UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to _____
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were shares of the registrant’s common stock, $0.0001 par value per share, outstanding as of May 15, 2025.
CHILEAN COBALT CORP.
Contents
| i |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHILEAN COBALT CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Subscriptions receivable | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued service expenses | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Convertible Preferred Stock, $ par value; shares authorized and and shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Series B Convertible Preferred Stock, $ par value; shares authorized and and shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Common Stock, $ par value; shares authorized and and issued and outstanding at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 1 |
CHILEAN COBALT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE LOSS
| Three-Months Ended | Three-Months Ended | |||||||
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of mineral exploration | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Foreign currency transaction (gain) loss | ( | ) | ||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per common share | $ | ) | $ | ) | ||||
| Weighted-average number of shares outstanding: | ||||||||
| Basic and diluted share count | ||||||||
| Comprehensive loss: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustments | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 2 |
CHILEAN COBALT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Foreign currency translation | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Issuance of Series B Convertible Preferred Stock | – | |||||||||||||||||||||||||||||||
| Foreign currency translation | – | – | ||||||||||||||||||||||||||||||
| Stock based compensation | – | – | ||||||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 3 |
CHILEAN COBALT CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| Three-Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Series B Convertible Preferred Stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate on cash | ( | ) | ||||||
| Net increase in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
CHILEAN COBALT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Organization and Nature of Business |
The accompanying condensed consolidated financial statements include the accounts of Chilean Cobalt Corp. (the “Company”) (OTCQB: COBA), a Nevada corporation formed on December 4, 2017, and its wholly-owned subsidiary Baltum Minería SpA (“Baltum”), a Chilean Sociedad por Acciones formed on January 3, 2018. The Company is a primary cobalt, secondary copper, junior mining and exploration company. Cobalt, a critical mineral for many of the current cathode battery chemistry configuration options in the electric vehicle (“EV”) battery production space, was mined in Chile for 100 years from 1844 thru 1944 and ceased at the end of World War II. Baltum owns exploitation-level mining concessions for 2,635 hectares in the San Juan Mining District in northern Chile.
On May 12, 2022, the former Parent Company, Genlith, Inc. distributed all of its shares in the Company to its individual shareholders. As of the date of the distribution, Genlith, Inc. no longer held an equity interest in the Company.
The Company’s year-end is December 31.
| 2. | Going Concern |
The Company has not yet begun to generate revenue
as of March 31, 2025, has incurred recurring losses since inception, and expects to continue to incur losses as a result of costs and
expenses related to mining exploration and general and administrative expenses. For the three-month period ended March 31, 2025, the Company
reported a net loss of $
The ability of the Company to continue as a going concern over a longer term is dependent on the Company’s ability to raise the financing necessary to complete the exploration and development of cobalt and copper mines and bring mining operations into production and commercialization.
With a cash balance of $
| 3. | Summary of Significant Accounting Policies Basis of Presentation |
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The financial statements include the consolidated accounts of the Company and its wholly-owned subsidiary Baltum Minería SpA. All material intercompany transactions have been eliminated in consolidation.
Forward Stock Split
On May 2, 2023, the Company effected a 3 for 1 forward stock split of its common stock. All common stock amounts have been retroactively adjusted for the forward stock split for all periods presented and for all references in this Report unless stated otherwise.
| 5 |
The weighted-average common shares outstanding for both basic and diluted earnings per share for all periods presented was calculated, in accordance with ASC 260, Earnings Per Share. To the extent that stock options, warrants and convertible preferred stock are anti-dilutive, they are excluded from the calculation of diluted earnings (loss) per share. For the three-month periods ended March 31, 2025 and 2024, the Company excluded the following shares from the calculation of diluted loss per share because such amounts were anti-dilutive:
| March 31, 2025 | March 31, 2024 | |||||||
| Shares issuable upon conversion of Series B Convertible Preferred Stock | ||||||||
| Shares issuable upon exercise of stock options | ||||||||
| Total | ||||||||
Fair Value Measurements
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities, as necessary, and to determine fair value disclosures of financial instruments on a recurring basis.
Consistent with Accounting Standards Codification Topic 820, Fair Value Measurements (“ASC 820”), assets and liabilities that are required to be recorded at fair value are done so at the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring fair value, and consistent with the fair value hierarchy in ASC 820, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs consistent with the following fair value hierarchy:
| · | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to assess at the measurement date. | |
| · | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. | |
| · | Level 3 inputs are unobservable inputs for the asset or liability. |
For assets and liabilities measured at fair value when there is limited or no observable market data, management applies judgment to estimate fair value and considers factors such as current pricing policy, the economic and competitive environment, the characteristics of the asset or liability, and other factors. The amounts estimated by management cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Inherent limitations in any such fair value calculation technique, including changes in discount rates, estimates of future cash flows, and other underlying assumptions, could significantly affect the results of current or future value.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to the applicability of accrued expenses and volatility used in the determination of stock-based expenses. Estimates are periodically reviewed in light of changes in circumstances, facts, and experience. There have been no changes in estimates during the periods presented. Actual results could differ from the Company’s estimates and those differences may be material.
| 6 |
Cash
Cash amounts consist of cash on hand, bank deposits,
and money market accounts. Cash equivalents consist of all liquid debt instruments with original maturities of three months or less. As
of March 31, 2025, and December 31, 2024, the Company’s cash balances were $
Subscriptions Receivable and Stock Compensation
The Company typically reflects subscriptions receivable in stockholders’ equity, unless there is substantial evidence of the intent and ability of the subscriber to pay the amounts in a reasonable amount of time, in which case the subscriptions receivable are instead reflected as an asset on the balance sheet.
The subscriptions receivable of $
The Company reflects stock-based compensation at the intrinsic value of the compensation ratably across the periods in which the compensation is earned. When stock is issued for services, the intrinsic value of the stock issued is amortized ratably over the period in which the compensation is earned. In the initial period of amortization, the amortized portion is reflected in preferred or common stock, as applicable, for both shares and the full par value with any residual reflected in additional paid-in capital. The amortization for each subsequent period is reflected entirely in additional paid-in capital.
