Item
1. Description of Business.
Organization
We
were incorporated under the laws of the State of Nevada on February 27, 2014, with fiscal year end in December 31, under the original
name Tech Foundry Ventures, Inc. On April 28, 2014, we filed a Certificate of Correction to our Articles of Incorporation to correct
a typographical error in our Articles of Incorporation to state that the total number of authorized shares were 110,000,000, $0.0001
par value rather than 100,000,000, $0.001 par value. On March 3, 2016, our Board and majority shareholders approved an amendment
to our Articles of Incorporation by adding Articles Twelve through Fourteen, which, in summary: (i) grants the board the right
to amend, alter, change or repeal any provision in the Articles; (ii) authorizes the Board, without the consent of the shareholders,
to adopt any recapitalization affecting the outstanding securities by effecting a forward or reverse splits of all of the outstanding
securities, provided the recapitalization does not require any amendment to the Articles; and (iii) authorizes the Board to change
our name without shareholder approval. On July 6, 2016, we changed our name to
Nevada Canyon
Gold Corp.
We
have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification,
merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.
We
were a consulting service company, which provided management and consulting services to early and middle stage start-ups. We were
engaged by our first client in June 2015. In December 2015, we changed our business to mineral exploration, when we acquired all
of Nevada Canyon Gold Corporation’s - a privately held Nevada corporation (“NCG”) - rights, titles and interests
in and to an exploration agreement, dated for reference September 15, 2015, with an option to form a joint venture (the “Agreement”)
with Walker River Resources Corp., a Canadian public company (TSX.V:WRR) on its wholly-owned Lapon Canyon Gold Project (“Lapon
Canyon Project”, or “the Property”).
To
acquire full consideration for all rights in and to the Agreement we paid NCG $65,000, which consisted of an initial cash
deposit payment of $25,000, and a second cash payment of $30,000; the balance of $10,000 was paid through the issuance of 1,000,000
of our restricted common shares at a price of $0.01 per common share.
The
Agreement does not grant us an interest in or to the Property, or any equity interest in WRR, but rather, grants us the right
to earn up to an undivided 50% interest in the Property by incurring eligible expenditures of $500,000 (over a two-year period)
in exploration and other expenses required to carry out a work program established and operated by WRR on the Property (the “Eligible
Expenses”). Thereafter, the Agreement grants us an option to enter into a joint venture with WRR for further exploration
and development of the Property.
We
have had limited operations and have limited financial resources having raised $85,000 in our initial public offering and further
$375,000 through our private placement offering completed on June 21, 2016. Our auditors have expressed substantial doubt about
our ability to continue as a going concern. As of December 31, 2016, we had accumulated losses in the amount of $436,503, and
incurred $278,834 in Eligible Expenses associated with the exploration program as required under the Agreement. In order
to maintain our interest, we are required to invest an additional $221,166 over the next year. We had $51,789 in cash with
working capital deficit of $39,403, therefore we believe that our present capital is not sufficient to cover our budgeted expenditures
for the next 12 months. As such, we plan to support our operations including the exploration program through additional equity
or debt financing; however, there can be no assurance that we will be successful in our efforts to raise additional capital.
On
February 28, 2014, we issued 210,000,000 shares (70,000,000 common shares each) of our $0.0001 par value common stock, valued
at $0.0001 per share, to our three founders, Jeffrey Cocks, our Chief Executive Officer, Michael Levine, our director, and BCIM
Management, LP, in exchange for their services associated with our formation, organization, and development of our business model
and website. Our board of directors valued these services at $0.0001 per share, or $700, respectively. On April 4, 2016, our founders
tendered 180,000,000 shares of common stock for cancellation (60,000,000 shares each). These shares were cancelled and returned
to the Company’s treasury to a status of authorized but unissued.
On
April 28, 2016, we split our common stock on a 10:1 basis without affecting the par value. All shares and per share amounts have
been retroactively restated to account for the split.
Our
principal business, executive and registered statutory office is located at 316 California Avenue, Suite 543, Reno, NV 89509 and
our telephone number is (888) 909-5548, fax is (888) 909-1033 and email contact is
info@nevadacanyongold.com
. Our website
address is www.nevadacanyongold.com.
Business
We
are an exploration stage Company and only recently begun our exploration operations.
We
are a party to an Agreement with option to form a joint venture with Walker River Resources Corp. on its wholly-owned Lapon Canyon
Gold Project located approximately 40 miles southeast of Yerington, Nevada. The Agreement does not grant us an interest in or
to the Property, or any equity interest in WRR, but rather, grants us the right to earn up to an undivided 50% interest in the
Property by incurring eligible expenditures of $500,000 (over a two-year period) in exploration and other expenses required to
carry out a work program established and operated by WRR on the Property (the “Eligible Expenses”). Thereafter, the
Agreement grants us an option to enter into a joint venture with WRR for further exploration and development of the Property.
Even
if we complete our current exploration programs and are successful in identifying a mineralized deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will know if we have a commercially viable mineral deposit,
called a reserve.
We
commenced exploration of the Property in early 2016 with what we anticipated is sufficient funding for approximately one year
of operations. In order to continue our exploration activities we will be required to source additional cash through equity or
debt financing, or by borrowing the funds from our management. We did not buy or sell any significant equipment during the past
twelve months and do not anticipate buying or selling any significant equipment in the following 12 months either. If we find
mineralized materials in the Property, we have no intention to develop the reserves ourselves, but rather, we will attempt to
find a mining operations company to whom we can sell the property or with whom we can enter into a business arrangement to put
the ore deposit into operation.
We
do not intend to hire employees at this time. All of the work on the Property is being conducted by WRR, who is responsible for
surveying, geology, engineering, exploration, and excavation, and we are responsible for paying all of the expenses incurred in
such activities. As of October 15, 2016, we have incurred required $250,000 in Eligible Expenses, and earned the 25% interest
to the Property. Once we have paid an additional $250,000, we will have earned an additional 25% interest, for a total 50% in
the Property.
One
of our directors is present on the Property as a representative for the Company during most exploration operations. If we hire
an independent geologist, he/she will evaluate the information derived from the exploration and excavation and the engineers will
advise us on the economic feasibility of removing the mineralized material.
Mineral
property exploration is typically conducted in phases. We began our exploratory drilling campaign to determine if there is sufficient
mineralization on the property to warrant continued exploration and development activities. We estimate the cost of the drilling,
shipping samples, as well as geological mapping, rock chip sampling, grid establishment, hiring geologists, and soil sampling,
to be approximately $500,000, which is the amount we expect to pay in order to acquire a 50% interest in the Property.
After
the completion of the first phase of the exploration program, we will review the results and conclusions and evaluate the advisability
of additional exploration work on the Property.
If
we are unable to complete any phase of exploration because we don’t have enough funds, we will cease activities until we
raise more money. At the present time, we have made arrangements to raise the additional funds required to do advanced exploration
but not to place our Property into production. If we need additional cash and cannot raise it, we will either have to suspend
activities until we do raise the cash, or cease activities entirely. Other than as described in this paragraph, we have no financing
plans.
