Item
1. Description of Business
Organization
We
were incorporated under the laws of the State of Nevada on February 27, 2014, with fiscal year end on December 31, under the original
name Tech Foundry Ventures, Inc. On July 6, 2016, we changed our name to Nevada Canyon Gold
Corp. On April 28, 2016, we split our common stock on a 10:1 basis without affecting the par value. On August 27, 2020,
our Board of Directors approved a 1:10 reverse split of our common stock (the “Reverse Stock Split”), which became
effective upon approval by the Financial Industry Regulatory Authority (“FINRA”), which was received on October 28,
2020. All shares and per share amounts have been retroactively restated to account for the Reverse Stock Split.
We
have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification,
merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
We
were a consulting service company, which provided management and consulting services to early and middle stage start-ups. We were
engaged by our first client in June 2015. In December 2015, we changed our business to mineral exploration, when we acquired Nevada
Canyon Gold Corporation, a privately held Nevada corporation.
Our
principal business, executive and registered statutory office is located at 316 California Avenue, Suite 543, Reno, NV 89509 and
our telephone number is (888) 909-5548, fax is (888) 909-1033 and email contact is info@nevadacanyongold.com. Our website
address is www.nevadacanyongold.com.
Continued
Uncertainty due to Global Outbreak of COVID-19
In
March of 2020, the World Health Organization declared an outbreak of COVID-19 Global pandemic. The COVID-19 has impacted vast
array of businesses through the restrictions put in place by most governments internationally, including the USA federal government
as well as provincial and municipal governments, regarding travel, business operations and isolation/quarantine orders. At this
time, it is unknown to what extent the impact of 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 world-wide to
fight the virus. While the extent of the impact is unknown, the COVID-19 outbreak may hinder the Company’s ability to raise
financing for exploration or operating costs due to uncertain capital markets, supply chain disruptions, increased government
regulations and other unanticipated factors, all of which may also negatively impact the Company’s business and financial
condition.
Business
As
of the date of this Annual report on Form 10-K, our mineral interests are represented by Lazy Claims Property and Loman Property.
Lazy
Claims Property
On
August 2, 2017, we entered into an exploration lease agreement (the “Lazy Claims Agreement”) with Tarsis Resources
US Inc. (“Tarsis”), a Nevada corporation, to lease rights to three Lazy claims totaling 60 acres (the “Lazy
Claims”). The term of the Lazy Claims Agreement is ten years and is subject to extension for an additional two consecutive
10-year terms. Full consideration of the Lazy Claims Agreement consists of the following: an initial cash payment of $1,000 to
Tarsis, which we paid upon the execution of the Lazy Claims Agreement, with $2,000 payable to Tarsis on each subsequent anniversary
of the effective date. We agreed to pay Tarsis a 2% production royalty (the “Lazy Claims Royalty”) based on the gross
returns from the production and sale of minerals from the Lazy Claims Property. Should the Lazy Claims Royalty payments to Tarsis
be in excess of $2,000 per year, we will not be required to pay a $2,000 annual minimum payment. As of the date of this Annual
Report on Form 10-K, we retain our leasing rights to the Lazy Claims.
Location
and means of access
The
Lazy Claims consist of three claims (60 acres) and are located within the Walker Lane shear zone, a 60-mile-wide structural corridor
extending in a southeast direction from Reno, Nevada. The Project is located in Mineral County, Nevada, with year-round access
and established infrastructure, 18 miles southeast of Hawthorne, NV via U.S. Highway 95.
Geology
The
US Geological Survey has mapped the area and has published the results as Miscellaneous Field Studies maps, MF 1485 and MF 1486.
Mapped units include Paleozoic metasediments, Mesozoic sediments and intrusions, and Cenozoic volcanic rocks and porphyry intrusions.
Like most of the Walker Lane, the area has a strong system of N50W- trending, normal and strike-slip faults along with a series
of generally NE-trending thrust faults. The area has seen prospecting since the late 1800’s and contains hundreds of prospect
pits and adits that explore various styles of base and precious metal mineralization.
The
published USGS geologic quadrangle map for the Pamlico mine area, (MF 1485, MF 1486, Oldow, 1985), shows the eastern portion of
the Lazy Claims project area underlain by a thick, undivided sequence of folded and faulted Mesozoic and or Paleozoic volcanic
and sedimentary rocks. The western portion of the project is underlain by Jurassic- to Triassic-age Sunrise and Gabbs Formations
comprising interbedded limestones and calcareous mudstones. Locally, black Tertiary basalt caps the older rocks. The structural
fabric is dominated by NW-trending, Walker Lane structures and by an older N70o E fabric, several phases of strongly altered and
locally mineralized intrusive rocks as well as zones of jasperoids and strong silicification has been identified.
Mineralization
Previous
work on the project has identified the following discrete zones of mineralization: (1) the Lazy Man gold zone which is a structurally-controlled,
intrusion-related gold deposit that produced about 1,200 oz Au from NW-trending, high grade zones partially hosted by altered
rhyolite dikes, (2) areas of strong vuggy silica alteration in both intrusive porphyritic rocks and volcanic agglomerates particularly
in the footwall of the Lazy Man zone, (3) a large area of barite and copper mineralization with intense bleaching east of the
gold zone, (4) strong copper showings to the southeast of the gold zone, (5) the Loman antimony mine to the southwest of the gold
zone, (6) skarn zones to the west of the gold zone, (7) a large zone of strong IP response to the west of the gold zone, and (8)
a pyrrhotite porphyry intrusion west of the gold zone.
