Attached files
As
filed with the Securities and Exchange Commission on September 14,
2016
Registration
No. ______
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LODE-STAR
MINING INC.
(Exact
name of registrant in its charter)
|
Nevada
|
1041
|
47-4347638
|
|
(State
or other jurisdiction of
|
(Primary
Standard Industrial Classification
|
(I.R.S.
Employer Identification Number)
|
|
incorporation
or organization)
|
Code
Number)
|
|
13529 Skinner Road, Suite N
Cypress, TX 77429-1775
(832) 371-6531
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive
offices)
Mark Walmesley
Chief Executive Officer
13529 Skinner Road, Suite N
Cypress, TX 77429-1775
Telephone: (832) 371-6531
Email: markw@lode-starmining.com
(Name,
address, including zip code, and telephone number, including area
code, of agent for service)
Copies
of communications to:
Robert
L. Sonfield, Jr., Esq.
Sonfield & Sonfield
2500 Wilcrest Drive, Suite 300
Houston, Texas 77042
Telephone: (713)877-8333
Facsimile: (713)877-1547
Email: robert@sonfield.com
Approximate date of
commencement of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box.
☒
If this
Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this
Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
If this
Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
|
Non-accelerated
filer
|
☐
|
Smaller
reporting company
|
☒
|
|
(Do not
check if a smaller reporting company)
|
|
|
|
i
CALCULATION OF REGISTRATION FEE
|
|
|
Proposed
|
Proposed
|
|
|
|
|
Maximum
|
Maximum
|
Amount
of
|
|
Title
of Each Class of Securities
|
Amount
to be
|
Offering
Price
|
Aggregate
|
Registration
|
|
to
be Registered
|
Registered (1)
|
Per Share (2)
|
Offering Price
|
Fee (3)
|
|
|
|
|
|
|
|
Common stock, par
value $.001 per share,
issuable pursuant
to the Crane Creek Investment Agreement
|
10,000,000
|
$0.04
|
$400,000
|
$40.00
|
(1)
We are registering
10,000,000 shares of our common stock that we will put to Crane
Creek, Inc. pursuant to that certain investment agreement (the
“Crane Creek Investment Agreement”). The Crane Creek
Investment Agreement was entered into on July 25, 2016. In the
event of stock splits, stock dividends or similar transactions
involving the common stock, the number of common shares registered
shall, unless otherwise expressly provided, automatically be deemed
to cover the additional securities to be offered or issued pursuant
to Rule 416 promulgated under the Securities Act of 1933, as
amended (the “Securities Act”). In the event that the
adjustment provisions of the Crane Creek Investment Agreement
require the registrant to issue more shares than are being
registered in this registration statement, for reasons other than
those stated in Rule 416 of the Securities Act, the registrant will
file a new registration statement to register those additional
shares.
(2)
This offering price
has been estimated solely for the purpose of computing the amount
of the registration fee in accordance with Rule 457(c) of the
Securities Act on the basis of the closing price of common stock of
the company as reported on the OTC Market Group’s OTCQB tier
(the “OTCQB”) on September 9, 2016.
(3)
The Registration
Fee has been estimated based on the maximum offering price of the
Shares in accordance with Rule 457(o). If the maximum total
offering price increases prior to the effective date of the
registration statement, a pre-effective amendment will be filed to
increase the maximum dollar value being registered and the
additional filing fee shall be paid.
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with section 8(a) of the Securities Act of
1933 or until the registration statement shall become effective on
such date as the commission, acting pursuant to said section 8(a),
may determine.
ii
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
|
PRELIMINARY
PROSPECTUS
|
SUBJECT
TO COMPLETION, DATED SEPTEMBER 9, 2016
|
10,000,000 Shares of Common Stock
Lode-Star Mining Inc.
This
prospectus relates to the resale of up to 10,000,000 shares of
common stock of Lode-Star Mining Inc. (“we” or the
“company”), par value $.001 per share, issuable to
Crane Creek, Inc. (“Crane Creek”) pursuant to that
certain investment agreement. The investment agreement permits us
to “put” up to $2,000,000 in shares of our common stock
to Crane Creek over a period of up to thirty-six (36) months. We
will not receive any proceeds from the resale of these shares of
common stock. However, we will receive proceeds from the sale of
securities pursuant to our exercise of the put right offered by
Crane Creek. Crane Creek is deemed an underwriter for our common
stock.
The
selling stockholder may offer all or part of the shares for resale
from time to time through public or private transactions, at either
prevailing market prices or at privately negotiated prices. Crane
Creek is paying all of the registration expenses incurred in
connection with the registration of the shares except for
accounting fees and expenses and we will not pay any of the selling
commissions, brokerage fees and related expenses.
Our
common stock is quoted on the OTC Market Group’s OTCQB tier
under the ticker symbol LSMG. On September 9, 2016, the closing
price of our common stock was $0.04 per share.
Investing in our common stock involves a high degree of risk. See
“Risk Factors” beginning on page 2
to read about factors you should
consider before investing in shares of our common
stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities
or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The
Date of this Prospectus is: September 9, 2016
iii
TABLE OF CONTENTS
|
PROSPECTUS SUMMARY
|
1
|
|
|
|
|
RISK FACTORS
|
2
|
|
|
|
|
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
11
|
|
|
|
|
USE OF PROCEEDS
|
12
|
|
|
|
|
DILUTION
|
12
|
|
|
|
|
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
|
12
|
|
|
|
|
DESCRIPTION OF BUSINESS
|
13
|
|
|
|
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
18
|
|
|
|
|
EXECUTIVE COMPENSATION
|
21
|
|
|
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
|
22
|
|
|
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
23
|
|
|
|
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
|
23
|
|
|
|
|
SELLING STOCKHOLDER
|
23
|
|
|
|
|
PLAN OF DISTRIBUTION
|
24
|
|
|
|
|
DESCRIPTION OF SECURITIES TO BE REGISTERED
|
26
|
|
|
|
|
LEGAL MATTERS
|
27
|
|
|
|
|
EXPERTS
|
27
|
|
|
|
|
INTERESTS OF NAMED EXPERTS AND COUNSEL
|
27
|
|
|
|
|
WHERE YOU CAN FIND MORE INFORMATION
|
27
|
|
|
|
|
INDEX TO FINANCIAL STATEMENTS
|
F-1
|
iv
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in
this prospectus. This summary does not contain all the information
that you should consider before investing in the common stock of
Lode-Star Mining Inc. (referred to herein as the
“company,” “we,” “our,” and
“us”). You should carefully read the entire prospectus,
including “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and the accompanying financial statements and
notes before making an investment decision.
About us
Lode-Star Mining
Inc. (formerly International Gold Corp.) was incorporated in the
State of Nevada on December 9, 2004 for the purpose of acquiring
and exploring mineral properties. Our principal executive offices
are located at 13529 Skinner Road, Suite N, Cypress, Texas
77429-1775.
On May
12, 2015, International Gold Corp. completed a merger with its
wholly owned subsidiary, Lode-Star Mining Inc., and formally
assumed the subsidiary’s name by filing Articles of Merger
with the Nevada Secretary of State. The subsidiary was incorporated
for the sole purpose of effecting the name change and the merger
did not affect our corporate structure in any other
way.
Mineral Property Interest
On
December 5, 2014, we entered into an agreement with Lode-Star Gold
Inc., a private Nevada corporation, pursuant to which we issued
35,000,000 shares of our common stock, we valued at $230,180, to
Lode-Star Gold in exchange for a 20% undivided beneficial interest
in and to the mineral claims owned by Lode-Star Gold. The mineral
claims, known as the “Goldfield Bonanza Project”, are
located in the State of Nevada.
The
acquisition was one of the closing conditions of an option
agreement dated October 4, 2014, pursuant to which we acquired the
exclusive option to earn up to an 80% undivided interest in and to
the Goldfield Property. In order to earn the additional 60%
interest in the Goldfield Property, we are required to fund all
expenditures on the Goldfield Property and pay Lode-Star Gold a
total of $5 million in cash from mineral production proceeds in the
form of a net smelter royalty (“NSR”). Until such time
as we have earned the additional 60% interest, the NSR will be
split 79.2% to Lode-Star Gold, 19.8% to us and 1% to the former
property owner.
If we
fail to make any cash payments to Lode-Star Gold within one year of
the closing date, December 11, 2014, we are required to pay
Lode-Star Gold an additional $100,000, and in any subsequent years
in which we fail to complete the payment of the entire $5 million
described above, we must make quarterly cash payments to Lode-Star
Gold of $25,000 until such time as we have earned the additional
60% interest in the Goldfield Property.
The
Option Agreement provides that we will act as the operator on the
property and that a management committee will be formed, comprised
of representatives from us and Lode-Star Gold, with voting based on
each party’s proportionate interest, to supervise exploration
of the Goldfield Property and approve work programs and budgets. To
the date of this report, no work programs have been approved and
Lode-Star Gold has borne all costs in connection with operations on
the Goldfield Property. We expect the first work program, entailing
property-related costs for which we will be responsible, to be
approved in the last half of 2016.
Because
the permitting for operations on the Goldfield Property has not
been completed, at our request, Lode-Star Gold granted, by letter
agreement dated June 15, 2016, a
deferment to January 18, 2017 of payments totaling $173,901
otherwise due at June 30, 2016 in accordance with the Option
Agreement.
The Offering
|
Common stock outstanding before the offering
|
49,127,825 shares of common stock as of September 9,
2016.
|
|
|
|
|
Common stock being offered by the selling stockholder
|
10,000,000
shares of common stock.
|
|
|
|
|
Use of proceeds
|
We will
not receive any proceeds from the sale of shares by the selling
stockholder. However, we will receive proceeds from the sale of our
common stock to the selling stockholder pursuant to the Crane Creek
Investment Agreement described below. The proceeds received under
the Crane Creek Investment Agreement will be used for general
corporate and working capital purposes and acquisitions of assets,
businesses or operations or for other purposes that the board of
directors, in its good faith, deem to be in the best interest of
the company.
|
|
|
|
|
OTCQB Trading Symbol
|
LSMG
|
|
|
|
|
Risk Factors
|
The
common stock offered hereby involves a high degree of risk and
should not be purchased by investors who cannot afford the loss of
their entire investment. See “Risk Factors”.
|
1
Investment Agreement with Crane Creek, Inc.
On July
25, 2016, we entered into an investment agreement (the “Crane
Creek Investment Agreement”) with Crane Creek, Inc., a Texas
corporation (“Crane Creek”). Pursuant to the terms of
the Crane Creek Investment Agreement, Crane Creek committed to
purchase up to $2,000,000 of our common stock over a period of up
to thirty-six (36) months. From time to time during the thirty-six
(36) month period commencing with the effectiveness of the
registration statement, we may deliver a put notice to Crane Creek
which states the dollar amount that we intend to sell to Crane
Creek on a date specified in the put notice. The purchase price per
share to be paid by Crane Creek shall be calculated at a twenty
percent (20%) discount to the lowest price of the common stock as
reported by Bloomberg, L.P. during the twenty (20) consecutive
trading days immediately prior to the receipt by Crane Creek of the
put notice. We have reserved 62,500,000 shares of our common stock
for issuance under the Crane Creek Investment Agreement, including
10,000,000 shares included in the registration statement of which
this prospectus is a part filed with the Securities and Exchange
Commission (the “SEC”). We have reserved more shares
reserved than are covered by this registration
statement.
In
connection with the Crane Creek Investment Agreement, we also
entered into a registration rights agreement with Crane Creek,
pursuant to which we are obligated to file a registration statement
with the SEC covering 10,000,000 shares of our common stock
underlying the Crane Creek Investment Agreement within 21 days
after the closing of the transaction. In addition, we are obligated
to use all commercially reasonable efforts to have the registration
statement declared effective by the SEC within 120 days after the
closing of the transaction and maintain the effectiveness of such
registration statement until termination of the Crane Creek
Investment Agreement.
The
10,000,000 shares to be registered herein represent 16.9% of the
shares issued and outstanding, assuming that the selling
stockholder will sell all of the shares offered for
sale.
At an
assumed purchase price of $0.032 per share, a 20% discount to $0.04
per share, the closing bid price as of September 9, 2016, we will
be able to receive up to $320,000 in gross proceeds, assuming the
sale of the entire 10,000,000 shares being registered hereunder
pursuant to the Crane Creek Investment Agreement. Accordingly, we
would be required to register an additional 52,500,000 shares to
obtain the balance of $1,680,000 under the Crane Creek Investment
Agreement. We are currently authorized to issue 480,000,000 shares
of our common stock. Therefor we will likely not be required to
increase our authorized shares in order to receive the entire
purchase price. Crane Creek has agreed to refrain from holding an
amount of shares which would result in Crane Creek owning more than
4.99% of the then-outstanding shares of our common stock at any one
time.
There
are substantial risks to investors as a result of the issuance of
shares of our common stock under the Crane Creek Investment
Agreement. These risks include dilution of stockholders’
percentage ownership, significant decline in our stock price and
our inability to draw sufficient funds when needed.
Crane
Creek will periodically purchase our common stock under the Crane
Creek Investment Agreement and will, in turn, sell such shares to
investors in the market at the market price. This may cause our
stock price to decline, which will require us to issue increasing
numbers of common shares to Crane Creek to raise the same amount of
funds, as our stock price declines.
The
total investment amount of $2 million was determined based on
numerous factors, including the following: Our current running
costs are approximately $150,000 per annum, and thus we need a
portion of the investment amount to pay general operating expenses.
We require the remaining funds for capital expenditures related to
mine expansion. While it is difficult to estimate the likelihood
that we will need the full investment amount, we believe that we
may need the full amount of $2 million funding under the Crane
Creek Investment Agreement.
Where you can find us
Our
executive office is located at 13529 Skinner Road, Suite N,
Cypress, Texas 77429. Our telephone number is 832-371-6531. Our
website is located at http://www.lode-starmining.com.
The information on our website is not part of this
prospectus.
You should carefully consider the following risk factors discussed
below and the matters addressed under “Special Note Regarding
Forward-Looking Statements,” together with all the other
information presented in this prospectus, including our audited
financial statements and related notes. The risks described below
are the only presently known risks facing us or that may materially
adversely affect our business. Additional risks and uncertainties
not currently known to us or that we currently deem to be
immaterial may also materially and adversely affect our business.
If any of the following risks develop into actual events, our
business, financial condition or results of operations could be
materially adversely affected and you may lose all or part of your
investment.
Risks related to our business
We have a history of operating losses and expect to continue to
realize losses in the near future. Currently our operations are
producing no revenue to fund operating costs, and we rely on
investments by third parties to fund our business. Even if we
generate revenue we may not become profitable or be able to sustain
profitability.
2
From inception, we
have incurred significant net losses and have not generated any
revenue in order to support our operations. We have reported a net
loss of $1,560,145 from the date of inception through June 30,
2016. We expect to continue to incur net losses and negative cash
flow from operations in the near future, and we will continue to
experience losses for at least as long as it takes our company to
generate revenue by mining of the property. The size of these
losses will depend, in large part, on whether we develop the mine
in a profitable manner. To date, we have had no operating revenues.
There can be no assurance that we will achieve material revenues in
the future. Should we achieve a level of revenues that make us
profitable, there is no assurance that we can maintain or increase
profitability levels in the future.
There is substantial doubt as to whether we will continue
operations. If we discontinue operations, you could lose your
investment.
The
following factors raise substantial doubt regarding the ability of
our business to continue as a going concern: (i) the losses we
incurred since our inception; (ii) our lack of significant
operating revenues since inception through the date of this
prospectus; and (iii) our dependence on debt and equity funding to
continue in operation. We have signed the Crane Creek Investment
Agreement for up to $2,000,000 through sales of our common stock.
We therefore expect to incur significant losses in the foreseeable
future. The financial statements do not include any adjustments
that might result from the uncertainty about our ability to
continue our business. If we are unable to obtain additional
financing from outside sources and eventually produce enough
revenues, we may be forced to curtail or cease our operations. If
this happens, you could lose all or part of your
investment.
Our lack of any profitable operating history makes it difficult for
us to evaluate our future business prospects and make decisions
based on those estimates of our future performance.
We do
not have any substantial operating history, which makes it
impossible to evaluate our business on the basis of historical
operations. Our business carries both known and unknown risks. As a
consequence, our past results may not be indicative of future
results. Although this is true for any business, it is particularly
true for us because of our lacking any profitable operating
history.
Because our auditors have issued a going concern opinion, there is
substantial uncertainty that we will be able to continue our
operations.
Our
auditors have issued a going concern opinion. This means that there
is substantial doubt that we can continue to operate over the next
12 months. Our financial statements do not include any adjustments
relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that
might be necessary in the event we cannot continue in existence. As
such, if we are unable to obtain new financing to execute our
business plan we may be required to cease our
operations.
One of our stockholders has the ability to significantly influence
any matters to be decided by the stockholders, which may prevent or
delay a change in control of our company.
Lode-Star Gold,
Inc., a Nevada corporation, currently owns 35,015,000 shares of
common stock, Lonnie S. Humphries Non Exempt Trust owns 200,000
shares of common stock and Lonnie Humphries owns 1,369,756 shares
of common stock. Lonnie S. Humphries has investment and dispositive
authority of Lode-Star Gold and Lonnie S. Humphries Non Exempt
Trust. As a result, Lonnie S. Humphries has investment and
dispositive authority over a total of 36,584,759 shares of common
stock, 76.77% of the total outstanding shares of common stock and
can exert considerable influence over the outcome of any corporate
matter submitted to our stockholders for approval, including the
election of directors, removal of the entire board of directors and
any transaction that might cause a change in control, such as a
merger or acquisition. Any stockholders in favor of a matter that
is opposed by this stockholder cannot overrule the vote of Lonnie
S. Humphries. Lonnie Humphries is the wife of Mark Walmesley, a
director, president and chief executive officer.
Mark Walmesley is our director and officer and the loss of Mr.
Walmesley could adversely affect our business.
Since
Mr. Walmesley is currently one of our directors and our CEO, if he
were to die, become disabled, or leave our company, we would be
forced to retain an individual to replace him. There is no
assurance that we can find a suitable person to replace him if that
becomes necessary. We have no “key man” life insurance
at this time.
Our management has not had
extensive experience in managing the day to day operations
of a public company and, as a result, we may incur additional
expenses associated with the management of our
company.
We underwent a
change in management September 22, 2014. Our chief executive
officer, Mark Walmesley, is responsible for the operations and
reporting of our company. At the time of the management change, the
requirements of operating as a small public company were new to Mr.
Walmesley. This may require us to obtain outside assistance from
legal, accounting, investor relations, or other professionals that
could cost more than forecast. We may also be required to hire
additional staff to comply with additional SEC reporting
requirements.
3
Risks related to the gold mining industry
The Goldfield Property may not contain mineral reserves that are
economically recoverable and we cannot accurately predict the
effect of certain factors affecting such a
determination.
Lode-Star Gold has
not determined if the Goldfield Property contains mineral reserves
that are economically recoverable. Exploration for mineral reserves
involves a high degree of risk, which even a combination of careful
evaluation, experience and knowledge, may not eliminate. Few
properties which are explored are ultimately developed into
producing properties. Regardless, Lode-Star Gold is currently in
the process of re-opening its underground working and plans to
complete the first and second phases of its feasibility program,
which, pursuant to the Option Agreement, we are required to
fund.
Estimates of
mineral reserves and any potential determination as to whether a
mineral deposit will be commercially viable can be affected by such
factors as deposit size; grade; unusual or unexpected geological
formations and metallurgy; proximity to infrastructure; metal
prices which are highly cyclical; environmental factors; unforeseen
technical difficulties; work interruptions; and government
regulations, including regulations relating to permitting, prices,
taxes, royalties, land tenure, land use, importing and exporting of
minerals and environmental protection. The exact effect of these
factors cannot be accurately predicted.
The
long term profitability of our operations will be, in part,
directly related to the cost and success of our exploration and
development program. Substantial expenditures are required to
establish reserves through drilling, to develop processes to
extract the ore and, in the case of new properties, to develop the
extraction and processing facilities and infrastructure at any site
chosen for extraction. Although substantial benefits may be derived
from the discovery of a major deposit, we cannot provide any
assurance that any such deposit will be commercially viable or that
we will be able to obtain the funds required for development on a
timely basis.
