Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
1.
Nature of Operations
Joshua Gold Resources Inc. (referred to herein as “Joshua”, or the “Company”) was
incorporated on July 10, 2009 in the State of Nevada, USA.
The Company operates as a mineral exploration business headquartered at 1022 Pattullo Avenue. Woodstock,
Ontario, Canada. Its principal business activity is the acquisition, exploration and development of mineral property interests in Canada.
The Company is considered to be in the exploration stage and substantially all of the Company’s efforts are devoted to financing
and developing these property interests.
The Company has the rights to twelve mineral properties in Ontario and in the Northwest Territories,
Canada. There has been no determination whether the Company’s interests in unproven mineral properties contain mineral reserves,
which are economically recoverable.
During the year, there was a global outbreak of COVID-19 (coronavirus), which has had a significant
impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business
operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the
Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties
arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration
of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place
by Canada and other countries to fight the virus.
Going Concern
The unaudited condensed interim financial statements have been prepared on a going concern basis. The
going concern basis of presentation assumes that the Company will continue operations for the foreseeable future and will be able to realize
its assets and discharge its liabilities and commitments in the normal course of operations.
The Company has incurred a net loss of $110,168 for the three-month period ended March 31, 2022, and
a working capital deficit of $1,478,650. As an exploration stage entity, the Company has not yet commenced its mining operations and accordingly
does not have any revenue. This casts substantial doubt on the Company’s ability to continue as a going concern unless it can begin
to generate net profit and raise adequate financing.
The Company has been seeking additional debt or equity financing to support its operations until it
becomes cash flow positive. There can be no assurances that the action and plan above will be sufficient for the Company to continue
operating as a going concern.
The unaudited condensed interim financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company
be unable to continue in existence. These adjustments could be material.
8
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
2.
Significant Accounting Policies
The accompanying unaudited condensed interim financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and with the instructions to Form 10–Q and Rule 10 of
Regulation S–X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted
in the United States of America. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation
of the financial position and operating results have been included in these unaudited condensed interim financial statements. These unaudited
condensed interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s
Annual Report on Form 10–K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022. Operating results
for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent
quarters or for the year ending December 31, 2022.
Use of Estimates
The preparation of unaudited condensed interim financial statements in conformity with accounting principles
generally accepted in the United States 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 unaudited condensed interim financial statements
and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Some
of the Company's more significant estimates include those related to uncollectible receivables, the fair value of stock-based compensation
and other equity instruments, and the recoverability of mineral properties. These estimates are reviewed periodically, and, as adjustments
become necessary, they are reported in earnings in the period in which they become known.
Fair Value of Financial Instruments
In accordance with ASC 820, Fair Value Measurement, fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market
participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. A fair value hierarchy
for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by
requiring that the most observable inputs be used when available. Observable inputs are those that market participants would
use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect
the Company assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information
available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
|
| |
|
|
|
|
Level 1 - |
Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|
Level 2 - |
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial
instruments. |
|
Level 3 - |
Inputs to the valuation methodology are unobservable and significant to the fair value. |
9
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
2.
Significant Accounting Policies - continued
Income Taxes
The Company accounts for income taxes pursuant to ASC 740, Income Taxes. Deferred tax assets
and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result
in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax
payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.
Stock-based Compensation
The Company accounts for Stock-Based Compensation in accordance with ASC 718, Compensation –
Stock Compensation. ASC 718 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments
for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services
that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
ASC 718 focuses primarily on accounting for transactions in which an entity obtains employee services
in share-based payment transactions. ASC 718 requires that the compensation cost relating to share-based payment transactions
be recognized in the unaudited condensed interim financial statements measured based on the fair value of the equity or liability instruments
issued, when granted in exchange for employee services.
Awards granted to non-employees fall under ASC 505-50 and are recognized based on the fair value of
the goods or services received or the equity instruments, whichever is more reliable.
Net Earnings (Loss) Per Share
The Company accounts for earnings (loss) per share pursuant ASC 260, Earnings Per Share, which
requires disclosure on the unaudited condensed interim financial statements of “basic” and “diluted” earnings (loss)
per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding
for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common
shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. The weighted average
number of shares outstanding has been adjusted for the effects of stock dividends, stock splits, and reverse stock splits.
