10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________

Commission file number: 000-51808

ATHENA SILVER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	900775276 (IRS Employer Identification Number)
2010A Harbison Drive #312, Vacaville, CA (Address of principal executive offices)	95687 (Zip Code)

Registrant's telephone number, including area code:    (707)  291-6198

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 [ X ] No [_]

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). Yes [ X ] No [_]

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 definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer [_]	Accelerated filer [_]	Non-accelerated filer [ X ]	Smaller Reporting Company [ X ]
			Emerging Growth Company [ X ]

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A

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 [ X ]

On May 10, 2020, there were 36,532,320 shares of the registrant’s common stock, $.0001 par value, outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

ATHENA SILVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

	March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash	$	12,738		$	117
Total current assets		12,738			117
Land held for investment		185,290			185,290
Total assets	$	198,028		$	185,407
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	42,442		$	28,098
Accrued liabilities - related parties		81,500			76,500
Accrued lease option liability		–			10,000
Accrued interest		17,917			16,897
Accrued interest - related parties		583,445			555,872
Advances payable - related party		25,000			29,450
Deed amendment liability - short-term portion		10,000			10,000
Convertible note payable		51,270			51,270
Convertible credit facility - related party		2,244,870			2,202,120
Total current liabilities		3,056,444			2,980,207
Deed amendment liability		90,000			90,000
Total liabilities		3,146,444			3,070,207
Commitments and contingencies		–			–
Stockholders' deficit:
Preferred stock, $.0001 par value, 5,000,000 shares authorized, none outstanding		–			–
Common stock - $0.0001 par value; 100,000,000 shares authorized, 36,532,320 issued and outstanding		3,653			3,653
Additional paid-in capital		6,618,495			6,618,495
Accumulated deficit		(9,570,564	)		(9,506,948	)
Total stockholders' deficit		(2,948,416	)		(2,884,800	)
Total liabilities and stockholders' deficit	$	198,028		$	185,407

See accompanying notes to the unaudited consolidated financial statements.

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ATHENA SILVER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended March 31,
	2020			2019
Operating expenses:
Exploration costs	$	–		$	40,000
General and administrative expenses		34,375			43,549
Total operating expenses		34,375			83,549
Operating loss		(34,375	)		(83,549	)
Other income (expense):
Interest expense		(29,241	)		(26,584	)
Total other expense		(29,241	)		(26,584	)
Net loss	$	(63,616	)	$	(110,133	)
Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)
Basic and diluted weighted-average common shares outstanding		36,532,320			36,532,320

See accompanying notes to the unaudited consolidated financial statements.

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ATHENA SILVER CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2018		36,532,320	$	3,653	$	6,618,495	$	(9,255,432	)	$	(2,633,284	)
Cumulative adjustment upon adoption of ASU 2017-11		–		–		–		14,730			14,730
Net loss, three months ended March 31, 2019		–		–		–		(110,133	)		(110,133	)
Balance, March 31, 2019		36,532,320	$	3,653	$	6,618,495	$	(9,350,835	)	$	(2,728,687	)
Balance, December 31, 2019		36,532,320	$	3,653	$	6,618,495	$	(9,506,948	)	$	(2,884,800	)
Net loss, three months ended March 31, 2020		–		–		–		(63,616	)		(63,616	)
Balance, March 31, 2020		36,532,320	$	3,653	$	6,618,495	$	(9,570,564	)	$	(2,948,416	)

See accompanying notes to the unaudited consolidated financial statements.

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ATHENA SILVER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net loss	$	(63,616	)	$	(110,133	)
Changes in operating assets and liabilities:
Prepaid expenses		–			(9,000	)
Accounts payable		14,344			21,398
Accrued interest - related parties		27,573			25,635
Accrued liabilities and other liabilities		(3,980	)		15,949
Net cash used in operating activities		(25,679	)		(56,151	)
Cash flows from financing activities:
Proceeds from advances from related parties		125			1,000
Payments on advances from related parties		(4,575	)		(1,000	)
Borrowings from credit facility and notes payable - related parties		42,750			57,500
Net cash provided by financing activities		38,300			57,500
Net increase (decrease) in cash		12,621			1,349
Cash at beginning of period		117			3,991
Cash at end of period	$	12,738		$	5,340
Supplemental disclosure of cash flow information
Cash paid for interest	$	648		$	–
Cash paid for income taxes	$	–		$	–
Supplemental disclosure of non-cash transaction
Cumulative adjustment upon adoption of ASU 2017-11	$	–		$	14,730

See accompanying notes to the unaudited consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – Organization, Basis of Presentation, Liquidity and Going Concern

Nature of Operations

Athena Silver Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003, and began our mining operations in 2010.

In December 2009, we formed and organized a new wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates our mining interests. Since its formation, we have acquired various properties and rights and are currently determining whether those rights and properties could sustain profitable mining operations. We have not presently determined whether our mineral properties contain mineral reserves that are economically recoverable.

Our primary focus going forward will be to continue evaluating of our properties, and possible acquisitions of additional mineral rights and exploration, all of which will require additional capital. Further information regarding our land held for investment and mineral rights are discussed below in Note 2 – Land Held for Investment and Unpatented Claims, as well as in our Annual Report on Form 10-K for the year ended December 31, 2019.

Basis of Presentation

We prepared these interim consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

Reclassifications

Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

Recent Accounting Pronouncements

On July 13, 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I applies to financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II replaces the indefinite deferral for certain mandatorily redeemable non-controlling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The pronouncement is effective for annual and interim periods beginning after December 15, 2018. The Company adopted this standard on a modified retrospective basis on January 1, 2019. 

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Liquidity and Going Concern

Our interim consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

At March 31, 2020, we had not yet achieved profitable operations and we have accumulated losses of $9,570,564 since our inception. We expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. Effective September 30, 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020.

We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock. Currently, there are no arrangements in place for additional equity funding or new loans.

COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

Note 2 – Land Held for Investment and Unpatented Claims

On August 8, 2016, we purchased 33+/- acres of land (“Section 16 Property”) for $28,582, net of $18 of title fees, located in San Bernardino County, California. The property is located in the Calico Mining District in the SE ¼ of the SE ¼ of Section 16; T 10 North, R 1 East. The State of California patented this land to a private party in 1935 and reserved in favor of the State one-sixteenth of all coal, oil, gas and other mineral deposits contained in the land.

In 2014, we purchased 160 acres of land (“Castle Rock”), located in the eastern Calico Mining District, San Bernardino County, California. The parcel is the SE quarter of Section 25, Township 10 North, Range 1 East and is mostly surrounded by public lands. It was purchased for $21,023 in a property tax auction conducted on behalf of the County.