Value Added Tax (“VAT Tax”)
The Company’s subsidiary historically has paid significant amounts of value-added tax (“VAT Tax”) to the Chilean government on certain operating purchases. The tax paid can be offset against future VAT Tax due. The Company has not recorded any VAT tax receivables as of March 31, 2025, and December 31, 2024, because the Company’s ability to fund future expenditures necessary to recover VAT taxes paid in, is currently indeterminable.
Property and Equipment
Property, plant, and equipment are stated at cost,
less accumulated depreciation. Acquired property, plant and equipment are recognized at their estimated fair value. Capitalized costs
may include computers, vehicles, furniture and fixtures, machinery, and equipment, and are depreciated using the straight-line method
or unit-of-production method at rates sufficient to depreciate such costs over the shorter of estimated productive lives or the useful
life of the individual assets. Useful lives range from
Gains and losses are reflected in income or expense upon sale or retirement of assets. Expenditures that extend the useful lives of property, plant and equipment or increase productivity are capitalized. Ordinary repairs and maintenance are expensed as incurred through operating expense. We periodically evaluate whether events or circumstances indicate that the net book value of our property, plant and equipment may not be recoverable.
Costs are capitalized when it has been determined an ore body can be economically developed. The development stage begins at new projects when our management and/or board of directors make the decision to bring a mine into commercial production and ends when the production state, or extraction of reserves, begins. The production stage of a mine commences when salable materials, beyond a de minimis amount, are produced.
| 7 |
Exploration costs include those relating to activities carried out (a) in search of previously unidentified mineral deposits or (b) at undeveloped concessions. Pre-development activities involve costs incurred in the exploration stage that may ultimately benefit production and are expensed due to a lack of evidence of economic development, which is necessary to demonstrate future recoverability of these expenses. Costs for exploration, evaluation, and pre-development, including drilling costs related to those activities (discussed further below), and repairs and maintenance on capitalized property and equipment are charged to operations as incurred.
Drilling, development, and related costs are either classified as exploration, pre-development or secondary development as defined above, and charged to operations as incurred, or capitalized based on the following criteria:
| · | whether the costs are incurred to further define mineralization at and adjacent to existing reserve areas or intended to assist with mine planning within a reserved area; | |
| · | whether the drilling or development costs relate to an ore body that has been determined to be commercially mineable, and a decision has been made to put the ore body into commercial production; | |
| · | whether, at the time the cost is incurred: (a) the expenditure embodies a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflows, (b) we can obtain the benefit and control others’ access to it, and (c) the transaction or event giving risk to our right to or control of the benefit has already occurred. |
If all of these criteria are met, drilling, development and related costs are capitalized. Drilling and development costs not meeting all of these criteria are expensed as incurred. The following factors are considered in determining whether or not the criteria listed above have been met, and whether capitalization of drilling and development costs is appropriate:
| · | Completion of a favorable economic study and mine plan for the ore body targeted; | |
| · | authorization of development of the ore body by management and/or the board of directors; and | |
| · | there is a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues and/or contractual requirements necessary for us to have the right to or control of the future benefit from the targeted ore body have been met. |
Drilling and related costs at our properties as of and for the three-months ended March 31, 2025, and March 31, 2024, respectively, did not meet our criteria for capitalization.
When assets are retired or sold, the costs and related allowances for depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in the current period net income (loss).
| 8 |
Impairment of Long-lived Assets
Long-lived assets consist of property and equipment.
Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that
the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment
review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends,
and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset
for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition
of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected
to result from the use and eventual disposition of an asset are less than its carrying amount. The impairment loss would be based on the
excess of the carrying value of the impaired asset over its fair value less cost to sell or dispose, determined based on discounted cash
flows. During the three-months ended March 31, 2024 and 2025, we recorded
Environmental Obligations
We provide for environmental-related obligations when they are probable and amounts can be reasonably estimated. Where the available information is sufficient to estimate the amount of liability, that estimate has been used.
Included in our environmental liabilities are costs for the operation, maintenance and monitoring of site remediation plans (“OM&M”). If applicable, such reserves are based on our best estimates for these OM&M plans. Over time we could incur OM&M costs in excess of these reserves. However, we are unable to reasonably estimate an amount in excess of any recorded reserves because we cannot reasonably estimate the period for which such OM&M plans will need to be in place or the future annual cost of such remediation, as conditions at environmental sites change over time. If applicable, such additional OM&M costs could be significant in total but would be incurred over an extended period of years.
Environmental remediation charges represent the costs for continuing charges associated with environmental remediation at operating sites from previous years and from products that are no longer manufactured and are currently not applicable.
Leases
The Company determines if an arrangement is a lease at the inception of the contract. If applicable, our operating leases are included in Operating lease right-of-use (“ROU”) assets, operating lease liabilities – current, and Operating lease liabilities – long term in the condensed consolidated balance sheets. The operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit interest rate, we utilize an estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. In determining the discount rate used in the present value calculation, the Company has elected to apply the portfolio approach for leases provided the leases commenced at or around the same time. This election allows the Company to account for leases at a portfolio level provided that the resulting accounting at this level would not differ materially from the accounting at the individual lease level. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
| 9 |
If leases are applicable, the Company has elected not to separate lease and non-lease components and accounts for each separate lease component and non-lease component associated with that lease component as a single lease component. Operating lease ROU assets include all contractual lease payments and initial direct costs incurred less any lease incentives. Facility leases generally only contain lease expense and non-component items such as taxes and pass-through charges. Additionally, we have elected not to apply the recognition requirements of ASC 842 to leases which have a lease term of less than one year at the commencement date.
Mining Concessions
Mining concessions are recorded at cost based on the payments required under the contracts. Amortization begins when placed in service after the mining concession is exercised. Mining concessions are amortized over their useful life based on the pattern over which the mining concessions are consumed or otherwise used up. Determination of expected useful lives for amortization calculations is made on a property-by-property or asset-by-asset basis at least annually. At the time an ore body can be economically developed, the basis of the mining concession will be amortized on a units-of-production basis. Pursuant to our policy on the impairment of long-lived assets, if it is determined that a mining concession cannot be economically developed or its innate value has not been independently substantiated, the basis of the mining concession is reduced to its fair value and an impairment loss is recorded to expense in the period in which it is determined to be impaired.
