UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ended
Commission
File No. –
(Name of registrant as specified in its Charter)
| (State
or other Jurisdiction of Incorporation or organization) |
(I.R.S.
Employer Identification No.) |
(Address of Principal Executive Offices)
(
(Registrant’s Telephone Number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $0.00001 par value
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
Indicate by check mark if the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
(1)
Yes ☒ No ☐ (2)
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes
State
the aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which
the common stock was last sold, or the average bid and asked price of such common stock, as of the last business day of the Registrant’s
most recently completed second quarter: $
Outstanding Shares
As of April 14, 2023, the Registrant had shares of common stock and 51 shares of preferred stock outstanding.
Documents Incorporated by Reference
TABLE OF CONTENTS
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GLOSSARY OF MINING TERMS
Exploration Stage
An “exploration stage” prospect is one which is not in either the development or production stage.
Development Stage
A “development stage” project is one which is undergoing preparation of an established commercially mineable deposit for its extraction, but which is not yet in production. This stage occurs after completion of a feasibility study.
Mineralized
The term “mineralized material” refers to material that is not included in the reserve as it does not meet all the criteria for adequate demonstration for economic or legal extraction.
Probable Reserve
The term “probable reserve” refers to reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Production Stage
A “production stage” project is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.
Proven Reserve
The term “proven reserve” refers to reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well-established.
The term “reserve” refers to that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. (“Bankable standards” implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing.) A reserve includes adjustments to the in-situ tons and grade to include diluting materials and allowances for losses that might occur when the material is mined.
Additional definitions for terms currently or previously used in the Company’s Annual Reports filed on Form 10-K:
Assay – a measure of the valuable mineral content.
Block model – The representation of geologic units using three-dimensional blocks of pre-determined sizes.
Cut-off grade – When determining economically viable mineral reserves, the lowest grade of mineralized material that qualifies as ore, i.e., that can be mined at a profit.
Diamond drill – A type of rotary drill in which the cutting is done by abrasion rather than by percussion. The drill cuts a core of rock which is recovered in long cylindrical sections.
Fault - A fracture in the earth’s crust caused by tectonic forces with displacement along the fracture.
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Feasibility study – A study or group of studies that determine the economic viability of a given mineral occurrence.
g/t or gpt – Grams per metric ton.
Grade – A term used to assign metal value to resources and reserves, such as gram per ton (g/t) or troy ounces per ton (oz/ton).
Gravity – A methodology using instrumentation allowing the accurate measuring of the difference between densities of various geological units in situ.
Heap leaching – A process which uses dilute sodium-cyanide solutions to percolate through run-of-mine or crushed ore heaped on lined pad to dissolve gold and/or silver.
in-situ – in its natural position.
Mineral – A naturally formed chemical element or compound having a definite chemical composition and, usually, a characteristic crystal form.
Mineralization – A natural occurrence in rocks or soil of one or more metal yielding minerals.
Mineral deposit – A mineralized body, which has been intersected by a sufficient number of drill holes or by underground workings to give an estimate of grade(s) of metal(s) and thus to warrant further exploration or development. A mineral deposit does not qualify as a commercially viable mineral deposit with reserves under standards set by the U.S. Securities and Exchange Commission until a final, comprehensive, economic, technical and legal feasibility study has been completed.
Mining – The process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.
NSR – A net smelter returns royalty, which is customarily calculated by subtracting from gross revenues a deduction for calculated mill recoveries, transport costs of any concentrates to a smelter, treatment and refining charges, and other deductions at the smelter and multiplying that result by the prescribed rate.
Open pit – Surface mining in which the ore is extracted from a pit or quarry, the geometry of the pit may vary with the characteristics of the ore body.
Ore - A natural aggregate of one or more minerals which, at a specified time and place, may be mined and processed and the product(s) sold at a profit or from which some part may be profitably separated.
Ore body – a mostly solid and fairly continuous mass of mineralization estimated to be economically mineable.
Ore grade – the average weight of the valuable metal or mineral contained in a specific weight of ore i.e. grams per ton of ore.
Oxide – gold bearing ore which results from the oxidation of near surface sulfide ore.
Quartz – a mineral composed of silicon dioxide, SiO2 (silica).
Reclamation – The process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.
Rock – indurated naturally occurring mineral matter of various compositions.
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Sampling and analytical variance/precision – an estimate of the total error induced by sampling, sample preparation and analysis.
SEC Industry Guide 7 – U.S. reporting guidelines that apply to registrants engaged or to be engaged in significant mining operations.
Sediment – particles transported by water, wind, gravity or ice.
Sedimentary rock – rock formed at the earth’s surface from solid particles, whether mineral or organic, which have been moved from their position of origin and re-deposited.
Strike – the direction or trend that a structural surface, e.g. a bedding or fault plane, takes as it intersects the horizontal
Strip – to remove barren rock or overburden in order to expose ore.
Vein – a thin, sheet like crosscutting body of hydrothermal mineralization, principally quartz.
PART I
ITEM 1. BUSINESS
As used in this Annual Report on Form 10-K, unless otherwise indicated, the terms “we,” “us,” “our” and “the Company” refer to Inception Mining, Inc., a Nevada corporation.
Forward-Looking Statements and Associated Risks.
This Annual Report on Form 10-K contains forward-looking statements.
Such forward-looking statements include statements regarding, among other things, (1) discussions about mineral resources and mineralized material, (2) our projected sales and profitability, (3) our growth strategies, (4) anticipated trends in our industry, (5) our future financing plans, (6) our anticipated needs for working capital, (7) our lack of operational experience and (8) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements constitute forward-looking statements. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. Factors that may cause results to vary include, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings on Forms 10-K and 10-Q. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this filing generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under Item 1A below and other risks and matters described in this filing and in our other SEC filings. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur as projected. We do not undertake any obligation to update any forward-looking statements.
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The Company
Overview
We are a mining company that was formed in Nevada on July 2, 2007. We have operated two mining projects and currently operate as a consultant and advisor to the mining industry. Historically, we have been engaged in the production of precious metals. From 2013 to 2020, the Company owned certain real property and the associated exploration permits and mineral rights commonly known as the UP and Burlington Gold Mine in Idaho (“UP and Burlington”). From 2015 through January 24, 2023, the Company operated the Clavo Rico mine in Honduras through its wholly-owned subsidiary, Compañía Minera Cerros del Sur, S.A de C.V. (“CMCS”) and other mining concessions. The Clavo Rico mine’s workings include several historical underground mining operations dating back to the early Mayan and Spanish occupation, and the primary mine operated through 2022 is located on the 200-hectare Clavo Rico Concession, located in southern Honduras.
2023 Divestiture of the Clavo Rico Mine
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company.
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
The purchase price for the sale of CMCS by the Company to MLM consisted of the following cash consideration (a) $280,000 was delivered by MLM to the Company on January 3, 2023 to pay outstanding debts owed by the Corporation; (b) $300,000 was delivered by MLM to the Company on January 5, 2023 to satisfy existing debts of the Company; (c) $100,000 was delivered by MLM to the Company on January 16, 2023; (d) $200,000 was delivered by MLM to the Company on January 17, 2023; (e) $1,200,000 was delivered by MLM to the Company on January 18, 2023, to pay a settlement amount for existing debt of the Company; (f) $500,000 was delivered by MLM to the Company on January 23, 2023, to satisfy existing debts of the Company; (g) $420,000 was delivered by MLM to the Corporation on January 24, 2023 to satisfy existing debts of the Corporation.
In addition to the amounts already delivered under the LOI, an additional amount of $2,700,0000 shall be paid by MLM to the Company over a period of twenty-four (24) months (the “Monthly Payments”). The Monthly Payments shall be paid as follows: (i) $25,000 due March 1, 2023, (ii) $50,000 due on the first day of each of April, May and June 2023, and (iii) $100,000 due on the first day of each month for the following twenty months, until February 1, 2025 at which point all amounts due and payable hereunder shall be delivered in a final balloon payment. Outstanding balances and missed Monthly Payments will be secured by a 10% NSR on the Clavo Rico mine production until the Monthly Payments are delivered and the purchase price is paid in full. In addition to the Monthly Payments, the Company will receive a carried forward net profits interest royalty (“NPI”) of 5% on the Clavo Rico mine production until the total NPI paid to the Company is $1,000,000, subject to limited conditions.
Following the Closing of the LOI on January 24, 2023, the Company divested its ownership interest in CMCS and its interests in the Clavo Rico mine, resulting in the transfer of operations to Mother Lode Mining and full control of the Clavo Rico mine asset.
Current Operations
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
The Company will receive $2,700,000 in cash payments through January 2025, with such payments\ secured by a ten percent net smelter royalty on the Clavo Rico Mine’s production.
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The Company will also receive a carried forward net profits interest royalty of five percent of the Clavo Rico mine production until payment to the Company reaches $1,000,000, subject to reduction for certain limited Clavo Rico mine expenses.
COVID-19 - The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the first quarter of 2020 progressed. COVID-19 has spread across the globe during since 2020 and is impacting economic activity worldwide. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. Based on management’s assessment as of December 31, 2022, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
Compliance with Government Regulation
Since the Divestiture of CMCS and the Clavo Rico mine in January 2023, we are no longer subject to the mining regulations of Honduras.
The Company’s policy is to conduct our business in a manner that safeguards public health and mitigates the environmental effects of our business activities. To comply with these laws and regulations, we have made, and in the future may be required to make, capital and operating expenditures.
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Capital Equipment and Research & Development Expenditures
During the year ended December 31, 2022, we did not incur any expense related to research and development. Additionally, we are not currently conducting any research and development activities other than those relating to the possible acquisition of new gold and/or silver properties or projects of which there is no guarantee.
Employees
As of the date of this filing, we currently employ one full-time employee and no temporary employees in the United States and Honduras. We have contracts with various independent contractors and consultants to fulfill additional needs, including investor relations, exploration, development, permitting, and other administrative functions, and may staff further with employees as we expand activities and bring new projects on line.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
We do not currently own any patents or trademarks. Also, we are not a party to any license or franchise agreements, concessions, or labor contracts arising from any patents or trademarks, or any royalty agreements.
Company Information
The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. Further information about the Company may be found at its website: www.inceptionmining.com. The Company makes available its filings to investors, free of charge, on this website.
Reports to Security Holders
You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all the reports that we have filed electronically with the SEC at their Internet site www.sec.gov.
ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully the following risks, along with all of the other information included in this report, before deciding to buy our common stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also impair our business operations. If we are unable to prevent events that have a negative effect from occurring, then our business may suffer.
RISKS RELATED TO OUR COMPANY
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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We have incurred losses since our inception in 2007 and may never be profitable, which raises doubt about our ability to continue as a going concern.
Since our inception in 2007 and until the Merger in 2015, we had nominal operations and incurred operating losses. As of December 31, 2022, our accumulated deficit since inception was $41,655,570. We have substantial current obligations and at December 31, 2022, we had $29,068,198 of current liabilities compared to only $302,849 of current assets. Since inception, we have been able to raise only minimal additional capital, and we have minimal cash on hand. Accordingly, the Company does not have sufficient cash resources or current assets to pay its current obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants, and advisors as payment for the goods and services.
Our management continues to search for additional financing; however, considering the difficult U.S. and global economic conditions along with the substantial turmoil in the capital and credit markets, there is a significant possibility that we will be unable to obtain financing to continue our operations.
These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent registered public accounting firm’s report on our audited financial statements as of and for the year ended December 31, 2022. If we are unable to continue as a going concern, investors will likely lose all of their investment in our company.
We are Subject to Legal Proceedings.
We are subject to legal proceedings and litigation, which can be expensive and unpredictable..
The global financial conditions may have an impact on our business and financial condition in ways that we currently cannot predict.
The continued pressure on commodities markets and related turmoil in the global financial system may have an impact on our business and financial position. The recent high costs of consumables may negatively impact costs of our operations. In addition, current financial market conditions may limit our ability to raise capital through credit and equity markets. As discussed further below, the prices of the metals that we may produce are affected by a number of factors, and it is unknown how these factors will be impacted by a continuation of the financial crisis.
Changes to the regulations and laws in Honduras and changes in the government in Honduras could suspend or negatively impact our operations.
Mining regulations in Honduras may be changed by the Honduran government and may be impacted by political or social changes. For instance, the recent 2022 election of a new president has resulted in increased regulation and scrutiny on the mining industry and especially on open pit mines such as the Clavo Rico mine. Because of the Company’s ongoing NPI in the Clavo Rico mine production, and the ongoing payments to be delivered to the Company from the mine’s new operator, changes to the laws and regulations in Honduras could impact the Company’s ability to be paid.
We do not currently carry any property or casualty insurance.
Our business is subject to a number of risks and hazards generally, including but not limited to, adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment, and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to our properties, equipment, infrastructure, personal injury or death, environmental damage, delays, monetary losses and possible legal liability. You could lose all or part of your investment if any such catastrophic event occurs. We do not carry any property or casualty insurance at this time (but we will carry all insurances that we are required to by law, such as motor vehicle and workers’ compensation, plus other coverage that may be in the best interest of the Company). Even if we do obtain insurance, it may not cover all of the risks associated with our operations. Insurance against risks such as environmental pollution or other hazards as a result of exploration and operations are often not available to us or to other companies in our business on acceptable terms. Should any events against which we are not insured actually occur, we may become subject to substantial losses, costs and liabilities, which will adversely affect our financial condition.
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Our industry is highly competitive, attractive mineral lands are scarce, and we may not be able to obtain quality properties.
We compete with many companies in the mining industry, including large, established mining companies with capabilities, personnel and financial resources that far exceed our limited resources. In addition, there is a limited supply of desirable mineral lands available for claim-staking, lease or acquisition in the United States, and other areas where we may conduct exploration activities. We are at a competitive disadvantage in acquiring mineral properties, since we compete with these larger individuals and companies, many of which have greater financial resources and larger technical staffs. Likewise, our competition extends to locating and employing competent personnel and contractors to prospect, develop and operate mining properties. Many of our competitors can offer attractive compensation packages that we may not be able to meet. Such competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation and business.
We depend on our Chief Executive Officer and Chief Financial Officer and the loss of this individual could adversely affect our business.
Our company is completely dependent on Trent D’Ambrosio, our Chief Executive Officer and Chief Financial Officer. Mr. D’Ambrosio is also a member of our Board of Directors. The loss of Mr. D’Ambrosio could significantly and adversely affect our business and could even result in a complete failure of the Company. We do not carry any life insurance on the life of Mr. D’Ambrosio.
The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.
Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of economically feasible mineralization. Few properties that are explored are ultimately advanced to the stage of producing mines. We are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties such as, but not limited to:
| ● | economically insufficient mineralized material; | |
| ● | fluctuations in production costs that may make mining uneconomical; | |
| ● | labor disputes; | |
| ● | unanticipated variations in grade and other geologic problems; | |
| ● | environmental hazards; | |
| ● | water conditions; | |
| ● | difficult surface or underground conditions; | |
| ● | industrial accidents, such as personal injury, fire, flooding, cave-ins, and landslides; | |
| ● | metallurgical and other processing problems; | |
| ● | mechanical and equipment performance problems; and | |
| ● | decreases in revenues and reserves due to lower gold and mineral prices. |
Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent that are not recoverable.
Our operations are subject to permitting requirements that could require us to delay, suspend or terminate our operations on our mining property.
Our operations and exploration activities require permits from the local, state and federal governments. We may be unable to obtain these permits in a timely manner, on reasonable terms or at all. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for Inception will be adversely affected.
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Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
In their audit opinion issued in connection with our consolidated balance sheets as of December 31, 2022 and our related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2022, our auditors have expressed substantial doubt about our ability to continue as a going concern given our recurring net losses, negative cash flows from operations and the limited amount of funds on our balance sheet. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue in existence. This could make it more difficult to raise capital in the future.
Risks Associated with Our Common Stock
Trading on the Over the Counter markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.
Our common stock is quoted on the OTC Pink tier of the over-the-counter markets administered by OTC Markets Group, Inc. under the symbol “IMII”. Trading in stock quoted on over the counter markets is often thin, volatile, and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the Over the Counter markets are not a stock exchange, and trading of securities on the over the counter markets is often more sporadic than the trading of securities listed on other stock exchanges such as the NASDAQ Stock Market, New York Stock Exchange or American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares.
Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and the FINRA’s sales practice requirements, which may limit a stockholders’ ability to buy and sell our stock.
Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers’ account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability or willingness of broker-dealers to trade our securities. We believe that the penny stock rules discourage broker-dealer and investor interest in, and limit the marketability of, our common stock.
Our common stock may be affected by limited trading volume and price fluctuation which could adversely impact the value of our common stock.
There has been limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.
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FINRA sales practice requirements may also limit a stockholders’ ability to buy and sell our stock.
In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’ s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.
Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.
Our shares are classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) which imposes additional sales practice requirements on broker-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.
Our stock price may be volatile.
The stock market in general has experienced volatility that often has been unrelated to the operating performance of any specific public company. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
| ● | changes in our industry; | |
| ● | competitive pricing pressures; | |
| ● | our ability to obtain working capital financing; | |
| ● | additions or departures of key personnel; | |
| ● | limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market prices of our common stock; | |
| ● | sales of our common stock; | |
| ● | our ability to execute our business plan; |
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| ● | operating results that fall below expectations; | |
| ● | loss of any strategic relationship; | |
| ● | regulatory developments; | |
| ● | economic and other external factors; and | |
| ● | period-to-period fluctuations in our financial results. |
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
We have never paid a cash dividend on our common stock and we do not anticipate paying any in the foreseeable future.
