following discussion and analysis provides information that management believes is relevant for an assessment and understanding of our results of operations and financial condition. This information should be read in conjunction with our audited financial statements, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our interim unaudited financial statements and notes thereto included with this report in Part I, Item 1.
COVID-19 Pandemic
In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in China. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The outbreak has now spread to the United States and infections have been reported globally.
The COVID-19 pandemic is rapidly evolving. The information in this Quarterly Report is based on data currently available to us and will likely change as the pandemic progresses. As COVID-19 continues to spread throughout areas in which we operate, we believe the outbreak has the potential to have a material negative impact on our operating results and financial condition. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our operators, employees and vendors, and the impact on the Company’s ability to obtain debt and equity financing to fund ongoing exploration activities, all of which are uncertain and cannot be predicted. Given these uncertainties, we cannot reasonably estimate the related impact to our business, operating results and financial condition.
We expect the trends highlighted above with respect to the impact of the COVID-19 pandemic to continue and, in some cases, accelerate. The extent of the COVID-19 pandemic’s continued effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, the pace at which jurisdictions across the country re-open and restrictions begin to lift, the availability of government financial support to our business, tenants and operators and whether a resurgence of the outbreak occurs. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows but it could be material.
Forward-Looking Statements
Some of the information presented in this Form 10-Q constitutes “forward-looking statements”. These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
| 15 |
Overview
We were incorporated on September 28, 2010, in Nevada. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mineral rights contain mineral reserves that are economically recoverable.
We have only had limited operations to date, and we rely upon the sale of our securities and borrowings from significant investors to fund our operations, as we have not generated any revenue.
Effective July 1, 2020, Magellan entered into a stock purchase agreement to acquire Clearwater Gold Mining Corporation (“Clearwater”) which owns certain unpatented mining claims in Idaho County, Idaho that include the historic Center Star Gold Mine near Elk City, Idaho. The Center Star Mine hosts high grade gold mineralization that was discovered in the early 1900’s. There was periodic historic production and development work done under different ownership through the 1980s. With the high-grade gold mineralization present, Magellan will be evaluating the historic mine data to assess the potential to develop a gold resource at Center Star. The project area is located 45 miles from Grangeville, Idaho and near the town of Elk City, Idaho.
In consideration for 100% of the issued and outstanding shares of Clearwater, Magellan has agreed to pay its sole shareholder 1,000,000 shares of Magellan common stock and $150,000 in cash. The cash consideration of $25,000 was paid and the balance of $125,000 is evidenced by a secured promissory note due in two years. The Note is secured by the Clearwater shares and assets.
Our primary focus is to advance our Idaho gold project towards resource definition and eventual development, and possibly to acquire additional mineral rights and conduct additional exploration, development and permitting activities. Our permitting applications and exploration and development efforts will require additional capital. We rely upon the sale of our securities as well as advances and loans from executive management and significant shareholders to fund our operations as we have not generated any significant revenue.
Results of Operations for the three months ended September 30, 2023 and 2022
| Three months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 59,194 | $ | 33,313 | ||||
| Total operating expenses | 59,194 | 33,313 | ||||||
| Operating loss | (59,194 | ) | (33,313 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (21,359 | ) | (81,789 | ) | ||||
| Gain (loss) on change in derivative liability | (100,693 | ) | (38,372 | ) | ||||
| Total other income (expense) | (122,052 | ) | (43,417 | ) | ||||
| Net loss | $ | (181,246 | ) | $ | (76,730 | ) | ||
| 16 |
Operating expenses
During the three months ended September 30, 2023, our total operating expenses included general and administrative expenses of $59,194 as compared to $33,313 during the three months ended September 30, 2022. The $25,881 increase is primarily associated with increases in professional and consulting fees.
Other income (expense)
During the three months ended September 30, 2023, total other income was $122,052 as compared to other expense of $43,417 during the three months ended September 30, 2022. The $78,635 increase was mainly related to the change in derivative liability.
