UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
| For
the fiscal year ended |
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report:
For the transition period from ______ to ______
Commission
file number
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Telephone:+
Email:
(Name, Telephone, E-mail and/or Facsimile number and Address, of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Common Stock, par value $0.001 per share
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
There were shares outstanding on December 31, 2022.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐
Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐
Yes ☒
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| ☐ Large accelerated filer | ☐ Accelerated filer | ☒
|
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| US GAAP | ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board | ☐ | Other | ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes ☒
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F contains or incorporates by reference forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are characterized by terminology such as “anticipates,” “believes,” “expects,” “future,” “intends,” “assuming,” “projects,” “plans,” “will,” “should” and similar expressions or the negative of those terms or other comparable terminology. These forward-looking statements, which include statements about the mineral industry; market size, share and demand; performance; our expectations, objectives, anticipations, intentions and strategies regarding the future, expected operating results, revenues and earnings and potential litigation are not guarantees of future performance and are subject to risks and uncertainties, including those risks described under the heading “Risk Factors” set forth herein, or in the documents incorporated by reference herein, that could cause actual results to differ materially from the results contemplated by the forward-looking statements.
Investors are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.
As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.
We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in our reports on Form 20-F and Form 6-K, or their successors. We also note that we have provided a cautionary discussion of risks and uncertainties under the caption “Risk Factors” in this Annual Report. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us.
Information regarding market and industry statistics contained in this Annual Report is included based on information available to us which we believe is accurate. We have not reviewed or included data from all sources and cannot assure stockholders of the accuracy or completeness of the data included in this Annual Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.
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PART I
Item 1. Identity of Directors, Senior Management and Advisers.
Not applicable.
Item 2. Offer Statistics and Expected Timetable.
Not applicable.
Item 3. Key Information.
Item 3.A. Selected Financial Data.
Our selected financial data are found in our audited consolidated financial statements as of December 31, 2022, and for the year from January 1, 2022 to December 31, 2022, which are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in these statements.
Except as may be otherwise indicated, all dollar amounts are stated in U.S. dollars, the Registrant’s reporting currency. The following table sets out the exchange rates, based on the data from the website of Brazil’s “Banco Central” (an equivalent to the U.S. Federal Reserve), for the conversion of the Brazilian real (R$) currency into the United States dollar (US$), for the period from January 1, 2022 to December 31, 2022. The average exchange rates are based on the average of the daily closing exchange rates during such periods:
| Average | High | Low | Close | |||||||||||||
| Fiscal Year Ended 12/31/2022 | R$ | 5.2284 | R$ | 5.7042 | R$ | 4.7378 | R$ | 5.2177 | ||||||||
The exchange rate on December 31, 2022 was R$5.2177 Brazilian reais per one U.S. dollar.
Item 3.B. Capitalization and Indebtedness.
As of December 31, 2022, we had issued 8,118,737 shares of Common Stock and 1 share of a Series A Preferred Stock.
As of December 31, 2022, we had current liabilities of $20,583 all of which was unsecured and attributable to non-related parties. We had no long-term liabilities.
Item 3.C. Reasons for the Offer and Use of Proceeds.
Not applicable.
Item 3.D. Risk Factors.
You should carefully consider the following risk factors and all other information contained in this Report before purchasing our shares. We have assembled these risk factors based upon publicly available information, our own analysis and our own beliefs relative to our understanding of our business. If any of the following risks occur, our business, financial condition or results of operations could be materially and adversely affected, in which case, the value of our shares could decline, and you may lose some or all of your investment.
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General Risks Relating to Our Business
Risks Related to Operations
Our results are likely to fluctuate significantly in future periods.
Our operating and financial results are difficult to predict and may fluctuate significantly from period to period. Results of operations may fluctuate as a result of a variety of factors that are outside of our control including, but not limited to, lack of sufficient working capital, equipment malfunction and breakdowns, and regulatory or licensing delays.
We may be unable to access funding on acceptable terms or at all.
We may seek additional debt or equity financing to finance our business model and for growth. Such financing may not be available on acceptable terms or at all and any failure to obtain additional financing when needed could severely impact our business. Additional equity financing may be dilutive to shareholders, and debt financing may involve significant covenants and future repayment obligations.
Global Risks
While for the most part we have been to continue our operations during the coronavirus pandemic, there can be no assurance that a significant worsening.
Risks Related to Operating in Brazil
We are subject to extensive mining and environmental regulation in Brazil.
We are subject to various Brazilian federal mining laws and regulations and federal, state and local environmental laws and regulations. For any of the operations that we intend to pursue directly, we will be required to obtain a certain number of permits from regulators. After operations begin, we will have capital expenditures on an ongoing basis to continue to ensure compliance with the permits obtained as well as other mining and environmental laws and regulations. In addition, due to the possibility of changes to mining and environmental laws and regulations, the amount and timing of future regulatory expenditures may vary substantially from those currently anticipated. We could be subject to civil or criminal penalties for non-compliance with mining and environmental laws and regulations under Brazilian law.
Significant volatility in the value of the Brazilian real in relation to the U.S. dollar could harm our results.
The local costs in Brazil are in the currency of Brazil, the Brazilian real. There have been significant fluctuations in the exchange rate between the Brazilian real and the U.S. dollar and this may at times be detrimental to us.
Brazilian economic and political conditions may have an impact on our businesses.
The Brazilian economy has been characterized by frequent, and occasionally drastic, intervention by the Brazilian government, which has often changed monetary, credit and other policies to influence the economy. Actions taken by the Brazilian government concerning the economy may have important effects on us. Our financial condition and results of operations may be adversely affected by the following factors, among others, and by any of the Brazilian government’s actions in response to them: economic and social instability, energy and/or fuel shortages, exchange rate controls and restrictions on remittances abroad, and tax policy.
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Brazilian contract and corporate laws may negatively affect us.
The judicial enforcement of contracts in Brazil is a lengthy process, requiring skill and tenacity, and the application of corporate laws through the Brazilian legal system can be uneven, haphazard and unreliable.
Brazilian tax laws are complex and may be detrimental to us.
Brazilian taxation tends to be one of the more complex tax regimes in the world. We make every effort, in conjunction with Brazilian advisors, to limit the taxes to which we are subject; however, there is no assurance that the tax laws in Brazil will not be changed nor interpreted by Brazilian authorities in a manner that could be detrimental to us.
Risks Related to Our Common Stock
There is currently a very limited trading market for our Common Stock.
Our Common Stock trades on OTCQB, a platform of OTC Markets, and as of now it has low liquidity. A possible reason for this includes the fact that only a small percentage of our Common Stock is available to be traded and is held by a small number of holders. Another possible reason may be related to the fact that we are a new company and therefore the demand for our shares is limited by the lack of knowledge about us. We believe that liquidity will be dependent, among other things, on the perception of our business, alongside with steps that we may take to raise investor awareness, including press releases, road shows, and conferences. There can be no assurance as to when an increase in liquidity will occur.
The price and liquidity of our Common Stock may be affected by many reasons, some beyond our control.
The price and liquidity of our Common Stock may be affected by a variety of factors and events outside of our control, some, but not all, of which are listed below:
| ● | overall market conditions; |
| ● | changes in the market valuations of other similar or comparable companies; |
| ● | announcements by competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
| ● | the absence of consistent administrative supervision of “bid” and “ask” quotations; |
| ● | adoption of new accounting standards; |
| ● | changes in estimates and recommendations by advisors and analysts; and |
| ● | changes in gold prices. |
The price and liquidity of our Common Stock may also impair our ability to raise capital by selling shares of our stock, to acquire mineral properties by using our stock as consideration, or to recruit and retain executives with equity-based stock incentive plans.
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Our operating results may be volatile and difficult to predict, and if it fails to meet expectations the market price of our Common Stock may decline significantly.
Our operating results may fluctuate significantly from period to period, due to a number of factors. These factors include, but are not limited to:
| ● | the global price for gold; |
| ● | costs related to our operations; |
| ● | the Brazilian real – U.S. dollar exchange rate; |
| ● | extreme weather periods; |
| ● | delays in licensing of mines or mineral properties; |
| ● | departures of key personnel; |
| ● | research results related to any of their projects and mineral rights; |
| ● | new mining, environmental, and/or tax regulations in Brazil; and |
| ● | fluctuations in economic, political, and market conditions. |
Many of these factors are entirely outside of our control, and for others we only have limited influence. As a result of the factors above, and others, we may be unable to forecast our financial projections accurately and may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue and/or funding shortfalls. Additionally, a failure to meet revenue or expense projections may have an immediate and negative impact on our operating results. If this were to happen, the market price of our Common Stock could decline significantly.