Exploration
history
The
Lazy Claims cover several past-producing small-scale high-grade mines, altered and mineralized zones discovered by geological
compilations and mapping of the historical workings, discovered by the previous exploration on the Project. The previous sampling
on the project has revealed the presence of copper, bismuth, and antimony as well as pervasive lower grade gold mineralization,
cut by vein structures (some previously mined) of higher grade gold. Previous induced polarization surveys also denoted the presence
of significant coincident I.P. anomalies. Below is a summary of previous exploration of identified mineralized areas within the
properties.
Lazy
Man Mine
The
main structure that the mine workings explore has an N35oW trend and dips about 60o to the southwest. The
vein was discovered in 1933 by a local prospector. The mine is credited with historic production of about 1,200 ounces of gold
from 2,800 feet (853 m) of underground workings. The three main shafts explore about 1,000 feet (304 m) of strike length on the
vein, and the shafts extend to a maximum depth of 300 feet (91 m). The workings have been mapped and sampled in some detail by
Congdon and Carey in 1974, and many multi-ounce gold values are noted in the remaining vein material. One 4.9 foot-long (1.5 m)
sample from a cross cut on the 300 level contained 2.2 oz Au/ton (68.4g/t). The high-grade veins occur within a broader zone of
intense quartz-sericite alteration, which has previously been mapped as rhyolite. Most of the mine dumps are composed of this
“rhyolite”, and Congdon and Carey measured approximately 8,000 tons of this material containing from 0.09 to 0.21
oz Au/ton (3.07 to 7.1 g/t Au). Gold occurs in iron oxide-filled fractures along with druzy quartz veinlets, and there is occasionally
visible gold. Detailed mapping around the old workings of the Lazy Man mine has delineated a zone of intense acid-leaching in
intrusive porphyritic rocks and volcanic agglomerates primarily in the footwall of the vein. The rock now has a porous and vuggy
appearance; this style of alteration is interpreted to be “Vuggy Silica” alteration that is typical of the upper levels
of high-sulfidation ore deposits. Surrounding the vuggy silica zone is a zone of strong argillic alteration. Recent work has discovered
previously unrecognized mineralized zones east of and parallel to the Lazy Man vein that contain silicified, brecciated outcrops
assaying 2.26 g/t Au and 8,150 ppm As. These zones have been traced for over 1,200 feet (365 m) and are up to 60 feet (18 m) wide.
Exploration
program
We
plan to continue our exploration program once the uncertainty and the restrictions associated with COVID-19 pandemic are resolved
In 2020 we completed a portion of the Phase I exploration program on the Lazy Claims Property, which consisted of reconnaissance
prospecting, geological mapping, surface trenching, and relocating historical workings. Completion of the Phase I program is scheduled
for spring of 2021. Once completed, Phase I program will provide accurate modern data to assist in the planning of the Phase II
drill program. The Phase II drill program is expected to begin later in 2021, following the completion of a ground-based geophysical
survey and final compilation of all the Phase I results.
Loman
Property
In
December 2019 we acquired 27 unpatented mining claims for a total of $10,395 from a third-party (the “Loman Property”).
As at the date of this Annual Report on Form 10-K, the Loman Property claims are yet to be re-registered into the Company’s
name, as due to COVID-19 pandemic certain regulatory requirements cannot be finalized. The Company intends to finalize the re-registration
once the current world health crisis has passed and all local regulatory services are operating at full capacity.
Location
and means of access
The
Loman Property is located in Mineral County, Nevada, within the Walker Lane shear zone, a 60-mile-wide structural corridor extending
in a southeast direction from Reno, Nevada, located 20 miles southeast of Hawthorne, Nevada, along U.S. Highway 95. The project
has excellent year-round access and infrastructure within Mineral County, one of the most pro-mining counties in the pro-mining
states and highest-grade gold districts of Nevada.
The
Loman Property consists of 27 unpatented mining claims having a combined area of approximately 540 acres. The Loman Property covers
several past producing small-scale high-grade gold and copper mines, altered and mineralized zones discovered by previous geological
compilations and mapping of the historical workings. Historical sampling on the project has revealed the presence of copper, bismuth,
and antimony as well as pervasive lower grade gold mineralization, cut by vein structures (some previously mined) of higher-grade
gold. Previous geophysical surveys also denoted the presence of significant coincident I.P. and magnetic anomalies. These factors
clearly demonstrate the potential of this relatively unexplored project for the discovery of gold mineralization.
The
Loman Property is located near several past producing mines including the Bodie, Aurora, Borealis, Pamlico, Evening Star, Mabel,
Mindoro and Camp Douglas Mines. Held by private interests for most of its history, the Loman Property remains very underexplored
with a potential for new discoveries on several exploration targets with multiple zones.
Exploration
program
We
plan to continue our exploration program once the uncertainty and the restrictions associated with COVID-19 pandemic are resolved.
In 2020 we completed a portion of our Phase I that consisted of reconnaissance prospecting, geological mapping, surface trenching,
relocating historical workings and ground based geophysical surveying. Completion of the Phase I program will provide accurate
modern data to assist in the planning of the Phase II drill program. Phase I is expected to continue later in the spring
2021, with Phase II expected to begin sometime in 2021 following the compilation of the Phase I results.
Competition
The
mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking
for minerals. We are one of the smallest exploration companies and a very small participant in the mineral exploration business.
Being a junior mineral exploration company, we compete with other similar companies for financing and joint venture partners,
and for resources such as professional geologists, camp staff, helicopters, and mineral exploration contractors and supplies.
We do not represent a competitive presence in the industry.
Raw
Materials
The
raw materials for our exploration programs include camp equipment, hand exploration tools, sample bags, first aid supplies, groceries,
and propane. All of these types of materials are readily available from a variety of local suppliers.