In 2012, we purchased 661 acres of land (“Section 13 Property”) in fee simple for $135,685 cash, located in San Bernardino County, California, that was sold in a property tax auction conducted on behalf of the County. The parcel is all of Section 13 located in Township 7 North, Range 4 East, San Bernardino Base & Meridian. The Section 13 property is near the Lava Beds Mining District and has evidence of historic mining. It is adjacent to both the Silver Cliffs and Silver Bell historic mines.

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Note 3 – Langtry Property Lease and Deed Amendment Liability

The Company was party to a lease with an option to purchase for certain property known as the Langtry property. The lease was terminated on April 28, 2020. Further information regarding this transaction is located in Note 11, Subsequent Events, and further information as to the terms and conditions of the Langtry lease can be found in the footnotes to the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

The Langtry property is subject to a net smelter royalty in favor of Mobil Exploration and Producing North America Inc. from the sale of concentrates, precipitates or metals produced from ores mined from the royalty acreage. The agreement dated April 30, 1987 granted a base net smelter royalty of 3% plus an additional incremental 2% royalty on net smelter proceeds from silver sales above $10.00 per troy ounce plus an additional incremental 2% royalty on net smelter proceeds from silver sales above $15.00 per troy ounce.

On May 28, 2015 we executed an amendment to the deed underlying the Langtry Property to cap at 2% the net smelter royalty that would be due to Mobil Exploration and Producing North America Inc. (“Mobil”) from any future sales of concentrates, precipitates or metals produced from ores mined from the royalty acreage. In consideration for the amendment, we agreed to pay an amendment fee of $150,000, with $10,000 due at the time of the agreement and the balance payable $10,000 each June 1^st until paid in full. We have paid a total of $50,000 so far on this agreement, and the balance of $100,000 was outstanding as of March 31, 2020.

As of the date of the filing of this Form 10-Q, there has been no production or sale of any concentrates, precipitates or metals from the Langtry property mentioned in the above two paragraphs.

Note 4 – Adoption of ASU 2017-11

The Company changed its method of accounting for its convertible note through the adoption of ASU 2017-11 on January 1, 2019 on a modified retrospective basis. Accordingly, the outstanding derivative liability of $14,730 associated with a convertible note payable was eliminated as an adjustment to the beginning accumulated deficit. The following table provides a reconciliation of the derivative liability and accumulated deficit upon adoption on January 1, 2019:

	Derivative Liability			Accumulated Deficit
Balance January 1, 2019 (before adoption of ASU 2017-11)	$	14,730		$	(9,255,432	)
Reclassified derivative liability and cumulative effect of adoption		(14,730	)		14,730
Balance January 1, 2019 (after adoption of ASU 2017-11)	$	–		$	(9,240,702	)

Note 5 – Fair Value of Financial Instruments

Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.

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Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3 – Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Carrying Value at December 31,		Fair Value Measurement at December 31, 2018
	2018		Level 1		Level 2		Level 3
Derivative liability – Convertible note payable	$	14,730	$	–	$	–	$	14,730

The carrying values of cash and cash equivalents, accounts payable, accrued liabilities and other short-term debt, approximate their fair value because of the short-term nature of these financial instruments.

Note 6 – Convertible Note Payable

Effective April 1, 2015, the Company executed a convertible promissory note (the “Note”) in the principal amount of $51,270 in favor of Clifford Neuman, the Company’s legal counsel, representing accrued and unpaid fees for past legal services. The Note is unsecured and accrues interest at the rate of 6% per annum, compounded quarterly, and is due on demand. The principal and accrued interest due under the Note may be converted, at the option of the holder, into shares of the Company’s common stock at a conversion price of $0.0735 per share, which represented the market price of the Company’s common stock on the date the Note was made. The conversion price is subject to adjustment in the event the Company sells shares of common stock or common stock equivalent at a price below the conversion price.

The Note contains certain anti-dilution provisions that would reduce the conversion price should the Company issue common stock equivalents at a price less than the Note conversion price. Accordingly, prior to the prospective adoption of ASU 2017-11 on January 1, 2019, the conversion features of the Note were considered a discount to the Note. However, since the Note is payable upon demand by the note holder, the value of the discount is considered interest expense at the time of its inception. The Note was evaluated quarterly, and upon any quarterly valuations in which the value of the conversion option changed we recognized a gain or loss due to a decrease or increase in the fair value of the derivative liability, respectively.

As discussed in Note 4, the Company adopted ASU 2017-11 on January 1, 2019, which resulted in the elimination of the derivative liability of $14,730 at December 31, 2018 as a cumulative adjustment to accumulated deficit.

Accrued interest totaled $17,917 and $16,897 at March 31, 2020 and December 31, 2019, respectively, and is included in Accrued interest on the accompanying consolidated balance sheets.

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Note 7 – Convertible Credit Facility – Related Party

Effective July 18, 2012, we entered into a Credit Agreement with Mr. Gibbs, a significant shareholder, providing us with an unsecured credit facility in the maximum amount of $1,000,000. The aggregate principal amount borrowed, together with interest at the rate of 5% per annum, is convertible, at the option of the lender, into common shares at a conversion price of $0.50 per share. Since its inception we have amended the credit agreement several times to either increase the borrowing limit and/or extend the maturity date. Effective September 30, 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020. All other provisions remained unchanged. The modification was not considered substantial.

The Company evaluated the convertible line of credit for derivative and beneficial feature conversion and concluded that there is no beneficial conversion since the conversion price at inception was greater than the market value of shares that would be issued upon conversion. Likewise, derivative accounting did not apply to the embedded conversion option.

The credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, payment of taxes and other obligations, absence of defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events).

Total principal amounts owed under the credit facility notes payable were $2,244,870 and $2,202,120 at March 31, 2020 and December 31, 2019, respectively. Borrowings under our convertible note payable to Mr. Gibbs were $42,750 and $57,500 for the three months ended March 31, 2020 and 2019, respectively, and were generally used to pay certain mining obligations as well as other operating expenses. No principal or interest payments have made to Mr. Gibbs since the inception of the convertible credit facility. As of March 31, 2020, there remained $155,130 of credit available for future borrowings.

Total accrued interest on the notes payable to Mr. Gibbs was $583,445 and $555,872 at March 31, 2020 and December 31, 2019, respectively, and are included in Accrued interest - related parties on the accompanying consolidated balance sheets.

Interest Expense – Related Parties

Total related party interest expense was $27,573 and $25,635 for the three months ended March 31, 2020 and 2019, respectively.

Note 8– Commitments and Contingencies

We are subject to various commitments and contingencies as discussed in Note 3 – Langtry Property Lease and Deed Amendment Liability.

Note 9 – Share-based Compensation

2004 Equity Incentive Plan

All options previously issued under the 2004 Equity Incentive Plan as well as options issued outside the Plan expired unexercised in April 2018. No share-based compensation expense was recorded for either the three months ended March 31, 2020 or 2019.

