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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2013

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-54405

 

 

 

JAMESON STANFORD RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   90-0963619
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

  

2300 West Sahara Ave., Suite 800, Las Vegas, NV   89102
(Address of principal executive offices)   (Zip Code)

 

(702) 933-0808

(Registrant’s telephone number, including area code)

 

Not applicable.

(Former Name, former address and former fiscal year, if changed since last report)

 

Copies of Communications to:

Laura Anthony, Esq.

Legal& Compliance, LLC

330 Clematis Street, Suite 217

West Palm Beach, FL 33401

(561) 514-0936

Fax (561) 514-0832

 

Securities registered under Section 12(b) of the Act: None

 

Securities registered under Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [  ] No [X]

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 [  ] (Do not check if a smaller reporting company)   Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

The number of shares of Common Stock, $0.001 par value, issued and outstanding on April 11, 2014, was 39,442,758 shares.

 

At June 30, 2013, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $5,576,000 based on the closing sale price on June 28, 2013 of $.85 per share.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

  

 

 

 
 

  

Jameson Stanford Resources Corporation

Form 10-K

For the Year Ended December 31, 2013

Table of Contents

 

      Page
Part I    
Item 1 Business   4
Item 1A Risk Factors   7
Item 1B Unresolved Staff Comments   16
Item 2 Properties   17
Item 3 Legal Proceedings   22
Item 4 Mining Safety Disclosure   22
       
Part II    
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   22
Item 6 Selected Financial Data   23
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations   23
Item 7A Quantitative and Qualitative Disclosures About Market Risk   29
Item 8 Consolidated Financial Statements and Supplementary Data   30
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   31
Item 9A Controls and Procedures   31
Item 9B Other Information   32
       
Part III    
Item 10 Directors, Executive Officers and Corporate Governance   32
Item 11 Executive Compensation   35
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   36
Item 13 Certain Relationships and Related Transactions, and Director Independence   36
Item 14 Principal Accounting Fees and Services   37
       
Part IV    
Item 15 Exhibits, Financial Statement Schedules   37
Signatures   39

 

2
 

  

FORWARD-LOOKING STATEMENTS

 

This Annual Report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

 

  our proposed mining business including estimates of minerals, operational costs and volatility of sales prices,
  our needs for additional capital,
  our history of losses,
  our dependence on third party equipment and services to operate our business,
  economic, legal, environmental restrictions and business conditions in the mining industry,
  dependence on key personnel,
  material weaknesses in our internal control over financial reporting,
  the closely-held nature of our securities,
  limited public market for our common stock, and
  potential dilutive impact of future issuances.

 

This Annual Report and the documents referred to herein should be read thoroughly with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Item A. Risk Factors. Other sections of this Annual Report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this Annual Report, and the statements should not be relied on without also considering the risks and uncertainties associated with these statements and our business.

 

OTHER PERTINENT INFORMATION

 

Throughout this Annual Report references to “we”, “our”, “us”, “Jameson Stanford”, “the Company”, and similar terms refer to Jameson Stanford Resources Corporation and its wholly owned subsidiary Bolcán Mining Corporation.

 

CAUTIONARY STATEMENT REGARDING MINERALIZED MATERIAL

 

“Mineralized material” as used in this annual report on Form 10-K, although permissible under the United States Securities and Exchange Commission’s (“SEC”) Industry Guide 7, does not indicate “reserves” by SEC standards. We cannot be certain that any deposits from the Star Mountain/Chopar Mine, (b) Spor Mountain/Dugway Minerals Claim and Ogden Bay Wildlife Management Area in Weber County, Utah will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves”. Investors are cautioned not to assume that all or any part of the disclosed mineralized material estimates will ever be confirmed or converted into reserves or that mineralized material can be economically or legally extracted.

 

3
 

  

ITEM 1. BUSINESS

 

Business Development

 

We were originally incorporated under the laws of the state of Nevada in June 2009 as MyOtherCountryClub.com for the purpose of developing a website that would offer reciprocal golf privileges, and other related services, to members of private country clubs throughout the United States.

 

On May 2, 2012, we completed a 7-for-1 forward split of all outstanding shares of our common stock and a corresponding increase in our authorized common stock. The effect of the forward split was to increase the number of our common shares issued and outstanding from 8,400,000 to 58,800,000 and to increase our authorized common shares from 50,000,000 shares, par value $0.001, to 350,000,000 shares, par value $0.001.

 

On May 7, 2012, we entered into an Acquisition Agreement and Plan of Merger, as amended on July 24, 2012 and on October 24, 2012 (collectively referred to as the “Merger Agreement”), with our wholly-owned subsidiary, JSR Sub Co, a Nevada corporation (“Sub Co”), and Bolcán Mining Corporation, a Nevada corporation (“Bolcán Mining”). Pursuant to the Merger Agreement, we issued 25,000,000 shares of our Rule 144 restricted common stock in exchange for 100% of Bolcán Mining’s issued and outstanding capital stock.