We have not paid a cash dividend on our common stock to date, and we do not intend to pay cash dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Notwithstanding, we will likely elect to retain any earnings, if any, to finance our growth. Future dividends may also be limited by bank loan agreements or other financing instruments that we may enter into in the future. The declaration and payment of dividends will be at the discretion of our Board of Directors.
We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Recent federal legislation, including the Sarbanes-Oxley Act of 2002 and the Jumpstart our Business Startups Act of 2012, among others, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics. While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
Difficulties we may encounter managing our growth could adversely affect our results of operations.
As our business needs expand, we may need to hire a significant number of employees. This expansion may place a significant strain on our managerial and financial resources. To manage the potential growth of our operations and personnel, we will be required to:
| ● | improve existing, and implement new, operational, financial and management controls, reporting systems and procedures; | |
| ● | install enhanced management information systems; and | |
| ● | train, motivate, and manage our employees. |
We may not be able to install adequate management information and control systems in an efficient and timely manner, and our current or planned personnel, systems, procedures and controls may not be adequate to support our future operations. If we are unable to manage growth effectively, our business would be seriously harmed.
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If we lose key personnel or are unable to attract and retain additional qualified personnel, we may not be able to successfully manage our business and achieve our objectives.
We believe our future success will depend upon our ability to retain our key management, primarily Mr. D’Ambrosio, our Chief Executive Officer and Chief Financial Officer. We may not be successful in attracting, assimilating and retaining our employees in the future.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity related securities in the future at a time and price that we deem reasonable or appropriate.
ITEM 2: PROPERTIES
Corporate Headquarters
We currently maintain our corporate offices at 5330 South 900 East, Suite 280, Murray, Utah 84117. During the year ended December 31, 2022, we paid monthly rent of approximately $1,300 for use of a corporate office.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
On December 30, 2021, the Company was served with a complaint filed by Antilles Family Office, LLC (“Antilles”) asserting claims related to alleged breach of contract and unjust enrichment against the Company. This matter was settled on January 18, 2023 in exchange for the payment of $1,200,000 by the Company to Antilles.
Previously disclosed litigation matters related to one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., were assigned to a third party as part of the sale of CMCS that closed on January 24, 2023.
On October 15, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with a complaint filed by Empresa Agregados y Concretos S.A. (“Agrecon”) asserting claims related to non-payment for services performed and damages associated with the termination of a certain Material Crushing Agreement. The Company has reserved $120,000 to settle this matter.
On December 20, 2022 the company received a notice of demand from Servicio de Administracion de Rentas (“SAR”). SAR is the institution responsible for the collection of internal taxes. The notice was for Tax Obligations due in the amount of 9,245,637.70 Lps ($385,234.90). The tax obligations were due and payable immediately.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable as the Company conducts no active mining operations in the U.S. or its territories.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is not traded on any exchange. Our common stock is quoted on the Pink tier of the over-the-counter markets administered by OTC Markets Group, Inc. under the trading symbol “IMII.” We cannot assure you that there will be a market in the future for our common stock.
OTC securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC securities transactions are conducted through a telephone and computer network connecting dealers. OTC issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
Classes of Stock
We have two classes of stock: common stock and Series A Preferred Stock. On August 30, 2016, the Board of Directors of the Company, pursuant to Article II of the Company’s Articles of Incorporation, approved the designation of fifty-one (51) shares of its authorized capital stock as “Series A Preferred Stock”. The Certificate of Designation for the Series A Preferred Stock was filed on August 31, 2016. These shares have preferential voting rights and no conversion rights.
Holders
As of April 14, 2023, there were 1,475 holders of record of our common stock and one holder of record for our preferred stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
Equity Compensation Plans
As of the date of this Annual Report, we have an equity compensation plan: the 2013 Incentive Stock Plan.
Recent Sales of Unregistered Securities
We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the following transactions were made in reliance on Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by each shareholder, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
On January 25, 2022, the Company issued to an Investor 5,602,192 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
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On February 17, 2022, the Company issued to an Investor 4,201,644 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On March 2, 2022, the Company issued to an Investor 4,901,918 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On March 18, 2022, the Company issued to an Investor 5,041,973 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On April 5, 2022, the Company issued to an Investor 4,341,699 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On April 18, 2022, the Company issued to an Investor 4,481,753 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On April 25, 2022, the Company issued to an Investor 4,761,863 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On May 20, 2022, the Company issued to an Investor 5,041,973 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On June 2, 2022, the Company issued to an Investor 5,322,082 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On June 13, 2022, the Company issued to an Investor 5,602,192 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On June 17, 2022, the Company issued to an Investor 6,302,466 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On June 23, 2022, the Company issued to an Investor 8,403,288 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On June 28, 2022, the Company issued to an Investor 8,823,452 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On July 8, 2022, the Company issued to an Investor 9,383,671 shares of its common stock under a conversion notice pursuant to the term of the original secured Convertible Promissory Note entered into on May 20, 2019.
On February 1, 2023, the Company issued 5,142,857 restricted shares of Common Stock to Cluff-Rich 401(k) upon the conversion of $18,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 16,428,571 restricted shares of Common Stock to Fran Rich upon the conversion of $57,500 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 23,200,857 restricted shares of Common Stock to Debra D’Ambrosio upon the conversion of $81,203 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 485,402,857 restricted shares of Common Stock to Trent D’Ambrosio upon the conversion of $1,698,910 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 17,142,857 restricted shares of Common Stock to Kay Briggs upon the conversion of $60,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 204,285,714 restricted shares of Common Stock to Legends Capital Group upon the conversion of $715,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 314,571,429 restricted shares of Common Stock to L W Briggs Irrevocable Trust upon the conversion of $1,101,000 in existing debt owed to the shareholder that has been accrued by the Company.
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On February 1, 2023, the Company issued 52,857,143 restricted shares of Common Stock to Claymore Management upon the conversion of $185,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 965,137,143 restricted shares of Common Stock to Clavo Rico Inc. upon the conversion of $3,377,980 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 32,928,571 restricted shares of Common Stock to Pine Valley Investments upon the conversion of $115,200 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 42,857,143 restricted shares of Common Stock to Whit Cluff for services rendered to the Company.
On February 1, 2023, the Company issued 2,857,143 restricted shares of Common Stock to Rod Sperry for services rendered to the Company.
On February 1, 2023, the Company issued 2,857,143 restricted shares of Common Stock to Brunson Chandler & Jones, PLLC for services rendered to the Company.
On February 1, 2023, the Company issued 14,285,714 restricted shares of Common Stock to Kyle Pickard for services rendered to the Company.
On February 1, 2023, the Company issued 28,571,429 restricted shares of Common Stock to Justin Wilson for services rendered to the Company.
On February 1, 2023, the Company issued 28,571,429 restricted shares of Common Stock to Sean Wilson for services rendered to the Company.
ITEM 6: SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
Except for historical information, the following Management’s Discussion and Analysis contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) discussions about mineral resources and mineralized material, (b) our projected sales and profitability, (c) our growth strategies, (d) anticipated trends in our industry, (e) our future financing plans, (f) our anticipated needs for working capital, (g) our lack of operational experience and (h) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.
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Overview
On February 25, 2013, Inception Mining, Inc. (“Inception” or the “Company”) and its majority shareholder (the “Majority Shareholder”), and its wholly-owned subsidiary, Inception Development Inc. (the “Subsidiary”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Inception Resources, LLC, a Utah corporation (“Inception Resources”), pursuant to which Inception purchased the UP and Burlington Gold Mine in consideration of 16,000,000 shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net smelter royalty, which may increase or decrease depending on the amount of gold produced. Inception Resources was an entity owned by and under the control of a shareholder. This transaction is deemed an asset purchase by entities under common control. The Asset Purchase Agreement closed on February 25, 2013 (the “Closing”). We were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior to our acquisition of the gold mine pursuant to the terms of the Assert Purchase Agreement.
We are a mining company engaged in the production, acquisition, exploration, and development of mineral properties, primarily for gold, from owned mining properties. Inception Resources has acquired two projects, as described below. Our target properties are those that have been the subject of historical exploration.
UP and Burlington Gold Mine
On February 25, 2013, the Company acquired certain real property and the associated exploration permits and mineral rights commonly known as the UP and Burlington Gold Mine (“UP and Burlington”).
On February 21, 2020, the Company sold the Up & Burlington property and mineral rights to Ounces High Exploration, Inc. in exchange for $250,000 in cash consideration and 66,974,252 shares of common stock of Hawkstone Mining Limited, a publicly-trade Australian company.
Clavo Rico Mine
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”) through which it acquired companies (including Compañía Minera Cerros del Sur, S.A de C.V.)with with principal mining operations in Honduras, Central America. Its workings include several historical underground mining operations dating back to the early Mayan and Spanish occupation.
The Clavo Rico mine operations were divested on January 24, 2023 when the Company sold Compañía Minera Cerros del Sur, S.A de C.V.
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Results of Operations
Year ended December 31, 2022 compared to the year ended December 31, 2021
We had a net loss of $4,066,605 for the year ended December 31, 2022, which was $1,225,391 more than the net loss of $2,841,214 for the year ended December 31, 2021. This change in our results over the two periods is primarily the result of a decrease in interest expense of $573,453, the change of derivative liabilities of $2,682,379 and a decrease in loss on extinguishment of debt of $1,512,082. The following table summarizes key items of comparison and their related increase (decrease) for the years ended December 31, 2022 and 2021.
| Years Ended December, | Increase/ | |||||||||||
| 2022 | 2021 | (Decrease) | ||||||||||
| General and Administrative | $ | 745,131 | $ | 690,001 | $ | 55,130 | ||||||
| Depreciation and Amortization Expenses | 725 | 2,789 | (2,064 | ) | ||||||||
| Total Operating Expenses | 745,856 | 692,790 | 53,066 | |||||||||
| Loss from Operations | (745,856 | ) | (692,790 | ) | (53,066 | ) | ||||||
| Other Income (expense) | - | 637 | (637 | ) | ||||||||
| Gain on Forgiveness of PPP loan | 31,667 | 31,667 | - | |||||||||
| Change in Derivative Liabilities | 833,278 | 3,515,657 | (2,682,379 | ) | ||||||||
| Change in Marketable Securities | - | 328,970 | (328,970 | ) | ||||||||
| Loss on Extinguishment of Debt | (271,511 | ) | (1,783,593 | ) | (1,512,082 | ) | ||||||
| Interest Expense | (2,880,542 | ) | (3,453,994 | ) | 573,452 | |||||||
| Loss from Operations Before Taxes | (3,032,964 | ) | (2,053,446 | ) | 979,518 | |||||||
| Provision for Income Taxes | - | - | - | |||||||||
Net Loss from Continuing Operations | (3,032,964 | ) | (2,053,446 | ) | 979,518 | |||||||
| Net Loss from Discontinued Operations before Income Taxes | (973,303 | ) | (258,130 | ) | 715,173 | |||||||
| Provision for Income Taxes on Discontinued Operations | (142,582 | ) | (529,638 | ) | 387,056 | |||||||
| Net Loss from Discontinued Operations | (1,115,885 | ) | (787,768 | ) | (328,117 | ) | ||||||
| Net Loss | $ | (4,148,849 | ) | $ | (2,841,214 | ) | $ | 1,307,635 | ||||
Operating Expenses
Operating expenses for the years ended December 31, 2022 and 2021 were $745,856 and $692,790, respectively. The increase in operating expenses for 2022 compared to 2021 were comprised primarily of geologist/mine manager expenses and legal fees.
Other Income (Expenses)
Other income (expenses) for the years ended December 31, 2022 and 2021 were $0 and ($637), respectively.
Net Loss
Net loss for the year ended December 31, 2022 was $4,148,849 while the net loss for the year ended December 31, 2021 was $2,841,214.
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Liquidity and Capital Resources
Our balance sheet as of December 31, 2022, reflects assets of $1,153,403. As we had cash in the amount of $0 and a working capital deficit in the amount of $28,765,349 as of December 31, 2022, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
Working Capital
| December 31, 2022 | December 31, 2021 | |||||||
| Current assets | $ | 302,849 | $ | 543,008 | ||||
| Current liabilities | 29,068,198 | 25,279,768 | ||||||
| Working capital deficit | $ | (28,765,349 | ) | $ | (24,736,760 | ) | ||
We anticipate generating losses and, therefore, may be unable to continue operations in the future. If we require additional capital, we would have to issue debt or equity or enter into a strategic arrangement with a third party.
Going Concern Consideration
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $41,655,570. In addition, there is a working capital deficiency of $28,765,349 and a stockholder’s deficiency of $34,131,043 the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Cash Flows
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net Cash Used in Operating Activities | $ | (902,422 | ) | $ | (76,864 | ) | ||
| Net Cash Provided by (Used in) Investing Activities | (49,666 | ) | 374,245 | |||||
| Net Cash Provided by (Used in) Financing Activities | 899,543 | (276,205 | ) | |||||
| Effects of Exchange Rate Changes on Cash | (152 | ) | (261 | ) | ||||
| Net Increase (Decrease) in Cash | $ | (52,697 | ) | $ | 20,915 | |||
Operating Activities
Net cash flow used in operating activities during the year ended December 31, 2022 was $902,422, an increase of $825,558 from the $76,864 net cash used in operating activities during the year ended December 31, 2021. This increase is mostly due to the net loss in 2022 versus the net income in 2021.
Investing Activities
Cash used in investing activities during the year ended December 31, 2022 was $49,666, a decrease of $423,911 from the $374,245 net cash provided during the year ended December 31, 2021. This decrease was due to cash received from the sale of mine property of $249,660 and more cash received from the sale of marketable securities of $592,919 in 2021 versus the cash of $49,666 paid for property plant and equipment in 2022.
Financing Activities
Financing activities during the year ended December 31, 2022, provided $899,543, an increase of $1,175,748 from the $276,205 used in financing activities during the year ended December 31, 2021. During the year ended December 31, 2022, the company received $996,210 in notes payable from related parties, $403,687 in notes payable, $100,000 in convertible notes payable, made payments of $473,900 in cash on notes payable – related parties, $37,891 in cash on notes payable and $11,620 in cash on convertible notes.
Critical Accounting Policies
Going Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2022, the Company recorded a net loss of $4,148,849 and used $902,422 in cash from operating activities. The Company has a net loss since inception of $41,655,570. In addition, there is a working capital deficiency of $28,765,349 and a stockholder’s deficiency of $34,131,043 as of December 31, 2022. These factors among others indicate that the Company may be unable to continue as a going concern for one year from the issuance of these financial statements.
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The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Basis of Presentation - The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.
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Long-Lived Assets - We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment - We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
| Building | 7 to 15 years | |
| Vehicles and equipment | 3 to 7 years | |
| Processing and laboratory | 5 to 15 years | |
| Furniture and fixtures | 2 to 3 years |
Reclamation Liabilities and Asset Retirement Obligations - Minimum standards for site reclamation and closure have been established for us by various government agencies. Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligation at each mine site.
Revenue Recognition - Effective January 1, 2018 we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 606-10, Revenue from Contracts with Customers (“ASC 606-10”). The adoption of ASC 606-10 had no impact on prior year or previously disclosed amounts. In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account
All accounts receivable amounts are due from a single customer. Substantially all mining revenues recorded in the current period also related to the same customer. As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.
Derivative Liabilities - Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
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Income Taxes - The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah on a month-to-month basis.
The Company incurred rent expense of $15,252 and $14,945 for the year ended December 31, 2022 and 2021.
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recent Accounting Pronouncements
For recent accounting pronouncements, please refer to the notes to the financial statements section of this Annual Report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company required by Article 8 of Regulation S-X are attached to this report, beginning at page F-1.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act, as of the end of the period covered by this report. Based on this evaluation, because of the Company’s limited resources and limited number of employees and due to reasons listed below, management concluded that our disclosure controls and procedures were not effective as of December 31, 2022.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
With the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO-2013”). Based on our evaluation and the material weaknesses described below, management concluded that the Company’s internal controls were not effective based on financial reporting as of December 31, 2022 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties. Management of the Company believes that these material weaknesses are due to the small size of the Company’s management and accounting staff and reliance on outside consultants for external reporting. The small size of the Company’s accounting staff may prevent adequate controls in the future and the internal controls may continue to be not effective, such as segregation of duties, due to the cost/benefit of such remediation.
To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and outside accounting consultants. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.
In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended December 31, 2022 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the year ended December 31, 2022 are fairly stated, in all material respects, in accordance with US GAAP.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.
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Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Controls
During the year ended December 31, 2022, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
ITEM 9B: OTHER INFORMATION
None.
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Identification of Directors and Executive Officers
Our Bylaws state that our authorized number of directors shall be one or more and shall be set by resolution of our Board of Directors. We currently have two directors.
Our current directors and officers are as follows:
| Name and Business Address | Age | Position | ||
| Trent D’Ambrosio | 58 | CEO, CFO and Director | ||
| Whit Cluff | 72 | Director |
Our directors will serve in that capacity until our next annual shareholder meeting or until a successor is elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.
Trent D’Ambrosio, Chief Executive Officer, Chief Financial Officer, and Director
Mr. D’Ambrosio has been a Director of Inception Mining Inc. since February 28, 2013. From October 2011 through March 2013, Mr. D’Ambrosio held the positions of Interim Chief Executive Officer and Chief Financial Officer of Inception Holdings LLC, a resource exploration company, and was the responsible for the overall strategic direction for the organization. His professional record includes 25 years of management and financial services experience with companies ranging from Fortune 500 companies to start-ups. Mr. D’Ambrosio holds a B.S. in Business Management, an MBA and a Certificate of Mining Studies.
