Blusky Ai Inc 10-K for FY2023
Blusky Ai Inc. (BSAI)
About this 10-K
Blusky Ai Inc filed this 10-K on May 2, 2024, covering the fiscal year ended December 31, 2023 (FY2023).
Headline figures
Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $12.74M
- compared with a net loss of $4.15M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. –
(Name of registrant as specified in its Charter) |
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(State or other Jurisdiction of Incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
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(Registrant’s Telephone Number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $0.00001 par value
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
Indicate by check mark if the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
(1) Yes ☒ No ☐ (2)
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging growth company |
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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
State the aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common stock was last sold, or the average bid and asked price of such common stock, as of the last business day of the Registrant’s most recently completed second quarter: $
Outstanding Shares
As of May 2, 2024, the Registrant had
Documents Incorporated by Reference
See Part IV, Item 15.
TABLE OF CONTENTS
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GLOSSARY OF MINING TERMS
Exploration Stage
An “exploration stage” prospect is one which is not in either the development or production stage.
Development Stage
A “development stage” project is one which is undergoing preparation of an established commercially mineable deposit for its extraction, but which is not yet in production. This stage occurs after completion of a feasibility study.
Mineralized
The term “mineralized material” refers to material that is not included in the reserve as it does not meet all the criteria for adequate demonstration for economic or legal extraction.
Probable Reserve
The term “probable reserve” refers to reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Production Stage
A “production stage” project is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.
Proven Reserve
The term “proven reserve” refers to reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well-established.
The term “reserve” refers to that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. (“Bankable standards” implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing.) A reserve includes adjustments to the in-situ tons and grade to include diluting materials and allowances for losses that might occur when the material is mined.
Additional definitions for terms currently or previously used in the Company’s Annual Reports filed on Form 10-K:
Assay – a measure of the valuable mineral content.
Block model – The representation of geologic units using three-dimensional blocks of pre-determined sizes.
Cut-off grade – When determining economically viable mineral reserves, the lowest grade of mineralized material that qualifies as ore, i.e., that can be mined at a profit.
Diamond drill – A type of rotary drill in which the cutting is done by abrasion rather than by percussion. The drill cuts a core of rock which is recovered in long cylindrical sections.
Fault - A fracture in the earth’s crust caused by tectonic forces with displacement along the fracture.
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Feasibility study – A study or group of studies that determine the economic viability of a given mineral occurrence.
g/t or gpt – Grams per metric ton.
Grade – A term used to assign metal value to resources and reserves, such as gram per ton (g/t) or troy ounces per ton (oz/ton).
Gravity – A methodology using instrumentation allowing the accurate measuring of the difference between densities of various geological units in situ.
Heap leaching – A process which uses dilute sodium-cyanide solutions to percolate through run-of-mine or crushed ore heaped on lined pad to dissolve gold and/or silver.
in-situ – in its natural position.
Mineral – A naturally formed chemical element or compound having a definite chemical composition and, usually, a characteristic crystal form.
Mineralization – A natural occurrence in rocks or soil of one or more metal yielding minerals.
Mineral deposit – A mineralized body, which has been intersected by a sufficient number of drill holes or by underground workings to give an estimate of grade(s) of metal(s) and thus to warrant further exploration or development. A mineral deposit does not qualify as a commercially viable mineral deposit with reserves under standards set by the U.S. Securities and Exchange Commission until a final, comprehensive, economic, technical and legal feasibility study has been completed.
Mining – The process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product. Exploration continues during the mining process and, in many cases, mineral reserves are expanded during the life of the mine operations as the exploration potential of the deposit is realized.
NSR – A net smelter returns royalty, which is customarily calculated by subtracting from gross revenues a deduction for calculated mill recoveries, transport costs of any concentrates to a smelter, treatment and refining charges, and other deductions at the smelter and multiplying that result by the prescribed rate.
Open pit – Surface mining in which the ore is extracted from a pit or quarry, the geometry of the pit may vary with the characteristics of the ore body.
Ore - A natural aggregate of one or more minerals which, at a specified time and place, may be mined and processed and the product(s) sold at a profit or from which some part may be profitably separated.
Ore body – a mostly solid and fairly continuous mass of mineralization estimated to be economically mineable.
Ore grade – the average weight of the valuable metal or mineral contained in a specific weight of ore i.e. grams per ton of ore.
Oxide – gold bearing ore which results from the oxidation of near surface sulfide ore.
Quartz – a mineral composed of silicon dioxide, SiO2 (silica).
Reclamation – The process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.
Rock – indurated naturally occurring mineral matter of various compositions.
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Sampling and analytical variance/precision – an estimate of the total error induced by sampling, sample preparation and analysis.
SEC Industry Guide 7 – U.S. reporting guidelines that apply to registrants engaged or to be engaged in significant mining operations.
Sediment – particles transported by water, wind, gravity or ice.
Sedimentary rock – rock formed at the earth’s surface from solid particles, whether mineral or organic, which have been moved from their position of origin and re-deposited.
Strike – the direction or trend that a structural surface, e.g. a bedding or fault plane, takes as it intersects the horizontal
Strip – to remove barren rock or overburden in order to expose ore.
Vein – a thin, sheet like crosscutting body of hydrothermal mineralization, principally quartz.
PART I
ITEM 1. BUSINESS
As used in this Annual Report on Form 10-K, unless otherwise indicated, the terms “we,” “us,” “our” and “the Company” refer to Inception Mining, Inc., a Nevada corporation.
Forward-Looking Statements and Associated Risks.
This Annual Report on Form 10-K contains forward-looking statements.
Such forward-looking statements include statements regarding, among other things, (1) discussions about mineral resources and mineralized material, (2) our projected sales and profitability, (3) our growth strategies, (4) anticipated trends in our industry, (5) our future financing plans, (6) our anticipated needs for working capital, (7) our lack of operational experience and (8) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements constitute forward-looking statements. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. Factors that may cause results to vary include, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings on Forms 10-K and 10-Q. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this filing generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under Item 1A below and other risks and matters described in this filing and in our other SEC filings. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur as projected. We do not undertake any obligation to update any forward-looking statements.
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The Company
Overview
We are a mining company that was formed in Nevada on July 2, 2007. We currently operate as a consultant and advisor to the mining industry. Historically, we have been engaged in the production of precious metals. From 2013 to 2020, the Company owned certain real property and the associated exploration permits and mineral rights commonly known as the UP and Burlington Gold Mine in Idaho (“UP and Burlington”). From 2015 through January 24, 2023, the Company operated the Clavo Rico mine in Honduras through its wholly-owned subsidiary, Compañía Minera Cerros del Sur, S.A de C.V. (“CMCS”) and other mining concessions. The Clavo Rico mine’s workings include several historical underground mining operations dating back to the early Mayan and Spanish occupation, and the primary mine operated through 2022 is located on the 200-hectare Clavo Rico Concession, located in southern Honduras.
2023 Divestiture of the Clavo Rico Mine
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company.
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
The purchase price for the sale of CMCS by the Company to MLM consisted of the following cash consideration (a) $204,200 was delivered by MLM to the Company on January 3, 2023 to pay outstanding debts owed by the Corporation; (b) $300,000 was delivered by MLM to the Company on January 5, 2023 to satisfy existing debts of the Company; (c) $100,000 was delivered by MLM to the Company on January 16, 2023; (d) $200,000 was delivered by MLM to the Company on January 17, 2023; (e) $1,200,000 was delivered by MLM to the Company on January 18, 2023, to pay a settlement amount for existing debt of the Company; (f) $500,000 was delivered by MLM to the Company on January 23, 2023, to satisfy existing debts of the Company; (g) $500,000 was delivered by MLM to the Corporation on January 24, 2023 to satisfy existing debts of the Corporation.
In addition to the amounts already delivered under the LOI, an additional amount of $2,700,0000 shall be paid by MLM to the Company over a period of twenty-four (24) months (the “Monthly Payments”). The Monthly Payments shall be paid as follows: (i) $25,000 due March 1, 2023, (ii) $50,000 due on the first day of each of April, May and June 2023, and (iii) $100,000 due on the first day of each month for the following twenty months, until February 1, 2025 at which point all amounts due and payable hereunder shall be delivered in a final balloon payment. Outstanding balances and missed Monthly Payments will be secured by a 10% NSR on the Clavo Rico mine production until the Monthly Payments are delivered and the purchase price is paid in full. In addition to the Monthly Payments, the Company will receive a carried forward net profits interest royalty (“NPI”) of 5% on the Clavo Rico mine production until the total NPI paid to the Company is $1,000,000, subject to limited conditions.
Following the Closing of the LOI on January 24, 2023, the Company divested its ownership interest in CMCS and its interests in the Clavo Rico mine, resulting in the transfer of operations to Mother Lode Mining and full control of the Clavo Rico mine asset.
Current Operations
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
According to the LOI, the Company is obligated to receive $2,700,000 in cash payments through January 2025, with such payments secured by a ten percent net smelter royalty on the Clavo Rico Mine’s production.
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The Company also received a carried forward net profits interest royalty of five percent of the Clavo Rico mine production until payment to the Company reaches $1,000,000, subject to reduction for certain limited Clavo Rico mine expenses.
During the year ended December 31, 2023, the Company received payments from Mother Lode Mining in the amount of $480,558. Mother Lode Mining is in default with payments towards this note. Management has been addressing this issue with Mother Lode Mining. The Company has established an allowance for the entire remaining balance.
Compliance with Government Regulation
Since the Divestiture of CMCS and the Clavo Rico mine in January 2023, we are no longer subject to the mining regulations of Honduras.
The Company’s policy is to conduct our business in a manner that safeguards public health and mitigates the environmental effects of our business activities. To comply with these laws and regulations, we have made, and in the future may be required to make, capital and operating expenditures.
Capital Equipment and Research & Development Expenditures
During the year ended December 31, 2023, we did not incur any expense related to research and development. Additionally, we are not currently conducting any research and development activities other than those relating to the possible acquisition of new gold and/or silver properties or projects of which there is no guarantee.
Employees
As of the date of this filing, we currently employ one full-time employee and no temporary employees in the United States and Honduras. We have contracts with various independent contractors and consultants to fulfill additional needs, including investor relations, exploration, development, permitting, and other administrative functions, and may staff further with employees as we expand activities and bring new projects on line.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
We do not currently own any patents or trademarks. Also, we are not a party to any license or franchise agreements, concessions, or labor contracts arising from any patents or trademarks, or any royalty agreements.
Company Information
The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. Further information about the Company may be found at its website: www.inceptionmining.com. The Company makes available its filings to investors, free of charge, on this website.
Reports to Security Holders
You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all the reports that we have filed electronically with the SEC at their Internet site www.sec.gov.
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ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully the following risks, along with all of the other information included in this report, before deciding to buy our common stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also impair our business operations. If we are unable to prevent events that have a negative effect from occurring, then our business may suffer.