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Note 10 – Related Party Transactions

Conflicts of Interests

Magellan Gold Corporation (“Magellan”) is a company under common control. Mr. Power is a significant shareholder and director of both Athena and Magellan. Mr. Gibbs is a significant shareholder and creditor (see Note 7 – Convertible Credit Facility – Related Parties), in both Athena and Magellan. Athena and Magellan are both involved in the business of acquisition and exploration of mineral resources.

Silver Saddle Resources, LLC (“Silver Saddle”) is also a company under common control. Mr. Power and Mr. Gibbs are the owners and managing members of Silver Saddle. Athena and Silver Saddle are both involved in the business of acquisition and exploration of mineral resources.

There exists no arrangement or understanding with respect to the resolution of future conflicts of interest. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena, Magellan and Silver Saddle been autonomous.

Management Fees – Related Parties

The Company is subject to a month-to-month management agreement with Mr. Power requiring a monthly payment of $2,500 as consideration for the day-to-day management of Athena. For each of the three months ended March 31, 2020 and 2019, a total of $7,500 was recorded as management fees and are included in general and administrative expenses in the accompanying consolidated statements of operations. At March 31, 2020 and December 31, 2019, $81,500 and $76,500, respectively, of management fees due to Mr. Power had not been paid and are included in accrued liabilities – related parties on the accompanying consolidated balance sheets.

Accrued Interest - Related Parties

At March 31, 2020 and December 31, 2019, Accrued interest - related parties includes accrued interest payable to Mr. Gibbs in the amounts of $583,445 and $555,872, respectively, representing unpaid interest on the convertible credit facility.

Advances Payable - Related Parties

Mr. Power has on occasion advanced the Company funds generally utilized for day-to-day operating requirements. These advances are non-interest bearing and are generally repaid as cash becomes available.

During the three months ended March 31, 2020, Mr. Power made short-term advances to the Company totaling $125 and was repaid $4,575 during the period. At March 31, 2020 and December 31, 2019, a total of $25,000 and $29,450 of advances were outstanding and included in Advances payable – related party on the accompanying consolidated balance sheets.

The Company also utilizes credit cards owned by Mr. Power to pay various obligations when an online payment is required, the availability of cash is limited, or the timing of the payments is considered critical. As of March 31, 2020, and December 31, 2019, $6,655 and $-0-, respectively, were due on these credit cards and are included in Accounts payable on the accompanying consolidated balance sheets.

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Note 11 – Subsequent Events

Termination of lease and purchase option: On April 28, 2020, Athena Silver Corporation entered into Agreement to Terminate Lease with Option to Buy dated March 10, 2016 with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007, including any and all amendments thereto dated April 28, 2020 with respect to the Langtry Mine in California. As a result of this termination agreement, all scheduled lease option payments due in 2020 are considered terminated and void upon signing of the Agreement.

Net Smelter Return Agreement: On April 28, 2020, Athena Silver Corporation entered into Agreement to Grant a 1% Net Smelter Return (NSR) on all Silver Produced from Langtry Mine (the “NSR Agreement”) with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007 whereby Strachan has agreed to grant to Athena Minerals, Inc. a 1% net smelter return on the Langtry Mine in California, conditioned upon the completion of the Company’s payment obligation of $150,000 to Mobil Exploration in exchange for Mobil agreeing to reduce its net smelter royalty to 2% pursuant to a 2015 agreement between the Company and Mobil. Athena is making annual payments of $10,000 to Mobil and has a remaining balance outstanding of $100,000. Athena’s 1% NSR on Langtry will not vest until the payment obligation to Mobil has been completed.

Adjustment of Convertible note payable conversion price: On April 24, 2020, the Company agreed to reduce the conversion price of the $51,270 convertible note payable in favor of Clifford Neuman, the Company’s legal counsel from $0.0735 per share to $0.021 per share which was considered the market price on the date of the price reduction. All other terms of the convertible note remain unchanged.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We use the terms “Athena,” “we,” “our,” and “us” to refer to Athena Silver Corporation and its consolidated subsidiary.

The following discussion and analysis provides information that management believes is relevant for an assessment and understanding of our results of operations and financial condition. This information should be read in conjunction with our audited consolidated financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and our interim unaudited consolidated financial statements and notes thereto included with this report in Part I. Item 1.

Forward-Looking Statements

Some of the information presented in this Form 10-Q constitutes “forward-looking statements”. These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Business Overview

We were incorporated on December 23, 2003, in Delaware and our principal business is the acquisition and exploration of mineral resources.

After the Langtry lease termination, our holdings consist of 38 unpatented mining claims and 3 investment properties totaling approximately 850 acres acquired in cash sales. All of the unpatented mining claims and investment properties are located in San Bernardino County, California.

We intend to continue to maintain our 38 unpatented mining claims adjacent to the Langtry property. In addition, we have reached an agreement to potentially acquire a 1% NSR in the Langtry patented claims as a way to maintain a financial interest in the upside of the project. Further discussion of the Langtry lease termination can be found below in Subsequent Events. A complete discussion of our mineral rights and properties can be found in the footnotes to the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

We continue to evaluate strategies to enhance the value of our mining claims and properties subject to restrictions based on our limited capital available under our line of credit. Further mineral exploration and development efforts and ongoing general and administrative expenses will require additional capital.

Reclassifications: Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

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COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

Results of Operations for the Three Months Ended March 31, 2020 and 2019

A summary of our results from operations is as follows:

	Three Months Ended March 31,
	2020			2019
Operating expenses:
Exploration costs	$	–		$	40,000
General and administrative expenses		34,375			43,549
Total operating expenses		34,375			83,549
Operating loss		(34,375	)		(83,549	)
Total other income (expenses), net		(29,241	)		(26,584	)
Net loss	$	(63,616	)	$	(110,133	)

During the three months ended March 31, 2020, our net loss was $63,616 as compared to a net loss of $110,133 during the same period in 2019. The $46,517 decrease in our loss was mainly attributable to annual lease option costs which were paid in full in March 2019. Upon the Langtry lease termination any amounts due in 2020 under the lease option to purchase were terminated.

Operating expenses:

Our total operating expenses decreased $49,174, from $83,549 to $34,375 for the three months ended March 31, 2019 and 2020, respectively.

During the three months ended March 31, 2019, we incurred $40,000 of exploration costs representing the total annual lease option payment for the Langtry project. Because of the Langtry lease termination, no costs were incurred during the three months ended March 31, 2020.

Our general and administrative expenses decreased by $9,174, from $43,549 to $34,375 for the three months ended March 31, 2019 and 2020, respectively, and is primarily due to decreases in certain professional services fees.

Other income and expense:

Our total other expenses, net was $29,241 during the three months ended March 31, 2020, as compared to total other income of $26,584 during the three months ended March 31, 2019.

