UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended:
For the transition period from ____________ to ______________
Commission file number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of Incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices, Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class |
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 Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ((§229.405 of this chapter) 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of March 31, 2023 there were
TABLE OF CONTENTS
| 2 |
| Table of Contents |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements are generally located in the material set forth under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Properties” but may be found in other locations as well. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements.
We identify forward-looking statements by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” “hope,” “plan,” “believe,” “predict,” “envision,” “intend,” “will,” “continue,” “potential,” “should,” “confident,” “could” and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward looking statements.
Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward looking statements in this report. These factors include, among others:
| · | our ability to raise capital; |
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| · | our ability to identify suitable acquisition targets; |
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| · | our ability to successfully execute acquisitions on favorable terms; |
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| · | declines in general economic conditions in the markets where we may compete; |
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| · | unknown environmental liabilities associated with any assets we may acquire; and |
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| · | significant competition in the markets where we may operate. |
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis.
Forward-looking statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
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| Table of Contents |
PART I
ITEM 1. BUSINESS
THE COMPANY
The Company was incorporated in the State of Nevada on August 23, 2019. We are a developing mineral royalties company with a focus in precious metals, primarily gold and silver. We work with mining companies that are in need of funds either to bring them into production or to further expand production through royalty financing. Typically, royalty agreements provide specified upfront payments for the rights to receive streams of payment from future revenues deriving from mineral reserves and resources on the mining properties until they are depleted.
Royalty companies are not obligated to make any capital contributions other than the contracted funding amount. In the event that mineral reserves and resources on the mining properties that are subject to royalty payments expand on further exploration, royalty companies get to share the newly discovered minerals with no additional costs to them. It is not uncommon to see that royalty agreements that covered mining properties that had initial mine life of ten years ended up several times longer as in the case of one of the flagship royalty assets of Franco Nevada, the largest precious metals royalty company in the world.
The Business Model
Mining royalty companies employ a wide spectrum of business models to implement their strategies. These models can be broadly categorized into (1) Project generation model whereby royalty companies generate projects and usually option out those projects to mining operators to advance them while retaining royalty interests in the projects. (2) Third party royalty acquisition or the trading model whereby royalty companies only involve in buying and selling of existing royalties. (3) Organic growth model whereby royalty companies work with mining operators to create royalty agreements.
Within these broad categories, a whole bunch of nuances exist. Certain royalty companies are known to employ a combination of each or a hybrid model. In addition, some models have been proved out to work well in some jurisdictions but not in others.
Royalty companies primarily thrive on the asset portfolios that are created which are basically stream of discounted cash flows that usually cover the life of mine of the underlying mining assets or properties. Hence, portfolio creation process and execution strategies constitute the fundamental backbone of royalty companies.
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| Table of Contents |
One of the key differentiators of the Company is that we intend to replicate the proved out royalty model in mining finance in the North American market in other international markets where our research indicates that abundant opportunities exist. We believe our knowledge of some of these markets and deal sourcing capabilities as well as access to technical professionals including geologists and mining engineers who are familiar with the regions and land packages that are of interest to us will gain us a foothold in those markets.
Our royalty asset portfolio creation strategies primarily focus on producing or near producing properties. Mining projects would have to be adequately de-risked to come under our radar screen. The potential targets are likely to have gone through a preliminary economic assessment (PEA) or a pre-feasibility study (PFS) and therefore either have an inferred resource or measured and indicated resource on them.
Competition
The mining royalties industry, precious metals in particular, is highly competitive. We compete with other royalty companies and investors in efforts to generate or to acquire existing royalty interests. Resource sector investors and lenders like Sprott Lending and major tier royalties companies like Franco Nevada, Wheaton Precious Metals and Royal Gold are extremely well-capitalized. These major players dominate most of the US and Canadian markets. In order to grow fast and attain a critical mass in asset size, our strategy is to capture opportunities in jurisdictions other than the so-called Tier I jurisdictions which consist of US, Canada and Australia. We believe our geographical focus away from Tier I countries and niche market strategy would afford us competitive edge over our peers. Through employing other key competitive factors in royalty interest generation and acquisition which include the ability to identify and evaluate potential opportunities, transaction structure and consideration, as well as access to capital, we will be able to compete effectively in the face of fierce competition in the mining royalty space.
