UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended
December 31, 2019
 
Commission file number: 1-03319
  
Quad M Solutions, Inc.
(Exact name of registrant as specified in its charter)
   
Idaho
 
82-0144710
(State or Other Jurisdiction of
Incorporation or Organization)
 
(
I.R.S. Employer
Identification Number
)
 
122 Dickinson Avenue, Toms River, NJ
 
08753
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (732) 423-5520
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
x
Smaller reporting company
x
Emerging growth company
x
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ¨ No x
 
As of February 17, 2020, there were 72,128,616 shares of the issuer’s common stock outstanding.
 
 
 
 
 
   
 
 
 
 
Page
 
 
 
 
 
 
 
 
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23
 
 
23
 
 
23
 
 
24
 
 
24
 
 
24
 
 
24
 
 
 
 
 
 
25
 
  
 
2
 
       
 
 
(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
December 31,
2019
 
 
September 30,
2019
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$ 53,489
 
 
$ 14,700
 
Total Current Assets
 
 
53,489
 
 
 
14,700
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$ 53,489
 
 
$ 14,700
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
Accounts payable
 
$ 14,990
 
 
$ 34,710
 
Accrued interest
 
 
74,167
 
 
 
39,312
 
Notes payable - related party
 
 
59,790
 
 
 
58,128
 
Convertible debt, net
 
 
706,066
 
 
 
351,275
 
Derivative liability
 
 
1,589,022
 
 
 
1,509,792
 
Accrued expense
 
 
367,167
 
 
 
283,833
 
Aurum payable
 
 
400,000
 
 
 
400,000
 
Assigned receivables
 
 
83,122
 
 
 
-
 
Total Current Liabilities
 
 
3,294,324
 
 
 
2,677,050
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES
 
 
3,294,324
 
 
 
2,677,050
 
 
 
 
 
 
 
 
 
 
COMMITMENTS AND CONTINGENCIES
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Preferred stock, $.10 par value, 10,000,000 shares authorized,
 
 
 
 
 
 
 
 
800,001 issued and outstanding
 
 
80,000
 
 
 
80,000
 
Common stock, $0.001 par value, 100,000,000 shares authorized;
 
 
 
 
 
 
 
 
68,777,733 and 60,436,162 shares issued and outstanding
 
 
69,560
 
 
 
68,978
 
Additional paid-in capital
 
 
4,376,504
 
 
 
4,271,462
 
Shares to be issued
 
 
21,558
 
 
 
-
 
Subscription receivable
 
 
(3,100 )
 
(3,100)-
 
Accumulated deficit
 
 
(7,785,356 )
 
 
(7,079,690 )
Total Stockholders' Equity
 
 
(3,240,835 )
 
 
(2,662,350 )
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$ 53,489
 
 
$ 14,700
 
 
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.
 
 
3
 
 
(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
December 31
 
 
 
2019
 
 
2018
 
 
 
(unaudited)
 
 
(unaudited)
 
REVENUES
 
$ 221,358
 
 
$ -
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
Insurance expense
 
 
211,377
 
 
 
-
 
Professional fees
 
 
-
 
 
 
55,542
 
General and administrative
 
 
237,862
 
 
 
17,884
 
Officers' fees
 
 
-
 
 
 
99,110
 
Mineral property expense
 
 
-
 
 
 
27,301
 
Travel
 
 
17,186
 
 
 
38,707
 
Directors' fees
 
 
-
 
 
 
22,000
 
TOTAL OPERATING EXPENSES
 
 
466,425
 
 
 
260,544
 
 
 
 
 
 
 
 
 
 
LOSS FROM OPERATIONS
 
 
(245,067 )
 
 
(260,544 )
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES)
 
 
 
 
 
 
 
 
Interest expense
 
 
(397,106 )
 
 
(4,848 )
Financing fees
 
 
 
 
 
 
 
 
Gain (loss) on issuance of convertible debt
 
 
(294,700 )
 
 
(71,158 )
Gain (loss) on revaluation of derivative
 
 
266,907
 
 
 
35,753
 
Gain (loss) on assignment of receivable
 
 
(35,699 )
 
 
-
 
TOTAL OTHER INCOME (EXPENSES)
 
 
(460,599 )
 
 
(40,253 )
 
 
 
 
 
 
 
 
 
LOSS BEFORE TAXES
 
 
(705,666 )
 
 
(300,797 )
 
 
 
 
 
 
 
 
 
INCOME TAXES
 
 
 
 
 
 
-
 
 
 
 
 
 
 
 
 
 
NET LOSS
 
$ (705,666 )
 
 
(300,797 )
 
 
 
 
 
 
 
 
 
NET LOSS PER COMMON SHARE,
 
 
 
 
 
 
 
 
BASIC AND DILUTED
 
$ (0.01 )
 
 
(0.00 )
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE NUMBER OF
 
 
 
 
 
 
 
 
COMMON STOCK SHARES
 
 
 
 
 
 
 
 
OUTSTANDING, BASIC AND DILUTED
 
 
69,038,372
 
 
 
65,592,829
 
 
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.
 
 
4
 
  
 
(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
 
 
 
 
Common Stock
 
 
Preferred Stock
 
 
Additional
 
 
 
 
Stock to be Issued or
 
 
Total
 
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Paid- in
Capital
 
 
Accumulated
Deficit
 
 
Subscription Receivable
 
 
Stockholders' Equity
 
Balance, September 30, 2018
 
 
60,436,162
 
 
$ 60,436
 
 
 
 
 
$
 
 
$ 2,752,600
 
 
$ (3,026,479 )
 
$ 55,000
 
 
$ (158,443 )
Common stock issued for cash
 
 
3,925,000
 
 
 
3,925
 
 
 
 
 
 
 
 
 
170,075
 
 
 
 
 
 
 
(55,000 )
 
 
119,000
 
Common stock issued for services
 
 
200,000
 
 
 
200
 
 
 
 
 
 
 
 
 
49,800
 
 
 
 
 
 
 
 
 
 
 
50,000
 
Common stock issued for directors’ fees
 
 
110,000
 
 
 
110
 
 
 
 
 
 
 
 
 
21,890
 
 
 
 
 
 
 
 
 
 
 
22,000
 
Common stock issued for officers’ fees
 
 
4,000,000
 
 
 
4,000
 
 
 
 
 
 
 
 
 
76,000
 
 
 
 
 
 
 
 
 
 
 
80,000
 
Rescinded shares
 
 
(4,300,000 )
 
 
(4,300 )
 
 
 
 
 
 
 
 
4,300
 
 
 
 
 
 
 
 
 
 
 
-
 
Net income for period ending December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(300,798 )
 
 
 
 
 
 
(300,798 )
Balance, December 31, 2018 (unaudited)
 
 
64,371,162
 
 
$ 64,371
 
 
 
 
 
$
 
 
$ 3,074,665
 
 
$ (3,327,277 )
 
$ -
 
 
$ (188,241 )
Common stock issued for cash
 
 
1,758,000
 
 
 
1,758
 
 
 
 
 
 
 
 
 
62,242
 
 
 
 
 
 
 
 
 
 
 
64,000
 
Common stock issued for services
 
 
1,000,000
 
 
 
1,000
 
 
 
 
 
 
 
 
 
229,000
 
 
 
 
 
 
 
 
 