Our Common Stock may be considered a “penny stock” and may be difficult to sell.
The U.S. Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define a “penny stock” to be an equity security that has a market price of less than US$5.00 per share or an exercise price of less than US$5.00 per share, subject to specific exemptions. The SEC’s penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver to its customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that before a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s agreement to the transaction. These rules may adversely impact the liquidity of our Common Stock and may affect the ability of investors to sell their shares.
We do not anticipate paying dividends on our Common Stock for the foreseeable future.
We anticipate that, for the foreseeable future, if and when we generate profits, that our Board of Directors may choose to reinvest such profits or save them as reserves and not pay dividends.
Risks Specific to Jupiter Gold
Our results of operations, financial position and business outlook may become highly dependent on the price of gold, which is subject to significant volatility and uncertainty.
Our results may become substantially related to gold prices. As a result of the volatility of gold prices, such results may fluctuate substantially.
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We currently do not have mineral reserves as such term is defined by the SEC.
Although several of our projects are known to have gold, as determined by our own research exploration studies, none of these studies were carried out in a manner as to allow the measurement of “reserves” under the SEC’s definition of such term. Lack of “reserves” may lead to lesser desirability from investors and potential partners.
We are highly dependent on certain members of our management.
We depend on the efforts of a small number of officers and directors. In particular, we are heavily dependent upon the expertise of Marc Fogassa, our Chairman and Chief Executive Officer, who is also formally our Chief Financial Officer and Principal Accounting Officer. Mr. Fogassa speaks Portuguese and English fluently, has extensive networks in both Brazil and the United States of America, and relevant experience in management and finance. If it occurs, any loss of the services of Mr. Fogassa could have a material adverse effect upon our results of operations and financial position.
Marc Fogassa is both our Chairman and Chief Executive Officer as well as Chairman and Chief Executive Officer of Brazil Minerals, Inc. and may be subject to potential conflicts of interest in matters involving both companies.
Mr. Fogassa, our Chairman and Chief Executive Officer, is also Chairman and Chief Executive Officer of Atlas Lithium Corporation. (“Atlas Lithium”), our largest shareholder. Potential conflicts of interest may occur between us and Atlas Lithium as related to allocation of opportunities and of Mr. Fogassa’s working time, among others. As a practical manner to diminish or eliminate such potential conflicts of interests between these two companies, the Board of Directors of each company has a different composition. In board votes that involve a potential conflict of interest, Mr. Fogassa recuses himself, and let the disinterested directors decide.
Our Series A Preferred Stock has the effect of concentrating voting control in Marc Fogassa, our Chairman and Chief Executive Officer.
One share of our Series A Preferred Stock is issued, outstanding and held by Marc Fogassa, Chairman and Chief Executive Officer, since 2016. Mr. Fogassa holds the only outstanding share of such Series A Preferred Stock. The Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred provides that for so long as Series A Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of our Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of our Common Stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. Therefore, so long as he holds the only outstanding shares of Series A Preferred Stock, Mr. Fogassa will have effective voting control on all matters requiring a stockholder vote.
Under our Bylaws, stockholders that initiate certain proceedings may be obligated to reimburse us and our officers and directors for all fees, costs and expenses incurred in connection with such proceedings if the claim proves unsuccessful.
Our Bylaws include a fee-shifting provision in Article VI, Section 7 for stockholder claims (the “Fee Shifting Provision”), which reads as follows: “In the event that (a) any current or prior shareholder of the Company or anyone on their behalf (“Claiming Party”) initiates or asserts any claim or counterclaim (“Claim”) or joins, offers assistance to, or has a direct interest in any Claim against the Corporation and/or any of its shareholders, officers, or directors (together, the Corporation and/or any of its shareholders, officers, or directors are henceforth called “Receiving Parties”), including any Claim purportedly filed on behalf of the Corporation or any shareholder, whether direct or derivative, in any jurisdiction, and (b) the Claiming Party (or the third party that received assistance from the Claiming Party or in whose Claim the Claiming Party had a direct interest) does not obtain a favorable judgment on all of the merits of its Claim, with such determination made by the Corporation, then each Claiming Party shall be obligated jointly and severally to reimburse the Receiving Parties for all fees, costs and expenses of every kind and description (including, but not limited to, all attorneys’ fees) that the Receiving Parties may incur in connection with such Claim.”
The Fee Shifting Provision was adopted to eliminate or decrease nuisance and frivolous litigation. We intend to apply the Fee Shifting Provision broadly to all actions, including U.S. federal securities law claims. The level of recovery for the plaintiff to avoid any payment, quoting verbatim the language of the Fee Shifting Provision, would necessitate such plaintiff obtaining a “favorable judgment on all of the merits of its Claim.” The Fee Shifting Provision is intended to apply to “any current or prior shareholder of the Company or anyone on their behalf” and the Company will make such determination based on the facts of any case it may encounter. The parties entitled to recover, quoting verbatim, are “the Corporation and/or any of its shareholders, officers, or directors.”
We are incorporated in the Marshall Islands, which may have fewer rights and protections for shareholders.
We are incorporated in the Republic of the Marshall Islands (“Marshall Islands”). Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the Marshall Islands Business Corporations Act (the “BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction. Further, the Marshall Islands does not have a well-developed body of bankruptcy law. As such, in the case of our bankruptcy, there may be a delay of bankruptcy proceedings and the ability of shareholders and creditors to receive recovery after a bankruptcy proceeding. Additionally, our incorporation in the Marshall Islands may make service of process more difficult.
Substantially all of our assets are in Brazil.
Substantially all of our assets (mineral properties, equipment) are located in Brazil. We therefore depend on complying with laws and regulations in Brazil to keep such assets free of any liens or judgments. On the other hand, it may be difficult to enforce judgments from other countries’ courts against such assets.
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Item 4. Information on the Company.
History and Development of the Company.
Date of Incorporation, Legal Form, Domicile, & Business Summary
We were incorporated under the laws of the Republic of the Marshall Islands on July 27, 2016, and have been in continuous, active operations since that date. Our common stock symbol is JUPGF and we are currently listed in OTCQB, a platform of OTC Markets.
We are focused on gold properties in Brazil, a well-regarded jurisdiction that we know well and one that presents attractive opportunities. We plan to mine properties that lend themselves to year-round, simple open-sky operations to enable steady profitability on gold retrieval. In other situations, we will prefer to partner and collect royalties while another entity operates the project. Our main goal is to become a profitable company as soon as possible.
We have no issued debt, except for operational payables. We have been primarily funded to date by sales of our common stock. We are prohibited from issuing variable-rate convertible debt by our Bylaws.
Gold Sector Outlook
We believe that gold will continue to grow in its usage as a medium of value storage, in addition to uses in jewelry and manufacturing. We also believe that Brazil, a country that is larger than the continental United States, with varied geology, will continue to yield promising areas for gold exploration. Brazil also has a detailed mining code and a long history of welcoming exploration of its resources by foreign groups. We believe the trends favoring gold mining in stable jurisdictions such as Brazil will continue for the next several decades.
Gold has emotional, cultural and financial value and different people across the globe buy gold for different reasons, often influenced by a range of national socio-cultural factors, local market conditions and wider macro-economic drivers. The modern gold market is a picture of diversity and growth. Since the early 1970s, the volume of gold produced each year has tripled, the amount of gold bought annually has quadrupled and gold markets have flourished across the globe. Currently the global gold market has attracted a lot of attention and the price of gold is relatively higher than its historical trend. Gold is now bought by a far more diverse set of consumers and investors than at any previous time in history.
Gold’s diverse uses, in jewelry, technology and by central banks and investors, mean different sectors of the gold market rise to prominence at different points in the global economic cycle. This diversity of demand and self-balancing nature of the gold market underpin gold’s robust qualities as an investment asset. The price of gold, as each price, is determined by the market forces of demand and supply. The demand is the amount of a good demanded for purchase at a given price. Therefore, the demand for gold is the amount of a gold demanded for purchase at a given price. Gold demand is often analyzed on an annual basis and divided into jewelry demand, technology demand, central banks’ demand or investment demand.
The gold market is a global market, with London and New York being the two biggest marketplaces for gold in the world. The gold market is quite large, larger than many other markets. It is estimated that the size of the investable gold market is $2.4 trillion. The average daily trading volume in gold in the over-the-counter market alone is estimated at $67 billion, indicating that the gold market is very liquid. Investment demand is the demand for gold for investment purposes. This demand is made up of direct ownership of bars and coins, or indirect ownership via Exchange-Traded Funds (ETFs) and similar products. Investment demand is the most important category of demand for gold that really drives the price of gold.