Finite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Intangible assets that are not subject to amortization are tested for impairment annually and more frequently if events or changes in circumstances indicate that is more likely than not, meaning more than 50%, that the asset is impaired.
The value of the exploitation mining concessions
owned by Baltum has yet to be independently substantiated by a valuation or any level of feasibility study. As of March 31, 2025,
and December 31, 2024, these mining concessions had a value of $-
Restructuring and Other Charges
We continually perform strategic reviews and assess the returns on our businesses. In the event that this results in a plan to restructure the operations of our business, we record an accrual for severance and other exit costs under the provisions of the relevant accounting guidance.
Research and Development
Research and development costs are expensed as incurred.
Foreign Currency
The reporting currency of the Company is the
U.S. dollar. The functional currency of Baltum, the Company’s wholly-owned subsidiary, is the Chilean Peso. The assets and
liabilities of Baltum are translated into U.S. dollars based on exchange rates at the end of each reporting period. Expenses are
translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and
liabilities are included as a component of accumulated other comprehensive income or loss within the Company’s condensed
consolidated balance sheet. Gains and losses resulting from foreign currency transactions are reflected within the Company’s
condensed consolidated statements of operations. Transactions denominated in foreign currency other than our functional currency of
the foreign operation are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial
recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the
functional currency at the exchange rate at that date. The Company has not utilized foreign currency hedging strategies to mitigate
the effect of its foreign currency exposure. We recorded transaction and remeasurement gains of $-
| 10 |
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred taxes are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. The potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company’s wholly owned subsidiary is subject to foreign corporate tax in foreign taxing jurisdictions. We do not provide income taxes on the equity in undistributed earnings of consolidated foreign subsidiaries as it is our intention that such earnings will remain invested in those companies.
The Company accounts for income taxes in accordance with Accounting Standards Codification 740, “Accounting for Income Taxes” (“ASC 740”). Under ASC 740, income tax expense includes federal and state taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes.
In accordance with ASC 740, the Company has evaluated its tax positions. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that has a likelihood of being realized on examination of more than 50 percent. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Under the “more likely than not” threshold guidelines, the Company believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. The Company’s policy is to account for interest expense and penalties related to unrecognized tax benefits as a component of income tax expense. The Company is currently not under examination with any federal, state, or foreign taxing authorities. In addition, the Company had no material unrecognized tax benefits or accrued interest and penalties as of and for the three-months ended March 31, 2025.
Concentration of Credit Risk and of Significant Vendors
The Company maintains cash balances at financial institutions in the U.S. and Chile. The Company holds all cash balances at accredited financial institutions, in amounts that exceed federally insured limits in the United States of America. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Segment Reporting
The Company has not yet begun generating revenues from its planned principal operations and operates as a single reportable segment for its cobalt-copper project in Chile. The chief operating decision maker is the Company’s chief executive officer, who assesses the performance based on total expenses, cash flows and progress made in the Company’s ongoing development efforts. All of the Company’s long-lived assets are located in Chile.
Recently Issued and Adopted Accounting Pronouncements
The Company’s management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company’s current financial position and results of operations.
| 11 |
| 4. | Property and Equipment, Net |
Property and equipment, net consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Property and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expenses for the three-months ended March
31, 2025, and March 31, 2024, amounted to $-
| 5. | Accrued Expenses |
Accrued expenses consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Service fees | $ | $ | ||||||
| Employee benefits | ||||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 6. | Stockholders’ Equity |
Preferred Stock
The Company’s certificate of incorporation authorized the Company to issue 25,000,000 shares of Preferred Stock, $0.0001 par value.
On December 28, 2017, a Certificate of Designations was approved by the Board of Directors that authorized the issuance of 7,500,000 shares of Series A Convertible Preferred Stock, of which 5,151,125 were issued and then subsequently converted into shares of common stock on August 10, 2020. Once converted into shares of common stock, the provisions of the Certificate of Designations do not allow for the re-issuance of such shares of Series A Convertible Preferred Stock.
On December 26, 2024, a Certificate of Designations was approved by the Board of Directors that authorized the issuance of shares of Series B Convertible Preferred Stock. On December 29, 2024, an amended and restated Certificate of Designations was approved by the Board of Directors that authorized the issuance of shares of Series B Convertible Preferred Stock (an increase of shares), among other terms and conditions. The Certificate of Designations provides for anti-dilution and major exempt issuance protection and that all shares will convert to their common stock equivalent as of December 31, 2025.
| 12 |
There were shares of Series A Convertible Preferred Stock and and shares of Series B Convertible Preferred Stock issued and outstanding as of March 31, 2025, or December 31, 2024, respectively.
2025 Issuances:
During the three-months ended March 31, 2025, the Company issued the following shares of preferred stock:
| · | shares of Series
B Convertible Preferred Stock were issued to investors at $ per share for total proceeds of $ |
2024 Issuances:
During the year ended December 31, 2024, the Company issued the following shares of preferred stock:
| · | shares of Series B
Convertible Preferred Stock were issued to investors at $ per share for total proceeds of $ |
Common Stock
The Company’s certificate of incorporation authorizes the Company to issue shares of $ par value common stock. As of March 31, 2025, and December 31, 2024, there were and shares of common stock issued and outstanding. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.
2025 Issuances:
During the three-months ended March 31, 2025, shares of common stock were issued by the Company.
2024 Issuances:
During the year ended December 31, 2024, the Company issued the following shares of common stock:
| · | shares were issued
to a vendor on March 19, 2024, for a year of services at the fair value price on the date of issuance of $ per share, which
equates to total annual compensation paid in the amount of $ |
Forward Stock Split
On May 2, 2023, the Company effected a
| 13 |
Stock Options
On April 26, 2022, the board adopted, and by shareholder consent achieved on April 29, 2022, the shareholders approved the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), which allows awards for up to 5,850,000 options to purchase shares of its Common Stock at prevailing fair value exercise prices at the time of each award. There were options to purchase 5,611,254 shares of its Common Stock, net of forfeitures, awarded under the 2022 Plan as of March 31, 2025. The purposes of the 2022 Plan are (i) to attract and retain the best available personnel for positions of substantial responsibility, (ii) to provide additional incentives to Employees, Directors, and Consultants, and (iii) to promote the success of the Company’s business.
