0001584618 --12-31 ACRL 463105245 Smaller Reporting Company Yes Yes No This amendment is being made solely to correctly attach the XBRL files. No other changes have been made to the document. true 2017 Q4 0001584618 2017-01-01 2017-12-31 0001584618 2017-12-31 0001584618 2017-08-09 0001584618 2017-09-30 0001584618 2016-12-31 0001584618 2017-07-01 2017-09-30 0001584618 2016-07-01 2016-09-30 0001584618 2017-01-01 2017-09-30 0001584618 2016-01-01 2016-09-30 0001584618 2016-09-30 0001584618 2017-02-01 0001584618 2017-04-04 0001584618 2017-07-24 0001584618 2017-07-27 0001584618 2017-07-28 0001584618 2017-08-14 0001584618 2017-08-21 0001584618 2017-08-28 0001584618 2017-08-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

 

FORM 10-Q/A

 

[x]     Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended September 30, 2017

-OR-

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transaction period from _________ to________

 

Commission File Number 333-192217

 

ATACAMA RESOURCES INTERNATIONAL, INC.

 (Exact name of registrant as specified in its charter)

 

 

 

 

Florida

 

46-3105245

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification)

 

10820 68th Place , Kenosha, WI 53142

(Address of principal executive offices, including zip code)

 

613-868-6157

 (Registrant's telephone number, including area code)

 

Indicate by check mark whether the issuer (1) 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [x]   No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerate filer, or a small reporting company (as defined by Rule 12b-2 of the Exchange Act):

 

Large accelerated filer        [  ]

 

Non-accelerated filer             [  ]

Accelerated filer                 [  ]

 

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 7(a)(2)(B) of the Securities Act   Yes [  ]  No [x]

 

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

 

The number of outstanding shares of the registrant's common stock as of November 21, 2017: 226,023,535


1



EXPLANATORY NOTE

This amendment to the Form 10-Q filed with the Securities and Exchange Commission on November 20, 2017 is being filed solely to correctly file the XBRL files.  No other changes were made to the document.


2



TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

 

 

 

 

 

Page

Item 1.  Financial Statements (Unaudited)

 

3

Item 2.  Management's Discussion and Analysis of

  Financial Condition and Results of Operations

 

15

Item 3.  Quantitative and Qualitative Disclosures

  About Market Risk

 

19

Item 4.  Controls and Procedures

 

19

 

PART II – OTHER INFORMATION

 

 

 

 

 

Item 1.  Legal Proceedings

 

20

Item 1A.  Risk Factors

 

20

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

20

Item 3.  Defaults upon Senior Securities

 

20

Item 4.  Mine Safety Disclosures

 

20

Item 5.  Other Information

 

20

Item 6.  Exhibits

 

20

 

 

 

SIGNATURES

 

23


3



Part I. Financial Information

Item 1. Financial Statements.

ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Balance Sheets

(Unaudited)

 

 

 

September 30,

2017

December 31,

2016

 

 

 

ASSETS

 

 

Current Assets

 

 

 Cash and cash equivalents

$ 10,421   

$ 17,670   

 Accounts receivable

27   

0   

 Prepaid expenses

0   

3,895   

Total Current Assets

10,448   

21,565   

 

 

 

TOTAL ASSETS

$ 10,448   

$ 21,565   

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

 

 

 Accounts payable

$ 329,644   

$ 567,528   

 Accrued interest

36,860   

0   

 Payable for Good2Drive Acquisition

0   

27,923   

 Due to related party

102,579   

5,608   

 Derivative Liability

9,713,609   

0   

 Convertible notes net of discount of $287,325 and $0

163,445   

0   

 Notes payable

23,800   

99,880   

Total Current Liabilities

10,369,937   

700,839   

 

 

 

Total Liabilities

10,369,937   

70,839   

 

COMMITMENTS AND CONTINGENCIES

 

 

 

Stockholders' Deficit

 

 

 Common stock: $0.0001 par value 500,000,000 authorized; 141,900,818 and 114,800,001 shares issued and outstanding, respectively

23,124   

13,990   

 Additional paid in capital

2,828,289   

1,466,801   

 Other comprehensive income

(2,160,642)  

(8,165)  

 Accumulated deficit

(11,050,259)  

(2,151,900)  

Total Stockholders' Deficit

(10,357,406)  

(679,274)  

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$ 10,448   

$ 21,565   

 

 

The accompanying notes are an integral part of these consolidated financial statements

s


4



ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

 

For the three

months ended

September 30,

2017

For the three

months ended

September 30,

2016

For the nine

months ended

September 30,

2017

For the nine

months ended

September 30,

2016

 

 

 

 

 

