STOCKHOLDERS’ DEFICIT

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

9. STOCKHOLDERS’ DEFICIT

Common Stock:

During the year ended December 31, 2022, the Company received cash of $30,000 which is included in stock subscription payable at December 31, 2022, for a private placement of common shares priced at $0.01 per share, of which $5,000 was from William Orchow, a related party. Upon closing, the Company will issue 3,000,000 common shares.

Series A Convertible Preferred Stock:

The Company has 150,000 shares of Series A Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated 1,000,000 shares of Series A Preferred Stock, no par value, with the following rights and preferences:

● Liquidation Preference: Upon a liquidation event, an amount in cash equal to $2.00 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $300,000 at December 31, 2022 and 2021, together with declared but unpaid dividends to which the holders of outstanding shares of Series A Preferred Stock are entitled shall be paid prior to liquidation payments to holders of Company securities junior to the Series A Preferred Stock.

● Voting: Each holder of Series A Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series A Preferred Stock could be converted.

● Conversion: Any share of Series A Preferred Stock may, at the option of the holder, be converted at any time into six shares of common stock. The Company has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the third anniversary of its issuance if the weighted average trading price of the common stock exceeds $1.00 per share for ten consecutive trading days. The Company also has the right, at its sole option, to convert all Series A Preferred Stock into common stock after the tenth anniversary from the date of issuance.

● Dividend Rate: The holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board, yearly cumulative dividends from the surplus or net profits of the Company at an effective rate of 5% per annum, of the original Series A Preferred Stock purchase price of $1.00 per share. The Series A dividend shall accrue ratably from the date of issuance of the Series A Preferred Stock through the entire period in which shares of Series A Preferred Stock are held and shall be payable to the holder of the Series A Preferred Stock on the conversion date of the Series A Preferred Stock or as may be declared by the Board, with proper adjustment for any dividend period which is less than a full year.

● Preferential and Cumulative. The Series A dividends shall be payable before any dividends will be paid upon, or set apart for, the common stock of the Company and will be cumulative, so that any dividends not paid or set apart for payment for the Series A Preferred Stock, will be fully paid and set apart for payment, before any dividends will be paid upon, or set apart for, the common stock of the Company.

● Payment of Dividend: If the Company shall have sufficient earnings to pay a dividend on the Series A Preferred Stock, upon declaration of any dividend by the Board in compliance with the Alaska Code and the Company’s Articles of Incorporation and Bylaws, the holder of Series A Preferred Stock may elect to receive payment of Series A dividend on a dividend payment date in cash, or provisionally in gold. Payment of Series A dividends in gold shall be paid only if the Company is producing gold in sufficient quantities as of the dividend payment date to pay such in-kind dividend and shall be delivered in the form of gold produced from the Company’s Chandalar property. The Company has total dividends in arrears of $107,792 as of December 31, 2022 and $100,188 as of December 31, 2021. Total dividends of $30,618 were declared and payable as a result of conversion of preferred stock during 2011 and 2016, and have been recorded on the Company’s balance sheets at December 31, 2022 and 2021.

Conversion of outstanding shares of Series A Preferred stock would have resulted in dilution of 900,000 common shares for the years ended December 31, 2022 and 2021.

Series B Convertible Preferred Stock:

The Company has 200 shares of Series B Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated 300 shares of Series B Preferred Stock, no par value, with the following rights and preferences:

● Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $200,000 at December 31, 2022 and 2021, shall be paid prior to liquidation payments to holders of Company securities junior to the Series B Preferred Stock. Holders of the Company’s Series A Preferred Stock shall be paid in advance of holders of the Series B Preferred Stock on the occurrence of a Liquidation Event.

● Voting: Each holder of Series B Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series B Preferred Stock could be converted. Holders of Series B Preferred Stock vote as a single class with the common shares on an as-if-converted basis. No holder of Series B Preferred Stock is entitled to pre-emptive voting rights.

● Conversion: Shares of Series B Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series B shares by $1,000, then dividing by the Series B conversion price of $0.07 per common share. The Series B conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

● Dividend Rate: The holders of Series B Preferred Stock shall not be entitled to receive dividends.

Conversion of outstanding shares of Series B Preferred stock would result in dilution of 2,857,142 common shares for the years ended December 31, 2022 and 2021.