There were no dilutive financial instruments for the three-month periods ended March 31, 2022 and 2021.
10
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
2.
Significant Accounting Policies - continued
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting standards, when
adopted, will have a material effect on the accompanying financial statements.
3.
Mineral Property Interests
|
| |
Balance at January 1, 2016 |
$ |
1 |
Carson Property acquisition (a) |
|
15,000 |
Impairment charge Carson Property |
|
(15,000) |
Kenty Property (b) |
|
|
Balance at December 31, 2016 |
$ |
1 |
Rollo Property (expired) |
|
25,000 |
Janes Reef Property (expired) |
|
16,000 |
Asquith Property (expired) |
|
10,000 |
C1 Mortimer Property (c) |
|
941,460 |
Impairment charge |
|
(992,460) |
Balance at December 31, 2017 and 2018 |
$ |
1 |
C1 Mortimer amendment (c) |
|
359,760 |
Chewitt Property (d) |
|
60,360 |
King Solomon Mines Property (e) |
|
1,280,000 |
Impairment charge |
|
(1,700,120) |
Balance at December 31, 2019 |
$ |
1 |
Borden Lake North (f) |
|
15,000 |
Halcrow, McCool, Seymour Lake (g) |
|
145,000 |
Haycock, Godfrey and Roma (h) |
|
138,000 |
Hiltz (i) |
|
21,000 |
Jo-Anne Property(j) |
|
168,000 |
Impairment charge |
|
(487,000) |
Balance at December 31, 2020 |
$ |
1 |
Niobe Property (k)( expired) |
|
120,000 |
Benoit West Property (l) |
|
150,000 |
Impairment charge |
|
(270,000) |
Balance at December 31, 2021 and March 31, 2022 |
$ |
1 |
11
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
3.
Mineral Property Interests -continued
a)
Carson Property
On December 23, 2010, the Company entered into a mineral property acquisition agreement with 2214098
Ontario Ltd. pursuant to which the Company acquired the mining lease to the Carson Property. Under the acquisition agreement, the Company
was required to pay:
1.
Cash consideration of $99,060 (CDN$100,000) to be paid according
to an installment schedule between April 30, 2011 and December 31, 2015;
2.
Equity consideration of 1,000,000 shares of common stock to be
issued on or before March 30, 2011; and
3.
Royalty of 3% of all net smelter returns upon commencement of
commercial production of the property.
The Carson Property is 1,812 acres in area and is located north by north-west of the City of Yellowknife,
in the Northwest Territories, Canada. The Company’s interest in the property consists of a 21-year mining lease, which expires on
December 31, 2024 and for which the Company was responsible for making annual lease payments of $1,141, in order to keep the lease in
good standing.
On December 13, 2012, the Company terminated its acquisition agreement for the Carson Property with
2214098 Ontario Ltd. Under the terms of the agreement, the Company returned the property to the vendor, and both parties are released
from any further obligation under the agreement.
The Company had reflected the termination as a loss on disposal of mineral property on the statement
of operations of $112,686 for the year ended December 31, 2012.
During 2016, the Company reacquired the Carson Property in exchange for 300,000 shares of common stock
to be issued valued at $15,000.
In 2016, the Company recognized an impairment charge of $15,000 on the carrying value of the Carson
Property based on the substantial doubt of the Company’s ability to raise adequate financing.
b)
Kenty Gold Property
McClay Conveyed Property. On October 4, 2012, the Company entered into and closed a mineral
property acquisition agreement (the “McClay Agreement”) with Brian McClay, a British Columbia, Canada resident (“McClay”),
pursuant to which McClay agreed to sell to the Company an undivided one hundred percent (100%) interest in and to certain mineral interests
found on the Kenty Gold Property located in the Townships of Swayze and Dore, Ontario, Canada (the “McClay Conveyed Property”).
As consideration for the sale of the McClay Conveyed Property, the Company agreed to deliver the following
to McClay in the manner set forth below:
(a)
Closing Date. CDN$50,000
within six (3) business days following the closing date.
(b)
February 4, 2013.
