(Mark One) | | [X] | QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | For quarterly period ended September 30, 20172019 | | | [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | For the transition period from ___________ to ___________
|
Commission File Number 000-54653
BULLFROG GOLD CORP. (Exact name of registrant as specified in its charter)
| | Delaware | 41-2252162 | (State or other jurisdiction of | (I.R.S. Employer | incorporation or organization) | Identification No.) | | | 897 Quail Run Drive | | Grand Junction, Colorado | 81505 | (Address of principal executive offices) | (Zip Code) |
(970) 628-1670 (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | Large accelerated filer | [ ] | | Accelerated filer | [ ] | Non-accelerated filer (Do not check if a smaller reporting company) | [ ]X] | | Smaller reporting company | [X] | | | | Emerging growth company | [ ] | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 101,907,096134,987,288 shares of common stock, par value $0.0001, were outstanding on November 7, 2017.
12, 2019.
BULLFROG GOLD CORP. TABLE OF CONTENTS TO FORM 10-Q
2
PART I. FINANCIAL INFORMATION
ITEM 1.1 - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BULLFROG GOLD CORP. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 20172019 AND DECEMBER 31, 20162018 (unaudited)
| | 9/30/17 | | 12/31/16 | 9/30/19 | 12/31/18 | Assets | | | | | | | | | | Current assets | | | | | Cash | $ | 411,725 | | $ | 2,229 | $137,383 | $620,949 | Deposits | | 4,273 | | | 10,682 | | Prepaid expenses | | 101,709 | 5,442 | Total current assets | | 415,998 | | | 12,911 | 239,092 | 626,391 | | | | | | | | Other assets | | | | | | | Mineral properties | | 145,425 | | | 145,425 | 190,425 | | | | | | | | Total assets | $ | 561,423 | | $ | 158,336 | $429,517 | $816,816 | | | | | | | | Liabilities and Stockholders' Equity (Deficit) | | | | | | | | | | | | | | Current liabilities | | | | | | | Accounts payable | $ | 14,529 | | $ | 27,871 | $11,003 | $10,951 | Related party payable | | 436,409 | | | 369,334 | 617,077 | 578,764 | | | | | | | | Common stock to be issued | | 0 | 695,000 | Total liabilities | | 450,938 | | | 397,205 | 628,080 | 1,284,715 | | | | | | | | Stockholders' equity (deficit) | | | | | | | Stockholders' deficit | | | Preferred stock, 250,000,000 shares authorized, 200,000,000 undesignated, zero issued and outstanding, $.0001 par value | | 0 | | | 0 | 0 | Preferred stock series A, 5,000,000 shares authorized, $.0001 par value; zero issued and outstanding as of 9/30/17 and 12/31/16 | | 0 | | | 0 | | Preferred stock series B, 45,000,000 shares authorized, $.0001 par value; 30,187,500 and 29,562,500 issued and outstanding as of 9/30/17 and 12/31/16, respectively | | 3,018 | | | 2,956 | | Common stock, 750,000,000 shares authorized, $.0001 par value; 101,907,096 and 90,232,096 shares issued and outstanding as of 9/30/17 and 12/31/16, respectively | | 10,191 | | | 9,023 | | Preferred stock series A, 5,000,000 shares designated and authorized, $.0001 par value; zero issued and outstanding as of 9/30/19 and 12/31/18 | | 0 | Preferred stock series B, 45,000,000 shares designated and authorized, $.0001 par value; 30,187,500 issued and outstanding as of 9/30/19 and 12/31/18 | | 3,018 | Common stock, 750,000,000 shares authorized, $ .0001 par value; 129,355,096 share issued and outstanding 9/30/19 and 104,107,096 shares issued and outstanding as of 12/31/18 | | 12,935 | 10,411 | Additional paid in capital | | 8,779,008 | | | 7,754,238 | 11,019,913 | 9,589,037 | Accumulated deficit | | (8,681,732) | | | (8,005,086) | (11,234,429) | (10,070,365) | | | | | | | | Total stockholders' equity (deficit) | | 110,485 | | | (238,869) | | Total stockholders' deficit | | (198,563) | (467,899) | | | | | | | | Total liabilities and stockholders' equity (deficit) | $ | 561,423 | | $ | 158,336 | | Total liabilities and stockholders' deficit | | $429,517 | $816,816 |
See accompanying notes to consolidated financial statements
3
BULLFROG GOLD CORP. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 20172019 AND 20162018 (unaudited)
| | Three Months Ended | | Nine Months Ended | Three Months Ended | | Nine Months Ended | | 9/30/17 | | 9/30/16 | | 9/30/17 | | 9/30/16 | 9/30/19 | | 9/30/18 | | 9/30/19 | | 9/30/18 | | | | | | | | | | Revenue | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | $0 | | $0 | | $0 | | $0 | | | | | | | | | | | | | | Operating expenses | | | | | | | | | | | | | General and administrative | | 180,526 | | | 311,991 | | | 610,210 | | | 403,084 | 242,991 | | 52,252 | | 838,510 | | 176,070 | Lease expense | | 26,000 | | | 0 | | | 26,000 | | | 0 | 0 | | 16,000 | | 16,000 | | 16,000 | Exploration, evaluation and project expense | | 143,721 | | 53,071 | | 256,550 | | 119,557 | | | | | | | | | | | | | | | | | | | | Total operating expenses | | 206,529 | | | 311,991 | | | 636,210 | | | 403,084 | 386,712 | | 121,323 | | 1,111,060 | | 311,627 | | | | | | | | | | | | | | Net operating loss | | (206,529) | | | (311,991) | | | (636,210) | | | (403,084) | (386,712) | | (121,323) | | (1,111,060) | | (311,627) | | | | | | | | | | | | | | Gain on extinguishment of debt | | 0 | | | 0 | | | 0 | | | 2,523,813 | | Loss on asset abandonment | | 0 | | | 0 | | | 0 | | | (164,850) | | Interest expense | | (12,920) | | | (8,066) | | | (40,435) | | | (155,693) | (18,148) | | (14,626) | | (53,004) | | (42,287) | | | | | | | | | | | | | | Net (loss) income | $ | (219,449) | | $ | (320,057) | | $ | (676,645) | | $ | 1,800,186 | | Net loss | | $(404,860) | | $(135,949) | | $(1,164,064) | | $(353,914) | | | | | | | | | | | | | | Weighted average common shares outstanding - basic | | 101,907,096 | | | 88,843,207 | | | 96,677,929 | | | 78,661,666 | | Weighted average common shares outstanding - basic and diluted | | 128,983,357 | | 102,607,096 | | 123,563,785 | | 102,607,096 | | | | | | | | | | | | | | Weighted average common shares outstanding - diluted | | 101,907,096 | | | 88,843,207 | | | 96,677,929 | | | 88,506,110 | | | | | | | | | | | | | | | (Loss) income per common share - basic | $ | (0.00) | | $ | (0.00) | | $ | (0.01) | | $ | 0.02 | | | | | | | | | | | | | | | (Loss) income per common share - diluted | $ | (0.00) | | $ | (0.00) | | $ | (0.01) | | $ | 0.02 | | Loss per common share - basic and diluted | | $0.00 | | $0.00 | | $(0.01) | | $0.00 |
See accompanying notes to consolidated financial statements
4
BULLFROG GOLD CORP. CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS' EQUITY (DEFICIT) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 20172019 AND 20162018 (unaudited)
| Preferred Stock Shares Issued | | Preferred Stock | | Common Stock Shares Issued | | Common Stock | | Additional Paid In Capital | | Deficit Accumulated During the Exploration Stage | | Total Stockholders' Equity (Deficit) | | | | | | | | | | | | | | | December 31, 2017 | 30,187,500 | | $3,018 | | 102,607,096 | | $10,261 | | $9,520,187 | | $(9,534,278) | | $(812) | Net loss | - | | - | | - | | - | | - | | (126,758) | | (126,758) | March 31, 2018 | 30,187,500 | | 3,018 | | 102,607,096 | | 10,261 | | 9,520,187 | | (9,661,036) | | (127,570) | | | | | | | | | | | | | | | Net loss | - | | - | | - | | - | | - | | (91,209) | | (91,209) | June 30, 2018 | 30,187,500 | | $3,018 | | 102,607,096 | | $10,261 | | 9,520,187 | | $(9,752,245) | | $(218,779) | | | | | | | | | | | | | | | Net loss | - | | - | | - | | - | | - | | (135,948) | | (135,948) | September 30, 2018 | 30,187,500 | | 3,018 | | 102,607,096 | | 10,261 | | 9,520,187 | | (9,888,193) | | (354,727) | | | | | | | | | | | | | | | December 31, 2018 | 30,187,500 | | $3,018 | | 104,107,096 | | $10,411 | | 9,589,037 | | $(10,070,365) | | $(467,899) | Stock-based compensation, March 2019 | - | | - | | 900,000 | | 90 | | 80,910 | | - | | 81,000 | Private placement issued, February 2019 | - | | - | | 16,700,000 | | 1,670 | | 833,330 | | - | | 835,000 | Private placement issued, March 2019 | - | | - | | 5,848,000 | | 584 | | 291,816 | | - | | 292,400 | Net loss | - | | - | | - | | - | | - | | (380,163) | | (380,163) | March 31, 2019 | 30,187,500 | | 3,018 | | 127,555,096 | | 12,755 | | 10,795,093 | | (10,450,528) | | 360,338 | | | | | | | | | | | | | | | Issuance of stock for services, April 2019 | - | | - | | 900,000 | | 90 | | 125,910 | | - | | 126,000 | Net loss | - | | - | | - | | - | | - | | (379,041) | | (379,041) | June 30, 2019 | 30,187,500 | | $3,018 | | 128,455,096 | | $12,845 | | 10,921,003 | | $(10,829,569) | | $107,297 | | | | | | | | | | | | | | | Issuance of stock for services, August 2019 | - | | - | | 900,000 | | 90 | | 98,910 | | - | | 99,000 | Net loss | - | | - | | - | | - | | - | | (404,860) | | (404,860) | September 30, 2019 | 30,187,500 | | 3,018 | | 129,355,096 | | 12,935 | | 11,019,913 | | (11,234,429) | | (198,563) |