 
 
230,000
 
Common stock issued for officers’ fees
 
 
220,000
 
 
 
220
 
 
 
 
 
 
 
 
 
4,780
 
 
 
 
 
 
 
 
 
 
 
5,000
 
Common stock issued for financing fees asset
 
 
1,428,571
 
 
 
1,429
 
 
 
 
 
 
 
 
 
98,571
 
 
 
 
 
 
 
 
 
 
 
100,000
 
Net income for period ending March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(419,909 )
 
 
 
 
 
 
(419,909 )
Balance, March 31, 2019 (unaudited)
 
 
68,777,733
 
 
$ 68,778
 
 
 
-
 
 
$ -
 
 
$ 3,469,258
 
 
$ (3,747,186 )
 
$ -
 
 
$ (209,150 )
Preferred shares issued for subsidiaries
 
 
 
 
 
 
 
 
 
 
800,000
 
 
 
80,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
80,000
 
Retirement of derivative liability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,372
 
 
 
 
 
 
 
 
 
 
 
60,372
 
Subscription receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,100 )
 
 
(3,100 )
Net income for period ending June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,563,631 )
 
 
 
 
 
 
(1,563,631 )
Balance, June 30, 2019 (unaudited)
 
 
68,777,733
 
 
$ 68,778
 
 
 
800,000
 
 
$ 80,000
 
 
$ 3,529,630
 
 
$ (5,310,817 )
 
$ (3,100 )
 
$ (1,635,509 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued for services
 
 
200,000
 
 
 
200
 
 
 
 
 
 
 
 
 
 
 
19,200
 
 
 
 
 
 
 
 
 
 
 
19,400
 
Retirement of derivative liability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
215,051
 
 
 
 
 
 
 
 
 
 
 
215,051
 
Warrants issued for convertible debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
507,581
 
 
 
 
 
 
 
 
 
 
 
507,581
 
Net income for period ending September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,768,873 )
 
 
 
 
 
 
(1,768,873 )
Balance, September 30, 2019
 
 
68,977,733
 
 
 
68,978
 
 
 
800,000
 
 
 
80,000
 
 
 
4,271,462
 
 
 
(7,079,690 )
 
 
(3,100 )
 
 
(2,662,350 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued for convertible debt
 
 
781,916
 
 
 
782
 
 
 
 
 
 
 
 
 
 
 
6678
 
 
 
 
 
 
 
 
 
 
 
7,460
 
Warrants issued for convertible debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98,000
 
 
 
 
 
 
 
 
 
 
 
98,000
 
Retirement of derivative liability
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,564
 
 
 
 
 
 
 
 
 
 
 
19,564
 
Stock to be issued
 
 
(200,000 )
 
 
(200 )
 
 
 
 
 
 
 
 
 
 
(19,200 )
 
 
 
 
 
 
21,558
 
 
 
2,158
 
Net income for period ending December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(705,666 )
 
 
 
 
 
 
(705,666 )
Balance, December 31, 2019
 
 
69,559,649
 
 
 
69,560
 
 
 
800,000
 
 
 
80,000
 
 
 
4,376,504
 
 
 
(7,785,356 )
 
 
18,458
 
 
 
(3,240,835 )
 
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.
  
 
5
 
    
(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
(unaudited)
 
 
(unaudited)
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income (loss)
 
$ (705,666 )
 
$ (300,797 )
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
 
 
 
 
 
 
 
 
Amortization of debt discount
 
 
361,790
 
 
 
5,351
 
Common stock issued for services
 
 
2,158
 
 
 
50,000
 
Common stock issued for officers’ and directors’ fees
 
 
-
 
 
 
22,000
 
Common stock issued for reimbursement of mineral claim fees
 
 
-
 
 
 
 
 
Loss on issuance of convertible debt
 
 
319,700
 
 
 
71,158
 
Gain on revaluation of derivative liability
 
 
(266,907 )
 
 
(35,753 )
Loss on assignment of debt
 
 
35,699
 
 
 
-
 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Increase (decrease) in accounts payable
 
 
(19,719 )
 
 
(4,339 )
Increase (decrease) in accrued interest
 
 
35,315
 
 
 
(502 )
Increase (decrease) in deferred payroll
 
 
-
 
 
 
53,713
 
Increase (decrease) in accrued expense
 
 
83,334
 
 
 
-
 
Net cash used by operating activities
 
 
(154,296 )
 
 
(139,229 )
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
-
 
 
 
-
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
Proceeds from sale of common stock and warrants
 
 
-
 
 
 
119,000
 
Proceeds from convertible debt, net
 
 
144,000
 
 
 
60,000
 
Proceeds from note payable-related party
 
 
1,662
 
 
 
-
 
Proceeds from assignment of receivables
 
 
59,851
 
 
 
-
 
Payment on assignment of receivables
 
 
(12,428 )
 
 
-
 
Net cash provided by financing activities
 
 
193,085
 
 
 
179,000
 
 
 
 
 
 
 
 
 
 
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
38,789
 
 
 
(39,771 )
Cash, beginning of period
 
 
14,700
 
 
 
1,900
 
Cash, end of period
 
$ 53,489
 
 
$ 41,671
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
Interest paid
 
$ -
 
 
$ -
 
Income taxes paid
 
$ -
 
 
$ -
 
Common stock issued for convertible debt
 
$ 7,460
 
 
$ -
 
Derivative liabilities
 
$ 144,000
 
 
$ -
 
 
The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.
 
 
6
 
 
(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 31, 2019
 
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
 
Quad M Solutions, Inc (“the Company”), f/k/a Mineral Mountain Milling and Mining Company, was incorporated under the laws of the State of Idaho on August 4, 1932 for the purpose of mining and exploring for non-ferrous and precious metals, primarily silver, lead and copper. Until April 16, 2019, the Company had two wholly owned subsidiaries, Nomadic Gold Mines, Inc., an Alaska corporation, and Lander Gold Mines, Inc., a Wyoming corporation (the “MMMM Mining Subsidiaries”). On April 16, 2019, the Company divested itself of seventy-five percent of the MMMM Mining Subsidiaries to Aurum, LLC, a newly organized Nevada corporation (“Aurum”) formed by Sheldon Karasik, the Company’s former CEO, for the purpose of entering into the MBO Agreement and operating the Company’s formerly wholly-owned mining subsidiaries. Reference is made to
Recent Developments-Former MMMM Mining Subsidiaries
 under Note 3 – Former Mining Operations, below.
 
On March 22, 2019 the Company entered into two separate Share Exchange Agreements pursuant to which it agreed to acquire 100% of the capital stock of two newly organized entities, NuAxess 2, Inc., a Delaware corporation, and PR345, Inc., a Texas corporation, both private companies, in consideration for the issuance of 400,000 shares of Series C Preferred Stock, issued to the control shareholders of each of NuAxess and PR345, and 400,000 shares of Series D Preferred Stock, issued to the minority, non-control shareholders of the two entities. The closing of the two Share Exchange Agreements occurred on April 16, 2019, at which date NuAxess and PR345 became wholly-owned subsidiaries of the Company.
 
On May 13, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of implementing the following corporate actions: (i) the increase in the authorized shares of common stock from 100 million shares to 900 million shares (the “Authorized Common Stock Share Increase”); and (ii) change the name of the Company from Mineral Mountain Mining & Milling Company to Quad M Solutions, Inc. (the “Name Change”).
 