Dependence
on Customers
As
a junior exploration company, we have no customers.
Trademarks
and Patents
We
have no intellectual property such as patents or trademarks and, other than the obligations under the exploration lease agreement
with Tarsis Resources US Inc., no royalty agreements or labor contracts.
Need
for Any Government Approval of Principal Products or Services
Our
exploration activities on our claims may require permits from the BLM and several other governmental agencies. We may be unable
to obtain these permits in a timely manner, on reasonable terms, or at all. If we cannot obtain or maintain the necessary permits,
or if there is a delay in receiving these permits, our timetable and business plan for exploration of our exploration claims will
be adversely affected. Furthermore, the mining business is subject to various levels of government controls and regulations, which
are supplemented and revised from time to time. We cannot predict what additional legislation or revisions might be proposed that
could affect our business or when any proposals, if enacted, might become effective. Such changes, however, could require more
operating capital and expenditures and could prevent or delay some of our operations.
The
various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral
processing operations. For mining and processing, legislation and regulations in various jurisdictions establish performance standards,
air and water quality emission standards and other design or operational requirements for various components of operations, including
health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclaiming and rehabilitating
mining properties following the cessation of operations, and may require that some former mining properties be managed for long
periods of time. As we are not mining or processing, and are unlikely to do so for some years, we have not investigated these
regulations.
None
of the exploration work that we have completed to date requires an environmental permit, however, we must ensure timely repair
of any damage done to the land during exploration.
We
believe that we are in substantial compliance with all material government controls and regulations on the Lazy Claims Property
and on the Loman Property.
Research
and Development
We
have not spent any money on research and development activities.
Employees
At
the present time, we do not have any employees other than our sole officer who devotes his time as needed to our business and
expects to continue devoting approximately 10 hours per week in 2021.
Item
1A. Risk Factors
We
are subject to those financial risks generally associated with early-stage enterprises. Since we have sustained losses since inception,
we will require financing to fund our development activities and to support our operations and will independently seek additional
financing. However, we may be unable to obtain such financing. We are also subject to risk factors specific to our business strategy
and the mining and exploration industry.
RISKS
ASSOCIATED WITH OUR COMPANY AND INDUSTRY
The
following are certain risk factors that could affect our business, financial position, results of operations or cash flows. These
risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because
these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking
statements. The following discussion is not an all-inclusive listing of risks, although we believe these are the more material
risks that we face. If any of the following occur, our business, financial position, results of operations or cash flows could
be negatively affected. We caution the reader to keep these risk factors in mind and refrain from attributing undue certainty
to any forward-looking statements, which speak only as of the date of this Annual Report.
We
are a junior exploration company incorporated on February 27, 2014. We have a limited operating history upon which an evaluation
of our future prospects can be made. As at December 31, 2020, we had a working capital deficit of $536,890, cash on hand of $893,823,
and $259,053 in retained deficit. Our capital assets include an equity investment in common shares and warrants to acquire common
shares of Walker River Resources Corp. (“WRR”), which we can use as a source of additional cash inflow, should we
decide to sell all or part of our investment. These details must be considered in light of the substantial risks, expenses, and
difficulties encountered by new entrants into the mining and mineral exploration industry. Our ability to achieve and maintain
profitability and positive cash flow is highly dependent upon a number of factors. Based upon current plans, we expect to incur
losses in future periods as we incur expenses associated with our operations and exploration programs. Further, we cannot guarantee
that we will be successful in realizing future revenues or in achieving or sustaining positive cash flow at any time in the future.
Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or
additional sales of our equity securities to continue business operations, which would dilute the value of any shares.
As
a public company, we will have to comply with numerous financial reporting and legal requirements, including those pertaining
to audits and internal control. The cost of these compliance requirements could be significant. If we are unable to satisfy the
costs in the normal course of business and/or through the issuance of our shares, we may not be able to continue as a going concern.
Our
independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about
our ability to continue as a going concern.
Our
auditor’s report for the year ended December 31, 2020, expresses an opinion that substantial doubt exists as to whether
we can continue as an ongoing business. Moreover, our officers may be unable or unwilling to loan or advance us any funds. See
“Audited Financial Statements – Report of Independent Registered Public Accounting Firm”
We
had generated a net income of $288,158 for the year ended December 31, 2020, of which $135,849 resulted from gain on fair value
adjustment we recorded on our equity investment, and $168,866 was attributed to gain on sale of WRR shares. Our future is dependent
upon our ability to obtain financing, to continue gainfully sell shares of WRR, and upon future profitable operations. In addition
to selling part of our equity investment in WRR we may seek additional funds through private placements of our common stock which
may result in substantial dilution to our existing shareholders. Our financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be
necessary in the event we cannot continue in existence.
Key
management personnel may leave us, which could adversely affect our ability to continue operations.
We
are entirely dependent on the efforts of Jeffrey Cocks, our president, CEO, CFO, and director, and Michael Levine, a director.
The loss of our officer and directors, or of other key personnel hired in the future, could have a material adverse effect on
the business and its prospects. There is currently no employment contract by and between any officer/director and us. Also, there
is no guarantee that replacement personnel, if any, will help us to operate profitably. They have been and continue to expect
to be able to commit approximately 10 hours per week of their time, to the continued implementation of our business plan. If management
is required to spend additional time with their outside employment, they may not have sufficient time to devote to us, and we
would be unable to continue to implement our business plan resulting in the business failure.
We
do not maintain key person life insurance on our officer and directors.
If
we are unable to generate cash from our operations, we may sell our equity investment in WRR or obtain additional funding which
may cause substantial dilution to our then existing shareholders.