If we are successful in producing gold from the Goldfield Property,
we will encounter hazards and risks that could result in
significant legal liability.
In the
event that we are ultimately able to commence commercial production
on the Goldfield Property, our operations will be subject to all of
the hazards and risks normally encountered in the exploration,
development and production of gold, including unusual and
unexpected geologic formations, seismic activity, rock bursts,
cave-ins, flooding and other conditions involved in the drilling
and removal of material, any of which could result in damage to, or
destruction of, the mine and other producing facilities, damage to
life or property, environmental damage and possible legal
liability. Although we plan to take appropriate precautions to
mitigate these hazards and risks by, among other things, obtaining
liability insurance in an amount considered to be adequate by
management, their nature is such that the liabilities might exceed
policy limits, they might not be insurable, or we may not elect to
insure against them due to high premium costs or other reasons,
which could have a material adverse effect upon our financial
condition and results of operations.
We face significant competition in the mineral resource industry
that presents an ongoing threat to the success of our
business.
The
mining industry is intensely competitive in all of its phases, and
we will be forced to compete with many companies that possess
greater financial resources and technical facilities than we do. As
a result of this competition, our ability to operate profitably may
be adversely affected.
Fluctuating mineral prices may negatively affect our ability to
secure financing or our results of operations.
Our
future revenues, if any, will likely be derived from the extraction
and sale of base and precious metals. The price of those
commodities has fluctuated widely, particularly in recent years,
and is affected by numerous factors beyond our control including
economic and political trends, expectations of inflation, currency
exchange fluctuations, interest rates, global and regional
consumptive patterns, speculative activities and increased
production due to new extraction developments and improved
extraction and production methods. The effect of these factors on
the price of base and precious metals, and therefore the economic
viability of our business, could negatively affect our ability to
secure financing or our results of operations.
We are subject to government laws and regulations particular to our
operations with which we may be unable to comply.
We may
not be able to comply with all current and future government
environmental laws and regulations which are applicable to our
business. Our operations are subject to all government regulations
normally incident to conducting business: occupational safety and
health acts, workmen’s compensation statutes, unemployment
insurance legislation, income tax and social security laws and
regulations, and most importantly, environmental laws and
regulations. In addition, we are subject to laws and regulations
regarding the development of mineral properties in the State of
Nevada. We are also subject to governmental laws and regulations
applicable to small public companies and their capital formation
efforts.
4
We are
engaged in mineral exploration and are accordingly exposed to
environmental risks associated with mineral exploration and mining
activity. Lode-Star Gold is currently in the exploration stage and
has not determined whether significant site reclamation costs will
be required on the Goldfield Property in the future, which we will
likely be responsible for as well. Although we will make every
effort to comply with all applicable laws and regulations, we
cannot provide any assurance that we will be able to deal with
evolving environmental attitudes and regulations, nor can we
predict the effect of any future changes to environmental
regulations on our proposed business activities. We only plan to
record liabilities for site reclamation when reasonably
determinable and when such costs can be reliably quantified. Other
costs of compliance with environmental regulations may also be
burdensome.
Our
failure to comply with material regulatory requirements could have
an adverse effect on our ability to conduct our business. The
expenditure of substantial sums on environmental matters would have
a materially negative effect on our ability to implement our
business plan and could require us to cease
operations.
We are subject to all the risks inherent to mineral exploration,
which may have an adverse effect on our business
operations.
Potential investors
should be aware of the difficulties normally encountered by mineral
exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light
of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral
properties that we plan to undertake. These potential problems
include, but are not limited to, unanticipated problems relating to
exploration and additional costs and expenses that may exceed
current estimates. If we are unsuccessful in addressing these
risks, our business will likely fail and you will lose your entire
investment.
We are
subject to the numerous risks and hazards inherent to the mining
industry and resource exploration including, without limitation,
the following:
●
interruptions
caused by adverse weather conditions; and
●
unforeseen limited
sources of supplies resulting in shortages of materials, equipment
and availability of experienced manpower.
The
prices and availability of such equipment, facilities, supplies and
manpower may change and have an adverse effect on our operations,
causing us to suspend operations or cease our activities
completely.
If we establish the existence of a mineral reserve on any property,
we may still require additional capital in order to develop the
property into a producing mine. If we cannot raise this additional
capital, we will not be able to exploit the reserve and our
business could fail.
If we
do discover a mineral reserve on any property, we will be required
to expend substantial sums of money to establish the extent of the
reserve, develop processes to extract it and develop extraction and
processing facilities and infrastructure. Although we may derive
substantial benefits from the discovery of a reserve, there can be
no assurance that any reserve established will be large enough to
justify commercial operations, nor can there be any assurance that
we will be able to raise the funds required for development on a
timely basis. If we cannot raise the necessary capital or complete
the necessary facilities and infrastructure, our business may
fail.
A shortage of critical equipment, supplies, and resources could
adversely affect our exploration activities.
We will
be dependent on unique equipment, supplies and resources to carry
out our mining activities, including input commodities, drilling
equipment and skilled labor. A shortage in the market for any of
these factors could cause unanticipated cost increases and delays
in delivery times, which could in turn adversely impact production
schedules and costs.
Mineral exploration and development is subject to extraordinary
operating risks. We do not currently insure against these risks. In
the event of a cave-in or similar occurrence, our liability may
exceed our resources, which would have an adverse impact on our
company.
Mineral
exploration, development and production involve many risks which
even a combination of experience, knowledge and careful evaluation
may not be able to overcome. Our operations will be subject to all
of the hazards and risks inherent in these activities and, if we
discover a mineral reserve, our operations could be subject to all
of the hazards and risks inherent in the development and production
of a mineral reserve, including liability for pollution, cave-ins
or similar hazards against which we cannot insure or against which
we may elect not to insure. Any such event could result in work
stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage
against these operating hazards. The payment of any liabilities
that may arise from any such occurrence would likely have a
material adverse impact on our company.
Mineral prices are subject to dramatic and unpredictable
fluctuations and the economic viability of our company and its
activities cannot be accurately predicted.
5
We
expect to derive revenues, if any, either from the sale of our
discovered mineral properties or from the extraction and sale of
precious and base metals such as gold and to a lesser extent
silver, copper, zinc and indium, which are known to exist alongside
each other at times. The price of these commodities has fluctuated
widely in recent years and is affected by numerous factors beyond
our control, including international, economic and political
trends, expectations of inflation, currency exchange fluctuations,
interest rates, global or regional consumptive patterns,
speculative activities and increased production due to new
extraction developments and improved extraction and
production methods.
The effect of these factors is based on the price of precious
metals and therefore the economic viability of our company and its
activities cannot accurately be predicted.
Mineral operations are subject to applicable law and government
regulation. Even if we discover a mineral resource in a
commercially exploitable quantity, these laws and regulations could
restrict or prohibit the exploitation of that mineral resource. If
we cannot exploit any mineral resource that we discover on our
properties, our business may fail.
Both
mineral exploration and extraction require permits from various
federal, state, provincial and local governmental authorities and
are governed by laws and regulations, including those with respect
to prospecting, mine development, mineral production, transport,
export, taxation, labor standards, occupational health, waste
disposal, toxic substances, land use, environmental protection,
mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for
the continued exploration of our mineral properties or for the
construction and operation of a mine on our properties at an
economically viable cost. If we cannot accomplish these objectives,
our business could fail.
Although we believe
that we intend to comply with all material laws and regulations
that apply to our activities, we can give no assurance that we will
remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as
amended.
Further, there can
be no assurance that we will be able to obtain or maintain all
permits necessary for our future operations, or that we will be
able to obtain them on reasonable terms. To the extent such
approvals are required and are not obtained, we may be delayed or
prohibited from proceeding with planned exploration or development
of our mineral properties.
The mining industry is highly competitive and there is no assurance
that we will be successful in acquiring mineral claims. If we
cannot acquire properties to explore for mineral resources, we may
be required to reduce or cease operations.
The
mineral exploration, development, and production industry is
largely unintegrated. We may compete with other exploration
companies looking for mineral resource properties. Some of these
other companies possess greater financial resources and technical
facilities. This competition could adversely affect our ability to
acquire suitable prospects for exploration in the future.
Accordingly, there can be no assurance that we will acquire any
interest in any mineral resource properties that might yield
reserves or result in commercial mining operations. While we may
compete with other exploration companies in the effort to locate
and acquire mineral resource properties, we do not believe that we
will compete with them for the removal or sales of mineral products
from our properties if we should eventually discover the presence
of them in quantities sufficient to make production economically
feasible. Readily available markets exist worldwide for the sale of
mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce once we identify them
and acquire mineral rights to a property.
After we attempt to increase operations, we will face increasing
competition from domestic and foreign
companies.
The
mining industry throughout the world is fragmented. Our ability to
compete against other domestic and international enterprises will
be, to a significant extent, dependent on our ability to
distinguish our services from those of our competitors by
differentiating our marketing approach and identifying attractive
opportunities to market and sell. Some of our competitors have been
in business longer than we have and are more established. Our
competitors may provide services comparable or superior to those we
provide or adapt more quickly than we do to evolving industry
trends or changing market requirements. Increased competition may
result in reduced margins and loss of market share, any of which
could materially adversely affect our profit margins after we
commence operations and generate revenues.
We have no mining operations and no history as a mining
company.
We are
an exploration stage mining company and have no ongoing mining
operations of any kind. We intend to acquire interests in mining
concessions which may or may not lead to production.
We have
no history of earnings or cash flow from mining operations. If we
are able to proceed to production, commercial viability will be
affected by factors that are beyond our control such as the
particular attributes of the deposit, the fluctuation in metal
prices, the cost of construction and operating a mine, prices and
refining facilities, the availability of economic sources for
energy, government regulations including regulations relating to
prices, royalties, restrictions on production, quotas on
exploration of minerals, as well as the costs of protection of the
environment.
Significant economic downturns or any future changes in consumer
spending habits could have a material adverse effect on our
financial condition and results of operations.
6
Demand
for our products is affected by general global economic conditions.
When economic conditions are favorable and base or discretionary
income increases, purchases of non-essential items such as our
products increase. When economic conditions are less favorable,
sales of non-essential items are generally lower. In addition, we
may experience more competitive pricing pressure during economic
downturns. Therefore, any significant economic downturn or any
future changes in consumer spending habits could have a material
adverse effect on our financial condition and results of
operations.
Because we have a limited history of operations we may not be able
to successfully implement our business plan.
As a
development stage company, we have no operational history in our
industry. Accordingly, our operations are subject to the risks
inherent in the establishment of a new business enterprise,
including access to capital, successful implementation of our
business plan, and limited revenue from operations. We cannot
assure you that our intended activities or plan of operation will
be successful or result in revenue or profit to us and any failure
to implement our business plan may have a material adverse effect
on the business of the Company.
Our operations involve significant risks and hazards inherent to
the mining industry.
Our
exploration operations will involve the operation of large pieces
of drilling and other heavy equipment. Hazards such as fire,
explosion, floods, structural collapses, industrial accidents,
unusual or unexpected geological conditions, ground control
problems, cave-ins, flooding and mechanical equipment failure are
inherent risks in our operations. Hazards inherent to the mining
industry can cause injuries or death to employees, contractors or
other persons at our mineral properties, severe damage to and
destruction of our property, plant and equipment and mineral
properties, and contamination of, or damage to, the environment,
and can result in the suspension of our exploration activities and
any future development and production activities.
In
addition, from time to time we may be subject to governmental
investigations and claims and litigation filed on behalf of persons
who are harmed while at our properties or otherwise in connection
with our operations. To the extent that we are subject to personal
injury or other claims or lawsuits in the future, it may not be
possible to predict the ultimate outcome of these claims and
lawsuits due to the nature of personal injury litigation.
Similarly, if we are subject to governmental investigations or
proceedings, we may incur significant penalties and fines, and
enforcement actions against us could result in the closing of
certain of our mining operations. If claims and lawsuits or
governmental investigations or proceedings are ultimately resolved
against us, it could have a material adverse effect on our
financial performance, financial position and results of
operations. Also, if we mine on property without the appropriate
licenses and approvals, we could incur liability or our operations
could be suspended.
We face fluctuating gold and mineral prices and currency
volatility.
The
price of gold and silver as well as other precious base metals has
experienced volatile and significant price movements over short
periods of time and is affected by numerous factors beyond our
control, including international economic and political trends,
expectations of inflation, currency exchange fluctuations
(including, the U.S. dollar relative to other currencies) interest
rates, global or regional consumption patterns, speculative
activities and increases in production due to improved mining and
production methods. The supply of and demand for gold, other
precious and base metals are affected by various factors, including
political events, economic conditions and production costs in major
mineral producing regions.
We
depend heavily on key personnel, and turnover of key senior
management could harm our business.
Our
future business and results of operations depend, in significant
part, upon the continued contributions of our Chief Executive
Officer, Mark Walmesley. If we lose his services or if he fails to
perform in his current position, or if we are not able to attract
and retain skilled employees as needed, our business could suffer.
We depend on the skills and abilities of this key employee in
managing the product development, management, marketing and sales
aspects of our business, any part of which could be harmed by such
a turnover in the future and directly harm our
business.
Our future results and reputation may be affected by litigation or
other liability claims.
We have
not procured a general liability insurance policy for our business.
To the extent that we suffer a loss of a type which would normally
be covered by general liability, we would incur significant
expenses in defending any action against us and in paying any
claims that result from a settlement or judgment against us.
Adverse publicity could result in a loss of consumer confidence in
our business or our securities.
We may be subject to regulatory inquiries, claims, suits or
prosecutions which may cause us to incur substantial
expense.
Any
failure or perceived failure by us to comply with applicable laws
and regulations, in general, may subject us to regulatory
inquiries, claims, suits and prosecutions. We can give no assurance
that we will prevail in such regulatory inquiries, claims, suits
and prosecutions on commercially reasonable terms or at all.
Responding to, defending and/or settling regulatory inquiries,
claims, suits and prosecutions may be time-consuming and divert
management and financial resources or have other adverse effects on
our business. A negative outcome in any of these proceedings may
result in changes to or discontinuance of some of our services,
potential liabilities or additional costs that could have a
material adverse effect on our business, results of operations,
financial condition and future prospects.
It is possible that our title to the properties in which we have an
interest may be challenged by third parties.
7
We may
not obtain title insurance for any mineral properties. It is
possible that the title to the properties in which we will have an
interest will be challenged or impugned. If such claims are
successful, we may lose our interest in such
properties.
Our failure to compete with our competitors in mineral exploration
for financing, acquiring mining claims, and for qualified
managerial and technical employees will cause our business
operations to proceed slower or be suspended.
Our
competition includes large established mineral exploration
companies with substantial capabilities and with greater financial
and technical mineralized materials than we have. As a result of
this competition, we may be unable to acquire additional attractive
mining claims or financing on terms we consider acceptable. We may
also compete with other mineral exploration companies in the
recruitment and retention of qualified managerial and technical
employees. If we are unable to successfully compete for financing
or for qualified employees, our exploration programs may be slowed
down or suspended.
Risks related to our common stock
We lack an established trading market for our common stock, and you
may be unable to sell your common stock at attractive prices or at
all.
There
is currently a limited trading market for our common stock on the
OTC Market Group’s OTCQB tier under the symbol "LSMG." There
can be no assurances given that an established public market will
be obtained for our common stock or that any public market will
last. As a result, we cannot assure you that you will be able to
sell your common stock at attractive prices or at all.
The market price for our common stock may be highly
volatile.
The
market price for our common stock may be highly volatile. A variety
of factors may have a significant impact on the market price of our
common stock, including:
●
the publication of
earnings estimates or other research reports and speculation in the
press or investment community;
●
changes in the
mining industry and competitors;
●
our financial
condition, results of operations and prospects;
●
any future
issuances of our common stock, which may include primary offerings
for cash, and the grant or exercise of stock options from time to
time;
●
general market and
economic conditions; and
●
any outbreak or
escalation of hostilities, which could cause a recession or
downturn in our economy.
We may be subject to shareholder litigation, thereby diverting our
resources that may have a material effect on our profitability and
results of operations.
As
discussed in the preceding risk factors, the market for our common
shares is characterized by significant price volatility when
compared to seasoned issuers, and we expect that our share price
will continue to be more volatile than a seasoned issuer for the
indefinite future. In the past, plaintiffs have often initiated
securities class action litigation against a company following
periods of volatility in the market price of its securities. We may
become the target of similar litigation. Securities litigation will
result in substantial costs and liabilities and will divert
management’s attention and resources.
Future sales of common stock by stockholders may have an adverse
effect on the then prevailing market price of our common
stock.
In the
event a public market for our common stock is sustained in the
future, sales of our common stock may be made by holders of our
public float or by holders of restricted securities in compliance
with the provisions of Rule 144 of the Securities Act of 1933. In
general, under Rule 144, a non-affiliated person who has satisfied
a six-month holding period in a company registered under the
Securities Exchange Act of 1934, as amended, may, sell their
restricted common stock without volume limitation, so long as the
issuer is current with all reports under the Exchange Act in order
for there to be adequate common public information. Affiliated
persons may also sell their common shares held for at least six
months, but affiliated persons will be required to meet certain
other requirements, including manner of sale, notice requirements
and volume limitations. Non-affiliated persons who hold their
common shares for at least one year will be able to sell their
common stock without the need for there to be current public
information in the hands of the public. Future sales of shares of
our public float or by restricted common stock made in compliance
with Rule 144 may have an adverse effect on the then prevailing
market price, if any, of our common stock.
We do not expect to pay cash dividends in the foreseeable
future.
8
We do
not anticipate paying cash dividends on our common stock in the
foreseeable future. We may not have sufficient funds to legally pay
dividends. Even if funds are legally available to pay dividends, we
may nevertheless decide in our sole discretion not to pay
dividends. The declaration, payment and amount of any future
dividends will be made at the discretion of our board of directors,
and will depend upon, among other things, the results of our
operations, cash flows and financial condition, operating and
capital requirements, and other factors our board of directors may
consider relevant. There is no assurance that we will pay any
dividends in the future, and, if dividends are paid, there is no
assurance with respect to the amount of any such
dividend.
As a public company, we are subject to complex legal and accounting
requirements that will require us to incur significant expenses and
will expose us to risk of non-compliance.
As a
public company, we are subject to numerous legal and accounting
requirements that do not apply to private companies. The cost of
compliance with many of these requirements is material, not only in
absolute terms but, more importantly, in relation to the overall
scope of the operations of a small company. Our relative
inexperience with these requirements may increase the cost of
compliance and may also increase the risk that we will fail to
comply. Failure to comply with these requirements can have numerous
adverse consequences including, but not limited to, our inability
to file required periodic reports on a timely basis, loss of market
confidence and/or governmental or private actions against us. We
cannot assure you that we will be able to comply with all of these
requirements or that the cost of such compliance will not prove to
be a substantial competitive disadvantage vis-à-vis our
privately held and larger public competitors.
We were a shell company until we acquired the Goldfield Bonanza
Project December 5, 2014, resulting in certain limitations
on the ability of our stockholders
to use the Rule 144 safe harbor under the Securities Act of 1933,
as amended, for resales of our common stock.
The
safe harbor of Rule 144 is not available for the resale of
securities initially issued by shell companies (other than business
combination related shell companies) or issuers that have been at
any time previously a shell company. However, Rule 144 also
includes an important exception to this prohibition if the
following conditions are met:
●
the issuer of the
securities that was formerly a shell company has ceased to be a
shell company;
●
the issuer of the
securities is subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act;
●
the issuer of the
securities has filed all Exchange Act reports and material required
to be filed, as applicable, during the preceding 12 months (or such
shorter period that the issuer was required to file such reports
and materials), other than Form 8-K reports; and
●
at least one year
has elapsed from the time that the issuer filed current Form 10
information with the SEC, which is expected to be filed promptly
after completion of the business combination, reflecting its status
as an entity that is not a shell company.
Compliance with changing regulation of corporate governance and
public disclosure will result in additional expenses and pose
challenges for our management.