(i)
CDN$100,000 on or before February 4, 2013;
and
(ii)
200,000 common shares of Company on or
before February 4, 2013.
(c)
April 4, 2013.
(i)
CDN$150,000 on or before April 4, 2013;
and
12
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
b)
Kenty Gold Property-continued
(ii)
200,000 common shares of Company on or
before April 4, 2013.
(d)
October 4, 2013.
(i)
CDN$300,000 on or before October 4, 2013;
and
(ii)
250,000 common shares of Company on or
before October 4, 2013.
(e)
April 4, 2014.
(i)
CDN$300,000 on or before April 4, 2014;
and
(ii)
250,000 common shares of Company on or
before April 4, 2014.
(f)
October 4, 2014.
(i)
CDN$300,000 on or before October 4, 2014;
and
(ii)
250,000 common shares of Company on or
before October 4, 2014.
(g)
April 4, 2015.
(i)
CDN$300,000 on or before April 4, 2015; and
(ii)
550,000 common shares of Company on or before April 4, 2015.
(h)
Reserve. Upon completion of a NI 43-101 compliant
mineral resource estimate and pre-feasibility study, with an indicated reserve (by which the parties meant “indicated mineral resource”)
of 1,000,000 Troy Ounces of Gold (Aurum Metal) on the McClay Conveyed Property, Company shall pay CDN$1,000,000 to McClay.
(i)
Production.
(i)
Upon production of 1,000,000 Troy Ounces of Gold (Aurum Metal)
from the McClay Conveyed Property, Company shall pay CDN$1,000,000 to McClay.
(ii)
Upon production of 3,000,000 Troy Ounces of Gold (Aurum Metal)
from the McClay Conveyed Property, Company shall pay CDN$2,000,000 to McClay.
(iii)
Upon production of 5,000,000 Troy Ounces of Gold (Aurum Metal)
from the McClay Conveyed Property, Company shall pay CDN$2,000,000 to McClay.
(j)
Early Buyout Option. Company shall have the option
of early buyout within one year of execution for a cash payment of CDN$750,000 and 750,000 common shares of Company.
In addition, upon the Commencement of Commercial Production (as defined in the McClay Agreement), the
Company shall pay to McClay a royalty in an amount equal to three percent (3%) of all Net Smelter Returns (as defined in the McClay Agreement)
on minerals mined from the McClay Conveyed Property (the “Seller NSR”) on the terms and conditions as set out in the McClay
Agreement. Notwithstanding the foregoing, at any point in time following the closing date and upon the Company’s sole election,
McClay shall sell to Company fifty percent (50%) of the Seller NSR for a purchase price of CDN$1,500,000.
During 2014, the Company recognized an impairment charge of $1,975,999 on the carrying value of the
Kenty Property based on the substantial doubt of the Company’s ability to raise adequate financing to further develop and explore
this property.
13
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
b)
Kenty Gold Property-continued
At present the Company is involved in three material litigation proceedings. These actions are ongoing
in the Ontario Superior Court of Justice and all involve the ownership of the Kenty Property.
The first application is an application brought by Emerald Isle Resources on May
14, 2013 seeking a declaration that it is the legal owner of the Kenty Property. The application alleges: (i) that Brian A.
McClay, the owner of the Kenty Property, had sold 100% of his interest therein to Emerald Isle in 1986, although Emerald Isle did not
register its acquisition of the Kenty Property at that time; and (ii) that at the time he entered into an agreement to sell the Kenty
Property to the Company, Mr. McClay had no interest in the Kenty Property to sell. The Company has responded to that application.
By separate application commenced March 13, 2014 the Company and its co- applicant,
Mr. McClay commenced a separate proceeding in the Ontario Superior Court of Justice seeking a formal declaration that Mr. McClay is the
sole owner of a 100% undivided interest in the Kenty Property subject only to a smelting agreement and a Mineral Property Acquisition
Agreement in favor of the Company.
As at March 31, 2022, these matters remain to be resolved.