REVENUE, NET

$ 36   

0   

36   

$ 0   

 

 

 

 

 

OPERATING EXPENSE

 

 

 

 

 Consulting fees

0   

3,359   

0   

58,689   

 Exploration costs

0   

0   

33,578   

18,344   

 Management Fees

0   

114,000   

0   

249,000   

 Professional fees

0   

8,027   

147,166   

26,938   

 Property Taxes

0   

548   

0   

548   

 Stock based compensation

31,000   

0   

226,000   

0   

 Related party consulting fees

171,882   

0   

375,000   

0   

 Selling, general and administrative expenses

0   

7,218   

283,358   

15,381   

 Travel

79,385   

4,581   

0   

4,582   

 Impairment

0   

0   

167,647   

0   

Total operating expenses

282,267   

142,887   

1,232,749   

373,482   

 

 

 

 

 

Net loss from operations

(282,231)  

(142,887)  

(1,232,713)  

(373,482)  

 

 

 

 

 

 Interest expense

(3,234)  

(3,858)  

(3,234)  

(19.427)  

 Interest expense related to derivative liability

(90,301)  

0   

(215,643)  

0   

 Loss on Conversion of debt

(619,313)  

(247,135)  

(649,313)  

(247135)  

 Loss due to impairment of intangible

0   

(155,000)  

0   

(155,000)  

 Loss due to revaluation of investment

0   

(9.222)  

0   

(9,222)  

 Change in Derivative Liability

(9,734,406)  

0   

(8,949,356)  

0   

 

 

 

 

 

Net Income (Loss)

(10,016,637)  

(558,102)  

(11,050,259)  

(804,266)  

 

 

 

 

 

 Foreign exchange (loss)

(1,615)  

(1,106)  

(576)  

(2,293)  

 

 

 

 

 

Comprehensive (loss)

(10,018,252)  

$ (559,208)  

$ (11,050,835)  

$ (806,559)  

 

 

 

 

 

Basic and diluted loss per share

(0.048)  

$ (0.000)  

$ (0.049)  

$ (0.000)  

 

 

 

 

 

Weighted average number of shares outstanding

226,023,535   

127,173,382   

226,023,535   

127,173,382   

 

 

The accompanying notes are an integral part of these consolidated financial statements


5



ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the nine months

ended September 30,

2017

For the nine months

ended September 30,

2016

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 Net Income (Loss)

$ (11,050,259)  

$ (804,266)  

Changes in assets and liabilities:

 

 

 Increase (decrease) in operating liabilities:

 

 

   Accounts Payable

(237,884)  

152,185   

   Stock based compensation

170,000   

0   

   Accounts Receivable

(27)  

0   

   Impairment on intangible asset

0   

155,000   

   Loss on investment revaluation

0   

9,222   

   Loss on debt conversion

649,313   

247,135   

   Accrued Expenses

8,957   

20,336   

   Prepaid Asset

3,895   

(3,589)  

   Proceeds from derivative liability

9,713,609   

0   

Net cash provided by (used in) operating activities

(742,396)  

(223,977)  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 Proceeds from related parties

(552,342)  

(3,195)  

 Proceeds from notes payable

(76,000)  

(133,024)  

 Proceeds from issuance of stock

1,362,069   

0   

Net cash provided by financing activities

734,727   

(136,219)  

 

 

 

Foreign Currency Translation

576   

(2,293)  

Net change in cash and cash equivalents

(7,249)  

(6,703)  

 

 

 

Cash and cash equivalents

 

 

 Beginning of period

17,670   

$ 8,477   

 End of Period

$ 10,421   

$ 1,774   

 

 

 

Supplemental Cash Flow Information

 

 

 Cash paid for interest

$ 0   

$ 0   

 Cash paid for taxes

$ 0   

$ 0   

 

 

 

Non-cash Transaction

 

 

  Conversion of debt

$ 0   

$ 157,275   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements


6



Atacama Resources International, Inc.

Notes to the Consolidated Financial Statements

For the period ending September 30, 2017

(unaudited)

 

NOTE 1. NATURE OF BUSINESS

 

ORGANIZATION

 

Atacama Resources International, Inc. (hereinafter “ARII”) is a company incorporated in the State of Florida in June 2013. We were formed as a consultant to the mining industry.  The mining industry is subject to constant change due to market trends, thereby making it extremely competitive. The mining industry is complex, because several segments are regulated by both federal and state governments. ARII’s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by ARII, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.

 

Atacama Resources International Inc. purchase 100% of Good2Drive LLC, a smartphone application company that establishes a baseline to test driver’s alertness, in December 2015.  The acquisition includes the rights to two filed patent applications. The financial operations of Good2Drive LLC have been consolidated in the unaudited financial statements of Atacama Resources International Inc.