As
of December 31, 2020, we had $893,823 in cash on hand and $794,542 in equity investments. From April 2014 to December 31, 2020,
our initial three shareholders have advanced us $142,232 to cover our working capital expenses. We have raised $85,000 in our
initial public offering, $375,000 in private placement, and $16,164 through non-interest-bearing advances payable on demand. If
we are unable to develop our business or secure additional funds we will have no choice but to continue selling our equity investment
in WRR, or our business would fail and our shares may be rendered worthless. To preserve our equity investment in WRR we may seek
to obtain debt financing, which may result in substantial dilution to our then existing shareholders. There can also be no assurance
that we will be able to successfully dispose of our equity investment in WRR to satisfy our operating needs. The inability to
obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations.
If we are unable to obtain additional financing, we will likely be required to curtail our business plans and possibly cease our
operations.
General
domestic and international economic conditions could have a material adverse effect on our operating results and common stock
price and our ability to obtain additional financing.
As
a result of the current economic downturn, COVID-19 pandemic, and macro-economic challenges currently affecting the economy of
the United States and other parts of the world, some of the exploration programs that we may plan could suffer delays or postponement
until the economy strengthens, which could in turn effect our ability to obtain additional financing. We anticipate our revenues
to be derived from the sale of ore, which could suffer if customers are suffering from the economic downturn. During weak economic
conditions, we may not experience any growth if we are unable to obtain financing to enable us to continue our planned operations.
Because
Jeffrey Cocks, our officer and director and Michael Levine, our director, reside outside of the United States, it may be difficult
for an investor to enforce any right based on U.S. federal securities laws against Messrs. Cocks and Levine, or to enforce a judgment
rendered by a United States court against Messrs. Cocks and Levine.
While
our principal office and operations are located in the United States, Mr. Cocks, our officer and director and Mr. Levine, our
director, are non-residents of the United States. Therefore, it may be difficult to effect service of process on Messrs. Cocks
and Levine in the United States, and it may be difficult to enforce any judgment rendered against Messrs. Cocks and Levine. As
a result, it may be difficult or impossible for an investor to bring an action against Messrs. Cocks and Levine in the event that
an investor believes that such investor’s rights have been infringed under the U.S. securities laws, or otherwise. Even
if an investor is successful in bringing an action of this kind, it is uncertain whether the laws of Canada may enable that investor
to enforce a judgment against the assets of Messrs. Cocks and Levine. As a result, our shareholders may have more difficulty in
protecting their interests through actions against our management, directors or major shareholders, compared to shareholders of
a corporation whose officers and directors reside within the United States.
Our
officer and directors may have conflicts in allocating their time to our business.
Our
officer and directors are required to commit time to our affairs and, accordingly, may have conflicts of interest in allocating
management time among various business activities including Mr. Cocks’ competing businesses. Mr. Levine’s current
business in Canada is limited to music royalties, primarily the licensing of the rock group Triumph’s music rights; therefore,
we do not believe that he presently has any conflicts with us. In the course of other business activities, they may become aware
of business opportunities that may be appropriate for presentation to us, as well as the other entities with which they are affiliated.
Messrs. Cocks and Levine have orally agreed that any business opportunities that they come across in the United States will be
presented to our Company and that any opportunities that they come across in Canada will be made available to their other businesses.
We
cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
We
are subject to the periodic reporting requirements of the Exchange Act that will require us to incur audit fees and legal fees
in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.
We
are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder.
In order to comply with these requirements, our independent registered public accounting firm will have to review our financial
statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to
review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately
predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our
reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys.
However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability
to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from any new requirements
under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business
and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading
price of our common stock, if a market ever develops, could drop significantly.
Our
internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being
disseminated to the public.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange
Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal
executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
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pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets;
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provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with
authorizations of management and/or our directors; and
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provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the financial statements.
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Our
internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation
being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.
Our
board of directors has significant control over us, and we have not established committees comprised of independent directors.
We
have only two directors one of whom holds all of our officer positions. Accordingly, we cannot establish board committees comprised
of independent members to oversee functions like compensation or audit issues. In addition, since we only have two directors,
they have significant control over all corporate issues. We do not have an audit or compensation committee comprised of independent
directors. Our two directors performing these functions are not independent directors. Thus, there is a potential conflict in
that our directors are also engaged in management and participate in decisions concerning management compensation and audit issues
that may affect management performance.
Until
we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our
directors’ decisions and activities and little ability for minority shareholders to challenge or reverse those activities
and decisions, even if they are not in the best interests of minority shareholders.
We
are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from
disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors
and may make it more difficult to compare our performance with other public companies.
We
are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our ordinary shares held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues
exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds
$700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it
may also make comparison of our financial statements with other public companies difficult or impossible.
Our
mineral claims have no known reserves.
The
probability of a mining claim having the necessary quantity and quality of ore to result in a profitable mining operation is uncertain.
Our claims, even with large investments by us, may never generate a profit.
We
are dependent upon the successful exploration of our mining claims and the discovery of valuable mineralization on those claims
for our success. Should we fail to locate economically extractable mineralization on our mineral claims, or enter into an agreement
to option and sell our interests to mining production Company, we will have no revenue and our business will fail.
Mineral
deposit estimates are imprecise and subject to error.
Mineral
deposit estimation calculations, when made, may prove unreliable. Assumptions made regarding the supporting data may prove inaccurate
and unforeseen events may lead to further inaccuracies. Sample variability, mining and processing adjustments, environmental changes,
metal price fluctuations, and legal and regulatory changes are all factors that could lead to deviations from any original estimations.