Series C Convertible Preferred Stock:

The Company has 250 shares of Series C Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated 250 shares of Series C Preferred Stock, no par value, with the following rights and preferences:

● Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), for a total of $250,000 at December 31, 2022 and 2021, shall be paid prior to liquidation payments to holders of Company securities junior to the Series C Preferred Stock. Holders of the Company’s Series A Preferred Stock and Series B Preferred Stock shall be paid in advance of holders of the Series C Preferred Stock on the occurrence of a Liquidation Event.

● Voting: Each holder of Series C Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series C Preferred Stock could be converted. Holders of Series C Preferred Stock vote as a single class with the common shares on an as-if-converted basis. No holder of Series C Preferred Stock is entitled to pre-emptive voting rights.

● Conversion: Shares of Series C Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series C shares by $1,000, then dividing by the Series C conversion price of $0.03 per common share. The Series C conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

● Dividend Rate: The holders of Series C Preferred Stock shall not be entitled to receive dividends.

Conversion of outstanding shares of Series C Preferred stock would result in dilution of 8,333,333 common shares for the years ended December 31, 2022 and 2021.

Series D Convertible Preferred Stock:

The Company has 90 and 150 shares of Series D Convertible Preferred Stock outstanding at December 31, 2022 and 2021, respectively. These shares were issued from the designated 150 shares of Series D Preferred Stock, no par value. Conversion of outstanding shares of Series D Preferred stock would result in dilution of 3,000,000 and 5,000,000 common shares for the years ended December 31, 2022 and 2021.

During the year ended December 31, 2022, two holders of Series D Convertible Preferred Stock converted a total of 60 preferred shares into 2,000,000 common shares of the Company.

Series E Convertible Preferred Stock:

The Company has 300 shares of Series E Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated 300 shares of Series E Preferred Stock, no par value. Conversion of outstanding shares of Series E Preferred stock would result in dilution of 10,000,000 common shares for the years ended December 31, 2022 and 2021.

Series F Convertible Preferred Stock:

The Company has 153 shares of Series F Convertible Preferred Stock outstanding at December 31, 2022 and 2021. These shares were issued from the designated 300 shares of Series F Preferred Stock, no par value. Conversion of outstanding shares of Series F Preferred stock would result in dilution of 5,100,000 common shares for the years ended December 31, 2022 and 2021.

Series D, E and F Preferred Stock were issued with the following rights and preferences:

● Liquidation Preference: Upon a liquidation event, an amount in cash equal to $1,000 per share (adjusted appropriately for stock splits, stock dividends and the like), shall be paid prior to liquidation payments to holders of Company securities junior to the Series D, E, and F Preferred Stock. Holders of the Company’s Series A, B and C Preferred Stock shall be paid in advance of holders of the Series D, E and F Preferred Stock on the occurrence of a Liquidation Event.

● Voting: Each holder of Series D, E and F Preferred Stock shall be entitled to vote on all matters upon which holders of common stock would be entitled to vote and shall be entitled to that number of votes equal to the number of whole shares of common stock into which such holder’s shares of Series D, E and F Preferred Stock could be converted. Holders of Series D, E and F Preferred Stock vote as a single class respectively with the common shares on an as-if-converted basis. No holder of Series D, E and F Preferred Stock is entitled to pre-emptive voting rights.

● Conversion: Shares of Series D, E and F Preferred Stock may, at the option of the holder, be converted at any time into a number of fully-paid and non-assessable shares of common stock as is equal to the product obtained by multiplying the Series D, E and F shares by $1,000, then dividing by the Series D, E and F conversion price of $0.03 per common share. The Series D, E and F conversion price is subject to adjustment in accordance with the provisions of the statement of designation.

● Dividend Rate: The holders of Series D, E and F Preferred Stock shall not be entitled to receive dividends.

● The Series D, E and F Preferred Stock includes a redemption feature as described above.

A related party and member of the Company’s board of directors, Nicholas Gallagher, holds and controls all of the outstanding shares of the Series A, B and C Preferred Stock, 50 shares of the Series D Preferred Stock, 280 shares of the Series E Preferred Stock and all of the Series F Preferred Stock.