In separate proceedings, on May 13, 2015, the Company filed a Statement of Claim
against Mr. McClay seeking damages totaling $10,750,000 in the event that the Application of the Company and Mr. McClay is unsuccessful
and on or about September 28, 2015, Mr. McClay filed a counterclaim against the Company alleging that the Company has failed to deliver
the consideration for the purchase of the Kenty Property and therefore has no rights thereto, and seeking damages in the amount of $2,500,000
against the Company. The matter remains in abeyance pending the resolution of the two Applications.
14
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
c)
C1 Mortimer Property
In January 2017, the Company entered into a Joint Venture Agreement whereby it has an Option to acquire
a fifty per cent (50%) interest in a claim known as the C1- Mortimer property. In order to earn the fifty per cent interest the Company
must:
1.
Pay $10,000 CDN upon signing;
2.
Pay 10 million shares of common stock of the Company to the prospectors
pro rata upon signing, which was reduced to 9,850,000 shares of common stock, of which 8,840,000 were issued and the remaining are included
in stock to be issued.
3.
Spend five hundred thousand ($500,000) on mineral exploration
on the property within 30 months of the signing anniversary.
4.
Grant Larry Salo first right of refusal on all exploration work.
5.
Pay the prospector owners, pro rata, CDN$750,000, within 30 months
of the signing anniversary.
The current owner prospectors will retain a three per cent (3%) Net Smelter Royalty on the property.
On June 2, 2017, the payment of CDN$10,000 was changed to a payment of CDN$5,000 on June 5, 2017, plus
CDN$5,000 paid on July 7, 2017. Total consideration of shares and these payments translated into USD amounted to $941,460. The Company
recognized an impairment charge of $941,460 on the carrying value based on the substantial doubt of the Company’s ability to raise
adequate financing to further develop and explore this property.
On October 8, 2019 the Joint Venture agreement expired and was replaced with a new Joint Venture
Option Agreement signed November 19, 2019 with the following terms:
1.
Pay the prospector owners $75,000 CDN annually for 10 years beginning January
1, 2021 and ending January 1, 2030.
2.
The Company must spend three hundred thousand dollars ($300,000.00) CDN
in mineral exploration on the property by January 1, 2025.
3.
Upon signing, the Company will issue two million, four hundred
thousand (2,400,000) JSHG common shares to the prospector owners as compensation for the changes to the original Joint Venture Option
agreement.
4.
The Company must keep each and all claims within the group that comprises the
Property in good standing. If the Company forfeits one, any or all of the claims that comprise the Property, then the Company is obligated
to inform the prospector owners of its impending forfeiture of any or all claims at least four months previous to the leased claims coming
open for staking,
5.
Prospector and driller Larry Salo will be granted first right of refusal on
all exploration work,
6.
The Company must maintain proper insurance on the Property at all times either
by itself as a policy holder or through policies held by the Company's contractors such that the prospector owners have no legal liability
at any time on the Property,
15
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
As at December 31, 2021 and December 31, 2020, the Company had yet to issue 2,400,000 common shares of stock to the
prospector owners. In 2019, the Company recognized an additional impairment charge of $359,760 on the carrying value of the C1 Mortimer
Property based on the substantial doubt of the Company’s ability to raise adequate financing.
d)
Chewitt Property
During the year ended December 31, 2020, the Company entered into a mineral property acquisition
agreement, pursuant to which the Company acquired the mining lease to the Chewitt Property. Under the acquisition agreement, the Company
issued equity consideration of 300,000 shares of common stock and cash of $360 ($475 CDN).
In 2019, the Company recognized an impairment charge of $60,360 on the carrying value of the Chewitt
Property based on the substantial doubt of the Company’s ability to raise adequate financing.
e)
King Solomon Mines Property
During the year ended December 31, 2020, the Company entered into a mineral property acquisition agreement, pursuant
to which the Company acquired the mining lease to the King Solomon Mines Property. Under the acquisition agreement, the Company issued
equity consideration of 8,000,000 shares of common stock and agreed to a two per cent (2.0%) Net Smelter Royalty (NSR) to
be paid. Vendor granted the Purchaser an Option to purchase 50% of the NSR (1%NSR) for $2 Million Canadian dollars
($2,000,000).