On May 24, 2022, the Company granted stock options to purchase an aggregate of shares to officers/management, advisors, and directors at an exercise price of $. .
On June 1, 2022, the Company granted stock options to purchase an aggregate of shares to an advisor at an exercise price of $. .
On July 15, 2022, the Company granted stock options to purchase an aggregate of shares to an officer at an exercise price of $. .
On July 28, 2022, the Company granted stock options to purchase an aggregate of shares to an officer/director at an exercise price of $. .
On June 29, 2023, the board adopted, and by shareholder consent achieved on June 30, 2023, the shareholders approved the Company’s 2023 Equity Incentive Plan (the “2023 Plan”), which allows awards for up to 1,963,746 options to purchase shares of its Common Stock at prevailing fair value exercise prices at the time of each award. There were 1,820,000 options to purchase shares of its Common Stock awarded under the 2023 Plan as of March 31, 2025. The purposes of the 2023 Plan are (i) to attract and retain the best available personnel for positions of substantial responsibility, (ii) to provide additional incentives to Employees, Directors, and Consultants, and (iii) to promote the success of the Company’s business.
On July 1, 2023, the Company granted stock options to purchase an aggregate of shares to officers/management and directors at an exercise price of $. .
On July 7, 2023, the Company granted stock options to purchase an aggregate of shares to directors at an exercise price of $. .
On January 25, 2024, the Company granted stock options to purchase an aggregate of shares to advisory board members at an exercise price of $. .
On February 13, 2024, the Company granted stock options to purchase an aggregate of shares to an advisory board member at an exercise price of $. .
| 14 |
On January 17, 2025, the Company granted stock options to purchase an aggregate of shares to officers/management, directors, contractors and advisory board members at an exercise price of $. The options awarded to officers/management, directors and contractors vest quarterly starting on March 31, 2025, for 12.5% of the granted shares and then the remainder in equal installments at each quarter-end through the end of 2026 and expire in years from the date of grant. The options awarded to advisory board members vest quarterly starting on March 31, 2025, for 25% of the granted shares and then the remainder in equal installments at each quarter-end through the end of 2025 and expire in years from the date of grant.
The fair value of the options granted was estimated on the date of grant using the Black-Scholes options pricing model, with the following weighted average assumptions:
| Description |
As of March 31, 2024 |
As of March 31, 2025 |
||||||
| Expected dividend yield | % | % | ||||||
| Expected stock volatility (a) | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected life of options (years) | - | - | ||||||
| Expected forfeiture rate | % | % | ||||||
| Grant date fair value range per option issued | $ | - | $ | - | ||||
| (a) |
During the three-months ended March 31, 2025, and March 31, 2024, the Company recorded stock-based compensation expenses of $ and $, respectively. As of March 31, 2025, the unamortized stock option expense was $. The Company’s stock options had an intrinsic value of $, based on the OTCQB published closing price for (OTCQB: COBA) of $ per share as of March 31, 2025, which may not be indicative of the true market value of the stock options given the limited historical volumes traded and the volatility of the underlying shares as of that date. Stock-based compensation expense is measured at the date of grant, based on the fair value of the award, and is recognized over the vesting period of the option. The Company recognizes forfeitures in stock-based compensation expense as they occur.
A summary of the changes in stock options outstanding at March 31, 2025, are presented below:
Options Outstanding Number of Shares | Weighted Average Exercise Price | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Issued | $ | |||||||
| Expired/Forfeited | n/a | |||||||
| Exercised | n/a | |||||||
| Balance, December 31, 2023 | $ | |||||||
| Issued | $ | |||||||
| Expired/Forfeited | n/a | |||||||
| Exercised | n/a | |||||||
| Balance, December 31, 2024 | $ | |||||||
| Issued | $ | |||||||
| Expired/Forfeited | n/a | |||||||
| Exercised | n/a | |||||||
| Balance, March 31, 2025 | $ | |||||||
| 15 |
The Company has the following options outstanding and exercisable at March 31, 2025 and 2024:
| Schedule of options outstanding and exercisable | March 31, 2025 | March 31, 2024 | ||||||||||||||||||||||||||||||||
| Issue Date | Expiry Date | Exercise Price | Stock Options Outstanding | Stock Options Exercisable | Remaining Life | Exercise Price | Stock Options Outstanding | Stock Options Exercisable | Remaining Life | |||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||
| $ | n/a | n/a | ||||||||||||||||||||||||||||||||
| Totals and Weighted Averages Outstanding | $ | $ | ||||||||||||||||||||||||||||||||
| 7. | Commitments and Contingencies Indemnification Agreements |
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its consolidated financial position, results of operations, or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2025, and December 31, 2024.
Litigation
From time to time, the Company may be subject to claims and lawsuits arising in the normal course of business. The Company’s management believes that the outcome of any litigation or claims will not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows. On March 31, 2025, management was not aware of any material active, pending, or threatened litigation.
| 8. | Related Party Activity |
The Company’s Chilean legal counsel, Quinzio Abogados SpA (“QA”) have power of attorney (“POA”) over and also provide legal counsel to Baltum. Baltum’s contracted general manager is Felipe Quinzio, the sole owner of NyD Mining SpA (“NyD”). Baltum paid NyD for the services of Felipe Quinzio during the three-months ended March 31, 2025 and March 31, 2024 and for accounting services provided by NyD since July 2024. One of the law partners and owner of QA is Cristian Quinzio, who is the parent of Felipe Quinzio. Baltum pays QA for legal services provided, whether QA is engaged at the request of Baltum or the Company. There were no bills outstanding with Baltum to either NyD or QA at March 31, 2025 or March 31, 2024, however, Baltum accrued an estimate of legal services provided by QA, but yet to be billed by QA in the amount of $14,547 and $5,156 at March 31, 2025 and December 31, 2024, respectively. Baltum incurred legal expenses provided by QA of $14,799 and $5,241 for the three-months ended March 31, 2025 and March 31, 2024, respectively. Baltum incurred managerial and accounting expenses provided by NyD of $10,253 and $7,399 for the three-months ended March 31, 2025 and March 31, 2024, respectively, and had prepaid $66 towards the April 2025 invoice as of March 31, 2025.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of operations of Chilean Cobalt Corp. (“Chilean Cobalt” and including its subsidiaries, collectively, the “Company”) should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company. This Quarterly Report on Form 10-Q includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Risk Factors”, which are included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“Commission”) on April 2, 2025.