Warrants:

The following is a summary of warrants at December 31, 2022:

	Shares			Exercise Price ($)		Expiration Date
Class R Warrants: (Issued for Private Placement)
Outstanding and exercisable at January 1, 2021		15,000,001			.045 & .03	Aug 1 to Dec 9, 2023
Warrants expired		(3,333,333	)
Outstanding and exercisable at December 31, 2021		11,666,668
Warrants exercised		(2,555,555	)
Outstanding and exercisable at December 31, 2022		9,111,113
Class S Warrants: (Issued for Private Placement of Preferred Stock)
Outstanding and exercisable at January 1, 2021		4,633,336			.03	Dec 30, 2021 to Mar 30, 2022
Warrants exercised		(4,633,336	)
Outstanding and exercisable at December 31, 2021		-
Outstanding and exercisable at December 31, 2022		-
Class T Warrants: (Issued with Senior Secured Notes Payable)
Outstanding and exercisable at January 1, 2021		17,608,357			.03	Jun. 4, 2023 to Oct 31, 2024
Warrants exercised		(6,947,131	)
Outstanding and exercisable at December 31, 2021		10,661,226
Warrants exercised		(1,105,262	)
Warrants expired		(552,631	)
Outstanding and exercisable at December 31, 2022		9,003,333
Warrants outstanding at December 31, 2021 were 22,327,894 with a weighted average exercise price of $0.038. Total Warrants outstanding and weighted average exercise price at December 31, 2022		18,114,446			.032

Warrant Exercises

During the year ended December 31, 2022, the Company received $133,157 cash as a result of the exercise of Class R and T warrants at an exercise price of $0.03 per common share and Class R warrants at an exercise price of $0.045 per common share, resulting in the issuance of 3,660,817 common shares. Of that amount, 1,555,555 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash.

During the year ended December 31, 2021, the Company received $347,414 cash as a result of the exercise of Class S and T warrants at an exercise price of $0.03 per common share, resulting in the issuance of 11,580,467 common shares. Of that amount, 7,458,303 of the warrants exercised were owned by Mr. Gallagher and were transferred to unrelated parties. The unrelated parties then exercised the warrants for cash. The Company received an additional $40,000 for the exercise of Class T warrants which are included in stock subscription payable at December 31, 2021 and 2022. To complete the exercise, the Company will issue 1,333,333 common shares for the exercised warrants.

Warrant Extensions

On June 30, 2021, the Company’s Board of Directors, voted to extend the expiry dates for all Class R warrants not already expired, by two years. Prior to this change, the Class R warrants were set to expire at various times throughout 2021, with the last one expiring on December 9, 2021. With this change, 11,666,668 Class R warrants were modified to expire on various dates from August 1 to December 9, 2023.

Stock Options and Stock-Based Compensation:

Under the Company’s 2008 Equity Incentive Plan, as amended by shareholder vote on November 13, 2020 (the “Plan”), options to purchase shares of common stock may be granted to key employees, contract management and directors of the Company. The Plan permits the granting of nonqualified stock options, incentive stock options and shares of common stock. Upon exercise of options, shares of common stock are issued from the Company’s treasury stock or, if insufficient treasury shares are available, from authorized but unissued shares. Options are granted at a price equal to the closing price of the common stock on the date of grant. The stock options are generally exercisable immediately upon grant and for a period of 10 years.

In the event of cessation of the holder’s relationship with the Company, the holder’s exercise period terminates 90 days following such cessation. The Plan authorizes the issuance of up to 16,129,304 shares of common stock, subject to adjustment for certain events, such as a stock split or other dilutive events. As of December 31, 2022, there were a total of 8,954,304 shares available for grant in the Plan, 6,075,000 shares issued, 50,000 options exercised in prior years, and 1,050,000 options exercisable and outstanding.

A summary of stock option transactions for the years ended December 31, 2022 and 2021 are as follows:

	Shares			Weighted- Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Options outstanding and exercisable at December 31, 2020		1,075,000		$	0.06		5.24	$	2,125
Options expired		(25,000	)	$	0.21
Options outstanding and exercisable at December 31, 2021		1,050,000		$	0.05		4.35	$	38,225
Options outstanding and exercisable at December 31, 2022		1,050,000		$	0.05		3.35	$	2,975

Interest Payable Satisfied with Common Stock

During the year ended December 31, 2021, a total of 280,752 common shares were issued to one note holder in exchange for interest payable of $4,212 at $0.015 per share.