 

NOTE 2. GOING CONCERN

 

The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources.  Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses.  However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

 

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company.  In addition, profitability will ultimately depend upon the level of revenues received from business operations.  However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

UNAUDITED INTERIM FINANICAL STATEMENTS

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles. For complete financial statements please refer to our 2016 Annual Report on Form 10-K, filed on April 17, 2017.

 


7



In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the consolidated financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

 

BASIS OF PRESENTATION AND USE OF ESTIMATES

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents.  Cash and cash equivalents totaled $10,421 at September 30, 2017 and $17,670 at December 31, 2016.

 

CASH FLOWS REPORTING

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.

 

EXPLORATION AND DEVELOPMENT COSTS

Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities – Mining.  Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized.  Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.  Costs of abandoned projects are charged to operations upon abandonment.  The Company evaluates at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded.  The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

 

The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.

 

Capitalized costs are expensed in the period when the termination has been made that economic production does not appear reasonably certain.

 

During the nine months ending September 30, 2017 and 2016, the Company recorded exploration costs of $33,578 and $18,344, respectively.

 

RELATED PARTIES

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.  Related party transactions are summarized in Note 7.

 


8



FINANCIAL INSTRUMENTS

The Company’s consolidated balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

 

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

 

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

 

REVENUE RECOGNITION

The Company recognizes revenue from the sale of products and services in accordance with ASC 605,”Revenue Recognition.”

 

The Company recognizes revenue from services only when all of the following criteria have been met:

 

 

i)

Persuasive evidence for an agreement exists;

 

ii)

Service has been provided;

 

iii)

The fee is fixed or determinable; and,

 

iv)

Collection is reasonably assured.

 

Revenue related to multi-media downloads is fully recognized when the above criteria are met.

 

The Company derives revenue from the sale of its Good2Drive appliation.  Revenue is generated by a third party, iTunes or the Google Play Store (the Vendors) when a customer purchases the application. The Vendors submit inivoices and slaes reports to the Company and submits payment net of their cost.   As of September 30 2017 the Company record $36 of revenue.

 

DEFERRED INCOME TAXES AND VALUATION ALLOWANCE

The Company accounts for income taxes under ASC 740, Income Taxes.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  No deferred tax assets or liabilities were recognized as of September 30, 2017 or December 31, 2016.

 


9



NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.”  The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share.  Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding.  Dilutive potential common shares are additional common shares assumed to be exercised.

 

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at September 30, 2017 and December 31, 2016.  As of September 30, 2017, the Company had no dilutive potential common shares.

 

SHARE-BASED EXPENSE

ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired.  Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.  Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.  

 

RECENT ACCOUNTING PRONOUNCEMENTS

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.  Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.

 

We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-10”) and have applied the standard as of the dates during the periods reported.

 

We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-9”).  The Company does not believe that the new or modified principal will not have a material effect on these financial statements.

 

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

 

NOTE 4. PREPAID EXPENSE

 

The Company’s prepaid expense consisted of a retainer fee paid the law offices of Clifford J. Hunt, P.A. of $2,250 retainer and a last month rental fee for a storage facility of $1,644.  The prepaid balance was $0 and $7,483 on September 30, 2017 and December 31, 2016, respectively.


10



NOTE 5.  INVESTMENTS

 

 

September 30, 2017

December 31, 2016

 

 

 

CJP Properties: On April 5, the Company completed a purchase of mineral rights acquired in are in and around Biron Bay, Ontario Canada. Consists of 3,114 acres. The Company exchanged 600,000 shares of stock on April 5, 2017 valued at $158,000 resulting in a price per share of 26 cents. The market value at April 5 was .36 cents per share resulting in a loss of $61,000 which is included in the Company’s profit and loss as impairment equaling $219,000. The purchase included an additional payment of $127,000 in Canadian dollars to be paid at an undetermined future date.

 

The separate properties are described as follows:

 

         Property                      Mineral        Size/Acres

1. Biron Bay                    Iron Ore              99 

2. A1 Kimberlite             Diamond             395 

3. Simon Copper             Copper                939 

4. Cabo                            Diamond             317 

5. Mystery Graphite        Graphite              1,265 

6. Coronation Graphite   Graphite               99  

 

The valuation of these mineral rights have been re-measured and deemed to have no carrying value at September 30, 2017. This includes the $219,000 and $9,647 in prior periods for a total impairment expense of $228,647.

$ 0   

$9,647   

 

Allsopp Properties: Mineral Rights acquired in the Kirkland Lake Gold’s Macassa mine Complex Ontario Canada. Consists of 1,680 acres.