RISKS RELATED TO OUR COMPANY
An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.
We have incurred losses since our inception in 2007 and may never be profitable, which raises doubt about our ability to continue as a going concern.
Since our inception in 2007 and until the Merger in 2015, we had nominal operations and incurred operating losses. As of December 31, 2023, our accumulated deficit since inception was $28,913,582. We have substantial current obligations and at December 31, 2023, we had $1,576,349 of current liabilities compared to only $10,002 of current assets. Since inception, we have been able to raise only minimal additional capital, and we have minimal cash on hand. Accordingly, the Company does not have sufficient cash resources or current assets to pay its current obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants, and advisors as payment for the goods and services.
Our management continues to search for additional financing; however, considering the difficult U.S. and global economic conditions along with the substantial turmoil in the capital and credit markets, there is a significant possibility that we will be unable to obtain financing to continue our operations.
These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent registered public accounting firm’s report on our audited financial statements as of and for the year ended December 31, 2023. If we are unable to continue as a going concern, investors will likely lose all of their investment in our company.
We are Subject to Legal Proceedings.
We are subject to legal proceedings and litigation, which can be expensive and unpredictable.
Global financial conditions may have an impact on our business and financial condition in ways that we currently cannot predict.
The continued pressure on commodities markets and related turmoil in the global financial system may have an impact on our business and financial position. The recent high costs of consumables may negatively impact costs of our operations. In addition, current financial market conditions may limit our ability to raise capital through credit and equity markets. As discussed further below, the prices of the metals that we may produce are affected by a number of factors, and it is unknown how these factors will be impacted by a continuation of the financial crisis.
We do not currently carry any property or casualty insurance.
Our business is subject to a number of risks and hazards generally, including but not limited to, adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment, and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to our properties, equipment, infrastructure, personal injury or death, environmental damage, delays, monetary losses and possible legal liability. You could lose all or part of your investment if any such catastrophic event occurs. We do not carry any property or casualty insurance at this time (but we will carry all insurances that we are required to by law, such as motor vehicle and workers’ compensation, plus other coverage that may be in the best interest of the Company). Even if we do obtain insurance, it may not cover all of the risks associated with our operations. Insurance against risks such as environmental pollution or other hazards as a result of exploration and operations are often not available to us or to other companies in our business on acceptable terms. Should any events against which we are not insured actually occur, we may become subject to substantial losses, costs and liabilities, which will adversely affect our financial condition.
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Our industry is highly competitive, attractive mineral lands are scarce, and we may not be able to obtain quality properties.
We compete with many companies in the mining industry, including large, established mining companies with capabilities, personnel and financial resources that far exceed our limited resources. In addition, there is a limited supply of desirable mineral lands available for claim-staking, lease or acquisition in the United States, and other areas where we may conduct exploration activities. We are at a competitive disadvantage in acquiring mineral properties, since we compete with these larger individuals and companies, many of which have greater financial resources and larger technical staffs. Likewise, our competition extends to locating and employing competent personnel and contractors to prospect, develop and operate mining properties. Many of our competitors can offer attractive compensation packages that we may not be able to meet. Such competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation and business.
We depend on our Chief Executive Officer and Chief Financial Officer and the loss of this individual could adversely affect our business.
Our company is completely dependent on Trent D’Ambrosio, our Chief Executive Officer and Chief Financial Officer. Mr. D’Ambrosio is also a member of our Board of Directors. The loss of Mr. D’Ambrosio could significantly and adversely affect our business and could even result in a complete failure of the Company. We do not carry any life insurance on the life of Mr. D’Ambrosio.
The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.
Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of economically feasible mineralization. Few properties that are explored are ultimately advanced to the stage of producing mines. We are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties such as, but not limited to:
| ● | economically insufficient mineralized material; |
| ● | fluctuations in production costs that may make mining uneconomical; |
| ● | labor disputes; |
| ● | unanticipated variations in grade and other geologic problems; |
| ● | environmental hazards; |
| ● | water conditions; |
| ● | difficult surface or underground conditions; |
| ● | industrial accidents, such as personal injury, fire, flooding, cave-ins, and landslides; |
| ● | metallurgical and other processing problems; |
| ● | mechanical and equipment performance problems; and |
| ● | decreases in revenues and reserves due to lower gold and mineral prices. |
Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent that are not recoverable.
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Our operations are subject to permitting requirements that could require us to delay, suspend or terminate our operations on our mining property.
Our operations and exploration activities require permits from the local, state and federal governments. We may be unable to obtain these permits in a timely manner, on reasonable terms or at all. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for Inception will be adversely affected.
Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
In their audit opinion issued in connection with our consolidated balance sheets as of December 31, 2023 and our related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the year ended December 31, 2023, our auditors have expressed substantial doubt about our ability to continue as a going concern given our recurring net losses, negative cash flows from operations and the limited amount of funds on our balance sheet. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue in existence. This could make it more difficult to raise capital in the future.
Risks Associated with Our Common Stock
Trading on the Over the Counter markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.
Our common stock is quoted on the OTC Pink tier of the over-the-counter markets administered by OTC Markets Group, Inc. under the symbol “IMII”. Trading in stock quoted on over the counter markets is often thin, volatile, and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the Over the Counter markets are not a stock exchange, and trading of securities on the over the counter markets is often more sporadic than the trading of securities listed on other stock exchanges such as the NASDAQ Stock Market, New York Stock Exchange or American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares.
Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and the FINRA’s sales practice requirements, which may limit a stockholders’ ability to buy and sell our stock.
Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers’ account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability or willingness of broker-dealers to trade our securities. We believe that the penny stock rules discourage broker-dealer and investor interest in, and limit the marketability of, our common stock.
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Our common stock may be affected by limited trading volume and price fluctuation which could adversely impact the value of our common stock.
There has been limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.
FINRA sales practice requirements may also limit a stockholders’ ability to buy and sell our stock.
In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’ s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.
Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.
Our shares are classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) which imposes additional sales practice requirements on broker-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.
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Our stock price may be volatile.
The stock market in general has experienced volatility that often has been unrelated to the operating performance of any specific public company. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
| ● | changes in our industry; |
| ● | competitive pricing pressures; |
| ● | our ability to obtain working capital financing; |
| ● | additions or departures of key personnel; |
| ● | limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market prices of our common stock; |
| ● | sales of our common stock; |
| ● | our ability to execute our business plan; |
| ● | operating results that fall below expectations; |
| ● | loss of any strategic relationship; |
| ● | regulatory developments; |
| ● | economic and other external factors; and |
| ● | period-to-period fluctuations in our financial results. |
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
We have never paid a cash dividend on our common stock and we do not anticipate paying any in the foreseeable future.
We have not paid a cash dividend on our common stock to date, and we do not intend to pay cash dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Notwithstanding, we will likely elect to retain any earnings, if any, to finance our growth. Future dividends may also be limited by bank loan agreements or other financing instruments that we may enter into in the future. The declaration and payment of dividends will be at the discretion of our Board of Directors.
We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Recent federal legislation, including the Sarbanes-Oxley Act of 2002 and the Jumpstart our Business Startups Act of 2012, among others, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics. While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
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Difficulties we may encounter managing our growth could adversely affect our results of operations.
As our business needs expand, we may need to hire a significant number of employees. This expansion may place a significant strain on our managerial and financial resources. To manage the potential growth of our operations and personnel, we will be required to:
| ● | improve existing, and implement new, operational, financial and management controls, reporting systems and procedures; |
| ● | install enhanced management information systems; and |
| ● | train, motivate, and manage our employees. |
We may not be able to install adequate management information and control systems in an efficient and timely manner, and our current or planned personnel, systems, procedures and controls may not be adequate to support our future operations. If we are unable to manage growth effectively, our business would be seriously harmed.
If we lose key personnel or are unable to attract and retain additional qualified personnel, we may not be able to successfully manage our business and achieve our objectives.
We believe our future success will depend upon our ability to retain our key management, primarily Mr. D’Ambrosio, our Chief Executive Officer and Chief Financial Officer. We may not be successful in attracting, assimilating and retaining our employees in the future.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity related securities in the future at a time and price that we deem reasonable or appropriate.
ITEM 1C: CYBERSECURITY
Our board of directors and senior management recognize the critical importance of maintaining the trust and confidence of our clients, business partners and employees. Our management, led by our Chief Executive Officer, is actively involved in oversight of our risk management efforts, and cybersecurity represents an important component of the Company’s overall approach to enterprise risk management (“ERM”). Our cybersecurity processes and practices are fully integrated into the Company’s ERM efforts. In general, we seek to address cybersecurity risks through a cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur. In addition, we regularly review cybersecurity trends and, partially as a result of our prior cybersecurity exposure, have moved some of our internal servers to off-site locations.
Risk Management and Strategy
As one of the critical elements of our overall ERM approach, our cybersecurity efforts are focused on the following key areas:
● | Governance: Management oversees cybersecurity risk mitigation and reports to the board of directors any cybersecurity incidents. |
● | Collaborative Approach: We have implemented a cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. |
● | Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. |
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Third parties also play a role in our cybersecurity. We engage third-party service providers to conduct evaluations of our security controls, independent audits or consulting on best practices to address new challenges.
While we have experienced cybersecurity threats in the past in the normal course of business and expect to continue to experience such threats from time to time, to date, none have had a material adverse effect on our business, financial condition, results of operations or cash flows. Even with the approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
ITEM 2: PROPERTIES
Corporate Headquarters
We currently maintain our corporate offices at 5330 South 900 East, Suite 280, Murray, Utah 84117. During the year ended December 31, 2023, we paid monthly rent of approximately $1,500 for use of a corporate office.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
March 4, 2024, the Company filed a complaint against Mother Lode Mining, Inc., a Canadian company, and Robert Salna (the “Defendants"), alleging an amount of not less than $2,237,800 (plus interest, additional costs and attorneys’ fees) due from Defendants as a result of their breach of their obligations and duties arising from the sale of Compañía Minera Cerros Del Sur, S.A. de C.V. in 2023 (the “Sale”). In the complaint, filed in the United States District Court for the District of Utah, Central Division, the Company asserts claims related to alleged breach of contract and unjust enrichment against the Defendants, and seeks a monetary judgment and an award of attorneys’ fees and other expenses. The complaint arises from the Defendants’ failure to convey agreed-upon consideration to the Company as contracted for the sale of CMCS. The Company intends to pursue the lawsuit aggressively. Despite several attempts, the Company has not yet effected service of process on Mother Lode Mining, Inc.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable as the Company conducts no active mining operations in the U.S. or its territories.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is not traded on any exchange. Our common stock is quoted on the Pink tier of the over-the-counter markets administered by OTC Markets Group, Inc. under the trading symbol “IMII.” We cannot assure you that there will be a market in the future for our common stock.
