NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 1 Organization and Nature of Business
Dakota Territory Resource Corp., (“the Company”) was incorporated in the State of Nevada on February 6, 2002. In July 2006, the Company changed its name from Lakefield Ventures, Inc. to Urex Energy Corp. On July 22, 2010, the Company changed its name from Urex Energy Corp. to Mustang Geothermal Corp. reflecting a change in business expanding into geothermal energy. In September 2012, the Company changed its name from Mustang Geothermal Corp. to Dakota Territory Resource Corp., reflecting a change in business. The Company has been in the exploration stage since its formation and has not realized any revenues from its planned operations. The Company is primarily engaged in the acquisition, exploration, and development of mineral properties.
On March 9, 2012 the Company entered into an agreement with North Homestake Mining Company (“NHMC”) to exchange common stock to affect the acquisition of North Homestake’s gold exploration properties located in South Dakota. The Agreement was completed on September 26, 2012 and the Company concurrently effected a 10 for 1 reverse stock split. The merger was recorded as a reverse recapitalization (“reverse merger”) and the issuances of common stock were recorded as a reclassification between paid-in capital and par value of Common Stock.
North Homestake Mining Company was incorporated in the State of Nevada on April 12, 2011. In accordance with the generally accepted accounting principles in the United States of America governing reverse mergers, the historical financial statements are those of NHMC, since renamed Dakota Territory Resource Corp.
On December 31, 2012, the Company completed an agreement to acquire 57 unpatented lode mining claims covering approximately 853 acres in the Black Hills of South Dakota in exchange for 1,000,000 shares of the Company’s common stock, which was valued at $0.15 per share on the transaction date.
On February 24, 2014 the Company acquired surface and mineral title to the 26.16 acres of the Squaw and Rubber Neck Lodes that comprise Mineral Survey 1706 in the Black Hills of South Dakota. The property is located immediately to the north and adjoining the Company’s Paleoplacer Property.
On March 3, 2014, we completed an acquisition of approximately 565.24 mineral acres in the Northern Black Hills of South Dakota. The acquisition increased our mineral interests in the Homestake District by nearly 23%, to over 3,057 acres. As part of the property acquisition, we purchased an additional 64.39 mineral acres located immediately southwest and contiguous to our Paleoplacer Property, including mineral title to the historic Gustin, Minerva and Deadbroke Gold Mines.
On April 5, 2017 we acquired a combination of surface and mineral title to 284 acres in the Homestake District of the Northern Black Hills of South Dakota. The acquisition included 61 acres located immediately south and contiguous with our City Creek Property; 82 acres located approximately one half mile south of our Blind Gold Property at the western fringe of the historic Maitland Gold Mine; and 141 acres located immediately north and contiguous to our Homestake Paleoplacer Property.
In November 2018, we acquired 42 unpatented lode mining claims covering approximately 718 acres located immediately to the north and adjacent to the Company’s City Creek Property. The acquisition was based on recently completed inversion modeling of its geophysical survey data. Through this staking, the City Creek project area was expanded from approximately 449 acres to 1,167 acres and the Company’s overall land holdings in the Homestake District were increased from 3,341 acres to approximately 4,059 acres in total.
F-6
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 1 Organization and Nature of Business (continued)
Going Concern
These financial statements have been prepared assuming that we will continue as a going concern. The Company has an accumulated deficit of approximately $4,365,000 since inception and through the year ended March 31, 2019 and has yet to achieve profitable operations, and projects further losses in the development of its business.
At March 31, 2019, the Company had a working capital deficit of approximately $2,126,000. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. We anticipate that additional funding will be in the form of equity financing from the sale of common stock and/or commercial borrowing. There can be no assurance that capital will be available on terms acceptable to us. The issuances of additional equity securities by us would result in a dilution in the equity interests of our current stockholders. We may also seek to obtain short-term loans from the directors of the Company. There are no current arrangements in place for equity funding or short-term loans.
Based on these factors, there is substantial doubt as to our ability to continue as a going concern.
Note 2 Summary of Accounting Policies
Basis of Presentation
Our financial records are maintained on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of demand deposits at commercial banks.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, services have been performed, the sales price is fixed or determinable, and collection is probable. We have yet to generate any revenue.