14

For the three months ended March 31, 2020 other expenses consisted entirely of interest expense which included $27,573 in interest expense associated with our related party convertible credit facility, $1,020 of interest expense associated with a convertible note payable originating in April 2015, from the conversion of certain amounts due our primary legal counsel, as well as $648 of interest associated with the resolution of a 2019 franchise tax obligation which was paid during the quarter.

For the three months ended March 31, 2019 other expenses consisted of interest expense totaling $26,584 which included $25,635 in interest expense associated with our related party convertible credit facility, and $949 of interest expense associated with a convertible note payable originating in April 2015, from the conversion of certain amounts due our primary legal counsel.

Liquidity and Capital Resources

Going Concern

Our consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

At March 31, 2020, we had not yet achieved profitable operations and we have accumulated losses of $9,570,564 since our inception. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. In September 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020.

We have financed our capital requirements primarily through borrowings from related parties. We expect to meet our future financing needs and working capital and capital expenditure requirements through additional borrowings and offerings of debt or equity securities, although there can be no assurance that our future financing efforts will be successful. The terms of future financing could be highly dilutive to existing shareholders. Currently, there are no arrangements in place for additional equity funding or new loans.

Liquidity

As of March 31, 2020, we had $12,738 of cash and negative working capital of $3,043,706. This compares to cash on hand of $117 and negative working capital of $2,980,090 at December 31, 2019.

We have a Credit Agreement with a significant shareholder, as amended, which provides us with an unsecured credit facility in the maximum borrowing amount of $2,400,000. The aggregate principal amount borrowed, together with interest at the rate of 5% per annum, is due in full on June 30, 2020, and is convertible, at the option of the lender, into common shares at a conversion price of $0.50 per share.

15

The convertible credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, payment of taxes and other obligations, absence of defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events). As of March 31, 2020, total borrowings under the Credit Agreement were $2,244,870, leaving $155,130 of credit available for future borrowings.

Cash Flows

A summary of our cash provided by and used in operating, investing and financing activities is as follows:

	Three Months Ended March 31,
	2020			2019
Net cash used in operating activities	$	(25,679	)	$	(56,151	)
Net cash provided by financing activities		38,300			57,500
Net increase (decrease) in cash		12,621			1,349
Cash, beginning of period		117			3,991
Cash, end of period	$	12,738		$	5,340

Net cash used in operating activities:

Net cash used in operating activities was $25,679 and $56,161 during the three months ended March 31, 2020 and 2019, respectively.

Cash used in operating activities during the three months ended March 31, 2020 is primarily attributed to our $63,616 net loss. We realized increases in accounts payable of $14,344, accrued interest on our notes payable of $27,573, and a decrease in other accrued liabilities of $3,980.

Cash used in operating activities during the three months ended March 31, 2019 is primarily attributed to our $110,133 net loss. During the quarter, we prepaid certain amounts related to investor relations totaling $9,000. We also realized increases in accounts payable of $21,398, accrued interest on our notes payable of $25,635, and other accrued liabilities of $15,949.

Net cash provided by financing activities:

Cash provided by financing activities during the three months ended March 31, 2020 was $38,300 compared to cash provided by financing activities of $57,500 during the same period in 2019.

For the three months ended March 31, 2020 borrowings under our convertible credit facility were $42,750. Also, during the period the Company’s President had advanced a total of $125, and was repaid a total of $4,575 associated with advances outstanding at December 31, 2019.

For the three months ended March 31, 2019 borrowings under our convertible credit facility were $57,500. Also, during the three months ended March 31, 2019 the Company’s President had advanced a total of $1,000, all of which was repaid during the period.

16

Subsequent Events:

Termination of lease and purchase option: On April 28, 2020, Athena Silver Corporation entered into Agreement to Terminate Lease with Option to Buy dated March 10, 2016 with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007, including any and all amendments thereto dated April 28, 2020 with respect to the Langtry Mine in California. As a result of this termination agreement, all scheduled lease option payments due in 2020 are considered terminated and void upon signing of the Agreement.

Net Smelter Return Agreement: On April 28, 2020, Athena Silver Corporation entered into Agreement to Grant a 1% Net Smelter Return (NSR) on all Silver Produced from Langtry Mine (the “NSR Agreement”) with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007 whereby Strachan has agreed to grant to Athena Minerals, Inc. a 1% net smelter return on the Langtry Mine in California, conditioned upon the completion of the Company’s payment obligation of $150,000 to Mobil Exploration in exchange for Mobil agreeing to reduce its net smelter royalty to 2% pursuant to a 2015 agreement between the Company and Mobil. Athena is making annual payments of $10,000 to Mobil and has a remaining balance outstanding of $100,000. Athena’s 1% NSR on Langtry will not vest until the payment obligation to Mobil has been completed.

Adjustment of conversion price: On April 24, 2020, the Company agreed to reduce the conversion price of the $51,270 convertible note payable in favor of Clifford Neuman, the Company’s legal counsel from $0.0735 per share to $0.021 per share which was considered the market price on the date of the price reduction. All other terms of the convertible note remain unchanged.

Off Balance Sheet Arrangements:

We do not have and never had any off-balance sheet arrangements.

Recent Accounting Pronouncements

On July 13, 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I applies to financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II replaces the indefinite deferral for certain mandatorily redeemable non-controlling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The pronouncement is effective for annual and interim periods beginning after December 15, 2018. The Company has adopted this standard on a modified retrospective basis on January 1, 2019. 

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements. The accounting positions described below are significantly affected by critical accounting estimates.

We believe that the significant estimates, assumptions and judgments used when accounting for items and matters such as capitalized mineral rights, asset valuations, recoverability of assets, asset impairments, taxes, and other provisions were reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.

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Mineral Rights

We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, our direct costs to acquire or lease mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease mineral properties.

If we establish proven and probable reserves for a mineral property and establish that the mineral property can be economically developed, mineral rights will be amortized over the estimated useful life of the property following the commencement of commercial production or expensed if it is determined that the mineral property has no future economic value or if the property is sold or abandoned. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Proven and probable reserves have not been established for any mineral rights as of March 31, 2020. Impairment losses were recognized during each of the years ended December 31, 2018 and 2017, and at March 31, 2020 all previously capitalized mineral rights have been fully impaired.

Impairment of Long-lived Assets

We continually monitor events and changes in circumstances that could indicate that our carrying amounts of long-lived assets, including mineral rights, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

Exploration Costs

Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our consolidated balance sheets.

Share-based Payments

We measure and recognize compensation expense or professional services expense for all share-based payment awards made to employees, directors and non-employee consultants based on estimated fair values. We estimate the fair value of stock options on the date of grant using the Black-Scholes-Merton option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected life of the options.

