Exhibit 99.1
IDAHO COPPER CORPORATION
(f/k/a Joway Health Group Industries Inc.)
Financial Statements
For the Year Ended January 31, 2023
Your Vision Our Focus
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Idaho Copper Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Idaho Copper Corporation as of January 31, 2023, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year ended January 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Idaho Copper Corporation as of January 31, 2023, and the results of its operations and its cash flows for the year ended January 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 2 to the financial statements, the entity has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Idaho Copper Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Idaho Copper Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Turner, Stone & Company, L.L.P.
We have served as Idaho Copper Corporation’s auditor since 2023.
Dallas, Texas
June 14, 2023
IDAHO COPPER CORPORATION
(f/k/a Joway Health Industries Group Inc.)
Consolidated Balance Sheet
January 31, 2023
ASSETS | ||||
Current assets | ||||
Cash | $ | 431,374 | ||
Total current assets | 431,374 | |||
Deposit | 100,000 | |||
Total assets | $ | 531,374 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||
Current liabilities | ||||
Accounts payable and accrued expenses | $ | 354,763 | ||
Accrued expenses to related parties | 83,333 | |||
Accrued interest, current portion | 8,817 | |||
Total current liabilities | 446,913 | |||
Non-current liabilities | ||||
Bond liabilities | 3,135,000 | |||
Convertible notes payable, net of discounts | 218,429 | |||
Accrued interest, non-current portion | 1,351,609 | |||
Total non-current liabilities | 4,705,038 | |||
Total liabilities | 5,151,951 | |||
Commitments and contingencies (Note 8) | ||||
Stockholders’ deficit | ||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding | - | |||
Common stock, $0.001 par value, 500,000,000 shares authorized, 208,457,823 shares issued and outstanding | 208,458 | |||
Additional paid-in capital | 23,059,223 | |||
Accumulated deficit | (27,888,258 | ) | ||
Total stockholders’ deficit | (4,620,577 | ) | ||
Total liabilities and stockholders’ deficit | $ | 531,374 |
The accompanying notes are an integral part of the consolidated financial statements.
IDAHO COPPER CORPORATION
(f/k/a Joway Health Industries Group Inc.)
Consolidated Statement of Operations
For the Year Ended January 31, 2023
Revenue | $ | - | ||
Operating expenses | ||||
Professional fees | 240,324 | |||
Payroll and related expenses | 963,055 | |||
Stock-based compensation | 2,769,292 | |||
Rent expense | 42,000 | |||
Other general and administrative expenses | 138,214 | |||
Total operating expenses | 4,152,885 | |||
Operating loss | (4,152,885 | ) | ||
Other income (expense) | ||||
Amortization of beneficial conversion feature | (6,095 | ) | ||
Gain on disposal of asset | 200,458 | |||
Interest expense | (340,948 | ) | ||
Total other income (expense) | (146,585 | ) | ||
Net loss | $ | (4,299,470 | ) | |
Basic and diluted net loss per common share | $ | (0.18 | ) | |
Basic and diluted weighted average common shares outstanding | 24,183,399 |
The accompanying notes are an integral part of the consolidated financial statements.
IDAHO COPPER CORPORATION
(f/k/a Joway Health Industries Group Inc.)
Consolidated Statements of Changes in Stockholders’ Deficit
For the Year Ended January 31, 2023
Additional | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Accumulated | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
Balance, January 31, 2022 | - | $ | - | 20,054,000 | $ | 20,054 | $ | 232,861 | $ | (8,547,688 | ) | $ | (8,294,773 | ) | ||||||||||||||
Recapitalization | - | - | 182,240,000 | 182,240 | 19,378,067 | (15,041,100 | ) | 4,519,207 | ||||||||||||||||||||
Common stock options issued for services | - | - | 6,163,823 | 6,164 | 967,129 | - | 973,293 | |||||||||||||||||||||
Issuance of warrants for common stock | - | - | - | - | 1,796,000 | - | 1,796,000 | |||||||||||||||||||||
Beneficial conversion feature on convertible notes payable | - | - | - | - | 685,166 | - | 685,166 | |||||||||||||||||||||
Net loss for the year ended January 31, 2023 | - | - | - | - | - | (4,299,470 | ) | (4,299,470 | ) | |||||||||||||||||||
Balance, January 31, 2023 | - | $ | - | 208,457,823 | $ | 208,458 | $ | 23,059,223 | $ | (27,888,258 | ) | $ | (4,620,577 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
IDAHO COPPER CORPORATION
(f/k/a Joway Health Industries Group Inc.)