The most important reason for investing in gold is diversifying risk. Gold is an excellent portfolio diversifier, since it has very low correlation with other assets. This is why the yellow metal is one of the most effective hedges or safe havens. Gold can be seen as an insurance against tail risks, financial black swans, high and accelerating inflation or systemic crises. There are many factors influencing the investment demand for gold, however, the most important are the U.S. dollar strength, the level of real interest rates and the intensity of risk aversion.
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Emerging Growth Company Status
We may be deemed to be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
We will remain an “emerging growth company” for up to five years, or December 31, 2022, although we would cease to be an “emerging growth company” prior to such time if we have more than $1,070,000,000 in annual revenue, more than $700,000,000 in market value of our common stock is held by non-affiliates, or we issue more than $1,000,000,000 of non-convertible debt over a three-year period.
Item 4A. Unresolved Staff Comments.
Not applicable.
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Item 5. Operating and Financial Review and Prospects.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes and other information included elsewhere in this registration statement. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements and as a result of the factors we describe under “Risk Factors” and elsewhere in this filing. See “Special Note Regarding Forward-looking Statements” and “Risk Factors.” We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
Alpha Project
Overview:
Our 100%-owned Alpha Project encompasses 31,650 acres distributed in twelve mineral rights for gold in an area at the eastern edge of the so-called Iron Quadrangle in the State of Minas Gerais in Brazil. Most of the gold recovered from Brazil has been from mines located in the Iron Quadrangle. This project is located approximately 100 miles east of Belo Horizonte, capital of Minas Gerais, and has excellent infrastructure (roads, power, availability of local labor). Only 2% of the total area was researched in detail fifteen years ago by a prior owner, by drilling primarily saprolite and colluvial layers; the technical report produced at the time showed gold mineralization of 64,000 oz with an average of 1.54 g/t and at a cutoff of 0.8 g/t. Our technical team has advanced such work, and a revised technical report has been written as of November 2020 with gold mineralization of 84,000 oz at a cutoff of 0.8 g/t. An expert geological services consultancy, RCS Geologia e Meio Ambiente Ltda (“RCS Geologia”), has been retained to study the Alpha Project and propose a pathway to a first producing mine. RCS Geologia has indicated that the gold deposits are of greenstone belt type. Further work is ongoing at Alpha Project to expand the knowledge of and the measured size of the deposit.
Mineral: Gold
Ownership: 100%
Location: State of Minas Gerais
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 31,650 acres
Deposit Type: Greenstone Belt
Geology:
Our Alpha Project region is part of the Araçuaí Belt domain, of the Brasiliano event, part of the northern portion of the structural or geotectonic province Mantiqueira. According to the 2014 Coronel Fabriciano Cartographic Sheet prepared by CPRM (the Brazilian Geological Survey) our Alpha Project is inserted in the context of the Rio das Velhas Indiviso Supergroup.
The Santana do Alfié region where the Alpha Project is located has a metavolcanosedimentary sequence, consisting mainly of paragnaisses that intercalate with amphibolites, ultramafic rocks and small-scale iron formations. In some ranges, these same lithologies were later discorded by pegmatites. These pegmatites belong to the event that generated the vast majority of pegmatites in the Eastern Pegmatitic Province. It is also possible to observe small portions where there is a predominance of ultramafic rocks, such as serpentinite and tremolite. In the southern sector of the region, rocks appear called quartz-muscovite schist, a lithology that is more preserved in relation to the others and sometimes presents small quartz boudins and, in some places, the presence of magnetite crystals and tourmaline disseminated in shale quartz-mica is observed. In smaller proportions, sericitic quartzites and banded iron formation, basically consisting of recrystallized magnetite and quartz, follow.
The rock formation in the region where the Alpha Project is located has some similarities to gold deposits from shear zones in traditional volcanic sedimentary sequences. However, they differ in that they present a complex and marked metamorphic evolution, with the presence of gneissic rocks and late pegmatitic intrusions. Hydrothermal enrichment is also observed.
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Location Map:
Geological Map:
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Alta Floresta Project
Overview:
Our 100%-owned Alta Floresta Project encompasses 24,395 acres distributed in three mineral rights for gold in the northern portion of the State of Mato Grosso, more specifically in the Alta Floresta Auriferous Province. Two of the mineral rights show prior artisanal and superficial gold mining activities associated with robust production of gold. They also display similar geophysical signatures with known nearby gold deposits. The third area shows strong potential for gold, copper and manganese according to the technical team that visited and studied the area.
Mineral: Gold
Ownership: 100%
Location: State of Mato Grosso
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 24,395 acres
Geology:
The Alta Floresta Project area is geologically inserted in the Province of Rio Negro-Juruena Province. The Rio Negro-Juruena Province consists of numerous granitic bodies, developed through a succession of magmatic arcs. Structural arrangements made of Ductile Shear Zones constitutes one of the main determinants for the accommodation of a large part of the gold deposits and granitic bodies containing systems in gold.
The presence of soils is entirely sandy from sandstones of the Dardanelles Formation; sandy-clay soils, generated from granitoids, clayey soils from volcanic rocks, generally of light colors and red clayey soils (oxisoils) resulting from weathering. Geomorphologically the area is mostly contained in the unit called Interplanáltica Depression of the Southern Amazon and, to a lesser extent representativeness, in the subdivision Planalto de Dardanelos.
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Location Map:
Geological Map:
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Quartzite Project
Overview:
Our 100%-owned Quartzite Project (previously referred by us as “Diamantina Project”) encompasses 233 acres in a mineral right for quartzite and manganese located within the state of Minas Gerais. Four quartzite deposits have been identified in the project area, with an estimated mineralization of 3.9 million cubic meters of quartzite. The color, texture, and analytical properties of sampled quartzite have been within ornamental rock market standards.
Mineral: Quartzite
Ownership: 100%
Location: State of Minas Gerais
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 233 acres
Geology:
Our Quartzite Project borders the meridional portion of the mountain range known as Serra do Espinhaço. This formation contains a great extension of metamorphic-sedimentary rocks, specially quartzites and meta-sandstones, which is reason why the central region of Minas Gerais, where the city of Diamantina is located, stands out for its significant production of ornamental rocks made of quartzites. The various episodes that structured the Serra do Espinhaço sequences are also responsible for the steep relief that rises to 1200-1600m in altitude in the region. This morphology is supported by the horizons quartzites, phyllites and metaconglomerates of the Espinhaço Supergroup. In the local process area, there are lithologies from the Córrego Prereira Formation, which consists of fine-grained quartizites, with well-preserved structures.
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Location Map:
Geological Map:
| - 14 - |
Market
Quartzite is a very hard rock composed predominantly of an interlocking mosaic of quartz crystals. Recently polished quartzite slabs have become sought after as a higher-end substitute to granite in kitchen countertops and tiles. Brazil has a flourishing quartzite mining industry centered in the neighboring the states of Minas Gerais and Espírito Santo with smaller producers being the norm. Each quarry produces quartzite of different color and texture and therefore stones are unique to their location. Mining is via simple open pit procedures, not particularly labor intensive, and with the mined product normally prepared as cubes of raw quartzite measuring ten meters in each diameter. Buyers are normally responsible for the logistics of transporting such raw quartzite blocks from the mine. Buyers for quartzite mined in Brazil are primarily from four locations: Brazil itself, United States, China, and Italy. It is common for mines to develop an exclusive selling relationship to a buyer.
Summary of Our Quartzite Opportunity
While we are primarily focused on gold, in one of our mineral rights, measuring 233 acres, a greenfield deposit of quartzite was identified by our exploration team and became our “Quartzite Project”.
In 2021, we studied the Quartzite Project with detailed drilling and a preliminary volumetric estimate of a deposit was obtained. In 2021, Yan Taffner Binda, a mining engineer with vast experience in quartzite who meets the “Qualified Person” criteria under Item 1300 of Regulation S-K, prepared the mining plan for an open pit quarry at the Quartzite Project. An initial mining license from the Brazilian mining department, has been obtained.