In 2019, the Company recognized an impairment charge of $1,280,000 on the carrying value of the King
Solomon Property based on the substantial doubt of the Company’s ability to raise adequate financing.
f)
Borden Lake North Property
On January 15, 2020, the Company entered into a mineral property acquisition agreement, pursuant to which the Company
acquired 100% interest in eleven claims (approximately 495 acres), known as the Borden North Property in Cochrane and Darcy Townships
located about 6.5 kilometers (app. 4 miles) north of the Newmont Borden Lake gold mine in Northern Ontario. Under the acquisition
agreement, the Company will transfer equity consideration of 100,000 shares of common stock, valued at US$0.15 per share recorded in shares
to be issued and agreed to a two per cent (2.0%) Net Smelter Royalty (NSR) to be paid. Vendor granted the Purchaser
an Option to purchase 75% of the NSR (1.5%NSR) for $1 Million Canadian dollars ($1,000,000).
During the year ended December 31, 2020, the Company recognized an impairment charge of $15,000 on the
carrying value of the Borden Lake North Property based on the substantial doubt of the Company’s ability to raise adequate financing.
g)
Halcrow Gold, McCool, Seymour Lake Property
On April 14, 2020, the Company purchased a 100% interest in thirty five claims, known as the Halcrow
Gold Property, McCool Property and Seymour Lake Extension Property Northern Ontario. The Company paid one million JSHG common shares
at $0.145 per share for the mineral property and a two per cent (2%) Net Smelter Royalty ('NSR') of which the Company has the option to
repurchase 75% of the NSR for one million Canadian dollars ($1,000,000) for each of the three properties at any time.
In 2020, the Company recognized an impairment charge of $145,000 on the carrying value of the Halcrow
Gold Property, McCool Property and Seymour Lake Extension Property based on the substantial doubt of the Company’s ability to raise
adequate financing.
During the three-month period ended March 31, 2022 the Company began conduction of a magnetic survey
on the property with the use of drone equipment.
16
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
For the three month periods ended March
31, 2022 and 2021
h)
Haycock, Godfrey, Roma Lake Property
On August 20, 2020, the Company purchased a 100% interest in twenty claims, known as the Haycock Gold
Property, Godfrey and Roma Lake Property in Northern Ontario. The Company paid two million three hundred thousand JSHG common shares
at $0.06 per share for the mineral property and a three per cent (3%) Net Smelter Royalty ('NSR') of which the Company has the option
to repurchase 75% of the NSR for one million Canadian dollars ($1,000,000) for each of the three properties at any time. As
at March 31, 2022, the shares are reflected in Shares to be issued.
In 2020, the Company recognized an impairment charge of $138,000 on the carrying value of the Haycock
Gold Property, Godfrey and Roma Lake Property based on the substantial doubt of the Company’s ability to raise adequate financing.
i)
Hiltz Property
On November 19, 2020, the Company purchased a 100% interest in eight claims, known as the Hiltz in the
Asquith Township in Northern Ontario. The Company paid three hundred thousand JSHG common shares at $0.07 per share for the mineral
property and a two per cent (2%) Net Smelter Royalty ('NSR') of which the Company has the option to repurchase 75% of the NSR for one
million five hundred thousand Canadian dollars ($1,500,000) at any time.
In 2020, the Company recognized an impairment charge of $21,000 on the carrying value of the Hiltz Property
based on the substantial doubt of the Company’s ability to raise adequate financing.
j)
Jo-Anne Property
On November 13, 2020, the Company purchased a 100% interest in two claims, known as the Jo-Anne Property,
in Benoit Township in Northern Ontario. The Company paid two million four hundred thousand JSHG common shares at $0.07 per share
for the mineral property and a two per cent (2%) Net Smelter Royalty ('NSR') of which the Company has the option to repurchase 50% of
the NSR for two million Canadian dollars ($2,000,000) at any time.
In 2020, the Company recognized an impairment charge of $168,000 on the carrying value of the Jo-Anne
Property based on the substantial doubt of the Company’s ability to raise adequate financing.
k)
Niobe Property
On May 15, 2021, the Company entered into a mineral property acquisition agreement, pursuant to which the Company
acquired 100% interest in fifteen claims, known as the Borden North Property in CollinsChewett Townships located in Northern Ontario.