Regulation
Operators of mines that could be the subject of our royalty interests must comply with numerous environmental, mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, state, provincial and local governments around the world. Although we, as a royalty interest owner, are not responsible for ensuring compliance with these laws and regulations, failure by the operators to comply with applicable laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial condition.
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| Table of Contents |
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
The company does not own any real property. We rented our office space at Green Valley Corporate Center located at 701 N Green Valley Parkway, Henderson in Nevada on a month-to-month basis.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions required to be disclosed by Item 103 of Regulation S-K.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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| Table of Contents |
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is not traded on any national exchange or quotation system, and, accordingly, there is no established public trading market for our common stock. Until our common stock is listed, there is no market price for our shares. Once listed on a stock exchange or an automated quotation system, the shares may be sold at prevailing market prices or at privately negotiated prices.
Holders
As of the close of business on December 31, 2022, there were approximately 38 holders of record of our common stock.
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Dividend Policy
We cannot provide any assurance that we will declare or pay cash dividends on our common stock. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. Our board of directors may determine it to be necessary to retain future earnings (if any) to finance our growth.
Securities Authorized for Issuance Under Equity Compensation Plans
We have not adopted an Equity Compensation Plan.
Recent Sales of Unregistered Securities
None
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not, nor did anyone on our behalf or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) of the Exchange Act, repurchase any outstanding shares of our common stock during any month of our fiscal year ended December 31, 2022.
ITEM 5A. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item pursuant to Item 301 of Regulation S-K.
ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed elsewhere in this annual report.
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| Table of Contents |
Overview
The Mining Royalties Business
The mining royalties industry, precious metal in particular, is highly competitive. We compete with other royalty companies and investors in efforts to generate or to acquire existing royalty interests. Resource sector investors and lenders like Sprott Lending and major tier royalties companies like Franco Nevada, Wheaton Precious Metals and Royal Gold are extremely well-capitalized. These major players dominate most of the US and Canadian markets. In order to grow fast and attain a critical mass in asset size, our strategy is to capture opportunities in jurisdictions other than the so-called Tier I jurisdictions which consist of US, Canada and Australia. We believe our geographical focus away from Tier I countries and niche market strategy would afford us competitive edge over our peers. Through employing other key competitive factors in royalty interest generation and acquisition which include the ability to identify and evaluate potential opportunities, transaction structure and consideration, as well as access to capital, we will be able to compete effectively in the face of fierce competition in the mining royalty space.
Regulations
Operators of mines that could be the subject of our royalty interests must comply with numerous environmental, mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, state, provincial and local governments around the world. Although we, as a royalty interest owner, are not responsible for ensuring compliance with these laws and regulations, failure by the operators to comply with applicable laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial condition.
Key Factors Affecting Our Business Operations
We have a limited operating history and the pandemic worldwide practically slowed down the global economies with the mining industry being one of the hardest hit. Safety protocols and travel restrictions that were put in place inevitably impacted on precious metal production. Our long-term success hinges on the ability to significantly build our royalty assets portfolio. Attaining a critical mass in asset size is of paramount importance in the royalties business. Investors should consider our future prospects in light of the risks and challenges encountered by an emerging company in a fiercely competitive industry.
Our business requires a significant amount of capital in order to finance asset generation and acquisition, access to capital would be key before a cash flowing asset portfolio starts generating cash flows to fund the business internally.
It is expected that we may incur additional operating losses during the course of Fiscal 2023 and possibly thereafter. We plan to continue to pay or satisfy existing obligation and commitments and finance our operations, as we have in the past, primarily through the sale of our securities and other forms of external financing. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
Result of Operations
The following is a summary of our results of operations for the fiscal year ended December 31, 2022 and 2021.
We have had no operating revenues and $173,103 in expenses since our inception on August 23, 2019 through December 31, 2022. Our activities have been financed by $175,300 from issue of shares to our shareholders.