| | | | | | | Nine Months Ended | | 9/30/17 | | 9/30/16 | | | | | Cash flows from operating activities | | | | Net income (loss) | $ | (676,645) | | $ | 1,800,186 | Adjustments to reconcile net loss to net cash used in operating activities | | | | | | Gain on extinguishment of debt | | 0 | | | (2,523,813) | Interest capitalized to note payable | | 0 | | | 114,751 | Loss on asset abandonment | | | | | 164,850 | Stock issued for services | | 210,000 | | | 237,000 | Amortization of deferred financing fees | | 0 | | | 3,666 | Change in operating assets and liabilities: | | | | | | Accounts payable | | (13,343) | | | (7,316) | Related party payable | | 97,075 | | | 173,624 | Accrued interest | | 0 | | | 12,598 | Other liabilities | | 0 | | | (25,218) | | | | | | | Net cash used in operating activities | | (382,913) | | | (49,672) | | | | | | | Cash flows from investing activities | | | | | | Refund of deposits on mineral properties | | 6,409 | | | 0 | Acquisition of mineral properties | | 0 | | | (10,000) | | | | | | | Net cash provided by (used in) investing activities | | 6,409 | | | (10,000) | | | | | | | Cash flows from financing activities | | | | | | Proceeds from private placement of stock | | 786,000 | | | 312,000 | Payoff of note payable | | 0 | | | (250,000) | | | | | | | Net cash provided by financing activities | | 786,000 | | | 62,000 | | | | | | | Net increase in cash | | 409,496 | | | 2,328 | | | | | | | Cash, beginning of period | | 2,229 | | | 1,024 | | | | | | | Cash, end of period | $ | 411,725 | | $ | 3,352 | | | | | | | | | | | | | Supplemental disclosure of cash flow information | | | | | | Stock issued for debt conversion - related party | $ | 0 | | $ | 278,438 | Stock issued for lease payment | | 0 | | | 14,850 | Stock issued to payoff note payable | | 0 | | | 70,000 | Stock issued to payoff related party payable | | 0 | | | 348,336 | Stock and warrants issued to payoff related party payable | $ | 30,000 | | $ | 0 |
See accompanying notes to consolidated financial statements
5
BULLFROG GOLD CORP. Notes to Consolidated Financial StatementsCONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (unaudited) | Nine Month Ended | | 9/30/19 | | 9/30/18 | | | | | Cash flows from operating activities | | | | Net loss | $(1,164,064) | | $(353,914) | Adjustments to reconcile net loss to net cash used in operating activities | | | | Stock issued for services | 306,000 | | 0 | Change in operating assets and liabilities: | | | | Deposits | (96,267) | | 0 | Other assets | 0 | | (1,169) | Accounts payable | 52 | | (2,395) | Related party payable | 38,313 | | 69,494 | Net cash used in operating activities | (915,966) | | (287,984) | | | | | Cash flows from investing activity | | | | Acquisition of mineral properties | 0 | | (10,000) | | | | | Cash flows from financing activities | | | | Proceeds from private placement of stock | 432,400 | | 0 | | | | | Net decrease in cash | (483,566) | | (297,984) | | | | | Cash, beginning of period | 620,949 | | 299,048 | | | | | Cash, end of period | $137,383 | | $1,064 |
See accompanying notes to consolidated financial statements
6
BULLFROG GOLD CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business Bullfrog Gold Corp. (the “Company”) is an early stagea junior exploration company engaged in the acquisition and exploration of properties that may contain gold, silver and other metals in the United States. The Company’s target properties are those that have been the subject of historical exploration. The Company owns, controls or has acquired mineral rights on Federal patented and unpatented mining claims in the state of Nevada for the purpose of exploration and potential development of gold, silver and other metals on a total of approximately 4,3005,250 acres. The Company plans to review opportunities and acquire additional mineral properties with current or historic precious and base metal mineralization with meaningful exploration potential.
The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties to ascertainwith the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.
Basis of Presentation The consolidated unaudited financial statements included in this Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the disclosures required by U.S. generally accepted accounting principles for complete financial statements. These consolidated unaudited interim financial statements should be read in conjunction with the audited financial statements for the fiscal year ended December 31, 20162018 in our Annual Report on Form 10-K. The financial information furnished herein reflects all adjustments consisting of normal, recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our financial position, the results of operations and cash flows for the periods presented. Operating results for the three and nine months ended September 30, 20172019 are not necessarily indicative of results for future quarters or periods in the fiscal year ending December 31, 2017.2019.
Principles of Consolidation The consolidated financial statements include the accounts of Bullfrog Gold Corp. and its wholly owned subsidiaries, Standard Gold Corp. (“Standard Gold”) a Nevada corporation and Rocky Mountain Minerals Corp. (“Rocky Mountain Minerals” or “RMM”) a Nevada corporation. All significant inter-entity balances and transactions have been eliminated in consolidation.
Going Concern and Management’s Plans The Company has incurred losses from operations since inception and has an accumulated deficit of approximately $8,681,732$11,230,000 as of September 30, 2017.2019. The Company’s consolidated financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s continuation as a going concern is dependent upon attaining additional financing from external sources and profitable operations and revenue, where the Company has not achieved this.which will require generating revenue. This raises substantial doubt about the Company's ability to continue as a going concern.concern within one year from the issuance of these consolidated financial statements.
The Company has no operatingnot generated any revenues since its inception and does not expect to generate any revenues in 2017.2019 or 2020. Should itwe be unable to continue as a going concern, itwe may be unable to realize the carrying value of itsour assets and to meet itsour obligations as they become due. To continue as a going concern, the Company is dependent on continued fund raising.we will need to raise additional capital. However, the Company haswe have no commitment from any party to provide additional capital and there is no assurance that such funding will be available when needed, or if available, that its terms will be favorable or acceptable. The Company continuesacceptable to seek alternative financing options to continue its normal course of business.us.
6
7
Cash and Cash Equivalents and Concentration The Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation up to $250,000. At September 30, 2017,2019, the Company’s cash balance was approximately $411,725.$137,000. To reduce its risk associated with the failure of such financial institution, the Company will evaluate at least annually the rating of the financial institution in which it holds deposits.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Mineral Property Acquisition and Exploration Costs Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company has chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed. During the 3 and 9 months ended September 30, 2017 and 2016 the Company did not incur exploration costs. Costs of property acquisitions are being capitalized, and required payments of $0 and $25,000 were made in 2017 and 2016, respectively to Mojave Gold Mining Corporation (“Mojave”) as part of the Option to Purchase Agreement (“Option”).capitalized.
