Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 2022

 

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

 

Commission file number: 000-51808

 

ATHENA GOLD CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation or organization)

90-0775276

(IRS Employer Identification Number)

  

2010A Harbison Drive #312, Vacaville, CA

(Address of principal executive offices)

95687

(Zip Code)

 

Registrant's telephone number, including area code: (707) 291-6198

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each ClassTrading SymbolName of each exchange on which registered
N/AN/AN/A

 

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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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 definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 

Large accelerated Filer ☐Accelerated Filer ☐
Non-accelerated FilerSmaller reporting company
 Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

On May 4,August 11, 2022, there were 126,108,700126,608,700 shares of the registrant’s common stock, $.0001 par value, outstanding.

 

   

 

 

TABLE OF CONTENTS

 

 

 Page
PART I. FINANCIAL INFORMATION3
  
Item 1.FINANCIAL STATEMENTS3
 Balance Sheets (unaudited)3
 Statements of Operations (unaudited)4
 Statements of Stockholders' Equity (Deficit) (unaudited)5
 Statements of Cash Flows (unaudited)6
 Notes to Financial Statements (unaudited)7
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1416
Item 3.Quantitative and Qualitative Disclosures about Market Risk1822
Item 4.Controls and Procedures1822
   
PART II. OTHER INFORMATION2023
Item 1.Legal Proceedings2023
Item 1A.Risk Factors2023
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds2023
Item 3.Defaults Upon Senior Securities2023
Item 4.Mine Safety Disclosures2023
Item 5.Other Information2023
Item 6.Exhibits2023
Signature 2124

 

 

 

 

 2 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM I. FINANCIAL STATEMENTS

 

ATHENA GOLD CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

             
Assets 3/31/22 12/31/21  6/30/22 12/31/21 
          
Current assets                
Cash $40,147  $72,822  $31,464  $72,822 
Prepaid expenses  40,341   51,166 
Prepaid expenses and other current assets  70,067   51,166 
Total current assets  80,488   123,988   101,531   123,988 
                
Other assets                
Mineral Rights - Excelsior Springs  6,000,000   6,000,000 
Mineral Rights  6,003,114   6,000,000 
Total other assets  6,000,000   6,000,000   6,003,114   6,000,000 
                
Total assets $6,080,488  $6,123,988  $6,104,645  $6,123,988 
                
Liabilities and Stockholders' Equity                
                
Current liabilities                
Accounts payable $250,139  $50,373  $91,585  $50,373 
Notes payable – related party  75,000   0 
Note payable - related party  26,100   0 
Total current liabilities  325,139   50,373   117,685   50,373 
                
Long term liabilities                
Warrant liability  432,110   1,024,208   1,259,724   1,024,208 
Total long term liabilities  432,110   1,024,208   1,259,724   1,024,208 
                
Total liabilities  757,249   1,074,581   1,377,409   1,074,581 
                
Stockholders' equity                
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, NaN outstanding  0   0 
Common stock - $0.0001 par value; 250,000,000 shares authorized, 119,858,700 and 119,858,700 issued and outstanding  11,986   11,986 
Preferred stock, $.0001 par value, 5,000,000 shares authorized, NaN outstanding  0   0 
Common stock - $0.0001 par value; 250,000,000 shares authorized, 126,608,700 and 119,858,700 issued and outstanding  12,661   11,986 
Additional paid in capital  16,068,449   16,056,561   16,304,906   16,056,561 
Accumulated deficit  (10,757,196)  (11,019,140)  (11,590,331)  (11,019,140)
                
Total stockholders' equity  5,323,239   5,049,407   4,727,236   5,049,407 
                
Total liabilities and stockholders' equity $6,080,488  $6,123,988  $6,104,645  $6,123,988 

 

See accompanying notes to the unaudited financial statements.

 

 

 3 

 

ATHENA GOLD CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

             
  Three Months Ended  Six Months Ended 
  6/30/22  6/30/21  6/30/22  6/30/21 
             
Operating expenses                
Exploration, evaluation and project expenses $113,497  $26,099  $306,063  $61,776 
General and administrative expenses  95,862   116,844   233,450   330,947 
Total operating expenses  209,359   142,943   539,513   392,723 
                 
Net operating loss  (209,359)  (142,943)  (539,513)  (392,723)
                 
Interest expense  0   (2,915)  0   (10,107)
Revaluation of warrant liability  (623,776)  62,093   (31,678)  62,093 
Net loss $(833,135) $(83,765) $(571,191) $(340,737)
                 
Weighted average common shares outstanding – basic and diluted  124,798,260   63,447,155   122,342,125   61,462,461 
                 
Loss per common share – basic and diluted $(0.01) $(0.00) $(0.00) $(0.01) 

         
  Three Months Ended 
  3/31/22  3/31/21 
       
Operating expenses        
Exploration, evaluation and project expenses $192,566  $35,677 
General and administrative expenses  137,588   214,103 
Total operating expenses  330,154   249,780 
         
Net operating loss  (330,154)  (249,780)
         
Interest expense  0   (7,192)
Revaluation of warrant liability  592,098   0 
Net income (loss) $261,944  $(256,972)
         
Weighted average common shares outstanding – basic and diluted  119,858,700   59,455,715 
         
Loss per common share – basic and diluted $0.00  $(0.00)

 

See accompanying notes to the unaudited financial statements.