OTC securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC securities transactions are conducted through a telephone and computer network connecting dealers. OTC issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
Classes of Stock
We have two classes of stock: common stock and Series A Preferred Stock. On August 30, 2016, the Board of Directors of the Company, pursuant to Article II of the Company’s Articles of Incorporation, approved the designation of fifty-one (51) shares of its authorized capital stock as “Series A Preferred Stock”. The Certificate of Designation for the Series A Preferred Stock was filed on August 31, 2016. These shares have preferential voting rights and no conversion rights.
Holders
As of May 2, 2024, there were 1,478 holders of record of our common stock and one holder of record for our preferred stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
Equity Compensation Plans
As of the date of this Annual Report, we have an equity compensation plan: the 2013 Incentive Stock Plan.
Recent Sales of Unregistered Securities
We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the following transactions were made in reliance on Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by each shareholder, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
On January 1, 2023, the Company issued 28,571,429 restricted shares of Common Stock to Justin Wilson for services rendered to the Company.
On January 1, 2023, the Company issued 28,571,429 restricted shares of Common Stock to Sean Wilson for services rendered to the Company.
On February 1, 2023, the Company issued 5,142,857 restricted shares of Common Stock to Cluff-Rich 401(k) upon the conversion of $18,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 16,428,571 restricted shares of Common Stock to Fran Rich upon the conversion of $57,500 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 23,200,857 restricted shares of Common Stock to Debra D’Ambrosio upon the conversion of $81,203 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 485,402,857 restricted shares of Common Stock to Trent D’Ambrosio upon the conversion of $1,698,910 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 17,142,857 restricted shares of Common Stock to Kay Briggs upon the conversion of $60,000 in existing debt owed to the shareholder that has been accrued by the Company.
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On February 1, 2023, the Company issued 204,285,714 restricted shares of Common Stock to Legends Capital Group upon the conversion of $715,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 314,571,429 restricted shares of Common Stock to L W Briggs Irrevocable Trust upon the conversion of $1,101,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 52,857,143 restricted shares of Common Stock to Claymore Management upon the conversion of $185,000 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 965,137,143 restricted shares of Common Stock to Clavo Rico Inc. upon the conversion of $3,377,980 in existing debt owed to the shareholder that has been accrued by the Company.
On February 1, 2023, the Company issued 32,928,571 restricted shares of Common Stock to Pine Valley Investments upon the conversion of $115,200 in existing debt owed to the shareholder that has been accrued by the Company.
On February 17, 2023, the Company issued 42,857,143 restricted shares of Common Stock to Whit Cluff for services rendered to the Company.
On February 17, 2023, the Company issued 2,857,143 restricted shares of Common Stock to Rod Sperry for services rendered to the Company.
On February 17, 2023, the Company issued 2,857,143 restricted shares of Common Stock to Brunson Chandler & Jones, PLLC for services rendered to the Company.
On February 17, 2023, the Company issued 14,285,714 restricted shares of Common Stock to Kyle Pickard for services rendered to the Company.
On September 22, 2023, the Company issued 157,142,857 restricted shares of Common Stock to William McCluskey for services rendered to the Company.
ITEM 6: SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
Except for historical information, the following Management’s Discussion and Analysis contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) discussions about mineral resources and mineralized material, (b) our projected sales and profitability, (c) our growth strategies, (d) anticipated trends in our industry, (e) our future financing plans, (f) our anticipated needs for working capital, (g) our lack of operational experience and (h) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.
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Overview
We currently provide consulting services to the mining industry. Our target properties are those that have been the subject of historical exploration.
Clavo Rico Mine
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”) through which it acquired companies (including Compañía Minera Cerros del Sur, S.A de C.V.) with principal mining operations in Honduras, Central America. Its workings include several historical underground mining operations dating back to the early Mayan and Spanish occupation.
The Clavo Rico mine operations were divested on January 24, 2023 when the Company sold Compañía Minera Cerros del Sur, S.A de C.V.
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
Results of Operations
Year ended December 31, 2023 compared to the year ended December 31, 2022
We had a net income of $12,755,659 for the year ended December 31, 2023, which was $16,904,508 more than the net loss of $4,148,849 for the year ended December 31, 2022. This change in our results over the two periods is primarily the result of a decrease in interest expense of $2,602,891, the change of derivative liabilities of $2,440,118, an increase in gain on extinguishment of debt of $6,584,613 and income from discontinued operations of $7,848,757. The following table summarizes key items of comparison and their related increase (decrease) for the years ended December 31, 2023 and 2022.
|
| Years Ended December, |
|
| Increase/ |
| ||||||
|
| 2023 |
|
| 2022 |
|
| (Decrease) |
| |||
General and Administrative |
| $ | 1,065,893 |
|
| $ | 745,131 |
|
| $ | 320,762 |
|
Depreciation and Amortization Expenses |
|
| 725 |
|
|
| 725 |
|
|
| - |
|
Total Operating Expenses |
|
| 1,066,618 |
|
|
| 745,856 |
|
|
| 320,762 |
|
Income (Loss) from Operations |
|
| (1,066,618 | ) |
|
| (745,856 | ) |
|
| (320,762 | ) |
Gain on Forgiveness of PPP loan |
|
| - |
|
|
| 31,667 |
|
|
| (31,667 | ) |
Change in Derivative Liabilities |
|
| 3,273,396 |
|
|
| 833,278 |
|
|
| 2,440,118 |
|
Bad Debt Expense on Note Receivable |
|
| (2,219,442 | ) |
|
| - |
|
|
| 2,219,442 |
|
Gain (Loss) on Extinguishment of Debt |
|
| 6,313,102 |
|
|
| (271,511 | ) |
|
| 6,584,613 |
|
Interest Expense |
|
| (277,651 | ) |
|
| (2,880,542 | ) |
|
| (2,602,891 | ) |
Income (Loss) from Operations Before Taxes |
|
| 6,022,787 |
|
|
| (3,032,964 | ) |
|
| 9,055,751 |
|
Provision for Income Taxes |
|
| - |
|
|
| - |
|
|
| - |
|
Net Income (Loss) from Continued Operations |
|
| 6,022,787 |
|
|
| (3,032,964 | ) |
|
| 9,055,751 |
|
Net Loss from Discontinued Operations |
|
| (497,581 | ) |
|
| (973,303 | ) |
|
| 475,722 |
|
Gain on Sale of Mine Property in Discontinued Operations |
|
| 7,230,453 |
|
|
| - |
|
|
| 7,230,453 |
|
Provision for Income Taxes on Discontinued Operations |
|
| - |
|
|
| (142,582 | ) |
|
| (142,582 | ) |
Net Income (Loss) from Discontinued Operations |
|
| 6,732,872 |
|
|
| (1,115,885 | ) |
|
| 7,848,757 |
|
Net Income (Loss) |
| $ | 12,755,659 |
|
| $ | (4,148,849 | ) |
| $ | 16,904,508 |
|
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Operating Expenses
Operating expenses for the years ended December 31, 2023 and 2022 were $1,066,618 and $745,856, respectively. The increase in operating expenses for 2023 compared to 2022 were comprised primarily of an increase in consulting fees offset with a decrease in the cost of keeping the company public comprised of accounting, auditing, legal, transfer agent and filing expenses.
Other Income (Expenses)
Other income (expenses) for the years ended December 31, 2023 and 2022 were $7,089,405 and ($2,287,108), respectively. For the year ended December 31, 2023, other income (expenses) was comprised of $3,273,396 for change in derivative liability, ($2,219,442) for bad debt expense on note receivable, $6,313,102 for gain on extinguishment of debt and ($277,651) for interest expense. For the year ended December 31, 2022, other income (expenses) was comprised of $31,667 for gain on forgiveness of PPP loan, $833,278 for change in derivative liability, ($271,511) for loss on extinguishment of debt and ($2,880,542) for interest expense.
Net Income (Loss)
Net income for the year ended December 31, 2023 was $12,755,659 while the net loss for the year ended December 31, 2022 was $4,148,849.
Liquidity and Capital Resources
Our balance sheet as of December 31, 2023, reflects current assets of $10,002. As we had cash in the amount of $2 and a working capital deficit in the amount of $1,566,347 as of December 31, 2023, we do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
Working Capital
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Current assets |
| $ | 10,002 |
|
| $ | 302,849 |
|
Current liabilities |
|
| 1,576,349 |
|
|
| 29,068,198 |
|
Working capital deficit |
| $ | (1,566,347 | ) |
| $ | (28,765,349 | ) |
We anticipate generating losses and, therefore, may be unable to continue operations in the future. If we require additional capital, we will have to issue debt or equity or enter into a strategic arrangement with a third party.
Going Concern Consideration
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $28,913,582. In addition, there is a working capital deficiency of $1,566,347 and a stockholder’s deficiency of $2,421,581 the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Cash Flows
|
| Years Ended December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net Cash Provided by (Used in) Operating Activities |
| $ | 1,242,675 |
|
| $ | (902,422 | ) |
Net Cash Provided by (Used in) Investing Activities |
|
| (652 | ) |
|
| (49,666 | ) |
Net Cash Provided by (Used in) Financing Activities |
|
| (1,243,126 | ) |
|
| 899,543 |
|
Effects of Exchange Rate Changes on Cash |
|
| 1,105 |
|
|
| (152 | ) |
Net Increase (Decrease) in Cash |
| $ | 2 |
|
| $ | (52,697 | ) |
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Operating Activities
Net cash flow provided by operating activities during the year ended December 31, 2023 was $1,242,675, an increase of $2,145,097 from the $902,422 net cash used in operating activities during the year ended December 31, 2022. This increase is mostly due to the net income in 2023 versus the net loss in 2022.
Investing Activities
Cash used in investing activities during the year ended December 31, 2023 was $652, a decrease of $49,014 from the $49,666 net cash used during the year ended December 31, 2022. This decrease was due to discontinued operations and no new investments.
Financing Activities
Financing activities during the year ended December 31, 2023, used $1,243,126, a decrease of $2,142,669 from the $899,543 provided by financing activities during the year ended December 31, 2022. During the year ended December 31, 2023, the company received $39,303 in notes payable from related parties, $100,000 in convertible notes payable, made payments of $39,000 in cash on notes payable – related parties and $1,343,429 in cash on convertible notes. During the year ended December 31, 2022, the company received $996,210 in notes payable from related parties, $100,000 in convertible notes payable, made payments of $473,900 in cash on notes payable – related parties, $37,891 in cash on notes payable and $11,620 in cash on convertible notes.
Critical Accounting Policies and Estimates
Going Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2023, the Company recorded a net income of $12,755,659 and provided $1,242,675 in cash from operating activities. The Company has an accumulated net loss since inception of $28,913,582. In addition, there is a working capital deficiency of $1,566,347 and a stockholder’s deficiency of $2,421,581 as of December 31, 2023. These factors among others indicate that the Company may be unable to continue as a going concern for one year from the issuance of these financial statements.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation through the date the subsidiaries were disposed of on January 24, 2023.