Mineral Property Costs
We have been in the exploration stage since inception and have not yet realized any revenues from its planned operations. All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If we do not continue with exploration after the completion of the feasibility study, the associated capitalized costs will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs.
F-7
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 2 Summary of Accounting Policies (continued)
To determine if the capitalized mineral property costs are in excess of their recoverable amount, we conduct periodic evaluation of the carrying value of capitalized costs and any related property and equipment costs based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15,
Impairment or Disposal of Long-Lived Assets
.
Fair Value Measurements
We account for assets and liabilities measured at fair value in accordance with ASC 820,
Fair Value Measurements and Disclosures
. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified with Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).The three levels of inputs used to measure fair value are as follows:
Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
Our financial instruments consist principally of cash, prepaid expense, accounts payable, accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature or the underlying terms are consistent with market terms. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue general, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.
Income Taxes
Income taxes are computed using the asset and liability method, in accordance with ASC 740,
Income Taxes
. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities, and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Basic and Diluted Loss Per Share
The Company computes basic and diluted income (loss) per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic loss per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted income (loss) per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.
The dilutive effect of outstanding options and warrants is reflected in diluted earnings per share by application of the treasury stock method. There was no impact since the options and warrants are dilutive.
F-8
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 2 Summary of Accounting Policies (continued)
Stock-Based Compensation
The Company estimates the fair value of share-based compensation using the Black-Scholes valuation model, in accordance with the provisions of ASC 718,
Compensation - Stock Compensation
and
ASC 505, Equity
. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of our stock, the risk-free rate, and dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the option holders, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.
Recent Accounting Pronouncements
In May 2014, the FASB issued its final standard on revenue from contracts with customers. The standard, issued as ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606) by the FASB, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” ASU 2014-09 becomes effective for reporting periods (including interim periods) beginning after December 15, 2017. This new standard permits the use of either the retrospective or cumulative effect transition method. Because the Company has no revenues, the new guidance is not expected to have a material impact on its financial statements and related disclosures.
Pronouncements between March 31, 2019 and the date of this filing are not expected to have a significant impact on our operations, financial position, or cash flow, nor does the Company expect the adoption of recently issued, but not yet effective, accounting pronouncements to have a significant impact on our results of operations, financial position or cash flows.
Note 3 Related Party Transactions
Effective October 1, 2005, we began paying a management consulting fee to Minera Teles Pires Inc., a company controlled by the Chief Geological Officer (“CGO”) and director of the Company. The agreement provides a fixed fee of $10,000 per month of which $5,000 is paid and the other $5,000 deferred until financing is obtained by us. Additionally, the agreement provides for a payment of $1,500 per month for office rent and expenses. During the twelve months ended March 31, 2019, we incurred approximately $138,000 in management fees and rent from Minera Teles Pires Inc. As of March 31, 2019, we owed Minera Teles Pires approximately $825,000 for management fees and out of pocket expenses.
In March 2013, the Company memorialized and restructured a debt obligation owed to International Mineral Resources Ltd., an affiliate of Mr. Bachman, Director, in the amount of $265,000, extending the maturity date to March 2016, with certain pre-payment obligations in the amount of 10% of gross proceeds from any financing exceeding $500,000. This obligations bear interest at a rate of 4% per annum. This note is now due and payable.
Effective February 24, 2012, we began paying consulting fees to Jerikodie, Inc., a company controlled by our CEO, President and a director of the Company. The agreement provides a fixed fee of $9,000 per month plus approved expenses. During the twelve months ended March 31, 2017, we incurred approximately $108,000 in consulting fees from Jerikodie, Inc. As of March 31, 2019, we owed Jerikodie, Inc. approximately $625,000 for consulting fees and out of pocket expenses.