Fair Value of Financial Instruments The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and accounts payable.and related party payables.
Income Taxes Income taxes are accounted for under the asset and liability method in accordance with ASC 740, "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.
The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. The Company has elected to classify interest and penalties related to unrecognized income tax benefits, if and when required, as part of income tax expense in the statement of operations. No liability has been recorded for uncertain income tax positions, or related interest or penalties as of September 30, 20172019 and December 31, 2016.2018. The periods ended December 31, 2018, 2017, 2016 and 2015 are open to examination by taxing authorities.
8
Long Lived Assets The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge.
7
The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
Preferred Stock The Company accounts for its preferred stock under the provisions of the ASC on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This standard requires an issuer to classify a financial instrument that is within the scope of the standard as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Company has determined that its preferred stock does not meet the criteria requiring liability classification as its obligation to redeem these instruments is not based on an event certain to occur. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification.
Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). This ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
The estimated fair value of each stock option as of the date of grant was calculated using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of a comparable peer company which is publicly traded.Company stock price history. The Company determines the expected life based on the simplified method given that its own historical share option exercise experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures.does not provide a reasonable basis for estimating expected term. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The shares of common stock subject to the stock-based compensation plan shall consist of unissued shares, treasury shares or previously issued shares held by any subsidiary of the Company, and such the number of shares of common stock are reserved for such purpose. On March 31, 2015, the Company granted options to purchase 4,500,000 shares of its common stock of the 4,500,000 shares of common stock available for grant under the 2011 Stock Incentive Plan.
Net Income (Loss)Loss per Common Share The following table shows basicCompany incurred net losses during the three and diluted earnings per share:
| | | | | | Three Months Ended | Nine Months Ended | | 9/30/17 | 9/30/16 | 9/30/17 | 9/30/16 | Basic and Diluted Earnings (Loss) per Common Share | | | | | Earnings (loss) | $(219,449) | $(320,057) | $(676,645) | $1,800,186 | Basic weighted average shares outstanding | 101,907,096 | 88,843,207 | 96,677,929 | 78,661,666 | Dilutive effect of common stock equivalents | -- | -- | -- | 9,844,444 | Diluted weighted average common shares outstanding, assuming conversion of common stock equivalents | 101,907,096 | 88,843,207 | 96,677,929 | 88,506,110 | Basic Earnings (Loss) Per Common Share | $(0.00) | $(0.00) | $(0.01) | $0.02 | Diluted Earnings (Loss) Per Common Share | $(0.00) | $(0.00) | $(0.01) | $0.02 |
For periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.
8
For the nine months ended September 30, 2016, 11,000,0002019 and 18,562,500 of preferred shares issued in July 2016 and August 2016 respectively were included in2018. As such, the Company excluded the following from computation of diluted shares. 4,500,000 of stock options were included inas the computation for the nine months ended September 30, 2016. 9,668,660 of warrants were not included in the diluted weighted average shares calculation because they were “out-of-the money” for the nine month period ending September 30, 2016.effect would be anti-dilutive:
| 9/30/19 | | 9/30/18 | Stock options | 9,500,000 | | 9,500,000 | Warrants | 21,474,000 | | 10,200,000 | Preferred stock | 30,187,500 | | 30,187,500 |
Risks and Uncertainties Since the Company’sour formation, it haswe have not generated any revenues. As an early stage company, the Company iswe are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. TheOur business is dependent upon the implementation of theour business plan. There can be no assurance that theour efforts will be successful or that the Companywe will ultimately be able to generate revenue or attain profitability.
9
Natural resource exploration, and exploring for gold, in particular, is a business that by its nature is very speculative. There is a strong possibility that the Companywe will not discover gold or any other resourcesmineralization which can be mined or extracted at a profit. Even if it doeswe do discover gold or other deposits, the deposit may not be of the quality or size necessary for itus or a potential purchaser of the property to make a profit from actually mining the deposit.it. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected geological formations, geological formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are just some of the many risks involved in mineral exploration programs and the subsequent development of gold deposits.
The Company’sOur business is exploring for gold and other minerals. In the event that it discoverswe discover commercially exploitable gold or other deposits, itwe will not be able to makegenerate any moneyrevenue from themsuch discoveries unless the gold or other minerals are actually mined, or it sellswe sell all or a part of itsour interest. Accordingly, itwe will need to find some other entity to mine itsour properties on itsour behalf, mine them itselfourselves or sell itsour rights to mine to third parties.
Mining operations in the United States are subject to many different federal, state and local laws and regulations, including stringent environmental, health and safety laws. In the event the Company assumeswe assume any operational responsibility for mining itsour properties, it is possible that it willwe may be unable to comply with current or future laws and regulations, which can change at any time. It is possible that changesChanges to these laws will be adverse tomay adversely affect any of our potential mining operations. Moreover, compliance with such laws may cause substantial delays and require capital outlays in excess ofgreater than those anticipated,we anticipate, adversely affecting any potential mining operations. TheOur future mining operations, if any, may also be subject to liability for pollution or other environmental damage. It is possible that the Company willWe may choose to not be insured against this risk because of high insurance costs or other reasons.
Recent Accounting Pronouncements There are several new accounting pronouncements issued by the FASB which are not yet effective.
On July 13, 2017, the FASB issued ASU 2017-11, which makes limited changes to the FASB’s guidance on classifying certain financial instruments as either liabilities or equity. The ASU’s objective is to improve (1) the accounting for instruments with “down-round” provisions and (2) the readability of the guidance in ASC 480 on distinguishing liabilities from equity by replacing the indefinite deferral of certain pending content with scope exceptions.
The ASU applies to issuers of financial instruments with down-round features. It amends (1) the classification of such instruments as liabilities or equity by revising the guidance in ASC 815 on the evaluation of whether instruments or embedded features with down-round provisions must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of the value transferred upon the trigger of a down-round feature for equity-classified instruments by revising ASC 260. The Company Management does not currentlybelieve any of these accounting pronouncements will be applicable and therefore will not have any financial instruments with a down-round feature but has historically issued warrants with a down-round feature. Therefore, there is nomaterial impact on the Company's financial statements.
FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), on February 25, 2016. This guidance supersedes FASB ASC 840, Leases,position or operating results. The Company has evaluated all contracts which could be classified as leases under the new standards and requires recognition of leased assets and liabilities, representing the rights and obligations created by leases with terms of more than 12 months, on the balance sheet as well as enhanced disclosure over the amount, timing and uncertainty of cash flows arising from leases. This ASU is effective for fiscal years beginning after December 15, 2018, with an expected impact on the balance sheet of approximately $885,000 as a right to use asset and a related liability.determined that there will be no impact.
9
NOTE 2 - STOCKHOLDER’S EQUITY
Recent Sales of Unregistered Securities
On January 25, 2017, the Company issued 2,000,000 shares of common stock at $0.10 per share for consulting services valued at $200,000 in 2017.
On May 23, 2017,February 12, 2019 and March 27, 2019, the Company sold an aggregate of 10,200,000 shares (the “Units”) (9,575,000 common shares16,700,000 Units and 625,000 series B preferred shares) with5,848,000 Units for gross proceeds to the Company of $816,000$835,000 ($30,000 payoff for related party payable695,000 of which was received in 2018 and $786,000 cash)included in liabilities on the consolidated balance sheet) and $292,400, respectively to certain accredited investors pursuant to a subscription agreement. The Company is using the proceeds from this offering primarily for general corporate purposes. Each Unit was sold for a purchase price of $0.08$0.05 per Unit and consisted of: (i) one share of the Company’s common stock $0.0001 par value per share (the “Common Stock”) or preferred stock, $0.0001 par value per share (the “Preferred Stock”) and (ii) a two-year warrant (the “Warrants”) to purchase one hundred (100%) percent50% of the number of shares of either Common Stock or Preferred Stockcommon stock purchased at an exercise price of $0.15$0.10 per share. The Warrants contains limitations on the holder’s ability to exercise the Warrant in the event such exercise causes the holder to beneficially own in excess of 4.99% of the Company’s issued and outstanding Common Stock, subject to a discretionary increase in such limitation by the holder to 9.99% upon 61 days’ notice. The Warrantswarrants were evaluated for purposes of classification between liability and equity. The Warrantswarrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was used to estimate the fair value of $528,448$415,019 of the Warrantswarrants with the following inputs:
| Warrants | Exercise Price | Term | Volatility | Risk Free Interest Rate | Fair Value | Exercise Price | Term | Volatility | Risk Free Interest Rate | Fair Value | 10,200,000 | $0.15 | 2 years | 187.8% | 1.38% | $528,448 | | 11,274,000 | | $0.10 | 2 years | 109.0% | 2.5% | $415,019 |
Using the fair value calculation, the relative fair value between the common stock preferred stock and the warrants was calculated to determine the warrantswarrants’ recorded equity amount of $346,634$232,287 accounted for in additional paid in capital.