Basis of Presentation - The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
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Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, allowances on notes receivable, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Notes Receivable – Notes receivable include amounts due to the Company pursuant to financial agreements stipulating interest rates, payment terms and maturity dates. The Company uses payment history, timeliness of payments, economic environment and potential disagreements with noteholder and debtor and other potential indicators to evaluate the collectability of the note receivable and to determine if an allowance for doubtful notes is required.
Fair Value Measurements - The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.
Long-Lived Assets - We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment - We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Building |
| 7 to 15 years |
Vehicles and equipment |
| 3 to 7 years |
Processing and laboratory |
| 5 to 15 years |
Furniture and fixtures |
| 2 to 3 years |
| 20 |
| Table of Contents |
Derivative Liabilities - Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
At December 31, 2023, the Company marked to market the fair value of the debt derivatives and determined a fair value of $39,281. The Company recorded a gain from change in fair value of debt derivatives of $3,273,396 for the year ended December 31, 2023. The fair value of the embedded derivatives was determined using the Monte Carlo Valuation Model. The Monte Carlo Valuation Model was based on the following assumptions: (1) expected volatility of 521.7%, (2) weighted average risk-free interest rate of 5.15% and (3) expected life of 0.46 years.
Income Taxes - The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah on a month-to-month basis.
| 21 |
| Table of Contents |
The Company incurred rent expense of $15,772 and $15,252 for the year ended December 31, 2023 and 2022.
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recent Accounting Pronouncements
For recent accounting pronouncements, please refer to the notes to the financial statements section of this Annual Report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company required by Article 8 of Regulation S-X are attached to this report, beginning at page F-1.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act, as of the end of the period covered by this report. Based on this evaluation, because of the Company’s limited resources and limited number of employees and due to reasons listed below, management concluded that our disclosure controls and procedures were not effective as of December 31, 2023.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
| 22 |
| Table of Contents |
With the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO-2013”). Based on our evaluation and the material weaknesses described below, management concluded that the Company’s internal controls were not effective based on financial reporting as of December 31, 2023 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties. Management of the Company believes that these material weaknesses are due to the small size of the Company’s management and accounting staff and reliance on outside consultants for external reporting. The small size of the Company’s accounting staff may prevent adequate controls in the future and the internal controls may continue to be not effective, such as segregation of duties, due to the cost/benefit of such remediation.
To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and outside accounting consultants. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.
In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended December 31, 2023 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the year ended December 31, 2023 are fairly stated, in all material respects, in accordance with US GAAP.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well 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 benefits 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. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Controls
During the year ended December 31, 2023, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
ITEM 9B: OTHER INFORMATION
None.
| 23 |
| Table of Contents |
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Identification of Directors and Executive Officers
Our Bylaws state that our authorized number of directors shall be one or more and shall be set by resolution of our Board of Directors. We currently have two directors.
Our current directors and officers are as follows:
Name and Business Address |
| Age |
| Position |
|
|
|
|
|
Trent D’Ambrosio |
| 59 |
| CEO, CFO and Director |
|
|
|
|
|
Whit Cluff |
| 73 |
| Director |
Our directors will serve in that capacity until our next annual shareholder meeting or until a successor is elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.
Trent D’Ambrosio, Chief Executive Officer, Chief Financial Officer, and Director
Mr. D’Ambrosio has been a Director of Inception Mining Inc. since February 28, 2013. From October 2011 through March 2013, Mr. D’Ambrosio held the positions of Interim Chief Executive Officer and Chief Financial Officer of Inception Holdings LLC, a resource exploration company, and was the responsible for the overall strategic direction for the organization. His professional record includes 25 years of management and financial services experience with companies ranging from Fortune 500 companies to start-ups. Mr. D’Ambrosio holds a B.S. in Business Management, an MBA and a Certificate of Mining Studies.
Whit Cluff, Director
Mr. Cluff has over 35 years of experience in the commercial real estate industry. Mr. Cluff has been involved in all disciplines of real estate land development, mixed-use development, retail tenant representation, developer representation, industrial property procurement and asset management. Mr. Cluff has an extensive background in public and private businesses giving him strong analytical, planning, and organization ability with effective negotiation skills. From 2003 through the present, Mr. Cluff has worked in commercial real estate. Mr. Cluff attended the University of Utah and served in the United States Army.
Other Directorships
Other than as set forth above, none of our directors hold any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
| 24 |
| Table of Contents |
Board of Directors and Director Nominees
Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee’s qualifications to serve on the Board, as well as a list of references.
The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual’s experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.
Some of the factors, which the Board considers when evaluating proposed nominees, include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.
Conflicts of Interest
Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.
In general, officers and directors of a corporation are required to present business opportunities to the corporation if:
| ● | the corporation could financially undertake the opportunity; |
| ● | the opportunity is within the corporation’s line of business; and |
| ● | it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation. |
We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
Significant Employees
Other than as described herein, we do not expect any other individuals to make a significant contribution to our business.
| 25 |
| Table of Contents |
Legal Proceedings
None of our directors, executive officers or control persons has been involved in any of the following events during the past five years:
| ● | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| ● | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| ● | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
| ● | being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended, or vacated. |
No Audit Committee or Financial Expert
The Company does not have an audit committee or a financial expert serving on the Board of Directors. The Company plans to form and implement an audit committee as soon as practicable.
Family Relationships
There are no family relationships among our officers, directors, or persons nominated for such positions.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officer and principal accounting officer, but intend to do so this year.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act of 1934, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash only rights) and any changes in that ownership with the Securities and Exchange Commission. The Company has evaluated all relevant Section 16(a) filings and has determined that the company is compliant with this section to the best of its knowledge.
ITEM 11: EXECUTIVE COMPENSATION
Our Board of Directors has not established a separate compensation committee. Instead, the Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for our officer(s), decides on benefit plans, and considers other matters as may, from time to time, be referred to it. We do not currently have a Compensation Committee Charter. Our Board continues to emphasize the important link between our performance, which ultimately benefits all shareholders, and the compensation of our executives. Therefore, the primary goal of our executive compensation policy is to closely align the interests of the shareholders with the interests of the executive officer(s). In order to achieve this goal, we attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective of owners with an equity stake in us.
| 26 |
| Table of Contents |
Compensation Table for Executives
Name and Principal Position |
| Year |
|
| Salary |
|
| Bonus |
|
| Stock Awards |
|
| Option Awards |
|
| Non-equity Incentive Plan Compensation |
|
| Non-qualified Deferred Compensation Earnings |
|
| All Other Compensation |
|
| Total |
| |||||||||
|
|
|
|
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
|
| ($) |
|
Trent D’Ambrosio, Chief Executive Officer, Chief Financial Officer, |
|
| 2023 |
|
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
President, Secretary, and Director |
|
| 2022 |
|
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Whit Cluff, |
|
| 2023 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
Director |
|
| 2022 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
(1) | Mr. D’ambrosi’s employment agreement compensates him $300,000 per year. However, the Company didn’t pay him that full amount during the fiscal years ended December 31, 2023 and 2022. For the years ended December 31, 2023 and 2022, he was paid $175,000 and $162,319, respectively. The Company also recorded $125,000 and $132,319 as deferred salaries payable for the fiscal years ended December 31, 2023 and 2022, respectively. |
Employment Agreements
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually. This agreement is effective for 60 months. Additionally, the employment agreement provides for benefits and an optional annual bonus to be determined by the Board of Directors.
Outstanding Equity Awards at Fiscal Year-End
None.
Compensation of Directors
We have no formal plan for compensating our directors for their services. We have no formal plan to compensating our directors in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
| 27 |
| Table of Contents |
Compensation Committee
We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. All members of the Board of Directors participate in the consideration of executive officer and director compensation.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following table lists, as of May 2, 2024, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership‚ concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 2,638,874,873 shares of our common stock issued and outstanding as of May 2, 2024. Unless otherwise indicated, the address of each person listed is c/o Inception Mining, Inc., 5330 South 900 East, Suite 280, Murray, UT 84117.
Title of Class |
| Name and Address of Beneficial Owner |
| Amount and Nature of Beneficial Ownership |
|
| Percent of Class |
| ||
|
|
|
|
|
|
|
|
| ||
Common Stock |
| Legends Capital Group, LLC (2) |
|
|
|
|
|
| ||
|
| 782 E. Pioneer Road |
|
|
|
|
|
| ||
|
| Draper, Utah 84120 |
|
| 11,685,874 |
|
|
| 0.44 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Madison, LLC (2) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road |
|
|
|
|
|
|
|
|
|
| Draper, Utah 84120 |
|
| 2,495,855 |
|
|
| 0.09 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Jason Briggs (3) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road |
|
|
|
|
|
|
|
|
|
| Draper, Utah 84120 |
|
| 935,946 |
|
|
| 0.02 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| LW Briggs Irrevocable Trust (2) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road |
|
|
|
|
|
|
|
|
|
| Draper, Utah 84120 |
|
| 314,571,429 |
|
|
| 11.92 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Clavo Rico, Inc. (2) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road Draper, Utah 84120 |
|
| 965,137,143 |
|
|
| 36.57 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Claymore Management (2) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road |
|
|
|
|
|
|
|
|
|
| Draper, Utah 84120 |
|
| 52,857,143 |
|
|
| 2.00 | % |
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
| Pine Valley Investments (2) |
|
|
|
|
|
|
|
|
|
| 782 E. Pioneer Road |
|
|
|
|
|
|
|
|
|
| Draper, Utah 84120 |
|
| 32,928,571 |
|
|
| 1.25 | % |
|
|
|
|
|
|
|
|
|
|
|
All 5% beneficial owners as a group |
|
|
|
| 1,380,611,961 |
|
|
| 52.32 | % |
| (1) | Percentage of ownership is based on 2,638,874,873 common shares outstanding as of May 2, 2024. The number and percentage of shares beneficially owned is determined under the rules of the SEC and the ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. |
| (2) | Beneficially controlled by Jason Briggs. |
| (3) | Includes additional shares beneficially owned by Jason Briggs including 311,982 shares owned personally and 623,964 shares owned by the Debbie Briggs Irrevocable Trust for which Jason Briggs serves as trustee. |
| 28 |
| Table of Contents |
|
|
| Amount and |
|
|
| ||||
|
|
| Nature of |
|
|
| ||||
|
| Title of |
| Beneficial |
|
| Percent of |
| ||
Name and Address of Beneficial Owner |
| Class |
| Ownership (1) |
|
| Class (2) |
| ||
|
|
|
|
|
|
|
|
| ||
Trent D’Ambrosio (3) |
| Common Stock |
|
| 516,531,916 |
|
|
| 19.57 | % |
|
| Preferred Stock |
|
| 51 |
|
|
| 100.00 | % |
Whit Cluff |
| Common Stock |
|
| 67,502,731 |
|
|
| 2.56 | % |
All Officers and Directors as a Group |
|
|
|
| 584,034,647 |
|
|
| 22.13 | % |
| (1) | Percentage of ownership is based on 2,638,874,873 common shares outstanding as of May 2, 2024. The number and percentage of shares beneficially owned is determined under the rules of the SEC and the ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. |
|
|
|
| (2) | SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants. |
|
|
|
| (3) | Mr. D’Ambrosio, a Director of the Company, owns 51 shares of preferred stock with voting rights per share equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (x) the Numerator. He is also the beneficial owner of 23,200,857 shares through his wife, Debra D’Ambrosio. |
|
|
|
| (4) | Mr. Cluff, a Director of the Company, owns 45,631,303 shares personally and beneficially owns 16,428,571 shares through his wife, Fran Rich, and 5,142,857 shares through the Cluff-Rich 401K. |
SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants held by directors or officers of the Company.
| 29 |
| Table of Contents |
Changes in Control
On February 1, 2023, the Company issued 2,117,097,999 shares of its common stock to certain service providers and to certain creditors in conversion of debt.