 

 

 4 

 

 

ATHENA GOLD CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

 

                               
     Additional          Additional     
 Common Stock Paid In Accumulated    Common Stock Paid In Accumulated   
 Shares Amount Capital Deficit Total  Shares Amount Capital Deficit Total 
                      
December 31, 2020  54,887,876  $5,489  $9,897,700  $(9,988,885) $(85,696)  54,887,876  $5,489  $9,897,700  $(9,988,885) $(85,696)
Conversion of management fees  2,144,444   214   96,286      96,500   2,144,444   214   96,286   0   96,500 
Stock based compensation        128,775      128,775   0   0   128,775   0   128,775 
Private placement  3,250,000   325   149,675      150,000   3,250,000   325   149,675   0   150,000 
Net loss           (256,972)  (256,972)  0   0   0   (256,972)  (256,972)
March 31, 2021  60,282,320  $6,028  $10,272,436  $(10,245,857) $32,607   60,282,320  $6,028  $10,272,436  $(10,245,857) $32,607 
                                        
Private placement  8,000,000   800   401,023   0   401,823 
Warrant liability  0   0   (485,052)  0   (485,052)
Stock based compensation  0   0   18,520   0   18,520 
Net loss  0   0   0   (83,765)  (83,765)
June 30, 2021  68,282,320  $6,828  $10,206,927  $(10,329,622) $(115,867)
                    
December 31, 2021  119,858,700   11,986   16,056,561   (11,019,140)  5,049,407   119,858,700   11,986   16,056,561   (11,019,140)  5,049,407 
Stock based compensation        11,888      11,888   0   0   11,888   0   11,888 
Net income           261,944   261,944 
Net loss  0   0   0   261,944   261,944 
March 31, 2022  119,858,700  $11,986  $16,068,449  $(10,757,196) $5,323,239   119,858,700  $11,986  $16,068,449  $(10,757,196) $5,323,239 
                    
Private placement  6,250,000   625   393,457   0   394,082 
Warrant liability  0   0   (203,838)  0   (203,838)
Common stock issued for mineral property  500,000   50   34,950   0   35,000 
Stock based compensation  0   0   11,888   0   11,888 
Net loss  0   0   0   (833,135)  (833,135)
June 30, 2022  126,608,700  $12,661  $16,304,906  $(11,590,331) $4,727,236 

 

See accompanying notes to the unaudited financial statements.

 

 

 5 

 

ATHENA GOLD CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

                
 Three Months Ended  Six Months Ended 
 3/31/22 3/31/21   6/30/22   6/30/21 
             
Cash flows from operating activities                
Net income (loss) $261,944  $(256,972)
Adjustments to reconcile net income (loss) to net cash used in operating activities        
Net loss $(571,191) $(340,737)
Adjustments to reconcile net loss to net cash used in operating activities        
Amortization of debt discount  0   5,493   0   7,324 
Revaluation of warrant liability  (592,098)  0   31,678   (62,093)
Share based compensation  11,888   128,775   23,776   147,295 
Change in operating assets and liabilities:                
Prepaid expense  10,825   0 
Prepaid expense and other current assets  42,199   0 
Accounts payable  199,766   3,323   41,212   (21,545)
Other liabilities  0   1,072 
Accrued liabilities and other liabilities  0   2,156 
                
Net cash used in operating activities  (107,675)  (118,309)  (432,326)  (267,600)
                
Cash flows from investing activities        
Purchase of mineral properties  (3,114)  0 
        
Net cash provided (used) by investing activities  (3,114)  0 
        
Cash flows from financing activities                
Proceeds from private placement of stock  0   150,000   319,082   551,823 
Proceeds from notes payable - related parties  75,000   9,245 
Proceeds from related parties  75,000   12,012 
Payments to related parties  0   (17,845)  0   (33,910)
                
Net cash provided by financing activities  75,000   141,400   394,082   529,925 
                
Net increase (decrease) in cash  (32,675)  23,091   (41,358)  262,325 
                
Cash, beginning of period  72,822   8,986   72,822   8,986 
                
Cash, end of period $40,147  $32,077  $31,464  $271,311 
                
Supplemental disclosure of cash flow information                
Cash paid for interest $0  $627  $0  $627 
Cash paid for income taxes $0  $0  $0  $0 
                
Noncash investing and financing activities                
Stock issued to payoff related party note payable $75,000  $0 
Common stock issued for mineral properties $35,000  $0 
Related party note payable for mineral property $26,100  $0 
Conversion of management fee payable $0  $96,500  $0  $96,500 
Warrant liability $203,838  $485,052 

 

See accompanying notes to the unaudited financial statements.

 

 6 

 

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Note 1 – Nature of Business and Summary of Significant Accounting Policies

 

Nature of OperationOperationss

 

Athena Gold Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003 and began our mining operations in 2010.

 

In December 2009, we formed and organized a wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates mining interests and property in California. On December 31, 2020 we sold the subsidiary to Mr. John Gibbs, a related party, in a non-cash exchange.

 

The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties with 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

 

We prepared these interim financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month periods ended March 31, 2022 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited financial statements and the footnotes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

  

Reclassifications

 

Certain reclassifications may have been made to our prior year’s consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

 

Foreign Currency Translation

 

The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. The Company has not entered any contracts to manage foreign exchange risk.

 

The functional currency of the Company is the US dollar; therefore, the Company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars.

 

Recent Accounting Pronouncements

 

We doThe Company is not expect the adoptionaware of recently issuedany recent accounting pronouncements expected to have a significantmaterial impact on our results of operations,the consolidated financial position or cash flow.statements.