On June 7, 2019, the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of the State of Idaho effecting the Name Change. On June 14, 2019 the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of the State of Idaho effecting the Authorized Common Stock Share Increase. In addition, effecting the Authorized Common Stock Share Increase. In addition, on July 19, 2019, the Company obtained the requisite approval from FINRA for the Name Change.
 
The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended September 30, 2019. In the opinion of management, the unaudited interim financial statements furnished herein includes all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Operating results for the three-month period ended December 31, 2019 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
This summary of significant accounting policies of Quad M Solutions, Inc and its two wholly owned subsidiaries is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
   
 
7
 
   
Fair Value of Financial Instruments
 
The Company's financial instruments as defined by ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2019 and December 31, 2019.
 
The standards under ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
 
Level 1. Observable inputs such as quoted prices in active markets;
 
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
 
Level 3. Unobservable inputs in which there is little of no market data, which require the reporting entity to develop its own assumptions.
 
The Company has convertible debt of $706,066 measured at fair value at December 31, 2019.
 
 
 
June 30,
2019
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Derivative liability
 
 
 
 
 
 
 
$ 1,589,022
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
$ 1,589,022
 
 
Going Concern
 
As shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of December 31, 2019, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $7,785,356. The Company’s working capital deficit is $3,240,835.
 
Achievement of the Company’s objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively operating and capital costs.
 
The Company plans to fund the operations of its two wholly-owned subsidiaries, NuAxess and PR345, by potential sales of its common stock and/or by issuing debt securities to institutional investors. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
 
Provision for Taxes
 
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25
Income Taxes – Recognition
. Under the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. See Note 8.
 
Revenue Recognition

 
Sales revenues are generally recognized in accordance with the SAB 104 Public Company Guidance, when an agreement exists and price is determinable, the services are rendered, net of discounts, returns and allowance and collectability is reasonably assured. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred or unearned revenue on our consolidated balance sheet.
  
 
8
 
  
NOTE 3 – FORMER MINING OPERATIONS
 
Recent Developments-Former MMMM Mining Subsidiaries
 
On April 24, 2019, the Company filed a Form 8-K reporting that on April 16, 2019, the Company entered into a Share Exchange and Assignment Agreement (the “MBO Agreement”) between the Company and Aurum, LLC, a newly organized Nevada corporation (“Aurum”) formed by Sheldon Karasik, the Company’s former CEO, for the purpose of entering into the MBO Agreement. Pursuant to the MBO Agreement, the Company sold, transferred and assigned to Aurum 75% of the shares of capital stock of the MMMM Mining Subsidiaries for cash consideration of $10 plus the assumption by Aurum of all liabilities of the MMMM Mining Sudsidiaries. The Company retained a 25% equity interest in the MMMM Mining Subsidiaries. Effective on September 15, 2019, the Company divested 6% of its equity interest in the MMMM Mining Subsidiaries to an unaffiliated third party for nominal consideration in the amount of $2000, represented by a note payable reducing its equity interest from 25% to 19%. Other than its minority equity interest, the Company has no control nor any involvement in the management or operations of the former MMMM Mining Subsidiaries.
 
NOTE 4 – EQUITY PURCHASE AGREEMENT
 
The Company entered into an Equity Purchase Agreement, dated as of October 1, 2018 (the “Equity Purchase Agreement”), by and between the Company and Crown Bridge Partners, LLC (the “Crown Bridge”) pursuant to which the Company has agreed to issue to Crown Bridge shares of the Company’s Common Stock, $0.001 par value (the “Common Stock”), in an amount up to Five Million Dollars ($5,000,000.00) (the “Shares”), in accordance with the terms of the Equity Purchase Agreement. In connection with the transactions contemplated by the Equity Purchase Agreement, the Company is required to register with the SEC the following shares of Common Stock: (1) 8,000,000 Put Shares to be issued to the Investors upon purchase from the Company by the Investors from time to time pursuant to the terms and conditions of the Equity Purchase Agreement; (2) 1,428,571 shares of Common Stock to be issued by the Company to the Investors as a commitment fee pursuant to the Equity Purchase Agreement; and (3) the Company also has entered into a Registration Rights Agreement, of even date with the Equity Purchase Agreement with the Investors (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Put Shares under the Securities Act of 1933, as amended (the “Securities Act”) relating to the resale of the Put Shares.
 
The Company intends to use the proceeds of the revolving credit line for general corporate purposes, which may include (i) acquisitions, (ii) refinancing or repayment of indebtedness, (iii) capital expenditures and working capital, (iv) investing in equipment and property development (which may include funding associated with exploration), and (v) pursuing other business opportunities both related and unrelated to our existing mining activities.
 
NOTE 5 – ACQUISTION OF WHOLLY OWNED SUBSIDIARIES
 
On April 24, 2019, the Company filed a Form 8-K reporting that effective on April 16, 2019, the Company completed the closing of the two separate Share Exchange Agreements with unaffiliated third parties, dated March 22, 2019, pursuant to which the Company acquired 100% of the capital stock of NuAxess 2, Inc., a newly-organized Delaware corporation, and PR345, Inc., a newly organized Texas corporation. Pursuant to these Agreements, the Company acquired all of the capital stock of NuAxess and P3R45 in exchange for the issuance to the shareholders of NuAxess and PR345 shares of newly authorized Series C and D Convertible Preferred Stock, par value $0.10 per share (the “New Preferred Stock”). The Shares of Series D Convertible Preferred Stock have beneficial ownership limitation provisions. The transaction was valued at $80,000 and as a result a loss on acquisition in the amount of $76,900 was recorded
 
NOTE 6 – SHARE EXCHANGE AND ASSIGNMENT AGREEMENT
 
On April 16, 2019, the Company entered into a Share Exchange and Assignment Agreement (the “MBO Agreement”) with Aurum, LLC (“Aurum”), a newly formed Nevada corporation organized by Sheldon Karasik for the purpose of entering into the MBO Agreement thereby acquiring 75% of the capital stock of the MMMM Mining Subsidiaries from the Company. On the date of closing, the Company made a payment of $100,000 to Aurum for the operations of the MMMM Mining Subsidiaries, and agreed to make additional payments subject to the terms and conditions of the MBO Agreement. In connection with the MBO Agreement, Aurum agreed to assume all of the liabilities of the MMMM Mining Subsidiaries, which were disclosed to the Company as totaling approximately $96,673. As a result of this transaction, a loss of $403,327 was recorded.
  
 
9
 
     
NOTE 7 – CONVERTIBLE DEBT
 
On or about November 27, 2018, the Company issued a convertible promissory note to an institutional investor for the principal sum of $63,000.00, together with interest at 12% per annum, with a maturity date of November 27, 2019 (the “Note”). The Note was convertible at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into shares of Common Stock at a Variable Conversion Price, which is equal to 58% multiplied by the Market Price (as defined below), representing a discount rate of 42% Market Price” is defined as the average of the lowest two (2) Trading Prices for the Company’s Common Stock during the preceding 15 trading day period prior to the Conversion Date. The Company paid $3,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1770 was $131,158 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs and amounts discussed immediately below), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $131,158 valuation of the conversion feature, $71,158 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt. An accredited investor acquired the note from the institutional investor, with the consent of the Company, in consideration for the payment of the outstanding principal, accrued interest and prepayment penalty in the aggregate amount of $96,816. The Company then issued a replacement convertible promissory note payable to acquiring institutional investor for the principal sum of $96,816 with identical terms to the original note (interest at 12% per annum, maturity date of November 27, 2019, conversion rights and conversion price.) This transaction was treated as an extinguishment and reissuance of the original note and resulted in accelerated recognition of interest expense for original issue discount debt discount of $1,471, interest expense for derivative liability debt discount of $26,425 and a loss on extinguishment in the amount of $29,943.
 