Overview
Chilean Cobalt Corp. is a US-based and US-listed (OTCQB: COBA) critical materials exploration and development company focused on the La Cobaltera cobalt-copper project in northern Chile, one of the world’s few primary cobalt districts. Chilean Cobalt strives to responsibly supply cobalt and other critical minerals for a sustainable future.
Cobalt demand has been driven by the growth of its use in high performance metal alloy products for industrial and defense applications, as well as in lithium-ion batteries for portable electronic devices (tablets, phones) and electric vehicles (EVs). Copper demand continues to be driven by the growth in all manner of electrification as copper is a staple in nearly all things electric. The Company’s wholly-owned subsidiary Baltum Mineria SpA (“Baltum”) has acquired 2,635 hectares of fully exploitable mining concessions in northern Chile’s Atacama region in the San Juan District. The Company continues to seek opportunities to further consolidate mining rights in the district and to finalize an offtake and downstream processing partner. The San Juan mining district, which includes the La Cobaltera area, has been identified by CORFO, the Chilean governmental agency responsible for the country’s economic development, as likely containing the highest quality cobalt assets in Chile. Chile already being the leading copper-producing country in the world with the La Cobaltera area historically supporting the existence of established and high-quality copper assets. Being strategically located near roads, electricity, water, and ports, the site is in close proximity to robust mining infrastructure. The Company’s principal business activities since incorporation have been the assessment, acquisition and consolidation of mining concessions; the exploration of the potential cobalt-copper resources within the concessions; and developing an accelerated phased implementation plan to generate revenue as quickly as possible. In addition, on July 3, 2024, we signed a non-binding Letter of Intent (“LOI”) with a subsidiary of Glencore plc (“Glencore”) whereby Glencore will purchase all of the Company’s production of cobalt and copper minerals from the La Cobaltera project which it expects to ship to the United States or U.S. Free Trade Agreement countries. In addition, on September 6, 2024, we signed a non-binding LOI with US Strategic Metals (“USSM”) to process and refine cobalt and copper concentrate we expect to produce at our La Cobaltera project. This processing is intended to lead to the creation of cobalt metal, battery chemical intermediate products, and/or other products critical for the production of advanced materials and energy technologies. USSM plans to carry out the processing at its production facility in Missouri. We are advancing due diligence and strategic discussions pursuant to both LOI’s and the terms and conditions of the agreements to be entered into between the Company, Glencore and USSM are subject to negotiation. The objective of the three-way strategic partnership between the Company, Glencore and USSM is to establish an Americas-centric cobalt and copper supply chain, connecting Chilean Cobalt’s La Cobaltera cobalt-copper project in Chile with USSM’s integrated critical minerals processing site in Missouri, USA - which may include development of a dedicated processing line for La Cobaltera concentrate at USSM’s site. Our partnership with USSM and Glencore is expected to strengthen US critical minerals supply chains while providing a sustainable and traceable source of raw materials for the growing domestic lithium-ion battery manufacturing capacity and high-performance metal alloy markets.
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We have not generated revenues to date. Our limited operations have included the formation of the Company and its wholly-owned subsidiary Baltum Mineria SpA, oversight of cobalt exploration activities, business development activities and sustainability framework development activities. These limited operations have been funded by capital raised through the issuance of our common stock, preferred stock, and debt. From December 4, 2017 through May 15, 2025, we raised a total of $31,309,545 from accredited investors through the issuance of our common stock, preferred stock, and debt. This total does not include the $56,272 of stock-based compensation inferred by the issuance of 216,429 shares for the retainer for services provided by Collingwood Capital Partners AG at $0.26 per share on March 19, 2024 or any other non-cash amounts for other stock-based compensation, dividends paid-in-kind or similar.
We have limited business operations and have achieved losses since inception. We have been issued a going concern opinion from our auditors as a result of not generating sufficient business to date.
Our monthly “burn rate,” the amount of expenses we expect to incur on a monthly basis, is approximately $121,000 for a total of $1,452,000 for the following 12 months. We have relied and will continue to rely on capital raised from third parties to fund operations during the upcoming 12 months and we have plans to raise an additional $300,000 and then possibly $20,000,000 or more in the second half of the year. We expect to be able to further our acquisition and exploration plans, if we are successful in raising the anticipated working capital.
In order to complete our plan of operations, which entails proving out feasibility, commencing production and generating saleable product, we estimate that approximately $325 million in funds will be required.
For the years ended December 31, 2024 and 2023, we generated no revenues and reported net losses of $882,574 and $1,292,742, respectively, and negative cash flow from operating activities of $791,706 and $929,418, respectively. For the three-months ended March 31, 2025 and March 31, 2024, we reported net losses of $334,298 and $263,176, respectively, and negative cash flow from operating activities of $271,221 and $165,001, respectively. Our management has concluded that our historical recurring losses from operations and negative cash flows from operations as well as our dependence on securing private equity and other financings raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit reports for the fiscal years ended December 31, 2024 and 2023. As noted in our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q, we had an accumulated stockholders’ deficit of approximately $33,717,110 and recurring losses from operations as of March 31, 2025. See the risk factor in our Annual Report on Form 10-K titled, “Risk Factors - We have a history of operating losses and our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report for the fiscal years ended December 31, 2024 and 2023.”