 

 

 7 

 

 

Liquidity and Going Concern

 

Our financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

  

At March 31,June 30, 2022, we had not yet achieved profitable operations and we have accumulated losses of approximately $10,757,19611,000,000$11,600,000 since our inception. We expect to incur further losses in the development of our business, all of which raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due.

 

Impairment of Long-lived Assets

 

We continually monitor events and changes in circumstances that could indicate that our carrying amounts of long-lived assets, including mineral rights, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

 

Notes Payable - Related Party

 

Related party payables are classified as current liabilities as the note holders are control persons and have the ability to control the repayment dates of the notes.

 

Exploration Costs

 

Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our consolidated balance sheets.

 

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 Company stock price history. The Company determines the expected life based on the simplified method given that its own historical share option exercise experience 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 number of shares of common stock are reserved for such purpose.

 

 

 8 

 

 

Fair Value of Financial Instruments

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

 

Level 1 -   Valuation based on quoted market prices in active markets for identical assets and liabilities.

 

Level 2 -   Valuation based on quoted market prices for similar assets and liabilities in active markets.

 

Level 3 -   Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

 

The fair value of cash, receivables and accounts payable approximates their carrying values due to their short term to maturity. The warrant liabilities are measured using level 3 inputs (Note 4).

  

Earnings (Loss)Loss per Common Share

 

The Company incurred a net income and net loss for the three and six months ended March 31,June 30, 2022 and 2021, respectively. In periods where the Company has a net income certain options and warrants are included in the computation of diluted shares outstanding, however, the options and warrants were not included in the calculation because they were “out-of-the money”. In periods where the Company has a net loss, all common stock equivalents are excluded as they would be anti-dilutive.anti-dilutive. As of June 30, 2022 there were 2,000,000 options and 15,608,700 warrants. As of June 30, 2021 there were 2,000,000 options and 6,250,000 warrants.

 

COVID-19 Pandemic

 

An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.

 

Note 2 – Mineral Rights - Excelsior Springs

 

Effective December 27, 2021 (“Effective Date”), the Company simultaneously executed and consummated a definitive Share Purchase Agreement (the “SPA”) with Nubian Resources, Ltd. (“Nubian”). The SPA was the result of a previously disclosed Option Agreement with Nubian dated as of December 11, 2020, as amended by First Amendment to Option Agreement dated November 10, 2021 (the “Option”). While the Option granted the Company the right to acquire up to a 100% interest in the mining claims comprising the Excelsior Springs Prospect (the “Property”) located in Esmerelda County, Nevada, the Company and Nubian agreed to restructure the transaction so that the Company purchased 100% of the issued and outstanding shares of common stock of Nubian Resources USA, Ltd (“Nubian USA”), a wholly-owned subsidiary of Nubian which held the Property. By purchasing 100% of Nubian USA, the Company effectively acquired the remaining 90% interest in the Property, the Company having previously acquired a 10% interest in the Property in December 2020 under the terms of the Option.

 

9

The following is a summary of the terms of the SPA, which summary is qualified in its entirety by reference to the SPA:

 

 ·The consideration paid to Nubian for 100% of the issued and outstanding shares of Nubian US consisted of:

 

 An aggregate of 50 million shares of Athena Gold Corp. common stock, which number includes the 5 million shares of common stock previously issued to Nubian under the Option; and
 A 1% Net Smelter Royalty on all production from the Excelsior Springs Property.

  

9

 ·The 50 million shares issued to Nubian were issued as “restricted securities” under the Securities Act of 1933, as amended (“Securities Act”). However, the Company has agreed to file a registration statement on Form S-1 within 90 days of the Effective Date registering the distribution by Nubian of all 50 million shares to its shareholders, pro rata. Nubian has undertaken to complete the distribution of all the shares once the S-1 registration statement has been declared effective.
 ·Pending completion of the S-1 and distribution of the 50 million shares issued to Nubian, for a period of 12 months following the Effective or until Nubian owns less than 4.9% of the Athena issued and outstanding shares, Nubian has agreed to exercise its voting rights with respect to such shares in a manner to support the recommendations of the Athena Board of Directors except for (i) voting on any proposed change in control transaction or (ii) voting on any proposed sale of all or substantially all of the Excelsior Property, including a property included known as Palmetto.
 ·Nubian shall be entitled to nominate one representative to serve on the Athena Board of Directors.

 

The mineral property was valued at the December 31, 2021, the closing date for the SPA with a stock price of $0.13, resulting in a fair value consideration of $5,850,000 for the 45,000,000 shares issued. The transaction does not constitute a business combination in accordance with ASC 805, which defines a business as an integrated set of activities and assets capable of being conducted and managed for the purposes of providing a return to investors or other participants and that a business consists of inputs and processes applied to those inputs that have the ability to contribute to the creation of outputs. Management has determined that the acquired assets do not contain processes sufficient to constitute a business in accordance with ASC 805. The transaction represents the acquisition of assets in exchange for the assumption of liabilities and the issuance of share-based payments.

 

Note 3 – Convertible Note Payable

 

Effective April 1, 2015, the Company executed a convertible promissory note (the “Note”) in the principal amount of $51,270 in favor of Clifford Neuman, the Company’s legal counsel, representing accrued and unpaid fees for past legal services. The Note was unsecured and accrued interest at the rate of 6% per annum, compounded quarterly, and was due on demand. The principal and accrued interest due under the Note was convertible, at the option of the holder, into shares of the Company’s common stock.