Securities Authorized for Issuance under Equity Compensation Plans
As of December 31, 2023, we have one equity compensation plan: the 2013 Incentive Stock Plan.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
In February 2014, the Company entered into a consulting agreement with the Company’s chief executive officer (CEO), stockholder and director. The Company agreed to pay $18,000 per month for twelve months. This agreement was renegotiated in October 2017 and the Company agreed to pay the stockholder/director $25,000 per month starting in October 2017. This agreement was superseded by an Employment Agreement as of July 1, 2018 (see Employment Agreements below). As of December 31, 2022, the Company owed $1,035,000 to the stockholder/director in accrued consulting fees. The accrued consulting fees were converted to equity on February 1, 2023 (see Note 8 – MDL Ventures).
Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $300,000 annually. This agreement is effective for 60 months. Additionally, the employment agreement provides for benefits and an optional annual bonus to be determined by the Board of Directors.
The Company took a few short-term notes payable from related parties during 2023. The Company received $39,303 in cash from related parties and paid out $39,000 in cash to related parties on notes payable (see Note 8).
Two officers/directors of the Company have been paying expenses for the Company on their personal credit cards. The Company has recorded these expenses and accrued the amounts in accounts payable to the individuals. As of December 31, 2023, there is $102,425 in accounts payable and accrued liabilities.
Director Independence
Our securities are quoted on the OTC Markets, which does not have any director independence requirements. Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.
Parents of the Smaller Reporting Company
We have no parents.
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2023, and 2022:
Fee Category |
| 2023 |
|
| 2022 |
| ||
Audit Fees |
| $ | 92,432 |
|
| $ | 93,000 |
|
Audit-related Fees |
|
| - |
|
|
| - |
|
Tax Fees |
|
| - |
|
|
| - |
|
All Other Fees |
|
| - |
|
|
| - |
|
Total Fees |
| $ | 92,432 |
|
| $ | 93,000 |
|
| 30 |
| Table of Contents |
Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q and Form 10-K or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.
Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
| 31 |
| Table of Contents |
PART IV
ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)(2) |
| Financial Statements. See the audited financial statements for the year ended December 31, 2023 contained in Item 8 above which are incorporated herein by this reference. |
|
|
|
(a)(3) |
| Exhibits. The following exhibits are filed as part of this Annual Report: |
| 32 |
| Table of Contents |
| 33 |
| Table of Contents |
101.INS | Inline XBRL Instance Document | |
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| |
101.SCH | Inline XBRL Schema Document | |
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| |
101.CAL | Inline XBRL Calculation Linkbase Document | |
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101.DEF | Inline XBRL Definition Linkbase Document | |
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101.LAB | Inline XBRL Label Linkbase Document | |
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101.PRE | Inline XBRL Presentation Linkbase Document | |
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| |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Filed herewith. |
|
|
(1) | Incorporated by reference from Form SB-2 filed with the SEC on October 31, 2007. |
|
|
(2) | Incorporated by reference from Form 8-K filed with the SEC on March 10, 2010. |
|
|
(3) | Incorporated by reference from Form 8-K filed with the SEC on June 28, 2010. |
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|
(4) | Incorporated by reference from Form 10-Q filed with the SEC on May 20, 2013. |
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|
(5) | Incorporated by reference from Form 8-K filed with the SEC on August 5, 2013. |
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|
(6) | Incorporated by reference from Form 8-K filed with the SEC on March 1, 2013. |
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|
(7) | Incorporated by reference from Form 8-K filed with the SEC on September 6, 2013. |
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(8) | Incorporated by reference from Form 10-Q filed with the SEC on June 20, 2014. |
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(9) | Incorporated by reference from Form 8-K filed with the SEC on March 12, 2014. |
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(10) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2014. |
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(11) | Incorporated by reference from Form 8-K filed with the SEC on October 7, 2015. |
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(12) | Incorporated by reference from the Form 10-K filed with the SEC on May 3, 2016. |
|
|
(13) | Incorporated by reference from the Form 10-K filed with the SEC on April 17, 2017. |
|
|
(14) | Incorporated by reference from the Form 10-Q filed with the SEC on May 16, 2017. |
|
|
(15) | Incorporated by reference from the Form 8-K filed with the SEC on October 19, 2017. |
|
|
(16) | Incorporated by reference from the Form S-1 filed with the SEC on June 2, 2019. |
|
|
(17) | Incorporated by reference from the Form 8-K filed with the SEC on January 25, 2023. |
|
|
(18) | Incorporated by reference from the Form 8-K filed with the SEC on February 8, 2023. |
| 34 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Sections 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.
| INCEPTION MINING, INC. |
| |
|
|
|
|
Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
| Name: | Trent D’Ambrosio |
|
| Title: | Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
|
|
|
|
Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
| Name: | Trent D’Ambrosio |
|
| Title: | Chief Financial Officer |
|
|
| (Principal Financial and Accounting Officer) |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE |
| TITLE |
| DATE |
|
|
|
|
|
/s/ Trent D’Ambrosio |
|
|
|
|
Trent D’Ambrosio |
| Director |
| May 2, 2024 |
|
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|
/s/ Whit Cluff |
|
|
|
|
Whit Cluff |
| Director |
| May 2, 2024 |
| 35 |
| Table of Contents |
INCEPTION MINING, INC.
CONTENTS
| F-1 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Inception Mining, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Inception Mining, Inc. (“the Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency and negative cash flows from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/
We have served as the Company’s auditor since 2015.
May 2, 2024
| F-2 |
| Table of Contents |
Inception Mining, Inc.
Consolidated Balance Sheets
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
ASSETS |
| |||||||
Current Assets |
|
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|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Prepaid expenses and other current assets |
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| ||
Current assets of discontinued operations |
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| ||
Total Current Assets |
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| ||
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Property, plant and equipment, net |
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|
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| ||
Note receivable, net of allowance |
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| ||
Right of use operating lease asset |
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| ||
Other assets |
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| ||
Other non-current assets of discontinued operations |
|
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|
| ||
Total Assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities |
|
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|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Accrued interest - related parties |
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| ||
Operating lease liability - current portion |
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Note payable - current portion |
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Notes payable - related parties |
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Convertible notes payable - net of discount |
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| ||
Derivative liabilities |
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Current liabilities of discontinued operations |
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| ||
Total Current Liabilities |
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| ||
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Long-term note payable |
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Long-term notes payable - related parties, net of current portion |
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Operating lease liability, net of current portion |
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Long-term liabilities of discontinued operations |
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Total Liabilities |
|
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| ||
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Commitments and Contingencies |
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Stockholders' Deficit |
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Preferred stock, $ |
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| ||
Common stock, $ |
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Additional paid-in capital |
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| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Accumulated other comprehensive loss |
|
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|
| ( | ) | |
Total Controlling Interest |
|
| ( | ) |
|
| ( | ) |
Non-Controlling Interest |
|
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|
| ( | ) | |
Total Stockholders' Deficit |
|
| ( | ) |
|
| ( | ) |
Total Liabilities and Stockholders' Deficit |
| $ |
|
| $ |
| ||
See accompanying notes to the consolidated financial statements.
| F-3 |
| Table of Contents |
Inception Mining, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
| For the Years Ended |
| |||||
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Operating Expenses |
|
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| ||
General and administrative |
| $ |
|
| $ |
| ||
Depreciation and amortization |
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Total Operating Expenses |
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Loss from Operations |
|
| ( | ) |
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| ( | ) |
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Other Income/(Expenses) |
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Gain on forgiveness of PPP loan |
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Change in derivative liability |
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Bad debt expense on note receivable |
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| ( | ) |
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Gain (loss) on extinguishment of debt |
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| ( | ) | |
Interest expense |
|
| ( | ) |
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| ( | ) |
Total Other Income/(Expenses) |
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| ( | ) | |
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Net Loss from Operations before Income Taxes |
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| ( | ) | |
Provision for Income Taxes |
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Net Income (Loss) from Continuing Operations |
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| ( | ) | |
Net Loss from Discontinued Operations |
|
| ( | ) |
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| ( | ) |
Gain on Sale of Mine Property in Discontinued Operations |
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Provision for Income Taxes on Discontinued Operations |
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| ( | ) | |
Net Income (Loss) from Discontinued Operations |
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| ( | ) | |
Net Income (Loss) |
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| ( | ) | |
Net Income (Loss) - Non-Controlling Interest |
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| ( | ) |
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| |
Net Income (Loss) - Controlling Interest |
| $ |
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| $ | ( | ) | |
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Net income (loss) per share - Continuing Operations - Basic and Diluted |
| $ |
|
| $ | ( | ) | |
Net income (loss) per share - Discontinued Operations - Basic and Diluted |
| $ |
|
| $ | ( | ) | |
Net income (loss) per share - Basic |
| $ |
|
| $ | ( | ) | |
Net income (loss) per share - Diluted |
| $ |
|
| $ | ( | ) | |
Weighted average number of shares outstanding during the period - Basic |
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Weighted average number of shares outstanding during the period - Diluted |
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Net Income (Loss) |
| $ |
|
| $ | ( | ) | |
Other Comprehensive Income (Loss) |
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Exchange differences arising on translating foreign operations |
|
| ( | ) |
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| |
Total Comprehensive Income (Loss) |
|
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| ( | ) | |
Total Comprehensive Income (Loss) - Non-Controlling Interest |
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| ||
Total Comprehensive Income (Loss) - Controlling Interest |
| $ |
|
| $ | ( | ) | |
See accompanying notes to the consolidated financial statements.
| F-4 |
| Table of Contents |
Inception Mining, Inc.