 

Exploration costs of $50,000 annually for the first two years of the agreement are required to meet contractual commitments and have been incurred by December 2016. The valuation of these mineral rights have been re-measured and deemed to have no carrying value at September 30, 2017.

$ 0   

$ 9,222   

 

NOTE 6.  INTANGIBLE ASSET

 

The Company had no intangible assets at September 30, 2017.

 

NOTE 7. NOTES PAYABLE

 

 

 

September 30,

2017

 

December 31,

2016

 

 

 

 

 


11



On August 31, 2017, Adar Baya, LLC an unrelated party has entered into a convertible note with the Company in the amount of $100,000. The note states an 12% interest rate with a maturity date of July 31, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 25 trading days.

 

$100,000

 

 

 

 

 

 

 

On May 9, 2017, Power Up Lending Group, LTD an unrelated party has entered into a convertible note with the Company in the amount of $35,000. The note states an 8% interest rate with a maturity date of November 5, 2017, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.

 

35,000

 

 

 

 

 

 

 

On July 26, 2017, Power Up Lending Group, LTD an unrelated party has entered into a convertible note with the Company in the amount of $53,000. The note states an 8% interest rate with a maturity date of April 30, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.

 

53,000

 

 

 

 

 

 

 

On April 24, 2017, Crown Bridge Partners, LLC, an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 12% interest rate with a maturity date of April 23, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time during the period beginning on the date of this note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.

 

30,000

 

 

 

 

 

 

 

On May 19, 2017, Eagle Equities, LLC, an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 8% interest rate with a maturity date of January 12, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time from the date of the note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.

 

30,000

 

 

 

 

 

 

 

On June 26, 2017, GS Capital Partners, LLC , an unrelated party has entered into a convertible note with the Company in the amount of $42,000. The note states an 8% interest rate with a maturity date of June 25, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 40% to the lowest trading day during the previous 15 trading days.

 

42,000

 

 

 

 

 

 

 


12



On June 2, 2017, LG Capital Funding, LLC , an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 8% interest rate with a maturity date of February 2, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.

 

30,000

 

 

 

 

 

 

 

On June 30, 2017, Peak One Opportunity Fund, L.P, an unrelated party has entered into a convertible note with the Company in the amount of $50,000. The note states an -0-% interest rate with a maturity date of June 30, 2020, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.

 

50,000

 

 

 

 

 

 

 

New Opportunity Business Solutions, Inc., a related party by virtue of common ownership in various companies that hold stock, for consulting services to the Company. Atacama Resources International, Inc. (ARII) is a client of New Opportunity Business Solutions, Inc. The original amount of the note payable was $199,800.  The note states a 10% interest rate with no set maturity date and is due on demand. Payment of principal and interest is due on demand and is not contingent. However, to the extent that the Company incurs expense to accomplish the goal of the consulting agreement, the obligation of the company shall be reduced an equal amount. The note is as support for the consulting fee which was owed by ARII but not paid as required.  Accrued interest at September 30, 2017 and December 31, 2016 was $27,902 and $63,663, respectively.

 

 

23,800

 

143,880

 

 

 

 

 

Total notes payable

$

393,800

$

143,880

 

 

 

 

 

Current portion

$

393,800

$

143,880

 

NOTE 8. INCOME TAXES

 

At September 30, 2017, the Company had a net operating loss carry–forward for Federal income tax purposes of approximately $4,154,331 that may be offset against future taxable income through 2032  No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets   calculated at the effective rates note below, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the valuation allowance.

 

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

 

The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.6% to income before taxes), as follows:

 

 

 

 

For the Period Ended

September 30, 2017

 

For the Period Ended

September 30, 2016


13



 

 

 

 

 

Tax expense (benefit) at the statutory rate

$

(3,756,576)

$

(10,404)

State income taxes, net of federal income tax benefit

 

(397,755)

 

(1,102)

Change in valuation allowance

 

4,154,331

 

11,506

Total

$

0

$

0

 

The tax effects of the temporary differences between reportable consolidated financial statement income and taxable income are recognized as deferred tax assets and liabilities.

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

 

For the period ending September 30, 2017 and for the year ended December 31, 2016, the Company has net operating losses from operations. The carry forwards expire through the year 2032. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.

 

The Company’s net deferred tax asset as of September 30, 2017 and December 31, 2016 is as follows:

 

 

 

September 30,

2017

 

December 31,

2016

 

 

 

 

 

Deferred tax assets

$

4,154,331

$

225,475

Valuation allowance

 

(4,154,331)

 

(225,475)

Net deferred tax asset

$

0

$

0

 

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the period from inception ended December 31, 2013 through the year ended December 31, 2016.  The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest through the year ended December 31, 2016.