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Whit Cluff, Director
Mr. Cluff has over 35 years of experience in the commercial real estate industry. Mr. Cluff has been involved in all disciplines of real estate land development, mixed-use development, retail tenant representation, developer representation, industrial property procurement and asset management. Mr. Cluff has an extensive background in public and private businesses giving him strong analytical, planning, and organization ability with effective negotiation skills. From 2003 through the present, Mr. Cluff has worked in commercial real estate. Mr. Cluff attended the University of Utah and served in the United States Army.
Other Directorships
Other than as set forth above, none of our directors hold any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Board of Directors and Director Nominees
Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee’s qualifications to serve on the Board, as well as a list of references.
The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual’s experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.
Some of the factors, which the Board considers when evaluating proposed nominees, include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.
Conflicts of Interest
Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.
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In general, officers and directors of a corporation are required to present business opportunities to the corporation if:
| ● | the corporation could financially undertake the opportunity; | |
| ● | the opportunity is within the corporation’s line of business; and | |
| ● | it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation. |
We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
Significant Employees
Other than as described herein, we do not expect any other individuals to make a significant contribution to our business.
Legal Proceedings
None of our directors, executive officers or control persons has been involved in any of the following events during the past five years:
| ● | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; | |
| ● | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| ● | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or | |
| ● | being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended, or vacated. |
No Audit Committee or Financial Expert
The Company does not have an audit committee or a financial expert serving on the Board of Directors. The Company plans to form and implement an audit committee as soon as practicable.
Family Relationships
There are no family relationships among our officers, directors, or persons nominated for such positions.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officer and principal accounting officer, but intend to do so this year.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act of 1934, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash only rights) and any changes in that ownership with the Securities and Exchange Commission. The Company has evaluated all relevant Section 16(a) filings and has determined that the company is compliant with this section to the best of its knowledge.
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ITEM 11: EXECUTIVE COMPENSATION
Our Board of Directors has not established a separate compensation committee. Instead, the Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for our officer(s), decides on benefit plans, and considers other matters as may, from time to time, be referred to it. We do not currently have a Compensation Committee Charter. Our Board continues to emphasize the important link between our performance, which ultimately benefits all shareholders, and the compensation of our executives. Therefore, the primary goal of our executive compensation policy is to closely align the interests of the shareholders with the interests of the executive officer(s). In order to achieve this goal, we attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective of owners with an equity stake in us.
Compensation Table for Executives
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-equity Incentive Plan Compensation | Non-qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
| Trent D’Ambrosio, Chief Executive Officer, Chief Financial Officer, | 2022 | 300,000 | - | - | - | - | - | - | 300,000 | |||||||||||||||||||||||||||
| President, Secretary, and Director | 2021 | 300,000 | - | - | - | - | - | - | 300,000 | |||||||||||||||||||||||||||
| Whit Cluff, | 2022 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Director | 2021 | - | - | - | - | - | - | 10,070 | 10,070 | |||||||||||||||||||||||||||
| (1) | Mr. D’ambrosi’s employment agreement compensates him $300,000 per year. However, the Company didn’t pay him that full amount during the fiscal years ended December 31, 2022 and 2021. For the years ended December 31, 2022 and 2021, he was paid $162,319 and $234,970, respectively. The Company also recorded $132,319 and $65,030 as deferred salaries payable for the fiscal years ended December 31, 2022 and 2021, respectively. |
Employment Agreements
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually. This agreement is effective for 60 months. Additionally, the employment agreement provides for benefits and an optional annual bonus to be determined by the Board of Directors.
Outstanding Equity Awards at Fiscal Year-End
None.
Compensation of Directors
We have no formal plan for compensating our directors for their services. We have no formal plan to compensating our directors in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.
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Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
Compensation Committee
We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. All members of the Board of Directors participate in the consideration of executive officer and director compensation.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following table lists, as of April 14, 2023, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership‚ concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 2,481,653,106 shares of our common stock issued and outstanding as of April 14, 2023. Unless otherwise indicated, the address of each person listed is c/o Inception Mining, Inc., 5330 South 900 East, Suite 280, Murray, UT 84117.
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| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||
| Common Stock | Legends Capital Group, LLC (2) | |||||||||
| 782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 215,971,588 | 8.7 | % | |||||||
| Common Stock | Madison, LLC (2) | |||||||||
| 782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 2,495,855 | 0.1 | % | |||||||
| Common Stock | Jason Briggs (3) | |||||||||
| 782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 935,946 | 0.02 | % | |||||||
| Common Stock | LW Briggs Irrevocable Trust (2) | |||||||||
782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 314,977,006 | 12.69 | % | |||||||
| Common Stock | Clavo Rico, Inc. (2) | |||||||||
| 782 E. Pioneer Road Draper, Utah 84120 | 965,137,143 | 38.89 | % | |||||||
| Common Stock | Claymore Management (2) | |||||||||
| 782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 52,857,143 | 2.13 | % | |||||||
| Common Stock | Pine Valley Investments (2) | |||||||||
| 782 E. Pioneer Road | ||||||||||
| Draper, Utah 84120 | 32,928,571 | 1.33 | % | |||||||
| All 5% beneficial owners as a group | 1,585,303,252 | 63.84 | % | |||||||
(1)
|
Percentage of ownership is based on 2,481,653,106 common shares outstanding as of April 14, 2023. The number and percentage of shares beneficially owned is determined under the rules of the SEC and the ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. | |
| (2) | Beneficially controlled by Jason Briggs. | |
| (3) | Includes additional shares beneficially owned by Jason Briggs including 311,982 shares owned personally and 623,964 shares owned by the Debbie Briggs Irrevocable Trust for which Jason Briggs serves as trustee. |
| Amount and | ||||||||||
| Nature of | ||||||||||
| Title of | Beneficial | Percent of | ||||||||
| Name and Address of Beneficial Owner | Class | Ownership (1) | Class (2) | |||||||
| Trent D’Ambrosio (3) | Common Stock | 512,475,815 | 20.65 | % | ||||||
| Preferred Stock | 51 | 100.00 | % | |||||||
| Whit Cluff | Common Stock | 67,202,731 | 2.7 | % | ||||||
| All Officers and Directors as a Group | 579,678,546 | 23.35 | % | |||||||
| (1) | Percentage of ownership is based on 2,481,653,106 common shares outstanding as of April 14, 2023. The number and percentage of shares beneficially owned is determined under the rules of the SEC and the ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. | |
| (2) | SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants. | |
(3)
(4) |
Mr. D’Ambrosio, a Director of the Company, owns 51 shares of preferred stock with voting rights per share equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (x) the Numerator. He is also the beneficial owner of 23,200,857 shares through his wife, Debra D’Ambrosio.
Mr. Cluff, a Director of the Company, owns 45,631,303 shares personally and beneficially owns 16,428,571 shares through his wife, Fran Rich, and 5,142,857 shares through the Cluff-Rich 401K. |
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SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants held by directors or officers of the Company.
Changes in Control
On February 1, 2023, the Company issued 2,237,019,090 shares of its common stock to certain service providers and to certain creditors in conversion of debt.
Securities Authorized for Issuance under Equity Compensation Plans
As of December 31, 2022, we have one equity compensation plan: the 2013 Incentive Stock Plan.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
In February 2014, the Company entered into a consulting agreement with a stockholder/director. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of July 1, 2018 (see Employment Agreements below). As of December 31, 2022, the Company owed $1,035,000 to the stockholder/director in accrued consulting fees.
Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually. This agreement is effective for 60 months. Additionally, the employment agreement provides for benefits and an optional annual bonus to be determined by the Board of Directors.
The Company took several short-term notes payable from related parties during 2022. The Company received $996,210 in cash from related parties and paid out $473,900 in cash to related parties on notes payable (see Note 9).
Director Independence
Our securities are quoted on the OTC Markets, which does not have any director independence requirements. Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.
Parents of the Smaller Reporting Company
We have no parents.
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ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2022, and 2021:
| Fee Category | 2022 | 2021 | ||||||
| Audit Fees | $ | 93,000 | $ | 91,582 | ||||
| Audit-related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | - | - | ||||||
| Total Fees | $ | 93,000 | $ | 91,582 | ||||
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q and Form 10-K or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
PART IV
ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| (a)(1)(2) | Financial Statements. See the audited financial statements for the year ended December 31, 2022 contained in Item 8 above which are incorporated herein by this reference. | |
| (a)(3) | Exhibits. The following exhibits are filed as part of this Annual Report: |
| Exhibit Number | Exhibit Description | |
| 3.1 | Articles of Incorporation (1) | |
| 3.2 | Certificate of Amendment, effective March 5, 2010(2) | |
| 3.3 | Certificate of Amendment, effective June 23, 2010(3) | |
| 3.4 | Articles of Merger, effective May 17, 2013 (4) | |
| 3.5 | Bylaws (1) | |
| 4.1* | Description of Securities |
| 32 |
| 33 |
| 31.1* | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Chief Financial Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Schema Document | |
| 101.CAL | Inline XBRL Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Definition Linkbase Document | |
| 101.LAB | Inline XBRL Label Linkbase Document | |
| 101.PRE | Inline XBRL Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| * | Filed herewith. | |
| (1) | Incorporated by reference from Form SB-2 filed with the SEC on October 31, 2007. | |
| (2) | Incorporated by reference from Form 8-K filed with the SEC on March 10, 2010. | |
| (3) | Incorporated by reference from Form 8-K filed with the SEC on June 28, 2010. | |
| (4) | Incorporated by reference from Form 10-Q filed with the SEC on May 20, 2013. | |
| (5) | Incorporated by reference from Form 8-K filed with the SEC on August 5, 2013. | |
| (6) | Incorporated by reference from Form 8-K filed with the SEC on March 1, 2013. | |
| (7) | Incorporated by reference from Form 8-K filed with the SEC on September 6, 2013. | |
| (8) | Incorporated by reference from Form 10-Q filed with the SEC on June 20, 2014. | |
| (9) | Incorporated by reference from Form 8-K filed with the SEC on March 12, 2014. | |
| (10) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2014. | |
| (11) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2015. | |
| (12) | Incorporated by reference from the Form 10-K filed with the SEC on May 3, 2016. | |
| (13) | Incorporated by reference from the Form 10-K filed with the SEC on April 17, 2017. | |
| (14) | Incorporated by reference from the Form 10-Q filed with the SEC on May 16, 2017. | |
| (15) | Incorporated by reference from the Form 8-K filed with the SEC on October 19, 2017. | |
(16)
(17)
(18) |
Incorporated by reference from the Form S-1 filed with the SEC on June 2, 2019.
Incorporated by reference from the Form 8-K filed with the SEC on January 25, 2023.
Incorporated by reference from the Form 8-K filed with the SEC on February 8, 2023. |
| 34 |
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INCEPTION MINING, INC. | ||
| Date: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| SIGNATURE | TITLE | DATE | ||
| /s/ Trent D’Ambrosio | ||||
| Trent D’Ambrosio | Director | April 17, 2023 | ||
| /s/ Whit Cluff | ||||
| Whit Cluff | Director | April 17, 2023 |
| 35 |
INCEPTION MINING, INC.
CONTENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Inception Mining, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Inception Mining, Inc. (“the Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2022 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, has an accumulated deficit, a working capital deficiency and negative cash flows from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-2 |
Determination and Valuation of Derivative Liabilities
Critical Audit Matter Description
As described further in Note 4 of the consolidated financial statements, during the year ended December 31, 2022, and in prior periods, the Company issued convertible notes that required management to assess whether the conversion features of the convertible notes required bifurcation and separate valuation as a derivative liability. The Company determined that the conversion features of certain of its convertible notes issued in financing arrangements required to be accounted for as derivative liabilities and accordingly were recorded at fair value when issued and subsequently re-measured to fair value upon settlement or at the end of each reporting period. The Company utilized either a monte carlo simulation with a geometric stock path, or an enterprise valuation-based model to determine the fair value of the derivative liabilities, depending on the nature of the instrument, and such models used certain assumptions related to exercise price, term, expected volatility, and risk-free interest rate.
We identified auditing the determination and valuation of the derivative liabilities as a critical audit matter due to the significant judgements used by the Company in determining whether the embedded conversion features required derivative accounting treatment and the significant judgements used in determining the fair value of the derivative liabilities. Auditing the determination and valuation of the derivative liabilities involved a high degree of auditor judgement, and specialized skills and knowledge were needed.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures included the following, among others:
| ● | We inspected and reviewed debt and other agreements to evaluate the Company’s determination of whether derivative accounting was required, including assessing and evaluating management’s application of relevant accounting standards to such transactions. | |
| ● | We evaluated the appropriateness and mechanical accuracy of each model utilized. | |
| ● | We tested the reasonableness of the assumptions used by the Company in the respective models, including exercise price, expected term, expected volatility, risk-free interest rate, and market capitalization. | |
| ● | We tested the accuracy and completeness of data used by the Company in developing the assumptions used in the valuation models. | |
| ● | We developed an independent expectation for comparison to the Company’s estimate. | |
| ● | We evaluated the accuracy and completeness of the Company’s presentation of these instruments in the financial statements and related disclosures in Note 4, including evaluating whether such disclosures were in accordance with relevant accounting standards. |
Professionals with specialized skills and knowledge were utilized by the Firm to assist in the evaluation of the Company’s estimate of fair value and in some cases the development of our own independent expectations.
Classification of Discontinued Operations
As described in Note 17 to the consolidated financial statements, during the year ended December 31, 2022, the Company committed to a plan to sell the Compañía Minera Cerros del Sur, S.A de C.V (“CMCS”) subsidiary. Management concluded that the held for sale criteria had been met related to CMCS and reflected the results of this business as a discontinued operation in the consolidated statements of operations for all periods presented. Management presents discontinued operations when there is a disposal or anticipated disposal of a component group or a group of components that, in management’s judgment, represents a strategic shift in the business that will have a major effect on operations and financial results. Upon the decision to sell CMSC, the net assets of CMCS were reclassified as held for sale in accordance with the authoritative guidance.
We identified the classification of CMCS as held for sale and as a discontinued operation as a critical audit matter because evaluating management’s analysis involved a high degree of auditor judgment and subjectivity due to the assumptions made by management when assessing whether CMCS met the criteria to be classified as held for sale, including the probability of the sale being completed within one year.
| F-3 |
Our audit procedures related to the classification of CMCS as held for sale and as discontinued operations included the following, among others:
| ● | We tested management’s assertion that CMCS met the criteria to be presented as held for sale at the balance sheet date, including the financial reporting presentation and disclosure requirements of such assertion. | |
| ● | We tested management’s assertion that CMCS should be presented as a discontinued operation, including the financial reporting implications of CMCS’s classification. | |
| ● | We inquired of management and inspected evidence that management planned to sell the business. | |
| ● | We evaluated the evidence, including testing completeness and accuracy of information provided by the entity used in the Company’s evaluation of whether CMCS met the criteria for discontinued operations, including the probability of the sale being completed within one year. Evidence that we examined included, but is not limited to, board meeting minutes for approval from the Board of Directors to sell CMCS, letters of intent with third parties for the purchase of CMCS, and a share purchase agreement for the sale of CMCS. We also evaluated the accuracy and appropriateness of the Company’s financial reporting and disclosure for CMCS’s classification as held for sale and as a discontinued operation. |
/s/
We have served as the Company’s auditor since 2015.
April 17, 2023
| F-4 |
Inception Mining, Inc.
Consolidated Balance Sheets
| December 31, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets held for sale | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Right of use operating lease asset | ||||||||
| Other assets | ||||||||
| Other non-current assets held for sale | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest - related parties | ||||||||
| Operating lease liability - current portion | ||||||||
| Note payable - current portion | ||||||||
| Notes payable - related parties | ||||||||
| Convertible notes payable - net of discount | ||||||||
| Derivative liabilities | ||||||||
| Current liabilities held for sale | ||||||||
| Total Current Liabilities | ||||||||
| Long-term note payable | ||||||||
| Long-term notes payable - related parties, net of current portion | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Long-term liabilities held for sale | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized, and shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Controlling Interest | ( | ) | ( | ) | ||||
| Non-Controlling Interest | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| F-5 |
Inception Mining, Inc.
Consolidated Statements of Operations and Comprehensive Loss
| For the Years Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Precious Metals Income | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating Expenses | ||||||||
| General and administrative | ||||||||
| Depreciation and amortization | ||||||||
| Total Operating Expenses | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other Income/(Expenses) | ||||||||
| Other income (expense) | ||||||||
| Gain on forgiveness of PPP loan | ||||||||
| Change in derivative liability | ||||||||
| Change in marketable securities | ||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Total Other Income/(Expenses) | ( | ) | ( | ) | ||||
| Net Loss from Operations before Income Taxes | ( | ) | ( | ) | ||||
| Provision for Income Taxes | ||||||||
| Net Loss from Continuing Operations | ( | ) | ( | ) | ||||
| Net Loss from Discontinued Operations | ( | ) | ( | ) | ||||
| Provision for Income Taxes on Discontinued Operations | ( | ) | ( | ) | ||||
| Net Loss from Discontinued Operations | ( | ) | ( | ) | ||||
| Net Loss | ( | ) | ( | ) | ||||
| Net Loss - Non-Controlling Interest | ||||||||
| Net Loss - Controlling Interest | $ | ( | ) | $ | ( | ) | ||
| Net loss per share - Continuing Operations - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Net loss per share - Discontinued Operations - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Net loss per share - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares outstanding during the period - Basic | ||||||||
| Weighted average number of shares outstanding during the period - Diluted | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Other Comprehensive Income (Loss) | ||||||||
| Exchange differences arising on translating foreign operations | ||||||||
| Total Comprehensive Loss | ( | ) | ( | ) | ||||
| Total Comprehensive Income (Loss) - Non-Controlling Interest | ( | ) | ||||||
| Total Comprehensive Loss - Controlling Interest | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to the consolidated financial statements.
| F-6 |
Inception Mining, Inc.