The Company and Mr. Mathers, in connection with his appointment as Chief Financial Officer, entered into a consulting agreement whereby the Company agreed to compensate Mr. Mathers with 100,000 shares of Common Stock issued and a five-year option to purchase 1,000,000 shares of Common Stock at an exercise price of 0.14 per share. As of the date hereof, these options have expired. In May 2018, the Company agreed to issue a ten-year option to purchase 1,300,000 shares of Common Stock at an exercise price of 0.08 per share. The Company also agreed to pay to Mr. Mathers cash consideration in the amount of $1,000 per month, increasing to $2,000 per month on September 1, 2013, and to $3,000 per month on March 1, 2014. In January 2013, Mr. Mathers purchased 50,000 shares of Common Stock for $5,000. As of March 31, 2019, we owed Mr. Mathers approximately $151,000 for consulting fees.
On August 26, 2016, the Company issued a note payable in the amount of $25,000 to Minera Teles Pires Inc., a Company controlled by our President, for the purpose of funding ongoing operating expenses. The note bears annual interest of 3% and was due and payable on October 26, 2016. The Company paid $21,855 in principle during the year ended March 31, 2018. The remainder of the loan is outstanding as of the date of this filing.
F-9
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 3 Related Party Transactions (continued)
On September 15, 2016, the Company issued a note payable in the amount of $30,000 to Minera Teles Pires Inc., a Company controlled by our President, for the purpose of funding ongoing operating expenses. The note bears annual interest of 4% and was due and payable on December 14, 2016. This loan remains outstanding as of the date of this filing.
On June 6, 2018, we received an advance from our CGO in the amount of $7,000 for working capital. The advance is due on demand and bears no interest.
On August 10, 2018, the Company issued a note payable in the amount of $20,500 to Jerikodie, Inc., a Company controlled by our President and CEO, for the purpose of funding ongoing operating expenses.
On January 2, 2019, the Company entered into a Strategic Advisory agreement with Mr. Graber. As consideration for this position, the Company granted this individual 300,000, 10-year common stock options at an exercise price of $0.08 per share. The Black-Scholes pricing model was used to estimate the fair value of the 300,000 options issued during the period. Using the assumption of a risk free interest rate of 2.7%, dividend yield of 0%, volatility of 330%, and an expected life of one year. The options have a fair value of approximately $13,00 and have not been exercised.
On February 5, 2019, the Company entered into an agreement for legal services in regards to various Corporate and securities law matters. In consideration of services to be performed, the Company has agreed to pay a monthly fee of $2,000 in cash and issue upon the date hereof a warrant to purchase up to 500,000 shares of our common stock, at the exercise price of $0.08 per share, on or before December 31, 2024. Effective February 5, 2019, and continuing on the first day of each subsequent calendar month thereafter, 41,667 shares of our common stock shall vest and become exercisable under this warrant (all 500,000 shares shall vest on January 1, 2020), provided that on such vesting date, our legal engagement with us has not been terminated by us.
Note 4 Mineral Properties
On September 26, 2012, the Company was re-organized with North Homestake Mining Company. With this re-organization, the Company acquired 84 unpatented lode mining claims covering approximately 1,600 acres known as the Blind Gold Property located in the Black Hills of South Dakota.
On December 28, 2012, the Company acquired 57 unpatented lode mining claims covering approximately 853 acres known as the West False Bottom Creek and Paradise Gulch Claim Group, the City Creek Claims Group, and the Homestake Paleoplacer Claims Group, all located in the Black Hills of South Dakota. The West False Bottom Creek and Paradise Gulch Claims were contiguous to the Blind Gold Property and have been incorporated into the Blind Gold Property. The purchase price was 1,000,000 restricted common shares valued at $0.15 per share, or $150,000
On February 24, 2014 the Company acquired surface and mineral title to the 26.16 acres of the Squaw and Rubber Neck Lodes that comprise Mineral Survey 1706 in the Black Hills of South Dakota. Located immediately to the north and adjoining the Company’s Paleoplacer Property, Mineral Survey 1706 was explored by Homestake Mining Company in the late 1980’s. The Company is required to make annual lease payments of $8,000 for a period of 5 years, of which $8,000 was due upon execution of the agreement. The Company has an option to purchase the mineral property for $120,000.