Lapon
Canyon Gold Project
Location
and means of access
The
Lapon Canyon Gold Project (the “Lapon Project”, or the “Property”) consists of 36 claims (720 acres) situated
in the Wassuk Range, easily accessible by secondary state roads from the main highway (40 miles) south of Yerington, Nevada. A
state grid power transmission line passes within 2 miles of the Property.
Geology
and Mineralization
The
Lapon Project is located within the Walker Lane shear zone, a 60 mile wide structural corridor extending in a southeast direction
from Reno, Nevada. Within this trend, numerous gold, silver, and copper mines are located, notably the historic Comstock Lode
mines in Virginia City, the past producing Esmeralda/Aurora gold mine, with reported production of some one million ounces, as
well as the Anaconda open pit copper mine in Yerington. Nevada Copper’s new mine, Pumpkin Hollow, is also located within
the Wassuk Range about 15 miles north of Lapon.
The
Lapon project is cut by a series of steeply dipping cross fault structures cutting across the Walker trend, analogous to other
cross fault structures responsible for many gold and base metal deposits in the world. These faults are heavily sheared and altered
(sericite, iron oxides) with abundant silica. They vary in width from 200 to 1000 feet. Four of these structures have been discovered
at Lapon, and at least two can be traced for over three miles. Gold mineralization is located within echelon structures within
these faults. At least one of these shear zones, the Lapon Rose zone was the site of underground development, and shows a minimum
strike length of 3 miles, has a width of over 200 feet and has a vertical extent of at least 2000 feet.
Exploration
history
Small
scale high grade mining began on the project in 1914. Approximately 2000 feet of drifts and raises were developed from two adits
and a two-stamp mill was built. Further limited underground work was carried out, returning numerous assay values in the range
of one ounce per ton, with a sample at the end of an adit returning 20.6 ounces per ton. (National Instrument 43-101, Montgomery
and Barr, 2004).
2015
Exploration program
Walker
River Resources Corp. began its initial exploration work in April 2015 with significant exploration progress made during 2015.
Within the upper Lapon Rose Zone, gold mineralization in the form of Visible Gold was noted in two different locations within
the upper adit. Due to intense alteration and shearing the on-site identification was found to be rather difficult; the samples
were cut and studied using a microscope. The assays confirmed that the in situ rock is Porphyry, in all probabilities, a quart
monzonite intrusive. Copper mineralization, in the form of malachite and chalcopyrite, has also been identified within the Lapon
Rose Zone.
During
the same exploration program a newly discovered shear/altered zone was discovered some 2000 feet east of the Lapon Rose Zone.
Evidence of mining activities within this previously unknown zone were discovered with evidence of a collapsed mine portal.
Finally,
another shear zone, some 3300 feet west of the Lapon Rose Zone, shows intense iron oxide mineralization and silicification, with
the presence of a previously unknown adit into the center of this zone.
In
the end of 2015, Walker River Resources Corp. completed an initial 5-hole reverse circulation (“RC”) drill program
totalling 2500 feet on the Lapon Canyon Gold Project. The drill program was designed to test and confirm mineralization in an
around the historical workings and mining on the Lapon Gold Project. The initial drill results confirmed the potential for the
emplacement of significant gold mineralization on the Lapon Project.
2016
Exploration Program
During
2016, we completed a 9-hole RC drill program totaling 3400 feet on the Lapon Project. The drill program was designed to build
on the results received from the 2015 drill program carried out by Walker River Resources Corp. continuing to test and confirm
mineralization in and around the historical workings and mining on the Lapon Project.
RC
drill hole LC 16-10 was designed to verify the position of previously reported, presently inaccessible mined out area. The drill
hole successfully intersected the mined-out stope at the reported location and verified the width at some 26 feet at a depth of
223 feet. It is significant that the gold mineralization encountered in LC 16-10 was encountered from 180.12 to 220.14 feet, only
2.62 feet from the stope.
The
additional drill results from the 2016 drill program continue to confirm the potential for the emplacement of significant gold
mineralization on the Lapon Project.
Sampling
Methodology, Chain of Custody, Quality Control and Quality Assurance
All
sampling was conducted under the supervision of our project geologists and the chain of custody, from the drill to the sample
preparation facility, was continuously monitored. A blank or certified reference material was inserted approximately every tenth
sample. The Lapon samples were delivered to ALS Minerals certified laboratory facility in Reno, NV. The samples were crushed,
pulverized and the sample pulps digested and analyzed for gold using fire assay fusion and a 50g gravimetric finish. Higher grade
samples used a 1kg screen fire assay with screen to 100 microns and 50g gravimetric finish.
Competition
The
mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking
for minerals. We are one of the smallest exploration companies and a very small participant in the mineral exploration business.
Being a junior mineral exploration company, we compete with other similar companies for financing and joint venture partners,
and for resources such as professional geologists, camp staff, helicopters and mineral exploration contractors and supplies. We
do not represent a competitive presence in the industry.
Raw
materials
The
raw materials for our exploration programs include camp equipment, hand exploration tools, sample bags, first aid supplies, groceries
and propane. All of these types of materials are readily available from a variety of local suppliers.
Dependence
on Customers
As
a junior exploration company, we have no customers.
Trademarks
and Patents
We
have no intellectual property such as patents or trademarks, and, other than the obligation under our option to acquire an interest
in the Lapon Canyon Project that we discussed under the “
Business
” section, no royalty agreements or labor
contracts.
Need
For Any Government Approval of Principal Products or Services
We
are not required to obtain permits or submit operational plans in order to conduct exploration on the Lapon Project. The mining
business, however, is subject to various levels of government controls and regulations, which are supplemented and revised from
time to time. We cannot predict what additional legislation or revisions might be proposed that could affect our business or when
any proposals, if enacted, might become effective. Such changes, however, could require more operating capital and expenditures
and could prevent or delay some of our operations.
The
various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral
processing operations. For mining and processing, legislation and regulations in various jurisdictions establish performance standards,
air and water quality emission standards and other design or operational requirements for various components of operations, including
health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclaiming and rehabilitating
mining properties following the cessation of operations, and may require that some former mining properties be managed for long
periods of time. As we are not mining or processing, and are unlikely to do so for some years, we have not investigated these
regulations.
None
of the exploration work that we have completed to date requires an environmental permit, however, we must ensure timely repair
of any damage done to the land during exploration.
We
believe that we are in substantial compliance with all material government controls and regulations on the Lapon Project.
Research
and Development
We
have not spent any money on research and development activities.
Employees
At
the present time, we do not have any employees other than our sole officer who devotes his time as needed to our business and
expects to devote 10 hours per week in 2017.
Item
1A. Risk Factors.
We
are subject to those financial risks generally associated with early stage enterprises. Since we have sustained losses since inception,
we will require financing to fund our development activities and to support our operations and will independently seek additional
financing. However, we may be unable to obtain such financing. We are also subject to risk factors specific to our business strategy
and the mining and exploration industry.
RISKS
ASSOCIATED WITH OUR COMPANY AND INDUSTRY
The
following are certain risk factors that could affect our business, financial position, results of operations or cash flows. These
risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because
these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking
statements. The following discussion is not an all-inclusive listing of risks, although we believe these are the more material
risks that we face. If any of the following occur, our business, financial position, results of operations or cash flows could
be negatively affected. We caution the reader to keep these risk factors in mind and refrain from attributing undue certainty
to any forward-looking statements, which speak only as of the date of this Annual Report.