 

On April 24, 2020, the Company agreed to reduce the conversion price from $0.0735 per share to $0.021 per share. All other terms of the convertible note remain unchanged, and therefore did not change the cash flows of the note. The Company determined the transaction was considered an extinguishment because of the change in conversion price in which no gain or loss was recorded according to ASC 470-50. However, because the conversion price was reduced below the $0.03 market value on the date of the change, a beneficial conversion feature resulted from the price reduction in the amount of $21,973, which was accounted for as a discount to the debt and a corresponding increase in additional paid in capital. The debt discount is being amortized on a straight-line basis over one year to interest expense. A total of $5,493 was amortized to interest expense during the three months ended March 31, 2021, 0 interest in 2022.

  

On November 30, 2021, the Company received a notice of conversion of the Note with a principal balance of $51,270 and a conversion price of $0.021. On December 3, 2021, a total of 2,441,476 shares of Common Stock were issued. An additional 1,026,204 shares were issued for $21,550 of accrued interest on the same Note.

10

 

Note 4 – Common Stock and Warrants

On June 9, 2022 the Company entered into an acquisition agreement to purchase an undivided 100% interest in the Fortunatus and Prout patented lode mining claims in Esmeralda County, Nevada $185,000.

The Claims are currently held by the Company under a lease option agreement that expires in June 2023 and are an integral part of the Company’s flagship Excelsior Springs project including the high-grade gold historic Buster Mine.

The commercial terms of the transaction are:

·$25,000 will be settled in cash paid by the Company to the Vendor at Closing which was in escrow as of June 30, 2022
·$35,000 of the purchase price will be settled by the issuance and delivery to the Vendor at Closing of 500,000 shares of the Company’s common stock (the “Consideration Shares”), each issued at a price of $0.07 per Consideration Share (being the 20 day volume weighted average price on the over the counter market, calculated as of the day the Acquisition Agreement was fully executed). The Consideration Shares are to be deposited into escrow for delivery to the Vendor upon the recording of the deed of transfer for the Claims. The shares have been issued and in escrow as of June 30, 2022. The Consideration Shares will be subject to applicable United States resale restrictions; and
·$125,000 will be settled by a loan to the Company by the Vendor (the “Loan”) at Closing, repayable by the Company in quarterly installments of USD $25,000, beginning 120 days after Closing, and continuing on the same day of each and every consecutive calendar quarter thereafter until 15 months after the Closing, at which time the entire remaining unpaid principal balance will be payable. The Loan will be evidenced by way of a secured first purchase money note issued by the Company to the Vendor

In April 2022 the Company completed a private placement in which we sold 6,250,000 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire April 13, 2025. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional 70,000 broker warrants were granted to a Canadian broker as a placement fee. We realized total proceeds of $394,082net of offering costs. During March 2022, the Company executed two promissory notes with John Gibbs for $50,000 and $25,000 at 6% that is payable on demand. In April 2022, the Company issued 1,181,250 shares out of 3,375,000 shares of common stock in April 2022 at C$.08 per share as a part of the private placement offering to settle $75,000 of notes payable to Mr. Gibbs.

The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.

In April 2022, the warrant liability had an initial value of $203,838. As of June 30, 2022, the warrant liability was valued at $602,523, resulting in a loss on revaluation of warrant liability of $398,685 based on the following assumptions:

Schedule of assumptions used      
Fair value assumptions – warrant liability: 4/13/22  6/30/22 
Risk free interest rate  2.57%   2.99% 
Expected term (years)  3.0   2.8 
Expected volatility  184%   180% 

The broker warrants were evaluated for purposes of classification between liability and equity. The broker warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was calculated in US dollars to estimate the fair value of $1,344 with the following inputs:

Schedule of assumptions used
Fair value assumptions – broker warrants:April 13, 2022
Risk free interest rate2.37%
Expected term (years)2.30
Expected volatility138%

 

During the twelve months ended December 31, 2021 we sold 14,358,700 shares of common stock in private placements realizing proceeds of $742,375.

 

11

On September 30, 2021 wethe Company completed a private placement in which we sold 3,108,700 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire May 31, 2024. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional 91,000 Broker Warrants (“Broker Warrants”)broker warrants were granted to a Canadian broker as a placement fee. We realized total proceeds of $190,552 net of offering costs.

10

  

The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.

 

At December 31, 2021, the warrant liability was valued at $341,145. As of March 31,June 30, 2022, the warrant liability was valued at $151,001218,793, resulting in a gain on revaluation of warrant liability of $190,144 122,352based on the following assumptions:

Schedule of assumptions used         
Fair value assumptions – warrant liability:9/30/2112/31/213/31/22 9/30/21  12/31/21  6/30/22 
Risk free interest rate0.53%0.97%2.28%  0.53%   0.97%   2.92% 
Expected term (years)2.72.42.2  2.7   2.4   1.9 
Expected volatility189%191%181%  189%   191%   135% 

 

The Broker Warrants were evaluated for purposes of classification between liability and equity. The Broker Warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was calculated in US dollars to estimate the fair value of $7,472with the following inputs: 

Schedule of assumptions used   
Fair value assumptions – broker warrants: September 30, 2021
Risk free interest rate 0.28%
Expected term (years) 2.0
Expected volatility 
Expected volatility119696%

 

On May 25, 2021 wethe Company completed a private placement in which we sold 6,250,000 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire May 31, 2024. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional 173,810 Broker Warrants (“Broker Warrants”)broker warrants were granted to a Canadian broker as a placement fee. We realized total proceeds of $401,823 net of offering costs.

 

The warrants have an exercise price in Canadian dollars while the Company’s functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.