Consolidated Statements of Cash Flows
For the Year ended January 31, 2023
Cash flows from operating activities: | ||||
Net loss | $ | (4,299,470 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Stock-based compensation | 2,769,292 | |||
Convertible notes payable issued for expenses | 360,666 | |||
Expenses paid by parent company | 395,735 | |||
Amortization of beneficial conversion feature | 6,095 | |||
Change in assets and liabilities: | ||||
Prepaid expenses | 5,000 | |||
Accounts payable and accrued expenses | 281,639 | |||
Accrued expenses - related party | 83,333 | |||
Accrued interest | 250,136 | |||
Net cash used in operating activities | (147,574 | ) | ||
Cash flows from financing activities: | ||||
Proceeds from notes payable | 361,000 | |||
Net cash provided by financing activities | 361,000 | |||
Net increase in cash | 213,426 | |||
Cash at beginning of period | 217,948 | |||
Cash at end of period | $ | 431,374 | ||
Cash paid for interest | $ | 90,813 | ||
Cash paid for taxes | $ | - | ||
Non-cash investing and financing activities: | ||||
Beneficial conversion feature on convertible debt | $ | 685,166 |
The accompanying notes are an integral part of these consolidated financial statements.
IDAHO COPPER CORPORATION
(f/k/a Joway Health Industries Group Inc.)
Notes to the Consolidated Financial Statements
January 31, 2023
NOTE 1 – NATURE OF OPERATIONS
The financial statements include the financial statements of Idaho Copper Corporation (formerly known as Joway Health Industries Group Inc.) (referred to herein as “Idaho Copper”). Idaho Copper is hereinafter referred to as the “Company,” “we” and “us.”
On February 3, 2022, the Company consummated the transactions contemplated by the Stock Purchase Agreement dated as of January 31, 2022 (the “Purchase Agreement”), by and among the Company, Crystal Globe Limited, a company incorporated under the laws of British Virgin Islands (the “Seller”), and JHP Holdings, Inc., a Nevada corporation (the “Buyer”), pursuant to which the Buyer purchased 16,644,820 shares of common stock of the Company from the Seller.
On January 23, 2023, the Company entered into and consummated the transactions contemplated by a share exchange agreement (the “Share Exchange Agreement”) by and among the Company, International CuMo Mining Corporation, an Idaho corporation (“ICUMO”), and all of the shareholders of ICUMO (collectively, the “ICUMO Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the ICUMO Shareholders transferred all the issued and outstanding shares of common stock of ICUMO to the Company in exchange for 182,240,000 shares of the Company’s common stock, par value $0.001 per share. As a result of this share exchange (the “Exchange”), ICUMO became a wholly owned subsidiary of the Company. See Note 7.
The Company continues to be a “smaller reporting company,” as defined under the Exchange Act of 1934, as amended (the “Exchange Act”) following the Exchange, however, as a result of the Exchange, the Company has ceased to be a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act).
ICUMO Background
ICUMO is an exploration and development company with mineral right interests in the United States of America. ICUMO was originally incorporated under the laws of Nevada in 2005, as Mosquito Mining Corp. In 2013, the Company was moved to Idaho and the name changed to Idaho CuMo Mining Corporation. In early January 2021 the name was changed to International CuMo Mining Corporation.