We
are an exploration stage company that was incorporated on February 27, 2014 and for the period from February 27, 2014 (inception)
through December 31, 2016, we only generated $4,000 in revenues from our consulting services, which we terminated in December
2015. We have a limited operating history upon which an evaluation of our future prospects can be made. From February 27, 2014
(inception) to December 31, 2016, we have incurred a net loss of $436,503. Such prospects must be considered in light of the substantial
risks, expenses and difficulties encountered by new entrants into the mining and mineral exploration industry. Our ability to
achieve and maintain profitability and positive cash flow is highly dependent upon a number of factors. Based upon current plans,
we expect to incur losses in future periods as we incur expenses associated with our exploration program. Further, we cannot guarantee
that we will be successful in realizing future revenues or in achieving or sustaining positive cash flow at any time in the future.
Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or
additional sales of our equity securities to continue business operations, which would dilute the value of any shares.
As
a public company, we will have to comply with numerous financial reporting and legal requirements, including those pertaining
to audits and internal control. The costs of this compliance could be significant. If our revenues are insufficient, and/or we
cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs in the normal course
of business that would result in our being unable to continue as a going concern.
Our
independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about
our ability to continue as a going concern.
Our
auditor’s report on December 31, 2016, financial statements express an opinion that substantial doubt exits as to whether
we can continue as an ongoing business. Moreover, our officers may be unable or unwilling to loan or advance us any funds. See
"
Audited Financial Statements – Auditors Report.”
We
had a net loss of $297,509 for the year ended December 31, 2016. Our future is dependent upon our ability to obtain financing
and upon future profitable operations. We plan to seek additional funds through private placements of our common stock which may
result in substantial dilution to our existing shareholders. Our financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be
necessary in the event we cannot continue in existence.
Key
management personnel may leave us, which could adversely affect our ability to continue operations.
We
are entirely dependent on the efforts of Jeffrey Cocks, our president and director, and Michael Levine, a director. The loss of
our officer and directors, or of other key personnel hired in the future, could have a material adverse effect on the business
and its prospects. There is currently no employment contract by and between any officer/director and us. Also, there is no guarantee
that replacement personnel, if any, will help us to operate profitably. They have been, and continue to expect to be able to commit
approximately 10 hours per week of their time, to the continued implementation of our business plan. If management is required
to spend additional time with their outside employment, they may not have sufficient time to devote to us and we would be unable
to continue to implement our business plan resulting in the business failure.
We
do not maintain key person life insurance on our officer and directors.
If
we are unable to obtain additional funding our business operation will be harmed, and if we do obtain additional funding, our
then existing shareholders may suffer substantial dilution.
We
have limited financial resources. As of December 31, 2016, we had $51,789 in cash on hand and $131,797 in assets. From April 2014
to December 31, 2016, our initial three shareholders have advanced us $98,000 to cover our working capital expenses. We have raised
$85,000 in our initial public offering and $375,000 in private placement. If we are unable to develop our business or secure additional
funds our business would fail and our shares may be rendered worthless. We may seek to obtain debt financing as well. There is
no assurance that we will not incur debt in the future, that we will have sufficient funds to repay any indebtedness, or that
we will not default on our debt obligations, jeopardizing our business viability. Furthermore, we may not be able to borrow or
raise additional capital in the future to meet our needs, or to otherwise provide the capital necessary to conduct our business.
There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to
obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations.
If we are unable to obtain additional financing, we will likely be required to curtail our business plans and possibly cease our
operations. Any additional equity financing may involve substantial dilution to our then existing shareholders.
General
domestic and international economic conditions could have a material adverse effect on our operating results and common stock
price and our ability to obtain additional financing.
As
a result of the current economic downturn and macro-economic challenges currently affecting the economy of the United States and
other parts of the world, some of the exploration programs that we may plan could suffer delays or postponement until the economy
strengthens, which could in turn effect our ability to obtain additional financing. We anticipate our revenues to be derived from
the sale of ore, which could suffer if customers are suffering from the economic downturn. During weak economic conditions, we
may not experience any growth if we are unable to obtain financing to enable us to continue our planned operations.
Because
Jeffrey Cocks, our officer and director and Michael Levine, our director, reside outside of the United States, it may be difficult
for an investor to enforce any right based on U.S. federal securities laws against Messrs. Cocks and Levine, or to enforce a judgment
rendered by a United States court against Messrs. Cocks and Levine.
While
our principal office and operations are located in the United States, Mr. Cocks, our officer and director and Mr. Levine, our
director, are non-residents of the United States. Therefore, it may be difficult to effect service of process on Messrs. Cocks
and Levine in the United States, and it may be difficult to enforce any judgment rendered against Messrs. Cocks and Levine. As
a result, it may be difficult or impossible for an investor to bring an action against Messrs. Cocks and Levine in the event that
an investor believes that such investor’s rights have been infringed under the U.S. securities laws, or otherwise. Even
if an investor is successful in bringing an action of this kind, it is uncertain whether the laws of Canada may enable that investor
to enforce a judgment against the assets of Messrs. Cocks and Levine. As a result, our shareholders may have more difficulty in
protecting their interests through actions against our management, directors or major shareholders, compared to shareholders of
a corporation whose officers and directors reside within the United States.
In
the future we may seek additional financing through the sale of our common stock resulting in dilution to existing shareholders.
The
most likely source of future financing presently available to us is through the sale of shares of our common stock. Any sale of
common stock will result in dilution of equity ownership to existing shareholders. This means that, if we sell shares of our common
stock, more shares will be outstanding and each existing shareholder will own a smaller percentage of the shares then outstanding,
which will result in a reduction in the value of an existing shareholder’s interest. To raise additional capital, we may
have to issue additional shares, which may substantially dilute the interests of existing shareholders. Alternatively, we may
have to borrow large sums, and assume debt obligations that require us to make substantial interest and capital payments.
We
cannot guarantee we will be successful in generating revenue in the future or be successful in raising funds through the sale
of shares to pay for our business plan and expenditures. As of the date of this Annual Report on Form 10-K, we have earned minimal
revenue. Failure to generate additional revenue will cause us to go out of business, which will result in the complete loss of
investment.
We
do not have any intellectual property and, if we develop any, may not be able to adequately protect it from infringement by third
parties.
Our
business plan is significantly dependent upon results of our exploration activities on the Lapon Canyon Gold Property. We do not
currently have any intellectual property. In the event that we develop intellectual property in the future, there can be no assurance
that we will be able to control all of the rights for all of our future intellectual property or trade secrets that we may develop.
We may not have the resources necessary to assert infringement claims against third parties who may infringe upon these future
intellectual property rights. Litigation can be costly and time consuming and divert the attention and resources of management
and key personnel. We cannot assure you that we can adequately protect any future intellectual property or successfully prosecute
potential infringement of any future intellectual property rights. Also, we cannot assure you that others will not assert rights
in, or ownership of, trademarks and other proprietary rights that we may obtain, or that we will be able to successfully resolve
these types of conflicts to our satisfaction. Our failure to protect any future intellectual property rights may result in a loss
of revenue and could materially adversely affect our operations and financial condition.