We expense share-based compensation, adjusted for estimated forfeitures, using the straight-line method over the vesting term of the award for our employees and directors and over the expected service term for our non-employee consultants. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. Our excess tax benefits, if any, cannot be credited to stockholders’ equity until the deduction reduces cash taxes payable; accordingly, we realized no excess tax benefits during any of the periods presented in the accompanying consolidated financial statements.

18

Income Taxes

We account for income taxes through the use of the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and for income tax carry-forwards. A valuation allowance is recorded to the extent that we cannot conclude that realization of deferred tax assets is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

We follow a two-step approach to recognizing and measuring tax benefits associated with uncertain tax positions taken, or expected to be taken in a tax return. The first step is to determine if, based on the technical merits, it is more likely than not that the tax position will be sustained upon examination by a taxing authority, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement with a taxing authority. We recognize interest and penalties, if any, related to uncertain tax positions in our provision for income taxes in the consolidated statements of operations. To date, we have not recognized any tax benefits from uncertain tax positions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures:

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of such date as a result of a material weakness in our internal control over financial reporting due to lack of segregation of duties, a limited corporate governance structure and insufficient formal management review processes over certain financial and accounting reports as discussed in Item 9A of our Form 10-K for the fiscal year ended December 31, 2019

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in many exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Part I. Item 1A. of our Annual Report on  Form 10-K for the year ended December 31, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

All sales of unregistered securities were reported on Form 8-K during the period.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

EXHIBIT NUMBER	DESCRIPTION
31	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema**
101.CAL	XBRL Taxonomy Extension Calculation**
101.DEF	XBRL Taxonomy Extension Definition **
101.LAB	XBRL Taxonomy Extension Labels**
101.PRE	XBRL Taxonomy Extension Presentation**
____________________
*	Filed herewith
**	Furnished, not filed.

20

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ATHENA SILVER CORPORATION
Dated: May 18, 2020	By:	/s/ John C. Power
		John C. Power
		Chief Executive Officer, President, Chief Financial Officer, Secretary & Director (Principal Executive Officer) (Principal Accounting Officer)

21

EX-31

Exhibit 31

CERTIFICATION

I, John C. Power, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Athena Silver Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 18, 2020	/s/ John C. Power
	John C. Power, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Athena Silver Corporation (the "Company") on Form 10-Q for the period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John C. Power, Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ John C. Power                                   

John C. Power, Chief Executive Officer

(Principal Executive Officer), Chief Financial

Officer (Principal Accounting Officer)

May 18, 2020

XML

10. Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Accrued liabilities - related parties	$ 81,500		$ 76,500
Accounts payable	42,442		28,098
Proceeds from related party	125	$ 1,000
Repayment to related party	4,575	1,000
Accrued interest - related parties	583,445		555,872
Advances payable - related party	25,000		29,450
Power [Member]
Management fees	7,500	7,500
Accrued liabilities - related parties	81,500		76,500
Accounts payable	6,655		0
Proceeds from related party		125
Repayment to related party		$ 4,575
Gibbs [Member]
Accrued interest - related parties	583,445		555,872
Advances payable - related party	$ 25,000		$ 29,450

XML

5. Fair Value of Financial Instruments (Details - Fair Value) - Fair Value Measurements Recurring [Member] - Convertible Notes Payable [Member]	Dec. 31, 2018 USD ($)
Derivative liabilty - Convertible note payable	$ 14,730
Fair Value Inputs Level 1 [Member]
Derivative liabilty - Convertible note payable	0
Fair Value Inputs Level 2 [Member]
Derivative liabilty - Convertible note payable	0
Fair Value Inputs Level 3 [Member]
Derivative liabilty - Convertible note payable	$ 14,730

XML

1. Organization, Liquidity and Going Concern (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Accumulated deficit	$ (9,570,564)	$ (9,506,948)
Mr. Gibbs [Member]
Line of credit maximum borrowing capacity	$ 2,400,000
Credit line expiration date	Jun. 30, 2020

XML

11. Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Note 11 – Subsequent Events

Termination of lease and purchase option: On April 28, 2020, Athena Silver Corporation entered into Agreement to Terminate Lease with Option to Buy dated March 10, 2016 with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007, including any and all amendments thereto dated April 28, 2020 with respect to the Langtry Mine in California. As a result of this termination agreement, all scheduled lease option payments due in 2020 are considered terminated and void upon signing of the Agreement.

Net Smelter Return Agreement: On April 28, 2020, Athena Silver Corporation entered into Agreement to Grant a 1% Net Smelter Return (NSR) on all Silver Produced from Langtry Mine (the “NSR Agreement”) with Bruce and Elizabeth Strachan, Trustees of the Bruce and Elizabeth Strachan Revocable Living Trust dated July 25, 2007 whereby Strachan has agreed to grant to Athena Minerals, Inc. a 1% net smelter return on the Langtry Mine in California, conditioned upon the completion of the Company’s payment obligation of $150,000 to Mobil Exploration in exchange for Mobil agreeing to reduce its net smelter royalty to 2% pursuant to a 2015 agreement between the Company and Mobil. Athena is making annual payments of $10,000 to Mobil and has a remaining balance outstanding of $100,000. Athena’s 1% NSR on Langtry will not vest until the payment obligation to Mobil has been completed.

Adjustment of Convertible note payable conversion price: On April 24, 2020, the Company agreed to reduce the conversion price of the $51,270 convertible note payable in favor of Clifford Neuman, the Company’s legal counsel from $0.0735 per share to $0.021 per share which was considered the market price on the date of the price reduction. All other terms of the convertible note remain unchanged.

XML

7. Convertible Credit Facility - Related Party

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Convertible Credit Facility - Related Party

Note 7 – Convertible Credit Facility – Related Party

Effective July 18, 2012, we entered into a Credit Agreement with Mr. Gibbs, a significant shareholder, providing us with an unsecured credit facility in the maximum amount of $1,000,000. The aggregate principal amount borrowed, together with interest at the rate of 5% per annum, is convertible, at the option of the lender, into common shares at a conversion price of $0.50 per share. Since its inception we have amended the credit agreement several times to either increase the borrowing limit and/or extend the maturity date. Effective September 30, 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020. All other provisions remained unchanged. The modification was not considered substantial.

The Company evaluated the convertible line of credit for derivative and beneficial feature conversion and concluded that there is no beneficial conversion since the conversion price at inception was greater than the market value of shares that would be issued upon conversion. Likewise, derivative accounting did not apply to the embedded conversion option.

The credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, payment of taxes and other obligations, absence of defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events).

Total principal amounts owed under the credit facility notes payable were $2,244,870 and $2,202,120 at March 31, 2020 and December 31, 2019, respectively. Borrowings under our convertible note payable to Mr. Gibbs were $42,750 and $57,500 for the three months ended March 31, 2020 and 2019, respectively, and were generally used to pay certain mining obligations as well as other operating expenses. No principal or interest payments have made to Mr. Gibbs since the inception of the convertible credit facility. As of March 31, 2020, there remained $155,130 of credit available for future borrowings.