On June 30, 2017,March 20, 2019, the Company issued 100,000900,000 shares of common stock at $0.10 for consulting services performed in the three months ended March 31, 2019 valued at $10,000$0.09 per share and an aggregate of $81,000. On April 12, 2019, the Company issued 900,000 shares of common stock for consulting services performed in 2017.the three months ended June 30, 2019 valued at $0.14 per share and an aggregate of $126,000.
On August 7, 2019, the Company issued 900,000 shares of common stock for consulting services performed in the three months ended September 30, 2019 valued at $0.11 per share and an aggregate of $99,000.
10
Convertible Preferred Stock
In August 2011, the Board of Directors designated 5,000,000 shares of its Preferred Stock as Series A Preferred Stock. Each share of Series A preferred stock par value $0.0001 per share (“Series A Preferred Stock”)Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially ownsown more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon conversion of the Series A Preferred Stock.stock. The holders of the Company’s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.
In October 2012, the Board of Directors designated 5,000,000 shares of its Preferred Stock as Series B Preferred Stock. In July 2016, the Board of Directors increased the number of designated shares oftotal Series B Preferred Stock designated to 45,000,000. Each share of Series B Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series B Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series B Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially ownsown more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock calculated immediately after giving effectstock. For a period of 24 months from the issue date, the holder of Series B Preferred Stock is entitled to price protection as determined in the subscription agreement. The Company has evaluated this embedded lower price issuance feature in accordance with ASC 815 and determined that is clearly and closely related to the issuancehost contract and is therefore accounted for as an equity instrument. As of September 30, 2019, the Company had outstanding 30,187,500 shares of common stock upon conversion of the Series B Preferred Stock.
As of September 30, 2017, the Company had outstanding 30,187,500 series B preferred shares.
10
Common Stock Options
On September 30, 2011, the Board of Directors and stockholders adopted the 2011 Stock Incentive Plan (the “2011 Plan”). Under the 2011 Plan, options may be granted which are intended to qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not intended to qualify as Incentive Stock Options thereunder. In addition, Company may make direct grants of stock or restricted stock under the 2011 Plan. The Company has reserved 4,500,000 shares of common stock for issuance under the 2011 Plan.
There was a total of 4,500,000 options granted from the 2011 Plan in March 2015. These options issued are nonqualified stock options and were 100% vested on grant date. All expense related to these stock options has been recognized.
A summary of the stock options as of September 30, 20172019 and changes during the periodperiods are presented below:
| | | | | | | | | | | | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | | | Number of Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life (Years) | | Aggregate Intrinsic Value | | Balance at December 31, 2015 | | | 4,500,000 | | $ | 0.025 | | | 9.25 | | -- | | Balance at December 31, 2017 | | 9,500,000 | $0.083 | 8.70 | - | Granted | | | -- | | | -- | | | -- | | -- | - | Exercised | | | -- | | | -- | | | -- | | -- | - | Forfeited | | | -- | | | -- | | | -- | | -- | - | Canceled | | | -- | | | -- | | | -- | | -- | - | Balance at December 31, 2016 | | | 4,500,000 | | $ | 0.025 | | | 8.25 | | -- | | Granted | | | -- | | | -- | | | -- | | -- | | Balance at December 31, 2018 | | 9,500,000 | $0.083 | 7.70 | - | Exercised | | | -- | | | -- | | | -- | | -- | - | Forfeited | | | -- | | | -- | | | -- | | -- | - | Canceled | | | -- | | | -- | | | -- | | -- | - | Balance at September 30, 2017 | | | 4,500,000 | | $ | 0.025 | | | 7.50 | | $562,500 | | Options exercisable at September 30, 2017 | | | 4,500,000 | | $ | 0.025 | | | 7.50 | | $562,500 | | Balance at September 30, 2019 | | 9,500,000 | $0.083 | 6.91 | $337,500 | Options exercisable at September 30, 2019 | | 9,500,000 | $0.083 | 6.91 | $337,500 |
Effective February 8, 2017 the Company amended its CertificateTotal outstanding warrants of Incorporation to increase the total number21,474,000 as of authorized shares to One Billion (1,000,000,000). The classes and aggregate number of shares of each class which the Company shall have authority to issue areSeptember 30, 2019 were as follows:
Warrants Issued | Exercise Price | Expiration Date | 10,200,000 | $0.15 | May 2020 | 8,350,000 | $0.10 | February 2021 | 2,924,000 | $0.10 | March 2021 |
1.
Seven Hundred Fifty Million (750,000,000) shares of common stock, par value $0.0001 per share; and
11
2.
Two Hundred Fifty Million (250,000,000) shares of preferred stock, par value $0.0001 per share with 5,000,000 series A preferred stock and 45,000,000 series B preferred stock designated.
NOTE 3 - RELATED PARTY
As of September 30, 2017,2019, and December 31, 2018, the Company has a related party payable with David Beling, CEO and President, of $436,409.$617,077 and $578,764, respectively. This amount at September 30, 2019 consists of $199,043$213,450 of expense reports plus interest of $66,532$140,223 and salary of $150,000$191,667 plus interest of $20,834$71,737. Interest is accrued at a rate of 1% compounded per month.
On May 23, 2017, the Company issued units (common stock and warrants) of $30,000 as repayment for related party payable as part of the stock and warrants issued discussed in Note 2.
NOTE 4 - COMMITMENTS
On March 23, 2015, Rocky Mountain Minerals Corp. (“Effective Date”RMM”), RMM a wholly owned subsidiary of the Company, entered into a Mineral Lease and Option to Purchase Agreement (the “Barrick Agreement”) with Barrick Bullfrog Inc. (“Barrick Bullfrog”) involving patented mining claims, unpatented mining claims, and mill site claims (“Properties”(collectively, the “Properties”) located threeapproximately four miles west of Beatty, Nevada. In order for RMM to exercise the option to acquire a 100% interest in and to the properties, RMM must provide thirty-days advance notice to Barrick Bullfrog and, thereafter, at the mutually agreed upon closing date, the Company will issue to Barrick Gold 3,230,000 shares of its common stock. The Company has not exercised the option to date. These Properties are strategically located adjacent to the Company’s Bullfrog Gold Project and include two patents that cover the southwest half of the Montgomery-Shoshone (M-S) open pit gold mine. In October 2014 the Company optioned the northeast half of the M-S pit and now controls the entire pit.pit, however no payment is due to Barrick Bullfrog for this.