Our
officer and directors may have conflicts in allocating their time to our business.
Our
officer and directors are required to commit time to our affairs and, accordingly, may have conflicts of interest in allocating
management time among various business activities including Mr. Cocks’ competing businesses. Mr. Levine’s current
business in Canada is limited to music royalties, primarily the licensing of the rock group Triumph’s music rights; therefore,
we do not believe that he presently has any conflicts with us. In the course of other business activities, they may become aware
of business opportunities that may be appropriate for presentation to us, as well as the other entities with which they are affiliated.
Messrs. Cocks and Levine have orally agreed that any business opportunities that they come across in the United States will be
presented to our Company and that any opportunities that they come across in Canada will be made available to their other businesses.
We
cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
We
are subject to the periodic reporting requirements of the Exchange Act that will require us to incur audit fees and legal fees
in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.
We
are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder.
In order to comply with these requirements, our independent registered public accounting firm will have to review our financial
statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to
review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately
predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our
reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys.
However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability
to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from any new requirements
under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business
and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading
price of our common stock, if a market ever develops, could drop significantly.
Our
internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being
disseminated to the public.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange
Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal
executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
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pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets;
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provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with
authorizations of management and/or our directors; and
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provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the financial statements.
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Our
internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation
being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.
Our
board of directors has significant control over us and we have not established committees comprised of independent directors.
We
have only two directors one of whom holds all of our officer positions. Accordingly, we cannot establish board committees comprised
of independent members to oversee functions like compensation or audit issues. In addition, since we only have two directors,
they have significant control over all corporate issues. We do not have an audit or compensation committee comprised of independent
directors. Our two directors performing these functions are not independent directors. Thus, there is a potential conflict in
that our directors are also engaged in management and participate in decisions concerning management compensation and audit issues
that may affect management performance.
Until
we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our
directors’ decisions and activities and little ability for minority shareholders to challenge or reverse those activities
and decisions, even if they are not in the best interests of minority shareholders.
We
are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging
growth companies will make our common stock less attractive to investors.
As
an “Emerging Growth Company” under The Jobs Act, we are permitted to rely on exemptions from certain disclosure requirements
We
qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely
on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required
to:
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have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
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provide
an auditor attestation with respect to management’s report on the effectiveness of our internal controls over financial
reporting;
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comply
with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(i.e., an auditor discussion and analysis);
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submit
certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;"
and
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disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons
of the Chief Executive’s compensation to median employee compensation.
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In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements
may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We
will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first
fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated
filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our
ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed
second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding
three year period. Even if we no longer qualify for the exemptions for an emerging growth company, we may still be, in certain
circumstances, subject to scaled disclosure requirements as a smaller reporting company. For example, smaller reporting companies,
like emerging growth companies, are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation
S-K or auditor attestation of internal controls over financial reporting.
Until
such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
RISKS
RELATING TO OUR JOINT VENTURE AND THE GOLD MINING INDUSTRY
No
known reserves.
The
probability of a mining claim having the necessary quantity and quality of ore to result in a profitable mining operation is uncertain
and our claims, even with large investments by us, may never generate a profit.
We
are dependent upon the successful exploration of our mining property and the discovery of valuable mineralization on the property
for success. All anticipated future revenues would come directly or indirectly from the Lapon Canyon Project (the “Property”).
Should we fail to locate economically extractable mineralization on our property, or enter into an agreement to option and sell
our interests to mining production Company, we will have no revenue and our business will fail.
Mineral
deposit estimates are imprecise and subject to error.
Mineral
deposit estimation calculations, when made, may prove unreliable. Assumptions made regarding the supporting data may prove inaccurate
and unforeseen events may lead to further inaccuracies. Sample variability, mining and processing adjustments, environmental changes,
metal price fluctuations, and law and regulation changes are all factors that could lead to deviances from any original estimations.
The Lapon Canyon Project has no known ore reserves. Despite future investment in exploration activities, there is no guarantee
our joint venture partner will locate a commercially viable ore deposit or reserve. Most exploration projects do not result in
discovery of commercially viable and mineable ore deposits. With little capital available, it may have to limit its exploration,
which decreases the chances of finding a commercially viable ore body. Even if potentially promising mineralization is identified,
the Lapon Canyon Project may not be put into production due to many factors, including high extraction costs, low gold prices,
or inadequate amount and reduced recovery rates. If the exploration activities do not suggest a commercially successful prospect,
then our joint venture partner may altogether abandon plans to pursue efforts to develop the property.
The
Joint Venture’s future operations may be adversely affected by future governmental and environmental regulations and permitting.
Environmental
regulations may negatively affect the progression of operations and these regulations may become stricter in the future. In the
U.S., all mining is regulated by Federal and State level government agencies. Obtaining licenses and permits from these agencies
as well as an environmental impact study for each mining property must be completed before starting mining activities. These are
expensive and affect the timing of operations. Pollution can be anticipated with mining activities. If our joint venture partner
is unable to comply with current or future regulations, this may expose the joint venture to fines, penalties and litigation that
could cause the joint venture business to fail.
Further,
the laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency
in the U.S. or Nevada may be changed, applied or interpreted in a manner which will fundamentally alter the ability for the joint
venture to carry on its business.
The
actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups,
may have a detrimental effect on us. Any or all of these situations may have a negative impact on our joint venture’s ability
to operate and/or its profitably.
The
Joint Venture is subject to inherent mining hazards and risks that may result in future financial obligations.
Risks
and hazards associated with the mining industry may adversely affect the joint venture’s proposed operations such as but
not limited to: political and country risks, industrial accidents, labor disputes, inability to retain necessary personnel or
equipment, environmental hazards, unexpected geologic formations, cave-ins, landslides, flooding and monsoons, fires, explosions,
power outages, processing problems. Personal injury and death could result as well as property damage, delays in mining, environmental
damage, legal liability and monetary loss. The joint venture may not be able to obtain insurance to cover these risks at economically
reasonable premiums. It does not carry any sort of insurance and may have difficulties obtaining such once operations start as
insurance is generally sparse and cost prohibitive.
The
joint venture’s financial performance depends on the successful operation of its proposed exploration activities on the
Property, which are subject to various operational risks and our agreement to invest up to $500,000 over a two-year period in
the joint venture.
There
is no assurance our joint venture partner will be successful in its proposed mining exploration activities. Our joint venture
financial performance depends on the successful operation of its proposed exploration activities, which are being conducted by
Walker River and partially (50%) paid for by us if we are able to fulfill the terms of our agreement with them, which requires
us to invest $500,000 over a two-year period. The cost of operation and maintenance and the results of the proposed activities
may be adversely affected by a variety of factors, including the following:
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regular
and unexpected maintenance and replacement expenditures;
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shutdowns
due to the breakdown or failure of our equipment;
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labor
disputes;
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the
presence of hazardous materials on our planned project sites;
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catastrophic
events such as fires, explosions, earthquakes, landslides, floods, releases of hazardous materials, severe storms or similar
occurrences affecting our proposed exploration activities; and
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unforeseen
results and problems inherent in mining and exploration activities.