 

Pursuant to the terms of the Merger Agreement, on October 29, 2012 Sub Co merged with and into Bolcán Mining (the “Merger”) with Bolcán Mining surviving the Merger as our wholly owned subsidiary. After the Merger, there were 31,300,000 shares of our common stock outstanding, of which approximately 80% were held by the former shareholders of Bolcán Mining. Prior to the Merger, we were a shell company with no business operations. As a result of the Merger, we are no longer considered a shell company.

 

Description of Bolcán Mining Corporation’s Business

 

Bolcán Mining was incorporated on April 11, 2012 to pursue the exploration of certain mining claims, mineral leases and excavation rights for mining projects located in (a) Star Mining District in Beaver County, Utah, (b) Spor Mountain Mining District in Juab County, Utah, and (c) Ogden Bay Wildlife Management Area in Weber County, Utah. On April 23, 2012, Bolcán Mining acquired certain lode mining claims and mineral leases related to the Star Mining District and Spor Mountain Mining District projects.

 

Effective as of June 30, 2012, pursuant to an Asset Purchase Agreement between Bolcán Mining and The Bolcán Group LLC (“Bolcán Group”) which was formed in October 12, 2010 by Mr. Michael Stanford, Bolcán Mining purchased all of the assets and assumed certain liabilities of Bolcán Group resulting in a combination of the two companies.

 

The operating activities of the Bolcán Group were inconsequential until October 2011 and consisted primarily of historical site research performed by Mr. Stanford. Mr. Stanford has other mining interests and provides services to the mining industry that are not part of Bolcán Mining.

 

Projects

 

Our current active projects include the following:

 

Star Mountain/Chopar Mine (Star Mining District)

 

On April 23, 2012, the Company paid and capitalized $22,113 to acquire 117 unpatented lode mining claims from the Bureau of Land Management related to the Star Mountain project near Milford, Utah. In addition, on May 1, 2012, the Company entered into a mineral lease agreement with the State of Utah for approximately 1,400 acres that are contiguous with the Star Mountain lode mining claims. The initial costs incurred and capitalized in connection with obtaining the lease was $1,599. Collectively, the Star Mountain claims and lease encompass a total area of approximately 3,740 acres.

 

The Star Mountain lease has an initial term of 10 years, subject to certain extension provisions. The future minimum annual rental commitment is $1.00 per acre (or $1,408). The lease also provides for a minimum annual royalty payment of $4,224 beginning in the 11th year of the lease (if extended), and requires contingent production royalty payments based on 4% to 8% of the gross value (as defined in the lease) of non-fissionable and fissionable metalifferous minerals, respectively, extracted from the leased area.

 

4
 

  

Spor Mountain/Dugway Minerals (Spor Mountain Mining District)

 

On May 1, 2012, the Company entered into a mineral lease agreement with the State of Utah for approximately 1,920 acres related to the Dugway Minerals project near Delta, Utah (the “Dugway Minerals Lease”). The initial costs incurred and capitalized in connection with obtaining the lease were $2,157. The lease has an initial term of 10 years, subject to certain extension provisions. The future minimum annual rental commitment is $1.00 per acre (or $1,918). The lease also provides for a minimum annual royalty payment of $5,754 beginning in the 11th year of the lease, and requires contingent production royalty payments based on 4% to 8% of the gross value (as defined in the lease) of non-fissionable and fissionable metalifferous minerals extracted from the leased area

 

Ogden Bay Minerals

 

The Company’s plans for the Ogden Bay Minerals project consists of developing a mineral exploration and possible excavation project on federal protected wetlands, canals and river systems across 25 square miles of land area known as North Delta located in West Ogden, Utah. Excavation and harvesting rights are maintained through easement rights obtained from Weber County and a special use river/stream alteration permit as part of a State of Utah/Weber County flood mitigation project. We intend to continue to explore for silica, zircon, silver and gold.

 

Products

 

We intend to develop our project mining claims, mineral leases and excavation rights to produce the following specialized mining products:

 

  Copper Ore with Precious Metals Component — Hard rock mineralized material will be drilled, blasted, excavated and hauled, then crushed and classified to customer specifications. We will deliver this product on-demand or just in time to customers on a 24/7 schedule, utilizing truck and pup combos for local deliveries and rail for regional deliveries. The Union Pacific Railroad main line from Los Angeles to Ogden, Utah, is routed through Milford, Utah, approximately five miles east of our Star Mountain project site.
     
  Mined Mineral Concentrates — Finely divided particles from hard rock mining and recovery operations containing significant enrichments of silver and gold will be upgraded by gravity concentrating methods to contain a minimum 3,000 grams of precious metals per ton of concentrate. Mineral concentrate products are dried, bagged and shipped to customers.
     
 

Refined Precious Metals — During 2014–2015, we plan to develop a refining capacity for up to two tons per day of selected precious metals concentrates from our mining and recovery operations. Precious metals concentrates containing greater than 50% combined silver/gold mixture will be further concentrated, refined, separated and manufactured into bar and ingot product.