Results of Operations for the nine months ended September 30, 2023 and 2022
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 160,759 | $ | 133,121 | ||||
| Total operating expenses | 160,759 | 133,121 | ||||||
| Operating loss | (160,759 | ) | (133,121 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (68,899 | ) | (241,796 | ) | ||||
| Gain (loss) on change in derivative liability | 30,076 | (238,640 | ) | |||||
| Total other income (expense) | (98,975 | ) | (480,436 | ) | ||||
| Net loss | $ | (259,734 | ) | $ | (613,557 | ) | ||
Operating expenses
During the nine months ended September 30, 2023, our total operating expenses included general and administrative expenses of $160,759 as compared to $133,121 during the nine months ended September 30, 2022. The $27,638 increase is primarily associated with increases in professional and consulting fees.
Other income (expense)
During the nine months ended September 30, 2023, total other income was $98,975 as compared to other expense of $480,436 during the nine months ended September 30, 2022. The $381,461 decrease was mainly related to the change in derivative liability and decrease of the amortization of debt discount in 2023.
| 17 |
Liquidity and Capital Resources
Our unaudited consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern. At September 30, 2023, we had not yet generated sufficient revenues or achieved profitable operations and we have accumulated losses of $19,789,476. We expect to incur further losses in the development of our business, all of which raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due, of which there can be no assurance.
We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financing will occur.
Cash Flows
A summary of our cash provided by and used in operating, investing and financing activities is as follows:
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash used in operating activities | $ | (56,757 | ) | $ | (131,853 | ) | ||
| Net cash used in investing activities | (100,000 | ) | (769 | ) | ||||
| Net cash provided by financing activities | 168,899 | 116,000 | ||||||
| Net change in cash | 12,142 | (16,622 | ) | |||||
| Cash beginning of period | 743 | 18,766 | ||||||
| Cash end of period | $ | 12,885 | $ | 2,144 | ||||
At September 30, 2023, we had $12,885 in cash and a $1,778,602 working capital deficit. This compares to cash of $743 and a working capital deficit of $1,692,051 at December 31, 2022.
Net cash used in operating activities during the nine months ended September 30, 2023 was $56,757 and was mainly comprised of our $259,734 net loss during the period, adjusted by a non-cash charges of $20,583 of stock compensation, accretion of discounts on notes payable of $10,000 and a loss on change in derivative liability of $30,076. In addition, it reflects changes in operating assets and liabilities of $142,318.
Net cash used in operating activities during the nine months ended September 30, 2022 was $131,853 and was mainly comprised of our $613,557 net loss during the period, adjusted by a non-cash charges of $29,408 of stock compensation, loss on change in derivative liability of $238,640 and accretion of discounts on notes payable of $183,147. In addition, it reflects changes in operating assets and liabilities of $30,509.
| 18 |
Net cash used in investing activities during the nine months ended September 30, 2023 was $100,000 which was comprised of cash payment for acquisition of mineral properties.
Net cash used in investing activities during the nine months ended September 30, 2022 was $769 which was comprised of cash payments for development costs.
During the nine months ended September 30, 2023, net cash provided by financing activities was $168,899 which was comprised of $252,600 proceeds from sale of common stock, $21,000 proceeds from notes payable, third parties, which were offset with the repayment of convertible debt of $100,000 and repayment of advances from third parties of $4,701.
During the nine months ended September 30, 2022, net cash provided by financing activities was $116,000 comprised of $63,000 proceeds from notes payable and $53,000 proceeds from notes payable from related parties.
Off Balance Sheet Arrangements
We do not have and have never had any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements, including the notes thereto. We consider critical accounting policies to be those that require more significant judgments and estimates in the preparation of our financial statements, including the following: long lived assets; intangible assets valuations; and income tax valuations. Management relies on historical experience and other assumptions believed to be reasonable in making its judgment and estimates. Actual results could differ materially from those estimates.
Management believes its application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are periodically reevaluated, and adjustments are made when facts and circumstances dictate a change.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures:
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms, and that such information is accumulated and communicated to management, including Michael Lavigne, our Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.
| 19 |
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of such date as a result of material weaknesses in our internal control over financial reporting due to lack of segregation of duties, a limited corporate governance structure, and lack of a formal review process that includes multiple levels of review as discussed in Item 9A of our Form 10-K for the fiscal year ended December 31, 2022.