In 2021, Geoline, an independent engineering and environmental licensing consultancy, performed the field studies needed to file our petition to the applicable regulatory body for an operation license. The filing of such permit occurred in August 2021
On April 4, 2022, our Quartzite Project received the necessary permit from Brazilian mining department (“ANM”). On December 12, 2022, our Quartzite Project received the operational license from the state of Minas Gerais environmental department (“SUPRAM”). These approvals from ANM and SUPRAM allow the Quartzite Project to begin its operations and to be able to commercialize production as soon as it is available for sale. Our expectation is to start operations during 2023. We anticipate that our quartzite quarry will require five on-site full-time employees; expected prices for the type of color and texture of the quartzite anticipated to be mined range from $1,200 to $2,000 per cubic meter.
| - 15 - |
Paracatu Project
Overview:
Our 100%-owned Paracatu Project encompasses 773 acres in one mineral right for gold located the northwest portion of the State of Minas Gerais. This region has been marked by gold mining activities since the 18th century, and currently produces 22% of all gold in Brazil.
Mineral: Gold
Ownership: 100%
Location: State of Minas Gerais
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 773 acres
Deposit Type: Alluvial
Geology:
The gold mineralization occurs in veins associated with sulfides of arsenic, copper, zinc and lead. Gold seen in our Paracatu Project deposit is one remobilized by the river that cuts through these mineralized rocks and concentrated in sand banks.
The primary auriferous mineralizations at the Paracatu district are described embedded in carbonaceous sericite schists and phyllites of the Paracatu Formation, belonging to the Brasilia Fold Belt ridden over the pelitic and carbonate metasediments of the Vazante Belt to the east. Silver to dark brown sericite-xysts predominate over quartzite, containing quartz boudins stretched perpendicular to the direction of the mineral lineation, which suggests the NEE direction of movement, with gentle dips. Deformation in the boudins has produced oblate forms. Arsenopyrite, pyrite, chalcopyrite and pyrrhotite associated with gold define one of the paragenesis of the sulfide mineralization, while galena and sphalerite define the other.
The mineralization that occurred at Paracatu is closely related to aqueous fluids of hydrothermal nature, rich in As, Au and subordinately in Pb and Zn, which percolated along favorable structures contained in the sericite schists and phyllites, thus defining a mineralized region. Apparently, gold, and sulfides were deposited in boudin traction zones, along the contact between boudins and sericite schists and in microcracks and micropores in the boudins themselves. The rocks are more deformed and more sulfidized along the quartz boudin zone where gold contents are higher. This group of mineralized rock is disaggregated and transported by the Rico River which processes the gold and concentrates it naturally in the banks, banks and riverbed that outcrops in our Paracatu Project area.
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Location Map:
Geological Map:
| - 17 - |
Apuí Project
Overview:
Our 100%-owned Apuí Project encompasses 69,330 acres distributed in three mineral rights for gold in the southeast portion of the State of Amazonas. The city of Apuí has an infrastructure capable of offering services such as water supply, electricity, mailing, hospitals and banks.
Mineral: Gold
Ownership: 100%
Location: State of Amazonas
Infrastructure: Waterways, some paved highway, mostly remote areas with extensive vegetation cover
Size: 69,330 acres
Geology:
The Apuí Project is located in the NW portion of a new gold frontier, named the Jureuena-Teles Pires Gold Province. The Jureuena-Teles Pires Gold Province is known to have gold deposits generally explored by artisanal miners. Primary deposits in this region of Brazil are usually greater than 1 million ounces. Geologically, the area is located in the Alto Tapajós basin. The Alto Tapajós basin is non-compliant over the volcanic rock of the Colíder Group (rhyolites) and the Beneficente sedimentary basin (silzite, claystone and quartzites), and over rocks from the Sucunduri Migmatitic Suite and Mafic-Ultramafic Suite. Intrusive Post-orogenic Suites occur on the Beneficente Group.
According to geological studies over the region, the area where the Apuí Project is located has great potential for epithermal, primary, and secondary gold deposits. In fact, there exists an auriferous occurrence proven trough a deactivated gold mine approximately 3.5 km away.
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Location Map:
Geological Map:
| - 19 - |
Crixás Project
Overview:
Our 100%-owned Crixás Project encompasses 3,068 acres in one mineral right for gold located the northwest portion of the State of Goiás. This region has been marked by gold mining activities since the 18th century, and currently produces 22% and currently produces over 6 tons of gold per year.
Mineral: Gold
Ownership: 100%
Location: State of Goiás
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 3,068 acres
Geology:
The supracrustal rocks from the Crixás Project region include peridotitic komatiite, overlaid by garnet-quartz-chlorite schist, quartz-muscovite schist, quartzite, garnet-rich quartzite, metagreywacke, metachert, amphibolite and banded iron formation, latter two subjected to shear zone controlled hydrothermal alteration. These rocks constitute a fragment of the Crixás greenstone belt in the Goiás Magmatic Arc. This sequence is intruded by granites and gabbros. Supracrustal rocks are metamorphosed in the transition from greenschist to epidote facies metamorphism. Hydrothermally altered amphibolite and iron formation in the Bocaina shear zone are enriched in Au, As, Ag, Cu, Ba, Bi, Sb and W. Metamorphic fluid involvement is suggested, such as for orogenic gold deposit formation. Gold mineralizations occur in massive sulfide, quartz vein and disseminated styles hosted by metabasalt and carbonaceous shale subjected to hydrothermal alteration.
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Location Map:
Geological Map:
| - 21 - |
Cavalcante Project
Overview:
Our 100%-owned Cavalcante Project encompasses 4,771 acres in one mineral right for gold located in the northernmost portion of the State of Goiás and continuing to the southernmost portion of the State of Tocantins. This region has been marked by gold mining activities since the 18th century.
Mineral: Gold
Ownership: 100%
Location: States of Goiás and Tocantins
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 4,771 acres
Geology:
The ore is located mainly in the Gneissic Granite Complex domain. These are peraluminous, syn-tectonic, S-type granites that host, besides gold mineralization, plationoidy, tin, tantalum, and uranium mineralizations. The mineralized region is in an E-W shear zone, near the contact between the biotite-muscovite granite of the Aurumina Suite and the Ticunzal Formation, composed of schists and graphitic paragnaisses.
Our Cavalcante Project is located near the contact between the Aurumina Suite and the Ticunzal Formation. The shear zone, which has silicified, sericitized and hydrothermally altered zoins, was generated almost concomitantly with the granitic intrusions and develops a band of milonites over the biotite-muscovite granite. The ore-bearing host rocks, which occur in the contact region, are extremely siliceous and micaceous, referred to as muscovite-quartz milonite and were developed over the biotite-muscovite granite of the Aurumina Suite. In general, gold occurs in isolated grains but is also associated with metallic minerals. This deposit is notorious for the association between gold and platinum group element minerals, however PGMs have never been exploited as a by-product of gold in this region.
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Location Map:
Geological Map:
| - 23 - |
Brotas Project
Overview:
Our 100%-owned Brotas Project encompasses 4,821 acres in one mineral right for gold located the central-western portion of the State of Bahia. This region has been marked by gold mining activities since the 18th century.
Mineral: Gold
Ownership: 100%
Location: State of Bahia
Infrastructure: Paved highway, water, nearby electrical power grid
Size: 4,821 acres
Geology:
In the region gold occurs both associated with quartz veins cutting through bedrock and accumulated in alluvial bars and colluvial deposits.
The Brotas Project is situated in the valley of the Paramirim River, a tributary of the São Francisco River, one of the largest rivers in Brazil. The valley is bounded to the west by the Northern Espinhaço Range and to the east by the Western Chapada Diamantina. The area comprises two domains: the pre-Paleoarchean to Paleoproterozoic basement units and the Paleo to Neoproterozoic volcanosedimentary coverings.
The pre-spine basement domain integrates the infrastructure of the São Francisco Craton, an extensive core stabilized at the end of the Transamazonian tectonometamorphic event, between 2,2 and 2,0 Ga, and limited by the Rio Preto, Riacho do Pontal and Sergipana mobile belts to the north, Brasília to the west and Araçuaí to the south, deformed between 650 and 485 Ma. The domain of the volcanosedimentary coverings deposited in the interior of the São Francisco Craton encompasses the Espinhaço and São Francisco supergroups. The sedimentary stack related to the Espinhaço Supergroup accumulated, according to Almeida, in a sedimentary basin of Proterozoic age spared of brasilian deformations, or, as per, in an aulacogenic structure (Aulacogen of Espinhaço), in the time interval from 1,8 to 1,0 Ga.