RMM shall expend as minimum work commitments (the “Project Work Commitments”) for the benefit of the Properties prior to the 5th anniversary of the Effective Dateeffective date per the schedule below. As the Properties are part of a logical land and mining unit, work performed on any of the Properties will be counted toward Rocky Mountain’s Project Work Commitment. In any given year, if Rocky Mountain incurs Project Work Commitment expenditures in excess of the Project Work Commitment for that year, then up to 20% of the excess expenditures, as measured against the Project Work Commitment for that year, shall be credited toward the minimum Project Work Commitment expenditures for the following years. In any given year, if Rocky Mountain incurs expenditures below the required Project Work Commitment for that year, then up to 20% of the expenditure shortfall, as measured against the Project Work Commitment for that year, may be carried forward by Rocky Mountain and added to the minimum Project Work Commitment expenditures for the following year. In such case, Rocky Mountain shall make cash payments to Barrick Bullfrog equal to the remaining expenditure shortfall for the year. Further, if Rocky Mountain incurs expenditures below the required Project Work Commitment for a given year but elects not to carry forward any shortfall to the subsequent year, then Rocky Mountain shall make cash payments to Barrick Bullfrog equal to the expenditure shortfall for the year; provided however, that if Rocky Mountain elects not to carry forward any shortfall such payment shall not be due if Rocky Mountain terminates the agreement before the end of the year with the expenditure shortfall. If a party fails to keep or perform any covenant or condition of the agreement to be kept or performed by that party, the other party may provide written notice to first party specifying such default. If the Company does not, within 15 days after it has received notice of default with respect to the share delivery, or any party within 30 days after it has received notice of any other default, cure the default, the party issuing the notice of default may terminate the agreement by delivering to the other party written notice of such termination and exercising any other rights and remedies permitted by law or equity. These work commitments, as of September 30, 2017,2019, have been satisfactorily met with the management of the Properties. The Company does not haveand include a 5% management fee, policy for projects, however, it does track time spent per project. This soft cost performed by Company management is considered by the Company a requirement to study and analyze the Properties for feasibility.but exclude corporate expenses of RMM.
| | Anniversary of Effective Date | Minimum Project Work Commitment ($) | First (March 2016) | 100,000 | Second (March 2017) | 200,000 | Third (March 2018) | 300,000 | Fourth (March 2019) | 400,000 | Fifth (March 2020) | 500,000 |
On May 21, 2019 the Barrick Agreement was amended whereby work commitments for the fifth anniversary and the total of $1.5 million were extended to September 23, 2020. The Company has paid the required work commitments with a final work commitment of $561,762.
12
On July 1, 2017, (“Effective Date”), RMM entered a 30-year Mineral Lease (the “Lunar Lease”) with Lunar Landing, LLC.LLC (“Lunar”) involving 24 patented mining claims situated in the Bullfrog Mining District, Nye County, Nevada. Lunar owns a 100% undivided interest in the mining claims.
Under the Lunar Lease, RMM shall expend as minimum work commitments of $50,000 per year starting in 2017 until a cumulative of $500,000 of expense has been incurred. If RMM fails to perform its obligations under the Lunar Lease, and in particular fails to make any payment due to Lunar thereunder, Lunar may declare RMM in default by giving RMM written notice of default which specifies the obligation(s) which RMM has failed to perform. If RMM fails to remedy a default in payment within fifteen (15) days of receiving the notice of default or fails to remedy or commence to remedy any other default within thirty (30) days of receiving notice, Lunar may terminate the Lunar Lease and RMM shall peaceably surrender possession of the properties to Lunar. Notice of default or of termination shall be in writing and served in accordance with the Lunar Lease. RMM has made all required payments and has paid Lunar $26,000 on the Effective Date$58,000 as of September 30, 2019 and makes lease payments on the following schedule:
| | Years Ending December 31 | Annual Lease Payment ($) | 2018-20222019-2022
| 16,000 | 2023-2027 | 21,000 | 2028-2032 | 25,000 | 2033-2037 | 30,000 | 2038-2042 | 40,000 | 2043-2047 | 45,000 |
On October 29, 2014, RMM entered into an Option Agreement (the “Mojave Option”) with Mojave Gold Mining Corporation (“Mojave”). Mojave holds the purchase rights to 100% of 12 patented mining claims located in Nye County, Nevada. This property is contiguous to the Company’s Bullfrog Project and covers approximately 156 acres, including the northeast half of the Montgomery-Shoshone (M-S) pit mined by Barrick Gold in the 1990’s.
Mojave granted to RMM the sole and immediate working right and option with respect to the property until the 10th anniversary of the closing date, to earn a 100% interest in and to the property free and clear of all charges encumbrances and claims, except a sliding scale Net smelter return (or NSR) royalty.
In order to maintain in force, the working right and option granted to it, and to exercise the Mojave Option, RMM issued Mojave 750,000 shares of Company common stock and paid $16,000 in October 2014, and RMM must pay to Mojave a total of $190,000 over the next 10 years of which the Company has made all required payments and paid $60,000 as of September 30, 2019. Future payments will be due as follows:
Due Date | Amount | October 2019 | $20,000 | October 2020 | $25,000 | October 2021 | $25,000 | October 2022 | $30,000 | October 2023 | $30,000 |
NOTE 5 - SUBSEQUENT EVENTS
On October 3, 2019, the Board of Directors of the Company approved a stock compensation distribution to board members Alan Lindsay, Chairman; Kjeld Thygesen, board member; and David Beling, CEO, President and board member. On October 10, 2019, the Company issued 500,000 shares of common stock to each board member, for a total of 1,500,000 shares with the fair market value of $0.17 per share determined by the closing price of the Company’s common stock as of October 10, 2019.
13
ITEM 2.2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in this Management's Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements". Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate,” or “believe,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable law. Readers should carefully review the risk factors and related notes included under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20162018 filed with the Securities and Exchange Commission on March 31, 2017.12, 2019.
The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Unless otherwise indicated or unless the context otherwise requires, all references in this document to “we,” “us,” “our,” the “Company,” and similar expressions refer to Bullfrog Gold Corp., and depending on the context, its subsidiaries.
Company History and Recent Events
Bullfrog Gold Corp. was incorporated under the laws of the State of Delaware on July 23, 2007 as Kopr Resources Corp. On July 21, 2011, the Company changed its name to "Bullfrog Gold Corp.". The Company is in the exploration stage of its resource business.
Company Overview
We are an exploration stage company engaged in the acquisition and exploration of properties that may contain gold and other mineralization primarily in the United States.
Bullfrog Project The Bullfrog Gold Project lies approximately 4 miles west of the town of Beatty, Nevada and 120 miles northwest of Las Vegas, Nevada. In 2011, Standard Gold Corp. (“Standard Gold”) a wholly owned subsidiary of the Company, initially acquired a 100% right, title and interest in 79 lode claims and 2 patented claims that contain approximately 1,600 acres subject to a 3% net smelter royalty.
On October 29, 2014, Rocky Mountain Minerals Corp. (“RMM”) a wholly owned subsidiary of the Company, entered into an Option Agreement (the “Option”) with Mojave Gold Mining Corporation (“Mojave”). Mojave holds and possesses the purchase rights to 100% of 12 patented mining claims located in Nye County, Nevada. This property is contiguous to the Company’s Bullfrog Project and covers approximately 156 acres, including the northeast half of the Montgomery-Shoshone (M-S) pit mined by Barrick Gold in the 1990’s.
Mojave granted to RMM the sole and immediate working right and option with respect to the property until the 10th anniversary of the closing date, to earn a 100% interest in and to the property free and clear of all charges encumbrances and claims, save and except a sliding scale Net smelter return (or NSR) royalty.
In order to maintain in force, the working right and Option granted to it, and to exercise the Option, RMM grantedthe Company issued Mojave 750,000 shares of common stock and paid $16,000.Mojave $16,000 in October 2014. In addition, to exercise the option, RMM must pay to Mojave a total of $190,000 over the next 10 years. For reference, Barrick Bullfrog Inc. (“Barrick”) terminated a lease on these patents after they ceased operations in late 1999.
13
14
On March 23, 2015, RMM entered into a Mineral Lease and Option to Purchase Agreement with Barrick involving 6 patented mining claims, 20 unpatented mining claims, and 8 mill site claims located approximately four miles west of Beatty, Nevada and coverscovering approximately 444 acres (the “Barrick Properties”). These Barrick Properties are strategically located adjacent to the Company’s Bullfrog Gold Project and include two patents that cover the southwest half of the M-S open pit from which Barrick produced approximately 220,000 ounces of gold by the late 1990’s. Underground mining in the early 1900’s produced approximately 70,000 ounces of gold from the M-S deposit. Also included in the agreement is the northern one third of the main Bullfrog deposit where Barrick mined approximately 2.1 million additional ounces by open pit and underground methods. In addition to prospective adjacent lands, these acquisitions provide the potential to expand the M-S deposit along strike and at depth and in the northern part of the main Bullfrog deposit.