 

At December 31, 2021, the warrant liability was valued at $683,063. As of March 31,June 30, 2022, the warrant liability was valued at $281,109438,408, resulting in a gain on revaluation of warrant liability of $401,954 244,655based on the following assumptions:

Schedule of assumptions used         
Fair value assumptions – warrant liability:5/25/2112/31/213/31/22 5/25/21  12/31/21  6/30/22 
Risk free interest rate0.30%0.97%2.28%  0.30%   0.97%   2.92% 
Expected term (years)3.02.42.2  3.0   2.4   1.9 
Expected volatility180%189%181%  180%   189%   135% 

12

 

The Broker Warrants were evaluated for purposes of classification between liability and equity. The Broker Warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was calculated in US dollars to estimate the fair value of $12,943with the following inputs: 

Schedule of assumptions used  
Fair value assumptions – broker warrants: May 25, 2021
Risk free interest rate 0.14%
Expected term (years) 2.0
Expected volatility 205%

  

Total outstanding warrants of 15,943,510 as of June 30, 2022 were as follows:

Schedule of outstanding warrants                
  Warrants Issued  Total 
Warrants issued  6,250,000   3,108,700   6,250,000   15,608,700 
Broker warrants issued (1)  173,810   91,000   70,000   334,810 
Issued date  5/25/2021   9/30/2021   4/13/2022     
Expiration date  5/31/2024   5/31/2024   4/13/2025     
Exercise price (Canadian $) $0.15  $0.15  $0.15     
                 
Balance at December 31, 2020  0   0   0   0 
Exercised  0   0   0   0 
Issued  6,423,810   3,199,700   0   9,623,510 
Expired  0   0   0   0 
Balance at December 31, 2021  6,423,810   3,199,700   0   9,623,510 
Exercised  0   0   0   0 
Issued  0   0   6,320,000   6,320,000 
Expired  0   0   0   0 
Balance at June 30, 2022  6,423,810   3,199,700   6,320,000   15,943,510 

11(1)Broker warrants: issued 5/25/21 expire 5/31/23; issued 9/30/21 expire 9/30/23; issued 4/13/22 expire 4/13/24

 

During the quarter ended March 31, 2021, we sold 5,000,000 shares of common stock in private placements to six individuals at a price of $0.03 per share, realizing total proceeds of $150,000.$150,000. Of the 5,000,000 shares sold, 1,750,000 shares were issued on May 28, 2021.

 

On January 1, 2021 Mr. John Power, the Company’s CEO/CFO agreed to convert accrued management fees totaling $96,500. As a result, we issued 2,144,444 shares common stock at a price of $0.045$0.045 per share.

 

Note 5 – Share Based Compensation

  

On March 22, 2021 the Company issued a total of 2,000,000 non-statutory stock options to four individuals, three of whom are Directors of the Company, the other an independent technical consultant that is helping design our 2021 exploration programs at Excelsior Spring. Upon vesting, each option is exercisable to purchase one share of common stock at a price of $0.09 per share. The options vest 50% upon issuance, and 25% on each of the first and second anniversaries of the grant date.

 

We estimated the fair value of the options using the Black-Scholes option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected remaining life of the options. The total estimated fair value of the options utilized the following assumptions: 

Share-based compensation assumptions  
 Expected volatility211%
 Expected life3.4years
 Risk free interest rate0.31%

 

13

The calculations resulted in the total fair value of the options issued to be $190,202. We expense share-based compensation using the straight-line method over the vesting term of the award for our employees and directors and over the expected service term for our non-employee consultants. As such, a stock-based compensation charges totaling of $11,888 23,776and $117,295have been charged during the threesix months ended March 31, 2022. June 30, 2022 and June 30, 2021, respectively.A summary of the stock options as of March 31,June 30, 2022 and changes during the periods are presented below:

Schedule of Stock Options Activity                         
      Weighted         Weighted   
      Average         Average   
    Weighted Remaining       Weighted Remaining   
    Average Contractual Aggregate    Average Contractual Aggregate 
 Number of Exercise Life Intrinsic  Number of Exercise Life Intrinsic 
 Options  Price  (Years)  Value  Options Price (Years) Value 
Balance at December 31, 2020  0  $0     $  0 $0  $ 
Exercised  0   0        0 0   
Issued  2,000,000   0.09   4.2     2,000,000 0.09 4.2  
Canceled  0   0        0 0   
Balance at December 31, 2021  2,000,000   0.09   4.2   80,000  2,000,000 0.09 4.2 80,000 
Exercised  0   0        0 0   
Issued  0   0        0 0   
Canceled  0   0        0 0   
Balance at March 31, 2022  2,000,000   0.09   4.0    
Options exercisable at March 31, 2022  1,500,000   0.09   4.0    
Balance at June 30, 2022 2,000,000 0.09 3.7  
Options exercisable at June 30, 2022 1,500,000 0.09 3.7  

 

Also, on March 22, 2021 the Company agreed to issue a total of 300,000 restricted stock units at a price of $0.10 per share to the independent technical consultant helping design our 2021 exploration programs at Excelsior Springs. However, the shares shall not be issued until such time the individual either provides a written request or his termination date, whichever is sooner. The shares shall have no voting rights until issued. As such, we have recorded stock-based compensation in the amount of $30,000.

12

 

Note 6 – Commitments and Contingencies

 

We are subject to various commitments and contingencies.