On March 3, 2014, the Company completed the acquisition of approximately 565.24 mineral acres in the Northern Black Hills of South Dakota. The acquisition increased our mineral interests in the Homestake District by nearly 23%, to over 3,057 acres. As part of the property acquisition, the Company purchased an additional 64.39 mineral acres located immediately southwest and contiguous to our Paleoplacer Property, including mineral title to the historic Gustin, Minerva and Deadbroke Gold Mines. The three mines were the last of a string of mines that produced ores from fossil gold placers derived from the Homestake Lode and are located at the point where the channel disappears under the cover of younger sedimentary and intrusive rocks approximately one mile north of the Homestake Open Cut source. With this acquisition the Company consolidated and extended the Paleoplacer Property position to a distance extending approximately 3,100 feet along the south to north trend of the channel. The purchase price of the mineral interests was $33,335.
F-10
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 4 Mineral Properties (continued)
On April 5, 2017 the Company acquired options to purchase a combination of surface and mineral titles to 284 acres in the Homestake District of the Northern Black Hills of South Dakota. The acquisition included 61 acres located immediately south and contiguous with our City Creek Property; 82 acres located approximately one half mile south of our Blind Gold Property at the western fringe of the historic Maitland Gold Mine; and 141 acres located immediately north and contiguous to our Homestake Paleoplacer Property. The Company is required to make annual lease payments totaling $20,000 for a period of 5 years, of which $20,000 was due upon execution of the agreement. The Company has an option to purchase the mineral properties for total price of $626,392. As of March 31, 2019 the Company is current on all required annual lease payments.
In November 2018, we acquired 42 unpatented lode mining claims covering approximately 718 acres located immediately to the north and adjacent to the Company’s City Creek Property. The acquisition was based on recently completed inversion modeling of its geophysical survey data. Through this staking, the City Creek project area was expanded from approximately 449 acres to 1,167 acres and the Company’s overall land holdings in the Homestake District were increased from 3,341 acres to approximately 4,059 acres in total.
The Company plans to commence an exploratory program on these mineral properties as soon as financing can be arranged.
|
|
March 31,
|
|
March 31,
|
|
|
2019
|
|
2018
|
Capitalized costs
|
$
|
216,104
|
$
|
216,104
|
Accumulated amortization
|
|
-
|
|
-
|
Impairment
|
|
-
|
|
-
|
Capitalized costs, net
|
$
|
216,104
|
$
|
216,104
|
Note 5 Income Taxes
The following table sets forth a reconciliation of the statutory federal income tax for the years ended March 31:
|
|
2019
|
|
2018
|
Income (Loss) before income taxes
|
$
|
19,439
|
$
|
(477,014)
|
|
|
|
|
|
Income tax benefit computed at statutory rates
|
$
|
4,000
|
$
|
(100,000)
|
Increase in valuation allowance
|
|
(10,000)
|
|
86,000
|
Impact of change in tax rates
|
|
-
|
|
-
|
Utilization of NOL
|
|
(4,000)
|
|
-
|
Temporary differences, exploration costs
|
|
10,000
|
|
14,000
|
Tax benefit
|
$
|
-
|
$
|
-
|
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as a deferred tax asset and liability. Significant components of the deferred tax assets are set out below along with a valuation allowance to reduce the net deferred tax asset to zero.
In order to comply with generally accepted accounting principles in the United States of America, management has decided to establish a valuation allowance because of the potential that the tax benefits underlying deferred tax asset may not be realized. Significant components of our deferred tax asset at March 31 are as follows:
|
|
2019
|
|
2018
|
Deferred tax assets (liability)
|
|
|
|
|
Net operating loss carryforwards
|
$
|
1,168,000
|
$
|
2,041,000
|
Impact of change in tax rate
|
|
-
|
|
(863,000)
|
Net capital loss carryforwards
|
|
326,000
|
|
326,000
|
Less: valuation allowance
|
|
(1,494,000)
|
|
(1,504,000)
|
Net deferred tax assets
|
$
|
-
|
$
|
-
|
F-11
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 5 Income Taxes (continued)
As a result of a change in control effective in September 2012, our net operating losses prior to that date may be partially or entirely unavailable, by law, to offset future income and, accordingly, are excluded from the associated deferred tax asset.
The net operating loss carry forward in the approximate amount of $5,560,000 will begin to expire in 2027. We file income tax returns in the United States and in one state jurisdiction.