Nature of Operations
The Company is in the process of exploring its mineral rights interests in the United States and at the date of these financial statements, has not yet determined whether any of its mineral properties contain economically recoverable mineral reserves. Accordingly, the carrying amount of mineral right interests represents cumulative expenditures incurred to date and does not necessarily reflect present or future values. The recovery of these costs is dependent upon the discovery of economically recoverable mineral reserves and the ability of ICMC to obtain the necessary financing to complete their exploration and development and to resolve any environmental, regulatory, or other constraints. Uncertainty also exists with respect to the recoverability of the carrying value of certain mineral rights interests. The ability of the Company to realize its investment in resource properties is contingent upon the resolution of the uncertainties and confirmation of the Company’s title to the mineral properties.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and has a year-end of January 31. On March 9, 2023, the Company filed with the State of Nevada for a year-end change from December 31 to January 31. The consolidated financial statements are based on the balance sheet and statement of operations of ICUMO on a post-merger basis.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in the consolidation. The consolidated financial statements included herein, presented in accordance with US GAAP and stated in United States dollars, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission.
Liquidity and Going Concern
We have incurred recurring losses since inception and expect to continue to incur losses as a result of legal and professional fees and our corporate general and administrative expenses. On January 31, 2023, we had $431,374 in cash. Our net loss incurred for the year ended January 31, 2023 was $4,299,470 and the working capital deficit was $15,539 on January 31, 2023. As a result, there is substantial doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company expects to seek to obtain additional funding through increased revenues and future financing. There can be no assurance as to the availability or terms upon which such financing and capital might be available. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 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.
Cash
Cash is comprised of cash balances. Cash is held at major financial institutions and is subject to credit risk to the extent that those balances exceed applicable Federal Deposit Insurance Corporation (“FDIC”) insurance amounts of $250,000. From time to time, the Company has certain cash balances, including restricted cash, that may exceed insured limits. The Company utilizes large and reputable banking institutions which it believes mitigates these risks.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718, Compensation – Stock Compensation, and Certain Redeemable Financial Instruments. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.
Fair Value of Financial Instruments
The book values of cash, accounts receivable, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).
The hierarchy consists of three levels
● | Level one — Quoted market prices in active markets for identical assets or liabilities; | |
● | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and | |
● | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
Net Loss Per Share
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by FASB, ASC Topic 260, Earnings per Share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. The Company has 17,960,000 dilutive shares (related to convertible notes (see Note 4)) of common stock as of January 31, 2023, which were excluded from the net loss per share calculation because the effect would be anti-dilutive.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of January 31, 2023. Interest and penalties if any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the year ended January 31, 2023.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options, which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in ASC 470-20, Debt, that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. The guidance is effective for fiscal year 2023. There was no impact to the Company’s consolidated financial statements.
Recently Issued Accounting Standards: Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Unproven Mineral Right Interests
The application of the Company’s accounting policy for unproven mineral right interests requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting that the recovery of the expenditures is unlikely, the amount capitalized is impaired with a corresponding charge to profit or loss in the period in which the new information becomes available.
Title to Unproven Mineral Right Interests
Although the Company has taken steps to verify title to its unproven mineral right interests, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
Convertible Debentures
The Company presents convertible debentures separately in its debt and equity components on the statement of financial position. The fair value of a compound instrument at issuance is assigned to its respective debt and equity components. The fair value of the debt component is established first with the equity component being determined by the residual amount.
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date in which they are granted. Estimating fair values for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expenses are recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.
Unproven Mineral Right Interests
The Company capitalizes into intangible assets all costs, net of any recoveries, of acquiring, exploring, and evaluating an unproven mineral right interest, until the rights to which they relate are placed into production, at which time these deferred costs will be amortized over the estimated useful life of the rights upon commissioning the property, or written-off if the rights are disposed of, impaired or abandoned.