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Any
of these events could significantly increase the expenses incurred in the joint venture’s planned exploration and could
materially and adversely affect its business, financial condition, future results and cash flow, if any.
The
joint venture’s proposed exploration is subject to substantial risks, including:
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unanticipated
cost increases;
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shortages
and inconsistent qualities of equipment, material and labor;
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work
stoppages;
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inability
to obtain permits and other regulatory matters; and
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failure
by key suppliers, component manufacturers and vendors to timely and properly perform.
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Any
one of these risks, or other unanticipated factors, could give rise to delays and cost overruns. There can be no assurance that
the joint venture will ever successfully complete its proposed exploration, or become profitable.
We
do not expect positive cash flow from the future joint venture operations for the foreseeable future. If we are unable to obtain
financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our investment in the joint venture
business and as a result the joint venture partner may be required to scale back or cease operations for the business.
We
do not expect positive cash flow from the joint venture operations for the foreseeable future. Completion of the exploration,
permitting, and other work required before determining that a mineral deposit can be placed into production can take over 10 years
in the best of circumstances. There is no assurance that actual cash requirements will not exceed the joint venture’s estimates.
In particular, additional capital may be required in the event that:
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drilling,
exploration and completion costs for the Lapon Canyon Project increase beyond our joint venture’s partner’s expectations;
or
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it
encounters greater costs associated with general and administrative expenses or other costs.
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The
occurrence of any of the aforementioned events could adversely affect its ability to meet its business plans.
We
will depend almost exclusively on outside capital to pay for the continued exploration and development of the joint venture Property.
If we are unable to raise sufficient funds to honor our agreement with WRR, then it may not have sufficient funds to explore the
Property to the extent it may find necessary to determine the quantity and quality of any orders that may be in or on the Property,
and most importantly, whether it can find a mining operation company to enter into a business venture with it. Such outside capital
may include the sale of additional stock and/or commercial borrowing. We can provide no assurances that any financing will be
successfully completed.
Capital
may not be available if and when necessary to meet these continuing development costs or, if the capital is available, that it
will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in
the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase
our liabilities and future cash commitments.
If
we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our interest
in the joint venture business and as a result may be required to have our interest reduced or our joint venture partner may cease
future operations for its business, the result of which would be that our stockholders would lose some or all of their investment.
As
the joint venture Property is in the pre-exploration stage, there can be no assurance that our joint venture partner will identify
commercially viable qualities and quantities of mineralization on the Property.
Exploration
for mineralization is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing
mines. The Property is only in the pre-exploration stage and is without any identified economically extractable mineralization.
Our joint venture partner may not establish commercially viable quantities and qualities of economically extractable mineralization
on the Lapon Canyon Project (or on any future property it may acquire) and, even if it does, there is no guarantee that it will
be able to interest a third-party mining company to enter into a business arrangement, e.g., option to purchase arrangement with
it, which could cause the joint venture business to fail.
Because
we anticipate the joint venture’s operating expenses will increase prior to it earning revenues, it may never achieve profitability
and we may never achieve a return on our investment in it.
Prior
to completion of the exploration stage, our joint venture partner anticipates that it will incur increased operating expenses
without realizing any revenues. It therefore expects to incur significant losses into the foreseeable future. We recognize that
if it is unable to generate significant revenues from the exploration of its mineral claims, it will not be able to earn profits
or continue future proposed operations, which will adversely affect us. There is no history upon which to base any assumption
as to the likelihood that it will prove successful, and it can provide no assurance that it will generate any revenues or ever
achieve profitability. If it is unsuccessful in addressing these risks, our joint venture business will most likely fail.
Because
of the inherent dangers involved in mineral exploration, there is a risk that our joint venture partner may incur liability or
damages as it conducts its business.
The
search for valuable mineralization involves numerous hazards. As a result, our joint venture partner may become subject to liability
for such hazards, including pollution, cave-ins and other hazards against which it cannot insure or against which it may elect
not to insure. At the present time it does not have any coverage to insure against these hazards. The payment of such liabilities
may have a material adverse effect on its financial position and our investment in the joint venture.
If
our joint venture partner’s exploration costs are higher than anticipated, then its exploration activities will be adversely
affected.
Our
joint venture partner is currently conducting its exploration of the Property on the basis of estimated exploration costs. If
its exploration costs are greater than anticipated, then it will not be able to carry out all of its planned exploration of the
Property. Factors that could cause exploration costs to increase are: adverse weather conditions, difficult terrain and shortages
of qualified personnel, among others.
The
price of gold is volatile and a decrease in gold prices could cause us to incur losses.
Our
joint venture partner will be exploring primarily for gold on the Property. The profitability of gold exploration and production
is directly related to the prevailing market price for gold. The market prices of metals, including the gold market, fluctuate
significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation,
the exchange rate of the dollar to other currencies, interest rates, and global economic and political conditions. Price fluctuations
in gold market from the time exploration is undertaken and the time production can commence can significantly affect the profitability
of a mine. Accordingly, our joint venture partner may begin to explore for gold at a time when the price of gold or other related
mineral make such exploration economically feasible and, subsequently, incur losses because prices have decreased. Adverse fluctuations
of metals market prices or the continued decline in the gold market, generally, may force it to curtail or cease the joint venture
business operations.
The
costs of compliance with environmental laws and of obtaining and maintaining environmental permits and governmental approvals
required for construction and/or operation, which currently are significant, may increase in the future and could materially and
adversely affect our business, financial condition, future results and cash flow; any non-compliance with such laws or regulations
may result in the imposition of liabilities which could materially and adversely affect our business, financial condition, future
results and cash flow.
Our
joint venture mining partner is required to comply with numerous federal, state and local statutory and regulatory environmental
standards and to maintain numerous environmental permits and governmental approvals required for construction and/or operation.
Some of the environmental permits and governmental approvals that may be issued to the joint venture project may contain conditions
and restrictions, including restrictions or limits on emissions and discharges of pollutants and contaminants, or may have limited
terms. If it fails to satisfy these conditions or comply with these restrictions, or with any statutory or regulatory environmental
standards, it may become subject to regulatory enforcement action and the operation of the projects could be adversely affected
or be subject to fines, penalties or additional costs. In addition, it may not be able to renew, maintain or obtain all environmental
permits and governmental approvals required for the continued operation or further development of the projects. As of the date
of this Annual Report, our joint venture partner has not yet obtained certain permits and government approvals required for the
continuation and successful operation of projects under construction or enhancement. Its failure to renew, maintain or obtain
required permits or governmental approvals, including the permits and approvals necessary for operating projects under construction
or enhancement, could cause its operations to be limited or suspended. Environmental laws, ordinances and regulations affecting
it can be subject to change and such change could result in increased compliance costs, the need for additional capital expenditures,
or otherwise adversely affect us.
Our
joint venture partner could be exposed to significant liability for violations of hazardous substances laws because of the use
or presence of such substances at its project.