The conversion feature of the replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1775 was $292,344 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $292,344 valuation of the conversion feature, $195,528 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the three-months ended December 31, 2019, $3,751 of regular interest and $32,993 of derivative liability discount was expensed. During the three-months ended December 31, 2018, $663 of regular interest, $255 of original issue discount and $5,096 of derivative liability discount was expensed.
 
On or about April 25, 2019, the Company issued a convertible promissory note to another third-party institutional investor for the principal sum of $75,000, together with interest at the rate of 12%per annum, with a maturity date of April 25, 2020. The investor had the right at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price equal 58% multiplied by the Market Price, representing a discount rate of 42%, in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $1,250 in original issue discount and $3,000 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.
 
On December 5, 2019, the investor elected to convert $7,000 of principal and $460 of accrued interest into 781,916 shares of common stock at a price of $0.009541.
   
 
10
 
     
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1062 was $139,348 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $139,348 valuation of the conversion feature, $69,348 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the three-months ended December 31, 2019, $2,209 of regular interest, $1,257 of original issue discount, and $17,596 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about April 29, 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $66,000, together with interest at the rate of 12% per annum, with a maturity date of April 29, 2020. Jefferson has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price (representing a discount rate of 42%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $6,000 in original issue discount and $3,000 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1510 was $175,334 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $175,334 valuation of the conversion feature, $118,334 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $665 of regular interest, $2,262 of original issue discount, and $14,328 of derivative liability discount was expensed. There was no corresponding expense during the period ended September 30, 2018.
 
On or about May 7, 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $50,000, together with interest at the rate of 12% per annum, with a maturity date of May 7, 2020. The investor had the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $3,500 as a fee which is recorded as a debt discount and being amortized over the life of the loan.
   
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1607 was $131,162 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $131,162 valuation of the conversion feature, $84,662 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $1,512, of regular interest, $879 of original issue discount, and $11,689 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about May 17, 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $50,000, together with interest at the rate of 12% per annum, with a maturity date of February 17, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price, representing a discount rate of 42%, in which Market Price is the lowest bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.
   
 
11
 
     
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0902 was $76,989 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $76,989 valuation of the conversion feature, $31,989 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $1,512, of regular interest, $1,667 of original issue discount, and $15,000 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about May 21, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $110,000, together with interest at the rate of 8% per annum, with a maturity date of November 21, 2019. The investor has the right at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price, representing a discount rate of 40%, in which Market Price is the lowest bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0765 was $138,861 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $138,861 valuation of the conversion feature, $38,861 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $1,959, of regular interest, $2,826 of original issue discount, and $28,261 of derivative liability discount was expensed. There was no corresponding expense during the period ended September 30, 2018.
 
On November 21, 2019, the note entered Maturity Date Default as a result the interest rate on the outstanding balance increased to 18%.
 
On or about June 11, 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $70,000, together with guaranteed interest at the rate of 15% per annum with a six-month minimum, with a maturity date of September 11, 2019. The investor has the right if the note is defaulted to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market Price, representing a discount rate of 50%, in which Market Price is the lowest trading price for the Company’s Common Stock during the preceding 30 trading day period prior to the Conversion Date. The Company paid $20,000 in original issue discount which is recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0631 was $122,694 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $122,694 valuation of the conversion feature, $72,694 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
On September 25, 2019, a third-party institutional investor acquired the $70,000 note dated June 11, 2019, with the consent of the Company, paying the outstanding principal, accrued interest and prepayment penalty in the aggregate amount of $95,760. The Company then issued a replacement convertible promissory note payable to third-party purchaser for the principal sum of $95,760 with interest at 10% per annum, a maturity date of September 25, 2020, granting the purchaser the right at any time to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lesser of 60% multiplied by the average of the two lowest trading prices during the 20 trading days preceding the date of the note, or the average of the two lowest trading prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. This transaction was treated as an extinguishment of the original note and resulted in recognition a loss on extinguishment in the amount of $49,762.
   
 
12
 
    
The conversion feature of this replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04407 was $145,522 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $145,522 valuation of the conversion feature, $49,762 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $816 of regular interest and $24,071 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about July 1 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $112,500, together with interest at the rate of 12% per annum with a maturity date of December 25, 2020, which investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price, representing a discount rate of 40%, in which Market Price is the average of the two lowest trading prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid fees of $122,500 which was recorded as a debt discount and being amortized over the life of the loan
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0696 was $182,517 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $182,517 valuation of the conversion feature, $82,517 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $3,403, of regular interest, $2,095 of original issue discount, and $16,758 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about July 12 2019, the Company issued a convertible promissory note to another institutional investor for the principal sum of $75,000, together with interest at the rate of 12% per annum with a maturity date of April 12, 2020, which investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market Price, representing a discount rate of 50%, in which Market Price is the lowest trading price (average of the two lowest closing bid prices) for the Company’s Common Stock during the preceding 25 trading day period prior to the Conversion Date. The Company paid $7,500 in original issue discount, fees of $2,750 and issued warrants valued at $27,911 all of which are recorded as a debt discount and being amortized over the life of the loan
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0416 was $91,496 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $91,496 valuation of the conversion feature, $54,656 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
    
 
13
 
     
During the period ended December 31, 2019, $2,268, of regular interest, $14,933 of original issue discount, and $12,324 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about August 13 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $225,000, together with interest at the rate of 10% per annum with a maturity date of February 13, 2020, which investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.08 and 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $22,500 in original issue discount and fees of $7,500 which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $479,670, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this cap, $284,670 is recorded as an expense and reported as a loss on issuance of convertible debt.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0754 was $642,857 using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully discounted by the amounts above, the $642,857 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $5,750, of regular interest and $12,500 of original issue was expensed. There was no corresponding expense during the period ended December 31, 2018.
 
On or about August 29 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000, together with interest at the rate of 8% per annum with a maturity date of August 28, 2020, which investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $5,000 in original issue discount and fees of $2,500 which are recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.05368 was $84,403 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $84,403 valuation of the conversion feature, $36,903 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $1,124, of regular interest and $1,811 of original issue and $11,470 of derivative liability discount was expensed. There was no corresponding expense during the period ended September 30, 2018.
 