Consolidated Statement of Stockholders’ Deficit
|
| Preferred stock |
|
| Common stock |
|
| Additional |
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| Other |
|
| Non- |
|
| Total |
| ||||||||||||||||
|
| ($0.00001 Par) |
|
| ($0.00001 Par) |
|
| Paid-in |
|
| Accumulated |
|
| Comprehensive |
|
| Controlling |
|
| Stockholders' |
| |||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Interest |
|
| Deficiency |
| |||||||||
Balance, December 31, 2021 |
|
|
|
| $ |
|
|
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|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||||
Shares issued with note payable |
|
| - |
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| ||||||||
Foreign currency translation adjustment |
|
| - |
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| - |
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| |||||||
Net loss for the year |
|
| - |
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| - |
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|
| ( | ) |
|
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|
| ( | ) |
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| ( | ) | ||||
Balance, December 31, 2022 |
|
|
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|
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|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
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| ( | ) | |||||
Shares issued for services |
|
| - |
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| ||||||||
Shares issued with extinguishment of debt |
|
| - |
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| ||||||||
Effects of sale of mine property |
|
| - |
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| - |
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| ( | ) |
|
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| ||||||
Foreign currency translation adjustment |
|
| - |
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| - |
|
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|
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| ( | ) |
|
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| ( | ) | |||||
Net loss for the year |
|
| - |
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| - |
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| |||||||
Balance, December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
|
| $ | ( | ) | |||||||
See accompanying notes to the consolidated financial statements.
| F-5 |
| Table of Contents |
Inception Mining, Inc.
Consolidated Statements of Cash Flows
|
| For the Years Ended |
| |||||
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Cash Flows From Operating Activities: |
|
|
|
|
|
| ||
Net Income (Loss) |
| $ |
|
| $ | ( | ) | |
Net Loss from discontinued operations |
|
|
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|
| ||
Gain on sale of mine property in discontinued operations |
|
| ( | ) |
|
|
| |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations |
|
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Depreciation and amortization expense |
|
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| ||
Common stock issued for services |
|
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| ||
Allowance for doubtful note receivable |
|
| |
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| |
|
(Gain) Loss on extinguishment of debt |
|
| ( | ) |
|
|
| |
Change in derivative liability |
|
| ( | ) |
|
| ( | ) |
Gain on forgiveness of PPP loan |
|
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|
| ( | ) | |
Amortization of right-of-use asset |
|
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| ||
Amortization of debt discount |
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| ||
Changes in operating assets and liabilities: |
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Other receivables |
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| ||
Prepaid expenses and other current assets |
|
| ( | ) |
|
|
| |
Accounts payable and accrued liabilities |
|
|
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|
| ||
Accounts payable and accrued liabilities - related parties |
|
| ( | ) |
|
|
| |
Net Cash Provided By (Used In) Continuing Operations |
|
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|
|
| ( | ) | |
Net Cash Provided By (Used In) Discontinued Operations |
|
| ( | ) |
|
|
| |
Net Cash Provided By (Used In) Operating Activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
Investing activities of discontinued operations |
|
| ( | ) |
|
| ( | ) |
Net Cash Used In Investing Activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
Repayment of notes payable |
|
|
|
| ( | ) | ||
Repayment of notes payable-related parties |
|
| ( | ) |
|
| ( | ) |
Repayment of convertible notes payable |
|
| ( | ) |
|
| ( | ) |
Proceeds from notes payable-related parties |
|
|
|
|
|
| ||
Proceeds from convertible notes payable |
|
|
|
|
|
| ||
Financing activities of discontinued operations |
|
|
|
|
|
| ||
Net Cash Provided By (Used In) Continuing Financing Activities |
|
| ( | ) |
|
|
| |
Effects of exchange rate changes on cash |
|
|
|
|
| ( | ) | |
Net Change in Cash |
|
|
|
|
| ( | ) | |
Cash at Beginning of Period |
|
|
|
|
|
| ||
Cash at End of Period |
|
|
|
|
|
| ||
Less Cash of Discontinued Operations at End of Period |
|
|
|
|
| ( | ) | |
Cash of Continued Operations at End of Period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Note receivable acquired for sale of mine property |
| $ |
|
| $ |
| ||
Common stock issued for conversion of debt |
| $ |
|
| $ |
| ||
Inventory used to satisfy note payable |
| $ |
|
| $ |
| ||
Common stock issued for settlement of notes payable - related parties |
| $ |
|
| $ |
| ||
Recognition of debt discounts on convertible note payable |
| $ |
|
| $ |
| ||
Note payable issued to finance lease payments |
| $ |
|
| $ |
| ||
Finance leases to acquire equipment |
| $ |
|
| $ |
| ||
See accompanying notes to the consolidated financial statements.
| F-6 |
| Table of Contents |
Inception Mining, Inc.
Notes to Consolidated Financial Statements
As of December 31, 2023 and 2022
1. Nature of Business
Inception Mining, Inc. (formerly known as Gold American Mining Corp.) was incorporated under the name of Golf Alliance Corporation and under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration and development company. Inception Development, Inc., its wholly owned subsidiary, was incorporated under the laws of the State of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business focus toward precious metal mineral acquisition and exploration.
On March 5, 2010, the Company amended its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock from
On June 23, 2010, the Company amended its articles of incorporation to change its name to Gold American Mining Corp.
On November 21, 2012, the Company implemented a
On February 25, 2013, Gold American Mining Corp. and its majority shareholder (the “Majority Shareholder”), and its wholly-owned subsidiary,
On May 17, 2013, the Company amended its articles of incorporation to change its name to Inception Mining, Inc. (“Inception” or the “Company”).
On October 2, 2015, the Company consummated a merger with Clavo Rico Ltd. (“Clavo Rico”). Clavo Rico is a privately held Turks and Caicos company with principal operations in Honduras, Central America. Clavo Rico operates the Clavo Rico mining concession through its subsidiaries Compañía Minera Cerros del Sur, S.A de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. and holds other mining concessions. Pursuant to the agreement, the Company issued of
On January 11, 2016, the Company implemented a
| F-7 |
| Table of Contents |
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023.
Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
Since the Divestiture of the Clavo Rico Mine, the Company has been operating as a consultant and advisor to the mining industry, including to Mother Lode Mining, the new owner of the Clavo Rico mine. It also has an ongoing financial interest in the Clavo Rico Mine under the LOI.
COVID-19 – The Company has been impacted significantly by the COVID-19 global pandemic. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders, and recommendations to practice social distancing. Based on management’s assessment as of December 31, 2023, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.
2. Summary of Significant Accounting Policies
Going Concern – The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during year ended December 31, 2023, the Company has an accumulated deficit of $
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
Management is currently working to make changes that will result in profitable operations and to obtain additional funding sources to meet the Company’s need for cash during the next twelve months and beyond.
Use of Estimates – In preparing financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenditures during the reported periods. Actual results could differ materially from those estimates. Estimates may include those pertaining to valuation of inventories and mineralized material on leach pads, the estimated useful lives and valuation of properties, plant and equipment, mineral rights and properties, deferred tax assets, convertible preferred stock, derivative assets and liabilities, reclamation liabilities, stock-based compensation and payments, and contingent liabilities.
Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiaries, Inception Development, Corp., Clavo Rico Development Corp., Clavo Rico, Ltd. and Compañía Minera Cerros del Río, S.A. de C.V., and its controlling interest subsidiaries, Compañía Minera Cerros del Sur, S.A. de C.V. and Compañía Minera Clavo Rico, S.A. de C.V. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation through the date the subsidiaries were disposed of on January 24, 2023.
Basis of Presentation – The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
| F-8 |
| Table of Contents |
Cash and Cash Equivalents – The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2023 and December 31, 2022, the Company had no cash equivalents. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $
Settlement of Contracts in Company’s Equity– In accordance with ASC 815-40-25, the Company must meet certain requirements in order to report contracts as equity versus liabilities. These requirements must be met by the Company or the contracts need to be reported as liabilities. The Company has adopted the sequencing approach as guidance on contracts that permit partial net share settlement. The Company evaluates the contracts based on the earliest issuance date. Currently, the Company doesn’t have any items that are reported as equity instead of liabilities.
Fair Value Measurements – The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
| F-9 |
| Table of Contents |
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.
The fair value of financial instruments on December 31, 2023 are summarized below:
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Debt derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The fair value of financial instruments on December 31, 2022 are summarized below:
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Debt derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The Company recognizes its marketable securities as level 1 and values its marketable securities using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed below in Note 3. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below in Note 3 are that of volatility and market price of the underlying common stock of the Company.
Notes Receivable – Notes receivable include amounts due to the Company pursuant to financial agreements stipulating interest rates, payment terms and maturity dates. As of December 31, 2023 and 2022, notes receivable balances include one note due from Mother Load Mining, Inc. in the amounts of $
| F-10 |
| Table of Contents |
Long-Lived Assets – We review the carrying amount of our long-lived assets for impairment whenever there are negative indicators of impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flows.
Properties, Plant and Equipment – We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Building | |
Vehicles and equipment | |
Processing and laboratory | |
Furniture and fixtures |
Stock Issued for Goods and Services – Common and preferred shares issued for goods and services are valued based upon the fair market value of our common stock or the goods and services received.
Stock-Based Compensation – For stock-based transactions, compensation expense is recognized over the requisite service period, which is generally the vesting period, based on the estimated fair value on the grant date of the award.
Income (Loss) per Common Share – Basic net income (loss) per common share is computed by dividing net income (loss), less the preferred stock dividends, by the weighted average number of common shares outstanding. Dilutive income (loss) per share includes any additional dilution from common stock equivalents, such as stock options and warrants, and convertible instruments, if the impact is not antidilutive.
The following tables summaries the changes in the net earnings per common share for the years ended December 31, 2023 and 2022:
|
| For the Years Ended |
| |||||
Numerator |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Net Income (Loss) - Controlling Interest |
| $ |
|
| $ | ( | ) | |
Gain on Extinguishment of Debt |
|
| ( | ) |
|
|
| |
Interest Expense |
|
|
|
|
|
| ||
Change in Derivative Liabilities |
|
| ( | ) |
|
|
| |
Adjusted Net Income (Loss) - Controlling Interest |
| $ |
|
| $ | ( | ) | |
|
|
|
|
|
|
|
|
|
Denominator |
| Shares |
|
| Shares |
| ||
Basic Weighted Average Number of Shares Outstanding during Period |
|
|
|
|
|
| ||
Dilutive Shares |
|
|
|
|
| - |
| |
Diluted Weighted Average Number of Shares Outstanding during Period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Diluted Net Income (Loss) per Share |
| $ |
|
| $ | ( | ) | |
Comprehensive Loss – Comprehensive loss is made up of the exchange differences arising on translating foreign operations and the net loss for the years ended December 31, 2023 and 2022.
| F-11 |
| Table of Contents |
Derivative Liabilities – Derivatives liabilities are recorded at fair value when issued and the subsequent change in fair value each period is recorded in other income (expense) in the consolidated statements of operations. We do not hold or issue any derivative financial instruments for speculative trading purposes.