The stratigraphic stacking of these sedimentary coverings in the Chapada Diamantina region includes the groups Paraguaçu (Rio dos Remédios, Ouricuri do Ouro, Mangabeira, Lagoa de Dentro and Açuruá formations), Chapada Diamantina (Tombador and Caboclo formations) and the Morro do Chapéu Formation; and, in the Northern Espinhaço region, the Oliveira dos Brejinhos Group, subdivided into the Pajeú, Bom Retiro, Riacho do Bento, Mosquito and Fazendinha Formations and the Sítio Novo Formation. The units related to the São Francisco Supergroup correspond to mixed siliciclastic and carbonatic deposits accumulated in the Neoproterozoic, in a passive margin basin, or flexural, generated by mass overburden.
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Location Map:
Geological Map:
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Jupiter Gold Project Name |
Minerals | Location (State in Brazil) |
Total Area (acres) |
Status | ||||
| Alpha | Gold | Minas Gerais | 28,167 | Research Exploration & Pre-Mining Licensing | ||||
| Alta Floresta | Gold | Mato Grosso | 24,610 | Research Exploration | ||||
| Quartzite | Quartzite, Manganese | Minas Gerais | 233 | Pre-Mining Licensing | ||||
| Paracatu | Gold | Minas Gerais | 733 | Research Exploration | ||||
| Apuí | Gold | Amazonas | 69,330 | Research Exploration | ||||
| Crixás | Gold | Goiás | 3,068 | Research Exploration | ||||
| Cavalcante | Gold | Goiás, Tocantins | 4,771 | Research Exploration | ||||
| Brotas | Gold, Palladium, Platinum | Bahia | 9,578 | Research Exploration |
Note: None of our projects currently has “reserves” in accordance with the definition of such term by the Securities and Exchange Commission.
Capital Equipment
We built and own a modular gold processing and recovery plant (see photo below); its capacity can be easily increased. This plant uses high speed centrifugation as the primary method of gold separation. Its applicable for gold in saprolite and colluvial layers, as seen for instance in the more superficial layers in the Alpha Project.
The use of centrifugal concentrators for free gold recovery from alluvial ore has been a common practice in the mining industry for decades. This method uses the difference in intrinsic densities for separation; whereas the native gold density is 19.0 g/cm³, and the density of silica, the main component of the waste, is approximately 2.6 g/cm³. This equipment has several advantages over other processes, such as:
| ● | No use of chemicals (such as cyanide and mercury) | |
| ● | Low maintenance and low energy consumption | |
| ● | Recovery of gold in a wide particle size range | |
| ● | Simple installation and operation, with excellent mobility |
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An example of a gold bar obtained from the processing of material in our plant is below.
Results of Operations
Fiscal Year Ended December 31, 2022 Compared to Fiscal Year Ended December 31, 2021
We did not record any revenue during the year ended December 31, 2022, compared to revenue of $0 during the year ended December 31, 2021. We expect revenues to increase in future periods as we increase our mining operations; however, can offer no assurances that we will be successful in efforts.
Our operating expenses are comprised primarily of stock-based compensation, general administrative expenses, and to lesser extent professional fees and other compensation related costs. Operating expenses totaled $657,375 for the year ended December 31, 2022, compared to operating expenses of $546,989 during the year ended December 31, 2021. The increase in operating expenses of 320% is explained primarily by increased general and administrative expenses and compensation costs.
We incurred a net loss of $657,375 for the year ended December 31, 2022, representing an increase of $108,937, or 20%, compared to a net loss of $548,438 incurred during the year ended December 31, 2021.
Net cash used in operating activities was $534,073 for the year ended December 31, 2022, compared to net cash used in operating activities of $377,579 during the year ended December 31, 2021. Net cash provided by investing activities was $74,678 for the year ended December 31, 2022, compared to net cash provided by investing activities of $105,378 during the year ended December 31, 2021. Net cash provided by financing activities was $489,875 for the year ended December 31, 2022, compared to $205,496 during the year ended December 31, 2021.
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Liquidity and Capital Resources
As of December 31, 2022, we had total current assets of $24,438 and total current liabilities of $20,583 for a current ratio of 1.23 to 1.0 and working capital of $4,855. By comparison, we had total current assets of $86,052 and total current liabilities of $14,417 for a current ratio of 6 to 1.0 and working capital of $71,634 at December 31, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
For both the years ended December 31, 2022 and 2021, our primary source of liquidity was derived from the sale of our common stock. We expect that our primary source of liquidity will continue to be generated from the sale of our common stock, as well as increased revenues generated from the operation of our modular plant.
Item 5.C. R&D, Patents and Licenses
None, except mineral rights described above.
Item 5.E. Off-Balance Sheet Arrangements
None.
Item 5F. Tabular Disclosure of Contractual Obligations.
The following table sets forth our contractual obligations and commercial commitments as of December 31, 2022, due on demand:
| Payable To | Description | Amount | ||||
| Various third-parties | Professional fees and other general obligations | $ | 20,583 | |||
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Item 6. Directors, Senior Management and Employees.
Item 6.A. Directors and Senior Management.
Our officers and directors as of April 28, 2023 were as follows:
| Name | Age | Position | ||
| Marc Fogassa | 56 | Chairman of the Board of Directors, Chief Executive Officer, and Chief Financial Officer | ||
| Joel de Paiva Monteiro, Esq. | 33 | Director, Vice-President of Administration and Operations, and Secretary | ||
| Areli Nogueira da Silva Júnior | 43 | Director, and Vice-President, Mineral Exploration | ||
| Brian W. Bernier | 65 | Vice-President, Corporate Development and Investor Relations |
Executive officers are appointed by and serve at the pleasure of our Board of Directors. A biography of each director and officer follows.
Marc Fogassa is our Founder and has been our Chairman and Chief Executive Officer since July 2016. He has lengthy investment experience in executive management for mining projects, as well as in venture capital and capital markets, and has served on boards of directors of multiple private companies. Mr. Fogassa double majored at the Massachusetts Institute of Technology (M.I.T.), graduating with two Bachelor of Science degrees in 1990. He later graduated from the Harvard Medical School with a Doctor of Medicine degree in 1995, and also from the Harvard Business School with a Master in Business Administration degree in 1999. Mr. Fogassa was born in Brazil and is fluent in Portuguese and English. Mr. Fogassa is also the Chairman and Chief Executive Officer of Brazil Minerals, Inc., one of our shareholders, and of Apollo Resources Corporation.
Joel de Paiva Monteiro, Esq., has been a consultant to us since 2017 and became our Vice-President, Administration and Operations, in 2020. Previously he was a partner of the Brazilian law firm PRA Advogados - Pimenta da Rocha Andrade, with three offices and headquarters in Belo Horizonte, state of Minas Gerais. Mr. Monteiro has worked with all aspects of Brazilian business law, and has extensive experience in a wide range of areas from strategic business planning to litigation. His prior clients included large corporations in a variety of economic sectors in diverse states in Brazil. Mr. Monteiro has a law degree from the Milton Campos Faculty in Belo Horizonte, Brazil. Subsequently he achieved a post-graduate degree in Business and Civil Law from the Pontifical Catholic University of Minas Gerais. Mr. Monteiro is also an officer at Brazil Minerals, Inc., one of our shareholders, and an officer and a director of Apollo Resources Corporation.
Areli Nogueira da Silva Júnior has been a consultant to us since 2018 and became our Vice-President, Mineral Exploration, in 2021. He is the Founder and was the Chief Technical Officer of MineXplore, a consultancy focused on mineral rights in Brazil. Mr. da Silva Júnior has been a consultant geologist with GeoEspinhaço, a firm that undertakes geological studies in a variety of minerals across Brazil. Mr. da Silva Júnior has also been a college faculty member teaching geology. Previously, he worked at the Brazilian mining department) and before that as a geologist at Usiminas Mineração. Mr. da Silva Júnior has a Master of Geology degree from the Federal University of Rio de Janeiro, and an undergraduate degree in Geological Engineering from the School of Mines of the Federal University of Ouro Preto, a premier and the oldest mining-focused college in Brazil. Mr. da Silva is also a director of Jupiter Gold Corporation.
Brian W. Bernier has been a consultant to us since 2019 and became our Vice-President, Corporate Development and Investor Relations in 2020. Mr. Bernier has worked in the business development and investor relations sector for over three decades, and was most recently at a regional investment bank. He graduated with a degree in Management from Boston University.
There are no family relationships between or among any of the persons listed above.
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Item 6.B. Compensation.
We adopted an incentive plan (the “2016 Incentive Plan”) to compensate employees, directors, and consultants, and allow it to acquire and retain human talent. The 2016 Incentive Plan is hereby incorporated by reference to Exhibit 10.7 in our Registration Statement on Form F-1 (Registration No. 333-214872) filed with the Securities and Exchange Commission on December 1, 2016 (the “F-1”).