We follow the provisions of ASC 740 relating to uncertain tax provisions and have commenced analyzing filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. As a result of adoption, no additional tax liabilities have been recorded. There are no unrecognized tax benefits as of March 31, 2019 or March 31, 2018. The Company files income tax returns in the U.S. federal jurisdiction and in certain state jurisdictions. The Company has not been subjected to tax examinations for any year and the statute of limitations has not expired. The Company’s tax returns remain open for examination by the applicable authorities, generally 3 years for federal and 4 years for state.
Note 6 Notes Payable
For the year ended March 31, 2019, the Company extinguished 10 year debt due to 2 entities in the amount of $660,239 consisting of $405,550 in principal and $254,689 in accrued interest. Under the statute of limitations in Nevada the debt is no longer enforceable and the noteholders are no longer in existence. The Company recorded this transaction as Gain from Debt Extinguishment on the income statement for year ended March 31, 2019.
Notes Payable to Related Party
The Company has a note payable to its President that is unsecured, has a principal amount of $265,000, and bears interest at 4% per annum. The Company will apply 10% of the gross proceeds from any equity financing in an amount exceeding $0.5 million (whether one or more transactions) from and after the date hereof to prepay principal and accrued interest. All remaining unpaid principal and interest was due at March 27, 2019 and remains unpaid.
On August 26, 2016, the Company issued a note payable in the amount of $25,000 to Minera Teles Pires Inc., a Company controlled by our President, for the purpose of funding ongoing operating expenses. The note bears annual interest of 3% and was due and payable on October 26, 2016. The Company paid $21,855 in principle during the year ended March 31, 2018. The remainder of the loan is outstanding as of the date of this filing.
On September 15, 2016, the Company issued a note payable in the amount of $30,000 to Minera Teles Pires Inc., a Company controlled by our President, for the purpose of funding ongoing operating expenses. The note bears annual interest of 4% and was due and payable on December 14, 2016. This loan remains outstanding as of the date of this filing.
On June 6, 2018, we received an advance from our CGO in the amount of $7,000 for working capital. The advance is due on demand and bears no interest.
On August 10, 2018 and January 3, 2019, the Company issued a notes payable totaling $20,500 to Jerikodie, a Company controlled by our President, for the purpose of funding ongoing operating expenses. The notes bear annual interest of 3% and were due as of September 30, 2018 and March 31, 2019, respectively. These loans remain outstanding as of the date of this filing.
Note 7 Line of Credit
The Company executed a Line of Credit with Wells Fargo Bank in California. The Line of Credit allows the Company to borrow up to $47,500. The Line of Credit bears interest at 7.75% per annum, is unsecured, and due on demand. The balance on this Line of Credit at March 31, 2019 and 2018 was $35,165 and $37,601, respectively.
F-12
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 8 Convertible Note Payable
For the year ended March 31, 2019, we extinguished debt to an entity in the amount of $154,098 consisting of $100,000 in principal and $54,098 in accrued interest. Under the statute of limitations in Nevada the debt is no longer enforceable and the noteholders are no longer in existence. The Company recorded this transaction as Gain from Debt Extinguishment on the income statement for the year ended March 31, 2019.
Note 9 Common Stock
Our authorized capital stock consists of 300,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 preferred shares with a par value of $0.001 per share.
On July 19, 2018, the Company issued 300,000 shares of restricted common stock, at $0.03 per share, to a consultant for services values at approximately $9,000.
On August 21, 2018, the Company completed a sale of our restricted common shares to a private investor. The Company sold a total of 750,000 shares of restricted common stock at a price of $0.10 per share for an aggregate amount of $75,000 received by the Company. In addition, the Company issued a warrant to purchase an additional 750,000 shares of our restricted common stock at an exercise price of $0.10 per share on or before August 20, 2019. As of March 31, 2019, the warrant has not been exercised.
On October 2, 2018, the Company issued 300,000 shares of restricted common stock, at $0.03 per share, to a consultant for services values at approximately $9,000.