Consolidated Statement of Stockholders’ Deficit
| Preferred stock | Common stock | Additional | Other | Non- | Total | |||||||||||||||||||||||||||||||
| ($ 0.00001 Par) | ($ 0.00001 Par) | Paid-in | Accumulated | Comprehensive | Controlling | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Deficiency | ||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Shares issued upon conversions of note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the year | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued upon conversions of note payable | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the Year | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
| F-7 |
Inception Mining, Inc.
Consolidated Statements of Cash Flows
| For the Years Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss from discontinued operations | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Depreciation and amortization expense | ||||||||
| Loss on extinguishment of debt | ||||||||
| Change in derivative liability | ( | ) | ( | ) | ||||
| Gain on forgiveness of PPP loan | ( | ) | ( | ) | ||||
| Change in marketable securities | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Accounts payable and accrued liabilities - related parties | ||||||||
| Secured borrowings | ||||||||
| Operating cash flows from discontinued operations | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Proceeds on sale of marketable securities | ||||||||
| Investing activities of discontinued operations | ( | ) | ( | ) | ||||
| Net Cash Provided By (Used In) Investing Activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Repayment of notes payable-related parties | ( | ) | ( | ) | ||||
| Repayment of convertible notes payable | ( | ) | ( | ) | ||||
| Repayment of secured borrowings | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Proceeds from notes payable-related parties | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Financing activities of discontinued operations | ||||||||
| Net Cash Provided by (Used in) Financing Activities | ( | ) | ||||||
| Effects of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | ||||||||
| Less Cash of Discontinued Operations at End of Period | ( | ) | ( | ) | ||||
| Cash of Continued Operations at End of Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Finance leases to acquire equipment | $ | $ | ||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
| Inventory used to satisfy note payable | $ | $ | ||||||
| Recognition of debt discounts on convertible notes payable | $ | $ | ||||||
| Note payable issued for finance lease payments | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| F-8 |
Inception Mining, Inc.
Notes to Consolidated Financial Statements
As of December 31, 2022 and 2021
1. Nature of Business
Inception Mining, Inc. (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.
On March 5, 2010, the Company amended its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock from to .
On June 23, 2010 the Company amended its articles of incorporation to change its name to Gold American Mining Corp.
On
November 21, 2012, the Company implemented a
On
February 25, 2013, Gold American Mining Corp. and its majority shareholder (the “Majority Shareholder”), and its wholly-owned
subsidiary,
On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. (“Inception” or the “Company”).
On
October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks
and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through
its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V.
and holds other mining concessions. Pursuant to the agreement, the Company issued of shares of common stock of Inception
and assumed promissory notes in the amount of $
| F-9 |
On
January 11, 2016, the Company implemented a
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 .
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
COVID-19 – The Company has been impacted significantly by the COVID-19 global pandemic. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders, and recommendations to practice social distancing. Based on management’s assessment as of December 31, 2022, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
2. Summary of Significant Accounting Policies
Going
Concern – The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated
financial statements during year ended December 31, 2022, the Company has an accumulated deficit of $
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Basis of Presentation – The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Reclassifications - Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation.
Cash
and Cash Equivalents – The
Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.
At December 31, 2022 and December 31, 2021, the Company had no cash equivalents. The aggregate cash balance on deposit in these accounts
are insured by the Federal Deposit Insurance Corporation up to $
Exploration and Development Costs – Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
| F-10 |
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
Mineral Rights and Properties – We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
Fair Value Measurements – The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
| F-11 |
The fair value of financial instruments on December 31, 2022 are summarized below:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
The fair value of financial instruments on December 31, 2021 are summarized below:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Marketable securities | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below in Note 4. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below in Note 4 are that of volatility and market price of the underlying common stock of the Company.
Marketable Securities – We measure the fair value of marketable securities in accordance with ASC 820-10 – Fair Value Measurements. Any change in the fair value is recognized in net income in the period being reported.
Long-Lived Assets – We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment – We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
| Building | |
| Vehicles and equipment | |
| Processing and laboratory | |
| Furniture and fixtures |
| F-12 |
Revenue Recognition – In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
All accounts receivable amounts are due from a single customer. Substantially all mining revenues recorded in the current period also related to the same customer. As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product. However, the Company has chosen to sell to only two customers at this time.
Stock Issued for Goods and Services – Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received.
Comprehensive Loss – Comprehensive loss is made up of the exchange differences arising on translating foreign operations and the net loss for the years ended December 31, 2022 and 2021.
Derivative Liabilities – Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
Income Taxes – The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
| F-13 |
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Business
Segments – The Company operates in
Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah on a month-to-month basis.
The
Company incurred rent expense of $
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
3. Inventories, Stockpiles and Mineralized Materials on Leach Pads
Inventories, stockpiles and mineralized materials on leach pads at December 31, 2022 and 2021 consisted of the following:
| December 31, 2022 | December 31, 2021 | |||||||
| Supplies | $ | $ | ||||||
| Mineralized Material on Leach Pads | ||||||||
| ADR Plant | ||||||||
| Finished Ore | ||||||||
| Total Inventories | $ | $ | ||||||
There
were
| F-14 |
4. Derivative Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2022:
| Debt
Derivative Liabilities | ||||
| Balance, December 31, 2021 | $ | |||
| Transfers in upon initial fair value of derivative liabilities | ||||
| Change in fair value of derivative liabilities and warrant liability | ( | ) | ||
| Balance, December 31, 2022 | $ |
Derivative Liabilities – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
At
December 31, 2022, the Company marked to market the fair value of the debt derivatives and determined a fair value of $
Based upon ASC 840-15-25, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.
Warrant Liabilities – Prior to the periods being reported, the Company issued warrants in conjunction with the issuance of three Crown Bridge Convertible Notes and a Convertible Note with an investor. These warrants contained certain reset provisions. The accounting treatment of derivative financial instruments required that the Company record fair value of the derivatives as of the inception date (issuance date) and to fair value as of each subsequent reporting date.
At
December 31, 2022, the Company had a warrant liability of $
| F-15 |
5. Properties, Plant and Equipment, Net
Properties, plant and equipment of continuing operations at December 31, 2022 and 2021 consisted of the following:
| December 31, 2022 | December 31, 2021 | |||||||
| Machinery and Equipment | $ | $ | ||||||
| Office Equipment and Furniture | ||||||||
| Less Accumulated Depreciation | ( | ) | ( | ) | ||||
| Total Property, Plant and Equipment | $ | $ | ||||||
During
the years ended December 31, 2022 and 2021, the Company recognized depreciation expense of $
On
February 21, 2021, the Company sold the Up & Burlington property and mineral rights to Ounces High Exploration, Inc. in exchange
for $
6. Accounts Payable and Accrued Liabilities
Accounts Payable and accrued liabilities of continuing operations at December 31, 2022 and 2021 consisted of the following:
| December 31, 2022 | December 31, 2021 | |||||||
| Accounts Payable | $ | $ | ||||||
| Accrued Liabilities | ||||||||
| Accrued Salaries and Benefits | ||||||||
| Advances Payable | ||||||||
| Total Accrued Liabilities | $ | $ | ||||||
7. Secured Borrowings
On
June 25, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $
| F-16 |
8. Notes Payable
Notes payable of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
| Notes Payable | December 31, 2022 | December 31, 2021 | ||||||
| Phil Zobrist | $ | $ | ||||||
| Small Business Administration | ||||||||
| Total Notes Payable | ||||||||
| Less Short-Term Notes Payable | ( | ) | ||||||
| Total Long-Term Notes Payable | $ | $ | ||||||
Phil
Zobrist – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $
Small
Business Administration – On April 17, 2020, the Company issued an unsecured Promissory Note to the Small Business Administration
in the principal amount of $
9. Notes Payable – Related Parties
Notes payable – related parties of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
| Notes Payable - Related Parties | Relationship | December 31, 2022 | December 31, 2021 | |||||||
| Clavo Rico, Inc. | $ | $ | ||||||||
| Claymore Management | ||||||||||
| Cluff-Rich PC 401K | ||||||||||
| Debra D’ambrosio | ||||||||||
| Francis E. Rich IRA | ||||||||||
| Legends Capital | ||||||||||
| LWB Irrev Trust | ||||||||||
| MDL Ventures | ||||||||||
| Pine Valley Investments | ||||||||||
| WOC Energy LLC | ||||||||||
| Total Notes Payable - Related Parties | ||||||||||
| Less Short-Term Notes Payable - Related Parties | ( | ) | ( | ) | ||||||
| Total Long-Term Notes Payable - Related Parties | $ | $ | ||||||||
| F-17 |
Clavo
Rico, Incorporated – On April 5, 2019, GAIA Ltd and Silverbrook Corporation assigned
Claymore
Management – On October 2, 2016, the note was extended until
Cluff-Rich
PC 401K – On June 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Cluff-Rich PC 401K in the principal
amount of
D.
D’Ambrosio – On January 1, 2022, there was three unsecured Short-Term Promissory Notes to D. D’Ambrosio in the
principal amount of $
Francis
E. Rich – On May 24, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount
of
Francis
E. Rich – On November 25, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal
amount of $
Legends
Capital Group – On October 2, 2016, the notes were extended until
LW
Briggs Irrevocable Trust – On October 2, 2016, the notes were extended until
MDL
Ventures – The Company entered into an unsecured convertible note payable agreement with MDL Ventures, LLC, which is
Pine
Valley Investments, LLC – On December 6, 2021, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments,
LLC in the principal amount of $
Pine
Valley Investments, LLC – On April 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments,
LLC in the principal amount of $
Pine
Valley Investments, LLC – On August 15, 2022, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments,
LLC in the principal amount of $
| F-18 |
10. Convertible Notes Payable
Convertible notes payable were comprised of the following as of December 31, 2022 and December 31, 2021:
| Convertible Notes Payable | December 31, 2022 | December 31, 2021 | ||||||
| 1800 Diagonal Lending | $ | $ | ||||||
| Antczak Polich Law LLC | ||||||||
| Antilles Family Office LLC | ||||||||
| Scotia International | ||||||||
| Total Convertible Notes Payable | ||||||||
| Less Unamortized Discount | ( | ) | ( | ) | ||||
| Total Convertible Notes Payable, Net of Unamortized Debt Discount | ||||||||
| Less Short-Term Convertible Notes Payable | ( | ) | ( | ) | ||||
| Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount | $ | $ | ||||||
1800
Diagonal Lending LLC – On October 18, 2022, the Company issued an unsecured Convertible Promissory Note (“Note”)
to 1800 Diagonal Lending, LLC (“1800”), in the principal amount of $
Antczak
Polich Law, LLC – On August 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak
Polich Law, LLC (“Antczak”), in the principal amount of $
Antczak
Polich Law, LLC – On December 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to
Antczak Polich Law, LLC (“Antczak”), in the principal amount of $
Antilles
Family Office LLC – On May 20, 2019, the Company issued a secured Convertible Promissory Note (“Note”) to an Investor,
in the principal amount of $
Scotia
International of Nevada, Inc. – On January 10, 2019, the Company issued an unsecured Convertible Promissory Note (“Note”)
to Scotia International of Nevada, Inc. (“Scotia”), in the principal amount of $
| F-19 |
11. Stockholders’ Deficit
Common Stock
On
January 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
January 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
January 26, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 9, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 17, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
February 22, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
March 8, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
March 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
March 25, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
April 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
April 20, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
April 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
May 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
| F-20 |
On
May 21, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
June 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
July 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
July 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for
$
On
October 7, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
October 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
November 23, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
December 31, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was
for $
On
January 25, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
February 17, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice.
The conversion was for $
On
March 2, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
March 18, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
April 5, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
April 18, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
| F-21 |
On
April 25, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
May 20, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion
was for $
On
June 2, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion
was for $
On
June 13, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
June 17, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
June 23, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
June 28, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The
conversion was for $
On
July 8, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion
was for $
Warrants
On
January 1, 2018, the Company issued
On
May 11, 2018, the Company issued
On
October 25, 2018, the Company issued
On
May 20, 2019, the Company entered into a Note Purchase Agreement (the “Agreement”) with an investor (the “Investor”)
through which the Investor purchased (i) a Senior Secured Redeemable Convertible Note (“Note”) with a face value of $
| F-22 |
The
Company re-valued the warrants at December 31, 2022 for $
The following tables summarize the warrant activity during the years ended December 31, 2022 and 2021:
| Stock Warrants | Number of Warrants | Weighted Average Exercise Price | ||||||
| Balance at December 31, 2020 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Balance at December 31, 2021 | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ||||||
| Balance at December 31, 2022 | $ | |||||||
| 2022 Outstanding Warrants | Warrants Exercisable | |||||||||||||||||||
| Range of Exercise Price | Number Outstanding at December 31, 2022 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable at December 31, 2022 | Weighted Average Exercise Price | |||||||||||||||
| $ | $ | |||||||||||||||||||
| F-23 |
Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share reflects the potential dilution that could occur if stock options, warrants, and convertible securities to issue common stock were exercised or converted into common stock, if not anti-dilutive. The following is a reconciliation of the numerator and denominator used in the basic and diluted computation of net income per share:
| For the Years Ended | ||||||||
| Numerator | December 31, 2022 | December 31, 2021 | ||||||
| Net Loss - Controlling Interest | $ | ( | ) | $ | ( | ) | ||
| Adjusted Net Loss - Controlling Interest | $ | ( | ) | $ | ( | ) | ||
| Denominator | Shares | Shares | ||||||
| Basic Weighted Average Number of Shares Outstanding during Period | ||||||||
| Dilutive Shares | ||||||||
| Diluted Weighted Average Number of Shares Outstanding during Period | ||||||||
| Diluted Net Loss per Share | $ | ( | ) | $ | ( | ) | ||
13. Income Taxes
The
Company’s subsidiaries, Compania Minera Cerros del Sur and Compania Minera Clavo Rico, which are located in Honduras, are required
to pay income tax and solidarity tax on their income and/or assets annually. The Honduran annual report for 2020 was completed during
the year ended December 31, 2021 and the company recognized a tax liability of $
The Company accounts for U.S. income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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 bases. 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. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The provision for income tax expense (recovery) is comprised the following amounts:
| Tax Reconciliations | December 31, 2022 | December 31, 2021 | ||||||
| Tax at Statutory Rate | $ | ( | ) | $ | ( | ) | ||
| Meals and Entertainment | ( | ) | ( | ) | ||||
| Depreciation | ||||||||
| Change in Derivative Liability | ( | ) | ||||||
| Amortization of Debt Discount | ( | ) | ( | ) | ||||
| Accrued Interest | ( | ) | ||||||
| Change in Valuation of Allowance | ||||||||
| Tax Provision | $ | $ | ||||||
| F-24 |
The components of deferred income tax in the accompanying balance sheets are as follows:
| Deferred Tax Assets | December 31, 2022 | December 31, 2021 | ||||||
| ( | ||||||||
| Net Operating Loss Carry-forwards | $ | $ | ||||||
| Depreciation | ||||||||
| Accrued Interest | ||||||||
| Valuation Allowance | ( | ) | ( | ) | ||||
| Deferred Tax Assets | $ | $ | ||||||
As
of December 31, 2022 and December 31, 2021, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of
approximately $
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2042.
The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company’s tax years beginning with the year ended June 30, 2012 through December 31, 2021 generally remain open to examination by the Internal Revenue Service until its net operating loss carry-forwards are utilized and the applicable statutes of limitation have expired.
14. Related Party Transactions
Consulting
Agreement – In February 2014, the Company entered into a consulting agreement with a stockholder/director. The Company agreed
to pay $
Employment Agreements – Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
The
Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective
as of April 1, 2019 and provides for compensation of $
Notes
Payable – The Company took several short-term notes payable from related parties during 2022. The Company received $
15. Commitments and Contingencies
Litigation
The Company at times is subject to other legal proceedings that arise in the ordinary course of business. The following is a summary of pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of operations of the Company.
| F-25 |
On
December 30, 2021, the Company was served with a complaint filed by Antilles Family Office, LLC (“Antilles”) alleging an
amount of $
On
June 28, 2021, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., settled a labor dispute
brought in Honduras by one of the Company’s former employees for an amount of $
On
March 4, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with notice
of a civil litigation brought in Honduras by Empresa Agregados y Concretos S.A. (“Agrecon”) for an amount of approximately
$
The
Servicio de administración de Rentas (“SAR,” the tax authority in Honduras) has completed an audit of the Company’s
tax returns for 2017 and 2018. The Company’s subsidiary, Compañía Minera Clavo Rico, S.A. de C.V., has been served
with a lawsuit filed by SAR in Honduras alleging additional tax liability due. The Complaint alleges that HNL7,186,151,96 lempires are
due in a demand for execution of a forced extrajudicial title. The Company has accrued $
In the opinion of management, as of December 31, 2022, the amount of ultimate liability with respect to such matters, if any, may be likely to have a material impact on the Company’s business, financial position, results of operations or liquidity. However, as the outcome of litigation and other claims is difficult to predict significant changes in the estimated exposures could exist.