 

Note 7 – Related Party Transactions

 

Conflicts of Interests

 

Magellan Gold Corporation (“Magellan”) is a company under common control. Mr. John Gibbs is a significant shareholder in both Athena and Magellan. Athena and Magellan are both involved in the business of acquisition and exploration of mineral resources.

 

Silver Saddle Resources, LLC (“Silver Saddle”) is also a company under common control. Mr. Power and Mr. Gibbs are the owners and managing members of Silver Saddle. Athena and Silver Saddle are both involved in the business of acquisition and exploration of mineral resources.

 

There exists no arrangement or understanding with respect to the resolution of future conflicts of interest. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena, Magellan and Silver Saddle been autonomous.

14

 

Management Fees

 

The Company is subject to a month-to-month management agreement with Mr. Power requiring a monthly payment of $2,500 as consideration for the day-to-day management of Athena, $7,50015,000 was recorded as management fees and are included in general and administrative expenses in the accompanying consolidated statements of operations.

 

On January 1, 2021, the Company agreed to convert the $96,500 balance of management fees due Mr. Power into 2,144,444 shares of common stock at a price of $0.045 per share.

 

Note Payable

 

During March 2022, the Company executed two promissory notes with John Gibbs for $50,000 and $25,000 at 6% that is payable on demand. In April 2022, the Company issued 1,181,250 shares out of 3,375,000 shares of common stock in April 2022 at C$.08 per share as a part of the private placement offering to settle $75,000 of notes payable to Mr. Gibbs.

In June 2022, the Company executed a promissory note with John Gibbs for $26,100 at 6% that is payable on demand as part payment for mineral property in escrow.

    

Note 8 – Subsequent Events

 

In April

On July 13, 2022, theThe Company completed the saleits acquisition of an aggregateundivided 100% interest in the Fortunatus and Prout patented lode mining claims in Esmeralda County, Nevada $185,000. See Note 4.

On August 12, 2022, The Company closed the 1st tranche of C$500,000a private placement and received gross proceeds of its Units at a purchase price of C$.08 per Unit forCAD $304,800 and will be issuing a total of 6,250,000 Units. Each Unit consisted3,810,000 units at CAD $0.08 consisting of one share of Common Stock and one common stock purchase warrant exercisable at CAD $0.12 for three years to purchase one additional share of Common Stock at a price of C$0.15 per share. The transaction was part of the Company’s unregistered private offering of up to C$500,000 in Units at a price of $0.08 per Unit. The Company issued 1,181,250 shares out of 3,375,000 shares of common stock in April 2022 at C$.08 per share as a part of the private placement offering to settle $75,000 of notes payable to Mr. Gibbs.two years.

 

 

 

 1315 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

We use the terms “Athena,” “we,” “our,” and “us” to refer to Athena Gold Corporation.

 

The following discussion and analysis provide information that management believes is relevant for an assessment and understanding of our results of operations and financial condition. This information should be read in conjunction with our audited consolidated financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and our interim unaudited consolidated financial statements and notes thereto included with this report in Part I. Item 1.

 

Forward-Looking Statements

 

Some of the information presented in this Form 10-Q constitutes “forward-looking statements”. These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.

 

All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

 

Business Overview

 

Athena Gold Corporation (“we,” “our,” “us,” or “Athena”) is engaged in the acquisition and exploration of mineral resources. We were incorporated in Delaware on December 23, 2003 and began our mining operations in 2010.

 

In December 2009, we formed and organized a wholly-owned subsidiary, Athena Minerals, Inc. (“Athena Minerals”) which owns and operates mining interests and property in California. On December 31, 2020 we sold the subsidiary to Mr. John Gibbs, a related party, in a non-cash exchange.

 

The Company’s properties do not have any reserves. The Company plans to conduct exploration programs on these properties with the objective of ascertaining whether any of its properties contain economic concentrations of precious and base metals that are prospective for mining.

 

Results of Operations for the Three Months Ended March 31,June 30, 2022 and 2021

 

 Three Months Ended  Three Months Ended 
 3/31/22 3/31/21   6/30/22   6/30/21 
             
Operating expenses                
Exploration, evaluation and project expenses $192,566  $35,677  $113,497  $26,099 
General and administrative expenses  137,588   214,103   95,862   116,844 
Total operating expenses  330,154   249,780   209,359   142,943 
                
Net operating loss  (330,154)  (249,780)  (209,359)  (142,943)
                
Interest expense     (7,192)  0   (2,915)
Revaluation of warrant liability  592,098      (623,776)  62,093 
Net income (loss) $261,944  ($256,972)
Net loss $(833,135) $(83,765)

 

 

 1416 

 

 

DuringResults of Operations for the three months ended March 31,Six Months Ended June 30, 2022 our net income was approximately $262,000 as compared to a net loss of approximately $257,000 during the same period in 2021. The 2022 operating loss of approximately $330,000 increased approximately $80,000 over the prior year period and was mainly attributable to the exploration and evaluation of the Excelsior Springs project. The 2022 net income was increased by approximately $593,000 gain on the change in value of the warrant liability associated with a private placement in May and September 2021.2021

  Six Months Ended 
  6/30/22  6/30/21 
       
Operating expenses        
Exploration, evaluation and project expenses $306,063  $61,776 
General and administrative expenses  233,450   330,947 
Total operating expenses  539,513   392,723 
         
Net operating loss  (539,513)  (392,723)
         
Interest expense  0   (10,107)
Revaluation of warrant liability  (31,678)  62,093 
Net loss $(571,191) $(340,737)

 

Operating expenses:

 