The
Lapon Project is subject to numerous federal, state and local statutory and regulatory standards relating to the use, storage
and disposal of hazardous substances. It will use propane and industrial lubricants and other substances on the Property which
are or could become classified as hazardous substances. If any hazardous substances are found to have been released into the environment
at or by the Property in concentrations that exceed regulatory limits, it could become liable for the investigation and removal
of those substances, regardless of their source and time of release. If it fails to comply with these laws, ordinances or regulations
(or any change thereto), it could be subject to civil or criminal liability, the imposition of liens or fines, and large expenditures
to bring the project into compliance. Furthermore, in Nevada, it may be held liable for the cleanup of releases of hazardous substances
at other locations where it arranged for disposal of those substances, even if it did not cause the release at that location.
The cost of any remediation activities in connection with a spill or other release of such substances could be significant.
The
joint venture operations are subject to permitting requirements which could require it to delay, suspend or terminate its operations
on its mining property.
Our
joint venture partner’s exploration activities on the Lapon Canyon Project, and other properties it may acquire, require
permits from the BLM, and several other governmental agencies. It may be unable to obtain these permits in a timely manner, on
reasonable terms or at all. If it cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits,
its timetable and business plan for exploration of the Lapon Canyon Project will be adversely affected. WRR has no current plans
to acquire any other property.
Our
joint venture partner’s exploration activities may not be commercially successful, which could lead it to abandon its plans
to seek a mining production company to develop or purchase it’s Property, and thereby lose the investment we made in the
joint venture.
Our
joint venture partner’s long-term success depends on its ability to identify commercially viable and mineable mineralization
deposits on the Lapon Canyon Project that it can then, using its best business judgment, determine whether any such deposits can
be developed into a commercially viable mining operation. Mineral exploration is highly speculative in nature, involves many risks
and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable
or adequate machinery, equipment or labor. The success of exploration is determined in part by the following factors:
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the
identification of potential silver and/or gold mineralization based on evaluation of the host rock, alteration, structure,
geochemistry and proper sampling;
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availability
of government-granted operation permits;
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the
quality of our management and our geological and technical expertise; and
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the
capital available for exploration.
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Substantial
expenditures are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes
to extract metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether
a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular
attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing
and exporting of minerals and environmental protection. Our joint venture partner may invest significant capital and resources
in exploration activities and abandon such investments if it is unable to identify commercially exploitable mineral deposits.
The decision to abandon its Lapon Project may have an adverse effect on the market value of our securities and its and our ability
to raise future financing. We cannot assure you that our joint venture partner will discover or acquire any mineralized material
in sufficient quantities on the Property to justify commercial operations, or that it will be able to find a mining operator who
is willing and able to enter into a business venture with it.
Actual
capital costs, operating costs, production and economic returns may differ significantly from those our joint venture partner
has anticipated and there are no assurances that its exploration activities will result in identification of commercially viable
quantities and qualities of mineable ores.
Our
joint venture partner’s estimated operating and exploration costs for the Lapon Canyon Project are based on limited information
available to it and that it believes to be accurate. However, costs for labor, regulatory compliance, energy, mine and plant equipment
and materials needed for exploration may significantly fluctuate. In light of these factors, actual costs related to its proposed
budgeted exploration costs may exceed any estimates it may make. It does not have an operating history upon which it can base
estimates of future operating costs related to Lapon Canyon Project, and it intends to rely upon its future economic feasibility
of the Project and any estimates that may be contained therein. Studies derive estimates of cash operating costs based upon, among
other things:
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anticipated
tonnage, grades and metallurgical characteristics of the material to be mined and processed;
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anticipated
recovery rates of gold and other metals from the material;
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cash
operating costs of comparable facilities and equipment; and
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anticipated
climatic conditions and availability of water.
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Capital
and operating costs, production and economic returns, and other estimates contained in feasibility studies may differ significantly
from actual costs, and there can be no assurance that our actual capital and operating costs will not be higher than anticipated
or disclosed.
A
shortage of critical equipment, supplies, and resources could adversely affect our exploration activities.
Our
joint venture partner is dependent on the availability of certain equipment, supplies and resources for it to carry out our mining
exploration activities, including input commodities, drilling equipment and skilled labor. A shortage in the market for any of
these factors could cause unanticipated cost increases and delays in delivery times, which could in turn adversely impact exploration
schedules and costs.
Historical
production at the Lapon Canyon Project may not be indicative of the potential for future development.
The
Lapon Canyon Project is
not in commercial production,
and, since acquiring its interests, our joint venture partner has
never recorded any revenues from commercial production at the Property. The fact that there were limited historical mining operations
in the mining district surrounding the Property should not be relied upon as an indication that it will ever find commercially
mineable quantities and qualities of extractable mineralization on its Property or have future successful commercial operations
on its Property. In fact, based on the information available to us, which we have reviewed, none of the historical mining operations
were successful.
We
currently do not have sufficient funds, nor does our joint venture partner intend to bring the Property into commercial operation
or production, and it expects that it will require additional financing in the future.
Our
joint venture partner does not currently have any proposed plans or sufficient capital for sustained operations, specifically
including the mining, processing and production of minerals from any ores which may be identified during its exploration activities.
Our future financing needs may be substantial if our joint venture partner encounters unexpected costs or delays at this early
stage of exploration of the Property
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If we are unable to raise sufficient funds to honor the financing obligation under
our agreement, then we may lose our interest in the joint venture.
Failure
to obtain sufficient financing to satisfy our financial obligations under our joint venture agreement may result in the delay
or indefinite postponement of exploration, drilling or other mining activities at the Lapon Canyon Project. Furthermore, even
if we raise sufficient additional capital, there can be no assurance that our joint venture partner will achieve success in its
exploration activities. In addition, any future equity offering that we engage in or that our joint venture partner will offer,
will further dilute our equity interest or joint venture interest and any future debt financing will require it or us to dedicate
a portion of our cash flow, if any, to payments on indebtedness and will limit its or our flexibility in planning for or reacting
to changes in our business.
We
are strictly a joint venture partner that has acquired an exploration interest and have no intent or plans to engage in operations
involving the mining, processing and/or production of minerals from orders, if any, which our joint venture partner may discover
on its property during its exploration activities. In the event our joint venture partner’s exploration operations determine
that it has ores which may warrant further mining operations, it is its intent to seek to identify a mining production company
to purchase or option the joint venture interests in the property, which may have an interest and capability to conduct further
mining operations on the property and enter into some type of business arrangement with such company relating to the Property.
If
the development of one or more claims included in our Lapon Project is found to be economically feasible, such claims will be
subject to all of the risks associated with establishing new mining operations.
If
the development of one or more of our joint venture partner’s mining claims included in the Lapon Project is found to be
economically feasible, and it is unable to enter into a business arrangement with a mining company that engages in mining operations
and production, such development will require obtaining permits and financing, and the construction and operation of mines, processing
plants and related infrastructure. As a result, the project will be subject to all of the risks associated with establishing new
mining operations, including:
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the
timing and cost, which can be considerable, of the construction of mining and processing facilities and related infrastructure;
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the
availability and cost of skilled labor, mining equipment and principal supplies needed for operations, including explosives,
fuels, chemical reagents, water, power, equipment parts and lubricants;
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the
availability and cost of appropriate smelting and refining arrangements;
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the
need to obtain necessary environmental and other governmental approvals and permits and the timing of the receipt of those
approvals and permits;
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the
availability of funds to finance construction and development activities;
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industrial
accidents;
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mine
failures, shaft failures or equipment failures;
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natural
phenomena such as inclement weather conditions, floods, droughts, rock slides and seismic activity;
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unusual
or unexpected geological and metallurgic conditions;
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exchange
rate and commodity price fluctuations;
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high
rates of inflation;
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potential
opposition from non-governmental organizations, environmental groups or local groups, which may delay or prevent development
activities; and
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restrictions
or regulations imposed by governmental or regulatory authorities.