Under the acquisition agreement, the Company issued equity consideration of 2,000,000 shares of common stock, valued at US$0.06
per share and agreed to a two per cent (2.0%) Net Smelter Royalty (NSR) to be paid. The Vendor granted the Purchaser
an Option to purchase 50% of the NSR (1.0%NSR) for $2 Million Canadian dollars ($2,000,000). In the year ended December 31, 2021,
the Company recognized an impairment charge of $120,000 on the carrying value of the Niobe Property based on the substantial doubt of
the Company’s ability to raise adequate financing. In addition, No work was done on these claims and they expired in December
of 2021.
l)
Benoit West Property
On August 17, 2021, the Company entered into a mineral property acquisition agreement, pursuant to which the Company
acquired 100% interest in fifteen claims, known as the Benoit West located in Northern Ontario. Under the acquisition agreement,
the Company issued equity consideration of 2,500,000 shares of common stock, valued at US$0.06 per share and agreed to a two per cent
(2.0%) Net Smelter Royalty (NSR) to be paid. Vendor granted the Purchaser an Option to purchase 50% of the
NSR (1.0%NSR) for $1 Million Canadian dollars ($1,000,000).
17
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
l)
Benoit West Property (continued)
In the year ended December 31, 2021, the Company recognized an impairment charge of $150,000 on the
carrying value of the Benoit West Property based on the substantial doubt of the Company’s ability to raise adequate financing.No
work was done on these claims and they expired in December of 2021.
4.
Advances From Stockholders
The Company has advances from related stockholders and various individuals and
corporations who are not related parties.
| | |
| March 31, 2022 | December 31 , 2021 |
Due to Alan Ward – former CEO | $74,861 | $74,861 |
During the year ended December 31, 2016, Alan Ward, the former CEO of the Company transferred personal shareholdings to a vendor of the Company and assumed the debt previously owed to the vendor. The amount is non-interest bearing, unsecured and has no specified terms of repayment. | | |
Due to Penny Currah, stockholder and consultant to the Company. The amount is non-interest bearing, unsecured and has no specified terms of repayment. | 1,185 | 1,172 |
Due to David Mason – former Director and Consultant | 130,845 | 122,587 |
On February 18, 2013, the Company entered into a short term loan agreement with David Mason, at the time a director of the Company, in the amount of CDN$25,000, with 7,500 common stock. The loan was formerly interest bearing at 1% compounded monthly, with an original maturity of April 18, 2013 and if unpaid thereafter bearing interest at 22.5%. The loan is secured by a 10% interest in the Mortimer property, which the Company no longer owns, or 150,000 common stock. As the maturity has passed, the amount plus accrued interest is now due on demand. Interest expense on the loan was CDN$8,784 ($6,940) in 2022 andCDN$7,065 ($5,618) in 2022 which is included in the amount of the loan. | | |
Due to 1815681 Ontario Inc., a company under the control of Benedetto Fuschino, President and CEO of the Company. During 2022 the amount of the advances totalled US $16,500, these amounts are non-interest bearing, unsecured and have no terms of repayment. | 16,500 | - |
Due to Friggi N. A. Inc., a company under the control of Benedetto Fuschino, President and CEO of the Company. During 2022 the amount of the advances totalled US $25,000, these amounts are non-interest bearing, unsecured and have no terms of repayment. | 456,948 | 431,660 |
Due to 1873942 Ontario Inc., a company under the control of Dino Micacchi Secretary-Treasurer and CFO of the Company. These amounts were non-interest bearing, unsecured and had no terms of repayment. | 4,850 | 4,850 |
| | |
Advances from Shareholders | $685,189 | $635,131 |
| | |
| | |
18
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three month periods ended March
31, 2022 and 2021
5.
Amounts Due On Mineral Rights Acquisitions
|
|
|
|
| |
|
March 31, 2022 |
December 31, 2021 |
|
|
|
Due to Andrew Currah re: Kenty Property |
|
|
On December 13, 2021 Andrew Currah sold $12,500 of his loan to a third party for $12,500 cash at fair value after
which the entire debt was settled for shares of common stock and warrants as described in note 6.
6.
Capital Stock
a)
Common Stock
During the three months ended March 31, 2022, the Company issued no shares of common stock to directors
and employees of the Company for services rendered.