Our current mineral claims have no known ore reserves. Despite future investment in exploration activities, there is no guarantee
we will locate a commercially viable ore deposit or reserve. Most exploration projects do not result in discovery of commercially
viable and mineable ore deposits. With little capital available, we may have to limit our exploration efforts, which decrease
the chances of finding a commercially viable ore body. Even if potentially promising mineralization is identified, we may not
be able to put our claims into production due to many factors, including high extraction costs, low gold prices, or inadequate
amount and reduced recovery rates. If the exploration activities do not suggest a commercially successful prospect we may have
to abandon our plans to pursue efforts to develop the claims.
Our
future exploratory operations may be adversely affected by future governmental and environmental regulations and permitting.
Environmental
regulations may negatively affect the progression of operations and these regulations may become stricter in the future. In the
U.S., all mining is regulated by Federal and State level government agencies. Obtaining licenses and permits from these agencies
as well as an environmental impact study for each mining property must be completed before starting mining activities. These are
expensive and affect the timing of operations. Pollution can be anticipated with mining activities. If we are unable to comply
with current or future regulations, we may expose ourselves to fines, penalties and litigation that could cause our business to
fail.
Further,
the laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency
in the U.S. or Nevada may be changed, applied or interpreted in a manner which will fundamentally alter our ability to carry on
our business.
The
actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups,
may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or
our profitably.
We
are subject to inherent mining hazards and risks that may result in future financial obligations.
Risks
and hazards associated with the mining industry may adversely affect our operations such as, but not limited to, political and
country risks, industrial accidents, labor disputes, inability to retain necessary personnel or equipment, environmental hazards,
unexpected geologic formations, cave-ins, landslides, flooding and monsoons, fires, explosions, power outages, processing problems.
Personal injury and death could result, as well as property damage, delays in mining, environmental damage, legal liability and
monetary loss. We may not be able to obtain insurance to cover these risks at economically reasonable premiums. We do not carry
any sort of insurance and may have difficulties obtaining such once operations start as insurance is generally sparse and cost
prohibitive.
Our
financial performance depends on the successful operation of our exploration activities, which are subject to various operational
risks.
There
is no assurance we will be successful in our mining exploration activities. Our financial performance depends on the successful
operation of our future exploration activities. The cost of operation and maintenance, and the results of the proposed activities
may be adversely affected by a variety of factors, including the following:
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regular
and unexpected maintenance and replacement expenditures;
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shutdowns
due to the breakdown or failure of our equipment;
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labor
disputes;
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the
presence of hazardous materials on our planned project sites;
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catastrophic
events such as fires, explosions, earthquakes, landslides, floods, releases of hazardous materials, severe storms or similar
occurrences affecting our proposed exploration activities; and
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unforeseen
results and problems inherent in mining and exploration activities.
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Any
of these events could significantly increase the expenses incurred on our planned and future exploration activities and
could materially and adversely affect our business, financial condition, future results, and cash flow if any.
In
addition, our exploration activities would be subject to substantial risks, including:
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unanticipated
cost increases;
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shortages
and inconsistent qualities of equipment, material, and labor;
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work
stoppages;
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inability
to obtain permits and other regulatory matters; and
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failure
by key suppliers, component manufacturers, and vendors to timely and properly perform.
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As
all our mineral claims are in the early-exploration stage, there can be no assurance that we will identify commercially viable
qualities and quantities of mineralization on the claims.
Exploration
for mineralization is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing
mines. Our mineral claims are in the early-exploration stage and are without any identified economically extractable mineralization.
We may not establish commercially viable quantities and qualities of economically extractable mineralization on our mineral claims
and, even if we do, there is no guarantee that we will be able to interest a third-party mining company to enter into a business
arrangement, e.g., option to purchase arrangement with us, which could cause our business to fail.
Because
we anticipate our operating expenses will increase prior to us earning revenues, we may never achieve profitability.
Prior
to completion of the exploration stage, we anticipate incurring increased operating expenses without realizing any revenues, and
therefore incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues
from the exploration of our mineral claims, we will not be able to earn profits or continue future proposed operations, which
will adversely affect us. There is no history upon which to base any assumption as to the likelihood that we will prove successful,
and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing
these risks, our business will most likely fail.
Because
of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct
our business.
The
search for valuable mineralization involves numerous hazards. As a result, we may become subject to liability for such hazards,
including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At
the present time we do not have any coverage to insure against these hazards. The payment of such liabilities may have a material
adverse effect on our financial position.
Our
exploration activities will be adversely affected if our exploration costs are higher than anticipated.
If
our exploration costs surpass our budgeted costs, we will not be able to carry out all of our planned exploration of the claims.
Factors that could cause exploration costs to increase are: adverse weather conditions, difficult terrain, and shortages of qualified
personnel, among others.
The
price of gold is volatile and a decrease in gold prices could cause us to incur losses.
We
will be exploring our claims primarily for gold. The profitability of gold exploration and production is directly related to the
prevailing market price for gold. The market prices of metals, including the gold market, fluctuate significantly and are affected
by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar
to other currencies, interest rates, and global economic and political conditions. Price fluctuations in the gold market from
the time exploration is undertaken and the time production can commence can significantly affect the profitability of a mine.
Accordingly, we may begin to explore for gold at a time when the price of gold or other related mineral make such exploration
economically feasible and, subsequently, incur losses because prices have decreased. Adverse fluctuations of metals market prices
or the continued decline in the gold market, generally, may force us to curtail or cease our operations.
The
costs of compliance with environmental laws and obtaining and maintaining environmental permits and governmental approvals required
for construction and/or operation, which currently are significant, may increase in the future and could materially and adversely
affect our business, financial condition, future results, and cash flow; any non-compliance with such laws or regulations may
result in the imposition of liabilities which could materially and adversely affect our business, financial condition, future
results, and cash flow.