The Company also has access to Barrick’s substantial data base within a 1.5 mile1.5-mile radius of the leased lands to further advance its exploration and development programs. To maintain the lease and option, the Company mustwas required to spend $1.5 million dollars within five years on the Barrick Properties and thento exercise the option the Company must issue to Barrick 3.25 million shares of the Company’s common stock while providingstock. On May 21, 2019 the Barrick Agreement was amended whereby work commitments for the fifth anniversary and the total of $1.5 million were extended to September 23, 2020. The final work commitment has been accounted at $561,762. The Company will also provide a 2% gross royalty on production from the Barrick Properties. Overriding royalties of 5% net smelter returns and 5% gross proceeds are respectively limited to three claims and two patents in the main Bullfrog pit area. Barrick has retained a back-in right to reacquire a 51% interest in the Barrick Properties, subject to definition of a mineral resource on the Barrick Properties meeting certain criteria and reimbursing the Company in an amount equal to two and one-half times Company expenditures on the Barrick Properties.
On July 1, 2017, RMM entered a 30-year Mineral Lease (the “Lunar Lease”) with Lunar Landing, LLC. (“Lunar”), the owner of 24 patented mining claims situated in the Bullfrog Mining District, Nye County, Nevada. On January 29, 2018 the Company purchased two patented claims, thereby eliminating minor constraints to expand the Bullfrog pit to the north. In August 2018 and December 2018, the Company staked and duly recorded an additional 46 unpatented claims, for a total of 134 claims staked by the Company. Significant drilling is required to test projections of mineralized trends and structures that extend for considerable distances to the north and east of the M-S pit on the original lands acquired by the Company in 2011. Located east of the M-S pit is an area 700 meters by 1,300 meters in which there is only one shallow hole from which there is no data available. Only a small portion of this area may be prospective, but we believe the area certainly warrants additional study and exploration drilling.
There is only one drill hole located about 150 meters northeast of the M-S pit limit and another hole 1,000 meters northeast of the pit along strike of a major geologic structure. In this regard, the Company’s lands extend nearly 5,000 meters north-northeast of the pit and there has been very little drilling in this area, even though several structures have been mapped by Barrick and others.
15
Barrick drilled twelve deep holes in the M-S area ranging from 318 meters to 549 meters. Notable mineral intercepts from four holes below the central part of the pit are summarized below:
| Intercept Data, Meters | Gold | Hole No. | Thickness | Under Pit | g/t | 717 | 51.8 | 70 | 1.35 | | 18.3 | 135 | 0.59 | | 15.2 | 150 | 0.68 | | 160.0 | 180 | 0.96 | 732 | 10.7 | 200 | 0.84 | | 79.2 | 330 | 0.74 | 733 | 12.2 | 130 | 1.14 | | 13.7 | 220 | 0.75 | | 29.0 | 250 | 0.70 | 734 | 4.6 | 15 | 6.03 | | 21.3 | 70 | 1.43 | | 22.9 | 130 | 0.89 | | 4.6 | 190 | 1.04 |
These results demonstrate that substantial amounts of gold occur in an exceptionally large epithermal system that has good potential for expansion and possibly higher grades at depth. Three of these intercepts are less than 75 meters below the existing pit. Two holes located 40 meters and 90 meters east of the 160 meter160-meter interval in hole #717 contained no significant mineralization at this depth, whereas the 29 meters of mineral in hole #733 is 60 meters west and the mineral zone is open to the north, south and west.
For reference, Barrick terminated all mining and milling operations in the autumn of 1999 when their cash production costs exceeded gold prices that averaged less than $300 per ounce for the year and reached a low of $258/oz in August 1999. The economic margins for heap leaching lower grades at current gold prices near $1200/oz are deemed better than in 1999, and we believe the Company is positioned to explore such opportunities. Furthermore, Barrick never controlled or had access to a patented claim on the immediate east and north limits of the M-S pit, but this patent is owned by the Company.
Starting in 2015, the Company has studied Barrick’s entire electronic data base and much of their paper data base obtained from their Elko, Nevada and Salt Lake City, Utah offices. On June 27,August 9, 2017, an independent engineering firm provided resourceissued estimates of mineralized materials totally contained on Company landscontrolled lands. In January 2018 the Company purchased a patent that removed all remaining constraints for pit mining the mineralization, see summary below: Mineralized Material Estimates | Cutoff | Mineral T | Grade | Gold Oz | Grade | Silver Oz | Waste T | W : Min. | Deposit | Gold g/t | Millions | Gold g/t | 000's | Silver g/t | 000's | Millions | Ratio | Bullfrog | 0.20 | 26.4 | 0.69 | 585 | 1.85 | 1,569 | 110 | 3.5 | | 0.36 | 14.9 | 1.02 | 489 | 2.50 | 1,198 | 124 | 7.0 | | | | | | | | | | M-S | 0.20 | 1.4 | 0.84 | 39 | 3.48 | 162 | 11 | 7.8 | | 0.36 | 1.1 | 1.00 | 36 | 4.02 | 146 | 11 | 10.1 | | | | | | | | | | Total | 0.20 | 27.8 | 0.70 | 624 | 1.93 | 1,731 | 121 | 4.3 | | 0.36 | 16.0 | 1.02 | 525 | 2.60 | 1,344 | 135 | 8.4 |
“Mineralized material” as summarized below:used in this quarterly report on Form 10-Q, although permissible under the Securities and Exchange Commission (“SEC”) Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any part of the Company’s deposits will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.” Investors are cautioned not to assume that all or any part of the mineralized material will be confirmed or converted into reserves or that mineralized material can be economically or legally extracted.
16
![[bfgc_10q001.jpg]](https://capedge.com/proxy/10-Q/0001393905-17-000340/bfgc_10q001.jpg)
Input parameters used in the estimates are tabulated below:
Estimate Input Parameters | | | Parameter | Input | Unit | Mining Cost - M & W | 2.25 | $/t | Processing Cost | 6.00 | $/t | General & Admin. | 1.60 | $/t | Refining Sales | 0.05 | $/t | Sell Cost | 10 | $/tr oz | Gold Recovery | 72 | % | Silver Recovery | 20 | % | Gold Price (3-yr average) | 1200 | $/tr oz | Pit Slopes | 45 | degrees |
ResourceMineral estimates are in place and do not include recoveries from a proposed downstream heap leach/processing operation. Of the combined M&I resource estimate, the measured component was approximately 9% in the Bullfrog deposit and 36% of the in the M-S deposit. The resource classificationsmineral estimates herein are consistent with the policies and standards of Canadian National Instrument 43-101 (“NI 43-101”).
The data base used for the estimates included 1,262 holes containing 155 miles of coring and drilling completed from 1983 through 1996 by Barrick and its predecessors. Assaying was performed by several accredited laboratories. Tetra Tech, Inc. (“Tetra Tech”) a recognized global provider of engineering, technical and construction management services with particular expertise in the mining sector, reviewed the data base in detail and found it to be of sufficient quality and quantity to estimate measured, indicated and inferred resources.mineralized materials. A final NI 43-101 Technical Report is posted on the Company’s website.
The resourcesmineralized materials were estimated by the Golden, Colorado office of Tetra Tech. The estimates were prepared in accordance with requirements of NI 43-101 Standards of Disclosure for Mineral Projects. The technical work, analysis and findings were completed or directly supervised by Rex Bryan, PhD, who is as an independent "Qualified Person" as defined by NI 43-101. Mr. Bryan has also reviewed and approved the information in the June 27, 2017 news release.
An internal pit cutoff ranging between 0.20 to 0.36 g/t in the same base case pit shell provides an additional 99,000 ounces of gold averaging 0.26 g/t that is planned to be heap leached at a run-of-mine or uncrushed size. Thus, 624,000 ounces of measured and indicated resourcesmineralized materials grading 0.70 g/t are within this base case pit. With respect to pit slope layback constraints,From June 2017 through December 2018 the Company is in the process of consolidating all lands in the Bullfrog pit and from June through September 2017 has leased 24 patents and staked 88134 mining claims to cover exploration targets and potential sites for leach pads and other project facilities.
For reference, the Company estimated in April 2016 a preliminary mineral inventory of 470,000 ounces grading 0.89 g/t using a nominal 0.3 g/t cutoff. In comparison, the M&I resourcesmineralized materials of 624,000 ounces represents a 33% increase in gold ounces. As the existing pit slopes are up to 52 degrees and stable after 20 years of no mining, the 45-degree input by Tetra Tech is conservative and provides upside in final pit designs. It is also noted that Barrick terminated all mining by the end of 1998 and mill production in early 1999 when gold prices were less than $300 per ounce. However, economic margins for gold mining in general are now much better, particularly with the application of low-cost heap leaching methods. Barrick also used gold cut-off grades of 0.5 g/t in the pits and 3.0 g/t in the underground mine.