Stock To Be Issued
For the three months ended March 31, 2022, 500,000 (2021 - 500,000) shares became issuable to directors
and officers of the Company for services rendered. These transactions have been recorded as stock-based compensation having a fair value
of $7,500 within shares to be issued (2020 - $55,000).
As of March 31, 2022, the Company has yet to issue 10,021,577 shares of common stock. Of these, 6,076,534 shares of
common stock are issuable to directors for services. An additional 3,945,043 shares of common stock are yet to be issued for debt settlements
from prior years.
b)
Preferred Stock
The Company has authorized Class A preferred stock available to be issued for $1.00 per share, are non-participating
and non-voting and accrue cumulative dividends at the rate of 10% per annum. The Company may retract the stock at any time upon the payment
of $1.00 per share plus any unpaid dividends. In the event of any wind-up of the Company, the Class A preferred stock has a priority distribution
of $1.00 per share plus any unpaid dividends before any distribution to the common stockholders.
19
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three-month periods ended March
31, 2022 and 2021
6.
Capital Stock - continued
c)
Dividends
As at March 31, 2022, the Company was in arrears in dividends on preferred shares. The balance of dividends
payable of $502,790 (December 31, 2021 - $486,202) includes dividends of $284,861 (December 31, 2021 - $278,769) and accrued interest
of $217,929, (December 31, 2021 - $207,433), accrued at 10.0% interest compounded annually.
Preferred dividends for the three-month periods ended March 31, 2022 and 2021 had an effect of $nil
on loss per share available to common stockholders.
d)
Warrants
As at March 31, 2022 the Company had 1,950,000 warrants outstanding due to expire December 13, 2024
resulting from the debt settlement describe in note 6 a). The warrants were valued at $0.004 each for a total of $7,860 based on the following
assumptions:
|
1. |
Exercise price of each warrant |
$0.20 |
|
2. |
Expected life in years |
3 |
|
3. |
Annualized Volatility |
100% |
|
4. |
Annual rate of quarterly dividends |
0% |
|
5. |
Discount rate – Bond Equivalent
yield |
0.95% |
e)
Stock-Based Compensation
The Company incurred stock-based compensation expense in connection with its compensation agreements
for its directors and officers. Under these agreements, common stock may be issued as a signing bonus or at certain benchmark dates within
an individual’s period of service. Stock-based compensation is calculated as the fair value of the stock issued or to be issued to
an individual at the time the employment contract was signed and is recorded at the time becomes owing to the individual. Stock issued
to a director, manager, or employee may be deferred in the event that their contract requires the individual to remain employed with the
Company for a specified time period after issuance.
For the three-month period ended March 31, 2022, the Company’s 500,000 shares (March 31, 2021 -
500,000) became issuable in connection with stock-based compensation arrangements. As at March 31, 2022 the shares remain to be issued.
These shares were valued at $0.015 per share and resulted in compensation expense of $7,500. These fees
were recorded as a component of consulting fees in the amount of $7,500 (March 31, 2021 - $55,000) on the unaudited condensed interim
statements of operations and comprehensive loss.
7.
Related Party Transactions and Balances
The following transactions with related parties were in the normal course of operations and were measured
at the exchange value which represented the amount of consideration established and agreed to by the parties.
Refer to Note 6(e) for the disclosure of stock-based compensation to the CEO and CFO of the Company.
Refer to Note 4 related to advances from stockholders and debt settlements with related parties.
20
Joshua Gold Resources Inc.
(An Exploration Stage Company)
Notes to Unaudited Condensed Interim Financial Statements
For the three-month periods ended March
31, 2022 and 2021
8.
Financial Instruments
Fair Values
The Company’s financial instruments consist of cash, accounts receivable, notes receivable, accounts
payable and accrued liabilities, dividends payable and advances from stockholders. The fair values of these financial instruments approximate
their carrying values due to the short-term maturity of these instruments. The Company’s only financial instruments carried at fair
value on the unaudited condensed interim balance sheet is cash, which is classified at Level 1 and is measured using quoted market prices.
Furthermore, there were no transfers of financial instruments between Levels 1, 2, and 3 during the three-month periods ended March 31,
2022 and 2021.
21