Changing laws,
regulations and standards relating to corporate governance and
public disclosure, including the Dodd-Frank Wall Street Reform and
Consumer Protection Act, and the rules and regulations promulgated
thereunder, the Sarbanes-Oxley Act and SEC regulations, have
created uncertainty for public companies and significantly
increased the costs and risks associated with accessing the U.S.
public markets. Our management team will need to devote significant
time and financial resources to comply with both existing and
evolving standards for public companies, which will lead to
increased general and administrative expenses and a diversion of
management time and attention from revenue generating activities to
compliance activities.
We will need to raise substantial additional capital in the future
to fund our operations and we may be unable to raise such funds
when needed and on acceptable terms.
The
extent to which we utilize the Crane Creek Investment Agreement as
a source of funding will depend on a number of factors, including
the prevailing market price of our common stock, the volume of
trading in our common stock and the extent to which we are able to
secure funds from other sources. The number of shares that we may
sell to Crane Creek under the Crane Creek Investment Agreement on
any given day and during the term of the agreement is limited. See
“Plan of Distribution” section of this prospectus for
additional information. Additionally, we and Crane Creek may not
effect any sales of shares of our common stock under the Crane
Creek Investment Agreement during the continuance of an event of
default defined in the Crane Creek Investment Agreement. Even if we
are able to access the full $2.0 million under the Crane Creek
Investment Agreement, we will still need additional capital to
fully implement our business, operating and development
plans.
When we
elect to raise additional funds or additional funds are required,
we may raise such funds from time to time through public or private
equity offerings, debt financings, corporate collaboration and
licensing arrangements or other financing alternatives, as well as
through sales of common stock to Crane Creek under the Crane Creek
Investment Agreement. Additional equity or debt financing or
corporate collaboration and licensing arrangements may not be
available on acceptable terms, if at all. If we are unable to raise
additional capital in sufficient amounts or on terms acceptable to
us, we will be prevented from pursuing acquisition, licensing,
development and commercialization efforts and our ability to
generate revenues and achieve or sustain profitability will be
substantially harmed.
9
If we
raise additional funds by issuing equity securities, our
stockholders will experience dilution. Debt financing, if
available, would result in increased fixed payment obligations and
may involve agreements that include covenants limiting or
restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring
dividends. Any debt financing or additional equity that we raise
may contain terms, such as liquidation and other preferences, which
are not favorable to us or our stockholders. If we raise additional
funds through collaboration and licensing arrangements with third
parties, it may be necessary to relinquish valuable rights to our
technologies, future revenue streams or product candidates or to
grant licenses on terms that may not be favorable to us. Should the
financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, our
business, operating results, financial condition and prospects
could be materially and adversely affected and we may be unable to
continue our operations.
We are subject to penny stock regulations and restrictions and you
may have difficulty selling shares of our common
stock.
Our
common stock is subject to the provisions of Section 15(g) and Rule
15g-9 of the Securities Exchange Act of 1934 (the “Exchange
Act”), commonly referred to as the “penny stock
rule.” Section 15(g) sets forth certain requirements for
transactions in penny stock, and Rule 15g-9(d) incorporates the
definition of “penny stock” that is found in Rule
3a51-1 of the Exchange Act. The SEC generally defines a penny stock
to be any equity security that has a market price less than $5.00
per share, subject to certain exceptions. We are subject to the
SEC’s penny stock rules.
Since
our common stock is deemed to be penny stock, trading in the shares
of our common stock is subject to additional sales practice
requirements on broker-dealers who sell penny stock to persons
other than established customers and accredited investors.
“Accredited investors” are persons with assets in
excess of $1,000,000 (excluding the value of such person’s
primary residence) or annual income exceeding $200,000 or $300,000
together with their spouse. For transactions covered by these
rules, broker-dealers must make a special suitability determination
for the purchase of such security and must have the
purchaser’s written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny
stock, unless exempt the rules require the delivery, prior to the
first transaction of a risk disclosure document, prepared by the
SEC, relating to the penny stock market. A broker-dealer also must
disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing
recent price information for the penny stocks held in an account
and information to the limited market in penny stocks.
Consequently, these rules may restrict the ability of broker-dealer
to trade and/or maintain a market in our common stock and may
affect the ability of our stockholders to sell their shares of
common stock.
There
can be no assurance that our shares of common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our
common stock was exempt from the Penny Stock Rule, we would remain
subject to Section 15(b)(6) of the Exchange Act, which gives the
SEC the authority to restrict any person from participating in a
distribution of penny stock if the SEC finds that such a
restriction would be in the public interest.
Our common stock is subject to price volatility unrelated to our
operations.
The
market price of our common stock could fluctuate substantially due
to a variety of factors, including market perception of our ability
to achieve our planned growth, quarterly operating results of other
companies in the same industry, trading volume in our common stock,
changes in general conditions in the economy and the financial
markets or other developments affecting our competitors or
ourselves. In addition, the OTCQB is subject to extreme price and
volume fluctuations in general. This volatility has had a
significant effect on the market price of securities issued by many
companies for reasons unrelated to their operating performance and
could have the same effect on our common stock.
Trading in our common stock on the OTC Markets is limited and
sporadic making it difficult for our shareholders to sell their
shares or liquidate their investments.
Trading
in our common stock is currently published on the OTC Markets. The
trading price of our common stock has been subject to wide
fluctuations. Trading prices of our common stock may fluctuate in
response to a number of factors, many of which will be beyond our
control. The stock market has generally experienced extreme price
and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of companies with no
current business operation. There can be no assurance that trading
prices and price earnings ratios previously experienced by our
common stock will be matched or maintained. These broad market and
industry factors may adversely affect the market price of our
common stock, regardless of our operating performance. In the past,
following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been
instituted. Such litigation, if instituted, could result in
substantial costs for us and a diversion of management's attention
and resources.
The sale of our common stock to Crane Creek may cause substantial
dilution to our existing stockholders and the sale of the shares of
common stock acquired by Crane Creek could cause the price of our
common stock to decline.
We are
registering for sale 10,000,000 shares that we may sell to Crane
Creek under the Crane Creek Investment Agreement. It is anticipated
that shares registered in this offering will be sold over a period
of up to approximately 36 months from the date of this prospectus.
The number of shares ultimately offered for sale by Crane Creek
under this prospectus is dependent upon the number of shares we
elect to sell to Crane Creek under the Crane Creek Investment
Agreement. Depending upon market liquidity at the time, sales of
shares of our common stock under the Crane Creek Investment
Agreement may cause the trading price of our common stock to
decline.
10
Crane
Creek may ultimately purchase all, some or none of the $2.0 million
of common stock that is the subject of this prospectus. Crane Creek
may sell all, some or none of our shares that it holds or comes to
hold under the Investment Agreement. Sales by Crane Creek of shares
acquired pursuant to the Investment Agreement under the
registration statement, of which this prospectus is a part, may
result in dilution to the interests of other holders of our common
stock. The sale of a substantial number of shares of our common
stock by Crane Creek in this offering, or anticipation of such
sales, could make it more difficult for us to sell equity or
equity-related securities in the future at a time and at a price
that we might otherwise wish to effect sales. However, we have the
right to control the timing and amount of sales of our shares to
Crane Creek, and the Investment Agreement may be terminated by us
at any time at our discretion without any penalty or cost to
us.
Crane Creek will pay less than the then-prevailing market price for
our common stock.
The
common stock to be issued to Crane Creek pursuant to the Crane
Creek Investment Agreement will be purchased at a 20% discount to
the lowest trading price of our common stock during the twenty (20)
consecutive trading days immediately before Crane Creek receives
our notice of sale. Crane Creek has a financial incentive to sell
our common stock immediately upon receiving the shares to realize
the profit equal to the difference between the discounted price and
the market price. If Crane Creek sells the shares, the price of our
common stock could decrease. If our stock price decreases, Crane
Creek may have a further incentive to sell the shares of our common
stock that it holds. These sales may have a further impact on our
stock price.
Your ownership interest may be diluted and the value of our common
stock may decline by exercising the put right pursuant to the Crane
Creek Investment Agreement.
Pursuant to the
Crane Creek Investment Agreement, when we deem it necessary, we may
raise capital through the private sale of our common stock to Crane
Creek at a price equal to a discount to the lowest volume weighted
average price of the common stock for the twenty (20) consecutive
trading days before Crane Creek receives our notice of sale.
Because the put price is lower than the prevailing market price of
our common stock, to the extent that the put right is exercised,
your ownership interest may be diluted.
We are registering 10,000,000 shares of common stock to be issued
under the Crane Creek Investment Agreement. The sales of such
shares could depress the market price of our common
stock.
We are
registering 10,000,000 shares of common stock under the
registration statement of which this prospectus is a part, pursuant
to the Crane Creek Investment Agreement. Notwithstanding Crane
Creek’s ownership limitation, the 10,000,000 shares will
represent approximately 20.36% of our shares of common stock
outstanding immediately after our exercise of the put right under
the Investment Agreement. The sale of these shares into the public
market by Crane Creek could depress the market price of our common
stock.
We may not have access to
the full amount available under the Crane Creek Investment
Agreement.
Our
ability to draw down funds and sell shares under the Crane Creek
Investment Agreement requires that this resale registration
statement be declared effective and continue to be effective. This
registration statement registers the resale of 10,000,000 shares
issuable under the Crane Creek Investment Agreement, and our
ability to sell any remaining shares issuable under the Crane Creek
Investment Agreement is subject to our ability to prepare and file
one or more additional registration statements registering the
resale of these shares. These registration statements may be
subject to review and comment by the staff of the SEC, and will
require the consent of our independent registered public accounting
firm. Therefore, the timing of effectiveness of these registration
statements cannot be assured. The effectiveness of these
registration statements is a condition precedent to our ability to
sell all of the shares of common stock to Crane Creek under the
Crane Creek Investment Agreement. Even if we are successful in
causing one or more registration statements registering the resale
of some or all of the shares issuable under the Crane Creek
Investment Agreement to be declared effective by the SEC in a
timely manner, we may not be able to sell the shares unless certain
other conditions are met. For example, we might have to increase
the number of our authorized shares in order to issue the shares to
Crane Creek. Accordingly, because our ability to draw down any
amounts under the Crane Creek Investment Agreement is subject to a
number of conditions, there is no guarantee that we will be able to
draw down any portion or all of the proceeds of $2,000,000 under
the Crane Creek Investment Agreement.
Certain restrictions on the extent of puts and the delivery of
advance notices may have little, if any, effect on the adverse
impact of our issuance of shares in connection with the Crane Creek
Investment Agreement, and as such, Crane Creek may sell a large
number of shares, resulting in substantial dilution to the value of
shares held by existing shareholders.
Crane
Creek has agreed, subject to certain exceptions listed in the Crane
Creek Investment Agreement, to refrain from holding an amount of
shares which would result in Crane Creek or its affiliates owning
more than 4.99% of the then-outstanding shares of our common stock
at any one time. These restrictions, however, do not prevent Crane
Creek from selling shares of common stock received in connection
with a put, and then receiving additional shares of common stock in
connection with a subsequent put. In this way, Crane Creek could
sell more than 4.99% of the outstanding common stock in a
relatively short time frame while never holding more than 4.99% at
one time.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains certain forward-looking statements. When used
in this prospectus or in any other presentation, statements which
are not historical in nature, including the words
“anticipate,” “estimate,”
“should,” “expect,” “believe,”
“intend,” “may,” “project,”
“plan” or “continue,” and similar
expressions are intended to identify forward-looking statements.
They also include statements containing a projection of revenues,
earnings or losses, capital expenditures, dividends, capital
structure or other financial terms.
11
The
forward-looking statements in this prospectus are based upon our
management’s beliefs, assumptions and expectations of our
future operations and economic performance, taking into account the
information currently available to them. These statements are not
statements of historical fact. Forward-looking statements involve
risks and uncertainties, some of which are not currently known to
us that may cause our actual results, performance or financial
condition to be materially different from the expectations of
future results, performance or financial condition we express or
imply in any forward-looking statements. These forward-looking
statements are based on our current plans and expectations and are
subject to a number of uncertainties and risks that could
significantly affect current plans and expectations and our future
financial condition and results.
We
undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this
prospectus might not occur. We qualify any and all of our
forward-looking statements entirely by these cautionary factors. As
a consequence, current plans, anticipated actions and future
financial conditions and results may differ from those expressed in
any forward-looking statements made by or on our behalf. You are
cautioned not to unduly rely on such forward-looking statements
when evaluating the information presented herein.
USE OF PROCEEDS
We will
not receive any proceeds from the sale of shares by the selling
stockholder. However, we will receive proceeds from the sale of
securities pursuant to the Crane Creek Investment Agreement. The
proceeds received from any “puts” tendered to Crane
Creek under the Crane Creek Investment Agreement will be used for
general corporate and working capital purposes and acquisitions or
assets, businesses or operations or for other purposes that the
board of directors, in its good faith deem to be in the best
interest of the company.
DILUTION
The
sale of our common stock to Crane Creek pursuant to the Crane Creek
Investment Agreement will have a dilutive impact on our
shareholders. As a result, our net loss per share could increase in
future periods and the market price of our common stock could
decline. In addition, the lower our stock price is at the time we
exercise our right to “advance”, the more shares of our
common stock we will have to issue to Crane Creek pursuant to the
Crane Creek Investment Agreement and our existing shareholders
would experience greater dilution.
After
giving effect to the sale in this offering of 10,000,000 shares of
common stock at an assumed price of $0.032 per share, a 20%
discount to $0.04 per share, the closing bid price as of September
9, 2016, our pro forma as adjusted net tangible book value as of
June 30, 2016 would have been approximately negative $398,315, or
negative $0.0067 per share of common stock, versus negative
$718,315, or negative $0.0146 per share of common stock before the
adjustment. This represents an immediate increase in pro forma as
adjusted net tangible book value of $0.0079 per share to our
existing stockholders and an immediate dilution of $0.0407 per
share to our new shareholders.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Public market for common stock
From
January of 2010 the company was quoted on the OTC Markets under the
symbol ITGC. On May 12, 2016 the company changed its name from
International Gold Corp to Lode-Star Mining Inc. and was quoted on
the OTCQB under the ticker symbol LSMG at $0.03 per common
share.
The
following table summarizes the high and low historical closing
prices reported by the OTCQB Historical Data Service for the
periods indicated. OTCQB quotations reflect inter-dealer prices,
without retail mark-up, mark down or commissions, so those quotes
may not represent actual transactions.
|
|
2016
|
|
|
Quarter Ended
|
High
|
Low
|
|
June
30
|
$0.05
|
$0.03
|
|
March
31
|
$0.0492
|
$0.025
|
|
|
2015
|
|
|
Quarter Ended
|
High
|
Low
|
|
December
31
|
$0.04
|
$0.01
|
|
September
30
|
$0.0275
|
$0.015
|
|
June
30
|
$0.05
|
$0.02
|
|
March
31
|
$0.11
|
$0.03
|
|
|
2014
|
|
|
Quarter Ended
|
High
|
Low
|
|
December
31
|
$0.10
|
$0.01
|
|
September
30
|
$0.15
|
$0.03
|
|
June
30
|
$0.55
|
$0.03
|
|
March
31
|
$0.20
|
$0.03
|
12
Holders
We had
approximately 76 record holders of our common stock as of September
1, 2016 according to the books of our transfer agent. The actual number of stockholders is greater than
this number of record holders, and includes stockholders who are
beneficial owners, but whose shares are held in street name by
brokers and other nominees. This number of holders of record also
does not include stockholders
whose shares may be held in trust by other
entities.
Dividends
There
are no restrictions in our articles of incorporation or bylaws that
restrict us from declaring dividends. The Nevada Revised Statutes,
however, does prohibit us from declaring dividends where, after
giving effect to the distribution of the dividend:
●
we would not be
able to pay our debts as they become due in the usual course of
business; or
●
our total assets
would be less than the sum of our total liabilities, plus the
amount that would be needed to satisfy the rights of shareholders
who have preferential rights superior to those receiving the
distribution.
We have
not declared any dividends and do not plan to declare any dividends
in the foreseeable future.
Going concern
We have
not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive mine development. For these
reasons our auditors stated in their report that they have
substantial doubt we will be able to continue as a going
concern.
Accounting and audit plan
We
intend to continue to have our outside consultant assist us in the
preparation of our quarterly and annual financial statements and
have these financial statements reviewed or audited by our
independent auditor. Our outside consultant is expected to charge
us approximately $2,500 to prepare our quarterly financial
statements and approximately $3,500 to prepare our annual financial
statements.
We have
no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to stockholders.
Critical accounting policies
Our
financial statements are impacted by the accounting policies used
and the estimates and assumptions made by management during their
preparation. A complete summary of these policies is included in
Note 2 of the notes to our historical financial statements. We have
identified and disclosed accounting policies that are of particular
importance in the presentation of our financial position, results
of operations and cash flows and which require the application of
significant judgment by management.
DESCRIPTION OF BUSINESS
History and general overview
Lode-Star Mining
Inc. (formerly International Gold Corp.) was incorporated in the
State of Nevada on December 9, 2004 for the purpose of acquiring
and exploring mineral properties. Our principal executive offices
are located at 13529 Skinner Road, Suite N, Cypress, Texas
77429-1775. We also maintain a Canadian business office at 666
Burrard Street, Suite 600, Vancouver, British Columbia, Canada V6E
4M8.
On May
12, 2015, International Gold Corp. completed a merger with its
wholly owned subsidiary, Lode-Star Mining Inc., and formally
assumed the subsidiary’s name by filing Articles of Merger
with the Nevada Secretary of State (the “Name Change”).
The subsidiary was incorporated entirely for the purpose of
effecting the Name Change and the merger did not affect our
corporate structure in any other way.
Mineral Property Interest
On
December 5, 2014, we entered into an agreement with Lode-Star Gold
Inc., a private Nevada corporation, pursuant to which we issued
35,000,000 shares of our common stock, we valued at $230,180, to
Lode-Star Gold in exchange for a 20% undivided beneficial interest
in and to the mineral claims owned by Lode-Star Gold. The mineral
claims, known as the “Goldfield Bonanza Project”, are
located in the State of Nevada.
The
acquisition was one of the closing conditions of an option
agreement dated October 4, 2014, pursuant to which we acquired the
exclusive option to earn up to an 80% undivided interest in and to
the Goldfield Property. In order to earn the additional 60%
interest in the Goldfield Property, we are required to fund all
expenditures on the Goldfield Property and pay Lode-Star Gold a
total of $5 million in cash from mineral production proceeds in the
form of a net smelter royalty (“NSR”). Until such time
as we have earned the additional 60% interest, the NSR will be
split 79.2% to Lode-Star Gold, 19.8% to us and 1% to the former
property owner.
13
If we
fail to make any cash payments to Lode-Star Gold within one year of
the closing date, December 11, 2014, we are required to pay
Lode-Star Gold an additional $100,000, and in any subsequent years
in which we fail to complete the payment of the entire $5 million
described above, we must make quarterly cash payments to Lode-Star
Gold of $25,000 until such time as we have earned the additional
60% interest in the Goldfield Property.
The
Option Agreement provides that we will act as the operator on the
property and that a management committee will be formed, comprised
of representatives from us and Lode-Star Gold, with voting based on
each party’s proportionate interest, to supervise exploration
of the Goldfield Property and approve work programs and budgets. To
the date of this report, no work programs have been approved and
Lode-Star Gold has borne all costs in connection with operations on
the Goldfield Property. We expect the first work program, entailing
property-related costs for which we will be responsible, to be
approved in the last half of 2016.
Because
the permitting for operations on the Goldfield Property has not
been completed, at our request, Lode-Star Gold granted, by letter
agreement dated June 15, 2016, a
deferment to January 18, 2017 of payments totaling $173,901
otherwise due at June 30, 2016 in accordance with the Option
Agreement.
Lode-Star Gold Inc.
Lode-Star Gold was
incorporated in the State of Nevada on March 13, 1998 for the
purpose of acquiring exploration stage mineral properties. It
currently has one shareholder, Lonnie Humphries, who is the spouse
of Mark Walmesley, our President and chief financial officer. Mr.
Walmesley is also the Director of Operations and a director of
Lode-Star Gold.