While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in many exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations, at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.
Changes in Internal Control Over Financial Reporting:
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 20 |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in Item 1A. to Part I. of our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None, except as previously reported.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
|
Exhibit Number |
Exhibit Description | |
| 31.1* | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32* | Certification of the President, Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
_____________
* Filed or furnished herewith.
| 21 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 28, 2023
|
MAGELLAN GOLD CORPORATION
By: /s/ Michael Lavigne Michael Lavigne Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer) |
| 22 |
Exhibit 31.1
CERTIFICATION
I, Michael Lavigne, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Magellan Gold Corporation; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | |
| Dated: November 28, 2023 | /s/ Michael Lavigne |
|
Michael Lavigne, Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Michael Lavigne, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Magellan Gold Corporation; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | |
| Dated: November 28, 2023 | /s/ Michael Lavigne |
Michael Lavigne, Chief Financial Officer (Principal Financial Officer) |
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Magellan Gold Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Lavigne, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ Michael Lavigne
Michael Lavigne
Chief Executive Officer and Chief Financial Officer
(Principal Executive, Financial and Principal Accounting Officer)
Dated: November 28, 2023
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
| Common stock, shares issued | 19,577,072 | 12,772,786 |
| Common stock, shares outstanding | 19,577,072 | 12,772,786 |
| Series A Preferred Stock [Member] | ||
| Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
| Preferred stock, par value | $ 10.00 | $ 10.00 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Operating expenses: | ||||
| General and administrative expenses | $ 59,194 | $ 33,313 | $ 160,759 | $ 133,121 |
| Total operating expenses | 59,194 | 33,313 | 160,759 | 133,121 |
| Operating loss | 59,194 | 33,313 | 160,759 | 133,121 |
| Other expense: | ||||
| Interest expense | (21,359) | (81,789) | (68,899) | (241,796) |
| Gain (loss) on change in derivative liability | (100,693) | 38,372 | (30,076) | (238,640) |
| Total other expense | (122,052) | (43,417) | (98,975) | (480,436) |
| Net loss | $ (181,246) | $ (76,730) | $ (259,734) | $ (613,557) |
| Basic net loss per common share | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.05) |
| Diluted net loss per common share | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.05) |
| Basic weighted average | 19,497,833 | 11,887,071 | 19,100,327 | 11,661,016 |
| Diluted weighted average | 19,497,833 | 11,887,071 | 19,100,327 | 11,661,016 |
Organization, Basis of Presentation, and Nature of Operations |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization, Basis of Presentation, and Nature of Operations | Note 1 – Organization, Basis of Presentation, and Nature of Operations
Organization and Nature of Operations
Magellan Gold Corporation (“we” “our”, “us”, the “Company” or “Magellan”) was incorporated on September 28, 2010, under the laws of the State of Nevada. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable.
|
Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto contained in our annual report on Form 10-K for the year ended December 31, 2022.
Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiaries, Clearwater and M Gold. All intercompany transactions and balances have been eliminated. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
We compute basic net loss per common share by dividing our net loss attributable to common shareholders by our weighted-average number of common shares outstanding during the period. Computation of diluted net loss per common share adds the weighted-average number of potential common shares outstanding to the weighted-average common shares outstanding, as calculated for basic net loss per share, except for instances in which there is a net loss. For the nine months ended September 30, 2023, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects. For the nine months ended September 30, 2022, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects.
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company’s sequencing policy is to evaluate for reclassification contracts with the earliest maturity date first.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Recent Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Liquidity and Going Concern
Our consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern. At September 30, 2023, we had a working capital deficit of $1,778,602, we had not yet generated any significant revenues or achieved profitable operations and we have accumulated losses of $19,789,476. We expect to incur further losses in the development of our business, all of which raises substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due, of which there can be no assurance.