 

NOTE 9. SHAREHOLDERS’ EQUITY

 

The Company, through approval of its Board of Directors, authorized common shares of 500,000,000 with a par value of $0.0001.

 

COMMON STOCK

On February 1, 2017, the Company issued 2,000,000 shares, at $0.085 per share, to William D. Webb, Jr., a related party, in exchange for consulting services totaling $170,000.   The market price on February 1 was $0.10 resulting in a loss of $30,000 which is reflected in the financial statements.

 

On April 4, 2017, the Company issued 600,000 shares, at $0.26 per share, to CJP Exploration, Inc.an unrelated party, in exchange for certain mineral rights described herein totaling $158,000.  The market price on April 4, 2017 was $0.31 resulting in a loss of $28,000 which is reflected in the financial statements.

 

On July 24, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to Warren Booth, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 24, 2017 was $0.051 resulting in a loss of $350,000 which is reflected in the financial statements.

 

On July 27, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to JayCo Consulting, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $91,700 which is reflected in the financial statements.


14



 

On July 27, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Daniel Alejandro Tellez Villa, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Daniel Nunez Tellez, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.

 

On July 28, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Abraham Abu, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Surf Financial Group, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 900,000 shares, at $0.015 per share, to Karen Clair, an unrelated party.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $3,150 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 782,323 shares, at $0.02 per share, to Alan Flasch, a related party; 1,799,900 shares to Donald Swarz Trust, a related party; 8,116,000 shares to Dan Finch, a related party; 10,000,000 shares to Bower Solution, LTD, a related party; and 3,150,000 shares to Will D. Webb, Jr, a related party in lieu of debt owed to them by the Company. The market price on August 14, 2017 was $0.0115 resulting in a gain of $202,710 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 2,221,420 shares, at $0.02 per share, to Nelson Riis, an unrelated party, in exchange for debt; and 4,534,709 shares at $.02 to Cougar Pipeline Inspections and Consulting LTD, an unrelated party, in exchange for debt.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $57,427 which is reflected in the financial statements.

 

August 21, 2017, the Company issued 666,667 shares, at $0.015 per share, to Barbara Bush, an unrelated party; and 333,333 shares at $.015 to Kimberly Wieting, an unrelated party.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $2,300 which is reflected in the financial statements.

 

August 28, 2017, the Company issued 10,000,000 shares, at $0.001 per share, to Daniel Alejandro Tellez Villa , an unrelated party.  The market price on August 28, 2017 was $0.0102 resulting in a loss of $92,000 which is reflected in the financial statements.

 

August 30, 2017, the Company issued 12,000,000 shares, at $0.001 per share, to New Opportunity Business Solutions, an unrelated party, in lieu of debt owed to New Opportunity.  The market price on August 28, 2017 was $0.0101 resulting in a loss of $109,200 which is reflected in the financial statements.

 

There were 226,023,535 shares of common stock issued and outstanding at September 30, 2017.

 

NOTE 10. RELATED PARTY TRANSACTIONS

 

DUE TO RELATED PARTIES

During the nine months ended September 30, 2017, Glenn Grant, CEO and director paid certain expenses on behalf of the Company and is due reimbursement. As of September 30, 2017 the balance due to the related party was 102,579.

 

EQUITY TRANSACTIONS

On February 1, 2017 through approval of its Board of Directors, the Company issued 2,000,000 shares at $0.085 per share to William D. Webb, Jr, CFO and in exchange for services totaling $170,000. The market price was $.10 resulting in a loss of $30,000.

 

August 14, 2017 through approval of its Board of Directors, the Company issued 782,323 shares, at $0.02 per share, to Alan Flasch, a related party; 1,799,900 shares to Donald Swarz Trust, a related party; 8,116,000 shares to Dan Finch, a related party; 10,000,000 shares to Bower Solution, LTD, a related party; and 3,150,000 shares to Will D. Webb, Jr, a related party in lieu of debt owed to them by the Company. The market price on August 14, 2017 was $0.0115 resulting in a gain of $202,710 which is reflected in the financial statements.

 

NOTE 11. COMMITMENTS AND CONTINGENCIES


15



 

There are no commitments and contingencies of the Company as of September 30, 2017.

 

NOTE 12. WARRANTS AND OPTIONS

 

There are no warrants or options outstanding to acquire any additional shares of common stock of the Company as of September 30, 2017.

 

NOTE 13. CONVERTIBLE DEBT

 

On May 9, 2017, The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $35,000 together with an interest rate of eight percent (8%) per annum and a maturity date of November 5, 2017. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-five percent (45%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $131,769.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $600 resulting in a debt discount balance of $(7,000).