Lode-Star Gold
acquired the leases to the Goldfield Property in 1997 and became
the registered and beneficial owner of the Goldfield Property on
September 19, 2009. Since the earlier of those dates, it has
conducted contract exploration work on the Goldfield Property but
has not determined whether it contains mineral reserves that are
economically recoverable.
Lode-Star Gold is
an exploration stage company and has not generated any revenues
since its inception. The Goldfield Property represents its only
material asset.
Plan of Operations
We
anticipate that we will require approximately $2 million to pursue
our plan of operations over the next 12 months, as detailed
below:
Permitting
Our
primary focus now is on the mine permitting process. We have
retained the following specialists in underground permitting of
narrow vein, high sulphide mines to assist in executing that
permitting process:
●
Rubicon
Environmental Consulting to act as the lead consultant
●
Hydrogeologica Inc.
to consult on water and geology
●
Tierra Group
International to consult on mine planning and
engineering
Unique
to our permitting is the proposed underground area of work named
the Red Hills Stope Zone. It is 150 feet above the 450 foot deep
water table, making the mine essentially a dry mine.
The
mine’s 300 foot level workings has pockets of unused volume
where our potentially acid generating waste rock can be stored.
This means no waste rock will come to the surface and LSM will
avoid, for the short-term, the expense of having to build and
maintain a surface storage facility.
We are
hopeful that the two aforementioned mitigating circumstances will
make our permitting process more rapid and therefore, the costs of
execution and infrastructure improvements will be kept at a
minimum.
Permitting
costs are anticipated as follows:
|
Rubicon
|
$40,000
|
|
Hydrogeologica
|
$135,000
|
|
Tierra
|
$75,000
|
|
State /
NDEP
|
|
|
Total
|
$250,000
|
14
Site and Equipment Preparation
Funds
required for development and output from the Red Hills Vein Zone
are as follows:
Surface Infrastructure, Mine Support & Personnel
Accomodation
|
Office/Shop
Building (existing)
|
$0
|
|
Trailer
Accommodations
|
$60,000
|
|
Contingency
|
$40,000
|
|
Total
|
$100,000
|
Equipment and Mining Material
|
Pneumatic Jacklegs
(6)
|
$24,000
|
|
Pneumatic
Slusher/with bucket (used) (4)
|
$80,000
|
|
Pneumatic Tugger
(used) (2)
|
$10,000
|
|
1-Yard
Scoop (used)
|
$208,000
|
|
Stopers/Buzzies
(4)
|
$8,000
|
|
Schwing
Pump
|
$10,000
|
|
Compressor
|
$60,000
|
|
Hoist
Rehab & Retrofitting
|
$100,000
|
|
Total
|
$500,000
|
Underground Rehab & Preliminary Mine Development
|
Labor -
3.75 man crew x 10 hrs/day x 1 month
|
$31,428
|
|
Equipment
Maintenance
|
$38,212
|
|
Ground
Support
|
$20,000
|
|
Consumables –
small hand tools
|
$1,000
|
|
Utilities
|
$19,600
|
|
Total
|
$110,240
|
Ore Grade Control
|
Total
|
$50,000
|
Red Hills Vein Zone Mining
|
Labor
– 3.75 man crew x 10 hrs/day x 5 months
|
$145,620
|
|
Timber
|
$13,200
|
|
Equipment
Maintenance
|
$28,320
|
|
Ground
Support
|
$13,400
|
|
Explosives
|
$10,665
|
|
Backfill
Material
|
$46,454
|
|
Consumables -
small hand tools
|
$5,000
|
|
Utilities
|
$4,835
|
|
Total
|
$267,494
|
General Corporate and Administration Fees
|
Personnel
|
$320,000
|
|
Regulatory
|
$120,000
|
|
General
|
$280,000
|
|
Total
|
$720,000
|
15
Toll Milling
We have
no facilities to process ore and are negotiating with local mill
operators to have our ore processed.
Funding
We do
not currently have sufficient funds to carry out our entire plan of
operations, so we intend to meet the balance of our cash
requirements for the next 12 months through a combination of debt
financing and equity financing through private
placements. Currently we are active in contacting
broker/dealers regarding possible financing arrangements; however,
we do not currently have any arrangements in place to complete any
private placement financings and there is no assurance that we
will be successful in completing any such
financings.
If we
are unsuccessful in obtaining sufficient funds through our capital
raising efforts, we may review other financing options, although we
cannot provide any assurance that any such options will be
available to us or on terms reasonably acceptable to
us. Further, if we are unable to secure any additional
financing then we plan to reduce the amount that we spend on our
operations so as not to exceed the capital resources available to
us. Regardless, our current cash reserves and working capital
will not be sufficient for us to sustain our business for the next
12 months, even if we decide to scale back our
operations.
The Crane Creek Investment Agreement
General. On July 25, 2016, we entered
into an investment agreement (the “Crane Creek Investment
Agreement”) with Crane Creek, Inc., a Texas corporation
(“Crane Creek”). Pursuant to the terms of the Crane
Creek Investment Agreement, Crane Creek committed to purchase up to
$2,000,000 of our common stock over a period of up to thirty-six
(36) months.
In
connection with the Crane Creek Investment Agreement, we also
entered into a registration rights agreement with Crane Creek,
pursuant to which we are obligated to file a registration statement
with the SEC covering 10,000,000 shares of our common stock
underlying the Crane Creek Investment Agreement within 21 days
after the closing of the transaction. In addition, we are obligated
to use all commercially reasonable efforts to have the registration
statement declared effective by the SEC within 120 days after the
closing of the transaction and maintain the effectiveness of such
registration statement until termination of the Crane Creek
Investment Agreement.
The
10,000,000 shares to be registered herein represent 16.9% of the
publicly tradable shares issued and outstanding, assuming that the
selling stockholder will sell all of the shares offered for
sale.
At an
assumed purchase price of $0.032 (equal to 80% of the closing price
of our common stock of $0.04 on September 9, 2016), we will be able
to receive up to $320,000 in gross proceeds, assuming the sale of
the entire 10,000,000 shares being registered hereunder pursuant to
the Crane Creek Investment Agreement. Accordingly, we would be
required to register an additional 52,500,000 shares to obtain the
balance of $1,680,000 under the Crane Creek Investment Agreement.
We are currently authorized to issue 480.000,000 shares of our
common stock. Therefor we will not likely be required to increase
our authorized shares in order to receive the entire purchase
price. Crane Creek has agreed to refrain from holding an amount of
shares which would result in Crane Creek owning more than 4.99% of
the then-outstanding shares of our common stock at any one
time.
There
are substantial risks to investors as a result of the issuance of
shares of our common stock under the Crane Creek Investment
Agreement. These risks include dilution of stockholders’
percentage ownership, significant decline in our stock price and
our inability to draw sufficient funds when needed.
16
Crane
Creek will periodically purchase our common stock under the Crane
Creek Investment Agreement and will, in turn, sell such shares to
investors in the market at the market price. This may cause our
stock price to decline, which will require us to issue increasing
numbers of common shares to Crane Creek to raise the same amount of
funds, as our stock price declines.
The
total investment amount of $2 million was determined based on
numerous factors, including the following: Our current running
costs are approximately $150,000 per annum, and thus we need a
portion of the investment amount to pay general operating expenses.
We believe we need the remaining funds for capital expenditures
related to real estate acquisition. While it is difficult to
estimate the likelihood that the company will need the full
investment amount, we believe that the company may need the full
amount of $2 million funding under the Crane Creek Investment
Agreement.
Purchase of shares under the Crane Creek
Investment Agreement. From time to time during the
thirty-six (36) months period commencing with the effectiveness of
the registration statement, we may deliver a put notice to Crane
Creek which states the dollar amount that we intend to sell to
Crane Creek on a date specified in the put notice. The purchase
price per share to be paid by Crane Creek shall be calculated at a
fifty percent (20%) discount to the lowest price of the common
stock as reported by Bloomberg, L.P. during the twenty (20)
consecutive trading days immediately prior to the receipt by Crane
Creek of the put notice. We have reserved 62,500,000 shares of our
common stock for issuance under the Crane Creek Investment
Agreement, including 10,000,000 shares included in the registration
statement of which this prospectus is a part filed with the
Securities and Exchange Commission (the “SEC”). We have
more shares reserved than are covered in this registration
statement.
Minimum share price. Under the terms of
the Crane Creek Investment Agreement, there is no minimum purchase
price for the Put Shares.
Conditions to investor’s
obligation. Generally, Crane Creek is not obligated to
purchase any shares under the Investment Agreement
unless
each of the following conditions are satisfied:
●
a Registration
Statement shall have been declared effective and shall remain
effective and available for the resale of all the Registrable
Securities (as defined in the Registration Rights Agreement) at all
times until the Closing with respect to the subject Put
Notice;
●
at all times during
the period beginning on the related Put Notice Date and ending on
and including the related Closing Date, the common stock shall have
been listed or quoted for trading on the Principal Market and shall
not have been suspended from trading thereon for a period of two
(2) consecutive Trading Days during the Open Period and the company
shall not have been notified of any pending or threatened
proceeding or other action to suspend the trading of the common
stock;
●
the company has
complied with its obligations and is otherwise not in breach of or
in default under, this Agreement, the Registration Rights Agreement
or any other agreement executed in connection herewith which has
not been cured prior to delivery of the Investor’s Put Notice
Date;
●
no injunction shall
have been issued and remain in force, or action commenced by a
governmental authority which has not been stayed or abandoned,
prohibiting the purchase or the issuance of the Securities;
and
●
the issuance of the
Securities will not violate any shareholder approval requirements
of the Principal Market.
If any
of the events described in clauses (i) through (v) above occurs
during a Pricing Period, then the Investor shall have no obligation
to purchase the Put Amount of common stock set forth in the
applicable Put Notice.
Our termination rights. The Investment
Agreement may be terminated by us at any time, at our discretion,
without any penalty or cost to us.
No short-selling or hedging by Crane
Creek. Crane Creek has agreed that neither it nor any of its
agents, representatives and affiliates shall engage in any direct
or indirect short-selling or hedging of our common stock during any
time prior to the termination of the Investment
Agreement.
Effect of performance of the purchase agreement
on our stockholders. The Investment Agreement does not limit
the ability of Crane Creek to sell any or all of the 10,000,000
shares registered in this offering. It is anticipated that shares
registered in this offering will be sold over a period of up to
approximately 36 months from the date of this prospectus. The sale
by Crane Creek of a significant amount of shares registered in this
offering at any given time could cause the market price of our
common stock to decline and/or to be highly volatile. Crane Creek
may ultimately purchase all, some or none of the 10,000,000 shares
of common stock not yet issued pursuant to the Investment Agreement
but registered in this offering. After it has acquired such shares,
it may sell all, some or none of such shares. Therefore, sales to
Crane Creek by us pursuant to the Crane Creek Investment Agreement
also may result in substantial dilution to the interests of other
holders of our common stock. However, we have the right to control
the timing and amount of any sales of our shares to Crane Creek and
the Crane Creek Investment Agreement may be terminated by us at any
time at our discretion without any penalty or cost to
us.
17
Percentage of outstanding shares after giving
effect to the purchased shares issued to Crane Creek. Under
the terms of the Crane Creek Investment Agreement, we authorized
the sale to Crane Creek of up to $2.0 million of our shares of
common stock. We estimate that we will sell the entire number of
shares required to receive the full funding of $2.0 million as
described in the Crane Creek Investment Agreement. Only 10,000,000
are included in this registration statement. The 10,000,000 shares
to be registered herein represent 16.9% of the shares issued and
outstanding, assuming that the selling stockholder will sell all of
the shares offered for sale. Subject to any required approval by
our board of directors, we have the right but not the obligation to
issue more than the 10,000,000 shares included in this registration
statement to Crane Creek under the Crane Creek Investment
Agreement. In the event we elect to issue more than 10,000,000
shares under the Crane Creek Investment Agreement, we will be
required to file a new registration statement and have it declared
effective by the SEC. The number of shares ultimately offered for
sale by Crane Creek in this offering is dependent upon the number
of shares purchased by Crane Creek under the Crane Creek Investment
Agreement.
Significant Employees
Other
than our officers and directors, we do not expect any other
individuals to make a significant contribution to our
business.
Intellectual property
We have
no patents or trademarks.
Legal proceedings
We know
of no material, active or pending legal proceedings against us, nor
are we involved as a plaintiff in any material proceedings or
pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered beneficial
shareholder are an adverse party or has a material interest adverse
to us.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
Directors and Officers serving our company are as
follows:
|
Name and Address
|
|
Age
|
|
Positions Held
|
|
Mark
Walmesley
|
|
58
|
|
President,
Chief Executive Officer and Director
|
|
Thomas
Temkin
|
|
62
|
|
Chief
Operating Officer, Director
|
|
Pam
Walters
|
|
66
|
|
Secretary
|
Mark
Walmesley was appointed as our chief financial officer, treasurer
and director on September 22, 2014, and our President and Chief
Executive Officer on the December 11, 2014. Mr. Walmesley has been
Lode-Star Gold’s Director of Operations since 2005 and a
director of the company since March 2009.
Biographical information
Mark
Walmesley was appointed as our chief financial officer, treasurer
and director on September 22, 2014, and our President and Chief
Executive Officer on the December 11, 2014. Mr. Walmesley has been
Lode-Star Gold’s Director of Operations since January 2005
and a director of the company since March 24, 2009.
Biographical information
Mark Walmesley was appointed as our
chief financial officer, Treasurer and director on September 22,
2014, and our President and Chief Executive Officer on acquisition
of the interest in the Goldfield Property. He has been Lode-Star
Gold’s Director of Operations since January 2005 and a
director of the company since March 2009.
From
January 2005 to present, Mr. Walmesley has directed operations on
the Goldfield Property. At one time Lode-Star Gold had a crew of up
to eight people performing surface and underground exploratory
drilling and mine rehabilitation work. This work program ended in
the fall of 2009. From October 2010, to its finalization on March
23, 2011, he negotiated the terms of the ICN Option Agreement on
behalf of Lode-Star Gold.
Since
August 1985, Mr. Walmesley has been the owner and operator of Mark
Walmesley, Inc., a private Texas corporation, and MWI Utah, Inc.
(July 2005), a private Utah corporation, both of which specialize
in the sale of window etching theft deterrent products that are
distributed throughout the United States in the automotive
aftermarket industry. Through an established network of agents and
car dealerships, he has achieved product fulfillment on millions of
vehicles over his 30-year career.
Since
November 2008, Mr. Walmesley has been developing an emergency
medical communications platform for FAST Alert Support Team, Inc.,
a company dedicated to facilitating worldwide communication between
emergency medical technicians (EMTs), incapacitated individuals and
people assigned by those individuals to accommodate pre-determined
essential support. Although the project is currently on hold, Mr.
Walmesley originally developed this online software solution for
the medical industry in the United States and plans to build the
business using his existing network of automotive industry
contacts. He remains the company’s Founder and Chief Software
Architect.
18
Mr.
Walmesley has also been involved in financing and mentoring a
variety of other private companies throughout his professional
career.
We have
not entered into any transactions with Mark Walmesley described in
Item 404(a) of Regulation S-K. Mr. Walmesley was not appointed
pursuant to any arrangement or understanding with any other
person.
Thomas Temkin was appointed as Chief
Operating Officer and to the Board of Directors on January 19,
2015. Mr. Temkin is a Certified Professional Geologist and a
Qualified Person under National Instrument (NI) 43101, with more
than 38 years of experience in the mining industry, primarily in
exploration in the Western United States. As senior project manager
for several major mining companies, Mr. Temkin has been associated
with several advanced gold exploration projects, some of which
developed into significant mines. After receiving his Bachelor of
Science degree in Economic Geology in May 1976 from the Mackay
School of Mines, Mr. Temkin began his career as an exploration
Geologist. He is currently a consulting geologist working with
Lode-Star Gold, Inc. Mr. Temkin has been associated with Lode-Star
Gold and the project for over 15 years and has been instrumental
through its entire exploration program to date.
Pam Walters was appointed as our
Secretary on April 22, 2015. Since 1985 Ms. Walters has been
working as the Corporate Administration person responsible for
employee relations as well as managing the day-to-day corporate
finance and business operations of Lode-Star Gold, Inc. Ms. Walters
has been associated with the mining industry for over 25 years. She
attended the University of New Orleans in the early 1970s and since
1998 she has been acquiring and practicing the skills required to
manage and maintain our busy and growing corporate
needs.
Family
relationships
There
are no family relationships among our directors or executive
officers. Mark Walmesley, our director and chief executive officer,
and Lonnie Humphries, our controlling stockholder, are husband and
wife.
Involvement
in certain legal proceedings
During
the past ten (10) years, none of our directors, persons nominated
to become directors, executive officers, promoters or control
persons was involved in any of the legal proceedings listen in Item
401(f) of Regulation S-K.
Arrangements
There
are no arrangements or understandings between our director sole
executive officer and any other person pursuant to which he is to
be selected as an executive officer or director.
Significant employees and consultants
We have
no employees.. We do not yet have a formal management or consulting
agreement in place with Mark Walmesley, our President, Chief
Executive Officer, Chief Financial Officer, Treasurer and Director
who, at this time, receives no compensation for his activities.
Regardless, we expect Mr. Walmesley to allocate the majority of his
working time to our business. We also do not yet have a formal
management or consulting agreement in place with Thomas Temkin, our
Chief Operating Officer and director. Until a formal work program
for the Goldfield Property is in place, Mr. Temkin is being
compensated by Lode-Star Gold, Inc.
Code of ethics
We have
adopted a code of ethics that applies to our executive officers and
employees.
Corporate governance
Our
business, property and affairs are managed by, or under the
direction of, our board, in accordance with the Nevada Revised
Statutes and our bylaws. Members of the board are kept informed of
our business through discussions with the Chief Executive Officer
and other key members of management, by reviewing materials
provided to them by management.
We
continue to review our corporate governance policies and practices
by comparing our policies and practices with those suggested by
various groups or authorities active in evaluating or setting best
practices for corporate governance of public companies. Based on
this review, we have adopted, and will continue to adopt, changes
that the board believes are the appropriate corporate governance
policies and practices for our company. We have adopted changes and
will continue to adopt changes, as appropriate, to comply with the
Sarbanes-Oxley Act of 2002 and subsequent rule changes made by the
SEC and any applicable securities exchange.
Director qualifications and diversity
The
board seeks independent directors who represent a diversity of
backgrounds and experiences that will enhance the quality of the
board’s deliberations and decisions. Candidates shall have
substantial experience with one or more publicly traded companies
or shall have achieved a high level of distinction in their chosen
fields. The board is particularly interested in maintaining a mix
that includes individuals who are active or retired executive
officers and senior executives, particularly those with experience
in the finance and capital market industries.
19
In
evaluating nominations to the board of directors, our board also
looks for certain personal attributes, such as integrity, ability
and willingness to apply sound and independent business judgment,
comprehensive understanding of a director’s role in corporate
governance, availability for meetings and consultation on company
matters, and the willingness to assume and carry out fiduciary
responsibilities. Qualified candidates for membership on the board
will be considered without regard to race, color, religion, sex,
ancestry, national origin or disability.
Under
the National Association of Securities Dealers Automated Quotations
definition, an “independent director” means a person
other than an officer or employee of the company or its
subsidiaries or any other individuals having a relationship that,
in the opinion of the company’s board of directors, would
interfere with the exercise of independent judgment in carrying out
the responsibilities of the director. The board’s discretion
in determining director independence is not completely unfettered.
Further, under the NASDAQ definition, an independent director is a
person who (1) is not currently (or whose immediate family members
are not currently), and has not been over the past three years (or
whose immediate family members have not been over the past three
years), employed by the company; (2) has not (or whose immediate
family members have not) been paid more than $120,000 during the
current or past three fiscal years; (3) has not (or whose
immediately family has not) been a partner in or controlling
shareholder or executive officer of an organization which the
company made, or from which the company received, payments in
excess of the greater of $200,000 or 5% of that organizations gross
revenues, in any of the most recent three fiscal years; (4) has not
(or whose immediate family members have not), over the past three
years been employed as an executive officer of a company in which
an executive officer of the company has served on that
company’s compensation committee; or (5) is not currently (or
whose immediate family members are not currently), and has not been
over the past three years (or whose immediate family members have
not been over the past three years) a partner of our outside
auditor.