On or about October 1, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $94,000, together with interest at the rate of 10% per annum with a maturity date of September 30, 2020. The investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing a discount rate of 50%), in which Market Price is the lowest closing bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04487 was $210,363 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $210,363 valuation of the conversion feature, $116,363 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
   
 
14
 
     
During the period ended December 31, 2019, $2,344, of regular interest and $23,436 of derivative liability discount was expensed. There was no corresponding expense during the period ended December 31, 2018
 
On or about November 12, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $59,400, together with interest at the rate of 12% per annum with a maturity date of November 12, 2020. The investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lesser of 60% multiplied by the Market Price (representing a discount rate of 50%), in which Market Price is the average of the two lowest closing bid prices for the Company’s Common Stock during the 20 trading day period prior to the date of the note, or 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0483 was $125,504 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $125,504 valuation of the conversion feature, $75,504 is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
 
On or about December 20, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $33,333, together with interest at the rate of 10% per annum with a maturity date of February 13, 2020. The investor has the right has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.02 and 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $8,333 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $98,000, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this cap, $73,000 is recorded as an expense and reported as a loss on issuance of convertible debt.
 
The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0179 was $29,833 using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully discounted by the amounts above, the $29,833 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
 
During the period ended December 31, 2019, $102, of regular interest and $1,982 of original issue discount was expensed. There was no corresponding expense during the period ended December 31, 2018
 
NOTE 8 – COMMON AND PREFERRED STOCK
 
Upon formation the authorized capital of the Company was 2,000,000 shares of common stock with a par value of $.05, in 1953 the Company increased the authorized capital to 3,000,000 shares of common stock, in 1985 the authorized capital was again increased to 10,000,000 shares of common stock, and in 2014 the Company increased the authorized capital to 100,000,000 shares of common stock with a par value of $.001 and 10,000,000 shares of preferred stock with a par value of $.10.
 
During the year ended September 30, 2018, the Company issued 5,760,000 shares of common stock for cash of $224,100; 1,275,000 shares of common stock for cash of $55,000 that were unissued as of September 30, 2018;300,000 shares of common stock for services valued at $45,500; and 500,000 shares of common stock for reimbursement of mineral claim fees. Additionally, 280,000 warrants were issued for directors’ fees at an exercise price of $0.02 and a term of two years. The fair value of the warrants was estimated using the Black Scholes Option Price Calculation. The following assumptions were made to value the warrants on the date of issuance: strike price of $0.02, risk free interest rate of 1.99%, expected life of two years, and expected volatility of 495.28%. The fair value of the warrants totaled $39,194 at the issuance date and this amount was recorded as equity. Also during the period 60,000 options were exercised at a price of $.02 for cash in the amount of $1200.00
  
 
15
 
     
During the three month period ended December 31, 2018, the Company issued 2,650,000 shares of common stock for cash of $119,000; 1,275,000 shares that were paid for but unissued as of September 30, 2018; 200,000 shares of common stock for services valued at $50,000; 110,000 shares for directors’ fees valued at $22,000; and 4,000,000 shares for settlement of accumulated officers’ fees valued at $80,000.
 
During the three-month period ended March 31, 2019, the Company issued 1,958,000 shares of common stock for cash of $74,000; 1,000,000 shares of common stock for services valued at $230,000; 200,000 shares for officers’ fees valued at $4,000 and 1,428,571 shares valued at $100,000 for prepaid financing fees.
 
Additionally, in 2016, former management of the Company negotiated a contract with M6 Limited, a stock promotion company, in which M6 would collectively receive an advanced payment of 4.3 million shares of Company common stock for certain promotional services. M6 itself received 2 million shares, an affiliated company, Maximum Harvest LLC, received 1.3 million shares and an affiliate of M6, Hahn M. Nguyen, received 1 million shares. In 2018, current management determined that it was not in the best interest of the Company to pursue the services and therefore terminated the contract with M6. The 4.3 million shares of common stock have been rescinded and returned.
 
On March 21, 2019, the Company filed a Certificate of Designation amending the Articles of Incorporation and designating the rights and restrictions of 1 share of Series B Super Voting Preferred Stock, par value $0.10 per share (the “Series B Preferred Stock”), pursuant to resolutions approved by the Board of Directors (the “Board”) on November 5, 2018. On March 21, 2019, the Company issued to Sheldon Karasik, the Chief Executive Officer, President and Chairman of the Board, the one share of Series B Preferred Stock in exchange for $0.16, which price was based on the closing price of the Company’s Common Stock as of November 5, 2018 of $0.16, the date the issuance was approved by the Board. Sheldon Karasik, as the holder of the Series B Preferred Stock, is entitled to vote together with the holders of the Company’s Common Stock upon all matters that may be submitted to holders of Common Stock for a vote, and on all such matters, the share of Series Voting Preferred Stock shall be entitled to that number of votes equal to 51% of the total number of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination, on a fully diluted basis. The Company filed the Certificate of Designation with the Secretary of State of Idaho on March 21, 2019.
 
On April 2, 2019, the Company filed two Certificates of Designation amending the Articles of Incorporation and designation the rights and restrictions of 400,000 shares of Series C Convertible Preferred Stock, par value $0.10 and 400,000 shares of Series D Convertible Preferred Stock, par value $0.10 pursuant to two separate Share Exchange Agreements, see Note 5.
 
On April 8, 2019, the Company filed a Certificates of Designation amending the Articles of Incorporation and designation the rights and restrictions of 25,000 shares of Series E Convertible Preferred Stock, par value $0.10.
 
On August 14, 2019, the Company approve for issuance 200,000 shares of stock valued at $19,400 for investor relations, the are on the balance sheet as shares to be issued.
 
During the three month period ended December 31, 2019, the Company authorized for issuance 66,666 shares of common stock valued at $2,158 for investor relations, these are on the balance sheet as shares to be issued.
 
On December 5, 2019, the Company issued 781,916 shares of common stock for the conversion of principal of $7,000 and accrued interest of $460 at a conversion price of $0.009541.
 
The following warrants were outstanding at December 31, 2019:
 
Warrant Type
 
Warrants
Issued and
Unexercised
 
 
Exercise
Price
 
 
Expiration
Date
 
Warrants
 
 
1,000,000
 
 
$ 0.05
 
 
December 2021
 
Warrants
 
 
500,000
 
 
$ 0.10
 
 
December 2021
 
Warrants
 
 
220,000
 
 
$ 0.02
 
 
January 2020
 
Warrants
 
 
535,714
 
 
$ 0.07
 
 
July 2024
 
Warrants
 
 
4,945,055
 
 
$ 0.08
 
 
August 2024
 
Warrants
 
 
3,333,333
 
 
$ 0.02
 
 
December 2024
 
   
 
16
 
    
NOTE 9 – RELATED PARTY TRANSACTIONS
 
During the year ended September 30, 2016 the Company issued a note payable to a family member of an officer in the amount of $15,000. $3,000 was converted to 300,000 shares of common stock and $5,000 was repaid in cash. The note bears interest at a rate of 10% beginning on July 24, 2016, the balance of principal and interest at December 31, 2019 and September 30, 2019 was $9,992 and $9,727, respectively.
 
Also, during the year ended September 30, 2016, the Company through its wholly owned subsidiary, Nomadic Gold Mines, Inc., entered into a lease agreement with option to purchase with Ben Porterfield, a related party. See Note 3.
 
During the year ended September 30, 2017 the Company issued two notes payable to Premium Exploration Mining in the amount of $35,000 and $15,000 each having an interest rate of 5%, the balance of principal and interest at December 31, 2019 and September 30, 2019 was $60,073 and 58,772, respectively, the companies had directors in common at the time of the transaction.
 