16. Concentrations
We generally sell a significant portion of our mineral production to a relatively small number of customers. For the year ended December 31, 2022, most of our consolidated product revenues were attributable to A-Mark Precious Metals and to Asahi Refining, Inc., our current and only two customers as of December 31, 2022. We are not dependent upon any one purchaser and have alternative purchasers readily available at competitive market prices if there is a disruption in services or other events that cause us to search for other ways to sell our production.
The Company currently is producing all of its precious metals from one mine located in Honduras. This location has most of the Company’s fixed assets and inventories. It would cause considerable disruption to the Company’s operations and revenue if this mine was disrupted or closed.
17. Discontinued Operations
During the year ended December 31, 2022, the Company decided to discontinue all of its operating activities. Based on that decision, the Company’s board of directors committed to a plan to sell the CMCS entity operating the mine in Honduras.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations (held for sale) in the consolidated balance sheets.
| December 31, 2022 | December 31, 2021 | |||||||
| CURRENT ASSETS OF DISCONTINUED OPERATIONS (HELD FOR SALE): | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS (HELD FOR SALE) | $ | $ | ||||||
| NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS (HELD FOR SALE): | ||||||||
| Property, plant and equipment, net | $ | $ | ||||||
| Other assets | ||||||||
| TOTAL NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS (HELD FOR SALE) | $ | $ | ||||||
| CURRENT LIABILITIES OF DISCONTINUED OPERATIONS (HELD FOR SALE): | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Finance lease liabilities - current portion | ||||||||
| Note payable | ||||||||
| Taxes payable | ||||||||
| TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS (HELD FOR SALE) | $ | $ | ||||||
| NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS (HELD FOR SALE): | ||||||||
| Finance lease liabilities, net of current portion | $ | $ | ||||||
| Mine reclamation obligation | ||||||||
| TOTAL NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS (HELD FOR SALE) | $ | $ | ||||||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive loss. The results of operations from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021, and consist of the following.
| F-26 |
| Years Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Precious Metals Income | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ( | ) | ||||||
| OPERATING EXPENSES OF DISCONTINUED OPERATIONS: | ||||||||
| General and administrative | ||||||||
| Depreciation and amortization | ||||||||
| OPERATING INCOME (LOSS) OF DISCONTINUED OPERATIONS | ( | ) | ||||||
| OTHER (INCOME) EXPENSE OF DISCONTINUED OPERATIONS | ||||||||
| Other (income) expense | ( | ) | ||||||
| Interest expense | ||||||||
| LOSS BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||
| Provision for income taxes of discontinued operations | ( | ) | ( | ) | ||||
| NET LOSS OF DISCONTINUED OPERATIONS | $ | ( | ) | $ | ( | ) | ||
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended December 31, 2022 and 2021, and consist of the following.
| Years Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| DISCONTINUED OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Depreciation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables | ( | ) | ||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Accounts payable and accrued liabilities - related parties | ( | ) | ||||||
| Net cash provided by (used in) operating activities of discontinued operations | $ | $ | ||||||
| INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS | ||||||||
| Purchase of property, plant and equipment | $ | ( | ) | $ | ( | ) | ||
| Net cash used in investing activities of discontinued operations | $ | ( | ) | $ | ( | ) | ||
| FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS | ||||||||
| Payments on finance leases | $ | ( | ) | $ | ||||
| Proceeds from notes payable | ||||||||
| Net cash provided by financing activities of discontinued operations | $ | $ | ||||||
18. Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date which the consolidated financial statements were available to be issued and there are no material subsequent events, except as noted below.
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company.
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
The purchase price for the sale of CMCS by the Company
to MLM consisted of the following cash consideration (a) $
| F-27 |
In addition to the amounts already delivered under
the LOI, an additional amount of $ shall be paid by MLM to the Company over a period of twenty-four (24) months (the “Monthly
Payments”). The Monthly Payments shall be paid as follows: (i) $
Following the Closing of the LOI on January 24, 2023, the Company divested its ownership interest in CMCS and its interests in the Clavo Rico mine, resulting in the transfer of operations to Mother Lode Mining and full control of the Clavo Rico mine asset.
On December 30, 2021, the Company was served with a complaint filed by
Antilles Family Office, LLC (“Antilles”) asserting claims related to alleged breach of contract and unjust enrichment against
the Company. This matter was settled on January 18, 2023 in exchange for the payment of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Cluff-Rich 401(k) upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Fran Rich upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Debra D’Ambrosio upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Trent D’Ambrosio upon the conversion of
$
On
February 1, 2023, the Company issued restricted shares of Common Stock to Kay Briggs upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Legends Capital Group upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to L W Briggs Irrevocable Trust upon the conversion
of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Claymore Management upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Clavo Rico Inc. upon the conversion of $
On
February 1, 2023, the Company issued restricted shares of Common Stock to Pine Valley Investments upon the conversion of
$
On February 1, 2023, the Company issued restricted shares of Common Stock to Whit Cluff for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Rod Sperry for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Brunson Chandler & Jones, PLLC for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Kyle Pickard for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Justin Wilson for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Sean Wilson for services rendered to the Company.
| F-28 |
Exhibit 4.1
DESCRIPTION OF SECURITIES OF INCEPTION MINING INC.
The following is a summary of the material terms of the Inception Mining Inc.’s common and preferred stock, which is based upon, and is qualified in its entirety by reference to, applicable law and Inception Mining’s Articles of Incorporation, as amended (the “Inception Mining Articles of Incorporation”). For a complete description of the terms of Inception Mining’s common and preferred stock, refer to the Inception Mining Inc.’s Articles of Incorporation, as amended, which are included as exhibits to this Annual Report on Form 10-K.
Classes of Stock
Inception Mining Inc. has two classes of stock: common stock and preferred stock, with 10.310,000,000 shares of capital stock authorized consisting of (i) 10.300,000,000 shares of common stock, $0.00001 par value, and (ii) 10,000,000 shares of preferred stock, $0.00001 par value.
On August 31, 2016, fifty-one shares of preferred stock were designated as Series A with voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (x) the Numerator. They have no rights of conversion.
There are 2,481,653,106 shares of our common stock were issued, issuable and outstanding as of April 14, 2023, and 51 shares of preferred stock issued and outstanding as of April 14, 2023.
EXHIBIT 31.1
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Inception Mining Inc.; |
| 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. | I am 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my 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 my 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. | I have disclosed, based on my 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: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Inception Mining Inc.; |
| 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. | I am 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: |
| (e) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| (f) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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; | |
| (g) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my 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 | |
| (h) | 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. | I have disclosed, based on my 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): |
| (c) | 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 | |
| (d) | 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: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Financial Officer (Principal Accounting Officer) |
EXHIBIT 32.1
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 Annual Report on Form 10-K of Inception Mining Inc. (the “Company”) for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 32.2
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 Annual Report on Form 10-K of Inception Mining Inc. (the “Company”) for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 17, 2023 | By: | /s/ Trent D’Ambrosio |
| Name: | Trent D’Ambrosio | |
| Title: | Chief Financial Officer (Principal Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.00001 | $ 0.00001 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued | 51 | 51 |
| Preferred stock, shares outstanding | 51 | 51 |
| Common stock, par value | $ 0.00001 | $ 0.00001 |
| Common stock, shares authorized | 10,300,000,000 | 10,300,000,000 |
| Common stock, shares issued | 244,634,016 | 162,421,850 |
| Common stock, shares outstanding | 244,634,016 | 162,421,850 |
Consolidated Statement of Stockholders' Deficit - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
Noncontrolling Interest [Member] |
Total |
|---|---|---|---|---|---|---|---|
| Balance, value at Dec. 31, 2020 | $ 1 | $ 787 | $ 5,882,614 | $ (34,668,784) | $ (673,185) | $ (8,675) | $ (29,467,242) |
| Balance, shares at Dec. 31, 2020 | 51 | 78,668,420 | |||||
| Shares issued upon conversions of note payable | $ 837 | 1,998,825 | 1,999,662 | ||||
| Shares issued upon conversions of note payable, shares | 83,753,430 | ||||||
| Foreign currency translation adjustment | 33,236 | 33,236 | |||||
| Net loss for the Year | (2,839,645) | (1,569) | (2,841,214) | ||||
| Balance, value at Dec. 31, 2021 | $ 1 | $ 1,624 | 7,881,439 | (37,508,429) | (639,949) | (10,244) | (30,275,558) |
| Balance, shares at Dec. 31, 2021 | 51 | 162,421,850 | |||||
| Shares issued upon conversions of note payable | $ 822 | 271,276 | 272,098 | ||||
| Shares issued upon conversions of note payable, shares | 82,212,166 | ||||||
| Foreign currency translation adjustment | 21,266 | 21,266 | |||||
| Net loss for the Year | (4,147,141) | (1,708) | (4,148,849) | ||||
| Balance, value at Dec. 31, 2022 | $ 1 | $ 2,446 | $ 8,152,715 | $ (41,655,570) | $ (618,683) | $ (11,952) | $ (34,131,043) |
| Balance, shares at Dec. 31, 2022 | 51 | 244,634,016 |
Nature of Business |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Business | 1. Nature of Business
Inception Mining, Inc. (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.
On March 5, 2010, the Company amended its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock from to .
On June 23, 2010 the Company amended its articles of incorporation to change its name to Gold American Mining Corp.
On November 21, 2012, the Company implemented a 200 to 1 reverse stock split. Upon effectiveness of the stock split, each shareholder cancelled 200 shares of common stock for every share of common stock owned as of November 21, 2012. This reverse stock split was effective on February 13, 2013. All share and per share references have been retroactively adjusted to reflect this 200 to 1 reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented.
On February 25, 2013, Gold American Mining Corp. and its majority shareholder (the “Majority Shareholder”), and its wholly-owned subsidiary, Inception Development Inc. (the “Subsidiary”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Inception Resources, LLC, a Utah corporation (“Inception Resources”), pursuant to which Inception purchased the U.P. and Burlington Gold Mine in consideration of shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net royalty. Inception Resources was an entity owned by and under the control of the majority shareholder. This transaction is deemed an asset purchase by entities under common control. The Asset Purchase Agreement closed on February 25, 2013 (the “Closing”). Inception was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior to our acquisition of the gold mine pursuant to the terms of the Asset Purchase Agreement.
On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. (“Inception” or the “Company”).
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. and holds other mining concessions. Pursuant to the agreement, the Company issued of shares of common stock of Inception and assumed promissory notes in the amount of $5,488,980 and accrued interest of $3,434,426. Under this merger agreement, there was a change in control and it has been treated for accounting purposes as a reverse recapitalization with Clavo Rico, Ltd. being the surviving entity. Its workings include several historical underground operations dating back to the early Mayan and Spanish occupation.
On January 11, 2016, the Company implemented a 5.5 to 1 reverse stock split. This reverse stock split was effective on May 26, 2016. All share and per share references have been retroactively adjusted to reflect this 5.5 to 1 reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if it occurred on the first day of the first period presented. Immediately before the Reverse Split, the Company had shares of common stock outstanding. Immediately after the Reverse Split, the Company had shares of common stock outstanding, pending fractional-share rounding-up calculations to adjust for the Reverse Split.
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 .
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
COVID-19 – The Company has been impacted significantly by the COVID-19 global pandemic. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders, and recommendations to practice social distancing. Based on management’s assessment as of December 31, 2022, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
|
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
Going Concern – The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2022, the Company has an accumulated deficit of $41,655,570, a working capital deficit of $28,765,349 and used $902,422 in cash for operating activities. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date these financial statements are issued.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Basis of Presentation – The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
Reclassifications - Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation.
Cash and Cash Equivalents – The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2022 and December 31, 2021, the Company had no cash equivalents. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts.
Exploration and Development Costs – Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
Mineral Rights and Properties – We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
Fair Value Measurements – The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on December 31, 2022 are summarized below:
The fair value of financial instruments on December 31, 2021 are summarized below:
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below in Note 4. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below in Note 4 are that of volatility and market price of the underlying common stock of the Company.
Marketable Securities – We measure the fair value of marketable securities in accordance with ASC 820-10 – Fair Value Measurements. Any change in the fair value is recognized in net income in the period being reported.
Long-Lived Assets – We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment – We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Revenue Recognition – In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
All accounts receivable amounts are due from a single customer. Substantially all mining revenues recorded in the current period also related to the same customer. As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product. However, the Company has chosen to sell to only two customers at this time.
Stock Issued for Goods and Services – Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received.
Comprehensive Loss – Comprehensive loss is made up of the exchange differences arising on translating foreign operations and the net loss for the years ended December 31, 2022 and 2021.
Derivative Liabilities – Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
Income Taxes – The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Business Segments – The Company operates in one segment and therefore segment information is not presented.
Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah on a month-to-month basis.
The Company incurred rent expense of $15,252 and $14,945 for the year ended December 31, 2022 and 2021.
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
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Inventories, Stockpiles and Mineralized Materials on Leach Pads |
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories, Stockpiles and Mineralized Materials on Leach Pads | 3. Inventories, Stockpiles and Mineralized Materials on Leach Pads
Inventories, stockpiles and mineralized materials on leach pads at December 31, 2022 and 2021 consisted of the following:
There were no stockpiles at December 31, 2022 and 2021. All inventories are included in Note 17 – Discontinued Operations.
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Derivative Financial Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||
| Derivative Financial Instruments | 4. Derivative Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2022:
Derivative Liabilities – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
At December 31, 2022, the Company marked to market the fair value of the debt derivatives and determined a fair value of $3,262,612. The Company recorded a gain from change in fair value of debt derivatives of $833,278 for the year ended December 31, 2022. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model, the Monte Carlo Valuation Model and the Company’s Enterprise Valuation Model. The Binomial Option Pricing Model was based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 199.09%, (3) weighted average risk-free interest rate of 4.12% (4) expected life of 0.09 years, and (5) the quoted market price of the Company’s common stock at each valuation date. The Monte Carlo Valuation Model was based on the following assumptions: (1) expected volatility of 199.10%, (2) weighted average risk-free interest rate of 4.63% and (3) expected life of 0.80 years. The Company’s Enterprise Valuation Model was based on the following assumptions: (1) outstanding note balance at December 31, 2022 of $3,073,532, (2) outstanding shares of common stock at December 31, 2022 of shares and (3) closing stock price on December 31, 2022 of $ per share.
Based upon ASC 840-15-25, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.
Warrant Liabilities – Prior to the periods being reported, the Company issued warrants in conjunction with the issuance of three Crown Bridge Convertible Notes and a Convertible Note with an investor. These warrants contained certain reset provisions. The accounting treatment of derivative financial instruments required that the Company record fair value of the derivatives as of the inception date (issuance date) and to fair value as of each subsequent reporting date.
At December 31, 2022, the Company had a warrant liability of $0. The Company recorded a loss from change in fair value of warrant liability of $0 for the period ended December 31, 2022. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model. The Binomial Option Pricing Model was based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 191.21% to 196.98%, (3) weighted average risk-free interest rate of 4.73% to 4.76% (4) expected life of 0.36 to 0.82 years, and (5) the quoted market price of the Company’s common stock at each valuation date.
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Properties, Plant and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Properties, Plant and Equipment, Net | 5. Properties, Plant and Equipment, Net
Properties, plant and equipment of continuing operations at December 31, 2022 and 2021 consisted of the following:
During the years ended December 31, 2022 and 2021, the Company recognized depreciation expense of $725 and 2,789, respectively.
On February 21, 2021, the Company sold the Up & Burlington property and mineral rights to Ounces High Exploration, Inc. in exchange for $250,000 in cash consideration and 66,974,252 shares of common stock of Hawkstone Mining Limited, a publicly-traded Australian company. The value of this property had previously been reduced to zero in previous years, so the Company recorded a gain on sale on mining property of $471,083.
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Accounts Payable and Accrued Liabilities |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities | 6. Accounts Payable and Accrued Liabilities
Accounts Payable and accrued liabilities of continuing operations at December 31, 2022 and 2021 consisted of the following:
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Secured Borrowings |
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| Secured Borrowings | |
| Secured Borrowings | 7. Secured Borrowings
On June 25, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $172,663. The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $17,266, for a total expected remittance of $189,929. The maturity date of the notes was December 26, 2020. On December 26, 2020, the Company entered into two new financing arrangements with third parties for a combined principal amount of $118,757. The terms of the arrangements require the Company to pay the combined principal balance plus a guaranteed return of no less than 10 percent, or $11,876, for a total expected remittance of $130,633. Also on that day, one of the lenders chose to liquidate a portion of his balance amounting to $83,006. This amount was paid to the lender in January 2021. The maturity date of the notes was June 26, 2021. In May 2021, the remaining agreements were liquidated for an amount totaling $134,508. The terms of repayment allow the Company to remit to the lender a certain quantity of gold to satisfy the liability though the Company expects to liquidate gold held and satisfy the liability in cash.
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Notes Payable |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable | 8. Notes Payable
Notes payable of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
Phil Zobrist – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $60,000 (the “Note”) due on demand and bearing 0% per annum interest. The total net proceeds the Company received was $60,000. On October 2, 2015, the Company entered into a new convertible note with Phil Zobrist that matures on December 31, 2016 and bears 18% per annum interest. The Company agreed to accrue interest from inception of these Notes in the amount of $29,412 and charged this amount to interest expense during the year ended December 31, 2015. The Note is convertible into common stock, at holder’s option, at a price of $0.99 (0.18 pre-split) or a 50% discount to the average of the three lowest VWAP of the common stock during the 20-trading day period prior to conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2024. The Company recognized a gain on the extinguishment of debt of $121,337 for the remaining derivative liability and of $11,842 for the remaining debt discount. As of December 31, 2022, the gross balance of the note was $60,000 and accrued interest was $107,734.