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The
costs, timing and complexities of developing the joint venture projects may be greater than anticipated. Cost estimates may increase
significantly as more detailed engineering work is completed on a project. It is common in mining operations to experience unexpected
costs, problems and delays during construction, development and mine start-up. We cannot provide assurance that activities will
result in profitable mining operations at the mineral Property, or that we will derive financial benefits from such operations.
Any one or more of these events identified above could have a material adverse effect on any revenues we may anticipate receiving
from the Lapon Project.
Our
joint venture partner’s operations involve significant risks and hazards inherent to the mining industry.
Our
exploration operations involve the operation of large pieces of drilling and other heavy equipment. Hazards such as fire, explosion,
floods, structural collapses, industrial accidents, unusual or unexpected geological conditions, ground control problems, cave-ins,
flooding and mechanical equipment failure are inherent risks in our operations. Hazards inherent to the mining industry can cause
injuries or death to employees, contractors or other persons at our mineral Property, severe damage to and destruction of our
property, plant and equipment and mineral Property, and contamination of, or damage to, the environment, and can result in the
suspension of our exploration activities and any future development and production activities. While the Company aims to maintain
best safety practices as part of its culture, safety measures implemented by us may not be successful in preventing or mitigating
future accidents.
In
addition, from time to time we may be subject to governmental investigations and claims and litigation filed on behalf of persons
who are harmed while at our Property or otherwise in connection with our operations. To the extent that we are subject to personal
injury or other claims or lawsuits in the future, it may not be possible to predict the ultimate outcome of these claims and lawsuits
due to the nature of personal injury litigation. Similarly, if we are subject to governmental investigations or proceedings, we
may incur significant penalties and fines, and enforcement actions against us could result in the closing of certain of our mining
operations. If claims and lawsuits or governmental investigations or proceedings are ultimately resolved against us, it could
have a material adverse effect on our financial performance, financial position and results of operations. Also, if we conduct
mining operations on property without the appropriate licenses and approvals, we could incur liability or our operations could
be suspended.
The
mining industry is very competitive.
The
mining industry is very competitive. Much of our joint venture partner’s competition is from larger, established mining
companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower
cost structures, more effective risk management policies and procedures and/or a greater ability than us to withstand losses.
Our joint venture partner’s competitors may be able to respond more quickly to new laws or regulations or emerging technologies,
or devote greater resources to the expansion or efficiency of their operations than it can. In addition, current and potential
competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Accordingly,
it is possible that new competitors or alliances among current and new competitors may emerge and gain significant market share
to our joint venture partner’s detriment. It may not be able to compete successfully against current and future competitors,
and any failure to do so could have a material adverse effect on its business, financial condition or results of operations.
The
title to some of the joint venture’s mineral Property may be uncertain or defective, thus risking the investment in such
Property.
The
mineral Property in which we have a joint venture interest, and which our joint venture partner may acquire in the future, if
any, may be subject to prior recorded and unrecorded agreements, transfers or claims, and title may be affected by, among other
things, undetected defects. A title defect on any of its mineral Property (or any portion thereof) could adversely affect its
ability to mine the property and/or process the minerals that it mines.
Title
insurance is generally not available for mineral Property and our joint venture partner’s ability to ensure that it has
obtained secure claim to individual mineral Property or mining concessions may be severely constrained. We rely on title information
and/or representations and warranties provided by our joint venture partner’s grantors. Any challenge to its title could
result in litigation, insurance claims and potential losses, delay the exploration and development of a property and ultimately
result in the loss of some or all of our joint venture partner’s interest in the property. In addition, if it mines on property
without the appropriate title, it could incur liability for such activities.
If
our joint venture partner obtains insurance, it may not provide adequate coverage.
Our
joint venture business and operations are subject to a number of risks and hazards including, but not limited to, adverse environmental
conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground control problems, cave-ins,
changes in the regulatory environment, metallurgical and other processing problems, mechanical equipment failure, facility performance
problems, fires and natural phenomena such as inclement weather conditions, floods and earthquakes. These risks could result in
damage to, or destruction of, our mineral Property or exploration equipment, personal injury or death, environmental damage, delays
in exploration, increased exploration costs, asset write downs, monetary losses and legal liability.
We
do not currently have insurance and do not have any plans to obtain insurance. Our joint venture partner’s property and
liability insurance may not provide sufficient coverage for losses related to these or other hazards. Insurance against certain
risks, including those related to environmental matters or other hazards resulting from exploration, is generally not available
to us or to other companies within the mining industry. In addition, we do not carry business interruption insurance relating
to the joint venture Property. Accordingly, delays in returning to any future exploration could produce near-term severe impact
to our business. Any losses from these events may cause the joint venture to incur significant costs that could have a material
adverse effect on our financial performance, financial position and results of operations.
Changes
in the market price of gold, silver and other metals, which in the past has fluctuated widely, will affect the profitability of
our joint venture operations and financial condition.
Our
joint venture partner’s profitability and long-term viability depend, in large part, upon the market price of gold, copper,
silver and other metals and minerals which may be produced from our mineral Property, and from which our joint venture may derive
revenues under any agreement that we may enter into with a company that conducts mining operations on our Property. The market
price of gold and other metals is volatile and is impacted by numerous factors beyond our control, including:
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sales
by central banks and other holders, speculators and producers of gold and other metals in response to any of the below factors.
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the
relative strength of the U.S. dollar and certain other currencies;
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interest
rates;
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global
or regional political, financial, or economic conditions;
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supply
and demand for jewelry and industrial products containing metals; and
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expectations
with respect to the rate of inflation;
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A
material decrease in the market price of gold and other metals could affect the commercial viability of our joint venture Property
and any of our joint venture’s future anticipated development and production assumptions, if any. Lower gold prices could
also adversely affect our joint venture’s ability to finance future development at all of its mining Property, all of which
would have a material adverse effect on its financial condition and results of operations. There can be no assurance that the
market price of gold and other metals will remain at current levels or that such prices will improve.
We
will be relying on our third party joint venture partner to perform all of the exploration work.
We
will be relying on WRR, our joint venture partner, to perform all of the exploration work on the Property subject to the Agreement.
A management committee consisting of one WRR representative and one of our representatives, will be formed, with WRR having discretion
to act in accordance with its judgment in the event of any failure of the two committee members to agree on any issue. In the
event that WRR does not exercise skill and competence in the conduct of its operations, or fails to perform satisfactory quality
of mining activities, in a timely manner and at an acceptable cost, our interests in the Agreement and the Property may be negatively
impacted.