A family member of a former officer provided investor relations consulting services and other administrative functions to the Company, $10,000 was paid in cash for consulting during the period ended December 31, 2018, no such payments were made during the period ended December 31, 2019.
 
On March 21, 2019, we filed a Certificate of Designation amending our Articles of Incorporation and designating the rights and restrictions of 1 share of our Series B Super Voting Preferred Stock, par value $0.10 per share (the “Series B Preferred Stock”), pursuant to resolutions approved by our Board of Directors (the “Board”) on November 5, 2018. On March 21, 2019, we issued to Sheldon Karasik, our Chief Executive Officer, President and Chairman of the Board, the one share of our Series B Preferred Stock in exchange for $0.16,which price was based on the closing price of our Common Stock as of November 5, 2018 of $0.16, the date the issuance was approved by our Board. Sheldon Karasik, as the holder of our Series B Preferred Stock, is entitled to vote together with the holders of our Common Stock upon all matters that may be submitted to holders of our Common Stock for a vote, and on all such matters, the share of Series Voting Preferred Stock shall be entitled to that number of votes equal to 51% of the total number of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination, on a fully diluted basis. The Company filed the Certificate of Designation with the Secretary of State of Idaho on March 21, 2019.
 
NOTE 10 – INCOME TAXES
 
Topic 740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December31, 2018 the Company had taken no tax positions that would require disclosure under ASC 740.
 
The Company files income tax returns in the U.S. federal jurisdiction and the State of Idaho. The Company is currently in arrears in filing their federal and state tax returns, both jurisdictions statute of limitations of three years does not begin until the tax returns are filed.
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.
  
 
17
 
     
Significant components of the deferred tax assets at an anticipated tax rate 21% for the period ended December 31, 2019 and September 30, 2019 are as follows:
 
 
 
December 31,
2019
 
 
September 30,
2019
 
Net operating loss carryforwards
 
 
7,785,356
 
 
 
7,079,690
 
Deferred tax asset
 
 
1,968,134
 
 
 
1,819,944
 
Valuation allowance for deferred asset
 
 
(1,968,134 )
 
 
(1,819,944 )
Net deferred tax asset
 
 
-
 
 
 
-
 
 
At December 31, 2019 and September 30, 2019, the Company has net operating loss carryforwards of approximately $7,785,356 and $7,079,690 which will begin to expire in the year 2031. The change in the allowance account from September 30, 2019 to December 31, 2019 was $148,190.
 
On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowered the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the December 31, 2017 fiscal year using a Federal Tax Rate of 21%. The remeasurement of the deferred tax assets resulted in a $68,010 reduction in tax assets to $885,961 from an estimate of $953,971 that the assets would have been using a 35% effective tax rate.
 
NOTE 11 – SUBSEQUENT EVENTS
 
On or about January 17, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50.000, together with interest at the rate of 10% per annum with a maturity date of October 11, 2020. If the note is not paid or converted when due, the interest rate shall increase to 22%. The investor has the right at any time which is 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to 50% of the average of the lowest trading price for the Company’s Common Stock during the preceding 30 trading day period prior to the Conversion Date, but in no event will the conversion price exceed $0.02 per share.
 
The conversion feature of the note represents an embedded derivative, which will be calculated at a later date.
 
On or about January 21, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $115,000, together with interest at the rate of 8% per annum with a maturity date of January 21, 2021. If the note is not paid or converted when due, the interest rate shall increase to 24%. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to 60% of the lowest closing bid price for the Company’s Common Stock during the preceding 20 trading day period prior to and including the Conversion Date. The Company paid $10,000 in original issue discount and fees of $2,500 which are recorded as a debt discount and being amortized over the life of the loan.
 
The conversion feature of the note represents an embedded derivative, which will be calculated at a later date.
 
On January 21, 2020, an investor converted $4,050 of accrued interest and $750 of fees into 1,000,000 shares of common stock at a conversion price of $0.0048.
 
On January 29, 2020, and investor converted $15,000 of convertible debt principal, $3,352 of accrued interest and $500 in fees into 1,570,967 shares of common stock at a conversion price of $0.012.
   
 
18
 
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations General
 
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our financial statements and the notes to those statements.
In addition to historical financial information,
this discussion contains forward-looking statements reflecting our management’s current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the heading “Risk Factors” in our Consolidated Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on January 15, 2019.
 
Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company” or “our Company,” “Quad M” or “Mineral Mountain” refer to Quad M Solutions, Inc. f/k/a Mineral Mountain Mining & Milling Company, an Idaho corporation.
 
New Business Developments
 
On March 27, 2019, the Company filed a Form 8-K with the SEC reporting that the Company entered into two separate Share Exchange Agreements dated March 22, 2019 (the “Agreements”) with unaffiliated third parties, one with PR345, Inc. (“PR345”), a newly organized Texas corporation, and one with NuAxess 2, Inc. (“NuAxess”), a newly organized Delaware corporation. Pursuant to these Agreements, the Company agreed to acquire the all of the capital stock of P3R45 and NuAxess in exchange of the issuance of newly authorized shares of Series C and D Preferred Stock, par value $0.10 per share, to the shareholders of PR345 and NuAxess. The entry into the two Agreements was authorized and approved by the Company’s Board in furtherance of the Company’s plan, as disclosed in its registration statement declared effective by the SEC on March 8, 2019, Registration No. 333-227839 (the “Registration Statement”), to diversify its business beyond its historic mining operations of its two subsidiaries, Nomadic Gold Mines, Inc. and Lander Gold Mines, Inc. (the “MMMM Mining Subsidiaries”). The Company also granted Sheldon Karasik or an entity to be formed by him to acquire for a nominal amount 75% of the capital stock of the MMMM Mining Subsidiaries, with the Company retaining 25% of its capital stock.
 
The Company also agreed that upon the closing of the Agreements, among other conditions, that: (i) Sheldon Karasik shall resign as CEO and Chairman, but shall continue to serve as a director, as will Michael Miller, an independent director; (ii) Felix Keller shall resign as a director; and (iii) Pat Dileo, Carl Dorvil and Derrick Chambers would be appointed to the newly constituted 5 person Board and Pat Dileo would be appointed as CEO and Chairman of the Board.
 
As disclosed under Note 9-Subsequent Events, below, on April 24, 2019, the Company filed a Form 8-K reporting that: (i) on April 16, 2019, it entered into a Share Exchange and Assignment Agreement, also referred to as the MBO Agreement with Aurum, an entity formed by Sheldon Karasik for the purpose of acquiring 75% of the capital stock of the MMMM Mining Subsidiaries from the Company; (ii) effective April 16, 2019, Felix Keller resigned as a director; (iii) effective April 17, Sheldon Karasik resigned as CEO and Board Chairman (but continued to serve on the Board); (iii) effective April 17, 2019, Pat Dileo was appointed as CEO and Chairman of the Board and Carl Dorvil and Derrick Chambers were appointed to as members of the 5 person Board, joining Sheldon Karasik and Michael Miller; and (v) effective April 16, 2019, Sheldon Karasik transferred and assigned the Series B Super Voting Preferred Stock to Pat Dileo.
 