We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financing will occur.
|
Mineral Rights and Properties |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Extractive Industries [Abstract] | |
| Mineral Rights and Properties | Note 3 – Mineral Rights and Properties
Center Star Gold Mine
On July 1, 2020, the Company entered into a Stock Purchase Agreement to acquire Clearwater Gold Mining Corporation (“Clearwater”) which owns certain unpatented mining claims in Idaho County, Idaho that include the historic Center Star Gold Mine (“Center Star”) near Elk City, Idaho. As a result of the Clearwater acquisition, Gregory Schifrin, the sole shareholder of Clearwater, was appointed to serve as a member of the Company’s Board on July 1, 2020. In consideration for 100% of the issued and outstanding shares of Clearwater, the Company has agreed to pay Clearwater’s sole shareholder 1,000,000 shares of Magellan common stock, $125,000 convertible note and $25,000 in cash. The 1,000,000 shares are to be issued to the shareholder on and under the terms as follows: 250,000 shares at the time of closing, 250,000 shares at the time the Center Mine receives its permit to reopen the main portal of the mine, 250,000 shares at the point the main portal have been reopened and 250,000 shares two-years from closing concurrent the pay-off of the $125,000 convertible note. During the year ended December 31, 2022, the Company issued shares for the acquisition of Clearwater valued at $37,500. During the year ended December 31, 2022, the Company evaluated the mineral rights and properties for impairment and recorded an impairment expense of $1,037,500. As of September 30, 2023 and December 31, 2022, the Clearwater mineral rights and properties balance totaled $0.
As of September 30, 2023 and December 31, 2022, the Company had $194,274 in capitalized development cost to develop gold resources at Center Star.
Golden Idaho Project
On January 3, 2023, the Company entered into an asset purchase agreement with Gold Express Mines, Inc (“Golden Express”). Pursuant to the agreement, the Seller sold the following 1) Golden, Idaho Project located in Idaho County, Idaho and consisting of seventy-two unpatented mining claims 2) Seafoam District - located in Custer County, Idaho and consisting of five unpatented mining claims 3) Blacktail District - located in Lemhi County, Idaho and consisting of eight unpatented mining claims 4) Big-it Project- located in Shoshone County, Idaho consisting of twenty-five unpatented mining claims and a mineral lease over three unpatented mining claims and 94.86 acres of real property and 5) Terror Gulch (Capparelli Group) located in Shoshone County, Idaho consisting of twelve unpatented mining claims. As of March 31, 2023, the total purchase price for the acquisition was determined to be $1,000,000 which consisted of shares of common stock with a fair value of $1,000,000. The Company concluded the transaction qualified as an asset acquisition and all such acquisition costs have been capitalized. The Company concluded the purchase of a single set of assets qualified as an asset acquisition and all such acquisition costs have been capitalized as mineral rights and properties on the balance sheet. As of September 30, 2023, the Gold Express mineral rights and properties balance totaled $1,000,000.
Kris Project
On June 6, 2023, the Company entered into a memorandum of understanding for earn-in agreement(“MOU”) with Gold Express Mines, Inc. Per the MOU, the Company agreed to earn-in for up to 50% working interest in Kris Project, which has 69 unpatented mining claims located in Plumus County, CA. In March 2023, the Company paid Gold Express Mines, Inc. $100,000, which was recorded as a deposit, and shall spend $400,000 on the Kris Project in allowable expenditures over the next thirty-six months, assuming permitting for the work is obtained. In the event that permitting delays the exploration and other work programs, the earn-in period shall be extended accordingly. Allowable expenditures are sampling, drilling, assaying, geologic mapping and mine site improvements made or performed directly on the existing mine site or expanded mine site. Consulting fees for work directly benefiting the Project are also allowed including management of work, preparation of reports, and planning for Future work. Claim maintenance fees on the existing claims are also allowable expenditures, as are the costs of future land acquisitions which are deemed to benefit the Kris Project, and which are approved by both parties beforehand. As part of the agreement, the Company shall make the Bureau of Land Management claim maintenance fees on the existing claims no later than August 15, 2023, and by August 15th in ensuing years during the earn-in period. The Company shall pay for the annual Plumus County “notice of intent to hold” recording costs and any other Plumus County fees or taxes which accrue during the earn-in period. These shall all be allowable expenses under the earn-in agreement. As of September 30, 2023, the $100,000 deposit paid to Golden Express for the MOU was reclassed to mineral rights and properties on the balance sheet.