From our founding on July 27, 2016 and until February 14, 2020, Marc Fogassa was not paid any cash compensation for his service as chief executive officer and director. In 2020, our Board voted to provide Mr. Fogassa with an annual cash compensation of $60,000 pro-rated for the period between February 15, 2020 and September 30, 2020. In lieu of any other cash salary in 2020, the Board voted to compensate Marc Fogassa on October 1, 2020, on November 1, 2020, and on December 1, 2020 non-qualified stock options to purchase 5,000 shares of our common stock at an exercise price equal to $0.01 and a ten-year exercise period commencing on the date of grant of such option. These options shall be exercisable for cash or on a cashless exercise basis. The number of shares subject to the option and current strike price shall be subject to appropriate adjustment in the case of stock splits, stock dividends and recapitalizations. The annual cash compensation of Marc Fogassa for his service as chief executive officer and director for the period commencing January 1, 2022 is $275,00 per annum.
In addition, the Board voted to compensate Marc Fogassa, on the first day of every month: i) from March 1, 2020 to September 30, 2020, with non-qualified stock options to purchase 25,000 of our common stock with an exercise price equal to the average price of our common stock during the preceding twenty days as such prices are quoted on otcmarkets.com and five years of term to expiration, and b) from October 1, 2020 and thereafter with non-qualified stock options to purchase 15,000 shares of common stock of the Company at an exercise price equal to $0.01 and a ten-year exercise period commencing on the date of grant of such option. These options shall be exercisable for cash or on a cashless basis. The number of shares subject to the option and the exercise price of the option shall be subject to appropriate adjustment in the case of stock splits, stock dividends, and recapitalizations.
As of December 31, 2021, the other two directors receive together monthly cash compensation amounting to an aggregate of 2,500 Brazilian real (approximately $481 at the then current exchange rate). Board members will be reimbursed for reasonable travel expenses associated with attending any meetings of the Board of Directors or committees of the Board of Directors.
Item 6.C. Board Practices.
Our business is managed by the directors who exercise all the powers of the Company, subject to the Business Corporations Act of the Republic of the Marshall Islands, our Articles of Incorporation and our Bylaws, and any special resolution of the Board of Directors. Our Bylaws specify the procedures for the election and removal of directors. Our Bylaws are hereby incorporated by reference to Exhibit 1.3 in our F-1.
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Item 6.D. Employees.
As of December 31, 2022, we had five full time equivalent employees.
Item 6.E. Share Ownership.
The following table sets forth certain information as of December 31, 2022 regarding the beneficial ownership of our Common Stock by: each of our executive officers, each member of our board of directors and all officers and directors as a group. The number and percentage of our Common Stock beneficially owned by each person is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934 (the “Exchange Act”). The information contained in the table below is not necessarily indicative of beneficial ownership for any other purpose.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares issuable upon the exercise of stock options or warrants or the conversion of other securities held by that person that are exercisable or convertible within 60 days are deemed to be issued and outstanding. These shares, however, are not deemed outstanding for the purposes of computing percentage ownership of each other shareholder.
| Name and Address of Officers and Directors (1) | Number of Shares | Percentage of Shares Beneficially Owned |
||||||
| Marc Fogassa | 2,940,831 | (2)(3) | 29.3 | % | ||||
| Joel de Paiva Monteiro, Esq. | 22,441 | * | ||||||
| Areli Nogueira da Silva Júnior | 7,223 | * | ||||||
| Brian W. Bernier | 95,127 | 1.2 | % | |||||
| All Officers and Directors as a group (4 persons) | 3,065,622 | (2)(3) | 30.6 | |||||
| (1) | The address for each officer and director is: c/o Jupiter Gold Corporation, Rua Vereador João Alves Praes nº 95-A, Olhos D’Água, MG 39398-000, Brazil. |
| (2) | Includes 1,905,000 shares of common stock issuable to Mr. Fogassa upon exercise of options, the majority of which was awarded in lieu of any cash salary, with an average exercise price of $0.56 per share and an average maturity of 4.74 years. |
| (3) | Mr. Fogassa owns the only outstanding share of our Series A Convertible Preferred Stock (“Preferred A Stock”). The Certificate of Designations, Preferences and Rights of our Preferred A Stock provides that for so long as Preferred A Stock is issued and outstanding, the holders of Preferred A Stock shall vote together as a single class with the holders of our common stock, with the holders of Preferred A Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of Preferred A Stock then outstanding, and the holders of our common stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. Mr. Fogassa is thus deemed to have voting control on all matters requiring a stockholder vote. The Certificate of Designations, Preferences and Rights of our Preferred A Stock is hereby incorporated by reference to Exhibit 1.4 in our F-1. |
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Item 7. Major Shareholders and Related Party Transactions.
| A. | Major Shareholders |
The following table sets forth certain information as of December 31, 2022 regarding the beneficial ownership of our Common Stock by our major shareholders who beneficially own more than 5% of our voting securities. The number and percentage of our Common Stock beneficially owned by each person is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934 (the “Exchange Act”). The information contained in the table below is not necessarily indicative of beneficial ownership for any other purpose.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares issuable upon the exercise of stock options or warrants or the conversion of other securities held by that person that are exercisable or convertible within 60 days are deemed to be issued and outstanding. These shares, however, are not deemed outstanding for the purposes of computing percentage ownership of each other shareholder.
| Name and Address of Shareholder (1) | Number of Shares | Percentage of Shares Beneficially Owned |
||||||
| Marc Fogassa | 2,940,831 | (2)(3) | 29.3 | % | ||||
| Atlas Lithium Corporation | 2,331,884 | 28.7 | % | |||||
| HSP Resources LLC | 900,000 | 11.1 | % | |||||
| Igor Tkachenko | 435,000 | 5.4 | % | |||||
| (1) | The mailing address for each listed shareholder is c/o Jupiter Gold Corporation, Rua Vereador João Alves Praes nº 95-A, Olhos D’Água, MG 39398-000, Brazil. |
| (2) | Includes 1,905,000 shares of common stock issuable to Mr. Fogassa upon exercise of options, the majority of which was awarded in lieu of any cash salary, with an average exercise price of $0.56 per share and an average maturity of 4.74 years. |
| (3) | Mr. Fogassa owns the only outstanding share of our Series A Convertible Preferred Stock (“Preferred A Stock”). The Certificate of Designations, Preferences and Rights of our Preferred A Stock provides that for so long as Preferred A Stock is issued and outstanding, the holders of Preferred A Stock shall vote together as a single class with the holders of our common stock, with the holders of Preferred A Stock being entitled to 51% of the total votes on all matters regardless of the actual number of shares of Preferred A Stock then outstanding, and the holders of common stock being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. Mr. Fogassa is thus deemed to have voting control on all matters requiring a stockholder vote. |
To the best of our knowledge, as of December 31, 2022, over 99% of the outstanding shares of our common stock were beneficially owned or controlled by U.S. persons, and there were 65 record holders of our common stock who were U.S. persons.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
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Item 7.B. Related Party Transactions.
Not applicable.
Item 7.C. Interests of Experts and Counsel.
Not applicable.
Item 8. Financial Information.
Item 8.A. Consolidated Statements and Other Financial Information.
Our consolidated financial statements are stated in U.S. Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”).
The financial statements as required under Item 18 of Form 20-F are attached hereto and found immediately following the text of this Annual Report. The audit report of BF Borgers CPA P.C., our independent auditors, is included herein immediately preceding the financial statements.
Item 8.A.7. Legal/Arbitration Proceedings.
None that are material.
Item 8.A.8. Policy on Dividend Distributions.
No dividends are intended to be declared or paid by us in the foreseeable future.
Item 8.B. Significant Changes.
None
Item 9. The Offer and Listing.
The common stock is not currently listed or traded on any stock exchange or other market.
Item 10. Additional Information.
Item 10.A.
As of December 31, 2022, we had 8,118,737 shares of our Common Stock, par value $0.001 per share, and 1 share of our Preferred A Stock, par value $0.001 per share, issued and outstanding.
As of December 31, 2022, we had 40 million common shares and 10 million preferred shares authorized.
| - 33 - |
Item 10.B. Memorandum and Articles of Association.
Our Articles of Incorporation and Certificate of Incorporation are hereby incorporated by reference to Exhibits 1.1 and 1.2, respectively, in our F-1.
Item 10.C. Material Contracts.
The following descriptions of the material provisions of the referenced agreements do not purport to be complete and are subject to, and qualified in their entirety by reference to the agreements which have been filed as exhibits to this report.