Small Business Administration – On April 17, 2020, the Company issued an unsecured Promissory Note to the Small Business Administration in the principal amount of $100,000 (the “Note”) that matures on April 16, 2022 and bearing 1.00% per annum interest as part of the Covid-19 Cares Act. The total net proceeds the Company received was $100,000. On April 30, 2021, the Company issued an additional unsecured Promissory Note to the Small Business Administration in the principal amount of $31,667 that matures on April 30, 2023 and bears 3.75% per annum interest under additional funding of the Covid-19 Cares Act. The total net proceeds the Company received was $31,667. During the year ended December 31, 2021, the Company received forgiveness on the first loan in the amount of $31,667 under the Covid-19 Cares Act. During the nine months ended September 30, 2022, the Company received forgiveness on the second loan in the amount of $31,667 under the Covid-19 Cares Act. Since September 2021, the Company made monthly payments on the first loan that amount to $68,333. As of December 31, 2022, the gross balance of the note was $ and accrued interest was $0.
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Notes Payable – Related Parties |
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| Notes Payable – Related Parties | 9. Notes Payable – Related Parties
Notes payable – related parties of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
Clavo Rico, Incorporated – On April 5, 2019, GAIA Ltd and Silverbrook Corporation assigned 100% of the outstanding principal balance of their notes and all accrued interest to Clavo Rico, Incorporated. The GAIA Ltd and Silverbrook Corporation notes had been extended until December 31, 2024 and bear 18% per annum interest. As of December 31, 2022, the gross balance of the notes was $3,377,980 and accrued interest was $6,343,582.
Claymore Management – On October 2, 2016, the note was extended until December 31, 2024. As of December 31, 2022, the gross balance of the note was $185,000 and accrued interest was $392,849.
Cluff-Rich PC 401K – On June 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Cluff-Rich PC 401K in the principal amount of 60,000 (the “Note”) due on December 31, 2022 and bears a 5.0% interest rate. As of December 31, 2022, the outstanding balance of the Note was $60,000 and accrued interest was $18,000.
D. D’Ambrosio – On January 1, 2022, there was three unsecured Short-Term Promissory Notes to D. D’Ambrosio in the principal amount of $178,900 outstanding from 2021. During 2022, the Company has issued fourteen unsecured Short-Term Promissory Notes to D. D’Ambrosio in principal amounts totaling $731,210 (the “Notes”) that all bear a 3.00% interest rate. During 2022, the Company has made payments totaling $488,790 towards the principal balances of $463,900 and accrued interest of $24,890. As of December 31, 2022, there were three Notes outstanding with outstanding balance of the Notes of $446,210 and accrued interest of $81,204.
Francis E. Rich – On May 24, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount of 50,000 (the “Note”) due on December 25, 2022 and bears a 5.0% interest rate. As of December 31, 2022, the outstanding balance of the Note was $50,000 and accrued interest was $22,500.
Francis E. Rich – On November 25, 2021, the Company issued an unsecured Short-Term Promissory Note to Francis E. Rich in the principal amount of $50,000 (the “Note”) due on December 25, 2022 and bears a 5.0% interest rate. As of December 31, 2022, the outstanding balance of the Note was $50,000 and accrued interest was $25,000.
Legends Capital Group – On October 2, 2016, the notes were extended until December 31, 2024. As of December 31, 2022, the gross balance of the note was $715,000 and accrued interest was $1,478,412.
LW Briggs Irrevocable Trust – On October 2, 2016, the notes were extended until December 31, 2024. As of December 31, 2022, the gross balance of the note was $1,101,000 and accrued interest was $2,251,996.
MDL Ventures – The Company entered into an unsecured convertible note payable agreement with MDL Ventures, LLC, which is 100% owned by a Company officer, effective October 1, 2014, due on December 31, 2016 and bears 18% per annum interest, due at maturity. Principal on the convertible note is convertible into common stock at the holder’s option at a price of the lower of $0.99 (0.18 pre-split) or 50% of the lowest three daily volume weighted average prices of the Company’s common stock during the 20 consecutive days prior to the date of conversion. On October 2, 2016, the Company renegotiated the note payable. The convertible feature was removed, and the note was extended until December 31, 2020. The Company recognized a gain on the extinguishment of debt of $1,487,158 for the remaining derivative liability. As of December 31, 2022, the gross balance of the note was $1,794,754 and accrued interest was $178,849.
Pine Valley Investments, LLC – On December 6, 2021, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments, LLC in the principal amount of $100,000 (the “Note”) due on January 6, 2022 and bears a 5.0% interest rate. This note has been extended until October 29, 2022. As of December 31, 2022, the outstanding balance of the Note was $90,000 and accrued interest was $40,000.
Pine Valley Investments, LLC – On April 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments, LLC in the principal amount of $160,000 (the “Note”) due on December 24, 2022 and bears a 5.0% interest rate. As of December 31, 2022, the outstanding balance of the Note was $160,000 and accrued interest was $64,000.
Pine Valley Investments, LLC – On August 15, 2022, the Company issued an unsecured Short-Term Promissory Note to Pine Valley Investments, LLC in the principal amount of $45,000 (the “Note”) due on February 15, 2023 and bears a 5.0% interest rate. As of December 31, 2022, the outstanding balance of the Note was $45,000 and accrued interest was $11,250.
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Convertible Notes Payable |
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| Convertible Notes Payable | 10. Convertible Notes Payable
Convertible notes payable were comprised of the following as of December 31, 2022 and December 31, 2021:
1800 Diagonal Lending LLC – On October 18, 2022, the Company issued an unsecured Convertible Promissory Note (“Note”) to 1800 Diagonal Lending, LLC (“1800”), in the principal amount of $116,200 (the “Note”) due on October 18, 2023 and bears 12% per annum interest, due at maturity. The total net proceeds the Company received was $100,000 (less an original issue discount (“OID”) of $16,200). The Note is convertible into common stock, at holder’s option, at a 25% discount of the average of the three lowest trading price of the common stock during the 10 trading day period prior to conversion. On November 30, 2022, the Company paid $13,014 towards the principal balance of $11,620 and $1,394 in accrued interest and prepayment penalty. For the year ended December 31, 2022, the Company amortized $23,558 of debt discount to current period operations as interest expense. As of December 31, 2022, the gross balance of the note was $104,580 and accrued interest was $12,550.
Antczak Polich Law, LLC – On August 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $300,000 (the “Note”) due on August 1, 2019 and bears 8% per annum interest, due at maturity. This Note was issued for $300,000 in legal fees due to Antczak for its services related to several legal issues handled for the Company. The Note is convertible into common stock, at holder’s option, at a fixed conversion price of $0.75 per share. As of December 31, 2022, the gross balance of the note was $279,123 and accrued interest was $105,675.
Antczak Polich Law, LLC – On December 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $130,000 (the “Note”) due on December 1, 2019 and bears 8% per annum interest, due at maturity. This Note was issued for $130,000 in legal fees due to Antczak for its services related to several legal issues handled for the Company. The Note is convertible into common stock, at holder’s option, at a fixed conversion price of $0.75 per share. As of December 31, 2022, the gross balance of the note was $0 and accrued interest was $14,142.
Antilles Family Office LLC – On May 20, 2019, the Company issued a secured Convertible Promissory Note (“Note”) to an Investor, in the principal amount of $4,250,000 (the “Note”) due on May 20, 2022 and bears 20% (24% default) per annum interest, due at maturity. The total net proceeds the Company received was $3,000,000. On November 24, 2021, the Note was assigned by the Investor to Antilles Family Office, LLC (“Antilles”). The Note is convertible into common stock, at holder’s option, at 100% of market price less $0.01 per share. Market price means the mathematical average of the five lowest individually daily volume weighted average prices of the common stock from the period beginning on the issuance date and ending on the maturity date. The conversion price has a floor price of $0.01 per share of common stock. The Company issued 9,250,000 warrants to purchase shares of common stock in connection with this note. The warrants have a three-year life and an exercise price as follows: 3,750,000 at an exercise price of $0.40 per share, 3,000,000 at an exercise price of $0.50 per share and at an exercise price of $0.60 per share. The proceeds were allocated between the note for $1,788,038 and the warrants for $1,211,962. The note has an early payoff penalty of 140% of the then outstanding face value. On July 29, 2019, the investor converted $265,000 of the principal balance into shares of common stock valued at $0.11 per share. The Company recognized a loss on the extinguishment of debt of $40,350. During 2020, the investor converted $36,300 of the principal balance into shares of common stock. The Company recognized a loss on the extinguishment of debt of $531,194. The Company also made cash payments of $500,000 towards the principal balance of the note. The Company has required payments as follows: $2,400,000 in 2021 and the remaining balance due in 2022. During 2020, the Company experienced a triggering event. As a result, the interest rate increased to 20% for the life of the note. On April 14, 2020, the Company entered into a Forbearance Agreement with Investor in which Investor agreed to rescind its prior declaration of an Event of Default under the May 20, 2019 Note Purchase Agreement and the Company agreed to pay certain monthly and quarterly redemptions of the May 20, 2019 Note through 2022. Specifically, the Company agreed to pay $900,000 during 2020, $2,400,000 during 2021 and $500,000 delivered during each quarter of 2022 until the Note is converted or redeemed in full. During the year ended December 31, 2021, the investor converted $231,724 of the principal balance into shares of common stock. The Company recognized a loss on the extinguishment of debt of $1,783,593. The Company also made cash payments of $142,857 towards the principal balance of the note. The Investor assigned the Note to Antilles in November 2021. The Company is not current with all payments due under the Forebearance Agreement. On December 30, 2021, the Company was served with a complaint filed by Antilles claiming an amount of $5,324,206 due from the Company. In the complaint, filed in the United States District Court for the District of Delaware, Antilles alleges breach of contract and unjust enrichment against the Company and seeks a judgment in the collection action, an aware of attorneys’ fees and other expenses, and injunctive relief to preserve the assets of the Company. The Company has responded to the complaint with a motion to dismiss several counts of the complaint as impermissibly duplicative of the breach of contract claim, and intends to defend the lawsuit aggressively. During the nine months ended September 30, 2022, the investor converted $587 of the principal balance into shares of common stock. The Company recognized a loss on the extinguishment of debt of $271,511. As of December 31, 2022, the gross balance of the note was $3,073,532 and accrued interest was $3,635,012.
Scotia International of Nevada, Inc. – On January 10, 2019, the Company issued an unsecured Convertible Promissory Note (“Note”) to Scotia International of Nevada, Inc. (“Scotia”), in the principal amount of $400,000 (the “Note”) due on January 10, 2022 and bears 6% per annum interest, due at maturity. The Note was issued as part of a buyout agreement on the net smelter royalty due Scotia on the precious metals mined from the Company’s mining operation in Honduras. The Note is convertible into common stock, at holder’s option, at $0.50 per share as long as the Company’s common stock’s bid price is less than $0.75 per share. If the bid price is more than $0.75 per share, then Scotia may elect to convert at the average bid price of the common stock during the 10-trading day period prior to conversion. For the nine months ended September 30, 2022, the Company amortized $826 of debt discount to current period operations as interest expense. As of December 31, 2022, the gross balance of the note was $395,042 and accrued interest was $95,012.
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Stockholders’ Deficit |
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| Stockholders’ Deficit | 11. Stockholders’ Deficit
Common Stock
On January 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,500 in principal. The shares were valued at $ per share for a total value of $54,857. The Company recognized a loss of extinguishment of debt of $46,971 on this conversion.
On January 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,900 in principal. The shares were valued at $ per share for a total value of $58,206. The Company recognized a loss of extinguishment of debt of $49,847 on this conversion.
On January 26, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,000 in principal. The shares were valued at $ per share for a total value of $62,993. The Company recognized a loss of extinguishment of debt of $54,409 on this conversion.
On February 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,900 in principal. The shares were valued at $ per share for a total value of $75,356. The Company recognized a loss of extinguishment of debt of $66,730 on this conversion.
On February 9, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,500 in principal. The shares were valued at $ per share for a total value of $96,458. The Company recognized a loss of extinguishment of debt of $87,254 on this conversion.
On February 17, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,200 in principal. The shares were valued at $ per share for a total value of $123,152. The Company recognized a loss of extinguishment of debt of $114,106 on this conversion.
On February 22, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,300 in principal. The shares were valued at $ per share for a total value of $144,635. The Company recognized a loss of extinguishment of debt of $135,434 on this conversion.
On March 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,200 in principal. The shares were valued at $ per share for a total value of $107,088. The Company recognized a loss of extinguishment of debt of $97,873 on this conversion.
On March 8, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $10,800 in principal. The shares were valued at $ per share for a total value of $113,104. The Company recognized a loss of extinguishment of debt of $103,264 on this conversion.
On March 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $11,100 in principal. The shares were valued at $ per share for a total value of $152,081. The Company recognized a loss of extinguishment of debt of $141,925 on this conversion.
On March 15, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $11,500 in principal. The shares were valued at $ per share for a total value of $117,718. The Company recognized a loss of extinguishment of debt of $107,137 on this conversion.
On March 25, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $12,000 in principal. The shares were valued at $ per share for a total value of $102,994. The Company recognized a loss of extinguishment of debt of $91,802 on this conversion.
On April 5, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $12,600 in principal. The shares were valued at $ per share for a total value of $104,175. The Company recognized a loss of extinguishment of debt of $92,252 on this conversion.
On April 20, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,000 in principal. The shares were valued at $ per share for a total value of $69,949. The Company recognized a loss of extinguishment of debt of $57,413 on this conversion.
On April 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,600 in principal. The shares were valued at $ per share for a total value of $74,962. The Company recognized a loss of extinguishment of debt of $61,717 on this conversion.
On May 11, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $13,900 in principal. The shares were valued at $ per share for a total value of $69,319. The Company recognized a loss of extinguishment of debt of $55,567 on this conversion.
On May 21, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $19,000 in principal. The shares were valued at $ per share for a total value of $91,261. The Company recognized a loss of extinguishment of debt of $72,261 on this conversion.
On June 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $18,900 in principal. The shares were valued at $ per share for a total value of $74,411. The Company recognized a loss of extinguishment of debt of $55,511 on this conversion.
On July 2, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $9,500 in principal. The shares were valued at $ per share for a total value of $69,978. The Company recognized a loss of extinguishment of debt of $60,478 on this conversion.
On July 18, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $5,200 in principal. The shares were valued at $ per share for a total value of $57,975. The Company recognized a loss of extinguishment of debt of $52,775 on this conversion.
On October 7, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $40 in principal. The shares were valued at $ per share for a total value of $75,630. The Company recognized a loss of extinguishment of debt of $75,590 on this conversion.
On October 28, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $40 in principal. The shares were valued at $ per share for a total value of $64,985. The Company recognized a loss of extinguishment of debt of $64,945 on this conversion.
On November 23, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $4 in principal. The shares were valued at $ per share for a total value of $4,762. The Company recognized a loss of extinguishment of debt of $4,758 on this conversion.
On December 31, 2021, the Company issued to an Investor shares of its common stock under a conversion notice. The conversion was for $40 in principal. The shares were valued at $ per share for a total value of $33,613. The Company recognized a loss of extinguishment of debt of $33,573 on this conversion.
On January 25, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $40 in principal. The shares were valued at $ per share for a total value of $39,215. The Company recognized a loss of extinguishment of debt of $39,175 on this conversion.
On February 17, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $30 in principal. The shares were valued at $ per share for a total value of $31,512. The Company recognized a loss of extinguishment of debt of $31,482 on this conversion.
On March 2, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $35 in principal. The shares were valued at $ per share for a total value of $30,882. The Company recognized a loss of extinguishment of debt of $30,847 on this conversion.
On March 18, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $36 in principal. The shares were valued at $ per share for a total value of $22,689. The Company recognized a loss of extinguishment of debt of $22,653 on this conversion.
On April 5, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $31 in principal. The shares were valued at $ per share for a total value of $19,972. The Company recognized a loss of extinguishment of debt of $19,941 on this conversion.
On April 18, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $32 in principal. The shares were valued at $ per share for a total value of $15,686. The Company recognized a loss of extinguishment of debt of $15,654 on this conversion.
On April 25, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $34 in principal. The shares were valued at $ per share for a total value of $17,619. The Company recognized a loss of extinguishment of debt of $17,585 on this conversion.
On May 20, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $36 in principal. The shares were valued at $ per share for a total value of $14,622. The Company recognized a loss of extinguishment of debt of $14,586 on this conversion.
On June 2, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $38 in principal. The shares were valued at $ per share for a total value of $13,837. The Company recognized a loss of extinguishment of debt of $13,799 on this conversion.
On June 13, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $40 in principal. The shares were valued at $ per share for a total value of $14,005. The Company recognized a loss of extinguishment of debt of $13,965 on this conversion.
On June 17, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $45 in principal. The shares were valued at $ per share for a total value of $8,823. The Company recognized a loss of extinguishment of debt of $8,778 on this conversion.
On June 23, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $60 in principal. The shares were valued at $ per share for a total value of $16,807. The Company recognized a loss of extinguishment of debt of $16,747 on this conversion.
On June 28, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $63 in principal. The shares were valued at $ per share for a total value of $12,353. The Company recognized a loss of extinguishment of debt of $12,290 on this conversion.
On July 8, 2022, the Company issued to Antilles Family Office, LLC shares of its common stock under a conversion notice. The conversion was for $67 in principal. The shares were valued at $ per share for a total value of $14,076. The Company recognized a loss of extinguishment of debt of $14,009 on this conversion.