Our total operating expenses increased approximately $80,000, from approximately $250,000 to approximately $330,000 forFor the three months ended March 31,ending June 30, 2022, the Company decreased general and 2021, respectively.administrative expenses by approximately $21,000. The increase was due to the following approximate year over year variances:

Three months ending6/30/20226/30/2021Variance
Legal and other professional fees$69,000$89,000($20,000)
Share based compensation12,00019,000(7,000)
Stock exchange fees and related expenses7,0006,0001,000 
Other general expenses8,0003,0005,000 
Total$96,000$117,000($21,000)

For the six months ending June 30, 2022, the Company decreased general and administrative expenses by approximately $98,000. The increase was due to the following approximate year over year variances:

Six months ending6/30/20226/30/2021Variance
Legal and other professional fees$166,000$168,000 ($2,000)
Share based compensation$24,000117,000(93,000)
Stock exchange fees and related expenses$33,00041,000(8,000)
Other general expenses10,0005,0005,000 
Total$233,000$331,000($98,000)

·Legal and other professional fees remained largely unchanged for the six months ending June 30 compared to prior year. Legal fees were higher for the three months ending June 30, 2021, resulting from the listing on the Canadian Securities Exchange.
·Share based compensation was higher in 2021 with the issuance of options in March that were 50% vested on grant date with the remaining share based compensation recognized on a straight line basis for the remaining two years until the options are fully vested.
·Stock exchange fees and related expenses decreased in 2022 with the reduction of consulting fees for fund raising.
·Other general expenses is higher in 2022 with increases in travel and office expenses.

 

17

During the three and six months ended March 31,June 30, 2022, we incurred approximately $193,000$113,000 and $306,000, respectively of exploration costs, which were costs associated with our RC drill program on our flagship Excelsior Springs project. Our general and administrative expenses decreased by approximately $76,000, to approximately $138,000This is an increase from approximately $214,000 for the three and six months ended March 31, 2022,June 30, 2021 of approximately $26,000 and 2021,$62,000, respectively.

On March 22, 2021, the Company issued a total of 2,000,000 non-statutory stock options to four individuals, three of which are Directors of the Company, the other an independent technical consultant. Upon vesting, each option is exercisable to purchase one share of common stock at a price of $0.09 per share. The options vest 50% upon issuance, and 25% on each of the 1st and 2nd anniversaries of the grant date. During each vesting period or upon the vesting date a percentage of the total value of the options issued and outstanding is charged to stock-based compensation. Stock based compensation expense decreased $117,000 year over year with an offsetting increase in professional fees.

  

Other income and expense:

  

On May 25, 2021, we completed a private placement in which we sold 6,250,000 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire three years from the date of issuance. An additional 173,810 warrants were granted to a Canadian broker as a placement fee. We realized total proceeds of $401,823 net of offering costs.

 

At December 31, 2021, the warrant liability was valued at $683,063. As of March 31,June 30, 2022, the warrant liability was valued at $281,109,$438,408, resulting in a gain on revaluation of warrant liability of $401,954.$244,655.

 

On September 30, 2021 we completed a private placement in which we sold 3,108,700 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire May 31, 2024. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional 91,000 Broker Warrants (“Broker Warrants”) were granted to a Canadian broker as a placement fee. We realized total proceeds of $190,552 net of offering costs.

 

At December 31, 2021, the warrant liability was valued at $341,145. As of March 31,June 30, 2022, the warrant liability was valued at $151,001,$218,793, resulting in a gain on revaluation of warrant liability of $190,144$122,352.

In April 2022 the Company completed a private placement in which we sold 6,250,000 units. Each unit was priced at CAD$0.08 and consisted of one share of the Company’s common stock and one stock purchase warrant granting the holder the right to purchase one additional share of common stock at a price of CAD$0.15. The warrants expire April 13, 2025. All securities issued in connection with the offering are subject to restrictions on resale in Canada and the United States pursuant to applicable securities laws and the policies of any applicable stock exchange. An additional 70,000 broker warrants were granted to a Canadian broker as a placement fee. We realized total proceeds of $394,082 net of offering costs.

In April 2022, the warrant liability had an initial value of $203,838. As of June 30, 2022, the warrant liability was valued at $602,523, resulting in a loss on revaluation of warrant liability of $398,685

 

Liquidity and Capital Resources

 

Going Concern

 

Our consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown in our consolidated financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern.

 

 

 1518 

 

 

At March 31,June 30, 2022, we had not yet achieved profitable operations and we have accumulated losses of approximately $11,000,000$11,600,000 since our inception. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due.

 

We have financed our capital requirements primarily through borrowings from related parties and equity financings. We expect to meet our future financing needs and working capital and capital expenditure requirements through additional borrowings and offerings of debt or equity securities, although there can be no assurance that our future financing efforts will be successful. The terms of future financing could be highly dilutive to existing shareholders. Currently, there are no arrangements in place for additional equity funding or new loans.

 

Liquidity

 

As of March 31,June 30, 2022, we had approximately $40,000$31,000 of cash and a negative working capital of approximately $245,000.$16,000. This compares to cash on hand of approximately $32,000$73,000 and negative working capital of approximately $117,000$74,000 on MarchDecember 31, 2021.

 

During the twelve months ended December 31, 2021, we have sold 14,358,700 shares of common stock in private placements realizing proceeds of $742,375. In April 2022 the Company completed a private placement in which we sold 6,250,000 units. We realized total proceeds of $394,082 net of offering costs. We anticipate that future funding will be in the form of additional equity financing from the sale of our common stock, or loans from officers, directors or significant shareholders.