Metallurgy
In February 2018 the Company collected a 1,800-pound random bulk sample in the north Bullfrog pit to conduct preliminary metallurgical testing using high pressure grinding rolls (HPGR’s) to compare leaching with conventional crushing equipment. HPGR’s are designed to produce a much finer product with significantly more micro-fractures, thereby increasing leach recovery. These initial tests were encouraging, and further sampling and testing is in progress to fully document and support the probable improvements and use of HPGR’s.
17
In 1994 Kappes Cassiday of Reno, NV performed simulated heap leach column tests on 250 kg samples with results as follows:
Size, inch | -1.5 | -3/8 | Calc. Head, gold opt | .035 | .029 | Rec., % | 71.4 | 75.9 | Leach time, days | 41 | 41 |
In 1995, Barrick performed a pilot heap leach test on 844 tons that were crushed to -½ inch and averaged 0.019 gold opt. In only 41 days of leaching, 67% of the gold was recovered while cyanide and lime consumptions were exceptionally low.
In 1986 St Joe column leached a 22-ton composite of minus 12-inch material grading 0.037 gold opt to simulate heap leaching material at a coarse run-of-mine (“ROM”) size and recovered 49% in 59 days of leaching, which they projected to 54% for leaching 90 days.
In summary, the Bullfrog Gold Project mineralization has good heap leach gold recoveries for crushing to 1.5 inch or less and at ROM size. The latter is particularly important since much additional low grade under 0.3 g/t that must be excavated from a pit could be ROM heap leached to supplement production. Initial test results are showing that recoveries increase with heap leach feeds sized as fine as -1/16 inch using HPGR’s, but completion of tests in progress and perhaps additional tests are needed.
Results of Operations
Three Months Ended September 30, 20172019 Compared to September 30, 20162018
| | | | | | Three Months Ended | | Three Months Ended | 9/30/19 | | 9/30/18 | | 9/30/17 | | 9/30/16 | | | | | | | Revenue | $ | 0 | | $ | 0 | | | | | | | | | | | Operating expenses | | | | | | | | | General and administrative | | 180,529 | | | 311,991 | $242,991 | | $52,252 | Lease expense | | 26,000 | | | 0 | 0 | | 16,000 | Exploration, evaluation and project expense | | 143,721 | | 53,071 | | | | | | | | | | Total operating expenses | | 206,529 | | | 311,991 | 386,712 | | 121,323 | | | | | | | | | | Net operating loss | | (206,529) | | | (311,991) | (386,712) | | (121,323) | | | | | | | | | | Interest expense | | (12,920) | | | (8,066) | (18,148) | | (14,626) | | | | | | | | | | Net loss | $ | (219,449) | | $ | (320,057) | $(404,860) | | $(135,949) |
18
Nine Months Ended September 30, 20172019 Compared to September 30, 20162018
| | | | | | Nine Months Ended | | 9/30/17 | | 9/30/16 | 9/30/19 | | 9/30/18 | | | | | | Revenue | $ | 0 | | $ | 0 | | | | | | | | | | | Operating expenses | | | | | | | | | General and administrative | | 610,210 | | | 403,084 | $838,510 | | $176,070 | Lease expense | | 26,000 | | | 0 | 16,000 | | 16,000 | Exploration, evaluation and project expense | | 256,550 | | 119,557 | | | | | | | | | | Total operating expenses | | 636,210 | | | 403,084 | 1,111,060 | | 311,627 | | | | | | | | | | Net operating loss | | (636,210) | | | (403,084) | (1,111,060) | | (311,627) | | | | | | | | | | Gain on extinguishment of debt | | 0 | | | 2,523,813 | | Loss on asset abandonment | | 0 | | | (164,850) | | Interest expense | | (40,435) | | | (155,693) | (53,004) | | (42,287) | | | | | | | | | | Net (loss) income | $ | (676,645) | | $ | 1,800,186 | | Net loss | | $(1,164,064) | | $(353,914) |
We are still in the exploration stage and have generated no revenues to date.
During the three and nine months ended September 30, 2017 we had a net loss compared to a net income for the nine months ended September 30, 2016 and a net loss for the three months ended September 30, 2016. The variances for the three months ended September 30, 2017 were immaterial. The nine months ended 2016 net income was a result of the final repayment of a note owed to RMB Australia Limited (“RMB”) that resulted in a gain on extinguishment of debt of approximately $2,500,000. For the nine months endedending September 30, 2017,we incurred professional fees comprised of (1) accounting fees for annual audit and consulting for a total of $75,000 in 2019 compared to $48,000 in 2018, (2) legal fees for review of quarterly filings, prospectus for Canadian listing and general services for a total of $56,000 in 2019 and $6,000 in 2018 and (3) marketing and corporate services of $562,000 in 2019 compared to $3,000 spent in 2018. The 2019 marketing and corporate services includes (i) 900,000 common shares the increase in generalCompany issued valued at $0.09 per share for a non-cash transaction valued at $81,000; (ii) 900,000 common shares the Company issued valued at $0.14 per share for a non-cash transaction valued at $126,000; (iii) 900,000 common shares the Company issued valued at $0.11 per share for a non-cash transaction valued at $99,000; and administrative is due primarily(iv) marketing services of $230,000 to $200,000 of common stock thata consultant. In addition, there was issued for consulting services in 2017 for marketing. The interest expense in 2016 was mostly related to the interest for the RMB facility that was paid off in June 2016, and the 2017 interest expense due to the related party. Additionally, the Klondike Project agreement was terminated in June 2016 resulting in a loss on asset abandonment of $164,850. For the three and nine months ended September 30, 2017, the leasepayroll expense of $26,000 is the result of a 30 year lease executed on July 1, 2017 with Lunar Landing. See note 4 in the consolidated notes to the financial statements$80,000 for additional information.both 2019 and 2018.
Liquidity and Capital Resources
As of September 30, 2017, continuation2019, and December 31, 2018, the Company has a related party payable with David Beling, CEO and President, of $617,077 and $578,764, respectively. This amount at September 30, 2019 consists of $213,450 of expense reports plus interest of $140,223 and salary of $191,667 plus interest of $71,737. Interest is accrued at a rate of 1% per month. This resulted in $53,000 of interest expense in 2019 versus $42,000 in 2018. For the nine months ending September 30, exploration, evaluation and project expense costs included professional consulting services for a total of approximately $257,000 in 2019 compared to $120,000 in 2018. Included in the expense is continued payments for lab testing and project review, in addition to filing fees with the US Bureau of Land Management and Nye County totaled $43,000 in 2019. For the three months ending September 30, we incurred professional fees comprised of (1) accounting fees for annual audit and consulting for a total of $21,000 in 2019 compared to $13,000 in 2018, (2) legal fees for review of quarterly filings, prospectus for Canadian listing and general services for a total of $48,000 in 2019 and $0 in 2018 and (3) marketing and corporate services of $125,000 in 2019 compared to $1,000 spent in 2018. The 2019 marketing and corporate services includes 900,000 common shares the Company issued valued at $0.11 per share for a non-cash transaction valued at $99,000; and marketing services of $25,000 to a consultant. The interest expense owed to David Beling, as previously discussed, for the three months was $18,000 in 2019 and $15,000 in 2018. In addition, there was payroll expense of $26,000 for both 2019 and 2018. For the three months ending September 30, exploration, evaluation and project expense costs included professional consulting services for a total of approximately $144,000 in 2019 compared to $53,000 in 2018. Included in the expense is continued payments for lab testing and project review, in addition to filing fees with the US Bureau of Land Management and Nye County totaled $43,000 in 2019.
19
Liquidity and Capital Resources To continue as a going concern, is dependent upon raisingthe Company will need to raise additional funds and attainingattain profitable operations. The Company has no committed sources of capital and additional funding may not be available on terms acceptable to the Company, or at all. On December 10, 2012,October 29, 2014, Rocky Mountain Minerals Corp. a wholly owned subsidiary of the Company, entered into a facility agreementan Option Agreement (the “Option”) with RMB asMojave Gold Mining Corporation (“Mojave”). Mojave holds and possesses the lender,purchase rights to 100% of 12 patented mining claims located in Nye County, Nevada. This property is contiguous to the Company’s Bullfrog Project and covers approximately 156 acres, including the northeast half of the Montgomery-Shoshone (M-S) pit mined by Barrick Gold in the amount of $4.2 million. The RMB debt was paid off on June 30, 2016.1990’s.