Warrants
On January 1, 2018, the Company issued 100,000 warrants associated with the issuance of a convertible note payable to Crown Bridge Partners, LLC. The warrants have a -year life and are exercisable at $0.75 per share. These warrants’ relative fair value, based on cash proceeds allocation, was $30,532, which has been recorded warrant derivative liabilities.
On May 11, 2018, the Company issued 100,000 warrants associated with the issuance of a convertible note payable to Crown Bridge Partners, LLC. The warrants have a -year life and are exercisable at $0.75 per share. These warrants’ relative fair value, based on cash proceeds allocation, was $16,682, which has been recorded warrant derivative liabilities.
On October 25, 2018, the Company issued 100,000 warrants associated with the issuance of a convertible note payable to Crown Bridge Partners, LLC. The warrants have a -year life and are exercisable at $0.75 per share. These warrants’ relative fair value, based on cash proceeds allocation, was $17,881, which has been recorded warrant derivative liabilities.
On May 20, 2019, the Company entered into a Note Purchase Agreement (the “Agreement”) with an investor (the “Investor”) through which the Investor purchased (i) a Senior Secured Redeemable Convertible Note (“Note”) with a face value of $4,250,000 that is convertible into shares of common stock of the Company and (ii) a warrant (“Warrant”) to purchase 9,250,000 shares of common stock of the Company. The warrant has a life of three years. The warrant is exercisable at the following prices – 3,750,000 shares of common stock at $0.40 per share, 3,000,000 shares of common stock at $0.50 per share and 2,500,000 shares of common stock at $0.60 per share. These warrants’ relative fair value, based on cash proceeds allocation, was $1,711,394, which has been recorded warrant derivative liabilities.
The Company re-valued the warrants at December 31, 2022 for $0 and recorded a gain on the change in derivative liabilities of $0.
The following tables summarize the warrant activity during the years ended December 31, 2022 and 2021:
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Net Loss Per Common Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss Per Common Share |
Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share reflects the potential dilution that could occur if stock options, warrants, and convertible securities to issue common stock were exercised or converted into common stock, if not anti-dilutive. The following is a reconciliation of the numerator and denominator used in the basic and diluted computation of net income per share:
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Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 13. Income Taxes
The Company’s subsidiaries, Compania Minera Cerros del Sur and Compania Minera Clavo Rico, which are located in Honduras, are required to pay income tax and solidarity tax on their income and/or assets annually. The Honduran annual report for 2020 was completed during the year ended December 31, 2021 and the company recognized a tax liability of $158,321 during the period and paid $ of this tax liability. The Company also accrued for an additional tax liability of $137,756 along with penalties and interest of $246,945 for an ongoing tax audit for the fiscal year 2017. Also during the year ended December 31, 2021, the Company paid estimated tax payments for the current fiscal year totaling $77,940 and accrued for another $31,964 in estimated income tax for the fiscal year 2021. During 2022, the Company paid $109,904 for the 2021 tax liability and accrued for and estimated $13,973 for the 2022 fiscal year.
The Company accounts for U.S. income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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 bases. 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. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The provision for income tax expense (recovery) is comprised the following amounts:
The components of deferred income tax in the accompanying balance sheets are as follows:
As of December 31, 2022 and December 31, 2021, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of approximately $11,318,460 and $9,245,600, respectively. A portion of the federal amount, $1,710,000, is subject to an annual limitation of approximately $17,000 as a result of a change in the Company’s ownership through February 2013, as defined by Federal Internal Revenue Code Section 382 and the related income tax regulations. As a result of the 20-year federal carry-forward period and the limitation, approximately, $1,400,000 of the net operating loss will expire unutilized. These net operating loss carry-forwards will expire through the year ending 2042.
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2042.
The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company’s tax years beginning with the year ended June 30, 2012 through December 31, 2021 generally remain open to examination by the Internal Revenue Service until its net operating loss carry-forwards are utilized and the applicable statutes of limitation have expired.
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Related Party Transactions |
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| Related Party Transactions [Abstract] | |
| Related Party Transactions | 14. Related Party Transactions
Consulting Agreement – In February 2014, the Company entered into a consulting agreement with a stockholder/director. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of July 1, 2018 (see Employment Agreements below). As of December 31, 2022, the Company owed $1,035,000 to the stockholder/director in accrued consulting fees.
Employment Agreements – Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually. This agreement is effective for 60 months. Additionally, the employment agreement provides for benefits and an optional annual bonus to be determined by the Board of Directors.
Notes Payable – The Company took several short-term notes payable from related parties during 2022. The Company received $936,210 in cash from related parties and paid out $473,900 in cash to related parties on notes payable (see Note 9).
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 15. Commitments and Contingencies
Litigation
The Company at times is subject to other legal proceedings that arise in the ordinary course of business. The following is a summary of pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of operations of the Company.
On December 30, 2021, the Company was served with a complaint filed by Antilles Family Office, LLC (“Antilles”) alleging an amount of $5,324,206 (plus interest, additional costs and attorneys’ fees) due from the Company. Antilles was assigned a Secured Redeemable Convertible Promissory Note from Discover Growth Fund, LLC in November 2021. In the complaint, filed in the United States District Court for the District of Delaware, Antilles asserts claims related to alleged breach of contract and unjust enrichment against the Company, and seeks a monetary judgment, an award of attorneys’ fees and other expenses, and injunctive relief to preserve the assets of the Company. The Company has responded to the complaint with a motion to dismiss several counts of the complaint as procedurally improper or impermissibly duplicative of the breach of contract claim, and intends to defend the lawsuit aggressively.
On June 28, 2021, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., settled a labor dispute brought in Honduras by one of the Company’s former employees for an amount of $19,408. The settlement included the Company and all its related entities.
On March 4, 2020, one of the Company’s subsidiaries, Compañía Minera Clavo Rico, S.A. de C.V., was served with notice of a civil litigation brought in Honduras by Empresa Agregados y Concretos S.A. (“Agrecon”) for an amount of approximately $1,350,000, which has been accrued by the Company as of December 31, 2022. The complaint alleges a dispute regarding the amounts owed by the Company to Agrecon under a certain Material Crushing Agreement. The Company has responded disputing the amount owed and placed $125,000 in a dedicated account while the case is being litigated and until the court makes its determination on any amounts owed.
The Servicio de administración de Rentas (“SAR,” the tax authority in Honduras) has completed an audit of the Company’s tax returns for 2017 and 2018. The Company’s subsidiary, Compañía Minera Clavo Rico, S.A. de C.V., has been served with a lawsuit filed by SAR in Honduras alleging additional tax liability due. The Complaint alleges that HNL7,186,151,96 lempires are due in a demand for execution of a forced extrajudicial title. The Company has accrued $256,674 in this matter.
In the opinion of management, as of December 31, 2022, the amount of ultimate liability with respect to such matters, if any, may be likely to have a material impact on the Company’s business, financial position, results of operations or liquidity. However, as the outcome of litigation and other claims is difficult to predict significant changes in the estimated exposures could exist.
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Concentrations |
12 Months Ended |
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Dec. 31, 2022 | |
| Risks and Uncertainties [Abstract] | |
| Concentrations | 16. Concentrations
We generally sell a significant portion of our mineral production to a relatively small number of customers. For the year ended December 31, 2022, most of our consolidated product revenues were attributable to A-Mark Precious Metals and to Asahi Refining, Inc., our current and only two customers as of December 31, 2022. We are not dependent upon any one purchaser and have alternative purchasers readily available at competitive market prices if there is a disruption in services or other events that cause us to search for other ways to sell our production.
The Company currently is producing all of its precious metals from one mine located in Honduras. This location has most of the Company’s fixed assets and inventories. It would cause considerable disruption to the Company’s operations and revenue if this mine was disrupted or closed.
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Discontinued Operations |
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| Discontinued Operations | 17. Discontinued Operations
During the year ended December 31, 2022, the Company decided to discontinue all of its operating activities. Based on that decision, the Company’s board of directors committed to a plan to sell the CMCS entity operating the mine in Honduras.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations (held for sale) in the consolidated balance sheets.
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive loss. The results of operations from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021, and consist of the following.
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended December 31, 2022 and 2021, and consist of the following.
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 18. Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date which the consolidated financial statements were available to be issued and there are no material subsequent events, except as noted below.
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company.
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
The purchase price for the sale of CMCS by the Company to MLM consisted of the following cash consideration (a) $280,000 was delivered by MLM to the Company on January 3, 2023 to pay outstanding debts owed by the Corporation; (b) $300,000 was delivered by MLM to the Company on January 5, 2023 to satisfy existing debts of the Company; (c) $100,000 was delivered by MLM to the Company on January 16, 2023; (d) $200,000 was delivered by MLM to the Company on January 17, 2023; (e) $1,200,000 was delivered by MLM to the Company on January 18, 2023, to pay a settlement amount for existing debt of the Company; (f) $500,000 was delivered by MLM to the Company on January 23, 2023, to satisfy existing debts of the Company; (g) $420,000 was delivered by MLM to the Corporation on January 24, 2023 to satisfy existing debts of the Corporation.
In addition to the amounts already delivered under the LOI, an additional amount of $ shall be paid by MLM to the Company over a period of twenty-four (24) months (the “Monthly Payments”). The Monthly Payments shall be paid as follows: (i) $25,000 due March 1, 2023, (ii) $50,000 due on the first day of each of April, May and June 2023, and (iii) $100,000 due on the first day of each month for the following twenty months, until February 1, 2025 at which point all amounts due and payable hereunder shall be delivered in a final balloon payment. Outstanding balances and missed Monthly Payments will be secured by a 10% NSR on the Clavo Rico mine production until the Monthly Payments are delivered and the purchase price is paid in full. In addition to the Monthly Payments, the Company will receive a carried forward net profits interest royalty (“NPI”) of 5% on the Clavo Rico mine production until the total NPI paid to the Company is $1,000,000, subject to limited conditions.
Following the Closing of the LOI on January 24, 2023, the Company divested its ownership interest in CMCS and its interests in the Clavo Rico mine, resulting in the transfer of operations to Mother Lode Mining and full control of the Clavo Rico mine asset.
On December 30, 2021, the Company was served with a complaint filed by Antilles Family Office, LLC (“Antilles”) asserting claims related to alleged breach of contract and unjust enrichment against the Company. This matter was settled on January 18, 2023 in exchange for the payment of $1,200,000 by the Company to Antilles.
On February 1, 2023, the Company issued restricted shares of Common Stock to Cluff-Rich 401(k) upon the conversion of $18,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Fran Rich upon the conversion of $57,500 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Debra D’Ambrosio upon the conversion of $81,203 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Trent D’Ambrosio upon the conversion of $1,698,910 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Kay Briggs upon the conversion of $60,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Legends Capital Group upon the conversion of $715,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to L W Briggs Irrevocable Trust upon the conversion of $1,101,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Claymore Management upon the conversion of $185,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Clavo Rico Inc. upon the conversion of $3,377,980 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Pine Valley Investments upon the conversion of $115,200 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Whit Cluff for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Rod Sperry for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Brunson Chandler & Jones, PLLC for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Kyle Pickard for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Justin Wilson for services rendered to the Company.
On February 1, 2023, the Company issued restricted shares of Common Stock to Sean Wilson for services rendered to the Company. |
Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Going Concern | Going Concern – The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2022, the Company has an accumulated deficit of $41,655,570, a working capital deficit of $28,765,349 and used $902,422 in cash for operating activities. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date these financial statements are issued.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
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| Use of Estimates | Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
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| Principles of Consolidation | Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
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| Basis of Presentation | Basis of Presentation – The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
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| Reclassifications | Reclassifications - Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation.
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| Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2022 and December 31, 2021, the Company had no cash equivalents. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts.
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| Inventory, Policy [Policy Text Block] |
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| Exploration and Development Costs | Exploration and Development Costs – Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the determination has been made that economic production does not appear reasonably certain.
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| Mineral Rights and Properties | Mineral Rights and Properties – We defer acquisition costs until we determine the viability of the property. Since we do not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) Industry Guide 7, exploration expenditures are expensed as incurred. We expense care and maintenance costs as incurred.
We review the carrying value of our mineral rights and properties for impairment whenever there are negative indicators of impairment. Our estimate of the gold price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in the mineral claims and properties. Although we have made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our mineral claims and properties and possibly require future asset impairment write-downs.
Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess recoverability of carrying value from other means, including net cash flows generated by the sale of the asset. We use the units-of-production method to deplete the mineral rights and properties.
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| Fair Value Measurements | Fair Value Measurements – The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on December 31, 2022 are summarized below:
The fair value of financial instruments on December 31, 2021 are summarized below:
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below in Note 4. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below in Note 4 are that of volatility and market price of the underlying common stock of the Company.
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| Marketable Securities | Marketable Securities – We measure the fair value of marketable securities in accordance with ASC 820-10 – Fair Value Measurements. Any change in the fair value is recognized in net income in the period being reported.
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| Long-Lived Assets | Long-Lived Assets – We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
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| Properties, Plant and Equipment | Properties, Plant and Equipment – We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
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| Revenue Recognition | Revenue Recognition – In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company generates revenue by selling gold and silver produced from its mining operations. The majority of the Company’s sales come from the sale of refined gold; however, the end product at the Company’s gold operations is generally doré bars. Doré is an alloy consisting primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% gold. Under the terms of the Company’s refining agreements, the doré bars are refined for a fee, and the Company’s share of the refined gold and silver is credited to its bullion account.
The Company recognizes revenue for gold and silver from doré production when it satisfies the performance obligation of transferring gold and silver inventory to the customer, which generally occurs upon transfer of gold and silver bullion credits as this is the point at which the customer obtains the ability to direct the use and obtain substantially all of the remaining benefits of ownership of the asset.
The Company generally recognizes the sale of gold bullion credits at the prevailing market price when gold bullion credits are delivered to the customer. The transaction price is determined based on the agreed upon market price and the number of ounces delivered. Payment is due upon delivery of gold bullion credits to the customer’s account.
All accounts receivable amounts are due from a single customer. Substantially all mining revenues recorded in the current period also related to the same customer. As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product. However, the Company has chosen to sell to only two customers at this time.
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| Stock Issued for Goods and Services | Stock Issued for Goods and Services – Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received.
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| Stock-Based Compensation |
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| Income (Loss) per Common Share |
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| Comprehensive Loss | Comprehensive Loss – Comprehensive loss is made up of the exchange differences arising on translating foreign operations and the net loss for the years ended December 31, 2022 and 2021.
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| Derivative Liabilities | Derivative Liabilities – Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
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| Income Taxes | Income Taxes – The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
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| Business Segments | Business Segments – The Company operates in one segment and therefore segment information is not presented.
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| Operating Lease | Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah on a month-to-month basis.
The Company incurred rent expense of $15,252 and $14,945 for the year ended December 31, 2022 and 2021.
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| Non-Controlling Interest Policy | Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. |
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Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of Financial Instruments | The fair value of financial instruments on December 31, 2022 are summarized below:
The fair value of financial instruments on December 31, 2021 are summarized below:
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| Schedule of Property and Equipment Useful Lives |
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Inventories, Stockpiles and Mineralized Materials on Leach Pads (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventories | Inventories, stockpiles and mineralized materials on leach pads at December 31, 2022 and 2021 consisted of the following:
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Derivative Financial Instruments (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||
| Summary of Changes in Fair Value of Level 3 Financial Liabilities | The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2022:
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Properties, Plant and Equipment, Net (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Properties, Plant and Equipment | Properties, plant and equipment of continuing operations at December 31, 2022 and 2021 consisted of the following:
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Accounts Payable and Accrued Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Payable and Accrued Liabilities | Accounts Payable and accrued liabilities of continuing operations at December 31, 2022 and 2021 consisted of the following:
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Notes Payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Payable | Notes payable of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
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Notes Payable – Related Parties (Tables) |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable Related Parties | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Parties Notes Payable | Notes payable – related parties of continuing operations were comprised of the following as of December 31, 2022 and December 31, 2021:
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Convertible Notes Payable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes Payable | Convertible notes payable were comprised of the following as of December 31, 2022 and December 31, 2021:
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Stockholders’ Deficit (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity | The following tables summarize the warrant activity during the years ended December 31, 2022 and 2021:
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| Schedule of Warrants Outstanding and Exercisable |
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Net Loss Per Common Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Reconciliation of Basic and Diluted Computation of Loss per Share |
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Provision for Income Tax Expense (Recovery) | The provision for income tax expense (recovery) is comprised the following amounts:
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| Schedule of Components of Deferred Income Tax | The components of deferred income tax in the accompanying balance sheets are as follows:
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Discontinued Operations (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Discontinued operations |
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive loss. The results of operations from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021, and consist of the following.
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the years ended December 31, 2022 and 2021 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended December 31, 2022 and 2021, and consist of the following.