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

Power Up Lending Group, Ltd., a non-related party convertible promissory note:

 

$

35,000

 

 

$

0

 

Debt discount

 

 

(7,000

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

28,000

 

 

$

0

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

600

 

 

 

0

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

27,400

 

 

$

0

 

On July 26, 2017, The Company executed a convertible promissory note with Power Up Lending Group, ltd. The note carries a principal balance of $53,000 together with an interest rate of eight percent (8%) per annum and a maturity date of December 15, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-five percent (45%).

 


16



The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $163,006.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $0 resulting in a debt discount balance of $(57,292).

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

Power Up Lending Group, Ltd., a non-related party convertible promissory note:

 

$

68,750

 

 

$

-0-

 

Debt discount

 

 

(57,292

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

11,458

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

 

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

11,458

 

 

$

-0-

 

 

On April 24 2017, The Company executed a convertible promissory note with Crown Bridge Partners, LLC. The note carries a principal balance of $30,000 together with an interest rate of twelve percent (12%) per annum and a maturity date of April 23, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,055,671.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $3,104 resulting in a debt discount balance of $(16,932).

 

Convertible Note payable consisted of the following as of September 30, 2017:

 

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

Crown Bridge Partners, LLC., a non-related party convertible promissory note:

 

$

30,000

 

 

$

-0-

 

Debt discount

 

 

(16,932

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

13.068

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

3.104

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

9,964

 

 

$

-0-

 

 


17



On May 19, 2017, The Company executed a convertible promissory note with Eagle Equities, LLC. The note carries a principal balance of $30,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of January 12, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,090,005

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $511 resulting in a debt discount balance of $(7,667).

 

Convertible Note payable consisted of the following as of September 30, 2017:

 

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

Eagle Equities, LLC., a non-related party convertible promissory note:

 

$

30,000

 

 

$

-0-

 

Debt discount

 

 

(7,667

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

21,311

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

511

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

21,822

 

 

$

-0-

 

 

On September 26, 2017, The Company executed a convertible promissory note with GS Capital Partners, LLC. The note carries a principal balance of $42,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of September 25, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (40%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (60%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,233,491.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $933 resulting in a debt discount balance of $(19,600).

 

Convertible Note payable consisted of the following as of September 30, 2017:

 

 


18



 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

GS Capital Partners, LLC., a non-related party convertible promissory note:

 

$

42,000

 

 

$

-0-

 

Debt discount

 

 

(19,600

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

22.400

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

933

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

21,467

 

 

$

-0-

 

 

On September 2, 2017, The Company executed a convertible promissory note with LG Capital Funding, LLC. The note carries a principal balance of $40,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of February 2, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,659.952.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $667 resulting in a debt discount balance of $(13,333).

 

Convertible Note payable consisted of the following as of September 30, 2017:

 

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

LG Capital Funding, LLC., a non-related party convertible promissory note:

 

$

40,000

 

 

$

-0-

 

Debt discount

 

 

(13,333

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

26,667

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

(667)

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

26,000

 

 

$

-0-

 

 

 

On August 31, 2017, The Company executed a convertible promissory note with Adar Bays, LLC The note carries a principal balance of $68,750 together with an interest rate of twelve percent (12%) per annum and a maturity date of February 2, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

 

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-


19



five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).

 

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $163,006.

 

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $11,458 resulting in a debt discount balance of $(13,333).

 

Convertible Note payable consisted of the following as of September 30, 2017:

 

 

 

 

September 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

 

 

Adar Bays, a non-related party convertible promissory note:

 

$

68,750

 

 

$

-0-

 

Debt discount

 

 

(57,292

)

 

 

 

 

Convertible notes payable net of debt discount

 

$

11,458

 

 

$

-0-

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

(678)

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$

10,780

 

 

$

-0-

 

 

 

 

NOTE 14. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date the consolidated financial statements were issued.


20



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Special Note Regarding Forward Looking Statements.

 

This quarterly report on Form 10-Q of Atacama Resources International, Inc. for the period ended September 30, 2017 contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby.  To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties.  In particular, statements under this section contains forward looking statements.  Where in any forward looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

 

The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the cost and effects of legal proceedings.

 

You should not rely on forward looking statements in this quarterly report.  This quarterly report contains forward looking statements that involve risks and uncertainties.  We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements.  Prospective investors should not place undue reliance on these forward looking statements, which apply only as of the date of this quarterly report.  Our actual results could differ materially from those anticipated in these forward-looking statements.