At the
present time, we have no independent directors.
Lack of committees
We do not presently
have a separately designated audit committee, compensation
committee, nominating committee, executive committee or any other
committees of our board of directors. We believe that separate
committees of the board are not necessary at this time given that
we are in the development stage. As such, the directors act in
those capacities.
The
term “Financial Expert” is defined under the
Sarbanes-Oxley Act of 2002, as amended, as a person who has the
following attributes: an understanding of generally accepted
accounting principles and financial statements; has the ability to
assess the general application of such principles in connection
with the accounting for estimates, accruals and reserves;
experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised
by the company’s financial statements, or experience actively
supervising one or more persons engaged in such activities; an
understanding of internal controls and procedures for financial
reporting; and an understanding of audit committee
functions.
Mr.
Walmesley does not qualify as an “audit committee financial
expert.” We believe that the cost related to retaining such a
financial expert at this time is prohibitive, given our current
operating and financial condition. Further, because we are in the
development stage of our business operations, we believe that the
services of an audit committee financial expert are not necessary
at this time.
The
company may in the future create an audit committee to consist of
one or more independent directors. In the event an audit committee
is established, of which there can be no assurances given, its
first responsibility would be to adopt a written charter. Such
charter would be expected to include, among other
things:
●
being directly
responsible for the appointment, compensation and oversight of our
independent auditor, which shall report directly to the audit
committee, including resolution of disagreements between management
and the auditors regarding financial reporting for the purpose of
preparing or issuing an audit report or related work;
●
annually reviewing
and reassessing the adequacy of the committee’s formal
charter;
●
reviewing the
annual audited financial statements with our management and the
independent auditors and the adequacy of our internal accounting
controls;
●
reviewing analyses
prepared by our management and independent auditors concerning
significant financial reporting issues and judgments made in
connection with the preparation of our financial
statements;
●
reviewing the
independence of the independent auditors;
●
reviewing our
auditing and accounting principles and practices with the
independent auditors and reviewing major changes to our auditing
and accounting principles and practices as suggested by the
independent auditor or its management;
●
reviewing all
related party transactions on an ongoing basis for potential
conflict of interest situations; and
●
all
responsibilities given to the audit committee by virtue of the
Sarbanes-Oxley Act of 2002, which was signed into law by President
George W. Bush on July 30, 2002.
20
Risk oversight
Enterprise risks
are identified and prioritized by management and each prioritized
risk is assigned to the board for oversight. These risks include,
without limitation, the following:
●
Risks and exposures
associated with strategic, financial and execution risks and other
current matters that may present material risk to our operations,
plans, prospects or reputation.
●
Risks and exposures
associated with financial matters, particularly financial
reporting, tax, accounting, disclosure, internal control over
financial reporting, financial policies, investment guidelines and
credit and liquidity matters.
●
Risks and exposures
relating to corporate governance; and management and director
succession planning.
●
Risks and exposures
associated with leadership assessment, and compensation programs
and arrangements, including incentive plans.
Section 16(a) beneficial ownership reporting
compliance
Section
16(a) of the Exchange Act requires our executive officers and
directors, and persons who own more than ten percent of our common
stock to file reports of ownership and change in ownership with the
Securities and Exchange Commission and the exchange on which the
common stock is listed for trading. Executive officers, directors
and more than ten percent stockholders are required by regulations
promulgated under the Exchange Act to furnish us with copies of all
Section 16(a) reports filed. Based solely on our review of copies
of the Section 16(a) reports filed for the fiscal year ended March
31, 2016, we believe that all our executive officers, directors and
ten percent stockholders complied with all reporting requirements
applicable to them except Lode-Star Gold, Inc. the owner of
35,000,000 shares of our common stock that represents 71.24% of the
outstand shares of common stock as of July 26, 2016
EXECUTIVE COMPENSATION
The
following sets forth information with respect to the compensation
awarded or paid to Mark Walmesley, our President, Chief Executive
Officer, Chief Financial, Treasurer and director, Robert Baker, our
former President, Chief Executive Officer, chief financial officer
and Treasurer, Thomas Temkin, our Chief Operating Officer and
director, and Pam Walters, our Secretary, for all services rendered
in all capacities to us during our fiscal years ended December 31,
2015 and 2014. We do not have any other executive officers and no
other individual received total compensation from us in excess of
$100,000 during those years.
Pursuant to Item
402(a)(5) of Regulation S-K we have omitted certain columns from
the table since there was no compensation awarded to, earned by or
paid to these individuals required to be reported in such columns
in either year.
Summary Compensation Table
|
Name
|
Year
Ended
December
31
|
Salary
($)
|
Total
($)
|
|
Mark
Walmesley CEO (1)
|
2015
|
nil
|
nil
|
|
|
2014
|
nil
|
nil
|
|
Robert
Baker, former CEO (2)
|
2015
|
nil
|
nil
|
|
|
2014
|
$
60,653
|
$
60,653
|
|
Thomas
Temkin, Director and COO (3)
|
2015
|
nil
|
nil
|
|
|
2014
|
nil
|
nil
|
|
Pam
Walters, Secretary (4)
|
2015
|
nil
|
nil
|
|
|
2014
|
nil
|
nil
|
|
(1)
|
Mark
Walmesley was appointed as our chief financial officer, Treasurer
and director on September 22, 2014, and our President and Chief
Executive Officer on the December 11, 2014. Mr. Walmesley has been
Lode-Star Gold’s Director of Operations since 2005 and a
director of the company since March 2009.
|
|
(2)
|
Robert
Baker was appointed as our Secretary and director on December 9,
2004, acted as our chief financial officer and Treasurer from May
31, 2007 until September 22, 2014, and acted as our President and
Chief Executive Officer from May 31, 2007 until December 11, 2014.
The consulting agreement for those services, originally effective
January 1, 2012, was cancelled in accordance with a settlement
agreement dated December 5, 2014.
|
|
(3)
|
Thomas
Temkin was appointed as our Chief Operating Officer and director on
January 19, 2015.
|
|
(4)
|
Pam
Walters was appointed as our Secretary on April 22,
2015.
|
Outstanding equity awards at the end of the fiscal
year
We do
not have any equity compensation plans and therefore no equity
awards were outstanding as of March 31, 2016.
Stock option grants
We have
not granted any stock options to our executive officers as of June
30, 2016.
21
Employment agreements
We have
no employment agreements
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information as of September 9,
2016, with respect to the beneficial ownership of shares of the
company’s common stock by (i) each person known to us who
owns beneficially more than 5% of the outstanding shares of the
company’s common stock, (ii) each of our Directors, (iii)
each of our Executive Officers, and (iv) all of our Executive
Officers and Directors as a group. Unless otherwise indicated, each
stockholder has sole voting and investment power with respect to
the shares shown.
|
Name and Address of Beneficial Owner
|
Number of Shares Owned
Beneficially(1)
|
Percentage
Ownership(3)
|
||
|
|
Common
|
Common
|
||
|
Officers and directors:
|
|
|
||
|
Mark
Walmesley
Director
President and CEO
17213
Bending Oak Ct.
Cypress,
Texas 77429
|
1,225,000
|
2.49%
|
||
|
|
|
|
||
|
Thomas
Temkin
9120
Double Diamond PkwyReno, NV 89521
|
20,000
|
0.04%
|
||
|
5 % or more beneficial owners:
|
|
|
||
|
Lode-Star
Gold, Inc.
17213
Bending Oak Ct.
Cypress,
Texas 77429 (2)
|
35,015,000
|
71.27%
|
||
|
|
|
|
||
|
Lonnie
Humphries Combined
17213
Bending Oak Ct.
Cypress,
Texas 77429 (2)
|
1,569,756
|
3.20%
|
||
|
|
|
|
||
|
All executive officers and directors as a group (total
2)
|
1,245,000
|
2.53%
|
||
(1)
Under Rule 13d-3
under the Exchange Act, a beneficial owner of a security includes
any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or
shares: (i) voting power, which includes the power to vote, or to
direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares.
Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to
be beneficially owned by a person if the person has the right to
acquire the shares (for example, upon exercise of an option) within
60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of
shares is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these
acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily
reflect the person’s actual ownership or voting power with
respect to the number of shares of common stock actually
outstanding on October 22, 2015.
(2)
Lonnie Humphries
holds investment and dispositive authority over Lode-Star Gold as
well as over Lonnie S. Humphries Non Exempt Trust who owns of
record 200,000 common share as well as 1,369,756 owned of record by
Lonnie Humphries individually. Therefore, Lonnie S. Humphries, wife
of Mark Walmesley, has investment and dispositive power over
36,584,756 shares of common stock, 74.47% of the total outstanding
shares of common stock.
(3)
Our calculation of
the percentage of beneficial ownership is based on 49,127,825 shares of common stock
outstanding as of September 9, 2016.
Changes in control
The
company underwent a change in management on September 22, 2014,
when the prior officer and director resigned as director and
officer of the company. Shareholders holding a majority of the
issued and outstanding shares of the common stock elected Mark
Walmesley to serve as the director, president, secretary and
treasurer. There are currently no arrangements which would result
in a change in control of the company.
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Transactions with related persons
On
December 5, 2014, we entered into an agreement with Lode-Star Gold
Inc., a private Nevada corporation beneficially owned by Lonnie
Humphries, wife of Mark Walmesley, chief executive officer,
pursuant to which we issued 35,000,000 shares of our common stock,
valued at $230,180, to Lode-Star Gold in exchange for a 20%
undivided beneficial interest in and to the mineral claims owned by
Lode-Star Gold.
Since
January 1, 2014 the company has not been a party to any additional
transaction in which the amount involved exceeded or will exceed
$120,000 and in which any of the person who serves as our director
and executive officer or with any beneficial owners of more than 5%
of our common stock, or entities affiliated with them, had or will
have a direct or indirect material interest.
Director independence
Quotations for the
company’s common stock are reported by OTC Market
Group’s OTCQB tier inter-dealer quotation system which does
not have director independence requirements. For purposes of
determining director independence, we applied the definitions set
out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a
director is not considered to be independent if he or she is also
an executive officer or employee of the corporation. As a result,
the company does not have any independent directors. Our director,
Mark Walmesley, is also the company’s principal executive
officer.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no
disagreements on accounting and financial disclosures from the
inception of our company through the date of this report on Form
10-K.
On
December 14, 2015, we informed Morgan & Company LLP
(“Morgan”) that we had decided to change our
independent registered public accounting firm because we are now
headquartered in the United States. Morgan’s report on the
financial statements for the years ended December 31, 2014 and 2013
contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to audit scope or accounting, except that
the report contained an explanatory paragraph stating that there
was substantial doubt about the Company’s ability to continue
as a going concern.
Through
the two year period covered by the financial statement audits for
the years ended December 31, 2013 and December 31, 2014 and the
subsequent interim period from January 1, 2015 through December 11,
2015, there were no disagreements with Morgan on any matter of
accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Morgan would have caused them to make
reference thereto in their report on the financial statements and
(ii) no “reportable events” as defined in Item
304(a)(1)(v) of Regulation S-K. We authorized Morgan to respond
fully to the inquiries of the successor accountant.
On
December 11, 2015, we engaged MaloneBailey, LLP of Houston, Texas
(“MaloneBailey”) as our independent registered public
accounting firm. During the years ended December 31, 2013 and 2014
and the subsequent interim period from January 1, 2015 through
December 11, 2015 (the date MaloneBailey was engaged), we did not
consult with MaloneBailey regarding (i) the application of
accounting principles to a specified transaction, (ii) the type of
audit opinion that might be rendered on the Company’s
financial statements by Malone Bailey, in either case where written
or oral advice provided by MaloneBailey would be an important
factor considered by us in reaching a decision as to any
accounting, auditing or financial reporting issues or (iii) any
other matter that was the subject of a disagreement between us and
our former auditor or was a reportable event (as described in Items
304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K,
respectively).
SELLING STOCKHOLDER
We are
registering for resale shares of our common stock that are issued
and outstanding held by the selling stockholder identified below.
We are registering the shares to permit the selling stockholder to
resell the shares when and as it deems appropriate in the manner
described in the “Plan of
Distribution.” As of the date of this prospectus,
there are 49,127,825 shares of common stock issued and
outstanding.
The
following table sets forth:
●
the name of the
selling stockholder,
●
the number of
shares of our common stock that the selling stockholder
beneficially owned prior to the offering for resale of the shares
under this prospectus,
●
the maximum number
of shares of our common stock that may be offered for resale for
the account of the selling stockholder under this prospectus,
and
●
the number and
percentage of shares of our common stock to be beneficially owned
by the selling stockholder after the offering of the shares
(assuming all of the offered shares are sold by the selling
stockholder).
23
The
selling stockholder has never served as our officer or director or
any of its predecessors or affiliates within the last three years,
nor has the selling stockholder had a material relationship with
us. The selling stockholder is neither a broker-dealer nor an
affiliate of a broker-dealer. The selling stockholder did not have
any agreement or understanding, directly or indirectly, to
distribute any of the shares being registered at the time of
purchase.
The
selling stockholder may offer for sale all or part of the shares
from time to time. The table below assumes that the selling
stockholder will sell all of the shares offered for sale. The
selling stockholder is under no obligation, however, to sell any
shares pursuant to this prospectus.
|
Name
|
|
Shares of
Common Stock
Beneficially
Owned prior to
Offering (1)
|
|
Maximum
Number of
Shares of
Common Stock
to be Offered
|
|
Number of
Shares of
Common
Stock
Beneficially
Owned after
Offering
|
|
Percent
Ownership
after Offering
|
|
||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crane
Creek, Inc. (2)
|
|
-0-
|
|
10,000,000
|
|
|
-0-
|
|
|
-0-
|
%
|
(1)
Beneficial
ownership is determined in accordance with Rule 13d-3 under the
Exchange Act. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, securities
that are currently convertible or exercisable into shares of our
common stock, or convertible or exercisable into shares of our
common stock within 60 days of the date hereof are deemed
outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of any other
person. Except as indicated in the footnotes to the following
table, each stockholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
stockholder’s name.
(2)
Jenni Rebecca
Stephenson has the voting and dispositive power over the shares
owned by Crane Creek. The shares owned by Crane Creek, Inc. under
the terms of the Crane Creek Investment Agreement are subject to a
cap of 4.99% of the total outstanding. Therefore, selling
stockholder does not have the “right” to hold more than
the amount of the cap as expressed by the
Commission’s amicus
curiae brief in the case of Mark Levy v. Southbrook
International Investments, Ltd. (2nd Cir. Mar 31,
2001).
PLAN OF DISTRIBUTION
Pursuant to the
terms of the Crane Creek Investment Agreement, Crane Creek
committed to purchase up to $2,000,000 of our common stock over a
period of up to thirty-six (36) months. From time to time during
the thirty-six (36) months period commencing from the effectiveness
of the registration statement, we may deliver a put notice to Crane
Creek which states the dollar amount that we intend to sell to
Crane Creek on a date specified in the put notice. The purchase
price per share to be paid by Crane Creek shall be calculated at a
fifty percent (20%) discount to the lowest trading price of the
common stock as reported by Bloomberg, L.P. during the twenty (20)
consecutive trading days immediately prior to the receipt by Crane
Creek of the put notice. We have reserved 62,500,000 shares of our
common stock for issuance under the Crane Creek Investment
Agreement. We have fewer shares reserved than are covered in this
registration statement.
In
connection with the Crane Creek Investment Agreement, we also
entered into a registration rights agreement with Crane Creek,
pursuant to which we are obligated to file a registration statement
with the Securities and Exchange Commission (the “SEC”)
covering shares of our common stock underlying the Crane Creek
Investment Agreement within 21 days after the closing of the
transaction. In addition, we are obligated to use all commercially
reasonable efforts to have the registration statement declared
effective by the SEC within 120 days after the closing of the
transaction and maintain the effectiveness of such registration
statement until termination of the Crane Creek Investment
Agreement.
The
Crane Creek Investment Agreement is not transferable. However, upon
receipt of a put notice, Crane Creek may assign the put to a third
party who will be obligated to deliver the funds to the company in
the same amount and at the same time Crane Creek is obligated to
deliver the funds, regardless of whether the put notice has been
assigned.
At an
assumed purchase price of $0.032 per share, a 20% discount to $0.04
per share, the closing bid price as of September 9, 2016, we will
be able to receive up to $320,000 in gross proceeds, assuming the
sale of the entire 10,000,000 shares being registered hereunder
pursuant to the Crane Creek Investment Agreement. Accordingly, we
would be required to register an additional 52,500,000 shares to
obtain the balance of $1,680,000 under the Crane Creek Investment
Agreement. We are currently authorized to issue 480,000,000 shares
of our common stock. Therefor we will likely not be required to
increase our authorized shares in order to receive the entire
purchase price. Crane Creek has agreed to refrain from holding an
amount of shares which would result in Crane Creek owning more than
4.99% of the then-outstanding shares of our common stock at any one
time.
24
The
selling stockholder may, from time to time, sell any or all of its
shares of common stock directly to one or more purchasers or
through brokers, dealers, or underwriters who may act solely as
agents at market prices prevailing at the time of sale, at prices
related to the prevailing market prices, at negotiated prices, or
at fixed prices, which may be changed. The sale of the common stock
offered by this prospectus may be effected in one or more of the
following methods:
●
ordinary
brokers’ transactions;
●
transactions
involving cross or block trades;
●
through brokers,
dealers, or underwriters who may act solely as agents;
●
“at the
market” into an existing market for the common
stock;
●
in other ways not
involving market makers or established business markets, including
direct sales to purchasers or sales effected through
agents;
●
in privately
negotiated transactions; or
●
any combination of
the foregoing.
The
selling stockholder may also sell shares of common stock in
reliance on Section 4(a)(1) of the Securities Act and the safe
harbor of Rule 144 promulgated under the Securities Act, if
available, rather than under this prospectus. In addition, the
selling stockholder may transfer the shares of common stock by
other means not described in this prospectus.
Brokers, dealers,
underwriters, or agents participating in the distribution of the
shares as agents may receive compensation in the form of
commissions, discounts, or concessions from the selling stockholder
and/or purchasers of the common stock for whom the broker-dealers
may act as agent. Crane Creek has informed us that each such
broker-dealer will receive commissions from Crane Creek which will
not exceed customary brokerage commissions.
Crane
Creek is an “underwriter” within the meaning of the
Securities Act.
Neither
we nor Crane Creek can presently estimate the amount of
compensation that any agent will receive. We know of no existing
arrangements between Crane Creek, any other shareholder, broker,
dealer, underwriter, or agent relating to the sale or distribution
of the shares offered by this prospectus. At the time a particular
offer of shares is made, a prospectus supplement, if required, will
be distributed that will set forth the names of any agents,
underwriters, or dealers and any compensation from the selling
stockholder, and any other required information. Pursuant to a
requirement of the Financial Industry Regulatory Authority, or
FINRA, the maximum commission or discount and other compensation to
be received by any FINRA member or independent broker-dealer shall
not be greater than eight percent (8%) of the gross proceeds
received by us for the sale of any securities being registered
pursuant to Rule 415 under the Securities Act.
We will
pay all of the expenses incident to the registration, offering, and
sale of the shares to the public other than commissions or
discounts of underwriters, broker-dealers, or agents. We have
agreed to indemnify Crane Creek and certain other persons against
certain liabilities in connection with the offering of shares of
common stock offered hereby, including liabilities arising under
the Securities Act or, if such indemnity is unavailable, to
contribute amounts required to be paid in respect of such
liabilities. Crane Creek has agreed to indemnify us against
liabilities under the Securities Act that may arise from certain
written information furnished to us by Crane Creek specifically for
use in this prospectus or, if such indemnity is unavailable, to
contribute amounts required to be paid in respect of such
liabilities.
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers, and controlling
persons, we have been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the
Securities Act and is therefore, unenforceable.
We may
suspend the sale of shares by Crane Creek pursuant to this
prospectus for certain periods of time for certain reasons,
including if the prospectus is required to be supplemented or
amended to include additional material information.