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Nature of Business (Details Narrative) - USD ($) |
12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Jan. 11, 2016 |
Oct. 02, 2015 |
Feb. 25, 2013 |
Nov. 21, 2012 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Mar. 05, 2010 |
Mar. 04, 2010 |
|
| Common stock authorized | 10,300,000,000 | 10,300,000,000 | 500,000,000 | 100,000,000 | ||||
| Reverse stock split description | 5.5 to 1 reverse stock split | 200 to 1 reverse stock split | 5.5 to 1 reverse stock split | |||||
| Cancellation of stock split shares, description | Upon effectiveness of the stock split, each shareholder cancelled 200 shares of common stock for every share of common stock owned as of November 21, 2012. | |||||||
| Promissory note issued to related party | $ 8,074,944 | $ 7,456,791 | ||||||
| Common stock, shares outstanding | 244,634,016 | 162,421,850 | ||||||
| Immediately Before Reverse Split [Member] | ||||||||
| Common stock, shares outstanding | 266,669,980 | |||||||
| Immediately after Reverse Split [Member] | ||||||||
| Common stock, shares outstanding | 48,485,451 | |||||||
| Clavo Rico Ltd. [Member] | ||||||||
| Shares issued for conversion of debt, shares | 240,225,901 | |||||||
| Shares issued for conversion of debt | $ 5,488,980 | |||||||
| Accrued interest | $ 3,434,426 | |||||||
| Gold American Mining Corp [Member] | ||||||||
| Description of equity interests issued or issuable to acquire the entity | Inception Development Inc. (the “Subsidiary”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Inception Resources, LLC, a Utah corporation (“Inception Resources”), pursuant to which Inception purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock of Inception, the assumption of promissory notes in the amount of $950,000 and the assignment of a 3% net royalty. | |||||||
| Stock issued during period for consideration of acquisition, shares | 16,000,000 | |||||||
| Promissory note issued to related party | $ 950,000 | |||||||
| Percentage of net royalty | 3.00% |
Summary of Significant Accounting Policies (Details Narrative) |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2022
USD ($)
Segment
shares
|
Dec. 31, 2021
USD ($)
|
|
| Accounting Policies [Abstract] | ||
| Accumulated deficit | $ 41,655,570 | $ 37,508,429 |
| Working capital deficit | 28,765,349 | |
| Cash for operating activities | 902,422 | 76,864 |
| Cash, FDIC Insured Amount | $ 250,000 | |
| Common share equivalents excluded from calculation of diluted loss per share | shares | 430,519,296,789 | |
| Number of operating segments | Segment | 1 | |
| Operating lease, rent expense | $ 15,252 | $ 14,945 |
Schedule of Inventories (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Supplies | ||
| Mineralized Material on Leach Pads | ||
| ADR Plant | ||
| Finished Ore | ||
| Total Inventories |
Inventories, Stockpiles and Mineralized Materials on Leach Pads (Details Narrative) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Stockpiles | $ 0 | $ 0 |
Summary of Changes in Fair Value of Level 3 Financial Liabilities (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Change in fair value of derivative liabilities and warrant liability | $ (833,278) | $ (3,515,657) |
| Fair Value, Inputs, Level 3 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Derivative liabilities, beginning balances | 4,048,650 | |
| Fair value of derivative liabilities | 47,420 | |
| Change in fair value of derivative liabilities and warrant liability | (833,278) | |
| Derivative liabilities, ending balances | $ 3,262,612 | $ 4,048,650 |
Schedule of Properties, Plant and Equipment (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Machinery and Equipment | $ 25,368 | $ 25,368 |
| Office Equipment and Furniture | 1,627 | 1,627 |
| Property, Plant and Equipment Gross | 26,995 | 26,995 |
| Less Accumulated Depreciation | (23,012) | (22,287) |
| Total Property, Plant and Equipment | $ 3,983 | $ 4,708 |
Properties, Plant and Equipment, Net (Details Narrative) - USD ($) |
12 Months Ended | |||
|---|---|---|---|---|
Feb. 21, 2021 |
Feb. 21, 2020 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Depreciation expense | $ 725 | $ 2,789 | ||
| Gain on sale of mine property | $ 471,083 | |||
| Ounces High Exploration, Inc [Member] | ||||
| Cash consideration received from sale of property | $ 250,000 | |||
| Common stock received from sale of property | 66,974,252 | |||
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts Payable | $ 127,612 | $ 48,339 |
| Accrued Liabilities | 4,221,586 | 2,774,126 |
| Accrued Salaries and Benefits | 732,346 | 557,098 |
| Advances Payable | 106,222 | |
| Total Accrued Liabilities | $ 5,081,544 | $ 3,485,785 |
Secured Borrowings (Details Narrative) - USD ($) |
12 Months Ended | ||||
|---|---|---|---|---|---|
Dec. 26, 2020 |
Jun. 25, 2020 |
Dec. 31, 2022 |
Dec. 31, 2021 |
May 31, 2021 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Repayments of Secured Debt | $ 217,514 | ||||
| Secured Debt | $ 134,508 | ||||
| Two New Arrangements [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Debt Instrument, Face Amount | $ 118,757 | $ 172,663 | |||
| Guaranteed return, amount | 11,876 | 17,266 | |||
| Repayments of Debt | $ 130,633 | $ 189,929 | |||
| Debt Instrument, Maturity Date | Jun. 26, 2021 | Dec. 26, 2020 | |||
| Repayments of Secured Debt | $ 83,006 | ||||
Schedule of Notes Payable (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Total Notes Payable | $ 60,000 | $ 129,558 |
| Less Short-Term Notes Payable | (37,891) | |
| Total Long-Term Notes Payable | 60,000 | 91,667 |
| Small Business Administration [Member] | ||
| Total Notes Payable | 69,558 | |
| Phil Zobrist [Member] | ||
| Total Notes Payable | $ 60,000 | $ 60,000 |
Schedule of Convertible Notes Payable (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Less Short-Term Convertible Notes Payable | $ (3,801,698) | $ (3,747,457) |
| Antilles Family Office LLC [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total Convertible Notes Payable | 3,073,532 | 3,074,119 |
| Diagonal Lending [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total Convertible Notes Payable | 104,580 | |
| Antczak Polich Law LLC [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total Convertible Notes Payable | 279,123 | 279,123 |
| Scotia International [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total Convertible Notes Payable | 395,041 | 395,041 |
| Convertible Notes Payable [Member] | ||
| Short-Term Debt [Line Items] | ||
| Total Convertible Notes Payable | 3,852,276 | 3,748,283 |
| Less Unamortized Discount | (50,578) | (826) |
| Total Convertible Notes Payable, Net of Unamortized Debt Discount | 3,801,698 | 3,747,457 |
| Less Short-Term Convertible Notes Payable | (3,801,698) | (3,747,457) |
| Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount |
Schedule of Warrants Activity (Details) - Warrant [Member] - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Number of Warrants, Beginning Balance | 9,550,000 | 9,550,000 |
| Weighted Average Exercise Price, Beginning Balance | $ 0.49 | $ 0.50 |
| Number of Warrants, Granted | ||
| Weighted Average Exercise Price, Granted | ||
| Number of Warrants, Exercised | ||
| Weighted Average Exercise Price, Exercised | ||
| Number of Warrants, Forfeited | (9,350,000) | |
| Weighted Average Exercise Price, Forfeited | $ 0.49 | |
| Number of Warrants, Ending Balance | 200,000 | 9,550,000 |
| Weighted Average Exercise Price, Ending Balance | $ 0.75 | $ 0.49 |
Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] - $ / shares |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Outstanding Warrants, Range of Exercise Price | $ 0.75 | ||
| Number of Warrants Outstanding, Ending Balance | 200,000 | 9,550,000 | 9,550,000 |
| Weighted Average Remaining Contractual Life | 7 months 2 days | ||
| Warrants Outstanding, Weighted Average Exercise Price | $ 0.75 | ||
| Number of Warrants Exercisable Ending Balance | 200,000 | ||
| Warrants Exercisable, Weighted Average Exercise Price | $ 0.75 |
Stockholders’ Deficit (Details Narrative) - USD ($) |
1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 08, 2022 |
Jun. 28, 2022 |
Jun. 23, 2022 |
Jun. 17, 2022 |
Jun. 13, 2022 |
Jun. 02, 2022 |
May 20, 2022 |
Apr. 25, 2022 |
Apr. 18, 2022 |
Apr. 05, 2022 |
Mar. 18, 2022 |
Mar. 02, 2022 |
Feb. 17, 2022 |
Jan. 25, 2022 |
Dec. 31, 2021 |
Nov. 23, 2021 |
Oct. 28, 2021 |
Oct. 07, 2021 |
Jul. 18, 2021 |
Jul. 02, 2021 |
Jun. 18, 2021 |
May 21, 2021 |
May 11, 2021 |
Apr. 28, 2021 |
Apr. 20, 2021 |
Apr. 05, 2021 |
Mar. 25, 2021 |
Mar. 15, 2021 |
Mar. 11, 2021 |
Mar. 08, 2021 |
Mar. 02, 2021 |
Feb. 22, 2021 |
Feb. 17, 2021 |
Feb. 09, 2021 |
Feb. 05, 2021 |
Jan. 26, 2021 |
Jan. 15, 2021 |
Jan. 05, 2021 |
May 20, 2019 |
May 11, 2018 |
Jan. 02, 2018 |
Oct. 25, 2018 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued was converted value | $ 272,098 | $ 1,999,662 | |||||||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | (271,511) | (1,783,593) | |||||||||||||||||||||||||||||||||||||||||||
| Change in derivative liability | 833,278 | 3,515,657 | |||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 4,250,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Antilles Family Office LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued was converted | 9,383,671 | 8,823,452 | 8,403,288 | 6,302,466 | 5,602,192 | 5,322,082 | 5,041,973 | 4,761,863 | 4,481,753 | 4,341,699 | 5,041,973 | 4,901,918 | 4,201,644 | 5,602,192 | |||||||||||||||||||||||||||||||
| Aggregate principal amount | $ 67 | $ 63 | $ 60 | $ 45 | $ 40 | $ 38 | $ 36 | $ 34 | $ 32 | $ 31 | $ 36 | $ 35 | $ 30 | $ 40 | |||||||||||||||||||||||||||||||
| Share issued price per share | $ 0.0015 | $ 0.0014 | $ 0.002 | $ 0.0014 | $ 0.0025 | $ 0.0026 | $ 0.0029 | $ 0.0037 | $ 0.0035 | $ 0.0046 | $ 0.0045 | $ 0.0063 | $ 0.0075 | $ 0.007 | |||||||||||||||||||||||||||||||
| Common stock issued was converted value | $ 14,076 | $ 12,353 | $ 16,807 | $ 8,823 | $ 14,005 | $ 13,837 | $ 14,622 | $ 17,619 | $ 15,686 | $ 19,972 | $ 22,689 | $ 30,882 | $ 31,512 | $ 39,215 | |||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | $ 14,009 | $ 12,290 | $ 16,747 | $ 8,778 | $ 13,965 | $ 13,799 | $ 14,586 | $ 17,585 | $ 15,654 | $ 19,941 | $ 22,653 | $ 30,847 | $ 31,482 | $ 39,175 | |||||||||||||||||||||||||||||||
| Crown Bridge Partners, LLC [Member] | Convertible Notes Payable [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Number shares warrant purchase | 100,000 | 100,000 | 100,000 | ||||||||||||||||||||||||||||||||||||||||||
| Warrant term | 5 years | 5 years | 5 years | ||||||||||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 0.75 | $ 0.75 | $ 0.75 | ||||||||||||||||||||||||||||||||||||||||||
| Fair value of warrants | $ 16,682 | $ 30,532 | $ 17,881 | ||||||||||||||||||||||||||||||||||||||||||
| Investor [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued was converted | 5,602,192 | 560,219 | 5,602,192 | 5,602,192 | 4,791,348 | 4,665,219 | 4,960,711 | 4,986,959 | 3,648,354 | 3,569,612 | 3,412,130 | 3,307,141 | 3,149,658 | 3,018,422 | 2,913,434 | 2,834,692 | 2,677,209 | 2,703,456 | 2,677,209 | 2,755,951 | 2,598,468 | 2,624,715 | 2,598,468 | 2,493,479 | |||||||||||||||||||||
| Aggregate principal amount | $ 40 | $ 4 | $ 40 | $ 40 | $ 5,200 | $ 9,500 | $ 18,900 | $ 19,000 | $ 13,900 | $ 13,600 | $ 13,000 | $ 12,600 | $ 12,000 | $ 11,500 | $ 11,100 | $ 10,800 | $ 10,200 | $ 10,300 | $ 10,200 | $ 10,500 | $ 9,900 | $ 10,000 | $ 9,900 | $ 9,500 | $ 40 | ||||||||||||||||||||
| Share issued price per share | $ 0.006 | $ 0.0085 | $ 0.0116 | $ 0.0135 | $ 0.0121 | $ 0.015 | $ 0.015 | $ 0.0183 | $ 0.019 | $ 0.021 | $ 0.0205 | $ 0.0315 | $ 0.0327 | $ 0.039 | $ 0.0522 | $ 0.0399 | $ 0.04 | $ 0.0535 | $ 0.046 | $ 0.035 | $ 0.029 | $ 0.024 | $ 0.0224 | $ 0.022 | $ 0.006 | ||||||||||||||||||||
| Common stock issued was converted value | $ 33,613 | $ 4,762 | $ 64,985 | $ 75,630 | $ 57,975 | $ 69,978 | $ 74,411 | $ 91,261 | $ 69,319 | $ 74,962 | $ 69,949 | $ 104,175 | $ 102,994 | $ 117,718 | $ 152,081 | $ 113,104 | $ 107,088 | $ 144,635 | $ 123,152 | $ 96,458 | $ 75,356 | $ 62,993 | $ 58,206 | $ 54,857 | |||||||||||||||||||||
| Loss on extinguishment of debt | $ 33,573 | $ 4,758 | $ 64,945 | $ 75,590 | $ 52,775 | $ 60,478 | $ 55,511 | $ 72,261 | $ 55,567 | $ 61,717 | $ 57,413 | $ 92,252 | $ 91,802 | $ 107,137 | $ 141,925 | $ 103,264 | $ 97,873 | $ 135,434 | $ 114,106 | $ 87,254 | $ 66,730 | $ 54,409 | $ 49,847 | $ 46,971 | $ 271,511 | $ 1,783,593 | |||||||||||||||||||
| Investor [Member] | Note Purchase Agreement [Member] | Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Number shares warrant purchase | 9,250,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Warrant term | 3 years | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of warrants | $ 1,711,394 | 0 | |||||||||||||||||||||||||||||||||||||||||||
| Change in derivative liability | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||
| Investor [Member] | Note Purchase Agreement [Member] | Warrant 1 [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 0.40 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrant | 3,750,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Investor [Member] | Note Purchase Agreement [Member] | Warrant 2 [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 0.50 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrant | 3,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Investor [Member] | Note Purchase Agreement [Member] | Warrant 3 [Member] | |||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
| Warrant exercise price | $ 0.60 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrant | 2,500,000 | ||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Basic and Diluted Computation of Loss per Share (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Earnings Per Share [Abstract] | ||
| Net Loss - Controlling Interest | $ (4,147,141) | $ (2,839,645) |
| Adjusted Net Loss - Controlling Interest | $ (4,147,141) | $ (2,839,645) |
| Basic Weighted Average Number of Shares Outstanding during Period | 215,083,605 | 129,346,480 |
| Dilutive Shares | ||
| Diluted Weighted Average Number of Shares Outstanding during Period | 215,083,605 | 129,346,480 |
| Diluted Net Loss per Share | $ (0.02) | $ (0.02) |
Schedule of Provision for Income Tax Expense (Recovery) (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Tax at Statutory Rate | $ (1,041,630) | $ (415,838) |
| Meals and Entertainment | (280) | (645) |
| Depreciation | 51,239 | |
| Change in Derivative Liability | (216,652) | 914,071 |
| Amortization of Debt Discount | (3,559) | (197,067) |
| Accrued Interest | 723,448 | (579,406) |
| Change in Valuation of Allowance | 681,255 | 757,283 |
| Tax Provision | $ 142,582 | $ 529,638 |
Schedule of Components of Deferred Income Tax (Details) (Parenthetical) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Percentage of statutory rate | 21.00% | 21.00% |
| Average Corporate Rate | 5.00% | 5.00% |
Schedule of Components of Deferred Income Tax (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Net Operating Loss Carry-forwards | $ 851,302 | $ 2,403,846 |
| Depreciation | 217,362 | 166,123 |
| Accrued Interest | 723,448 | 579,406 |
| Valuation Allowance | (1,792,111) | (3,149,375) |
| Deferred Tax Assets |
Income Taxes (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Deferred tax liabilities, gross | $ 158,321 | |
| Payment, tax withholding, share-based payment arrangement | 79,907 | |
| Deferred income tax additional liabilities | 137,756 | |
| Unrecognized tax benefits, income tax penalties and interest expense | 246,945 | |
| Income tax paid net | $ 109,904 | 77,940 |
| Accrued estimated income tax | 13,973 | 31,964 |
| Operating loss carryforwards | 11,318,460 | $ 9,245,600 |
| Federal tax amount | 1,710,000 | |
| Annual limitation amount | 17,000 | |
| Net operating loss, unutilized | $ 1,400,000 | |
| Net operating loss carry-forwards expiration date | 2042 | |
Related Party Transactions (Details Narrative) - USD ($) |
1 Months Ended | |||
|---|---|---|---|---|
Apr. 01, 2019 |
Oct. 31, 2017 |
Feb. 28, 2014 |
Dec. 31, 2022 |
|
| Notes Payable [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due from related parties | $ 936,210 | |||
| Due to related parties | 473,900 | |||
| Employment Agreement [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Compensation amount | $ 300,000 | |||
| Agreement term | 60 months | |||
| Stockholder/Director [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Payment of consulting fees per month | $ 25,000 | $ 18,000 | ||
| Accrued consulting fees | $ 1,035,000 | |||
Commitments and Contingencies (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Dec. 30, 2021 |
Jun. 28, 2021 |
Mar. 04, 2020 |
Dec. 31, 2022 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Loss contingency accrual amount | $ 5,324,206 | |||
| Settlement amount | $ 19,408 | |||
| Accrued settlement expense | $ 256,674 | |||
| Agrecon [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Litigation amount | $ 1,350,000 | |||
| Litigation amount awarded | $ 125,000 |