 

Our Business Overview

 

ARII is an operating company that provides consulting services to companies and individuals participating in the mining industry, manages actual mining operations and owns and sells smartphone Apps. We have conducted our mining operations in the Kirkland Lake region of Ontario, Canada,

 

Plan of Operation

 

Our plan of operation for the next twelve months is to expand our client base to the extent that we pursue the corporate advisory market in the mining sector and continue to acquire mining claims, run geophysical testing, core drilling, analysis and assays to determine proven reserves appropriate steps to take in actual mining processes.  We will also develop international marketing and sales strategies for our Good2Drive App. As we continue to grow, we will need to raise additional funds. We do anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. We do not have need for the purchase of any property or equipment at this time. ARII will not have any significant changes in the current number of employees.

 

Our plan of operation for the next twelve months is to raise capital to continue to expand our operations.  We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(a)(2) of the Securities Act of 1933.  

 

In order to continue as a going concern, we will need, among other things, additional capital resources.  Management’s plan to obtain such resources include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses.  However, management cannot provide any assurance that we will be successful in accomplishing any of its plans.


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Implications of Being an Emerging Growth Company

 

We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

 

 

 

A requirement to have only two years of audited financial statements and only two years of related MD&A;

 

 

 

Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

 

 

 

Reduced disclosure about the emerging growth company’s executive compensation arrangements; and

 

 

 

No non-binding advisory votes on executive compensation or golden parachute arrangements.

  

We have already taken advantage of these reduced reporting burdens in this Form 10-Q, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.  We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act.  This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

We are a reporting company and file all reports required under sections 13 and 15d of the Exchange Act.

 

Critical Accounting Policies

 

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions.  On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our consolidated financial statements.  

 

While we believe that the historical experience, current trends and other factors considered support the preparation of our consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

 

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 Annual Report on Form 10-K.

 

Results of Consolidated Operations for the nine months ended September 30, 2017 and 2016.

 

The Company recorded revenues of $36 during the nine months ended September 30, 2017. We expensed exploration costs of $33,578, professional fees of $104,284, stock based compensation of $195,000, impairment expenses of $228,647, related


22



party consulting fees of $246,000, and selling and administrative costs of $142,973, resulting in total operating expenses of $950,482. We accrued interest expenses of $125,342, recorded a loss on the conversion of debt of $30,000 and recorded foreign exchange loss of $1,688. As a result, we had a net comprehensive loss of $1,002,309 for the nine months ended September 30, 2017.

 

Comparatively, the Company did not record any revenues during the nine months ended September 30, 2016. We expensed exploration costs of $18,344, professional fees of $26,938, consulting fees of $56,689, management fees of $249,000, property taxes of $548, travel of $4,582 and selling and administrative costs of $15,381, resulting in total operating expenses of $373,482. We accrued interest expenses of $19,427, recorded a foreign exchange loss of $2,293, a loss on investment of $9,222 and an impairment on intangilbr assets of $155,000 resulting in a net loss of $806,559 for the nine months ended September 30, 2016.

 

The $950,842, or 422%, increase in net comprehensive loss for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 is primarily due to compensation costs and interest expense during the nine months ended September 30, 2017.

 

Consolidated Financial Condition

 

Total Assets .  Total assets at were $12,531 and $21,565 at September 30, 2017 and December 31, 2016.  Total assets at September 30, 2017 and December 31, 2016 consisted of cash of $10,421 and $17,670, respectively; prepaid expense of $-0- and $3,894, respectively; accounts receivable of $713 and &-0- and INvestmetnin subsidiary of $1,397 and $-0-, respectively.  Total assets were due to cash received.

 

Total Liabilities .  Total liabilities were $10,369,937, and $700,839 at September 30, 2017 and December 31, 2016.  Total liabilities at September 30, 2017 and December 31, 2016 consisted of accounts payable of $329,644 and $567,528, respectively; notes payable of $23,800 and $99,800, respectively; derivative liabilities of $9,713,609 and $-0-, respectively; convertible notes of $163,445 and $ -0-, respectively; due to related parties of 12,579 and $5,608, respectively and accrued interest of $36,860 and $29,903, respectively.  Total liabilities were due to increase in convertible loans party loans acts and compensation expenses.

 

Consolidated Liquidity and Capital Resources

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.  

 

The Company sustained a loss for the nine months ending September 30, 2017 of $11,050,259  The Company has an accumulated loss of $13,209,559 as of September 30, 2017.  Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of services.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We are presently unable to meet our obligations as they come due.  At September 30, 2017 we had working capital deficit of $10,357,406  Our working capital deficit is due to the results of operations.

 

Net cash provided and used in operating activities for the nine months ended September 30, 2017 and 2016 was $(414,886) and ($232,977), respectively.   Net cash used in operating activities includes our net loss, prepaid expenses, accounts payable and accrued interest.