Income Taxes – The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid. Significant judgments and estimates are required in determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income, and are consistent with the plans and estimates that the Company is using to manage the underlying businesses. The Company provides a valuation allowance for deferred tax assets for which the Company does not consider realization of such deferred tax assets to be more likely than not.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on the Company’s results of operations, cash flows or financial position.
Business Segments – The Company operates in one segment and therefore segment information is not presented.
Operating Lease – The Company leases its corporate headquarters and administrative offices in Salt Lake City, Utah. This lease expires in August 2024.
The supplemental balance sheet information related to the operating lease for the periods is as follows:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Operating leases |
|
|
|
|
|
| ||
Right-of-use assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Short-term operating lease liabilities |
| $ |
|
| $ |
| ||
Long-term operating lease liabilities |
|
|
|
|
|
| ||
Total operating lease liabilities |
| $ |
|
| $ |
| ||
Maturities of the Company’s undiscounted operating lease liabilities are as follows:
Year Ending |
| Operating Lease |
| |
2024 |
|
|
| |
Total lease payments |
|
|
| |
Less: imputed interest/present value discount |
|
| ( | ) |
Present value of lease liabilities |
| $ |
| |
The Company made cash payments of $
Non-Controlling Interest Policy – Non-controlling interest (NCI) is the portion of equity ownership in a subsidiary not attributable to the parent company, who has a controlling interest and consolidates the subsidiary’s financial results with its own. The amount of equity relating to the non-controlling interest is separately identified in the equity section of the balance sheet and the amount of the net income (loss) relating to the non-controlling interest is separately identified on the statement of operations.
Recently Issued Accounting Pronouncements – From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption, except as noted below.
During the fiscal year ended December 31, 2023, the Company adopted ASC 2016-13 – Financial Instruments – Credit Losses. This accounting standard addresses the measurement of credit losses on financial statements. Management evaluated this standard and determined that it will have a significant impact on the Company’s financial statements. It was determined that a potential credit loss needed to be recognized in relation to the note receivable held by the Company. See Note 4 for more details.
| F-12 |
| Table of Contents |
3. Derivative Financial Instruments
The Company adopted the provisions of ASC subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2023:
|
| Debt Derivative Liabilities |
| |
Balance, December 31, 2022 |
| $ |
| |
Transfers in upon initial fair value of derivative liabilities |
|
|
| |
Change in fair value of derivative liabilities and warrant liability |
|
| ( | ) |
Balance, December 31, 2023 |
| $ |
| |
Derivative Liabilities – The Company issued convertible promissory notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.
At December 31, 2023, the Company marked to market the fair value of the debt derivatives and determined a fair value of $
Based upon ASC 840-15-25, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.
4. Note Receivable
On January 12, 2023, Inception Mining, Inc. (the “Company”) entered into a non-binding Letter of Intent (the “LOI”) with Mother Lode Mining, Inc. (“MLM”). The LOI became binding on January 24, 2023 when the final installment of initial payment set forth under the LOI was received by the Company. Pursuant to the terms of the LOI, the Company agreed to sell all of the shares of its wholly-owned subsidiary, Compañía Minera Cerros Del Sur, S.A. de C.V. (“CMCS”), to MLM. CMCS is the Honduran-based company that owns the Clavo Rico mine.
The purchase price for the sale of CMCS by the Company to MLM consisted of the following cash consideration (a) $
In addition to the amounts already delivered under the LOI, an additional amount of $
The following table summarizes the note receivable of the Company as of December 31, 2023 and 2022:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Note Receivable from Mother Load Mining, Inc. pursuant to a Letter of Intent dated effective January 12, 2023, in the original principal amount of $2,700,000, accruing no interest, with monthly payments beginning on March 31, 2023, maturing February 1, 2025. |
| $ |
|
| $ |
| ||
Less: Payments received |
|
| ( | ) |
|
|
|
|
Total Note Receivable outstanding |
|
|
|
|
|
| ||
Less: Allowance for Doubtful Note Receivable |
|
| ( | ) |
|
|
| |
Total Note Receivable |
| $ |
|
| $ |
| ||
5. Properties, Plant and Equipment, Net
Properties, plant and equipment of continuing operations at December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Machinery and Equipment |
| $ |
|
| $ |
| ||
Office Equipment and Furniture |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less Accumulated Depreciation |
|
| ( | ) |
|
| ( | ) |
Total Property, Plant and Equipment |
| $ |
|
| $ |
| ||
During the years ended December 31, 2023 and 2022, the Company recognized depreciation expense of $
| F-13 |
| Table of Contents |
6. Accounts Payable and Accrued Liabilities
Accounts Payable and accrued liabilities of continuing operations at December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Accounts Payable |
| $ |
|
| $ |
| ||
Accrued Liabilities |
|
|
|
|
|
| ||
Accrued Salaries and Benefits |
|
|
|
|
|
| ||
Total Accounts Payable and Accrued Liabilities |
| $ |
|
| $ |
| ||
7. Notes Payable
Notes payable of continuing operations were comprised of the following as of December 31, 2023 and 2022:
Notes Payable |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Phil Zobrist |
| $ |
|
| $ |
| ||
Antczak Polich Law LLC |
|
|
|
|
|
| ||
Total Notes Payable |
|
|
|
|
|
| ||
Less Short-Term Notes Payable |
|
| ( | ) |
|
|
| |
Total Long-Term Notes Payable |
| $ |
|
| $ |
| ||
Phil Zobrist – On January 11, 2013, the Company issued an unsecured Promissory Note to Phil Zobrist in the principal amount of $
Antczak Polich Law, LLC – On March 21, 2023, the Company issued an unsecured Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $
| F-14 |
| Table of Contents |
8. Notes Payable – Related Parties
Notes payable – related parties of continuing operations were comprised of the following as of December 31, 2023 and 2022:
Notes Payable - Related Parties |
| Relationship |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Clavo Rico, Inc. |
|
| $ |
|
| $ |
| |||
Claymore Management |
|
|
|
|
|
|
| |||
Cluff-Rich PC 401K |
|
|
|
|
|
|
| |||
Debra D'ambrosio |
|
|
|
|
|
|
| |||
Francis E. Rich |
|
|
|
|
|
|
| |||
Legends Capital |
|
|
|
|
|
|
| |||
LWB Irrev Trust |
|
|
|
|
|
|
| |||
MDL Ventures |
|
|
|
|
|
|
| |||
Pine Valley Investments |
|
|
|
|
|
|
| |||
Total Notes Payable - Related Parties |
|
|
|
|
|
|
|
| ||
Less Short-Term Notes Payable - Related Parties |
|
|
|
| ( | ) |
|
| ( | ) |
Total Long-Term Notes Payable - Related Parties |
|
|
| $ |
|
| $ |
| ||
Clavo Rico, Incorporated (Affiliate – Controlled by Significant Shareholder) – On April 5, 2019, GAIA Ltd and Silverbrook Corporation assigned
Claymore Management (Affiliate – Controlled by Significant Shareholder) – On October 2, 2016, the note was extended until December 31, 2024. On February 1, 2023, the Company negotiated a settlement on this note. The Company issued
Cluff-Rich PC 401K (Affiliate – Controlled by Significant Shareholder) – On June 29, 2022, the Company issued an unsecured Short-Term Promissory Note to Cluff-Rich PC 401K in the principal amount of
D. D’Ambrosio (Immediate Family Member of Director) – On January 1, 2023, there were six notes outstanding with outstanding balance of the Notes of $
D. D’Ambrosio (Immediate Family Member of Director) – During April and August 2023, the Company issued an unsecured Short-Term Promissory Notes to D. D’Ambrosio in principal amounts totaling $
D. D’Ambrosio (Immediate Family Member of Director) – During December 2023, the Company issued an unsecured Short-Term Promissory Notes to D. D’Ambrosio in principal amounts totaling $
Francis E. Rich (Immediate Family Member of Director) – On January 1, 2023, there were two notes outstanding with outstanding balance of the Notes of $
Legends Capital Group (Affiliate – Controlled by Significant Shareholder) – On October 2, 2016, the notes were extended until December 31, 2024. On February 1, 2023, the Company negotiated a settlement on these notes. The Company issued
| F-15 |
| Table of Contents |
LW Briggs Irrevocable Trust (Affiliate – Controlled by Significant Shareholder) – On October 2, 2016, the notes were extended until December 31, 2024. On February 1, 2023, the Company negotiated a settlement on these notes. The Company issued
MDL Ventures (Affiliate – Controlled by Director) – The Company entered into an unsecured convertible note payable agreement with MDL Ventures, LLC, which is 100% owned by a Company officer, effective October 1, 2014, due on December 31, 2016 and bears
Pine Valley Investments, LLC (Affiliate – Controlled by Significant Shareholder) – On January 1, 2023, there were three Notes outstanding with outstanding balance of the Notes of $
Typically, any gains or losses on the extinguishment of debts are reported on the statement of operations. However, since all of the debts in this section are related parties, the gains or losses on the extinguishment of debts have been recorded as additional paid-in capital instead of gains or losses.