For the period from inception through December 31, 2022, we incurred operating loss of $173,103, consisting primarily of professional fees and office expenses.
For the year ended December 31, 2022 we generated $0 in revenues and $91,104 in operating expenses for an operating loss of $91,104. The operating expenses of $91,104 consisted of mainly professional fees.
For the year ended December 31, 2021 we generated $0 in revenues and $54,333 in operating expenses for an operating loss of $54,333. The operating expenses of $54,333 consisted of mainly legal and auditing fees.
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Liquidity and Capital Resources
For the year ended December 31, 2022, the Company incurred a net loss of $92,304. At December 31, 2022 the Company had $7,299 in cash and there were outstanding liabilities of $28,000.
During the year ended December 31, 2022, the Company issued 360,000 shares (pre reverse stock split, 90,000 shares after a 1 for 4 reverse stock split) of common stock for consulting services.
Since inception in August 2019, the Company has generated an accumulated deficit of $173,103. Achievement of the Company’s objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively control operating and capital costs.
Assuming we raise additional funds and continue operations, it is expected we may incur additional operating losses during the course of Fiscal 2023 and possibly thereafter. We plan to continue to pay or satisfy existing obligation and commitments and finance our operations, as we have in the past, primarily through the sale of our securities and other forms of external financing. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
Off-Balance Sheet Arrangements
None
ITEM 7. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item pursuant to Item 305 of Regulation S-K.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
| F-1 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: | The Board of Directors and Stockholders of |
| GLOBAL GOLD ROYALTY INC. |
Opinion on the Financial Statements
We have audited the accompanying balance sheets of GLOBAL GOLD ROYALTY INC. (the Company) as of December 31, 2022, and 2021, and the related statements of operations, stockholders’ equity (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 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.
Emphasis of Matter
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 had incurred substantial losses during the years ended December 31, 2022, and 2021, and had accumulated deficits, and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 2. These 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.
Certified Public Accountants
(PCAOB ID:
We have served as the Company’s auditor since December 29, 2021
April 14, 2023
| F-2 |
| Table of Contents |
GLOBAL GOLD ROYALTY INC |
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BALANCE SHEETS As of December 31, 2022 and 2021 |
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(AUDITED) |
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ASSETS |
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CURRENT ASSETS |
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Cash |
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Deposit |
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TOTAL CURRENT ASSETS |
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NON CURRENT ASSETS |
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Deposit |
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TOTAL NON CURRENT ASSETS |
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TOTAL ASSETS |
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LIABILITIES |
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Current Liabilities: |
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Note Payable - Related Party |
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Account Payable |
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Accrued Liabilities |
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TOTAL LIABILITIES |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Preferred Stock: authorized |
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Common stock: authorized |
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Additional Paid-in Capital |
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Subscription Receivable |
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Accumulated Deficit |
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Total Stockholders' Equity (Deficit) |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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*Shares have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 4 reverse stock split
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The accompanying notes are an integral part of these financial statements | ||||||||
| F-3 |
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GLOBAL GOLD ROYALTY INC | ||||||||
STATEMENTS OF OPERATIONS | ||||||||
For The Years Ended December 31, 2022 and 2021 | ||||||||
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REVENUES |
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Royalty Proceeds |
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Total |
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Operating Expenses: |
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General and administrative |
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Total Expenses |
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Net Loss Before Tax |
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Interest Expense |
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Provision for Income Tax |
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Net Loss |
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Weighted average number of shares outstanding: * |
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Net loss per share - basic and fully diluted |
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*Shares and per share amount have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 4 reverse stock split
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The accompanying notes are an integral part of these financial statements | ||||||||
| F-4 |
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GLOBAL GOLD ROYALTY INC | ||||||||||||||||||||
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||
For the Years Ended December 31, 2022 and 2021 | ||||||||||||||||||||
(AUDITED) |
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| Preferred Stock |
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| Value |
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Balance, January 1, 2021 |
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Common Shares Issued: |
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Net Loss |
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Balance, December 31, 2021 |
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Balance, January 1, 2022 |
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| - |
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| |
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| $ |
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| $ |
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| $ | ( | ) |
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| $ |
| |||||
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Common Shares Issued: |
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| $ | ( | ) |
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| - |