Management reviews the carrying amounts of mineral rights annually or when there are indicators of impairment and will recognize impairment based upon current exploration results and upon assessment of the probability of profitable exploitation of the rights. An indication of impairment includes but is not limited to expiration of the right to explore, substantive expenditure in the specific area is neither budgeted nor planned, and if the entity has decided to discontinue exploration activity in a specific area. Management’s assessment of the mineral right’s fair value is also based upon a review of other mineral right transactions that have occurred in the same geographic area as that of the rights under review.
Costs include the cash consideration and the fair value of shares issued on the acquisition of mineral rights. Rights acquired under option or joint venture agreements, whereby payments are made at the sole discretion of the Company, are not accrued and are only recorded in the accounts when the payments are made. Proceeds from property option payments received by the Company are netted against the deferred costs of the related mineral rights, with any excess being included in operations.
There may be material uncertainties associated with the Company’s title and ownership of its unproven mineral right interests. Ordinarily the Company does not own the land upon which an interest is located, and title may be subject to unregistered prior agreements or transfers or other undetected defects. As of January 31, 2023, the balance of unproven mineral right interests was $0.
Impairment of Long-Lived Assets
The Company’s long-lived assets and other assets (consisting of property and equipment) are reviewed for impairment in accordance with the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360-10, Property, Plant, and Equipment. Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
Reclamation provision
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or straight-line method. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses.
Related party transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant common influence, related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions that are in the normal course of business and have commercial substance are measured at the exchange amount, which is determined on a cost recovery basis.
Stock Purchase Warrants
The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity. We determine the accounting classification of warrants we issue, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate us to settle the warrants or the underlying shares by paying cash or other assets, and warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet the liability classification under ASC 480-10, we assess the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.
If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, we also assess whether the warrants are indexed to our common stock and whether the warrants are classified as equity under ASC 815-40 or other GAAP. After all such assessments, we conclude whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. We do not have any liability classified warrants as of any period presented.
NOTE 3 – RECLAMATION BONDS AND PROVISIONS
Reclamation Bonds and Provisions
During 2016, the Company entered into a surety agreement that guarantees the reclamation bond on the CuMo Property. In order to maintain the good standing of this surety, the Company is required to make an annual payment of $8,340. The Company has a deposit of $100,000 (as reflected in other assets on the balance sheet) for the reclamation bond which has a face value of $278,000 as determined by the United States Department of Agriculture Forest Service.
The security deposit is refundable when the Company completes the required reclamation clean-up costs.
Although the Company does not anticipate being required to perform significant reclamation activities, to be conservative, it has recorded provisions for estimated reclamation costs based on the assumption that the amounts of the reclamation bonds posted with government authorities and the amount of the non-current deposit (surety deposit), approximate the best estimate of the net present value of expected future reclamation costs that may need to be incurred by the Company.
The estimated reclamation provision is comprised of deposits to the Bureau of Land Management, the United States Forest Service, the third-party provider of the surety, and other agencies for the above properties.
