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Capital Stock
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
CAPITAL STOCK

NOTE 4 - CAPITAL STOCK

 

Common Stock

 

The Company is authorized to issue 100,000,000 shares of common stock. All shares have equal voting rights and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

 

2018 Activity

 

The Company sold 4,500,000 shares of common stock to the convertible debt holders for $625,000 in cash and several concessions as to the convertibility, due dates and default provisions on their outstanding debt. See Note 9. The Company also sold 2,125,000 shares of its common stock at $.40 per share for cash proceeds of $850,000.

 

The Company failed to repay the related parties’ convertible debt in full on the November 30, 2018 maturity date. See Note 9. Under the terms of the debt agreements, the Company issued 300,000 shares of common stock to the note holders. The shares were valued at $0.40 per share ($120,000) which was determined by management to be the fair value of a share of common stock based upon sales of common stock shares in 2018. The issuance was accounted for as financing expense.

 

2017 Activity

 

The Company failed to repay the related parties’ convertible debt in full on the November 30, 2017 maturity date. See Note 9. Under the terms of debt agreements, the Company issued a total of 300,000 shares of common stock to the note holders and these shares have been recorded as of November 30, 2017. This issuance was valued at an estimated $0.04 per share ($12,000) which was determined by management to be the fair value of a share of common stock based upon a third-party valuation performed in 2014. The issuance was accounted for as financing expense.

 

Common stock redeemable with gold proceeds

 

An equity financing was initiated in September 2012 for the sale of up to 1,150,000 shares of the Company’s common stock. This offering closed December 31, 2012 with proceeds of $130,000 raised through sales of 130,000 shares of the Company’s common stock. Under the terms of this offering, the shares could be redeemed for cash generated from the sale of gold for a period of 12 months after commencement of operations at the Kiewit project. Proceeds from 5% of the gold produced during the first year of production were to be allocated to fund this option. Each investor received the right to convert a minimum of one-half and up to all of his shares (on a pro rata basis) into the value of the number of ounces represented by the total investment, determined using a base price of $1,000 per ounce. Due to the redemption feature of these shares, management has concluded that the shares should be recorded as a liability and not as equity.

 

Once sales of concentrate began in 2014, all investors in this equity financing opted to convert their shares for cash from 5% of the gold sales. Based on the sales price of gold sold during the conversion period, $151,406 in gold proceeds was due to be paid to investors at December 31, 2016 which is included in accounts payable and accrued expenses at December 31, 2017 and 2018. Payments of these funds due to investors were not made as of December 31, 2018 and the shares were not cancelled. As a condition of the financing agreement settled on March 7, 2019, settlement was made to the four investors. Because of the extended time from investment to payment, each shareholder was paid an amount equal to $1,250 per share purchased and was also allowed to retain stock shares purchased as part of this financing.

 

Preferred Stock

 

The Company’s Articles of Incorporation authorized 10,000,000 shares of $0.001 par value Preferred Stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

 

At December 31, 2017, DMRJ Group beneficially owned 77% of the Company on a fully diluted basis. On March 8, 2018, the Company finalized an agreement with the trustees of DMRJ, who owned all of the Series A, A-2 and Series B outstanding preferred stock. This agreement discharged all of the debt owed by the Company to DMRJ and its related affiliates and returned all of the shares of preferred stock to the Company in exchange for $625,000. The Company then cancelled all of the preferred shares of stock. As a result, DMRJ relinquished all ownership in the Company. See Note 13.