This
offering will terminate on the date that all shares offered by this
prospectus have been sold by Crane Creek.
Regulation M
We have
advised Crane Creek that while it is engaged in a distribution of
the shares included in this prospectus it is required to comply
with Regulation M promulgated under the Securities Exchange Act of
1934, as amended.
During
such time as it may be engaged in a distribution of any of the
shares we are registering by this registration statement, Crane
Creek is required to comply with Regulation M. In general,
Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates
in a distribution from bidding for or purchasing, or attempting to
induce any person to bid for or purchase, any security which is the
subject of the distribution until the entire distribution is
complete. Regulation M defines a "distribution" as an offering of
securities that is distinguished from ordinary trading activities
by the magnitude of the offering and the presence of special
selling efforts and selling methods. Regulation M also defines a
"distribution participant" as an underwriter, prospective
underwriter, broker, dealer, or other person who has agreed to
participate or who is participating in a distribution.
25
Regulation M under
the Exchange Act prohibits, with certain exceptions, participants
in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the
securities that are the subject of the distribution. Regulation M
also governs bids and purchases made in order to stabilize the
price of a security in connection with a distribution of the
security. We have informed Crane Creek that the anti-manipulation
provisions of Regulation M may apply to the sales of their shares
offered by this prospectus, and we have also advised Crane Creek of
the requirements for delivery of this prospectus in connection with
any sales of the common stock offered by this
prospectus.
Pursuant to the
Crane Creek Investment Agreement, Crane Creek shall not sell stock
short, either directly or indirectly through its affiliates,
principals or advisors, our common stock during the term of the
agreement.
DESCRIPTION OF SECURITIES TO BE REGISTERED
This
prospectus includes 10,000,000 shares of our common stock offered
by the selling stockholder. The following description of our common
stock is only a summary. You should also refer to our certificate
of incorporation and bylaws, which have been included as exhibits
to the registration statement of which this prospectus is a
part.
Shell Status
We were a “shell company” as
defined in Rule 144(i)(1)(i) under the Securities Act of 1933 and
Rule 12b-2 under the Securities
Exchange Act of 1934, until December 5, 2014 when operations
were commenced. On the 29th day of March 2016 we filed “Form
10 information” as required by Rule 144(i)(2) and; (i) were
subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act; and (ii) filed all required reports under Section 13
or 15(d) of the Exchange Act during the subsequent period. If we
file all required reports under Section 13 or 15(d) of the Exchange
Act no less than twelve months subsequent to the 29th day of March 2017,
pursuant to Rule 144(i)(2), then our stockholders may rely on the
safe harbor of Rule 144 to determine the seller is not an
underwriter as defined in Section 2(a)(11) of the Securities
Act.
Authorized capital stock
We are
authorized to issue 480,000,000 shares of common stock, $.001 par
value per share.
Common stock
As of
September 9, 2016, 49,127,825
shares of common stock were issued and outstanding.
The
holders of our common stock have equal ratable rights to dividends
from funds legally available if and when declared by our board of
directors and are entitled to share ratably in all of our assets
available for distribution to holders of common stock upon
liquidation, dissolution or winding up of our affairs. Our common
stock does not provide the right to a preemptive, subscription or
conversion rights and there are no redemption or sinking fund
provisions or rights. Our common stock holders are entitled to one
non-cumulative vote per share on all matters on which shareholders
may vote.
All
shares of common stock now outstanding are fully paid for and
non-assessable. We refer you to our Articles of Incorporation,
bylaws and the applicable statutes of the state of Nevada for a
more complete description of the rights and liabilities of holders
of our securities. All material terms of our common stock have been
addressed in this section.
Holders
of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding
shares, voting for the election of directors, can elect all of the
directors to be elected, if they so choose, and, in that event, the
holders of the remaining shares will not be able to elect any of
our directors.
Warrants
As of
the date of this prospectus we have no outstanding
warrants.
Dividends
We have
never declared or paid any cash dividends on shares of our capital
stock. We currently intend to retain earnings, if any, to fund the
development and growth of our business and do not anticipate paying
cash dividends in the foreseeable future. Our payment of any future
dividends will be at the discretion of our board of directors after
taking into account various factors, including our financial
condition, operating results, cash needs and growth
plans.
26
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our
Articles of Incorporation provide that it will indemnify its
officers and directors to the full extent permitted by Nevada state
law. Our bylaws provide that we will indemnify and hold harmless
our officers and directors for any liability including reasonable
costs of defense arising out of any act or omission taken on our
behalf, to the full extent allowed by Nevada law, if the officer or
director acted in good faith and in a manner the officer or
director reasonably believed to be in, or not opposed to, the best
interests of the corporation.
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 (the “Act” or “Securities Act”) may
be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the SEC, such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
LEGAL MATTERS
The
validity of the common stock offered by this prospectus will be
passed upon for us by Sonfield & Sonfield, Houston,
Texas.
EXPERTS
The financial
statements of our company for the years ended December 31, 2015 and
2014 included in this prospectus and in the registration statement
have been audited by MaloneBailey LLP or Morgan & Company LLP,
both independent registered public accountants, to the extent and
for the periods set forth in their reports appearing elsewhere
herein and in the registration statement, and are included in
reliance on such report, given the authority of said firm as an
expert in auditing and accounting.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other
legal matters in connection with the registration or offering of
the common stock was employed on a contingency basis, or had, or is
to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its
parents or subsidiaries. Nor was any such person connected with the
registrant or any of its parents or subsidiaries as a promoter,
managing or principal underwriter, voting trustee, director,
officer, or employee.
WHERE YOU CAN FIND MORE INFORMATION
We
filed with the Securities and Exchange Commission a registration
statement under the Securities Act for the common stock in this
offering. This prospectus does not contain all of the information
in the registration statement and the exhibits and schedule that
were filed with the registration statement. For further information
with respect to us and our common stock, we refer you to the
registration statement and the exhibits and schedule that were
filed with the registration statement. Statements contained in this
prospectus about the contents of any contract or any other document
that is filed as an exhibit to the registration statement are not
necessarily complete, and we refer you to the full text of the
contract or other document filed as an exhibit to the registration
statement. A copy of the registration statement and the exhibits
and schedules that were filed with the registration statement may
be inspected without charge at the Public Reference Room maintained
by the Securities and Exchange Commission at 100 F Street, N.E.
Washington, DC 20549, and copies of all or any part of the
registration statement may be obtained from the Securities and
Exchange Commission upon payment of the prescribed fee. Information
regarding the operation of the Public Reference Room may be
obtained by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains a
website that contains reports, proxy and information statements,
and other information regarding registrants that file
electronically with the SEC. The address of the website is
www.sec.gov.
We file
periodic reports under the Exchange Act, including annual,
quarterly and special reports, and other information with the
Securities and Exchange Commission. These periodic reports and
other information are available for inspection and copying at the
regional offices, public reference facilities and website of the
Securities and Exchange Commission referred to above.
27
Lode-Star Mining Inc.
INDEX TO FINANCIAL STATEMENTS
|
Balance Sheets as of June 30, 2016 (unaudited) and December 31,
2015
|
F-3
|
|
|
|
|
Statements of Operations for the Three and Six Months ended June
30, 2016 and 2015 (unaudited)
|
F-4
|
|
|
|
|
Statements of Cash Flows for the Six Months ended June 30, 2016 and
2015 (unaudited)
|
F-5
|
|
|
|
|
Condensed Notes to Financial Statements (unaudited)
|
F-6
|
|
|
|
|
Report of Independent Registered Public Accounting
Firm
|
F-10
|
|
|
|
|
Report of Independent Registered Public Accounting
Firm
|
F-11
|
|
|
|
|
Balance Sheet (restated) as of December 31, 2015 and
2014
|
F-12
|
|
|
|
|
Statements of Operations (restated) for the Years Ended December
31, 2015 and 2014
|
F-13
|
|
|
|
|
Statements of Cash Flows (restated) for the Years Ended December
31, 2015 and 2014
|
F-14
|
|
|
|
|
Statements of Stockholders' Deficiency (restated) for the Years
Ended December 31, 2015 and 2014
|
F-15
|
|
|
|
|
Notes to Financial Statements (restated) for the Years Ended
December 31, 2015 and 2014
|
F-16
|
F-1
LODE-STAR MINING INC.
(formerly International Gold Corp.)
INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND
2015
(Unaudited)
(Stated
in U.S. Dollars)
F-2
LODE-STAR MINING INC.
(formerly International Gold Corp.)
BALANCE SHEETS
(Stated in U.S. Dollars)
|
|
JUNE 30
|
DECEMBER
31
|
|
|
2016
|
2015
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
Cash
|
$13,121
|
$12,456
|
|
Prepaid
fees
|
3,217
|
3,217
|
|
|
16,338
|
15,673
|
|
|
|
|
|
Mineral Property Interest
|
230,180
|
230,180
|
|
|
$246,518
|
$245,853
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
|
|
|
|
Accounts
payable and accrued liabilities
|
$24,431
|
$14,302
|
|
Due
to related parties
|
640,701
|
495,384
|
|
Loans
payable
|
69,520
|
76,180
|
|
|
734,652
|
585,866
|
|
Contractual Obligations, Commitments And Subsequent Events (Notes
3, 7 and 8)
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
Capital Stock
|
|
|
|
Authorized:
|
|
|
|
480,000,000
voting common shares with a par value of $0.001 per
share
|
|
|
|
20,000,0000
preferred shares with a par value of $0.001 per share
|
|
|
|
Issued:
|
|
|
|
49,127,825
common shares at June 30, 2016 and December 31, 2015
|
1,947
|
1,947
|
|
|
|
|
|
Additional Paid-In Capital
|
1,070,064
|
1,070,064
|
|
Accumulated Deficit
|
(1,560,145)
|
(1,412,024)
|
|
|
(488,134)
|
(340,013)
|
|
|
$246,518
|
$245,853
|
The
accompanying condensed notes are an integral part of these
unaudited financial statements.
F-3
LODE-STAR MINING INC.
(formerly International Gold Corp.)
STATEMENTS OF OPERATIONS
(Unaudited)
(Stated
in U.S. Dollars)
|
|
THREE MONTHS ENDED
|
SIX MONTHS ENDED
|
||
|
|
JUNE 30
|
JUNE 30
|
||
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
Revenue
|
$-
|
$-
|
$-
|
$-
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Consulting
services
|
6,121
|
12,832
|
11,823
|
13,255
|
|
Corporate
support services
|
572
|
1,265
|
1,142
|
2,550
|
|
Mineral
option fees
|
25,000
|
-
|
49,988
|
-
|
|
Office,
foreign exchange and sundry
|
3,756
|
(4,236)
|
8,117
|
6,061
|
|
Professional
fees
|
8,311
|
19,357
|
23,878
|
39,709
|
|
Transfer
and filing fees
|
3,084
|
22,067
|
19,411
|
27,049
|
|
|
46,844
|
51,285
|
114,359
|
88,624
|
|
|
|
|
|
|
|
Operating Loss Before Other Income (Expense)
|
(46,844)
|
(51,285)
|
(114,359)
|
(88,624)
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
Interest,
bank and finance charges
|
(7,073)
|
(4,882)
|
(13,649)
|
(9,070)
|
|
Penalties
|
20,113
|
-
|
(20,113)
|
-
|
|
|
13,040
|
(4,882)
|
(33,762)
|
(9,070)
|
|
|
|
|
|
|
|
Net Loss For The Period
|
$(33,804)
|
$(56,167)
|
$(148,121)
|
$(97,694)
|
|
|
|
|
|
|
|
Basic And Diluted Loss Per Common Share
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
$(0.00)
|
|
|
|
|
|
|
|
Weighted Average Number Of Common Shares Outstanding
|
49,127,825
|
47,582,242
|
49,127,825
|
47,048,586
|
The
accompanying condensed notes are an integral part of these
unaudited financial statements.
F-4
LODE-STAR MINING INC.
(formerly International Gold Corp.)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated
in U.S. Dollars)
|
|
SIX MONTHS ENDED
|
|
|
|
JUNE 30
|
|
|
|
2016
|
2015
|
|
|
|
|
|
Cash Provided By (Used In)
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
Net
loss for the period
|
$(148,121)
|
$(97,694)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Foreign
exchange loss (gain)
|
1,720
|
(2,050)
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Accounts
payable and accrued liabilities
|
48,644
|
(13,476)
|
|
Due
to related party
|
49,988
|
-
|
|
Accrued
interest payable
|
13,434
|
8,769
|
|
|
(34,335)
|
(104,451)
|
|
|
|
|
|
Financing Activities
|
|
|
|
Repayment
of loans payable
|
(10,000)
|
(4,000)
|
|
Proceeds
from loans payable – related party
|
45,000
|
102,606
|
|
|
35,000
|
98,606
|
|
|
|
|
|
Net Increase (Decrease) In Cash
|
665
|
(5,845)
|
|
|
|
|
|
Cash, Beginning Of Period
|
12,456
|
5,372
|
|
|
|
|
|
Cash (Bank overdraft), End Of Period
|
$13,121
|
$(473)
|
|
|
|
|
|
Supplemental Disclosure Of Cash Flow Information
|
|
|
|
Cash
paid during the period for:
|
|
|
|
Interest
|
$-
|
$-
|
|
Income
taxes
|
$-
|
$-
|
|
|
|
|
|
Non-cash Financing Activity
|
|
|
|
Expenses
paid by related party on behalf of the Company
|
$38,515
|
$16,469
|
|
Common
shares issued for debt settlements
|
$-
|
$53,213
|
The
accompanying condensed notes are an integral part of these
unaudited financial statements.
F-5
LODE-STAR MINING INC.
(formerly International Gold Corp.)
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED June 30, 2016 AND 2015
(Unaudited)
(Stated
in U.S. Dollars)
|
1.
|
BASIS OF PRESENTATION AND NATURE OF OPERATIONS
|
Organization and Nature of Operations
Lode-Star
Mining Inc. (formerly International Gold Corp.) (“the
Company”) was incorporated in the State of Nevada, U.S.A., on
December 9, 2004. The Company’s principal executive offices
are located in Cypress, Texas. The Company was originally formed
for the purpose of acquiring exploration stage natural resource
properties. The Company acquired a mineral property interest from
Lode Star Gold Inc., a private Nevada corporation
(“LSG”) on December 11, 2014 (See Note 3) in
consideration for the issuance of 35,000,000 common shares of the
Company. As a result of this transaction, control of the Company
was acquired by LSG.
On
May 12, 2015, International Gold Corp. completed a merger with its
wholly owned subsidiary, Lode-Star Mining Inc., and formally
assumed the subsidiary’s name by filing Articles of Merger
with the Nevada Secretary of State (the “Name Change”).
The subsidiary was incorporated entirely for the purpose of
effecting the Name Change and the merger did not affect the
Company’s corporate structure in any other way.
Going Concern
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern.
The
future of the Company is dependent upon its ability to establish a
business and to obtain new financing to execute a business plan. As
shown in the accompanying financial statements, the Company has
incurred accumulated losses of $1,560,145 for the period from
December 9, 2004 (inception) to June 30, 2016, and has had no
revenue. There is no assurance that management’s plans to
seek additional capital through private placements of its common
stock will be realized, and these factors cast substantial doubt
upon the use of the going concern assumption. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the
amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue in
existence.
Basis of Presentation
The
unaudited financial information furnished herein reflects all
adjustments which, in the opinion of management, are necessary to
fairly state the Company’s financial position and the results
of its operations for the periods presented. These first quarter
financial statements should be read in conjunction with the
Company’s financial statements and notes thereto included in
the Company’s report on Form 10-K for the year ended December
31, 2015. The Company assumes that the users of the interim
financial information herein have read, or have access to, the
audited financial statements for the preceding fiscal year, and
that the adequacy of additional disclosure needed for a fair
presentation may be determined in that context. Accordingly,
footnote disclosure which would substantially duplicate the
disclosure contained in the Company’s financial statements
for the fiscal year ended December 31, 2015, has been omitted. The
results of operations for the six month period ended June 30, 2016
are not necessarily indicative of results for the entire year
ending December 31, 2016.
Reclassification of Prior Year Presentation
Certain
prior year amounts have been reclassified to conform to the current
period presentation. These reclassifications on the interim
statement of cash flows for the six months ended June 30, 2015 had
no effect on the reported results of operations. Expenses paid by a
related party on behalf of the Company were removed from the net
amount of loan advances and from the change in accounts payable,
and are shown as a Non-cash Financing Activity. The foreign
exchange gain component of the change in loan balances was removed
and shown as an adjustment to reconcile net loss to net cash used
in operating activities. Accrued interest that was exchanged for
shares to be issued was removed from the decrease in accrued
liabilities and from the net amount of loan advances. The amount is
included in Non-cash Financing Activity, as part of Common shares
issued for debt settlements. The remaining net amount of loan
advances was separated into repayments of loans payable to
non-related parties, and loan proceeds from related parties. These
changes in classification decreased the amount previously reported
as Cash Used In Operating Activities for the six months ended June
30, 2015 from $145,621 to $104,451. Offsetting that change, the
amount previously reported for the 2015 period as Cash Provided By
Financing Activities decreased from $139,776 to
$98,606.
F-6
LODE-STAR MINING INC.
(formerly International Gold Corp.)
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED June 30, 2016 AND 2015
(Unaudited)
(Stated in
U.S. Dollars)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The
financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States (“GAAP”). Because a precise determination
of many assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgment. All dollar amounts are in U.S. dollars unless otherwise
noted. The financial statements have, in management’s
opinion, been properly prepared within reasonable limits of
materiality.
The
Company has implemented all applicable new accounting
pronouncements that are in effect. Those pronouncements did not
have any material impact on the financial statements unless
otherwise disclosed, and the Company does not believe that there
are any other new accounting pronouncements that have been issued
that might have a material impact on its financial position or
results of operations.
|
3.
|
MINERAL PROPERTY INTEREST
|
Given
that permitting for operations on the Property is still to be
completed, at the request of the Company’s management, LSG
granted, by a letter of agreement dated June 15, 2016, a deferment
to January 18, 2017 of payments totaling $173,901 otherwise due at
June 30, 2016 in accordance with the Mineral Option Agreement
between the parties dated October 4, 2014.
The
Company assessed its mineral property interest at June 30, 2016 and
to the date of these financial statements and concluded that facts
and circumstances do not suggest that the mineral property
interest’s carrying value exceeds its recoverable amount and
therefore no impairment is required.
|
4.
|
CAPITAL STOCK
|
During
the six months ended June 30, 2016 and the year ended December 31,
2015, the Company did not receive any cash subscriptions for shares
of its common stock. No preferred shares have been issued to the
date of issue of these financial statements.
Summary
of warrant activity and warrants outstanding at June 30,
2016:
|
|
Number of Warrants
|
Exercise Price
|
Weighted Average Exercise Price
|
Weighted Average Life Remaining (Years)
|
Expiry Date
|
|
Balance, December 31, 2015
|
3,336,060
|
$0.02
|
$0.02
|
4.86
|
November
10, 2020
|
|
Granted
|
-
|
$-
|
$-
|
-
|
|
|
Expired
|
-
|
$-
|
$-
|
-
|
|
|
Exercised
|
-
|
$-
|
$-
|
-
|
|
|
Balance June 30, 2016
|
3,333,060
|
$0.02
|
$0.02
|
4.36
|
November 10, 2020
|
|
5.
|
LOANS PAYABLE
|
At
June 30, 2016, the Company had the following loans
payable:
|
i)
|
$1,000 (December 31, 2015 - $1,000): unsecured; interest at 15% per
annum; originally due on April 20, 2012.
|
|
ii)
|
$55,000 (December 31, 2015 - $65,000): unsecured; interest at 10%
per annum from January 10, 2015.
|
| ■ |
$27,500,
and any accrued interest was due and payable on written demand in
full (not received to date) on the earlier of June 9, 2015 or the
date on which the Company completes one or more debt or equity
financings that generate aggregate gross proceeds of at least
$250,000.
|
|
| ■ |
The
other $27,500 of outstanding principal and any accrued interest was
due and payable on written demand in full (not received to date) on
January 9, 2016.
|
|
| ■ |
The
Company shall have the right to repay all or any part of the
principal and any accrued interest to the lender at any time and
from time to time, without any premium.
|
|
F-7
LODE-STAR MINING INC.