We
are required to comply with numerous federal, state and local statutory and regulatory environmental standards and to maintain
numerous environmental permits and governmental approvals required for construction and/or operation. Some of the environmental
permits and governmental approvals that may be issued to us may contain conditions and restrictions, including restrictions or
limits on emissions and discharges of pollutants and contaminants, or may have limited terms. If we fail to satisfy these conditions
or comply with these restrictions, or with any statutory or regulatory environmental standards, we may become subject to regulatory
enforcement action and the operation of the projects could be adversely affected or be subject to fines, penalties or additional
costs. In addition, we may not be able to renew, maintain or obtain all environmental permits and governmental approvals required
for the continued operation or further development of the projects.
Our
operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our
exploration claims.
Our
exploration activities on our claims may require permits from the BLM and several other governmental agencies. We may be unable
to obtain these permits in a timely manner, on reasonable terms or at all. If we cannot obtain or maintain the necessary permits,
or if there is a delay in receiving these permits, our timetable and business plan for exploration of our exploration claims will
be adversely affected.
Our
exploration activities may not be commercially successful, which could lead us to abandon our plans to seek a mining production
company to develop or purchase our exploration claims, and thereby lose the investment we made in our exploration claims.
Our
long-term success depends on our ability to identify commercially viable and mineable mineralization deposits on our exploration
claims that we can then, using our best business judgment, determine whether any such deposits can be developed into a commercially
viable mining operation. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive.
These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment
or labor. The success of exploration is determined in part by the following factors:
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the
identification of potential silver and/or gold mineralization based on evaluation of the host rock, alteration, structure,
geochemistry and proper sampling;
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availability
of government-granted operation permits;
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the
quality of our management and our geological and technical expertise; and
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the
capital available for exploration.
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Substantial
expenditures are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes
to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether
a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular
attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing
and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities
and abandon such investments if we are unable to identify commercially exploitable mineral deposits. The decision to abandon our
mineral claims may have an adverse effect on the market value of our securities and our ability to raise future financing. We
cannot assure you that we will discover or acquire any mineralized material in sufficient quantities on the Property to justify
commercial operations, or that we will be able to find a mining operator who is willing and able to enter into a business venture
with us.
A
shortage of critical equipment, supplies, and resources could adversely affect our exploration activities.
We
are dependent on the availability of certain equipment, supplies, and resources for us to carry out our mining exploration activities,
including input commodities, drilling equipment and skilled labor. A shortage in the market for any of these factors could cause
unanticipated cost increases and delays in delivery times, which could in turn adversely impact exploration schedules and costs.
Historical
production on our mineral claims may not be indicative of the potential for future development.
Our
mineral claims are not in commercial production, and, since acquiring our interests, we have never recorded any revenues
from commercial production on the claims. The fact that there were limited historical mining operations in the mining district
surrounding the mineral claims should not be relied upon as an indication that we will ever find commercially mineable quantities
and qualities of extractable mineralization on our claims or have future successful commercial operations on our mineral claims.
In fact, based on the reviewed information available to us, none of the historical mining operations were successful.
If
the development of one or more claims included in our claims portfolio is found to be economically feasible, such claims will
be subject to all of the risks associated with establishing new mining operations.
If
the development of one or more of our mining claims is found to be economically feasible, and we are unable to enter into a business
arrangement with a mining company that engages in mining operations and production, such development will require obtaining permits
and financing, and the construction and operation of mines, processing plants and related infrastructure. As a result, the project
will be subject to all of the risks associated with establishing new mining operations, including:
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the
timing and cost, which can be considerable, of the construction of mining and processing facilities and related infrastructure;
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the
availability and cost of skilled labor, mining equipment and principal supplies needed for operations, including explosives,
fuels, chemical reagents, water, power, equipment parts, and lubricants;
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the
availability and cost of appropriate smelting and refining arrangements;
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the
need to obtain necessary environmental and other governmental approvals and permits and the timing of the receipt of those
approvals and permits;
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the
availability of funds to finance construction and development activities;
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industrial
accidents;
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mine
failures, shaft failures or equipment failures;
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natural
phenomena such as inclement weather conditions, floods, droughts, rock slides, and seismic activity;
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unusual
or unexpected geological and metallurgic conditions;
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exchange
rate and commodity price fluctuations;
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high
rates of inflation;
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potential
opposition from non-governmental organizations, environmental groups or local groups, which may delay or prevent development
activities; and
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restrictions
or regulations imposed by governmental or regulatory authorities.
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The
costs, timing, and complexities of developing the joint venture projects may be greater than anticipated. Cost estimates may increase
significantly as more detailed engineering work is completed on a project. It is common in mining operations to experience unexpected
costs, problems and delays during construction, development and mine start-up. We cannot provide assurance that activities will
result in profitable mining operations at the mineral claim, or that we will derive financial benefits from such operations. Any
one or more of the events identified above could have a material adverse effect on any revenues we may anticipate receiving from
our mineral claims.
Our
operations involve significant risks and hazards inherent to the mining industry.
Our
exploration operations may involve the operation of large pieces of drilling and other heavy equipment. Hazards such as fire,
explosion, floods, structural collapses, industrial accidents, unusual or unexpected geological conditions, ground control problems,
cave-ins, flooding, and mechanical equipment failure are inherent risks in our operations. Hazards inherent to the mining industry
can cause injuries or death to employees, contractors or other persons on our mineral claims, severe damage to and destruction
of our property, plant and equipment and mineral claims, and contamination of, or damage to, the environment can result in the
suspension of our exploration activities and any future development and production activities. While the Company aims to maintain
best safety practices as part of our culture, safety measures implemented by us may not be successful in preventing or mitigating
future accidents.