Plan of Operations
In order to complete our plan of operations, including Phase 2 exploration work, during the next 12 months, we estimate that approximately $960,000 in additional funds will be required. In order to pursue our strategic priorities of progressing mining rights acquisition and consolidation, along with both brownfield and greenfield exploration on existing and expected to be acquired mining concessions, and having a longer operational runway, we will require raising at least $4,000,000 to $5,000,000. To complete mining rights acquisition and consolidation will require substantially more funding. The source of such funds is anticipated to come from private placements of our securities as discussed in the Overview above. If we fail to raise the amounts we require, we may not be able to fully carry out our plan of operations. Assuming that we are able to raise the amounts discussed above, we believe we can satisfy our cash requirements during the next 12 months and begin to implement our business plan.
| 18 |
For the next twelve months, we intend to implement our business plan as follows:
| · | Exploration and Development Expenses. During this period, we intend to, among other things, continue exploration and development of the mining sites in addition to any new mining sites that are successfully acquired. The exploration and development expenses are expected to encompass sampling, mapping and trenching in greenfield areas and further diamond drilling and work towards establishing pre-feasibility and/or definitive feasibility studies in brownfield areas. To achieve our Phase 2 objectives, we expect this to cost approximately $350,000. To progress into feasibility assessment and drilling is expected to cost approximately $2,000,000 to $4,000,000, or more, depending on the breadth of the follow-up exploration program. | |
| · | Possible Strategic Acquisition Opportunities. During this period, we intend to, among other things, consider possible strategic acquisitions of other possible mining sites. There are several sites that the Company has expressed interest in acquiring and the ability to close on these acquisitions is dependent on the Company’s success in achieving its capital raise objectives and being able to negotiate favorable terms with mining concession sellers in the areas of cash, equity and net smelter royalties, as applicable. | |
| · | General and Administrative Expenses. During this period, we intend to, among other things, hire additional staff or engage additional advisors to assist with operations. We also intend to continue incurring the same level of general and administrative expenses, such as corporate insurance, professional services, public filer services, marketing, site and conference travel and other administrative costs in order to further our plan. The general and administrative expenses are expected to be approximately $1,200,000 to $1,300,000, depending on the phases of the business plan that are able to be engaged. |
We have board authorization for up to a $5,000,000 private raise and there are another 677,775 shares of Series B Convertible Preferred Stock that are authorized and could be issued to raise additional capital for meeting the requirements of our 12-month business plan. However, any major acquisition and the underlying funding source would need to be approved at the board level as a prerequisite to closing. In addition, we are seeking to secure a source of financing to fund our exploration and development efforts within our mining concessions that comprise our La Cobaltera cobalt-copper project as well as other mining concessions we are evaluating within the San Juan District in northern Chile. These efforts include a potential debt funding package of up to $317,400,000 pursuant to a June 4, 2024 non-binding letter of interest we received from the Export-Import Bank of the United States. There can be no assurance that a private raise or debt financing, when instituted can occur as planned or at all. Our future is dependent upon our ability to obtain further financing, the successful execution of our business plan, securing favorable off-take agreements, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.
Components of revenues and costs and expenses
Exploration and development expense. Our exploration and development costs are incurred during the exploration and development of mining sites. We did not incur any exploration and development expenses during the quarter ended March 31, 2025 because the Company has been focused on raising working capital that will allow for execution of the overall plans both short-term and long-term, including exploration, acquisition and general and corporate continuance. In addition, the Company worked diligently throughout the previous year to achieve long-term objectives for debt funding through a letter of interest with the Export-Import Bank of the United States, as discussed previously, and through the establishment of non-binding letters of intent for eventual product offtake through Glencore AG, an international commodity trading and mining company and for product processing streams through United States Strategic Metals for eventual three-party Americas-centric cobalt and copper downstream processing. In the first half of 2025, the Company is working diligently towards an Artificial Intelligence (“AI”) trial exploration campaign expecting to engage multiple vendors in an attempt to collaboratively further their technology and acquire more strategic exploration data related to our concessions. As indicated in the press release on March 6, 2025, the Company has appointed Dr. Lawrence W. Snee as its Executive Vice President of Exploration with responsibility for developing and executing the Company’s exploration activities, which includes progressing the AI trial exploration campaign and contributing to the overall corporate strategic plan.
| 19 |
General and administrative expense. Our general and administrative (“G&A”) expenses include compensation of staff and overhead, which includes depreciation and foreign currency transaction (gains) and losses.
Interest expense, interest income, net. Interest expense consists of interest expense associated with debt obligations. Interest income consists of interest income earned on our cash, cash equivalents and short-term investments.
Provision for Income Taxes. Provision for income taxes consists of an estimate of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business, as adjusted for allowable credits, deductions and the valuation allowance against deferred tax assets.
Gain (loss) on retirement/sale of assets. When fixed assets are sold, retired or disposed, there is either a non-cash gain or loss associated with the action depending on whether there is receipt of proceeds (in the case of a sale) and the extent of depreciation that has already been claimed on the fixed asset that is being removed from the books. For a gain, there must be proceeds received in excess of the residual book value of the asset, whereas, otherwise, there is no loss or a loss by the amount that the residual book value exceeds any applicable proceeds.
Results of Operations – Three-Months Ended March 31, 2025 Compared to the Three-Months Ended March 31, 2024
Three-Months Ended March 31, 2024 | Three-Months Ended March 31, 2025 | Increase (Decrease) | ||||||||||
| Revenue | $ | 0 | $ | 0 | $ | 0 | ||||||
| Cost of Sales | 0 | 0 | 0 | |||||||||
| Gross Profit | $ | 0 | $ | 0 | $ | 0 | ||||||
| Gross Profit % | 0% | 0% | 0% | |||||||||
| Operating Expenses: | ||||||||||||
| Cost of Mineral Exploration | $ | 0 | $ | 0 | $ | 0 | ||||||
| General and administrative expenses and foreign currency transaction (gain) loss | 270,130 | 341,829 | 71,699 | |||||||||
| Interest (income) expense, net | (6,954 | ) | (7,531 | ) | (577 | ) | ||||||
| Operating Income (Loss) | (263,176 | ) | (334,298 | ) | 71,122 | |||||||
| Provision for income taxes | 0 | 0 | 0 | |||||||||
| Gain (loss) on retirement/sale of assets | 0 | 0 | 0 | |||||||||
| Net Income (Loss) | $ | (263,176 | ) | $ | (334,298 | ) | $ | 71,122 | ||||
Operating losses for the three-months ended March 31, 2025, compared to March 31, 2024, were higher due primarily to higher mining concession patent costs for Baltum, along with higher legal costs in Chile related to due diligence on acquisitions and patent fee changes, higher cash-based compensation, due to employee additions to the management suite, along with higher non-cash option compensation to directors, officers and advisors, higher professional service costs to non-legal professionals, and higher travel costs in furtherance of the business strategy of raising capital, through the pursuit of both investor and government sources.