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Fair Value of Financial Instruments |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | Note 4 – Fair Value of Financial Instruments
Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level 3 – Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The carrying values for cash and cash equivalents, prepaid assets, accounts payable and accrued liabilities, related party line of credit and notes payable approximate their fair value due to their short-term maturities.
Fair Value Measurements
The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy.
The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2023 and December 31, 2022:
There were no transfers between Level 1, 2 or 3 during the period.
The table below presents the change in the fair value of the derivative liability during the nine months ended September 30, 2023:
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Notes payable, Convertible Note Payable and Derivative Liability |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Debt Disclosure [Abstract] | |
| Notes payable, Convertible Note Payable and Derivative Liability | Note 5 – Notes payable, Convertible Note Payable and Derivative Liability
Notes payable
During the year ended December 31, 2022, the Company entered into unsecured promissory notes totaling $78,000. During the nine months ended September 30, 2023, the Company entered into an unsecured promissory note totaling $21,000. The promissory notes bear interest at 12% per annum and are payable on demand. As of September 30, 2023 and December 31, 2022, the notes payable balance was $99,000 and $78,000, with accrued interest of $14,303 and $6,130, respectively.
Series 2019A 10% Unsecured Convertible Notes
In 2019, the Company sold $135,000 of Series 2019A 10% Unsecured Convertible Notes. The purchase price of the Note is equal to the principal amount of the Note. The Series 2019A Notes are convertible into shares of Common Stock at a conversion price of $1.00 during the life of the Note. The lenders were issued 100,000 common stock warrants with an exercise price of $2.00 per share. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in August and December 2019. The $135,000 debt discount is amortized over the term of the loan. The Notes will accrue interest at the rate of 10% per annum, payable quarterly in arrears. The Notes mature twelve (12) months from the date of issue. The maturity date can be extended at the option of the Company for an additional one (1) year. There are two Series 2019A 10% Unsecured Convertible Notes that were due and payable in August 2020 and are currently past due and in default. The default interest rate on the notes is 12%. As of September 30, 2023 and December 31, 2022, the balance due under these notes is $75,000, with accrued interest of $33,213 and $26,481, respectively.
On October 1, 2019, the Company sold a 10% Unsecured Convertible Note for $145,978 due on demand to settle accounts payable. The purchase price of the 10% Unsecured Convertible Note is equal to the principal amount of the Note. The 10% Unsecured Convertible Note is convertible into shares of Common Stock at a conversion price of $1.00 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital in October 2019. The debt discount will be amortized over the term of the loan. The 10% Unsecured Convertible Note will accrue interest at the rate of 10% per annum payable quarterly, accruing from the date of issuance. As of September 30, 2023 and December 31, 2022, the balance due under this note is $145,978, with accrued interest of $58,351 and $47,433, respectively.
Series 2020A 8% Unsecured Convertible Notes
In 2020, the Company sold $285,000 of Series 2020A 8% Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note. The lenders were issued 142,500 common stock warrants with an exercise price of $0.50 per share for a term of 5 years. Two related parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as of December 31, 2020. The $237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into 50,000 shares of common stock at a conversion price of $0.50 per share. The Series 2020A 8% Unsecured Convertible Notes that were due and payable in November 2020 and are currently past due. If a default notice is received the interest rate will be 12%. As of September 30, 2023 and December 31, 2022, the balance due to a third party under these notes is $200,000, with accrued interest of $52,264 and $40,297, respectively.