We
are not a Company that engages in hands-on mining activities and must, therefore, rely on WRR to conduct all of such activities,
and specifically operations related to exploration. WRR is the party that owns the Property and has entered into the Agreement
with us, granting us the right to expend monies and earn an interest in the Property. Our anticipated future dependence upon WRR
to conduct the mining exploration activities in a professional manner, all seeking to establish data supporting the presence of
valuable ores in sufficient qualities and quantities to make the Property viable as a target for a mining production Company to
purchase the Property or enter into a form of agreement with WRR and us. We, or our development partner WRR, may need to enter
into additional agreements for the exploration activities. There can be no assurance that we or our partners can do so on favorable
terms, if at all.
RISKS
RELATED TO THE OWNERSHIP OF OUR SECURITIES
Participation
is subject to risks of investing in micro capitalization companies.
Micro
capitalization companies generally have limited product lines, markets, market shares and financial resources. The securities
of such companies, if traded in the public market, may trade less frequently and in more limited volume than those of more established
companies. Additionally, in recent years, the stock market has experienced a high degree of price and volume volatility for the
securities of micro capitalization companies. In particular, micro capitalization companies that trade in the over-the-counter
markets have experienced wide price fluctuations not necessarily related to the operating performance of such companies.
There
has not been any established trading market for our common stock although our common stock is quoted on the OTC Link alternative
trading system on the OTC PINK marketplace and we are eligible with the Depository Trust Company (“DTC”) to permit
our shares to trade electronically. There can be no assurances as to whether
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(i)
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any
market for our shares will develop;
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(ii)
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the
prices at which our common stock will trade; or
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(iii)
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the
extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets
generally result in lower price volatility and more efficient execution of buy and sell orders for investors.
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In
addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market
makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock.
Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it
trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced
by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of us and general economic
and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common
stock.
Because
of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions
in these securities. Purchasers of our securities should be aware that any market that develops in our stock would be subject
to the penny stock restrictions.
Rule
3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity
security that has a minimum bid price of less than $4.00 per share or with an exercise price of less than $4.00 per share, subject
to a limited number of exceptions that are not available to us. It is likely that our shares will be considered to be penny stocks
for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common
stock.
For
any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s
account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction
setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person
and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has
sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating
to the penny stock market, which, in highlight form, sets forth:
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the
basis on which the broker or dealer made the suitability determination, and
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Disclosure
also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or
may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders
or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in
any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if
and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding
decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable
future and our shareholders will, in all likelihood, find it difficult to sell their securities.
Our
management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
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control
of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases;
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“Boiler
room” practices involving high pressure sales tactics and unrealistic price projections by sales persons;
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excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
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wholesale
dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor losses.
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Transfer
of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and
foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws,
our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered
for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the
ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary
trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17
states which do not offer manual exemptions (or may offer manual exemptions) and require shares to be qualified before they can
be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited
one.
Because
insiders control our activities, they may cause us to act in a manner that is most beneficial to them and not to outside shareholders,
which could cause us not to take actions that outside investors might view favorably and which could prevent or delay a change
in control
.
Our
three founders own 29,700,000 common shares representing 67.42% of the outstanding common stock and our officer and
directors hold approximately 45.18% of our outstanding common stock. As a result, they effectively control all matters
requiring director and stockholder approval, including the election of directors, and the approval of significant corporate
transactions, such as mergers and related party transactions. These insiders also have the ability to delay or perhaps even
block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of
delaying, deterring or preventing a change in control of our company that you might view favorably.
The
interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support
existing management with such issuances serving to enhance existing management’s ability to maintain control of us.
Our
directors have authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common
shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing
management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval
serves to enhance existing management’s ability to maintain control of us.
Our
articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that
may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the
benefit of officers and/or directors.
Our
Articles of Incorporation at Article Nine provides for indemnification as follows: “Every person who was or is a party to,
or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a Director or Officer
of the Corporation, or is or was serving at the request of the Corporation as a Director or Officer of another Corporation, or
as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and
loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered
by him in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired
by such person. The expenses of Officers and Directors incurred in defending a civil or criminal action, suit, or proceeding must
be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon
receipt of an undertaking by or on behalf of the Director or Officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall not
be exclusive of any other right which such Directors, Officers, or representatives may have or hereafter acquire, and, without
limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw,
agreement, vote of Stockholders, provision of law, or otherwise, as well as their rights under this Article. Without limiting
the application of the foregoing, the Stockholders or Board of Directors may adopt bylaws from time to time with respect to indemnification,
to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was a Director or Officer of the Corporation, or is or was
serving at the request of the Corporation as a Director or Officer of another Corporation, or as its representative in a partnership,
joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity
or arising out of such status, whether or not the Corporation would have the power to indemnify such person. The indemnification
provided in this Article shall continue as to a person who has ceased to be a Director, Officer, Employee, or Agent, and shall
inure to the benefit of the heirs, executors and administrators of such person.”
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against
public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification
for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer
or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled
by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process
relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either
of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.
We
do not expect to pay cash dividends in the foreseeable future.
We
have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in
the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial
requirements and other factors that our directors will consider. Since we do not anticipate paying cash dividends on our common
stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
Because
we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders
have limited protection against interested director transactions, conflicts of interest and similar matters.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges
and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, requires the implementation of various measures relating to corporate
governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply
to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with
many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated
with such compliance any sooner than legally required, we have not yet adopted these measures.
Because
our directors are not independent directors, we do not currently have independent audit or compensation committees. As a result,
our directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate
governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance
may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar
matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We
intend to comply with all corporate governance measures relating to director independence as and when required. However, we may
find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required
to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of
2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors
and executive officers. The perceived increased personal risk associated with these recent changes may make it costlier or deter
qualified individuals from accepting these roles.
The
access to information regarding our business may become limited because our obligations to file periodic reports with the SEC
could be automatically suspended under certain circumstances.
We
are subject to certain informational requirements of the Exchange Act, as amended and we will be required to file periodic reports
(i.e., annual, quarterly and special reports) with the SEC which will be immediately available to the public for inspection and
copying. Except during the year that our registration statement becomes effective, these reporting obligations may (in our sole
discretion) be automatically suspended under Section 15(d) of the Exchange Act if we have less than 300 shareholders and do not
file a registration statement on Form 8A. If this occurs after the year in which our registration statement becomes effective,
we will no longer be obligated to file periodic reports with the SEC and the access to our business information would then be
even more restricted. We will not be required to furnish proxy statements to security holders and our directors, officer and principal
beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of
the Exchange Act until we have both 500 or more security holders that are not accredited investors (or, alternatively, 2,000 or
more total shareholders) and greater than $10 million in assets. This means that the access to information regarding our business
will be limited.
We
will incur ongoing costs and expenses for SEC reporting and compliance; without revenue we may not be able to remain in compliance,
making it difficult for investors to sell their shares, if at all.
Securities
already quoted on the OTC Link alternative trading system on the OTC PINK marketplace that become delinquent in their required
filings are removed following a 30 or 60 day grace period if they do not make their required filing during that time. In order
for us to remain in compliance we will require further funding to cover the cost of these filings, which could comprise a substantial
portion of our available cash resources. If we are unable to generate sufficient revenues to remain in compliance it may be difficult
for our shareholders to resell any shares they may purchase, if at all.
For
all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the
future involves a high degree of risk.