NOTE 4 – CONVERTIBLE NOTES
The Company has $898,000 in convertible secured notes payable at January 31, 2023 as follows:
Issue | Maturity | Conversion | Conversion | Warrants | Exercise | Warrant | ||||||||||||||||||||||
Balance | Collateral | Date | Date | Price | Shares | Shares | Price | Expiration | ||||||||||||||||||||
Steven Rudofsky (a) | $ | 125,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 1,250,000 | 1,250,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Feehan Partners, LP (a) | $ | 87,334 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 873,340 | 873,340 | $ | 0.15 | 1/23/28 | ||||||||||||||||
The Jeffrey V. and Karin R. Hembrock Revocable Trust | $ | 100,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 1,000,000 | 1,000,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
The Gaitonde Living Trust, Girish Gaitonde Trustee | $ | 100,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 1,000,000 | 1,000,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Corey Redfield | $ | 50,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 500,000 | 500,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
PV Partners, LP | $ | 75,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 750,000 | 750,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Shaun Dykes | $ | 30,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 300,000 | 300,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Patricia Czerniej | $ | 30,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 300,000 | 300,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
James Dykes | $ | 30,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 300,000 | 300,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Jason Czerniej | $ | 30,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 300,000 | 300,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Louise Dykes | $ | 30,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 300,000 | 300,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Andrew Brodkey | $ | 98,000 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 980,000 | 980,000 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Feehan Partners. LP | $ | 112,666 | Property | 1/23/23 | 7/23/25 | $ | 0.10 | 1,126,660 | 1,126,660 | $ | 0.15 | 1/23/28 | ||||||||||||||||
Total | $ | 898,000 | 8,980,000 | 8,980,000 |
(a) | Originally issued in January 2022 and reissued as part of the RTO. |
NOTE 5 – BOND LIABILITIES
The Company has $3,135,000 in bond liabilities as of January 31, 2023 as follows:
Principal Amount | Note Date | Maturity Date | ||||||
Yin Yin Silver Limited | $ | 1,250,000 | 12/21/17 | 12/21/2024 | ||||
Barry Swenson | $ | 500,000 | 12/31/17 | 12/31/2025 | ||||
Don H. Adair or Joanne Adair | $ | 125,000 | 2/15/17 | 2/15/2024 | ||||
Joseph Swinford or Danielle Swinford | $ | 50,000 | 2/15/17 | 2/15/2024 | ||||
Brandon Swain or Sierra Swain | $ | 50,000 | 2/15/17 | 2/15/2024 | ||||
Scott Collins or Kendra Collins | $ | 12,500 | 2/15/17 | 2/15/2024 | ||||
Carl Collins or Ellen Collins | $ | 12,500 | 2/15/17 | 2/15/2024 | ||||
Jim Hammerel | $ | 5,000 | 9/21/2017 | 9/21/2024 | ||||
Bret Renaud | $ | 5,000 | 10/14/2017 | 10/14/2024 | ||||
Elatam Group Ltd | $ | 67,000 | 8/24/2021 | 5/31/2028 | ||||
James Hardy | $ | 7,000 | 8/24/2021 | 5/31/2028 | ||||
Acepac Holdings | $ | 1,000,000 | 8/24/2021 | 5/31/2028 | ||||
Rick Ward | $ | 15,000 | 8/24/2021 | 5/31/2028 | ||||
Robert & Joan Sweetman | $ | 10,000 | 7/1/2018 | 7/1/2025 | ||||
Michael Swenson | $ | 10,000 | 7/1/2018 | 7/1/2025 | ||||
Connie Sun | $ | 3,000 | 7/1/2018 | 7/1/2025 | ||||
Elizabeth Enoch | $ | 10,000 | 8/1/2018 | 7/1/2025 | ||||
William C. Stanton and Carol Stanton | $ | 3,000 | 7/1/2018 | 7/1/2025 | ||||
Total | $ | 3,135,000 |
The maturities of the bond liabilities as of January 31, 2023 are as follows:
2024 | $ | 1,510,000 | ||
2025 | 536,000 | |||
2026 | - | |||
2027 | - | |||
2028 | 1,089,000 | |||
Thereafter | - | |||
Total | $ | 3,135,000 |
NOTE 6 – RELATED PARTY TRANSACTIONS
As of January 31, 2023, the Company has accrued compensation of $83,333 for its officers. The Company compensated its officers $622,100 for the year ended January 31, 2023.
On January 23, 2023, the Company issued convertible notes payable to the following: Steven Rudofsky (“Rudofsky”), Chairman and CEO, for $125,000; Feehan Partners LP (“Feehan”), controlled by Robert Scannell, CFO and Director, for $87,334 and $112,666; Andrew Brodkey (“Brodkey”). COO and Director, for $98,000; and Shaun Dykes (“Dykes”), Vice President, for $150,000 (issued to Dykes and related parties to Dykes).