Total accrued interest on the notes payable to Mr. Gibbs was $583,445 and $555,872 at March 31, 2020 and December 31, 2019, respectively, and are included in Accrued interest - related parties on the accompanying consolidated balance sheets.

Interest Expense – Related Parties

Total related party interest expense was $27,573 and $25,635 for the three months ended March 31, 2020 and 2019, respectively.

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current Assets
Cash	$ 12,738	$ 117
Total current assets	12,738	117
Land held for investment	185,290	185,290
Total assets	198,028	185,407
Current liabilities:
Accounts payable	42,442	28,098
Accrued liabilities - related parties	81,500	76,500
Accrued lease option liability	0	10,000
Accrued interest	17,917	16,897
Accrued interest - related parties	583,445	555,872
Advances payable - related party	25,000	29,450
Deed amendment liability - short-term portion	10,000	10,000
Convertible note payable	51,270	51,270
Convertible credit facility - related party	2,244,870	2,202,120
Total current liabilities	3,056,444	2,980,207
Deed amendment liability	90,000	90,000
Total liabilities	3,146,444	3,070,207
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.0001 par value, 5,000,000 shares authorized, none outstanding	0	0
Common stock - $0.0001 par value; 100,000,000 shares authorized, 36,532,320 issued and outstanding	3,653	3,653
Additional paid-in capital	6,618,495	6,618,495
Accumulated deficit	(9,570,564)	(9,506,948)
Total stockholders' deficit	(2,948,416)	(2,884,800)
Total liabilities and stockholders' deficit	$ 198,028	$ 185,407

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (63,616)	$ (110,133)
Changes in operating assets and liabilities:
Prepaid expenses	0	(9,000)
Accounts payable	14,344	21,398
Accrued interest - related parties	27,573	25,635
Accrued liabilities and other liabilities	(3,980)	15,949
Net cash used in operating activities	(25,679)	(56,151)
Cash flows from investing activities:
Net cash used in investing activities	0	0
Cash flows from financing activities:
Proceeds from advances from related parties	125	1,000
Payments on advances from related parties	(4,575)	(1,000)
Borrowings from credit facility and notes payable - related parties	42,750	57,500
Net cash provided by financing activities	38,300	57,500
Net increase (decrease) in cash	12,621	1,349
Cash at beginning of period	117	3,991
Cash at end of period	12,738	5,340
Supplemental disclosure of cash flow information
Cash paid for interest	648	0
Cash paid for income taxes	0	0
Supplemental disclosure of non-cash financing activities
Cumulative adjustment upon adoption of ASU 2017-11	$ 0	$ 14,730

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Impairment of mineral rights and properties	$ 1,948,999	$ 1,948,999
Preferred stock, par value	$ 0.0001	$ .0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ .0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	36,532,320	36,532,320
Common stock, shares outstanding	36,532,320	36,532,320

XML

1. Organization, Liquidity and Going Concern

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Liquidity and Going Concern

Note 1 – Organization, Basis of Presentation, Liquidity and Going Concern

Nature of Operations

Athena Silver Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003, and began our mining operations in 2010.

In December 2009, we formed and organized a new wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates our mining interests. Since its formation, we have acquired various properties and rights and are currently determining whether those rights and properties could sustain profitable mining operations. We have not presently determined whether our mineral properties contain mineral reserves that are economically recoverable.

Our primary focus going forward will be to continue evaluating of our properties, and possible acquisitions of additional mineral rights and exploration, all of which will require additional capital. Further information regarding our land held for investment and mineral rights are discussed below in Note 2 – Land Held for Investment and Unpatented Claims, as well as in our Annual Report on Form 10-K for the year ended December 31, 2019.

Basis of Presentation

We prepared these interim consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

Reclassifications

Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

Recent Accounting Pronouncements

On July 13, 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I applies to financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II replaces the indefinite deferral for certain mandatorily redeemable non-controlling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The pronouncement is effective for annual and interim periods beginning after December 15, 2018. The Company adopted this standard on a modified retrospective basis on January 1, 2019. 

Liquidity and Going Concern

Our interim consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

At March 31, 2020, we had not yet achieved profitable operations and we have accumulated losses of $9,570,564 since our inception. We expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. Effective September 30, 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020.

We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock. Currently, there are no arrangements in place for additional equity funding or new loans.

COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

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10. Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Note 10 – Related Party Transactions

Conflicts of Interests

Magellan Gold Corporation (“Magellan”) is a company under common control. Mr. Power is a significant shareholder and director of both Athena and Magellan. Mr. Gibbs is a significant shareholder and creditor (see Note 7 – Convertible Credit Facility – Related Parties), in both Athena and Magellan. Athena and Magellan are both involved in the business of acquisition and exploration of mineral resources.

Silver Saddle Resources, LLC (“Silver Saddle”) is also a company under common control. Mr. Power and Mr. Gibbs are the owners and managing members of Silver Saddle. Athena and Silver Saddle are both involved in the business of acquisition and exploration of mineral resources.

There exists no arrangement or understanding with respect to the resolution of future conflicts of interest. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena, Magellan and Silver Saddle been autonomous.

Management Fees – Related Parties

The Company is subject to a month-to-month management agreement with Mr. Power requiring a monthly payment of $2,500 as consideration for the day-to-day management of Athena. For each of the three months ended March 31, 2020 and 2019, a total of $7,500 was recorded as management fees and are included in general and administrative expenses in the accompanying consolidated statements of operations. At March 31, 2020 and December 31, 2019, $81,500 and $76,500, respectively, of management fees due to Mr. Power had not been paid and are included in accrued liabilities – related parties on the accompanying consolidated balance sheets.

Accrued Interest - Related Parties

At March 31, 2020 and December 31, 2019, Accrued interest - related parties includes accrued interest payable to Mr. Gibbs in the amounts of $583,445 and $555,872, respectively, representing unpaid interest on the convertible credit facility.

Advances Payable - Related Parties

Mr. Power has on occasion advanced the Company funds generally utilized for day-to-day operating requirements. These advances are non-interest bearing and are generally repaid as cash becomes available.

During the three months ended March 31, 2020, Mr. Power made short-term advances to the Company totaling $125 and was repaid $4,575 during the period. At March 31, 2020 and December 31, 2019, a total of $25,000 and $29,450 of advances were outstanding and included in Advances payable – related party on the accompanying consolidated balance sheets.

The Company also utilizes credit cards owned by Mr. Power to pay various obligations when an online payment is required, the availability of cash is limited, or the timing of the payments is considered critical. As of March 31, 2020, and December 31, 2019, $6,655 and $-0-, respectively, were due on these credit cards and are included in Accounts payable on the accompanying consolidated balance sheets.