Registration Rights Agreement
The Registration Rights Agreement provides that whenever we propose to register any of its securities under the Securities Act of 1933, as amended (the “Securities Act”) and the registration form to be used may be used for the registration and contemplated disposition of Registrable Securities (a “Piggyback Registration”), we will give prompt written notice to Atlas Lithium of its intention to effect such a registration so that such notice is received by Atlas Lithium at least twenty (20) days before the anticipated filing date. We will include in such registration all securities covered by the Registration Agreement (“Registrable Securities”) with respect to which we has received a written request for inclusion therein subject to any limitations on the number of shares that may be registered for resale that may be imposed by law, including positions of the staff of the SEC. In connection with each Piggyback Registration, all of the expenses incurred in compliance with the aforesaid, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of our counsel and our blue sky fees and expenses will be paid by us and Atlas Lithium shall pay all of the underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for Atlas Lithium attributable to the sale of its securities pursuant to the Piggyback Registration.
The Registration Rights Agreement is hereby incorporated by reference to Exhibit 10.2 in our F-1.
Item 10.D. Exchange Controls
Brazilian Laws n. 4.131, of September 03, 1962, and n. 11.371, of November 28, 2006, as amended, regulate foreign investments in Brazil, requiring that foreign investments in Brazil be registered with Brazil’s Central Bank (the equivalent to the U.S. Federal Reserve) to enable foreign remittance of profits and/or interest on equity, and repatriation of foreign capital invested in Brazil.
The Brazilian legislation allows the investment in the capital market by individuals or legal entities, by means of the acquisition of shares and other securities. These investments, designated “portfolio investments”, when performed by non-residents, are subject to registration with the Brazilian Central Bank and Brazilian Securities Commissions (“CVM”), and according to the Resolution n. 4.373, of September 29, 2014 of the Brazil Monetary Council (“CMN”) can be made through Depositary Receipts, with the investor represented by institution authorized to work by Brazil’s Central Bank.
The non-resident investors must indicate one or more attorneys-in-fact in Brazil, which should be institution authorized to work by Central Bank and will be responsible mainly for the provision of information and for the registrations with the Central Bank and the CVM. The registration of the portfolio investments with the Central Bank’s electronic system constitutes an obligatory requirement for remittances abroad as distribution of profits and/or interest on equity, and repatriation of the capital invested. Such remittances may be made by means of a foreign exchange contract between the Brazilian company remitting the funds and a Brazilian commercial bank duly authorized to operate in the foreign exchange market (Depositary Receipts). Such foreign exchange contract reflects the exchange of Brazilian currency into foreign currency, at the rate agreed with the Brazilian commercial bank.
Under current Brazilian legislation, the federal government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil’s balance of payments. For approximately six months in 1989 and early 1990, the federal government froze all dividend and capital repatriations held by the Central Bank that were owed to foreign equity investors, in order to conserve Brazil’s foreign currency reserves. These amounts were subsequently released in accordance with federal government directives. There can be no assurance that the federal government will not impose similar restrictions on foreign repatriations in the future.
The likelihood of the imposition of such restrictions by the Brazilian government may be affected by, among other factors, the extent of Brazil’s foreign currency reserves, the availability of sufficient foreign currency on the date a payment is due, the size of Brazil’s debt service burden relative to the economy as a whole, Brazil’s policy towards the International Monetary Fund and political constraints to which Brazil may be subject.
| - 34 - |
Item 10.E. Taxation
Investors should consult their own tax advisor regarding the specific tax consequences of owning and disposing of our common stock, including eligibility for the benefits of any treaty for the avoidance of double taxation, the applicability or effect of any special rules to which they may be subject, and the effect of any state, local, or other tax laws.
Marshall Islands Tax Considerations
The following is applicable only to persons who are not citizens of and do not reside in, maintain offices in or engage in business, transactions or operations in the Marshall Islands.
Because we do not, and we do not expect that we or any of our future subsidiaries will, conduct business, transactions or operations in the Marshall Islands, and because we anticipate that all documentation related to any offerings of our securities will be executed outside of the Marshall Islands, under current Marshall Islands law our shareholders will not be subject to Marshall Islands taxation or withholding tax on our distributions. In addition, our shareholders will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of our common shares, and our shareholders will not be required by the Marshall Islands to file a tax return related to our common shares.
Item 10.F. Dividends and Paying Agents.
Not required.
Item 10.G. Statement by Experts.
Not required
Item 10.H. Documents on Display.
We are subject to the informational requirements of the Exchange Act applicable to foreign private issuers and, in accordance with these requirements, we file reports with the SEC. As a foreign private issuer, we are exempt from the rules under the Exchange Act relating to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
You may read and copy any documents that we file with the SEC, including this Report and the related exhibits, without charge at the Securities and Exchange Commission’s public reference room at 100 F Street, N.W., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the public reference room of the Commission at 100 F Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. In addition, the documents incorporated by reference into this Report are publicly available through the web site maintained by the Securities and Exchange Commission at www.sec.gov.
Item 10.I. Subsidiary Information.
Not applicable.
| - 35 - |
Item 11. Quantitative and Qualitative Disclosure about Market Risk.
Foreign Exchange Risk
We are subject to risk brought about by the possibility of a significant change in the rate of exchange of the U.S. Dollar for the Brazilian Real.
Interest Rate Risk
None; as of the date of this Annual Report, we had no fixed or floating rate indebtedness.
Item 12. Description of Securities Other than Equity Securities.
Not applicable.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None material
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
Not applicable.
Item 15. Controls and Procedures. Disclosure Controls And Procedures
Our management has evaluated the design, operation, and effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of December 31, 2022. On the basis of that evaluation, management concluded that our disclosure controls and procedures are designed, and are effective, to provide reasonable assurance that the information required to be disclosed in reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.
| - 36 - |
Management’s Report On Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.
Our internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and financial officer and effected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management performed an assessment of the effectiveness of our internal control over financial reporting at December 31, 2022, utilizing the criteria described in the “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at December 31, 2022.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting at December 31, 2022, we did not identify material weaknesses.
Based on our assessment, and because of the lack of any material weakness as described above, we have concluded that our internal control over financial reporting was effective at December 31, 2022.
Management’s Remediation Plan In Internal Controls
We will continue to monitor the effectiveness of our internal controls over financial reporting and to make any changes that our management deems appropriate
Changes In Internal Control Over Financial Reporting
Management does not believe that there have been any other changes in our internal control over financial reporting during the year ended December 31, 2022, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| - 37 - |
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
Our Board of Directors currently acts as our audit committee. We do not currently have an independent member of our Board of Directors who qualifies as an “audit committee financial expert” as such term is usually defined.
Item 16B. Code of Ethics.
Our Board of Directors plans to adopt in 2023 a code of ethics to apply to all of our directors, officers, and employees.
Item 16C. Principal Accountant Fees and Services.
BF Borgers CPA PC has served as our independent auditors for our financial statements as of December 31, 2022 and for the year ended December 31, 2021. This firm billed the following fees to us for professional services related to such date and periods:
| Audit Fees | $ | 8,100 | ||
| Audit-Related Fees | — | |||
| Tax Fees | — | |||
| All Other Fees | — | |||
| Total | $ | 8,100 |
BF Borgers CPA PC also served as our independent auditors for our financial statements as of December 31, 2021. This firm billed $8,100 in audit fees for professional services related to such date and period.
“Audit Fees” are the aggregate fees billed for the audit of our annual financial statements. This category also includes services that generally the independent accountant provides, such as consents and assistance with and review of documents filed with the SEC.
“Audit-Related Fees” are the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit and are not reported under Audit Fees. These fees include mainly accounting consultations regarding the accounting treatment of matters that occur in the regular course of business, implications of new accounting pronouncements and other accounting issues that occur from time to time.
“Tax Fees” are the aggregate fees billed for professional services rendered for tax compliance, tax advice, other than in connection with the audit. Tax compliance involves preparation of original and amended tax returns, tax planning and tax advice.
“All Other Fees” are the aggregate fees billed for products and services, other than the services reported on the preceding lines.
All of the audit and non-audit services to us were pre-approved by our Board of Directors.
| - 38 - |
Item 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
None.
Item 16F. Change in Registrant’s Certifying Accountant.
Not applicable.
Item 16G. Corporate Governance.
Not applicable.
Item 16H. Mine Safety Disclosure.
Not applicable.
PART III
Item 17. Financial Statements.
We have responded to Item 18 in lieu of this item.
Item 18. Financial Statements.
The financial statements required by this item are found at the end of this annual report, beginning on page F-1.
Item 19. Exhibits.