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Net Loss |
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| ( | ) |
Balance, December 31, 2022 |
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| - |
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| |
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| $ |
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| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
__________
*Shares have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 4 reverse stock split
The accompanying notes are an integral part of these financial statements
| F-5 |
| Table of Contents |
GLOBAL GOLD ROYALTY INC | ||||||||
STATEMENTS OF CASH FLOWS | ||||||||
For the Years Ended December 31, 2022 and 2021 | ||||||||
(AUDITED) | ||||||||
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| December 31, 2022 |
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| December 31, 2021 |
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Operating activities: |
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Net Loss |
| $ | ( | ) |
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| ( | ) |
Adjustment to reconcile net loss to net cash provided by operations: |
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Common stock issued for services |
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Changes in assets and liabilities: |
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Security deposit |
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| ( | ) | |
Account payable |
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| ||
Accrued liabilities |
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Provision for Income Tax |
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| ||
Net cash used in operating activities |
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| ( | ) |
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| ( | ) |
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Investing activities: |
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Acquisition of Royalty Interests |
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| ||
Net cash provided by investing activities |
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Financing activities: |
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Proceeds from issuance of common stock |
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Repayment of loan |
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| ( | ) | |
Demand promissory note |
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Net cash provided by financing activities |
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Net (decrease) increase in cash |
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| ( | ) |
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Cash, beginning of period |
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Cash, end of period |
| $ |
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Supplemental disclosure of cash flow information: |
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Cash paid during the period |
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Taxes |
| $ |
|
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| ||
Interest |
| $ |
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| ||
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Non-cash investing and financing activities: |
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Common stock issued for services |
| $ |
|
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| ||
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The accompanying notes are an integral part of these financial statements | ||||||||
| F-6 |
| Table of Contents |
Global Gold Royalty Inc.
Notes to the Financial Statements
December 31, 2022 and 2021
(Audited)
Note 1: Nature of Business
Global Gold Royalty Inc. (the “Company”) was established under the laws of the State of Nevada on
Royalties are non-operating interests in mining projects that provide the right to revenues from projects after deducting specified costs.
Note 2: Summary of Significant Accounting Policies
Basis of Presentation
The financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Going Concern
As shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of December 31, 2022, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $
Achievement of the Company’s objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively control operating and capital costs.
The Company plans to fund its future operations by sales of its common stock or by borrowing. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash is comprised of bank deposits at financial institutions with insured by the Federal Deposit Insurance Corporation. Management believes there is no risk of loss as the Company’s balance does not exceed the maximum amount insured.
| F-7 |
| Table of Contents |
Global Gold Royalty Inc.
Notes to the Financial Statements
December 31, 2022 and 2021
(Audited)
Royalty Interests in Mineral Properties and Related Depletion
Royalty interests include acquired royalty interests in production, development and exploration stage properties. The costs of acquired royalty interests are capitalized as tangible assets as such interests do not meet the definition of a financial asset under the ASC guidance. Production stage royalty interests are depleted using the units of production method over the life of the mineral property (as royalty payments are recognized), which are estimated using proven and probable reserves as provided by the operator. Development stage mineral properties, which are not yet in production, are not depleted until the property begins production. Exploration stage mineral properties, where there are no proven and probable reserves, are not depleted. At such time as the associated exploration stage mineral interests are converted to proven and probable reserves, the mineral property is depleted over its life, using proven and probable reserves. The Company has not begun generating revenues from royalty interests.
Asset Impairment
We evaluate long‑lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts of an asset or group of assets may not be recoverable. The recoverability of the carrying value of royalty interests in production and development stage properties is evaluated based upon estimated future undiscounted net cash flows from each royalty interest using estimates of proven and probable reserves and other relevant information received from the operators. We evaluate the recoverability of the carrying value of royalty interests in exploration stage properties in the event of significant decreases in the price of gold and whenever new information regarding the properties is obtained from the operator indicating that production will not likely occur or may be reduced in the future, thus potentially affecting the future recoverability of our royalty interests. Impairments in the carrying value of each property are measured and recorded to the extent that the carrying value in each property exceeds its estimated fair value, which is generally calculated using estimated future discounted cash flows. Estimates of gold price, and operators’ estimates of proven and probable reserves or mineralized material related to our royalty properties are subject to certain risks and uncertainties which may affect the recoverability of our investment in these royalty interests in properties. It is possible that changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from these royalty interests.