 

Net cash provided/used by financing activities for the nine months ended September 30, 2017 and 2016 was $1,293,917 and $219,567, respectively.  Net cash provided by financing activities included proceeds from related parties of $93,145 and $(3,195), respectively, proceeds from notes payable of $122,708 and $(133,024), respectively, proceeds from Derivative liability of $465,331 and &-0-, respectively; and proceeds from the issuance of common stock of $170,000 and $355,786, respectively.

 

We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash


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generated from operations and raising additional funds from the private sources and/or debt financing.  However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability.  Our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our company’s securities after the completion of this offering.  We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933.  See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”

 

We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.

 

Capital Resources.

 

We had no material commitments for capital expenditures as of September 30, 2017.

 

Off-Balance Sheet Arrangements

 

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4. Controls and Procedures .

 

(a)    Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.  

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

With respect to the period ending September 30, 2017, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

 

Based upon our evaluation regarding the period ending September 30, 2017, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, have added a Chief Financial Officer to oversee the financial information at multiple levels. Though there may be material weaknesses from a lack of a majority of outside directors on the board of directors, the placement of a Chief Financial Officer has compensated for this weakness. Through the use of external consultants and the review process, management believes that the consolidated financial statements and other information presented herewith are materially correct. Based on this evaluation, management concluded that our financial disclosure controls and procedures were not effective so as to timely identify, correct and disclose information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

 

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  However, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud.  A control system, no matter how well


24



conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

 

(b) Changes in Internal Controls.  

 

There have been no changes in the Company’s internal control over financial reporting during the period ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

For a full discussion of controls and procedures refer to Item 9A, Controls and Procedures, in our 2016 Annual Report on Form 10K.


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Part II. Other Information

 

Item 1.   Legal Proceedings  

None

 

Item 1A.  Risk Factors

Not applicable for smaller reporting company.

 

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds  

On July 24, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to Warren Booth, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 24, 2017 was $0.051 resulting in a loss of $350,000 which is reflected in the financial statements.

 

On July 27, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to JayCo Consulting, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $91,700 which is reflected in the financial statements.

On July 27, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Daniel Alejandro Tellez Villa, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Daniel Nunez Tellez, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.

On July 28, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Abraham Abu, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Surf Financial Group, an unrelated party, in exchange for debt owed to NOBS.  The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 900,000 shares, at $0.015 per share, to Karen Clair, an unrelated party.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $3,150 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 782,323 shares, at $0.02 per share, to Alan Flasch, a related party; 1,799,900 shares to Donald Swarz Trust, a related party; 8,116,000 shares to Dan Finch, a related party; 10,000,000 shares to Bower Solution, LTD, a related party; and 3,150,000 shares to Will D. Webb, Jr, a related party in lieu of debt owed to them by the Company. The market price on August 14, 2017 was $0.0115 resulting in a gain of $202,710 which is reflected in the financial statements.

 

August 14, 2017, the Company issued 2,221,420 shares, at $0.02 per share, to Nelson Riis, an unrelated party, in exchange for debt; and 4,534,709 shares at $.02 to Cougar Pipeline Inspections and Consulting LTD, an unrelated party, in exchange for debt.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $57,427 which is reflected in the financial statements.

 

August 21, 2017, the Company issued 666,667 shares, at $0.015 per share, to Barbara Bush, an unrelated party; and 333,333 shares at $.015 to Kimberly Wieting, an unrelated party.  The market price on August 14, 2017 was $0.0115 resulting in a gain of $2,300 which is reflected in the financial statements.

 

August 28, 2017, the Company issued 10,000,000 shares, at $0.001 per share, to Daniel Alejandro Tellez Villa , an unrelated party.  The market price on August 28, 2017 was $0.0102 resulting in a loss of $92,000 which is reflected in the financial statements.

 

August 30, 2017, the Company issued 12,000,000 shares, at $0.001 per share, to New Opportunity Business Solutions, an unrelated party, in lieu of debt owed to New Opportunity.  The market price on August 28, 2017 was $0.0101 resulting in a loss of $109,200 which is reflected in the financial statements.

 

Item 3.   Defaults Upon Senior Securities

None


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Item 4.  Mine Safety Disclosures

Not Applicable 

 

Item 5.   Other Information

None

 

Item 6.   Exhibits

 

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**   XBRL Instance Document

101.SCH**   XBRL Taxonomy Extension Schema Document

101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**   XBRL Taxonomy Extension Label Linkbase Document

101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


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Signatures

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

Atacama Resources International, Inc.

 

NAME

 

TITLE

 

DATE

 

 

 

 

 

/s/ Glenn Grant

 

Principal Executive Officer,

Principal Accounting Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors

 

November 21, 2017

Glenn Grant

 

 

 

 


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