As a result of the execution of the MBO Agreement and the closing of the March 22, 2019 Share Exchange Agreements, the Company’s resources will be devoted to the business operations of NuAxess and PR345, as follows:
 
(i) NuAxess’ business plan is to serve as a full service financial, employee benefit and insurance consulting company offering, either directly or through proven third parties, innovative ways to provide its clients’ employees with affordable and manageable health plans and comprehensive benefits, based upon a new system being developed throughout the country for the rapidly expanding market of small and medium-sized businesses (SMBs) which are experiencing significant problems with their existing programs, to the extent that they even provide programs because of their costs and complexities. NuAxess also intends to create an international professional employer association (IPEA) headquartered in San Juan, Puerto Rico, that will sponsor and provide professional outreach programs offering health insurance, healthcare and financial education to its PEO and financial services members globally; and (iii) additionally, the IPEA will offer these and other services to leading rural hospital providers via a proprietary program called ‘Community Health Exchanges’, which will work directly with SMB employers in rural communities providing access to private insured health plans with contracted medical services through the rural hospitals.
 
(ii) PR345, a business enterprise consulting firm, plans to provide: (a) specialized staffing services for a variety of professional industries including, but not limited to, medical, education, financial services, technology and hospitality, among others; (b) specific back office services including accounting, payroll, and a full complement of Human Resource (HR) benefits; and (iii) serve as a Professional Employer Organization (PEO).
   
 
19
 
    
The Company understands that Aurum, 75% owner of the MMMM Mining Subsidiaries, Lander Gold Mines, Inc. and Nomadic Gold Mines, Inc., will continue to operate its leases and staked claims of such entities. Under the MBO Agreement, the Company retained a 25% equity interest in the Mining Subsidiaries and effective on September 15, 2019, the Company sold, transferred and assigned to an unaffiliated third party 6% of its equity interest in the Mining Subsidiaries to an unaffiliated third party for $1,000, evidenced by a promissory note due on September 30, 2020, reducing the Company’s equity interest in the former Mining Subsidiaries from 25% to 19%.
 
Reference is made to the Company’s Form 8-K and 8-K/A filed with the SEC on October 22, 2019 and December 2, 2019 reporting the resignations of Sheldon Karasik and Michael Miller as member of the Board of Directors.
 
Results of Operations For the Three Months Ended
December 31 2019 compared to the Three Month Ended December 31, 2018
 
Revenue
 
The Company generated no revenues from its former mining operations during the two periods ended December 31, 2019 and 201. In April 2019, the Company experienced a change in control transaction, as reported in its Forms 8-K filed in March and April 2019, referenced above, as a result of which it divested 75% of the MMMM Mining Subsidiaries to an entity formed and controlled by the Company’s former CEO and Chairman, Sheldon Karasik. At the same time, the Company commenced operations of its health insurance and employee benefits subsidiaries.
 
During the three months ended December 31, 2019 the Company received $221,358 in revenue principally from insurance premiums and we incurred $211,377 in expense directly related to this revenue. No such revenue was earned in the three-month period ended December 31, 2018.
 
Expenses
 
Operating expenses for the three-month period ended December 31, 2019 were $460,599 compared to $260,544 for the same period of the prior year, representing an increase of 78%, due principally to an increase in expense related to the new revenue stream.
 
The main components of general and administrative expenses for the three-month period ended December 31, 2019 consisted of approximately $215,405 in consulting fees and approximately $6,530 in marketing fees. During the prior year, the Company’s legal and professional fees were minimal 74,662.
 
Working Capital
 
The Company’s net loss for the three-month period ended December 31, 2019 was $705,666, representing a 135% increase over the net loss of $300,797 at December 31, 2018. The increase in net loss is due primarily to an increase in non-cash gains and losses related to new convertible debt financings and acquisition and disposal of subsidiaries and also to an increase in general and administrative expenses as a result of the change in business focus.
 
During the three-months ended December 31, 2019, our principal sources of liquidity included cash received from convertible notes payable, and assignment of future receivables. During the three-months ended December 31, 2018 our principal source of liquidity included proceeds from sales of our common stock and proceeds from convertible debt. We intend to use new capital in the form of new equity or debt to further advance objectives. Net cash used by operating activities totaled $154,296 and $139,229 for the three-months ending December 31, 2019 and 2018, respectively. Net cash provided by financing activities totaled $193,085 and $179,000 for the three-month periods ending December 31, 2019 and 2018, respectively. The change between 2019 and 2018 is primarily attributed to an increase in convertible debt financing and assignment of future receivables in 2019 as compared to 2018. The cash increased to $53,489 at December 31, 2019 from $14,700 at September 30, 2019.
    
 
20
 
     
As reflected in our accompanying financial statements, other than approximately $203,851 received from the issuance of convertible notes and assignment of receivables during the three-month period ended December 31, 2019, we have limited cash, negative working capital, no revenues and an accumulated deficit of $7,785,356 and $7,079,690 for the three-month period ending December 31, 2019 and year ended September 30, 2019, respectively. Notwithstanding our belief that we will be able to continue to raise capital through the issuance of convertible notes at terms and condition acceptable to the Company, of which there can be no assurance, these factors indicate that we may be unable to continue in existence in the absence of receiving additional funding. In addition to our operating expenses which average approximately $165,000 per month, management’s plans for the next twelve months include approximately $2.5 million of cash expenditures for development and expansion of our health insurance and employee benefits business operations. While there can be no assurance, the Company believes that it will be able to generate sufficient capital from operations, equity and/or debt financing to fully-implement its business plan of offering principally to smaller and mid-sized employers a full spectrum of employee benefit and insurance services enabling employers to offer a variety of plans providing their employees with multiple levels of benefits including major medical health insurance, as well as providing financial and business consulting services.
 
Contractual Obligations
 
Other than lease obligations stated above, as of December 31, 2019, we have contractual obligations relating to debt or anticipated debt, as follows:
 
The Company entered into an Equity Purchase Agreement, dated as of October 1, 2018 (the “Equity Purchase Agreement”), by and between the Company and Crown Bridge Partners, LLC (the “Crown Bridge”) pursuant to which the Company has agreed to issue to Crown Bridge shares of the Company's Common Stock, $0.001 par value (the “Common Stock”), in an amount up to Five Million Dollars ($5,000,000.00) (the “Shares”), in accordance with the terms of the Equity Purchase Agreement. In connection with the transactions contemplated by the Equity Purchase Agreement, the Company is required to register with the SEC the following shares of Common Stock: (1) 8,000,000 Put Shares to be issued to the Investors upon purchase from the Company by the Investors from time to time pursuant to the terms and conditions of the Equity Purchase Agreement; (2) 1,428,571 shares of Common Stock to be issued by the Company to the Investors as a commitment fee pursuant to the Equity Purchase Agreement; and (3) the Company also has entered into a Registration Rights Agreement, of even date with the Equity Purchase Agreement with the Investors (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Put Shares under the Securities Act of 1933, as amended (the “Securities Act”) relating to the resale of the Put Shares.
 
The Company intends to use the proceeds of the revolving credit line for general corporate purposes, which may include (i) acquisitions, (ii) refinancing or repayment of indebtedness, (iii) capital expenditures and working capital, (iv) investing in equipment and property development (which may include funding associated with exploration), and (v) pursuing other business opportunities both related and unrelated to our existing mining activities.
 
The following is a listing of the convertible debt principal amounts outstanding at December 31, 2019.
 