(formerly International Gold Corp.)
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED June 30, 2016 AND 2015
(Unaudited)
(Stated in
U.S. Dollars)
|
5.
|
LOANS PAYABLE (Continued)
|
|
iii)
|
$42,278 (December 31, 2015 - $40,789): unsecured; interest at 5%
per annum; with no specific terms of repayment, due to a related
party, the president of the Company.
|
|
iv)
|
$335,000 (December 31, 2015 - $290,000): unsecured; interest at 5%
per annum from January 1, 2015; with no specific terms of
repayment, due to a related party, LSG, the Company’s
majority shareholder.
|
|
v)
|
$62,481 (December 31, 2015 - $23,966): unsecured; interest at 5%
per annum; with no specific terms of repayment, due to a related
party, LSG, the Company’s majority shareholder.
|
|
vi)
|
$3,844 (December 31, 2015 - $3,613): unsecured; non-interest
bearing; with no specific terms of repayment, due to a related
party, the controlling shareholder of LSG.
|
As
of June 30, 2016, interest totaling $36,717 (December 31, 2015 -
$23,283) was accrued on the above loan amounts.
|
6.
|
RELATED PARTY TRANSACTIONS AND AMOUNTS DUE
|
Transactions
with related parties were in the normal course of operations and
have been valued in these financial statements at the exchange
amount, which is the amount of consideration agreed to and
established by the related parties.
During
the six months ended June 30, 2016, the Company accrued mineral
option fees totaling $49,988 due to its majority shareholder under
terms of the Mineral Option Agreement between the parties. The
balance due at June 30, 2016 was $173,901 (December 31, 2015:
$123,913).
During
the six months ended June 30, 2016, the majority shareholder of the
Company paid a total of $38,515 to various vendors on behalf of the
Company. That amount is included in the $62,481 loan balance
detailed in Note 5 above.
At
June 30, 2016, accrued interest was due to related parties in
connection with loans detailed above in Note 5, as
follows:
Loan iii)
$3,774 (December 31, 2015 - $2,609) to the
president of the Company.
Loan iv)
$17,888 (December 31, 2015 - $10,157) to the
majority shareholder of the Company.
Loan v)
$1,535
(December 31, 2015 - $336) to the majority shareholder of the
Company.
At
June 30, 2016, the $640,701 total due to related parties is
comprised of the following:
Loans
and accrued interest - $466,800 (December 31, 2015:
$371,471)
Mineral
option fees payable - $173,901(December 31, 2015:
$123,913)
|
7.
|
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
|
Under
the terms of the Mineral Option Agreement between the Company and
LSG, its majority shareholder, payments are due from the Company to
LSG as follows:
If
the Company fails to make any option cash payments for a period of
one year from the Effective Date of the agreement (October 4, 2014)
the Company shall pay an additional $100,000 on the first
anniversary of the Effective Date and in any subsequent year in
which the Company has failed to exercise its option to acquire a
further 60% interest in the property and the agreement remains in
effect, the Company shall make quarterly cash payments of $25,000,
payable on the last day of the applicable quarter, until such time
as the option to acquire the additional 60% interest has been
exercised.
No
option cash payments have been made by the Company to date and
amounts totaling $173,901 were included in accrued liabilities at
June 30, 2016 (December 31, 2015: $123,913).
F-8
LODE-STAR MINING INC.
(formerly International Gold Corp.)
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED June 30, 2016 AND 2015
(Unaudited)
(Stated in
U.S. Dollars)
|
8.
|
SUBSEQUENT EVENTS
|
Management
has evaluated subsequent events and the impact on the reported
results and disclosures and has concluded that no other significant
events require disclosure as of the date these financial statements
were issued.
F-9
Report of
Independent Registered Public Accounting Firm
To the Board of
Directors of
Lode-Star Mining,
Inc.
Cypress,
TX
We have audited the
accompanying balance sheet of Lode-Star Mining, Inc. (the
“Company”) as of December 31, 2015, and the related
statement of operations, shareholders’ deficit, and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We conducted our
audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control
over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, 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. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the
financial statements referred to above present fairly, in all
material respects, the financial position of Lode-Star Mining, Inc.
as of December 31, 2015, and the results its operations and its
cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of
America.
The accompanying
financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has had no revenue and has
incurred accumulated losses since inception. These conditions raise
significant doubt about the Company’s ability to continue as
a going concern. Management’s plans in this regard are
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
As
discussed in Note 2, the financial statements for the year ended
December 31, 2015 have been restated to include the accrual of
mineral option fees.
/s/ MaloneBailey,
LLP
www.malonebailey.com
Houston,
Texas
March 29, 2016,
except for the effects of the restatement discussed in Note 2 as to
which the date is August 10, 2016
F-10
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and
Stockholders of
Lode-Star Mining Inc.
(formerly International Gold Corp.)
We have audited the
accompanying balance sheet of Lode-Star Mining Inc. (formerly
International Gold Corp.) (the “Company”) as of
December 31, 2014, and the related statements of operations, cash
flows and stockholders’ deficiency for year then
ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We conducted our
audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free of
material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, 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. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
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, 2014, and the results of its operations and its cash
flows for the year then ended, in conformity with accounting
principles generally accepted in the United States.
The accompanying
financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has suffered recurring losses
from operations, has negative operating cash flows, has a
stockholders’ deficiency and is dependent upon obtaining
adequate financing to fulfill its business
activities. These factors raise substantial doubt about
its ability to continue as a going
concern. Management’s plans in regard to these
matters are also discussed in Note 1. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
|
Vancouver,
Canada
|
"Morgan & Company
LLP"
|
|
|
|
|
March 28, 2016
|
Chartered Professional
Accountants
|
F-11
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
BALANCE
SHEETS (RESTATED)
(Stated in U.S.
Dollars)
|
|
DECEMBER
31
|
|
|
|
2015
(Restated - Note
2)
|
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
Cash
|
$12,456
|
$5,372
|
|
Prepaid
fees
|
3,217
|
-
|
|
|
15,673
|
5,372
|
|
|
|
|
|
Mineral Property
Interest
|
230,180
|
230,180
|
|
|
$245,853
|
$235,552
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
|
|
|
|
Accounts
payable and accrued liabilities
|
$14,302
|
$38,397
|
|
Due to
related parties
|
495,384
|
139,353
|
|
Loans
payable
|
76,180
|
135,825
|
|
|
585,866
|
313,575
|
|
Contractual
Obligations, Commitments And Subsequent Events (Notes 4, 8 and
10)
|
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIENCY
|
|
|
|
|
|
|
|
Capital
Stock
|
|
|
|
Authorized:
|
|
|
|
480,000,000
voting common shares with a par value of $0.001 per
share
|
|
|
|
20,000,0000
preferred shares with a par value of $0.001 per share
|
|
|
|
Issued:
|
|
|
|
49,127,825
common shares at December 31, 2015 (46,509,000 common
shares at December 31,
2014)
|
1,947
|
465
|
|
|
|
|
|
Additional
Paid-In Capital
|
1,070,064
|
922,215
|
|
Accumulated
Deficit
|
(1,412,024)
|
(1,000,703)
|
|
|
(340,013)
|
(78,023)
|
|
|
|
|
|
|
$245,853
|
$235,552
|
The accompanying notes are
an integral part of these financial statements.
F-12
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
STATEMENTS OF OPERATIONS
(RESTATED)
(Stated in U.S.
Dollars)
|
|
YEARS
ENDED
|
|
|
|
DECEMBER
31
|
|
|
|
2015
(Restated –
Note 2)
|
2014
|
|
|
|
|
|
Revenue
|
$-
|
$-
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
Consulting
services
|
121,409
|
60,653
|
|
Corporate
support services
|
12,759
|
2,594
|
|
Mineral
option fees
|
123,913
|
-
|
|
Office,
foreign exchange and sundry
|
10,136
|
(913)
|
|
Professional fees
|
94,783
|
92,861
|
|
Transfer
and filing fees
|
27,796
|
14,470
|
|
|
390,796
|
169,665
|
|
|
|
|
|
Operating Loss
Before Other Income (Expense)
|
(390,796)
|
(169,665)
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
Gain on
debt forgiveness
|
-
|
61,263
|
|
Interest,
bank and finance charges
|
(20,525)
|
(10,015)
|
|
|
(20,525)
|
51,248
|
|
|
|
|
|
Net Loss For The
Year
|
$(411,321)
|
$(118,417)
|
|
|
|
|
|
Basic And Diluted
Loss Per Common Share
|
$(0.01)
|
$(0.01)
|
|
|
|
|
|
Weighted Average
Number Of Common Shares Outstanding
|
47,436,336
|
13,426,808
|
The accompanying notes are
an integral part of these financial statements.
F-13
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
STATEMENTS OF CASH FLOWS
(RESTATED)
(Stated in U.S.
Dollars)
|
|
YEARS ENDED DECEMBER
31
|
|
|
|
2015
(Restated - Note
2)
|
2014
|
|
|
|
|
|
Cash Provided By
(Used In)
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
Net loss
for the year
|
$(411,321)
|
$(118,417)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Foreign
exchange (gain)
|
(4,791)
|
-
|
|
Stock
issued for services
|
29,397
|
-
|
|
Warrants
issued for services
|
66,721
|
-
|
|
Gain on
debt forgiveness
|
-
|
(61,263)
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Prepaid
expenses
|
(3,217)
|
-
|
|
Accounts
payable and accrued liabilities
|
33,194
|
21,584
|
|
Due to
related party
|
123,913
|
-
|
|
Accrued
interest payable
|
19,788
|
9,134
|
|
|
(146,316)
|
(148,962)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Repayment
of loans payable
|
(14,000)
|
-
|
|
Repayment
of loans payable – related party
|
(5,000)
|
-
|
|
Proceeds
from loans payable
|
-
|
17,484
|
|
Proceeds
from loans payable – related party
|
172,400
|
136,829
|
|
|
153,400
|
154,313
|
|
|
|
|
|
Net Increase In
Cash
|
7,084
|
5,351
|
|
|
|
|
|
Cash, Beginning
Of Year
|
5,372
|
21
|
|
|
|
|
|
Cash, End Of
Year
|
$12,456
|
$5,372
|
|
|
|
|
|
Supplemental
Disclosure Of Cash Flow Information
|
|
|
|
Cash paid
during the year for:
|
|
|
|
Interest
|
$-
|
$-
|
|
Income
taxes
|
$-
|
$-
|
|
|
|
|
|
Non-cash
Financing Activity
|
|
|
|
Expenses
paid by related party on behalf of the Company
|
$57,289
|
-
|
|
Common
shares issued for debt settlements
|
$53,213
|
$-
|
|
Common
shares issued for mineral property interest
|
$-
|
$230,180
|
The accompanying notes are
an integral part of these financial statements.
F-14
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
STATEMENTS OF
STOCKHOLDERS’ DEFICIENCY (RESTATED)
FOR THE
YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated in U.S.
Dollars)
|
|
NUMBER OF COMMON
SHARES
|
PAR VALUE
|
ADDITIONAL PAID-IN
CAPITAL
|
ACCUMULATED DEFICIT
|
TOTAL
|
|
|
|
|
|
|
|
|
Balance, December
31, 2013
|
11,509,000
|
$115
|
$692,385
|
$(882,286)
|
$(189,786)
|
|
|
|
|
|
|
|
|
Shares issued for
mineral property interest
|
35,000,000
|
350
|
229,830
|
-
|
230,180
|
|
|
|
|
|
|
|
|
Net loss for the
year
|
-
|
-
|
-
|
(118,417)
|
(118,417)
|
|
|
|
|
|
|
|
|
Balance, December 31,
2014
|
46,509,000
|
465
|
922,215
|
(1,000,703)
|
(78,023)
|
|
|
|
|
|
|
|
|
Shares issued for
debt
|
1,149,000
|
12
|
53,201
|
-
|
53,213
|
|
Shares issued for
consulting services
|
1,469,825
|
1,470
|
27,927
|
-
|
29,397
|
|
Warrants issued for
consulting services
|
-
|
-
|
66,721
|
-
|
66,721
|
|
Net loss for the
year
|
-
|
-
|
-
|
(411,321)
|
(411,321)
|
|
|
|
|
|
|
|
|
Balance, December 31,
2015
|
49,127,825
|
$1,947
|
$1,070,064
|
$(1,412,024)
|
$(340,013)
|
The accompanying notes are
an integral part of these financial statements.
F-15
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES TO
FINANCIAL STATEMENTS (RESTATED)
FOR THE
YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
1.
|
BASIS
OF PRESENTATION AND NATURE OF OPERATIONS -
Restated
|
Organization
Lode-Star Mining Inc.
(formerly International Gold Corp.) (“the Company”) was
incorporated in the State of Nevada, U.S.A., on December 9,
2004. The Company’s principal executive offices
are located in Cypress, Texas. The Company was
originally formed for the purpose of acquiring exploration stage
natural resource properties. The Company acquired a mineral
property interest from Lode Star Gold Inc., a private Nevada
corporation (“LSG”) on December 11, 2014 (See Note 4)
in consideration for the issuance of 35,000,000 common shares of
the Company. As a result of this transaction, control of the
Company was acquired by LSG.
On May 12, 2015,
International Gold Corp. completed a merger with its wholly owned
subsidiary, Lode-Star Mining Inc., and formally assumed the
subsidiary’s name by filing Articles of Merger with the
Nevada Secretary of State (the “Name Change”).
The subsidiary was incorporated entirely for the purpose of
effecting the Name Change and the merger did not affect the
Company’s corporate structure in any other way.
Going Concern
The accompanying
financial statements have been prepared assuming the Company will
continue as a going concern.
The future of the
Company is dependent upon its ability to establish a business and
to obtain new financing to execute its business plan. As shown in
the accompanying financial statements, the Company has had no
revenue and has incurred restated accumulated losses of
$1,412,024for the period from December 9, 2004 (inception) to
December 31 2015. There is no assurance that
management’s plans to seek additional capital through private
placements of its common stock will be realized, and these factors
cast substantial doubt upon the use of the going concern
assumption. These financial statements do not include any
adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of
liabilities that might be necessary in the event the Company cannot
continue in existence.
|
2.
|
RESTATEMENT OF
PREVIOUSLY ISSUED FINANCIAL STATEMENTS
|
Subsequent to the original issuance
of the Company’s annual financial statements, the Company
determined that mineral option fees totaling $123,913 owing under
the terms of its Mineral Option Agreement with LSG dated October 4,
2014 had not, but should have been accrued at December 31, 2015.
While a deferral of the actual payment to June 18, 2016 had been
granted by LSG in November, 2015, the fees still needed to be
accrued as long as they remained unpaid. A second deferral was
later granted by LSG on June 15, 2016, extending the repayment date
to January 18, 2017. On review, the Company determined that the
amount was material and a restatement was required.
No fees
were required to be accrued at December 31, 2014 in accordance with
the terms of the agreement.
The
following financial statement items were affected by the
restatement:
Balance
Sheet
|
|
As At December 31,
2015
|
||
|
|
As
previously reported
|
Adjustment
|
Restated
|
|
Due to
related parties
|
$371,471
|
$123,913
|
$495,384
|
|
Current
liabilities
|
$461,953
|
$123,913
|
$585,866
|
|
Accumulated
Deficit
|
$(1,288,111)
|
$(123,913)
|
$(1,412,024)
|
|
Stockholders’
Deficiency
|
$(216,100)
|
$(123,913)
|
$(340,013)
|
Statement of
Operations
|
|
Year Ended December
31, 2015
|
||
|
|
As
previously reported
|
Adjustment
|
Restated
|
|
Mineral
option fees
|
$-
|
$123,913
|
$123,913
|
|
Operating
Loss Before Other Income (Expense)
|
$(266,883)
|
$(123,913)
|
$(390,796)
|
|
Net Loss
For The Year
|
$(287,408)
|
$(123,913)
|
$(411,321)
|
F-16
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES TO
FINANCIAL STATEMENTS (RESTATED)
FOR THE
YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
2.
|
RESTATEMENT OF PREVIOUSLY
ISSUED FINANCIAL STATEMENTS (Continued)
|
Statement of Cash
Flows
|
|
Year Ended December
31, 2015
|
||
|
|
As
previously reported
|
Adjustment
|
Restated
|
|
Net loss
for the year
|
$(287,408)
|
$(123,913)
|
$(411,321)
|
|
Due to
related party
|
$-
|
$123,913
|
$123,913
|
Statement of
Stockholders’ Deficiency
|
|
Year Ended December
31, 2015
|
||
|
|
As
previously reported
|
Adjustment
|
Restated
|
|
Net loss
for the year
|
$(287,408)
|
$(123,913)
|
$(411,321)
|
|
Balance,
December 31, 2015
|
$(216,100)
|
$(123,913)
|
$(340,013)
|
|
3.
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
The financial
statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States
(“GAAP”). Because a precise determination of
many assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgment. All dollar amounts are in U.S. dollars unless
otherwise noted.
The financial
statements have, in management’s opinion, been properly
prepared within reasonable limits of materiality and within the
framework of the significant accounting policies summarized
below:
|
|
a)
|
Basis of
Accounting
|
The Company’s
financial statements have been prepared using the accrual method of
accounting. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations
for the periods presented have been reflected herein.
|
|
b)
|
Cash and Cash
Equivalents
|
Cash consists of cash
on deposit with high quality major financial institutions.
For purposes of the balance sheets and statements of cash
flows, the Company considers all highly liquid debt instruments
purchased with maturity of 90 days or less to be cash equivalents.
At December 31, 2015 and 2014, the Company had no cash
equivalents.
F-17
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES TO
FINANCIAL STATEMENTS (RESTATED)
FOR THE
YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
|
|
|
c)
|
Foreign Currency
Accounting
|
The Company’s
functional currency is the U.S. dollar. Branch office
activities are generally in Canadian dollars. Transactions in
Canadian currency are translated into U.S. dollars as
follows:
i)
monetary items at
the exchange rate prevailing at the balance sheet
date;
ii)
non-monetary items
at the historical exchange rate; and
iii)
revenue and expense
items at the rate in effect of the date of
transactions.
Gains and losses
arising on the settlement of foreign currency denominated
transactions or balances are recorded in the statements of
operations.
|
|
d)
|
Fair Value of
Financial Instruments
|
ASC Topic 820-10
establishes a three-tier value hierarchy, which prioritizes the
inputs used in measuring fair value. The hierarchy
prioritizes the inputs into three levels based on the extent to
which inputs used in measuring fair value are observable in the
market. These tiers include:
▪
Level 1 –
defined as observable inputs such as quoted prices in active
markets;
▪
Level 2 –
defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable;
and
▪
Level 3 –
defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own
assumptions.
The Company’s
financial instruments consist of cash, accounts payable and accrued
liabilities, and loans payable. The Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments. Pursuant to ASC 820 and 825, the fair value
of cash is determined based on “Level 1” inputs, which
consist of quoted prices in active markets for identical assets.
Accounts payable and accrued liabilities and loans payable are
measured using “Level 2” inputs as there are no quoted
prices in active markets for identical instruments. The
carrying values of cash, accounts payable and accrued liabilities,
and loans payable approximate their fair values due to the
immediate or short term maturity of these financial
instruments.
|
|
e)
|
Asset Retirement
Obligations
|
The Company has no
asset retirement obligations, including environmental
rehabilitation expenditures, which relate to an existing condition
caused by past operations.
|
|
f)
|
Use of Estimates
and Assumptions
|
The preparation of
financial statements, in conformity with GAAP, requires management
to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying
disclosures. By their nature, these estimates are
subject to measurement uncertainty and the effect on the financial
statements of changes in such estimates in future periods could be
significant. Significant areas requiring
management’s estimates and assumptions are determining the
fair value of transactions involving related parties and common
stock. Actual results may differ from the
estimates.
|
|
g)
|
Basic and Diluted
Earnings Per Share
|
The Company reports
basic earnings or loss per share in accordance with ASC Topic 260,
“Earnings Per Share”. Basic earnings per share is
computed by dividing net earnings available to common stockholders
by the weighted average number of common shares outstanding during
the period. Diluted earnings per share is computed similarly,
except that the common stock number is increased to include the any
potential additional common shares, for example from the exercise
of options or warrants. As the Company generated net losses in the
periods presented, the additional impact of including potential
shares from outstanding warrants would be anti-dilutive and is
therefore not part of the earnings per share
calculation.