AJB Convertible Note
On February 10, 2021, the Company entered into a debt agreement to borrow $200,000. The secured note has an original issuance discount of $16,000 along with $9,000 in legal and finder fees recorded as a discount, which will be amortized over the life of the note. The loan is secured by common stock of the Company, bears interest at a rate of 10% and has a six-month maturity. In August 2021, the note was extended six months and the interest rate was increased to 15%. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price shall be the less of 90% of the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period ending on date of conversion of this note. The Company issued the debt holder 266,667 common shares as a commitment fee. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability of $95,715 was recorded as a discount on the convertible notes payable. On February 9, 2022, the Company extended the maturity to May 10, 2022. In consideration of the extension, the Company issued the debt holder shares of common stock valued at $54,000. The incremental value of the debt modification of $54,000 will be recorded over the remaining life of the note ending May 10, 2022. On May 11, 2022, the Company agreed to a second amendment to extend the maturity of the AJB note to August 10, 2022. In consideration for the extension, the Company issued shares of common stock at a price of $0.30 per share for a total value of $70,000. The incremental value of the debt modification of $ will be recorded over the remaining life of the note ending August 10, 2022. On August 9, 2022, the Company agreed to a third amendment to extend the maturity of the AJB note to November 9, 2022. In consideration for the extension, the Company issued shares of common stock at a price of $0.24 per share for a total value of $56,000. The incremental value of the debt modification of $56,000 will be recorded over the remaining life of the note ending November 9, 2022. Th AJB Convertible Note is due and payable in November 2023. In January 2023, the Note was extended to August 11, 2023 and is currently past due. In consideration for the extension, the principal amount of the note was increased by $10,000. The incremental value of the debt modification of $ will be recorded as a debt discount and amortized over the remaining life of the note ending August 11, 2023. During the nine months ended September 30, 2023, the Company amortized $10,000 of debt discount. During the nine months ended September 30, 2023, the Company repaid $100,000 of principal on this note.
As of September 30, 2023, the total derivative liability on the above note was adjusted to a fair value of $178,241. During the nine months ended September 30, 2023, the Company recognized an additional $10,000 of debt discount and a day one loss of $2,136 related to the $10,000 increase in principal amount of the AJB. The debt discount will be amortized over the remaining life of the note ending August 11, 2023. The fair value of the conversion option was estimated using the Black-Scholes option pricing model and the following range of assumptions during the period: fair value of stock $0.12 - $0.20, volatility of 237.73% -250.85% based on a comparable company peer group, expected term of 0.50 years, risk-free rate of 4.76% - 5.47% and a dividend yield of 0%.
As of September 30, 2023 and December 31, 2022, the balance on the loan was $110,000 and $200,000, net of discount of $0, with accrued interest of $17,300 and $7,400, respectively.
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Stockholders’ Deficit |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Deficit | Note 6 – Stockholders’ Deficit
Common Stock
On January 12, 2023, the Company entered into a subscription agreement with a related party to issue shares of common stock at $0.14 per share for total cash proceeds of $100,000.
On March 24, 2023, the Company entered into a subscription agreement with Gold Express Mines, Inc. to issue shares of common stock at $0.14 for total cash proceeds of $140,000.
On September 19, 2023, the Company received proceeds of $12,600 from an investor for the purchase of shares of its common stock at a price of $ per share.
Stock Warrants, Stock Options and the 2017 Equity Incentive Plan:
Under the 2017 Equity Incentive Plan, the Company is authorized to grant rights to acquire up to a maximum of shares of common stock. The 2017 Plan provides for the grant of (1) both incentive and nonstatutory stock options, (2) stock bonuses, (3) rights to purchase restricted stock and (4) stock appreciation rights. As of September 30, 2023, the Company had shares available for future grant.
Stock option activity within the 2017 Equity Incentive Plan and warrant activity outside the plan, for the nine months ended September 30, 2023 is as follows:
As of September 30, 2023, the outstanding stock options have a weighted average remaining term of years and have intrinsic value, and the outstanding stock warrants have a weighted average remaining term of years and have intrinsic value.
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Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 7 – Commitments and Contingencies
Mining Claims
As part of our acquisition of the Center Star gold mine project, we acquired 15 Bureau of Land Management (“BLM”) unpatented mining claims and subsequently staked another 16 unpatented mining claims. In order to maintain the BLM lode \ claims, annual payments are required before the end of August of each year. As of September 30, 2023, all of these claims are in good standing.
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Executive Employment Agreement |
9 Months Ended |
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Sep. 30, 2023 | |
| Executive Employment Agreement | |
| Executive Employment Agreement | Note 8 – Executive Employment Agreement
Effective August 1, 2020, the Company and Michael Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of common stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of September 30, 2023, restricted stock units may be settled in shares of common stock. During the nine months ended September 30, 2023, the Company recognized $ of stock-based compensation related to the agreement.