*Filed herewith.
| - 39 - |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| JUPITER GOLD CORPORATION | |
| (Registrant) | |
| /s/ Marc Fogassa | |
| By: Marc Fogassa | |
| Title: Chief Executive Officer |
| - 40 - |
JUPITER GOLD CORPORATION
FINANCIAL STATEMENTS
| F-1 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Jupiter Gold Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Jupiter Gold Corporation as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/
We have served as the Company’s auditor since 2016
April 28, 2023
| F-2 |
JUPITER GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Related party receivables | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Series A preferred stock, $ par value. shares authorized; share issued and outstanding | ||||||||
| Common stock, $ par value. shares authorized; and shares issued and outstanding as of December 31, 2022 and 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-3 |
JUPITER GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Year Ended December 31, | Year Ended December 31, | |||||||
| 2022 | 2021 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Compensation and related costs | ||||||||
| Stock based compensation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expense (income): | ||||||||
| Other expense (income) | ( | ) | ||||||
| Total other expense (income) | ( | ) | ||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share | ||||||||
| Net loss per share | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic and diluted | ||||||||
| Comprehensive loss: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign curreny translation adjustment | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of the consolidated financial statements.
| F-4 |
JUPITER GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Income (Loss) | Deficit | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2020 | | $ | $ | $ | | $ | ( | ) | $ | ( | ) | $ | | |||||||||||||||||||
| Issuance of common stock in connection with sales made under private offerings | - | |||||||||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of common stock in connection with sales made under private offerings | - | |||||||||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||||||
| Change in foreign currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-5 |
JUPITER GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Year Ended December 31, | Year Ended December 31, | |||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities of continuing operations: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Stock based compensation and services | ||||||||
| Depreciation and amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Related party | ||||||||
| Acquisition of capital assets | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from sale of common stock | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| Effect of exchange rates on cash and cash equivalents | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-6 |
JUPITER GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
On
July 27, 2016, Jupiter Gold Corporation (“Jupiter Gold” or the “Company”) was incorporated under the laws of
the Republic of the Marshall Islands. Concurrently, Atlas Lithium Corporation (“Atlas Lithium”), a U.S. corporation, exchanged
its
The
Company has
Basis of Presentation
The
consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“GAAP”)
of the United States of America and are expressed in United States dollars. For the years ended December 31, 2022 and 2021, the consolidated
financial statements include the accounts of the Company and its
All material intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Going Concern
The consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has limited working capital, has incurred losses since its inception, and has not yet generated material revenues from the sale of its products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company generating cash from its operations, the sale of its stock and/or obtaining debt financing. During the year ended December 31, 2022, the Company funded operations primarily through the sale of equity securities. Management intends to cover any operating losses by selling its equity securities and obtaining debt financing. There can be no assurance the Company will be successful in these efforts.
| F-7 |
Fair Value of Financial Instruments
Jupiter Gold follows the guidance of Accounting Standards Codification (“ASC”) Topic 820 – Fair Value Measurement and Disclosure. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of Jupiter Gold. Unobservable inputs are inputs that reflect Jupiter Gold’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
As of December 31, 2022, Jupiter Gold did not have any level 2 or 3 assets or liabilities.
Jupiter Gold’s financial instruments consist of cash and cash equivalents, accounts payable, and accrued expenses. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.
Cash and Cash Equivalents
The
Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent
that the funds are not being held for investment purposes. Funds held in Brazilian banks are insured up to
Property and Equipment
Property and equipment are stated at cost. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements of operations as other gain or loss, net.
The
diamond and gold processing plant and other machinery are depreciated over an estimated useful life of
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs, including licenses and lease payments, are capitalized. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. The Company did not recognize any impairment losses related to mineral properties held during the years ended December 31, 2022 and 2021.
For
intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded
values. For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated
fair values of the assets received, if more clearly evident) are used to establish their recorded values, unless the values of neither
the assets received nor the assets transferred are determinable within reasonable limits, in which case the assets received are measured
based on the carrying values of the assets transferred. Valuation techniques consistent with the market approach, income approach and/or
cost approach are used to measure fair value. Intangible assets consist of mineral rights held by MJL and hold a recorded value of $
| F-8 |
Impairment of Long-Lived Assets
For long-lived assets, such as property and equipment and intangible assets subject to amortization, Jupiter Gold continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future undiscounted cash flows is less than the carrying amount of those assets, Jupiter Gold recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, volatility is based on the historical volatility of our stock or the expected volatility of the stock of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
The Company utilizes the Black-Scholes option-pricing model, which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the expected volatility of our stock price over a period equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect the estimated value of our employee stock options, it is management’s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of our employee stock options. Although the fair value of employee stock options is determined in accordance with ASC Topic 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.
On June 20, 2018, the FASB issued ASU 2018-07 which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. Equity classified share-based payments for employees are fixed at the time of grant. Equity-classified nonemployee share-based payment awards are measured at the grant date of the award which is the same as share-based payments for employees. The Company adopted the requirements of the new rule as of January 1, 2019, the effective date of the new guidance.
Foreign Currency
Jupiter Gold’s subsidiary, MJL, uses its local currency as its functional currency. Resulting translation gains or losses are recognized as a component of accumulated other comprehensive income. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized in the consolidated statements of operations.
The Company computes loss per share in accordance with ASC Topic 260, Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. As of December 31, 2022, the Company’s potentially dilutive securities relate to common stock issuable in connection with options. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings (loss) or and financial position.
| F-9 |
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below:
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective January 1, 2024, for the Company. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. The Company is evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements, but currently does not believe ASU 2020-06 will have a significant impact on the Company’s accounting for its convertible debt instruments. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.
In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate a material impact on results of operations. The Company is in the process of determining the effects adoption will have on its consolidated financial statements.
NOTE 2 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS
Property and Equipment, Net
The following table sets forth the components of the Company’s property and equipment at December 31, 2022 and December 31, 2021:
| December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
| Cost | Accumulated Depreciation | Net Book Value | Cost | Accumulated Depreciation | Net Book Value | |||||||||||||||||||
| Computers and office equipment | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
| Machinery and equipment | ( | ) | ( | ) | ||||||||||||||||||||
| Vehicles | ( | ) | ( | ) | ||||||||||||||||||||
| Total fixed assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
For
the years ended December 31, 2022 and 2021, the Company recorded depreciation expense of $
Related Party Receivables
As
of December 31, 2022, there is
| F-10 |
NOTE 3 – STOCKHOLDERS’ EQUITY
Issued and Authorized
As of December 31, 2022, Jupiter Gold had shares of its common stock and share of its preferred stock issued and outstanding. As of December 31, 2021, Jupiter Gold had common shares and preferred shares authorized.
Common Stock
During
the year ended December 31, 2022 Jupiter Gold issued and sold shares of common stock for cash proceeds of $
During
the year ended December 31, 2021 Jupiter Gold issued and sold shares of common stock for cash proceeds of $
Preferred A Stock
Jupiter
Gold has issued to one of its directors one share of a Series A Convertible Preferred Stock (“Preferred A Stock”). The Certificate
of Designations, Preferences and Rights of Preferred A Stock provides that for so long as it is issued and outstanding, its holders shall
vote together as a single class with the holders of the Company’s common stock, with
Stock Options
During
the year ended December 31, 2022, the Company granted to officers and directors as contractual compensation options to purchase an aggregate
of shares of its common stock. Such awards corresponded to the period between January 1, 2022 to December 31, 2022. The options
issued in 2022 were valued at $ in total. The options were valued using the Black-Scholes option pricing model with the following
average assumptions: our stock price on date of grant ($ to $), a strike price of $
During
the year ended December 31, 2021, the Company granted to officers and directors as contractual compensation options to purchase an aggregate
of shares of its common stock. Such awards corresponded to the period between January 1, 2021 to June 30, 2021; option awards
for the period between July 1, 2021 and December 31, 2021 were issued after December 31, 2021. The options issued in 2021 were valued
at $ in total. The options were valued using the Black-Scholes option pricing model with the following average assumptions: our
stock price on date of grant ($ to $), a strike price of $
| F-11 |
Number of Options Outstanding | Average Exercise Price | Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding, December 31, 2021 | ||||||||||||
| Issued in 2022 | ||||||||||||
| Exercised in 2022 | – | |||||||||||
| Outstanding, December 31, 2022 | $ | |||||||||||
Stock Warrants
During the year ended December 31, 2022 and 2021 the company did not issue any warrants.
NOTE 4 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to December 31, 2022 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
| F-12 |