F-18
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES
TO FINANCIAL STATEMENTS (RESTATED)
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
|
|
|
h)
|
Income
Taxes
|
The Company uses
the asset and liability method of accounting for income taxes in
accordance with ASC Topic 740, Income Taxes. This
standard requires the use of an asset and liability approach for
financial accounting and reporting on income taxes. If
it is more likely than not that some portion or all of a deferred
tax asset will not be realized, a valuation allowance is
recognized.
|
|
i)
|
Stock-Based
Compensation
|
Stock-based
compensation is accounted for in accordance with ASC 718 whereby a
compensation charge based on the fair value of the award is
recorded against earnings over the period during which the employee
is required to perform the services in exchange for the award
(generally the vesting period). For transactions with non-employees
in which services are performed in exchange for the Company’s
common stock or other equity instruments, the transactions are
recorded on the basis of the fair value of the service received or
the fair value of the equity instruments issued, whichever is more
readily measurable at the date of issuance. The expense is
recognized over the vesting period of the award.
|
|
j)
|
Mineral Property
Interest and Impairment
|
Mineral property
interests are capitalized and recorded at fair value. The property
interests are periodically assessed for impairment of value when
facts and circumstances suggest that the carrying amount of the
property interest may exceed its recoverable amount. Costs of
exploration, evaluation and retaining mineral property interests
are expensed as incurred. Once the Company has identified proven
and probable reserves in its investigation of its property
interests and upon development of a plan for operating a mine, it
would enter the development stage and capitalize future costs until
production is established. When a property reaches the production
stage, the related capital costs will be amortized, using the
units-of-production method over proven and probable
reserves.
|
|
k)
|
Recent Accounting
Pronouncements
|
The Company has
implemented all applicable new accounting pronouncements that are
in effect. Those pronouncements did not have any material impact on
the financial statements unless otherwise disclosed, and the
Company does not believe that there are any other new accounting
pronouncements that have been issued that might have a material
impact on its financial position or results of
operations.
|
4.
|
MINERAL
PROPERTY INTEREST - Restated
|
On December 5,
2014, the Company entered into a subscription agreement (the
“Subscription Agreements”) with Lode Star Gold Inc.
(“LSG”), a private Nevada corporation controlled by the
spouse of the Company’s current President, pursuant to
which the Company agreed to issue 35,000,000 shares of its common
stock, valued at $230,180, to LSG in exchange for a 20% undivided
interest in and to the mineral claims owned by LSG. The mineral
claims, known as the “Goldfield Bonanza Project” (the
“Property”), are located in the State of
Nevada.
The execution of
the Subscription Agreement was one of the closing conditions of an
Option Agreement dated October 4, 2014, pursuant to which the
Company acquired the sole and exclusive option to earn up to an 80%
undivided interest in and to the Property. In order to
earn the additional 60% interest in the Property, the Company is
required to fund all expenditures on the Property and pay LSG an
aggregate of $5 million in cash in the form of a net smelter
royalty, each beginning on the Closing Date, which was December 11,
2014. Until such time as the Company has earned the additional 60%
interest, the net smelter royalty will be split 79.2% to LSG, 19.8%
to the Company and 1% to the former Property owner.
If
the Company fails to make any cash payments to LSG within one year
of the Effective Date of the Mineral Option Agreement with LSG
dated October 4, 2014, it is required to pay LSG an additional
$100,000, and in any subsequent years in which the Company fails to
complete the payment of the entire $5 million described above, it
must make quarterly cash payments to LSG of $25,000 until such time
as the Company has earned the additional 60% interest in the
Property. At December 31, 2015 $123,913 in fees payable to LSG has
been accrued.
Given
that permitting for operations on the Property is still to be
completed, at the request of the Company’s management, LSG
granted, by a letter of agreement dated November 10, 2015, a
deferment of the payment to June 18, 2016. A further deferment, to
January 18, 2017, was granted by LSG on June 15, 2016.
F-19
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES
TO FINANCIAL STATEMENTS (RESTATED)
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
4.
|
MINERAL PROPERTY INTEREST - Restated (Continued)
|
In addition, the
Option Agreement provides that the Company will act as the operator
on the Property and that a management committee will be
formed, comprised of representatives from the Company and LSG, with
voting based on each party’s proportionate interest, to
supervise exploration of the Property and approve work
programs and budgets. To December 31, 2015, no work programs had
been approved.
The Company
assessed its mineral property interest at December 31, 2015 and to
the date of these financial statements and concluded that facts and
circumstances do not suggest that the mineral property
interest’s carrying value exceeds its recoverable amount and
therefore no impairment is required.
|
5.
|
CAPITAL
STOCK
|
During the year
ended December 31, 2015, the Company had no cash subscriptions for
shares of its common stock.
On November 11,
2015, the Company entered into a one year agreement to obtain
assistance in conducting business strategy and communications
planning, public financial disclosure reporting, and various
matters in connection with directors and other professionals as
needed by the Company. In consideration for the services to be
provided, the Company granted the consultant 1,469,825 shares of
common stock. Those shares were issued on December 11, 2015 and
were valued at $29,397, based on market price at the date of the
agreement. In addition, the consultant was granted warrants with a
five year term, commencing the date of the agreement, to purchase
3,336,060 shares of common stock at a price of $0.02
per
share, including a cashless exercise option. The warrants were
valued at $66,721 using the Black-Scholes option pricing model with
an average risk-free rate of 1.68%, estimated life of 5 years,
volatility of 208.7% and dividend yield of 0%.
On January 9, 2015,
agreements were reached in connection with the loans of $24,696
(CAD $28,650) and $1,767 (CAD $2,050) whereby the loan amounts were
to be converted to Company shares at a price of CAD $0.05, to
result in the issuance of 573,000 and 41,000 common shares
respectively. Those shares were issued on April 6,
2015.
On January 9, 2015,
an agreement was reached to modify the terms of a loan such that
$26,750 of accrued interest together with a premium was to be
converted to Company shares at a price of $0.05 per share, to
result in the issuance of 535,000 common shares. Those shares were
issued on April 6, 2015.
During the year
ended December 31, 2014, the Company received no cash subscriptions
for shares of its common stock, however, on December 11, 2014, the
Company issued 35,000,000 shares, valued at $230,180, in exchange
for the mineral property interest described in Note 4.
Capitalization
On November 24,
2015, the board of directors authorized the following changes to
the capitalization of the Company:
The authorized
capital was increased from 100,000,000 shares of common stock with
a par value of $0.00001 per share to 500,000,000 shares of capital
stock, divided into 480,000,000 shares of common stock with a par
value of $0.001 per share, and 20,000,000 shares of preferred stock
with a par value of $0.001 per share. The Company reserved
10,000,000 shares of common stock for issuance under its new 2016
Omnibus Equity Incentive Plan. To date, warrants to purchase
3,336,060 shares of common stock have been issued under the Equity
Incentive Plan and none of those warrants have been
exercised.
No preferred shares
have been issued to the date of issue of these financial
statements.
F-20
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES
TO FINANCIAL STATEMENTS (RESTATED)
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
5.
|
CAPITAL STOCK (Continued)
|
Warrants
Summary of warrant
activity and warrants outstanding at December 31,
2015:
|
|
|
Number
of Warrants
|
|
|
Exercise
Price
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted
Average Life Remaining
(Years)
|
|
|
Expiry
Date
|
|
|||||
|
Balance,
December 31, 2014
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Granted
|
|
|
3,336,060
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2015
|
|
|
3,336,060
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
|
4.86
|
|
|
November
10, 2020
|
|
|
|
6.
|
LOANS
PAYABLE
|
At December 31,
2015, the Company had the following loans payable:
i)
$1,000 (December
31, 2014 - $5,000): unsecured; interest at 15% per annum;
originally due on April 20, 2012.
●
On March 19, 2015,
$4,000 was paid by the Company in partial settlement of the
December 31, 2014 principal balance.
ii)
$65,000 (December
31, 2014 - $75,000): unsecured; interest at 10% per annum from
January 10, 2015.
●
$27,500, and any
accrued interest was due and payable on written demand in full (not
received to date) on the earlier of June 9, 2015 or the date on
which the Company completes one or more debt or equity financings
that generate aggregate gross proceeds of at least
$250,000;
●
The balance of the
outstanding principal, or $37,500, and any accrued interest was due
and payable on written demand in full (not received to date) on
January 9, 2016; and
●
The Company shall
have the right to repay all or any part of the Principal and any
accrued interest to the Lender at any time and from time to time,
without any premium.
iii)
$40,789 (December
31, 2014 - $34,160): unsecured; interest at 5% per annum; with no
specific terms of repayment, due to a related party, the president
of the Company.
iv)
$290,000 (December
31, 2014 - $100,000): unsecured; interest at 5% per annum from
January 1, 2015; with no specific terms of repayment, due to a
related party, LSG, the Company’s majority
shareholder.
v)
$23,966 (December
31, 2014 - $Nil): unsecured; interest at 5% per annum; with no
specific terms of repayment, due to a related party, LSG, the
Company’s majority shareholder.
vi)
$3,613 (December
31, 2014 - $4,310): unsecured; non-interest bearing; with no
specific terms of repayment, due to a related party, the
controlling shareholder of LSG.
vii)
$Nil (December 31,
2014 - $24,696): unsecured; non-interest bearing; with no specific
terms of repayment (converted on January 9, 2015 to 573,000 common
shares that were issued on April 6, 2015).
viii)
$Nil (December 31,
2014 - $1,767): unsecured; non-interest bearing; with no specific
terms of repayment (converted on January 9, 2015 to 41,000 common
shares that were issued on April 6, 2015).
As of December 31,
2015, interest totaling $23,283 (December 31, 2014 - $30,244) was
accrued on the above loan amounts.
|
7.
|
RELATED
PARTY TRANSACTIONS AND AMOUNTS DUE -
Restated
|
Transactions with
related parties were in the normal course of operations and have
been valued in these financial statements at the exchange amount,
which is the amount of consideration agreed to and established by
the related parties.
At December 31,
2015, $Nil (December 31, 2014 - $15,300) included in accounts
payable was due to a company controlled by a former director and
president of the Company.
F-21
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES
TO FINANCIAL STATEMENTS (RESTATED)
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
7.
|
RELATED PARTY TRANSACTIONS AND AMOUNTS DUE -
Restated (Continued)
|
At December 31,
2015, accrued interest was due to related parties in connection
with loans detailed above in Note 6, as follows:
iii)
$2,609 (December
31, 2014 - $883) to the president of the
Company.
iv)
$10,157 (December
31, 2014 - $Nil) to the majority shareholder of the
Company.
v)
$336 (December 31,
2014 - $Nil) to the majority shareholder of the
Company.
During
the year ended December 31, 2015, the Company incurred $123,913
(2014 - $Nil) in mineral option fees payable to LSG, which have
been accrued as of that date.
During the year
ended December 31, 2015, the Company incurred $Nil (2014 - $60,653)
in consulting fees and expenses to a former director and president
of the Company. See Note 8.
|
8.
|
CONTRACTUAL
OBLIGATIONS AND COMMITMENTS
|
See Note 4 for
details about the Company’s obligations and commitments
regarding its Mineral Property Interest.
Effective July 1,
2012, the Company entered into a consulting agreement whereby the
former sole director and officer of the Company was to provide
services as the Company’s CEO, COO, CFO and Corporate
Secretary. The consulting agreement, which would otherwise have
extended to June 2016, was terminated with immediate effect in
accordance with a settlement agreement dated December 5,
2014.
●
Under the terms of
that settlement agreement, the Company agreed to pay an aggregate
of $34,000 CAD.
●
Of that amount,
$Nil was outstanding and included in accounts payable at December
31, 2015 (December 31, 2014: $15,300 ($17,500
CAD).
|
9.
|
INCOME
TAXES - Restated
|
In December, 2014,
the Company underwent a change in control which subjected it to
limitations under Internal Revenue Code Section 382. That section
restricts post-change annual net operating loss utilization, based
on applying an IRS- prescribed rate to the purchase price of the
stock acquired in the change in control. The Company accordingly
revised its estimates of net operating loss carry forwards,
resulting in a reduction in the estimate of losses available for
utilization in the amount of approximately $872,000.
A reconciliation of
income tax benefit to the amount computed at the statutory rate of
34% (2014 – 34%) is as follows:
|
|
2015
|
2014
|
|
|
|
|
|
Expected income tax
recovery
|
$(139,800)
|
$(40,000)
|
|
Adjustment for
non-deductible stock compensation
|
32,700
|
-
|
|
Estimated decrease
in expected tax recovery resulting from Section 382 net operating
loss limitations after change in control
|
296,400
|
-
|
|
Increase (decrease)
in valuation allowance
|
(189,300)
|
40,000
|
|
|
$-
|
$-
|
Significant
components of deferred income tax assets are as
follows:
|
|
2015
|
2014
|
|
Deferred income tax
assets
|
|
|
|
Net
operating losses carried forward
|
$151,000
|
$340,000
|
|
Valuation
allowance
|
(151,000)
|
(340,000)
|
|
|
|
|
|
|
$-
|
$-
|
F-22
LODE-STAR
MINING INC.
(formerly
International Gold Corp.)
NOTES
TO FINANCIAL STATEMENTS (RESTATED)
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(Stated
in U.S. Dollars)
|
9.
|
INCOME TAXES - Restated
(Continued)
|
The
Company has approximately $444,000 (2014 - $1,000,700) in net
operating losses carried forward which will expire by 2035 if not
utilized. Future tax benefits, which may arise as a
result of these losses, have not been recognized in these financial
statements, and have been offset by a valuation
allowance.
The Company’s
net operating losses carried forward for United States income tax
purposes will expire, if not utilized, as follows:
|
2024
|
$10,000
|
|
2025
|
7,600
|
|
2026
|
6,000
|
|
2027
|
10,900
|
|
2028
|
53,200
|
|
2029
|
8,975
|
|
2030
|
6,445
|
|
2031
|
6,445
|
|
2032
|
6,445
|
|
2033
|
6,445
|
|
2034
|
6,445
|
|
2035
|
315,200
|
|
|
$444,100
|
Realization of the
above losses carried forward is dependent on the Company filing the
applicable tax returns with the tax authorities, generating
sufficient taxable income prior to expiration of the losses carried
forward and continuing use of the acquired historic business or a
significant portion of the acquired assets for two years after the
change of control transaction. If this continuity of business enterprise
requirement is not met, the annual net operating loss limitation on
pre-change losses is zero.
|
10.
|
SUBSEQUENT
EVENTS
|
Management has
evaluated subsequent events and the impact on the reported results
and disclosures and has concluded that no other significant events
require disclosure as of the date these financial statements were
issued.
F-23
PART II — INFORMATION NOT REQUIRED IN THE
PROSPECTUS
Item 13. Other expenses of issuance and distribution.
|
Accounting fees and
expenses
|
$2,500
|
|
Legal fees and
expense
|
$20,000
|
|
Blue Sky fees and
expenses
|
$0
|
|
Miscellaneous and
SEC filing fee
|
$5,000
|
|
Total
|
$27,500
|
All
amounts are estimates. We are paying all expenses of the offering
listed above.
Item 14. Indemnification of directors and officers.
Under
our Articles of Incorporation, we may indemnify an officer or
director who is made a party to any proceeding, including a
lawsuit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. The
company may advance expenses incurred in defending a proceeding. To
the extent that the officer or director is successful on the merits
in a proceeding as to which he is to be indemnified, we must
indemnify him against all expenses incurred, including
attorney’s fees. With respect to a derivative action,
indemnity may be made only for expenses actually and reasonably
incurred in defending the proceeding, and if the officer or
director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted
by the laws of the State of Nevada.
The
above-described provisions relating to the exclusion of liability
and indemnification of directors and officers are sufficiently
broad to permit the indemnification of such persons in certain
circumstances against liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors and officers and
to persons controlling us pursuant to the foregoing provisions, we
have been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable.
Item 15. Recent sales of unregistered securities.
Set forth below is information regarding securities sold by us
within the past three years that were not registered under the
Securities Act:
|
Date of Sale
|
|
Title of Security
|
|
Number Sold
|
|
Consideration Received and Description of Underwriting or Other
Discounts to Market Price or Convertible Security, Afforded to
Purchasers
|
|
Exemption from Registration Claimed
|
|
If Option, Warrant or Convertible Security, terms of exercise or
conversion
|
|
11/11/2015
|
|
Common
Stock
|
|
1,469,825
|
|
Consulting
services
|
|
Section
4(2)
|
|
|
|
11/11/2015
|
|
Common
Stock Warrant
|
|
3,336,060
|
|
Consulting
services
|
|
Section
4(2)
|
|
$0.02
price per share, 5 year term with cashless exercise
|
|
01/09/2016
|
|
Common
Stock
|
|
573,000
|
|
Debt
conversion of $24,696
|
|
|
|
Conversion
at $0.05
|
|
01/09/2016
|
|
Common
Stock
|
|
41,000
|
|
Debt
conversion of $1,767
|
|
|
|
Conversion
at $0.05
|
|
01/09/2016
|
|
Common
Stock
|
|
535,000
|
|
Debt
conversion of $26,750 and interest
|
|
|
|
Conversion
at $0.05
|
The above securities were not registered under the Securities Act.
These securities qualified for exemption under 3(a)9 of the
Securities Act. We made this determination based on the
representations of the investors, which included, in pertinent
part, that such shareholders were not a “U.S. person”
as that term is defined in Rule 902(k) of Regulation S under the
Act, and that such shareholders were acquiring our common stock,
for investment purposes for their own respective accounts and not
as nominees or agents, and not with a view to the resale or
distribution thereof, and that the shareholders understood that the
shares of our common stock may not be sold or otherwise disposed of
without registration under the Securities Act or an applicable
exemption therefrom.
F-24
Item 16. Exhibits and financial statement schedules
|
Exhibit No.
|
|
Description
|
|
23.2
|
|
Consent
of Sonfield & Sonfield (included in Exhibit 5.1)
|
|
101
|
|
Interactive
Data File
|
Item 17. Undertakings.
Undertaking
Required by Item 512 of Regulation S-K.
(a)
The
undersigned registrant hereby undertakes:
(1) to
file, during any period in which it offers or sells securities are
being made, a post-effective amendment to this Registration
Statement to:
(i)
include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii)
reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the
effective registration statement; and
(iii)
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) of this rule do not apply if the registration statement
is on Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Exchange Act that
are incorporated by reference in the registration statement; and
paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do
not apply if the registration statement is on Form S-3 or Form F-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is not part of the
registration statement.
(2) For
determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time
to be the initial bona fide offering.
(3)
File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the
offering.
(4) For
determining liability of the registrant under the Securities Act to
any purchaser in the initial distribution of the securities, the
registrant undertakes that in a primary offering of securities of
the registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the registrant
will be a seller to the purchaser and will be considered to offer
or sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the registrant relating to
the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or
on behalf of the registrant or used or referred to by the
registrant;
(iii)
The portion of any other free writing prospectus relating to the
offering containing material information about the registrant or
its securities provided by or on behalf of the registrant;
and
(iv)
Any other communication that is an offer in the offering made by
the registrant to the purchaser.
II-2
(b)
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of
Houston, Texas, on September 14, 2016.
|
|
Lode-Star Mining Inc.
|
|
|
By: /s/
Mark Walmesley
|
|
|
Mark
Walmesley
|
|
|
Chief
Executive Officer, President, Treasurer, Principal Executive
Officer, Principal Financial and Accounting Officer and
Director.
|
Pursuant
to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
Mark Walmesley
Mark
Walmesley
|
|
Chief
Executive Officer, President, Treasurer, Principal Executive
Officer, Principal Financial and Accounting Officer and
Director.
|
|
September
14, 2016
|
II-3