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Related Party Transactions |
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | Note 9 – Related Party Transactions
Notes Payable - Related Parties
During the year ended December 31, 2022, the Company entered into unsecured promissory notes with related parties totaling $53,000. The promissory notes bear interest at 12% per annum and are payable on demand. As of September 30, 2023 and December 31, 2022 the notes payable – related parties balance was $53,000, with accrued interest of $7,806 and $3,049 , respectively.
Series 2020A 8% Unsecured Convertible Notes
In 2020, the Company sold $285,000 of Series 2020A 8% Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note. The lenders were issued 142,500 common stock warrants with an exercise price of $0.50 per share for a term of 5 years. Two related parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as of December 31, 2020. The $237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into 50,000 shares of common stock at a conversion price of $0.50 per share. The Series 2020A 8% Unsecured Convertible Notes that were due and payable in November 2020 and are currently past due. If a default notice is received the interest rate will be 12%. As of September 30, 2023 and December 31, 2022, the balance due to a related party under these notes is $60,000, with accrued interest of $16,028 and $12,438, respectively.
3% Secured Convertible Note
On July 1, 2020, the Company issued a $125,000 Secured Convertible Note to a related party as part of the purchase of Clearwater Mining Corporation. The convertible note is secured by common stock of the Company, matures on July 1, 2022 and will accrue interest at the rate of 3% per annum, payable yearly in arrears beginning July 1, 2021. The Note is convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in July 2019. The $87,500 debt discount will be amortized over the term of the loan. Amortization expense of $21,815 was recognized during the year ended December 31, 2022. As of September 30, 2023 and December 31, 2022, the balance due to a related party under this note was $125,000, with accrued interest of $12,185 and $9,380, respectively.
Advances- Related Parties
During the year ended December 31, 2022, the CEO paid $938 of expenses on behalf of the Company. As of September 30, 2023 and December 31, 2022, the advances related party balance totaled $21,190.
Accrued Interest - Related Parties
Accrued interest due to related parties is included in our consolidated balance sheets as follows:
Consulting Agreement
On December 29, 2022, the Company entered into a two-year consulting agreement with Rock Creek Mining Company commencing on December 1, 2022, to provide consulting and advisory services. Michael Lavigne, the Company’s CEO, is an officer and a Director of Rock Creek Mining Company. The consulting agreement provides for compensation of $6,000 per month, payable on demand. During the nine months ended September 30, 2023, the Company incurred consulting fees of $54,000 related to this agreement.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation
We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto contained in our annual report on Form 10-K for the year ended December 31, 2022.
Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiaries, Clearwater and M Gold. All intercompany transactions and balances have been eliminated. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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| Net Loss per Common Share |
We compute basic net loss per common share by dividing our net loss attributable to common shareholders by our weighted-average number of common shares outstanding during the period. Computation of diluted net loss per common share adds the weighted-average number of potential common shares outstanding to the weighted-average common shares outstanding, as calculated for basic net loss per share, except for instances in which there is a net loss. For the nine months ended September 30, 2023, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects. For the nine months ended September 30, 2022, stock options, warrants, and shares issuable from convertible notes were considered for their dilutive effects.
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| Derivative Financial Instruments | Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company’s sequencing policy is to evaluate for reclassification contracts with the earliest maturity date first.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
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| Liquidity and Going Concern | Liquidity and Going Concern
Our consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern. At September 30, 2023, we had a working capital deficit of $1,778,602, we had not yet generated any significant revenues or achieved profitable operations and we have accumulated losses of $19,789,476. We expect to incur further losses in the development of our business, all of which raises substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due, of which there can be no assurance.
We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financing will occur.