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6. Convertible Note Payable

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Convertible Note Payable

Note 6 – Convertible Note Payable

Effective April 1, 2015, the Company executed a convertible promissory note (the “Note”) in the principal amount of $51,270 in favor of Clifford Neuman, the Company’s legal counsel, representing accrued and unpaid fees for past legal services. The Note is unsecured and accrues interest at the rate of 6% per annum, compounded quarterly, and is due on demand. The principal and accrued interest due under the Note may be converted, at the option of the holder, into shares of the Company’s common stock at a conversion price of $0.0735 per share, which represented the market price of the Company’s common stock on the date the Note was made. The conversion price is subject to adjustment in the event the Company sells shares of common stock or common stock equivalent at a price below the conversion price.

The Note contains certain anti-dilution provisions that would reduce the conversion price should the Company issue common stock equivalents at a price less than the Note conversion price. Accordingly, prior to the prospective adoption of ASU 2017-11 on January 1, 2019, the conversion features of the Note were considered a discount to the Note. However, since the Note is payable upon demand by the note holder, the value of the discount is considered interest expense at the time of its inception. The Note was evaluated quarterly, and upon any quarterly valuations in which the value of the conversion option changed we recognized a gain or loss due to a decrease or increase in the fair value of the derivative liability, respectively.

As discussed in Note 4, the Company adopted ASU 2017-11 on January 1, 2019, which resulted in the elimination of the derivative liability of $14,730 at December 31, 2018 as a cumulative adjustment to accumulated deficit.

Accrued interest totaled $17,917 and $16,897 at March 31, 2020 and December 31, 2019, respectively, and is included in Accrued interest on the accompanying consolidated balance sheets.

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4. Adoption of ASU 2017-11 (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019	Jan. 02, 2019	Dec. 31, 2018
Accumulated deficit	$ (9,570,564)	$ (9,506,948)
Accounting Standards Update 2017-11 [Member]
Derivative liability			$ 0	$ 14,730
Accumulated deficit			$ (9,240,702)	(9,255,432)
Accounting Standards Update 2017-11 [Member] | Derivative Liability [Member]
Reclassified derivative liabiltity and cumulative effect				(14,730)
Accounting Standards Update 2017-11 [Member] | Accumulated Deficit [Member]
Reclassified derivative liabiltity and cumulative effect				$ 14,730

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5. Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of fair value assets and liabilities on a recurring basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Carrying Value at December 31,		Fair Value Measurement at December 31, 2018
	2018		Level 1		Level 2		Level 3
Derivative liability – Convertible note payable	$	14,730	$	–	$	–	$	14,730

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9. Share-based Compensation (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement [Abstract]
Share based compensation	$ 0	$ 0

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1. Organization, Liquidity and Going Concern (Policies)

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Athena Silver Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003, and began our mining operations in 2010.

In December 2009, we formed and organized a new wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates our mining interests. Since its formation, we have acquired various properties and rights and are currently determining whether those rights and properties could sustain profitable mining operations. We have not presently determined whether our mineral properties contain mineral reserves that are economically recoverable.

Our primary focus going forward will be to continue evaluating of our properties, and possible acquisitions of additional mineral rights and exploration, all of which will require additional capital. Further information regarding our land held for investment and mineral rights are discussed below in Note 2 – Land Held for Investment and Unpatented Claims, as well as in our Annual Report on Form 10-K for the year ended December 31, 2019.

Basis of Presentation

Basis of Presentation

We prepared these interim consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019.

Reclassifications

Reclassifications

Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

On July 13, 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I applies to financial instruments such as warrants, convertible debt or convertible preferred stock that contain down round features. Part II replaces the indefinite deferral for certain mandatorily redeemable non-controlling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification (ASC) Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The pronouncement is effective for annual and interim periods beginning after December 15, 2018. The Company adopted this standard on a modified retrospective basis on January 1, 2019. 

Liquidity and Going Concern

Liquidity and Going Concern

Our interim consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

At March 31, 2020, we had not yet achieved profitable operations and we have accumulated losses of $9,570,564 since our inception. We expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. Effective September 30, 2019, we amended our credit agreement with Mr. Gibbs to increase the borrowing limit under the convertible credit facility to $2,400,000, and effective December 31, 2019 we amended the agreement to extend the maturity date to June 30, 2020.

We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock. Currently, there are no arrangements in place for additional equity funding or new loans.

COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 10, 2020
Cover [Abstract]
Entity Registrant Name	ATHENA SILVER CORP
Entity Central Index Key	0001304409
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		36,532,320
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Entity Small Business	true
Entity Emerging Growth	true
Entity ExTransition Period	false
Entity shell	false
Entity Interactive data	Yes
Entity File Number	000-51808
Entity Incorporation State Code	DE

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Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2018	36,532,320
Beginning balance, value at Dec. 31, 2018	$ 3,653	$ 6,618,495	$ (9,255,432)	$ (2,633,284)
Cumulative adjustment upon adoption of ASU 2017-11			14,730	14,730
Net loss			(110,133)	(110,133)
Ending balance, shares at Mar. 31, 2019	36,532,320
Ending balance, value at Mar. 31, 2019	$ 3,653	6,618,495	(9,350,835)	(2,728,687)
Beginning balance, shares at Dec. 31, 2019	36,532,320
Beginning balance, value at Dec. 31, 2019	$ 3,653	6,618,495	(9,506,948)	(2,884,800)
Net loss			(63,616)	(63,616)
Ending balance, shares at Mar. 31, 2020	36,532,320
Ending balance, value at Mar. 31, 2020	$ 3,653	$ 6,618,495	$ (9,570,564)	$ (2,948,416)

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8. Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8– Commitments and Contingencies

We are subject to various commitments and contingencies as discussed in Note 3 – Langtry Property Lease and Deed Amendment Liability.

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3. Langtry Property Lease and Deed Amendment Liability

3 Months Ended

Mar. 31, 2020

Mineral Industries Disclosures [Abstract]

Langtry Property Lease and Deed Amendment Liability

Note 3 – Langtry Property Lease and Deed Amendment Liability

The Company was party to a lease with an option to purchase for certain property known as the Langtry property. The lease was terminated on April 28, 2020. Further information regarding this transaction is located in Note 11, Subsequent Events, and further information as to the terms and conditions of the Langtry lease can be found in the footnotes to the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.

The Langtry property is subject to a net smelter royalty in favor of Mobil Exploration and Producing North America Inc. from the sale of concentrates, precipitates or metals produced from ores mined from the royalty acreage. The agreement dated April 30, 1987 granted a base net smelter royalty of 3% plus an additional incremental 2% royalty on net smelter proceeds from silver sales above $10.00 per troy ounce plus an additional incremental 2% royalty on net smelter proceeds from silver sales above $15.00 per troy ounce.