In
addition, from time to time we may be subject to governmental investigations and claims and litigation filed on behalf of persons
who are harmed while working on our mineral claims or otherwise in connection with our operations. To the extent that we are subject
to personal injury or other claims or lawsuits in the future, it may not be possible to predict the ultimate outcome of these
claims and lawsuits due to the nature of personal injury litigation. Similarly, if we are subject to governmental investigations
or proceedings, we may incur significant penalties and fines, and enforcement actions against us could result in the closing of
certain of our mining operations. If claims and lawsuits or governmental investigations or proceedings are ultimately resolved
against us, they could have a material adverse effect on our financial performance, financial position and results of operations.
Also, if we conduct mining operations on property without the appropriate licenses and approvals, we could incur liability or
our operations could be suspended.
The
mining industry is very competitive.
The
mining industry is very competitive. Much of our competition is from larger, established mining companies with greater liquidity,
greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective
risk management policies and procedures and/or greater ability than us to withstand losses. Our competitors may be able to respond
more quickly to new laws or regulations or emerging technologies, or devote greater resources to the expansion or efficiency of
their operations than we can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with third parties. Accordingly, it is possible that new competitors or alliances among current
and new competitors may emerge and gain significant market share to our detriment. We may not be able to compete successfully
against current and future competitors, and any failure to do so could have a material adverse effect on our business, financial
condition or results of operations.
The
title to some of our mineral claims may be uncertain or defective, thus risking the investment in such claims.
The
mineral claims to which we have options to buy, and those we may acquire in the future, if any, may be subject to prior recorded
and unrecorded agreements, transfers or claims, and other undetected defects, which may result in a defective title. A title defect
on any of our mineral claims (or any portion thereof) could adversely affect our ability to mine the claims and/or process the
minerals.
Title
insurance is generally not available for mineral claims and our ability to ensure that we have obtained a secure claim to individual
mineral claims or mining concessions may be severely constrained. We rely on title information and/or representations and warranties
provided by our grantors. Any challenge to titles could result in litigation, insurance claims, and potential losses, delay the
exploration and development of a claim and ultimately result in the loss of some or all of our interest in the claim. In addition,
if we mine on a claim without the appropriate title, we could incur liability for such activities.
If
we obtain insurance, it may not provide adequate coverage.
Our
operations are subject to a number of risks and hazards including, but not limited to, adverse environmental conditions, industrial
accidents, labor disputes, unusual or unexpected geological conditions, ground control problems, cave-ins, changes in the regulatory
environment, metallurgical and other processing problems, mechanical equipment failure, facility performance problems, fires and
natural phenomena such as inclement weather conditions, floods and earthquakes. These risks could result in damage to, or destruction
of, our mineral claims or exploration equipment, personal injury or death, environmental damage, delays in exploration, increased
exploration costs, asset write-downs, monetary losses, and legal liability.
We
do not currently have insurance and do not have any plans to obtain insurance. Insurance against certain risks, including those
related to environmental matters or other hazards resulting from exploration, is generally not available to us or to other companies
within the mining industry. In addition, we do not carry business interruption insurance relating to our mineral claims. Accordingly,
delays in returning to any future exploration could produce severe near-term impact on our business. Any losses from these events
may result in significant costs that could have a material adverse effect on our financial performance, financial position and
results of operations.
Changes
in the market price of gold, silver and other metals, which in the past has fluctuated widely, will affect the profitability of
our operations and financial condition.
Our
profitability and long-term viability depend, in large part, upon the market price of gold, copper, silver and other metals and
minerals which may be produced from our mineral claims, and from which we may derive revenues under any agreement we may enter
into with a company that conducts mining operations on our claims. The market price of gold and other metals is volatile and is
impacted by numerous factors beyond our control, including:
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sales
by central banks and other holders, speculators and producers of gold and other metals in response to any of the below factors.
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the
relative strength of the U.S. dollar and certain other currencies;
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interest
rates;
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global
or regional political, financial, or economic conditions;
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supply
and demand for jewelry and industrial products containing metals; and
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expectations
with respect to the rate of inflation;
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A
material decrease in the market price of gold and other metals could affect the commercial viability of our mineral claims and
any of our future anticipated development and production assumptions if any. Lower gold prices could also adversely affect our
ability to finance future development of our mining claims, all of which would have a material adverse effect on our financial
condition and results of operations. There can be no assurance that the market price of gold and other metals will remain at current
levels or that such prices will improve.
RISKS
RELATED TO THE OWNERSHIP OF OUR SECURITIES
Participation
is subject to risks of investing in micro-capitalization companies.
Micro
capitalization companies generally have limited product lines, markets, market shares, and financial resources. The securities
of such companies, if traded in the public market, may trade less frequently and in more limited volume than those of more established
companies. Additionally, in recent years, the stock market has experienced a high degree of price and volume volatility for the
securities of micro-capitalization companies. In particular, micro-capitalization companies that trade in the over-the-counter
markets have experienced wide price fluctuations not necessarily related to the operating performance of such companies.
There
has not been any established trading market for our common stock although our common stock is quoted on the OTC Link alternative
trading system on the OTC Pink marketplace and we are eligible with the Depository Trust Company (“DTC”) to permit
our shares to trade electronically. There can be no assurances as to whether:
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(i)
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any
market for our shares will develop;
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(ii)
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the
prices at which our common stock will trade; or
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(iii)
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the
extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets
generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
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In
addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market
makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock.
Until our common stock is fully distributed and an orderly market develops in our common stock if ever, the price at which it
trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced
by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of us and general economic
and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common
stock.