9. Convertible Notes Payable
Convertible notes payable were comprised of the following as of December 31, 2023 and 2022:
Convertible Notes Payable |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
1800 Diagonal Lending |
| $ |
|
| $ |
| ||
Antczak Polich Law LLC |
|
|
|
|
|
| ||
Antilles Family Office LLC |
|
|
|
|
|
| ||
Scotia International |
|
|
|
|
|
| ||
Total Convertible Notes Payable |
|
|
|
|
|
| ||
Less Unamortized Discount |
|
| ( | ) |
|
| ( | ) |
Total Convertible Notes Payable, Net of Unamortized Debt Discount |
|
|
|
|
|
| ||
Less Short-Term Convertible Notes Payable |
|
| ( | ) |
|
| ( | ) |
Total Long-Term Convertible Notes Payable, Net of Unamortized Debt Discount |
| $ |
|
| $ |
| ||
1800 Diagonal Lending LLC – On October 18, 2022, the Company issued an unsecured Convertible Promissory Note (“Note”) to 1800 Diagonal Lending, LLC (“1800”), in the principal amount of $
| F-16 |
| Table of Contents |
1800 Diagonal Lending LLC – On September 12, 2023, the Company issued an unsecured Convertible Promissory Note (“Note”) to 1800 Diagonal Lending, LLC (“1800”), in the principal amount of $
Antczak Polich Law, LLC – On August 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $
Antczak Polich Law, LLC – On December 1, 2018, the Company issued an unsecured Convertible Promissory Note (“Note”) to Antczak Polich Law, LLC (“Antczak”), in the principal amount of $
Antilles Family Office LLC – On May 20, 2019, the Company issued a secured Convertible Promissory Note (“Note”) to an Investor, in the principal amount of $
| F-17 |
| Table of Contents |
Scotia International of Nevada, Inc. – On January 10, 2019, the Company issued an unsecured Convertible Promissory Note (“Note”) to Scotia International of Nevada, Inc. (“Scotia”), in the principal amount of $
10. Stockholders’ Deficit
Common Stock
On January 25, 2022, the Company issued to Antilles Family Office, LLC
On February 17, 2022, the Company issued to Antilles Family Office, LLC
On March 2, 2022, the Company issued to Antilles Family Office, LLC
On March 18, 2022, the Company issued to Antilles Family Office, LLC
On April 5, 2022, the Company issued to Antilles Family Office, LLC
On April 18, 2022, the Company issued to Antilles Family Office, LLC
| F-18 |
| Table of Contents |
On April 25, 2022, the Company issued to Antilles Family Office, LLC
On May 20, 2022, the Company issued to Antilles Family Office, LLC
On June 2, 2022, the Company issued to Antilles Family Office, LLC
On June 13, 2022, the Company issued to Antilles Family Office, LLC
On June 17, 2022, the Company issued to Antilles Family Office, LLC
On June 23, 2022, the Company issued to Antilles Family Office, LLC
On June 28, 2022, the Company issued to Antilles Family Office, LLC
On July 8, 2022, the Company issued to Antilles Family Office, LLC
On January 1, 2023, the Company issued
On January 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
| F-19 |
| Table of Contents |
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 1, 2023, the Company issued
On February 17, 2023, the Company issued
On February 17, 2023, the Company issued
On February 17, 2023, the Company issued
On February 17, 2023, the Company issued
On September 22, 2023, the Company issued
Warrants
On January 1, 2018, the Company issued
On May 11, 2018, the Company issued
On October 25, 2018, the Company issued
| F-20 |
| Table of Contents |
On May 20, 2019, the Company entered into a Note Purchase Agreement (the “Agreement”) with an investor (the “Investor”) through which the Investor purchased (i) a Senior Secured Redeemable Convertible Note (“Note”) with a face value of $
The following tables summarize the warrant activity during the years ended December 31, 2023 and 2022:
Stock Warrants |
| Number of Warrants |
|
| Weighted Average Exercise Price |
| ||
Balance at December 31, 2021 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
|
|
| |
Exercised |
|
| - |
|
|
|
| |
Forfeited |
|
| ( | ) |
|
|
| |
Balance at December 31, 2022 |
|
|
|
|
|
| ||
Granted |
|
| - |
|
|
|
| |
Exercised |
|
| - |
|
|
|
| |
Forfeited |
|
| ( | ) |
|
|
| |
Balance at December 31, 2023 |
|
| - |
|
| $ |
| |
| F-21 |
| Table of Contents |
11. Income Taxes
The Company’s former subsidiaries, Compania Minera Cerros del Sur and Compania Minera Clavo Rico, which are located in Honduras, are required to pay income tax and solidarity tax on their income and/or assets annually. During 2022, the Company paid $
The Company accounts for U.S. income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement 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. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The provision for income tax expense (recovery) is comprised the following amounts:
Tax Reconciliations |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Tax at Statutory Rate |
| $ |
|
| $ | ( | ) | |
Meals and Entertainment |
|
| ( | ) |
|
| ( | ) |
Change in Derivative Liability |
|
| ( | ) |
|
| ( | ) |
Amortization of Debt Discount |
|
| ( | ) |
|
| ( | ) |
Accrued Interest |
|
| ( | ) |
|
|
| |
Change in Valuation of Allowance |
|
| ( | ) |
|
|
| |
Tax Provision |
| $ |
|
| $ |
| ||
The components of deferred income tax in the accompanying balance sheets are as follows:
Deferred Tax Assets |
| December 31, 2023 |
|
| December 31, 2022 |
| ||
(21% Federal, 5% Average Corporate Rate) |
|
|
|
|
|
| ||
Net Operating Loss Carry-forwards |
| $ |
| $ |
| |||
Depreciation |
|
|
|
|
|
| ||
Accrued Interest |
|
| ( | ) |
|
|
| |
Valuation Allowance |
|
| ( | ) |
|
| ( | ) |
Deferred Tax Assets |
| $ |
|
| $ |
| ||
As of December 31, 2023 and 2022, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of approximately $
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2043.
The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company’s tax years beginning with the year ended June 30, 2012 through December 31, 2023 generally remain open to examination by the Internal Revenue Service until its net operating loss carry-forwards are utilized and the applicable statutes of limitation have expired.
| F-22 |
| Table of Contents |
12. Related Party Transactions
Consulting Agreement – In February 2014, the Company entered into a consulting agreement with the Company’s chief executive officer, stockholder and director. The Company agreed to pay $
Employment Agreements – Mr. Cluff currently serves as a director of the Company and has a separate agreement as a consultant of the Company effective as of October 2, 2015.
The Company has an employment agreement with its chief executive officer, Trent D’Ambrosio. The employment agreement was effective as of April 1, 2019 and provides for compensation of $
Notes Payable – The Company took a few short-term notes payable from related parties during 2023. The Company received $
Accounts Payable – Two officers/directors of the Company have been paying expenses for the Company on their personal credit cards. The Company has recorded these expenses and accrued the amounts in accounts payable to the individuals. As of December 31, 2023, there is $
13. Commitments and Contingencies
Litigation
The Company at times is subject to other legal proceedings that arise in the ordinary course of business. The following is a summary of pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of operations of the Company.
On March 4, 2024, the Company filed a lawsuit against Mother Lode Mining, Inc., a Canadian company, and Robert Salna (the “Defendants"), alleging an amount of not less than $
On January 18, 2023, the Company negotiated a settlement with Antilles Family Office, LLC through which the Company paid $
| F-23 |
| Table of Contents |
The Company’s former subsidiary, Compañía Minera Clavo Rico, S.A. de C.V., has been served with a lawsuit filed by SAR, the taxing authority in Honduras, alleging additional tax liability due. The Complaint alleges that HNL7,186,151,96 lempires are due in a demand for execution of a forced extrajudicial title. The Company had accrued $
In the opinion of management, as of December 31, 2023, the amount of ultimate liability with respect to such matters, if any, may be likely to have a material impact on the Company’s business, financial position, results of operations or liquidity. However, as the outcome of litigation and other claims is difficult to predict significant changes in the estimated exposures could exist.
On September 22, 2023, the Company entered into a consulting agreement with William McCluskey. This agreement requires the Company to pay $
14. Concentrations
We generally sell a significant portion of our mineral production to a relatively small number of customers. For the year ended December 31, 2022, most of our consolidated product revenues were attributable to A-Mark Precious Metals and to Asahi Refining, Inc., our current and only two customers as of December 31, 2022. We are not dependent upon any one purchaser and have alternative purchasers readily available at competitive market prices if there is a disruption in services or other events that cause us to search for other ways to sell our production.
15. Discontinued Operations
During the year ended December 31, 2022, the Company decided to discontinue all of its operating activities. Based on that decision, the Company’s board of directors committed to a plan to sell the CMCS entity operating the mine in Honduras.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations (held for sale) in the consolidated balance sheets.
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
CURRENT ASSETS OF DISCONTINUED OPERATIONS: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Accounts receivable |
|
|
|
|
|
| ||
Inventories |
|
|
|
|
|
| ||
Prepaid expenses and other current assets |
|
|
|
|
|
| ||
TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
| $ |
|
| $ |
| ||
Other assets |
|
|
|
|
|
| ||
TOTAL NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Finance lease liabilities - current portion |
|
|
|
|
|
| ||
Note payable |
|
|
|
|
|
| ||
Taxes payable |
|
|
|
|
|
| ||
TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Finance lease liabilities, net of current portion |
| $ |
|
| $ |
| ||
Mine reclamation obligation |
|
|
|
|
|
| ||
TOTAL NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
| F-24 |
| Table of Contents |
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive loss. The results of operations from discontinued operations for the years ended December 31, 2023 and 2022 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022, and consist of the following.
|
| Years Ended |
| |||||
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Precious Metals Income |
| $ |
|
| $ |
| ||
Cost of goods sold |
|
|
|
|
|
| ||
Gross profit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES OF DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
OPERATING INCOME (LOSS) OF DISCONTINUED OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
OTHER (INCOME) EXPENSE OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Other (income) expense |
|
|
|
|
| ( | ) | |
Interest expense |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS |
|
| ( | ) |
|
| ( | ) |
Provision for income taxes of discontinued operations |
|
|
|
|
| ( | ) | |
NET INCOME (LOSS) OF DISCONTINUED OPERATIONS |
| $ | ( | ) |
| $ | ( | ) |
The Company recognized a gain on the sale of mine property in discontinued operations of $
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the years ended December 31, 2023 and 2022 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended December 31, 2023 and 2022, and consist of the following.
| F-25 |
| Table of Contents |
|
| Years Ended |
| |||||
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
DISCONTINUED OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Depreciation expense |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
|
|
|
|
| ||
Inventories |
|
| ( | ) |
|
|
| |
Prepaid expenses and other current assets |
|
| ( | ) |
|
| ( | ) |
Accounts payable and accrued liabilities |
|
| ( | ) |
|
|
| |
Accounts payable and accrued liabilities - related parties |
|
|
|
|
|
| ||
Net cash provided by (used in) operating activities of discontinued operations |
| $ | ( | ) |
| $ |
| |
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
| $ | ( | ) |
| $ | ( | ) |
Net cash used in investing activities of discontinued operations |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Payments on finance leases |
| $ |
|
| $ | ( | ) | |
Proceeds from notes payable |
|
|
|
|
|
| ||
Net cash provided by financing activities of discontinued operations |
| $ |
|
| $ |
| ||
16. Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date which the consolidated financial statements were available to be issued and there are no material subsequent events.
| F-26 |
EXHIBIT 31.1
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Inception Mining Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
|
| Name: | Trent D’Ambrosio |
|
|
| Title: | Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 31.2
OFFICER’S CERTIFICATE
PURSUANT TO SECTION 302
I, Trent D’Ambrosio, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Inception Mining Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (e) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (f) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (g) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (h) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| (c) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (d) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
|
| Name: | Trent D’Ambrosio |
|
|
| Title: | Chief Financial Officer (Principal Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Inception Mining Inc. (the “Company”) for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
|
|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
|
| Name: | Trent D’Ambrosio |
|
|
| Title: | Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Inception Mining Inc. (the “Company”) for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Trent D’Ambrosio, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
|
|
|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 2, 2024 | By: | /s/ Trent D’Ambrosio |
|
|
| Name: | Trent D’Ambrosio |
|
|
| Title: | Chief Financial Officer (Principal Accounting Officer) |
|