Revenue Recognition
Revenue is recognized pursuant to current guidance in ASC 606 – Revenue from Contracts with Customers (“ASC 606”). Under current ASC 606 guidance, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our royalty interests is generally recognized at the point in time that control of the related gold production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective royalty agreement. A more detailed summary of revenue recognition policies for our royalty interests is discussed in Note 3.
| F-8 |
| Table of Contents |
Global Gold Royalty Inc.
Notes to the Financial Statements
December 31, 2022 and 2021
(Audited)
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
The Company is subject to U.S. federal income tax laws. The company incurred operating losses in the 2022 and 2021. As of December 31, 2022, the Company had no previously recorded deferred tax assets based on net operating losses. In 2022, the Company continued to incur net operating losses; however, at the time of this report, management has not determined when it would generate taxable profits; accordingly, management has not recognized deferred tax assets for the year ended December 31, 2022.
| F-9 |
| Table of Contents |
Global Gold Royalty Inc.
Notes to the Financial Statements
December 31, 2022 and 2021
(Audited)
Recent Accounting Pronouncements
In June 2016, FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the accounting for credit losses by requiring immediate recognition of management’s estimates of current expected credit losses (CECL). Under the prior treatment, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The new accounting standard introduces the current expected credit losses methodology (CECL) for estimating allowances for credit losses.
In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments — Credit Losses (Topic 326). The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.
The new treatment is applicable to all financial instruments that are not accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates.
The Company believes the adoption of this update will not materially impact its financial statements and related disclosures. However, the Company will continue to monitor these and other emerging issues to assess any potential future impact on its financial statements.
Note 3: Revenue Recognition
Under U.S. GAAP, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective royalty agreement. A more detailed summary of revenue recognition policies for our royalty interests is discussed below.
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue from the project after deducting specified costs. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for the period in which metal production occurred. As a royalty holder, we act as a passive entity in the production and operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that the transfer of each unit of metal production, comprising our royalty interest, to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite treatment, refining, transportation and, if applicable, mining costs.
The Company has not begun generating revenues from royalty interests.
Note 4: Commitments and Contingencies
We are not a party to any pending legal proceedings. Nor has the Company presently identified any commitments and contingencies needing to be recorded or disclosed.
| F-10 |
| Table of Contents |
Global Gold Royalty Inc.
Notes to the Financial Statements
December 31, 2022 and 2021
(Audited)
Note 5: Liabilities
As of December 31, 2022 and 2021, the Company has incurred $
Note 6: Capital Stock
On September 28, 2020 the Company issued
On November 17, 2020 the Company increased its authorized capital to
On December 17, 2021 the Board of Directors approved a
A public offering of common stock in the Company commenced on April 26, 2021 when the Form S-1 registration statement filed with the SEC was declared effective. A total of
On April 18, 2022, the Company issued
On December 16, 2022 the Company’s Board of Directors approved a
As of December 31, 2022 there were no outstanding stock options or warrants.
Note 7: Related Party Transactions
In April 2022, the Company entered into a service agreement with a consultant, Vivian Kwok to further its business development , whereby she received
In July 2022, the Company issued a demand promissory note to its CEO in the principal amount of $
Note 8: Subsequent Events
On December 16, 2022 the Company’s Board of Directors approved a
| F-11 |
| Table of Contents |
ITEM 9. Changes in and Disagreements with Accountants in Accounting and Financial Statement Disclosures
None
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, due to small staff size, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
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. Due to 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, have been detected. During the year ended December 31, 2022, 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, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation and due to the lack of segregation of duties due to small Company staff size, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report. To address the deficiency, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
| 11 |
| Table of Contents |
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.