 

Cash Flows

 

A summary of our cash provided by and used in operating, investing and financing activities is as follows:

 

 Three Months Ended  Six Months Ended 
 3/31/22 3/31/21   6/30/22   6/30/21 
Net cash used in operating activities ($107,675) ($118,309) $(432,326) $(267,600)
Net cash used in investing activities  (3,114)  0 
Net cash provided by financing activities  75,000   141,400   394,082   529,925 
Net increase in cash  (32,675)  23,091   (41,358)  262,325 
Cash, beginning of period  72,822   8,986   72,822   8,986 
Cash, end of period $40,147  $32,077  $31,464  $271,311 

 

Net cash used in operating activities:

 

Net cash used in operating activities was approximately $108,000$432,000 and approximately $118,000$268,000 during the threesix months ended March 31,June 30, 2022 and 2021, respectively.

 

Cash used in operating activities during the threesix months ended March 31,June 30, 2022, is primarily attributed to the increasechange in prepaid expenses and accounts payable of $195,000$83,000.

  

Net cash provided by financing activities:

 

Cash provided by financing activities during the threesix months ended March 31,June 30, 2022, was approximately $75,000. During March 2022, the$394,000. The Company executed two promissory notes with John Gibbs for $50,000 and $25,000 at 6% that is payable on demand. Both notes were converted into shares as partreceived net proceeds of the$394,082 from a private placement on April 13, 2022.

 

 

 1619 

 

 

Off Balance Sheet Arrangements:

 

We do not have and never had any off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements. The accounting positions described below are significantly affected by critical accounting estimates.

 

We believe that the significant estimates, assumptions and judgments used when accounting for items and matters such as capitalized mineral rights, asset valuations, recoverability of assets, asset impairments, taxes, and other provisions were reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.

 

Foreign Currency

 

The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. The Company has not entered any contracts to manage foreign exchange risk. The functional currency of the Company is the US dollar; therefore, the Company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars.

 

Mineral Rights

 

We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, our direct costs to acquire or lease mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease mineral properties.

 

If we establish proven and probable reserves for a mineral property and establish that the mineral property can be economically developed, mineral rights will be amortized over the estimated useful life of the property following the commencement of commercial production or expensed if it is determined that the mineral property has no future economic value or if the property is sold or abandoned. For mineral rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Proven and probable reserves have not been established for any mineral rights as of September 30, 2021.

 

Impairment of Long-lived Assets

 

We continually monitor events and changes in circumstances that could indicate that our carrying amounts of long-lived assets, including mineral rights, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

 

 

 1720 

 

 

Exploration Costs

 

Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our consolidated balance sheets.

 

Share-based Payments

 

We measure and recognize compensation expense or professional services expense for all share-based payment awards made to employees, directors and non-employee consultants based on estimated fair values. We estimate the fair value of stock options on the date of grant using the Black-Scholes-Merton option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected life of the options.

 

We expense share-based compensation, adjusted for estimated forfeitures, using the straight-line method over the vesting term of the award for our employees and directors and over the expected service term for our non-employee consultants. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. Our excess tax benefits, if any, cannot be credited to stockholders’ equity until the deduction reduces cash taxes payable; accordingly, we realized no excess tax benefits during any of the periods presented in the accompanying consolidated financial statements.

 

Income Taxes

 

We account for income taxes through the use of the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and for income tax carry-forwards. A valuation allowance is recorded to the extent that we cannot conclude that realization of deferred tax assets is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

We follow a two-step approach to recognizing and measuring tax benefits associated with uncertain tax positions taken, or expected to be taken in a tax return. The first step is to determine if, based on the technical merits, it is more likely than not that the tax position will be sustained upon examination by a taxing authority, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement with a taxing authority. We recognize interest and penalties, if any, related to uncertain tax positions in our provision for income taxes in the consolidated statements of operations. To date, we have not recognized any tax benefits from uncertain tax positions.

21

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures:

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives.

18

  

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of such date as a result of a material weakness in our internal control over financial reporting due to lack of segregation of duties, a limited corporate governance structure and insufficient formal management review processes over certain financial and accounting reports as discussed in Item 9A of our Form 10-K for the fiscal year ended December 31, 2021.

 

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full-time staff. We believe that this is typical in many exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time, we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

 

Changes in Internal Control over Financial Reporting:

 

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 1922 

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

  

None.

  

ITEM 1A. RISK FACTORS

  

There have been no material changes from the risk factors disclosed in Part I. Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2021.

  

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

  

All sales of unregistered securities were reported on Form 8-K during the period.

  

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

  

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

  

None.

  

ITEM 6. EXHIBITS

  

EXHIBIT NUMBER DESCRIPTION
   
31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 20022002**
31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 20022002**
32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
   
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)**
101.SCH Inline XBRL Taxonomy Extension Schema Document**
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document**
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document**
104 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).**

 

____________________
* Filed herewith
** Furnished, not filed.

 

 

 2023 

 

 

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.

 

 ATHENA SILVER CORPORATION
  
Dated: May 9,August 15, 2022By:/s/ John C. Power
  John C. Power
  Chief Executive Officer, President,
  Secretary & Director
  (Principal Executive Officer)

  

 

 ATHENA SILVER CORPORATION
  
Dated: May 9,August 15, 2022By:/s/ Tyler J. Minnick
  Tyler J. Minnick
  Chief Financial Officer
  (Principal Accounting Officer)

 

 

 

 

 2124