Because
of the low price of our securities, many brokerage firms may not be willing to effect transactions in these securities. Purchasers
of our securities should be aware that any market that develops in our stock would be subject to the penny stock restrictions.
Rule
3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity
security that has a minimum bid price of less than $4.00 per share or with an exercise price of less than $4.00 per share, subject
to a limited number of exceptions that are not available to us. It is likely that our shares will be considered to be penny stocks
for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common
stock.
For
any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s
account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction
setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person
and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has
sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating
to the penny stock market, which, in highlight form, sets forth:
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the
basis on which the broker or dealer made the suitability determination, and
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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The
disclosure also must be made about the risks of investing in penny stock in both public offerings and in secondary trading and
commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in
penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or
may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders
or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in
any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if
and when our securities become publicly traded.
In
addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares,
in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood,
find it difficult to sell their securities.
Our
management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
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control
of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases;
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“Boiler
room” practices involving high pressure sales tactics and unrealistic price projections by sales persons;
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excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
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wholesale
dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor losses.
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Transfer
of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and
foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws,
our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered
for resale under the blue-sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the
ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary
trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17
states which do not offer manual exemptions (or may offer manual exemptions) and require shares to be qualified before they can
be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited
one.
Because
insiders control our activities, they may cause us to act in a manner that is most beneficial to them and not to outside shareholders,
which could cause us not to take actions that outside investors might view favorably and which could prevent or delay a change
in control.
Our
three founders together own 2,970,000 common shares representing 66.6% of the outstanding common stock and our officer and directors
hold approximately 44.6% of our outstanding common stock. As a result, they effectively control all matters requiring director
and stockholder approval, including the election of directors, and the approval of significant corporate transactions, such as
mergers and related party transactions. These insiders also have the ability to delay or perhaps even block, by their ownership
of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing
a change in control of our company that you might view favorably.
The
interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support
existing management with such issuances serving to enhance existing management’s ability to maintain control of us.
Our
directors have authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common
shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing
management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval
serves to enhance existing management’s ability to maintain control of us.
Our
articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that
may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the
benefit of officers and/or directors.
Our
Articles of Incorporation at Article Nine provide for indemnification as follows: “Every person who was or is a party to,
or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a Director or Officer
of the Corporation, or is or was serving at the request of the Corporation as a Director or Officer of another Corporation, or
as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and
loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered
by him in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired
by such person. The expenses of Officers and Directors incurred in defending a civil or criminal action, suit, or proceeding must
be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon
receipt of an undertaking by or on behalf of the Director or Officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall not
be exclusive of any other right which such Directors, Officers, or representatives may have or hereafter acquire, and, without
limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw,
agreement, vote of Stockholders, provision of law, or otherwise, as well as their rights under this Article. Without limiting
the application of the foregoing, the Stockholders or Board of Directors may adopt bylaws from time to time with respect to indemnification,
to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was a Director or Officer of the Corporation, or is or was
serving at the request of the Corporation as a Director or Officer of another Corporation, or as its representative in a partnership,
joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity
or arising out of such status, whether or not the Corporation would have the power to indemnify such person. The indemnification
provided in this Article shall continue as to a person who has ceased to be a Director, Officer, Employee, or Agent, and shall
inure to the benefit of the heirs, executors, and administrators of such person.”
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against
public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification
for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer
or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled
by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process
relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either
of which factors is likely to materially reduce the market and price for our shares, if such a market develops.
We
do not expect to pay cash dividends in the foreseeable future.
We
have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in
the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial
requirements and other factors that our directors will consider. Since we do not anticipate paying cash dividends on our common
stock, return on your investment, if any, will depend solely on the increase, if any, in the market value of our common stock.
Because
we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders
have limited protection against interested director transactions, conflicts of interest and similar matters.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges
and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate
governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply
to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with
many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated
with such compliance any sooner than legally required, we have not yet adopted these measures.
Because
our directors are not independent directors, we do not currently have independent audit or compensation committees. As a result,
our directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate
governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance
may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar
matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We
intend to comply with all corporate governance measures relating to director independence as and when required. However, we may
find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required
to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of
2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors
and executive officers. The perceived increased personal risk associated with these recent changes may make it costlier or deter
qualified individuals from accepting these roles.
The
access to information regarding our business may become limited because our obligations to file periodic reports with the SEC
could be automatically suspended under certain circumstances.
We
are subject to certain informational requirements of the Exchange Act, as amended and we are required to file periodic
reports (i.e., annual, quarterly and special reports) with the SEC which are immediately available to the public for inspection
and copying. These reporting obligations may (in our sole discretion) be automatically suspended under Section 15(d) of the Exchange
Act if we have less than 300 shareholders and do not file a registration statement on Form 8A. If this occurs, we will no longer
be obligated to file periodic reports with the SEC and the access to our business information would then be even more restricted.
We will not be required to furnish proxy statements to security holders and our directors, officer and principal beneficial owners
will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act
until we have both 500 or more security holders that are not accredited investors (or, alternatively, 2,000 or more total shareholders)
and greater than $10 million in assets. This means that access to information regarding our business will be limited.
We
will incur ongoing costs and expenses for SEC reporting and compliance; without revenue we may not be able to remain in compliance,
making it difficult for investors to sell their shares, if at all.
In
order for us to remain in compliance with the SEC reporting and compliance requirements we will require further funding to cover
the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate
sufficient revenues to remain in compliance, it may be difficult for our shareholders to resell any shares they may purchase,
if at all.
For
all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the
future involves a high degree of risk.