Management has identified control deficiencies regarding the lack of segregation of duties due to small staff size and the need for a stronger internal control environment. The small size of the Company’s staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation. The Company intends to add additional resources and controls during year 2023 to mitigate the above significant deficiency.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
No Attestation Report by Independent Registered Accountant
The effectiveness of our internal control over financial reporting as of December 31, 2022 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.
ITEM 9B. OTHER INFORMATION
None
| 12 |
| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERANCE.
Directors and Executive Officers
Our officer and director is as follows:
Name |
| Age |
| Position(s) |
Sam Kwok |
| 58 |
| Chief Executive Officer, Chief Financial Officer, Director, |
|
|
|
| Secretary and Treasurer |
Mr. Kwok has served as the Chief Executive Officer, Chief Financial Officer, Director, Secretary and Treasurer since our inception in August 2019. Prior to founding the Company, he co-founded and served as the managing partner of Precious Resources, an advisory firm that specialized in providing financing solutions to developing precious metals mining companies since 2015. In that role, he has been advising mining companies on various ways to fund their projects. He has had over thirty years of combined experience in the fields of finance, accounting and investment. Mr. Kwok holds a degree in economics from the London School of Economics in the UK and he was a U.S. Certified Public Accountant and a Chartered Alternative Investment Analyst.
Term of Office
Our directors hold office until the next annual meeting of the stockholders or until successors are elected and qualify, subject to prior death, resignation or removal. Officers serve at the discretion of the Board of Directors.
Director Independence
Our board of directors is currently composed of one member who does not qualify as an independent director as defined by NASDAQ Listing Rule Section 5605(a)(2).
Committees
Our board of directors does not currently have an audit committee, compensation committee or nominating and corporate governance committee.
Legal Proceedings
To the best of our knowledge, no officer, director, or persons nominated for these positions has been involved in legal proceedings that would be material to an evaluation of our management.
Code of Ethics
We have adopted a Code of Ethics that applies to our directors, officers, and all employees. It may be obtained free of charge by writing to Global Gold Royalty, Inc., Attn: Investor Relation, 701 N Green Valley Parkway, Suite 200, Henderson, NV 89074.
| 13 |
| Table of Contents |
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation to our Chief Executive Officer and Chief Financial Officer for the years ended 2022 and 2021:
SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||
Name and Principal Position |
| Year |
| Salary ($) |
| Bonus ($) |
| Stock Awards ($) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
|
| Total ($) |
| ||
Sam Kwok(1) |
| 2022 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
|
| 0 |
|
|
| 0 |
|
|
| 2021 |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
| -4500- |
|
| -4500- |
| ||
| (1) | Appointed Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director on August 23, 2019 at the inception of the Company. |
Non-Qualified Deferred Compensation
We do not maintain any nonqualified, deferred compensation plans or arrangements under which our named executive officer is entitled to participate.
Long Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any 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.
Employment Agreements
We currently do not have an employment agreement with our Chief Executive Officer, Mr. Kwok.
| 14 |
| Table of Contents |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
| Option Awards |
|
| Stock Awards | ||||||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock That Have Not Vested (#) |
| Market Value of Shares or Units of Stock That Have Not Vested ($) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Sam Kwok (1) |
| -0- |
| -0- |
| -0- |
|
| N/A |
|
|
| N/A |
|
| -0- |
| -0- |
| -0- |
| -0- | |
| (1) | Appointed to his positions on August 23, 2019 at the inception of the Company. |
Outstanding Equity Awards
No grants of stock options or stock awards were made during the fiscal year ended December 31, 2022 to our named executive officer. We have no stock options outstanding.
Compensation of Directors
Our director presently does not receive monetary compensation for his service on the board of directors. Directors may receive compensation for their services in the future and reimbursement for their expenses as shall be determined from time to time by resolution of the board of directors.