On March 31, 2015 weMojave granted options to purchase 4,500,000 shares of our common stockRMM the sole and immediate working right and option with respect to the property until the 10th anniversary of the 4,500,000closing date, to earn a 100% interest in and to the property free and clear of all charges encumbrances and claims, save and except a sliding scale Net smelter return (or NSR) royalty.
In order to maintain in force, the working right and Option granted to it, and to exercise the Option, RMM granted Mojave 750,000 shares of common stock available under our 2011 Equity Incentive Plan.and paid $16,000. In addition, to exercise the option, RMM must pay to Mojave a total of $190,000 over the next 10 years. For reference, Barrick Bullfrog Inc. (“Barrick”) terminated a lease on these patents after they ceased operations in late 1999.
On March 23, 2015, RMM the 100% owned subsidiary of the Company entered into a Mineral Lease and Option to Purchase Agreement with Barrick Bullfrog involving patented mining claims, unpatented mining claims, and mill site claims (“Properties”) located threeapproximately four miles west of Beatty, Nevada. These Properties are strategically located adjacent to the Company’s Bullfrog Gold Project and include two patents that cover the southwest half of the Montgomery-Shoshone (M-S) open pit gold mine. In October 2014 the Company optioned the northeast half of the M-S pit and now controls the entire pit.
RMM shall expend as minimumOn May 21, 2019 the Barrick Agreement was amended whereby work commitments for the benefitfifth anniversary and the total of $1.5 million were extended to September 23, 2020. The final work commitment has been accounted at $561,762.
On October 29, 2014, RMM entered into an Option Agreement (the “Option”) with Mojave Gold Mining Corporation (“Mojave”). Mojave holds and possesses the purchase rights to 100% of 12 patented mining claims located in Nye County, Nevada. This property is contiguous to the Company’s Bullfrog Project and covers approximately 156 acres, including the northeast half of the Properties priorMontgomery-Shoshone (M-S) pit mined by Barrick Gold in the 1990’s. Mojave granted to RMM the sole and immediate working right and option with respect to the fifthproperty until the 10th anniversary of the effectiveclosing date, perto earn a 100% interest in and to the schedule below. These work commitments,property free and clear of all charges encumbrances and claims, save and except a sliding scale Net Smelter Return (or NSR) royalty. To maintain in force, the working right and Option granted to it, and to exercise the Option, RMM granted Mojave 750,000 shares of common stock and paid $16,000 in October 2014. In addition, to exercise the option, RMM must pay to Mojave a total of $190,000 over the next 10 years of which he Company has paid $60,000. Future payments due as of September 30, 2017, have been satisfactorily met with the management of the Properties. The Company does not have a management fee policy for projects, however, it does track time spent per project. This soft cost performed by Company management is considered by the Company a requirement to study and analyze the Properties for feasibility.follows:
| | Anniversary of EffectiveDue Date
| Minimum Project Work Commitment ($)Amount
| FirstOctober 2019
| 100,000$20,000
| SecondOctober 2020
| 200,000$25,000
| ThirdOctober 2021
| 300,000$25,000
| FourthOctober 2022
| 400,000$30,000
| FifthOctober 2023
| 500,000$30,000
|
On July 1, 2017, RMM entered a 30-year Mineral Lease (the “Lunar Lease”) with Lunar Landing, LLC. involving(“Lunar”), the owner of 24 patented mining claims situated in the Bullfrog Mining District, Nye County, Nevada. Lunar owns 100% undivided interest in the mining claims. RMMNevada.RMM shall expend as minimum work commitments of $50,000 per year until a cumulative of $500,000 of expense has been incurred. RMM paid Lunar $26,000 on the Effective Date and makemakes lease payments on the following schedule:
20
| | Years Ending December 31 | Annual Lease Payment ($) | 2018-20222019-2022
| 16,000 | 2023-20172023-2027
| 21,000 | 2028-2032 | 25,000 | 2033-2037 | 30,000 | 2038-2042 | 40,000 | 2043-2047 | 45,000 |
The Company received $280,000 from certain accredited investors to pay off the RMB debt on June 30, 2016.
OnIn August 29, 2016,2018 and December 2018, the Company soldstaked and recorded an aggregateadditional 46 unpatented claims, for a total of 500,000 common shares for gross proceeds to134 claims staked by the Company.
In March 2019, the Company completed the final closing of $32,000a $1,127,400 private placement of equity. The subscriptions were priced at $0.05 per unit, which consisted of one share of the Company’s common stock and a two-year warrant to certain accredited investors pursuantpurchase a one-half share at a price of $0.10 per share. The initial closing of $835,000 was completed on February 11, 2019. We will need to a stock purchase agreement.
On May 23, 2017, the Company sold an aggregate of 10,200,000 shares (the “Units”) (9,575,000 common shares and 625,000 series B preferred shares) with gross proceeds to the Company of $816,000 ($30,000 payoff for related party payable and $786,000 cash) from certain accredited investors pursuant to a subscription agreement.
18
Financingraise additional funding though financing transactions, which may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. The trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtainSuch additional financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owedmay not be available on terms acceptable to us, or experience unexpected cash requirements that would force us to seek alternative financing.at all. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.
The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. ShouldIn the event that we beare unable to continue as a going concern, we may be unable to realize the carrying value of our assets and to meet our obligations as they become due. To continue as a going concern, we are dependent on continued fund raising.will need to raise additional capital. However, we have no commitment from any party to provide additional capital and there is no assurance that such funding will be available when needed, or if available, that its terms will be favorable or acceptable to us.
There can be no assurance thatIf we are unable to raise additional financing, will be available at all or on acceptable terms. If additional financing is not available, we may have to substantially reduce or cease operations.
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Critical Accounting Policies and Use of Estimates
Stock based compensation is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes pricing model. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. Costs of lease, exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. The Company has chosen to expense all mineral exploration costs as incurred given that it is still in the exploration stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized over the estimated life of the probable-proven reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value. To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed. Costs of property acquisitions are being capitalized.
21
ITEM 3.3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISK
AsThis information is not required because we are a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide information required by this Item.company.
ITEM 4.4 - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of September 30, 2017 our management concluded itsconducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.procedures as of September 30, 2019.
Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
With respect to the quarterly period ending September 30, 2017,2019, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon our evaluation regarding the quarterly period ending September 30, 2017,2019, our management, including our Chief Executive Officerchief executive officer and Chief Financial Officer,chief financial officer, has concluded that ourits disclosure controls and procedures were effective.
Changes in Internal Controls
There have been no changes in the Company’s internal control over financial reporting during the three months ended September 30, 20172019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
22
PART II. OTHER INFORMATION
ITEM 1.1 - LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against the Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A.1A - RISK FACTORS
There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162018.
ITEM 2.2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
NoneOn August 7, 2019, the Company issued 900,000 shares of common stock for consulting services.
In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.
ITEM 3.3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.4 - MINE SAFETY DISCLOSURES
None
ITEM 5.5 - OTHER INFORMATION
None
ITEM 6.6 - EXHIBITS
Exhibit Number | | Description | Exhibit Number
| Description
| 3131.1
| Certification of Chief Executive Officer andfiled pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | 31.2 | Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | 3232.1
| Certification of Chief Executive Officer and Chief Financial Officer filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | 101.ins | XBRL Instance Document * | 101.sch | XBRL Taxonomy Schema Document * | 101.cal | XBRL Taxonomy Calculation Document * | 101.def | XBRL Taxonomy Linkbase Document * | 101.lab | XBRL Taxonomy Label Linkbase Document * | 101.pre | XBRL Taxonomy Presentation Linkbase Document * |
*Filed herein
23
SIGNATURE
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | Date: November 8, 201714, 2019 | BULLFROG GOLD CORP. | | | | | | | By: | /s/ David BelingS/ DAVID BELING | | | | Name: David Beling | | | | Title: President and Chief Executive Officer and(Principal Executive Officer) | | | | | | | | | | Date: November 14, 2019 | BULLFROG GOLD CORP. | | | | | | | By: | /S/ TYLER MINNICK | | | | Name: Tyler Minnick | | | | Title: Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) | |
24
22
|