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Fair Value of Financial Instruments (Tables) |
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| Schedule of fair value of liabilities |
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| Schedule of fair value of the derivative liability |
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Stockholders’ Deficit (Tables) |
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| Schedule of options and warrant activity |
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Related Party Transactions (Tables) |
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued interest due to related parties |
|
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Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
| Working capital deficit | $ 1,778,602 | ||
| Accumulated losses | $ 19,789,476 | $ 19,529,742 | |
| Equity Option [Member] | |||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
| Anti dilutive shares | 72,000 | 72,000 | |
| Warrants [Member] | |||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
| Anti dilutive shares | 117,500 | 117,500 | |
| Convertible Notes [Member] | |||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
| Anti dilutive shares | 2,518,755 | 1,916,904 | |
Mineral Rights and Properties (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Jun. 06, 2023 |
Mar. 31, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Restructuring Cost and Reserve [Line Items] | |||||
| Deposit paid amount | $ 1,100,000 | $ 0 | |||
| Payment to related party | 100,000 | $ (0) | |||
| Clearwater [Member] | |||||
| Restructuring Cost and Reserve [Line Items] | |||||
| Number of shares issued | 250,000 | ||||
| Number of shares issued, value | $ 37,500 | ||||
| Impairment expense | 1,037,500 | ||||
| Mineral rights | 0 | 0 | |||
| Capitalized development cost | 194,274 | $ 194,274 | |||
| Golden Express [Member] | |||||
| Restructuring Cost and Reserve [Line Items] | |||||
| Number of shares issued | 5,000,000 | ||||
| Number of shares issued, value | $ 1,000,000 | ||||
| Purchase price for the acquisition | $ 1,000,000 | ||||
| Deposit paid amount | 1,000,000 | ||||
| Kris Project [Member] | |||||
| Restructuring Cost and Reserve [Line Items] | |||||
| Deposit paid amount | $ 100,000 | ||||
| Payment to related party | $ 100,000 | ||||
Fair Value of Financial Instruments (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Derivative liability | $ 178,241 | $ 148,165 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Derivative liability | 0 | 0 |
| Fair Value, Inputs, Level 2 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Derivative liability | 0 | 0 |
| Fair Value, Inputs, Level 3 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Derivative liability | $ 178,241 | $ 148,165 |
Fair Value of Financial Instruments (Details - Change in fair value of derivative liability) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Fair Value Disclosures [Abstract] | |
| Fair value of derivatives, Beginning balance | $ 148,165 |
| Loss on change in fair value of derivatives | (30,076) |
| Fair value of derivatives, Ending balance | $ 178,241 |
Executive Employment Agreement (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Executive Employment Agreement | ||
| Number of restricted stock units | 570,000 | |
| Stock-based compensation | $ 20,583 | $ 29,408 |
Related Party Transactions (Details - Accrued interest) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Mr. Gibbs [Member] | ||
| Related Party Transaction [Line Items] | ||
| Accrued interest | $ 17,814 | $ 12,130 |
| Mr. Schifrin [Member] | ||
| Related Party Transaction [Line Items] | ||
| Accrued interest | 12,185 | 9,380 |
| Mr. Malhotra [Member] | ||
| Related Party Transaction [Line Items] | ||
| Accrued interest | 2,439 | 1,841 |
| Mr. Lavigne [Member] | ||
| Related Party Transaction [Line Items] | ||
| Accrued interest | 3,581 | 1,517 |
| Related Parties [Member] | ||
| Related Party Transaction [Line Items] | ||
| Accrued interest | $ 36,019 | $ 24,868 |
Related Party Transactions (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Related Party Transaction [Line Items] | |||
| Proceeds from related party | $ 0 | $ 53,000 | |
| Rock Creek Mining Company [Member] | |||
| Related Party Transaction [Line Items] | |||
| Consulting fees | 54,000 | ||
| Series 2020 A Unsecured Convertible Note [Member] | |||
| Related Party Transaction [Line Items] | |||
| Accrued interest | 16,028 | $ 12,438 | |
| Notes payable | 60,000 | 60,000 | |
| Secured Convertible Note 3 [Member] | |||
| Related Party Transaction [Line Items] | |||
| Accrued interest | 12,185 | 9,380 | |
| Notes payable | 125,000 | 125,000 | |
| Note Payable Related Parties [Member] | |||
| Related Party Transaction [Line Items] | |||
| Proceeds from related party | 53,000 | ||
| Notes payable, related parties | 53,000 | 53,000 | |
| Accrued interest | 7,806 | 3,049 | |
| Advances From Related Parties [Member] | |||
| Related Party Transaction [Line Items] | |||
| Proceeds from related party | 938 | ||
| Advances from related parties | $ 21,190 | $ 21,190 | |
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