| 20 |
Liquidity and Capital Resources
Liquidity
We have primarily financed our operations through the sale of unregistered equity. As of March 31, 2025, our Company had cash totaling $808,130 current assets totaling $906,322 and total assets of $909,280. We had total liabilities of $74,328 (all current) and positive working capital of $831,994. Stockholders’ equity of $834,952.
Sources and Uses of Cash for the Three-Months Ended March 31, 2025 and 2024
The following table summarizes our cash flows for the three-months ended March 31, 2024 and 2025.
Three-Months Ended March 31, 2024 | Three-Months Ended March 31, 2025 | Increase (Decrease) | ||||||||||
| Net Cash Provided By (Used In) Operating Activities | $ | (165,001 | ) | $ | (271,221 | ) | $ | (106,220 | ) | |||
| Net Cash Provided By (Used In) Investment Activities | 0 | 0 | 0 | |||||||||
| Net Cash Provided By (Used In) Financing Activities | 0 | 747,443 | 747,443 | |||||||||
| Effect of foreign exchange rate on cash | (2,693 | ) | 599 | 3,292 | ||||||||
| Net Increase (Decrease) in Cash | $ | (167,694 | ) | $ | 476,821 | $ | 644,515 | |||||
Net cash used in operations
Net cash used in operating activities was $165,001 for the three-months ended March 31, 2024 versus net cash used in operating activities of $271,221 for the three-months ended March 31, 2025. The increase in cash flow used in operating activities was primarily due to higher annual mining concession patent payments by Baltum, and to a much lesser degree due to higher contractor services payments, higher cash-based compensation as additional employees were hired to the management suite, higher payments for legal and other professional service providers and higher outlays for travel. Each of these factors contributed to the $106,220 higher use in net cash for operations in the current period compared to the same period in the previous year.
Net cash used in investment activities
Net cash used in investment activities was $-0- for the three-months ended March 31, 2024 versus net cash used in investment activities of $-0- for the three-months ended March 31, 2025. There were no changes in cash flow used in investment activities between years.
Net cash provided by financing activities
Net cash provided by financing activities of $-0- in the three-months ended March 31, 2024, versus net cash provided by financing activities of $747,443 in the three-months ended March 31, 2025, which included an aggregate of $674,012 of proceeds for the sale of an aggregate of 1,497,805 shares of Series B convertible preferred and collection of $73,431 in subscriptions receivable.
| 21 |
Going Concern
Based upon our working capital of $831,994, compared to our $271,221 cash used in operating activities for the quarter, that annualized would equate to cash used in operating activities of $1,084,884, which exceeds our existing working capital, coupled with our accumulated deficit of ($33,717,110), as of March 31, 2025, we require additional equity and/or debt financing to continue our operations. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this filing. As a result of the foregoing factors, together with our recurring losses from operations and negative cash flows since inception, our independent registered public accounting firm included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited consolidated financial statements for the fiscal years ended December 31, 2024 and 2023 and as footnoted in our unaudited quarterly condensed consolidated financial statements for the quarters ended March 31, 2025 and 2024.
Availability of Additional Funds
Our capital requirements going forward will consist of financing our operations until we are able to reach a level of revenues and gross margins adequate to equal or exceed our ongoing operating expenses. Other than the possibility of borrowings from related and third parties, it should be noted that we do not have any credit agreement or source of liquidity immediately available to us.
Since inception our operations have primarily been funded through proceeds from existing shareholders in exchange for equity. There can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. We expect to have ongoing needs for working capital in order to (a) fund operations; plus (b) exploration and development. To that end, we may be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund its liabilities, or (d) seek protection from creditors.
In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company.
If we are able to raise additional capital, we do not know what the terms of any such capital raising would be. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.
Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate our continuation as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
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Public Company Expenses
We expect to incur direct, incremental selling, general and administrative expenses as a result of being a publicly traded company, including, but not limited to, where applicable, increased scope of our operations and costs associated with hiring new personnel, implementation of compensation programs that are competitive with our public company peer group, annual and quarterly reports to shareholders, tax return preparation, independent registered public accounting firm fees, investor relations activities, registrar and transfer agent fees, incremental director and officer liability insurance costs and independent director compensation. Some of these direct, incremental selling, general and administrative expenses are not yet applicable in our historical results of operations.
Climate Change
The potential physical impacts of climate change on our operations are highly uncertain and are specific to the geographic circumstances of areas in which we operate. These may include changes in rainfall and storm patterns and intensities, droughts and water shortages, changing sea levels and changing temperatures, and an increase in the number and severity of weather events and natural disasters. These changes may have a material adverse effect on our future operations, including cobalt extraction and production processes, as well as transportation of raw materials and delivery of products to customers. We may also face more stringent customer and regulatory requirements to accelerate water use reduction initiatives, more reliance on renewable energy sources and more water re-use and re-cycling. Climate change may also exacerbate socio-economic and political issues around the world and have other direct impacts to ecosystems, human health and quality of life, ranging from destruction of habitats to air, water and land quality to growing incidences of famines, pandemics and population shifts.
In addition, a number of governmental bodies have introduced or are contemplating legislative and regulatory change in response to the potential impacts of climate change. Such legislation or regulation, if enacted, potentially could include provisions for a “cap and trade” system of allowances and credits or a carbon tax, among other provisions. There is also a potential for climate change legislation and regulation to adversely impact the cost of purchased energy and electricity.