Limits on Liability and Indemnification
Our by-laws provide that our company shall indemnify its officers and directors to the fullest extent allowed by law for any liability including reasonable costs of defense arising out of any act or omission of any officer or director on behalf of the company to the full extent allowed by the laws of the State of Nevada and any amendment to Nevada law, whether effected by the Nevada Revised Statutes or judicial decision or otherwise, which allows for further indemnification of officers or directors after the date of our by-laws automatically adopted by our company without further act. Insofar as indemnification for liabilities under the Securities Act may be permitted to our directors, officers, and controlling persons under the foregoing provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
| 15 |
| Table of Contents |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information in the following table sets forth the beneficial ownership of our shares of common stock as of December 31, 2022 by: (i) our officers and directors; (ii) all officers and directors as a group; (iii) each shareholder who beneficially owns more than 5% of any class of our voting securities. Beneficial ownership is determined in accordance with the rules of the SEC.
Name |
| Number of Shares Beneficially Owned |
|
| Percent |
| ||
|
|
|
|
|
|
| ||
Sam Kwok (1)(2)(3) |
|
| 20,000,000 |
|
|
| 99.22 | % |
|
|
|
|
|
|
|
|
|
All Officers and Directors as a Group (1 Person)(3) |
|
| 20,000,000 |
|
|
| 99.22 | % |
(1) Indicates one of our officers or directors.
(2) Unless indicated otherwise, the address of the shareholder is Global Gold Royalty, Inc., 701 N Green Valley Parkway, Henderson, Nevada 89074.
(3) 80,000,000 shares pre- reverse stock split and 20,000,000 shares post reverse stock split.
We are not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above. We are not aware of any person who controls the issuer as specified in Section 2(a)(1) of the 1940 Act. There are no classes of stock other than common stock issued or outstanding.
Changes in Control
There are no current arrangements which will result in a change in control as that term is defined by the provisions of Item 403(c) of Regulation S-K.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Since Inception on August 23, 2019, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities or any member of the immediate family of the foregoing persons had or will have a direct or indirect material interest.
Transactions with Related Parties
In order to further its business development, the Company entered into a service agreement with a consultant, Vivian Kwok in April of 2022, whereby she received 360,000 shares (pre reverse stock split and 90,000 shares post reverse split) of the Company at $0.25($1.0 post reverse stock split) per share in compensation under the arrangement. Prior to the transaction, she owned 21,200 shares of the Company’s stock and is a family of our CEO. She agreed to serve the Company for a twelve-month term after retiring from a four decade long banking career. The agreement will expire at the end of March, 2023. In determining compensation for the service, we benchmarked the pay against similar job mandates of other gold royalty companies.
In July of 2022, the Company issued a demand promissory note to its CEO. The note bears interest at 12% per annum and is due in two business days after the demand for payment. As of December 31, 2022, the principal balance was $20,000.The interest expense for the year ended December 31, 2022 was $1,200.
Other than the above transactions, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 Regulation S-K.
Our director is not deemed independent because he is our single largest shareholder and CEO.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
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| Year ended |
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| Year ended |
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| Dec 31, |
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| Dec 31, |
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| 2022 |
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| 2021 |
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Audit Fee |
| $ | 8,500 |
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| $ | 12,650 |
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Audit-Related Fees |
| $ |
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| $ | 1,250 |
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Tax Fees |
| $ | - |
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| $ | - |
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All Other Fees |
| $ | - |
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| $ | - |
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Total |
| $ | 8,500 |
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| $ | 13,900 |
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Audit Fees
Audit fees consist of fees billed for professional services rendered for the audit of financial statements and the review of quarterly financial statements included in quarterly reports. Fees paid to WWC, P.C. for the audit of the years ended December 31, 2022 and 2021 were $8,500 and $3,500.
Audit-Related Fees
This consists of assurance and related services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under Audit Fees.
WWC, P.C. was not paid any audit-related fees for the years ended December 31, 2022 and 2021.
Tax Fees
We did not incur fees for tax compliance, tax advice, or tax planning for the fiscal years ended December 31, 2022 and 2021, respectively.
All Other Fees
None
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits:
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Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer | |
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Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer | |
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101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
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101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| Global Gold Royalty Inc. |
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| Registrant |
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Date: April 14, 2023 | By: | /s/ Sam Kwok |
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| Sam Kwok |
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| CEO, CFO and Director (Principal Executive, Financial and Accounting Officer) |
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