Auctus Fund LLC
 
$ 75,000
 
BHP Capital NY, Inc
 
 
95,760
 
Cavalry Fund I, LP
 
 
225,000
 
Cavalry Fund I, LP
 
 
33,333
 
Crossover Capital Fund I, LLC
 
 
50,000
 
GS Capital Partners, LLC
 
 
68,000
 
Harbor Gates Capital, LLC
 
 
110,000
 
Jefferson Street Capital, LLC
 
 
66,000
 
Jefferson Street Capital, LLC
 
 
59,400
 
KinerjaPay Corp
 
 
96,816
 
KinerjaPay Corp
 
 
94,000
 
Labrys Fund, LP
 
 
112,500
 
LG Capital Funding, LLC
 
 
55,000
 
Sunshine Equity Partners LLC
 
 
50,000
 
 
 
 
 
 
Total
 
$ 1,190,809
 
   
 
21
 
     
The following is a listing of loan amounts (all of which are unsecured) due to related parties (each of whom are either a shareholder or related to a shareholder of Mineral Mountain Mining & Milling Company) and the dates that these loans were made to the Company:
 
Name
 
Date
 
As of
December 31,
2019
Amount
 
 
As of
September 30,
2019
Amount
 
Premium Exploration
 
03/27/17
 
 
15,000
 
 
 
15,000
 
 
 
08/02/17
 
 
35,000
 
 
 
35,000
 
John J. Ryan, adult son of a former officer and director
 
2/23/2016
 
 
7,000
 
 
 
7,000
 
 
 
 
 
 
 
 
 
 
 
 
Total notes payable - shareholders
 
 
 
$ 57,000
 
 
$ 57,000
 
 
The loan from John J. Ryan bears interest at 10% per annum and is due upon demand. $3,000 was converted to 300,000,000 shares of common stock and $5,000 was repaid in cash. The note bears interest at a rate of 10% beginning on July 24, 2016 and, in the event of demand for payment, a default interest rate of 15% applies. the balance of principal and interest at December 31, 2019 was $9,992. The loans from Premium Exploration bear interest at 5% and 10% per annum. Pursuant to the terms of the loan agreements, interest on the unpaid balance increase from 5% to 10% for the $35,000 note on August 2, 2018 and interest increased from 5% to 10% for the $15,000 note on September 27, 2018. The outstanding principal and interest are due, upon demand of payment of Premium Exploration, on July 1, 2019. The outstanding principal will continue to earn 10% interest if demand for payment is not made on July 1, 2019 or in the event of default pursuant to the terms of the agreements the balance of principal and interest at December 31, 2019 was $60,073.
 
Off-Balance Sheet Arrangements
 
The Company has not undertaken any off-balance sheet transactions or arrangements. We have no guarantees or obligations other than those which arise out of normal business operations.
 
Critical Accounting Policies and Estimates
 
Our significant accounting policies are more fully described in Note 2 to our Unaudited Condensed Consolidated Financial Statements.
 
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
 
 
Disclosure Controls and Procedures
 
As of December 31, 2019, we conducted an evaluation, under the supervision and participation of management including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended). Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
 
The management of the Company assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on this assessment, management determined that, during the three months ended December 31, 2019 our internal controls and procedures require additional improvement due to deficiencies in the design or operation of the Company’s internal controls. Management identified the following areas of improvement in internal controls over financial reporting:
 
1. The Company did not have a written internal control procedurals manual which outlines the duties and reporting requirements of the Directors and any staff to be hired in the future. This lack of a written internal control procedurals manual does not meet the requirements of the SEC or good internal controls.
 
2. The Company should further improve maintenance and access to a centralized location for current and historical business records.
 
Changes in Internal Control over Financial Reporting
 
We have evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls as of December 31, 2019.
  
 
22
 
 
 
 
The Company received letter notice dated February 14, 2020 from counsel to Sheldon Karasik, a former director, stating that their belief that the Company owes additional monies to Mr. Karasik or Aurum LLC, a newly formed entity controlled by Mr. Karasik (“Aurum”) and, as a result, the Company should renegotiate certain terms in the Share Exchange and Assignment Agreement dated April 16, 2019, attached as Exhibit 99.4 to the Company’s Form 8-K filed with the SEC on April 24, 2019, in connection with a change in control transaction (the “MBO Agreement”). Pursuant to the MBO Agreement with Mr. Karasik, the Company transferred and assigned 75% of the Company’s former Mining Subsidiaries to Aurum LLC, a newly formed entity controlled by Mr. Karasik, for $10 plus the assumption by Aurum of the liabilities of the Company’s former wholly-owned Mining Subsidiaries. The Company believes that it has meritorious defenses to any claims by Mr. Karasik and Aurum and, indeed, has affirmative defenses in connection with any such claims. The Company believes that there will be no material adverse consequences in connection with any claims by or on behalf of Mr. Karasik.
 
Under the MBO Agreement, the Company retained a 25% equity interest in the Mining Subsidiaries and effective on September 15, 2019, the Company sold, transferred and assigned to an unaffiliated third party 6% of its 25% equity interest in the Mining Subsidiaries to an unaffiliated third party for $1,000, evidenced by a promissory note due on September 30, 2020, reducing the Company’s equity interest to 19% in the former Mining Subsidiaries.
 
Other than as set forth above, it is possible that from time to time in the ordinary course of business we may be involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business. However, we are not aware of any such legal proceedings or investigations and, in the opinion of our Board of Directors, legal proceedings are not expected to have a material adverse effect on our financial position or results of operations.
 
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
 
 
The Company intends to file a post-effective amendment to its registration statement, registration file no.
333-227839
, declared effective by the SEC (the “Registration Statement”) on March 8, 2019, for among other purposes of: (i) including its audited financial statements for the years ended September 30, 2019 and 2018 and the interim financial statements for the three months ended December 31, 2019 and 2018; (ii) fully-updating the disclosure of the Company’s new business operations contained in the Company’s Form 10-K filed with the SEC on January 16, 2020; (iii) disclosing the fact that the Company has no involvement in the operations of the former wholly-owned Mining Subsidiaries; and (iv) disclosure of new management and risk factors related to the new business operations, among other material information.
    
 
23
 
  
Pursuant to the terms of the Registration Statement, which may be amended, we may offer and sell to Crown Bridge Partners, LLC (“CBP”), from time to time, shares of our Common Stock at fixed prices and prevailing market prices at the time of sale, at varying prices, or at negotiated prices. While we will not receive any proceeds from the sale of the shares of our Common Stock by CBP, we will receive proceeds from our initial sale of shares to CBP pursuant to the Equity Financing Agreement. We will sell shares to CBP at a price equal to 75% of the lesser of (1) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period beginning on the date on which we deliver a put notice to CBP (the “Market Price”) or (2) the lowest traded price of our Common Stock during the fifteen (15) consecutive trading day period following the Clearing Date of the put notice (“Valuation Price”). There will be a minimum of twenty (20) trading days between purchases.
 
 
None
 
 
None
 
 
None
 
 
The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.
 
Exhibit
No.
 
 
 
 
 
 
   
 
24
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  
 
QUAD M SOLUTIONS, INC.
 
 
 
Dated: February 19, 2020
By:
/s/ Pasquale Dileo
 
 
Pasquale Dileo
 
 
Chief Executive Officer (Principal Executive Officer
and Principal Financial Officer and Accounting Officer)
 
   
 
25
 
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