On May 28, 2015 we executed an amendment to the deed underlying the Langtry Property to cap at 2% the net smelter royalty that would be due to Mobil Exploration and Producing North America Inc. (“Mobil”) from any future sales of concentrates, precipitates or metals produced from ores mined from the royalty acreage. In consideration for the amendment, we agreed to pay an amendment fee of $150,000, with $10,000 due at the time of the agreement and the balance payable $10,000 each June 1^st until paid in full. We have paid a total of $50,000 so far on this agreement, and the balance of $100,000 was outstanding as of March 31, 2020.

As of the date of the filing of this Form 10-Q, there has been no production or sale of any concentrates, precipitates or metals from the Langtry property mentioned in the above two paragraphs.

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4. Adoption of ASU 2017-11

3 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Adoption of ASU 2017-11

Note 4 – Adoption of ASU 2017-11

The Company changed its method of accounting for its convertible note through the adoption of ASU 2017-11 on January 1, 2019 on a modified retrospective basis. Accordingly, the outstanding derivative liability of $14,730 associated with a convertible note payable was eliminated as an adjustment to the beginning accumulated deficit. The following table provides a reconciliation of the derivative liability and accumulated deficit upon adoption on January 1, 2019:

	Derivative Liability			Accumulated Deficit
Balance January 1, 2019 (before adoption of ASU 2017-11)	$	14,730		$	(9,255,432	)
Reclassified derivative liability and cumulative effect of adoption		(14,730	)		14,730
Balance January 1, 2019 (after adoption of ASU 2017-11)	$	–		$	(9,240,702	)

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6. Convertible Note Payable (Details Narrative) - Convertible Notes Payable [Member] - Clifford Neuman [Member] - USD ($)	3 Months Ended
	Apr. 01, 2015	Mar. 31, 2020	Dec. 31, 2019
Debt issuance date	Apr. 01, 2015
Debt face amount	$ 51,270
Debt stated interest rate	6.00%
Accrued interest		$ 17,917	$ 16,897

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2. Land Held for Investment and Unpatented Claims (Details Narrative)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Aug. 08, 2016 USD ($) a	Dec. 31, 2014 USD ($) a	Dec. 31, 2012 USD ($) a
Land held for investment, original cost	$ 185,290	$ 185,290
Section 16 Property [Member]
Land held for investment, original cost			$ 28,582
Acres owned | a			33
Castle Rock [Member]
Land held for investment, original cost				$ 21,023
Acres owned | a				160
Section 13 Property [Member]
Land held for investment, original cost					$ 135,685
Acres owned | a					661

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7. Convertible Credit Facility - Related Party (Details Narrative) - USD ($)	3 Months Ended		7 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Jul. 18, 2012	Dec. 31, 2019	Dec. 31, 2018
Proceeds from line of credit	$ 42,750	$ 57,500
Accrued interest - related parties	583,445			$ 555,872
Gibbs Credit Agreement [Member]
Line of credit issuance date			Jul. 18, 2012
Line of credit maximum borrowing capacity	$ 2,400,000			2,150,000
Line of credit interest rate			5.00%
Line of credit expiration date	Jun. 30, 2020
Line of credit amount outstanding	$ 2,244,870			2,202,120	$ 2,059,620
Proceeds from line of credit	42,750	57,500
Line of credit remaining amount available	155,130
Accrued interest - related parties	583,445			$ 555,872
Interest expense, related party	$ 27,573	$ 25,635

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3. Langtry Property Lease and Deed Amendment Liability (Details Narrative) - Langtry Lease [Member]	Mar. 31, 2020 USD ($)
Purchase option deposit	$ 50,000
Lease option payable	$ 100,000

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9. Share-based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Share-based Compensation

Note 9 – Share-based Compensation

2004 Equity Incentive Plan

All options previously issued under the 2004 Equity Incentive Plan as well as options issued outside the Plan expired unexercised in April 2018. No share-based compensation expense was recorded for either the three months ended March 31, 2020 or 2019.

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2. Land Held for Investment and Unpatented Claims

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Land Held for Investment and Unpatented Claims

Note 2 – Land Held for Investment and Unpatented Claims

On August 8, 2016, we purchased 33+/- acres of land (“Section 16 Property”) for $28,582, net of $18 of title fees, located in San Bernardino County, California. The property is located in the Calico Mining District in the SE ¼ of the SE ¼ of Section 16; T 10 North, R 1 East. The State of California patented this land to a private party in 1935 and reserved in favor of the State one-sixteenth of all coal, oil, gas and other mineral deposits contained in the land.

In 2014, we purchased 160 acres of land (“Castle Rock”), located in the eastern Calico Mining District, San Bernardino County, California. The parcel is the SE quarter of Section 25, Township 10 North, Range 1 East and is mostly surrounded by public lands. It was purchased for $21,023 in a property tax auction conducted on behalf of the County.

In 2012, we purchased 661 acres of land (“Section 13 Property”) in fee simple for $135,685 cash, located in San Bernardino County, California, that was sold in a property tax auction conducted on behalf of the County. The parcel is all of Section 13 located in Township 7 North, Range 4 East, San Bernardino Base & Meridian. The Section 13 property is near the Lava Beds Mining District and has evidence of historic mining. It is adjacent to both the Silver Cliffs and Silver Bell historic mines.

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5. Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 5 – Fair Value of Financial Instruments

Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3 – Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Carrying Value at December 31,		Fair Value Measurement at December 31, 2018
	2018		Level 1		Level 2		Level 3
Derivative liability – Convertible note payable	$	14,730	$	–	$	–	$	14,730

The carrying values of cash and cash equivalents, accounts payable, accrued liabilities and other short-term debt, approximate their fair value because of the short-term nature of these financial instruments.

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4. Adoption of ASU 2017-11 (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Reconciliation after adoption of ASU 2017-11

	Derivative Liability			Accumulated Deficit
Balance January 1, 2019 (before adoption of ASU 2017-11)	$	14,730		$	(9,255,432	)
Reclassified derivative liability and cumulative effect of adoption		(14,730	)		14,730
Balance January 1, 2019 (after adoption of ASU 2017-11)	$	–		$	(9,240,702	)

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Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating expenses:
Exploration costs	$ 0	$ 40,000
General and administrative expenses	34,375	43,549
Total operating expenses	34,375	83,549
Operating loss	(34,375)	(83,549)
Other income (expense):
Interest expense	(29,241)	(26,584)
Total other expense	(29,241)	(26,584)
Net loss	$ (63,616)	$ (110,133)
Basic and diluted net loss per common share	$ (0.00)	$ (0.00)
Basic and diluted weighted-average common shares outstanding	36,532,320	36,532,320