On January 2, 2019, the Company entered into a Strategic Advisory agreement with an individual. As consideration for this position, the Company granted this individual 300,000, 10-year common stock options at an exercise price of $0.08 per share. The Black-Scholes pricing model was used to estimate the fair value of the 300,000 options issued during the period, using the assumptions of a risk free interest rate of 2.7%, dividend yield of 0%, volatility of 330%, and an expected life of one year. The options have a fair value of approximately $13,000 and have not been exercised.
On February 5, 2019, the Company entered into an agreement for legal services in regards to various corporate and securities law matters. In consideration of services to be performed, the Company has agreed to pay a monthly fee of $2,000 in cash and issue upon the date hereof a warrant to purchase up to 500,000 shares of our common stock, at the exercise price of $0.08 per share, on or before December 31, 2024. Effective February 5, 2019, and continuing on the first day of each subsequent calendar month thereafter, 41,667 shares of our common stock shall vest and become exercisable under this warrant (all 500,000 shares shall vest on January 1, 2020), provided that on such vesting date, our legal engagement with us has not been terminated by us. The Black-Scholes pricing model was used to estimate the fair value of the 500,000 options issued during the period, using the assumptions of a risk free interest rate of 1.1%, dividend yield of 0%, volatility of 288%, and an expected life of one year. The options have a fair value of approximately $14,000 and have not been exercised.
In February 2019, the Company completed a sale of our restricted common shares to private investors. The Company sold a total of 2,300,000 shares of restricted common stock at a price of $0.10 per share for an aggregate amount of $230,000 received by the Company. In addition, the Company issued warrants to purchase an additional 2,300,000 shares of our restricted common stock at an exercise price of $0.10 per share on or before February, 2020. The warrants have not been exercised.
On May 21, 2018, the Board approved the issuance of 1,300,000 common stock plan options with an exercise price of $0.08 per share. The options were granted to replace Mr. Mathers 1,000,000 options which expired on March 19, 2018. The term of the new options is 7 years and vest immediately. The Black-Scholes pricing model was used to estimate the fair value of the 1,300,000 options issued during the period, using the assumptions of a risk free interest rate of 1.1%, dividend yield of 0%, volatility of 295%, and an expected life of 7 years. We have determined these options to have an approximate fair value of approximately $91,000. These options have been expensed during the year ended March 31, 2019.
At March 31, 2019, the total issued and outstanding shares were 63,216,787.
F-13
DAKOTA TERRITORY RESOURCE CORP.
NOTES TO FINANCIAL STATEMENTS
for the years ended MARCH 31, 2019 AND 2018
Note 9 Common Stock (continued)
Common Stock Options and Warrants
A summary of the Company's stock option activity and related information for the two year period ended March 31, 2019 is as follows:
|
|
Options
|
Price Range
|
Weighted Average Remaining Life (Years)
|
Outstanding March 31, 2018
|
|
7,350,000
|
$ 0.06 – 0.14
|
5.78
|
Granted
|
|
2,100,000
|
$ 0.07 – 0.08
|
6.68
|
Cancelled/Expired
|
|
(1,000,000)
|
$ 0.14
|
-
|
Exercised
|
|
-
|
-
|
-
|
Outstanding and exercisable March 31, 2019
|
|
8,450,000
|
0.06 – 0.13
|
6.06
|
A summary of the Company's stock warrant activity and related information for the two year period ended March 31, 2019 is as follows:
|
|
Warrants
|
Price Range
|
Weighted Average
Remaining Life (Years)
|
Outstanding March 31, 2018
|
|
-
|
$ -
|
-
|
Granted
|
|
3,050,000
|
$ 0.08 - .10
|
13.07
|
Cancelled/Expired
|
|
-
|
-
|
-
|
Exercised
|
|
-
|
-
|
-
|
Outstanding and exercisable March 31, 2019
|
|
3,050,000
|
$ 0.08 - .10
|
13.07
|
Note 10 Subsequent Events
On May 7, 2019, the Company entered into a new five-year Lease with Option to Purchase Agreement for the Squaw and Rubber Neck Lodes that comprise Mineral Survey 1706, which is a key component of the Company’s overall Homestake Paleoplacer Property in the Black Hills of South Dakota.
F-14