The growing concerns about climate change and related increasingly stringent regulations may provide us with new or expanded business opportunities. Our future product contributes to the efforts of our customers to revolutionize their product lines and markets. As a key part of the EV and battery supply chain, we would eventually be providing cobalt-containing solutions that help enable the growth of electric transportation and the shift away from fossil fuels. As demand for, and legislation mandating or incentivizing the use of, alternative fuel technologies that limit or eliminate greenhouse gas emissions increases, we will continue to monitor the market and offer solutions where we have appropriate technology.
Off-Balance Sheet Arrangements
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders’ equity or that are not reflected in our condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our estimates form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the financial statements. We believe that our critical accounting policies reflect the most significant estimates and assumptions used in the preparation of the consolidated financial statements.
We believe that the assumptions and estimates associated with our mining concession capitalization and stock-based compensation and the valuation of stock option grants have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Principal Accounting Policies and Related Financial Information
Refer to Note 3. “Summary of Significant Accounting Policies Basis of Presentation” in the accompanying unaudited condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
The Company’s management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company’s current financial position and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based upon such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of March 31, 2025, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
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Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rue 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed 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 of America.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) 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 of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 and procedures may deteriorate.
Management, under the supervision of the Company’s Chief Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2025 under the criteria set forth in the 2013 Internal Control – Integrated Framework.
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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that a material weakness exists due to a lack of segregation of duties and lack of sufficient overall statement of internal controls over financial reporting. Currently, management contracts with an outside certified public accountant to assist the Company with preparation of its filings required pursuant to the Exchange Act.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. There are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.
We may be subject to a fine imposed by the National Forestry Corporation of the Atacama Region (“CONAF”), on our subsidiary Baltum Mineria SpA (“Baltum”), which is currently being negotiated by Baltum’s counsel and CONAF, of up to $4,000, which may be reduced by as much as 50%. This is in connection with a self-report made by Baltum to CONAF on May 13, 2019, reporting the involuntary cutting of certain vegetation species in the La Cobaltera sector. Since Baltum made a self-report to CONAF, the applicable fine may be reduced by as much as 50%. We do not believe that this fine, even if imposed in the full amount, will have any material effect on the Company’s business, financial position or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company and its common stock are currently listed under the ticker COBA on the OTCQB Tier of OTC Markets.
In order for a security to remain eligible for quotation by a market maker on the OTC Markets, the Company is required to meet a ($0.01) bid price test, provide information based upon their reporting standard (SEC Reporting, Bank Reporting or International Reporting), and submit an annual OTC Markets Certification signed by our Chief Executive Officer or Chief Financial Officer.
We can provide no assurance that our common stock will continue to be traded on the OTC Markets or that a robust and liquid public market will materialize.
Holders
As of the date of this Quarterly Report on Form 10-Q, there were 70 holders of record of our common stock. Because certain shares of common stock may be held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these record holders.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is VStock Transfer, LLC. VStock’s telephone number is (212) 828-8436.
Dividend Policy
We have not paid any cash dividends on our common or preferred stock and do not anticipate paying any such cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business.
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Use of Proceeds from the Sale of Registered Securities
We did not receive any proceeds from the sale of registered securities during our fiscal year ended December 31, 2024.
Recent Sales of Unregistered Securities
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in an Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Not applicable, as all issuances to date have been included in previous filings.
The foregoing share issuances were made in transactions exempt from the registration requirements of the Securities Act, under Regulation S, Regulation D, and Section 4(a)(2) of the Securities Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock, preferred stock or other securities during the three-months ended March 31, 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended March
31, 2025, no director or officer
ITEM 6. EXHIBITS
| Exhibit Number | Description of Document | |
| 3.1 | Articles of Incorporation of Chilean Cobalt Corp. filed with Nevada Secretary of State on December 4, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 3.2 | Bylaws of Chilean Cobalt Corp. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 3.3 | Articles of Amendment filed with Nevada Secretary of State on May 2, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 8, 2023). | |
| 4.1 | Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock of Chilean Cobalt Corp. filed December 28, 2017 with the Secretary of State of Nevada (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 4.2 | Certificate of Designations of Preferences and Rights of Series B Convertible Preferred Stock, dated as of December 23, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 3, 2025). | |
| 4.3 |
Certificate of Amendment to Certificate of Designations of Preferences and Rights of Series B Convertible Preferred Stock, dated as of December 29, 2024 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on January 3, 2025).
|
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| 10.1+ | Chilean Cobalt Corp. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 10.2+ | Advisory Agreement, dated January 1, 2022 between BACO MINING SPA (“BACO”), and Ignacio Moreno, the manager of BACO and Chilean Cobalt Corp. (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 10.3+ | Employment Agreement, dated July 15, 2022 between Duncan Blount and Chilean Cobalt Corp. (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 10.4+ | Chilean Cobalt Corp. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 6, 2023). | |
| 10.5+ | Form of Stock Option (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on July 6, 2023). | |
| 10.6 | Form of Series B Convertible Preferred Stock Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company Current Report on Form 8-K filed with the Commission on January 22, 2025). | |
| 14.1 | Code of Ethics adopted on March 25, 2024 (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2024). | |
| 19.1 | Insider Trading Policy adopted on April 22, 2024 (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K filed with the Commission on April 2, 2025). | |
| 21.1 |
Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on November 14, 2022). | |
| 31.1* | Rule 13a-14(a) Certification of Principal Executive Officer. | |
| 31.2* | Rule 13a-14(a) Certification of Principal Financial Officer. | |
| 32.1** | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Principal Executive Officer and Principal Financial Officer. |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
| + | Management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHILEAN COBALT CORP. | ||
| Dated: May 15, 2025 | By: | /s/ Duncan T. Blount |
|
Duncan T. Blount, Chairperson of the Board of Directors and Chief Executive Officer (principal executive officer) | ||
| Dated: May 15, 2025 | By: | /s/ Jim Van Horn |
|
Jim Van Horn, Principal Financial Officer (principal financial officer and principal accounting officer) | ||
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