As of January 31, 2023, the Company has payables of $54,000 to Brodkey.
For the year ended January 31, 2023, the Company paid Geologic System, Ltd., whose principal is Dykes, $103,289 in consulting fees.
NOTE 7 – STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has authorized share capital of 10,000,000 shares of preferred stock with par value of $0.001.
Common Stock
The Company has authorized share capital consisted of 500,000,000 shares of common stock with par value of $0.001.
On January 23, 2023, the Company issued 182,240,000 for the transaction with ICUMO (see Note 1).
On January 23, 2023, the Company issued 5,467,200 shares of common stock to Newbridge Securities and affiliates for investment banking services related to the Company’s transaction with ICUMO. The shares were valued at $0.15 per share or $820,080.
On January 23, 2023, the Company issued 446,623 shares of common stock to Steven Delonga and John Hedges for services. The shares were valued at $0.15 per share or $66,993.
On January 23, 2023, the Company issued 250,000 shares of common stock to David Lubin for legal services. The shares were valued at $0.15 per share or $37,500.
As of January 31, 2023, the Company had 208,457,823 shares issued and outstanding.
Options
On January 23, 2023, as part of the RTO, the Company accepted the assignment of the stock options for common stock from ICUMO to the Company, as consented by the parties. The Company has 56,615,000 options issued to various officers, directors and employees, based on milestones. As of January 31, 2023, 24,254,000 options have vested. The exercise price for the options is $0.125 and they expire on September 30, 2027.
Warrants
On January 23, 2023, as part of the RTO, the Company accepted the assignment of the warrants for common stock from ICUMO to the Company, as consented by the parties. These warrants were related to a private placement memorandum for ICUMO in May 2022 and June 2022. As of January 31, 2023, 41,540,000 warrants are outstanding. The exercise price for the warrants are $0.15 and they expire on May 11, 2027.
As of January 31, 2023, the Company had 8,980,000 warrants outstanding with a exercise price of $0.15. These warrants relate to convertible notes (see Note 4).
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
During 2016, the Company entered into a surety agreement that guarantees the reclamation bond on the CuMo Property. In order to maintain the good standing of this surety, the Company is required to make an annual payment of $8,340. The Company has a deposit of $100,000 for the reclamation bond which has a face value of $278,000 as determined by the United States Department of Agriculture Forest Service.
NOTE 9 – INCOME TAXES
As of January 31, 2023, the Company has net operating loss carry forwards of $397,846, which may be available to reduce future years’ taxable income through 2043. The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 21% to loss before taxes for fiscal year 2023), as follows:
January 31, | ||||
2023 | ||||
Tax expense (benefit) at the statutory rate | $ | (321,337 | ) | |
State income taxes, net of federal income tax benefit | (76,509 | ) | ||
Change in valuation allowance | 397,846 | |||
Total | $ | - |
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
The tax year 2023 remains open for examination by federal agencies and other jurisdictions in which it operates.
The tax effect of significant components of the Company’s deferred tax assets and liabilities at January 31, 2023 are as follows:
January 31, | ||||
2023 | ||||
Deferred tax assets: | ||||
Net operating loss carryforward | $ | 397,846 | ||
Timing differences | - | |||
Total gross deferred tax assets | 397,846 | |||
Less: Deferred tax asset valuation allowance | (397,846 | ) | ||
Total net deferred taxes | $ | - |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because of the historical earnings history of the Company, the net deferred tax assets for 2023 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $397,846 as of January 31, 2023, respectively.
NOTE 10 – SUBSEQUENT EVENTS
On March 23, 2023, Dykes resigned as Director.
On March 31, 2023, the Company issued 879,628 shares of common stock to Brodkey (108,024 shares), Scannell (385,802 shares), Kolodner (192,901 shares), and Rudofsky (192,901 shares) in exchange for the conversion of accrued compensation of $18,000, $62,500, $31,250, and $31,250, respectively. The shares were valued at $0.162 per share.