 

Our Industry

 

Copper is the world’s third most widely used metal, after iron and aluminum, and an important component in the world’s infrastructure. Copper has unique chemical and physical properties including high ductility, malleability, thermal and electrical conductivity, and resistance to corrosion that has made it a superior material for use in electrical and electronic products including power transmission and generation, which accounts for about three quarters of the global copper use, telecommunications, building construction, transportation and industrial machinery businesses. Copper is also an important metal in non-electrical applications such as plumbing and roofing and, when alloyed with zinc to form brass, in many industrial and consumer applications.

 

Copper is an internationally traded commodity with prices principally determined by the major metal exchanges, the New York Commodities Exchange or “COMEX” and the London Metal Exchange or “LME”. Copper is usually found in association with sulfur. Pure copper metal is generally produced during a multistage process beginning with the mining and concentrating of low-grade ores containing copper sulfide minerals followed by smelting and electrolytic refining to produce a pure copper cathode. An increasing share of copper is produced from acid leaching of oxidized ores. Copper is one of the oldest metals ever used and has been one of the important materials in the development of civilization.

 

5
 

  

Copper Market. Copper is an important industrial metal with significant demand for fabrication of electrical wires, plumbing and industrial machinery. Most copper is mined or extracted as copper sulfides from large open pit mines in porphyry copper deposits that contain 0.4% to 1.0% copper. Copper is 100% recyclable with no quality degradation and is the third most recycled metal. It is estimated that 80% of the copper ever mined is still in use today.

 

Gold Market. The global market for gold is large and highly liquid. Primary demand for gold is associated with a safe haven investment with additional demand for jewelry, industrial and health science applications. Gold is also considered a hedge against inflation and a commodity of refuge from concerns with fiat currencies and corresponding risks related to economic, political and social uncertainties.

 

The World Gold Council, a leading international gold industry research organization, published on its website that total gold demand for 2013 decreased 2% to 3,756 metric tons (a metric ton is equal to 2,204.6 pounds) year-over-year. Of this decrease, investment demand posted the largest segment decrease offsetting the increase in gold jewelry demand.

 

Silver Market. Demand for silver is predominantly for industrial applications, especially electronics and jewelry, with investment making up only a small portion of total annual demand.

 

Government and Environmental Regulation

 

Our mining, processing operations and exploration activities are subject to various laws and regulations governing: (i) the protection of the environment; (ii) exploration; (iii) mine safety, development and production; (iv) exports, (v) taxes, (vi) labor standards, (vii) occupational health, (viii) waste disposal, (ix) hazardous substances, (x) water rights; (xi) explosives; (xii) land reclamation and (xiii) other matters. New laws and regulations, amendments to existing laws and regulations or more stringent implementation of existing laws and regulations could have a material adverse impact on us, increase costs, cause a reduction in levels of, or suspension of, production and/or delay or prevent the development of new mining properties.

 

The governmental agencies and regulators tasked with implementing and enforcing the above laws and regulations include Beaver County (Utah), the Bureau of Land Management, the Mine Safety and Health Administration, the Utah Department of Natural Resources, the Utah State Institutional Trust Lands Administration, the Utah Department of Environmental Quality, the Environmental Protection Agency, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

 

We believe we are currently in compliance in all material respects with all applicable environmental laws and regulations. Such compliance requires significant expenditures and increases mine development and operating costs. Mining is subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Environmental liability may result from mining activities conducted by others prior to our ownership of a property. To the extent we are subject to uninsured environmental liabilities, the payment of such liabilities would reduce our otherwise available earnings and could have a material adverse effect on our business plan.

 

Licenses and Permits

 

Our operations require licenses and permits from various governmental authorities. We believe we hold all material licenses and permits required under applicable laws and regulations and believe we are presently complying in all material respects with the terms of such licenses and permits. However, such licenses and permits are subject to change in various circumstances. There can be no guarantee that we will be able to obtain or maintain all necessary licenses and permits that may be required to explore and develop our properties, to commence construction or operation of mining facilities and properties under exploration or development or to maintain continued operations that economically justify the cost.

 

6
 

  

Mine Safety and Health Administration Regulations

 

Pursuant to Section 1503(a) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions and mining-related fatalities. At this time, we have no safety violations, orders, citations, related assessments or legal actions or mining-related fatalities to report.

 

Competition

 

Because the life of a mine is limited by its mineral reserves, we plan to continually seek to replace and expand our reserves through the exploration of existing properties as well as through acquisitions of interests in new properties or of interests in companies which own such properties. We encounter competition from other mining companies in connection with the acquisition of properties and with the engaging and maintaining of qualified industry experienced personnel. This competition may increase the cost of acquiring suitable properties and retaining qualified industry experienced personnel.

 

Employees

 

For the years ended December 31, 2013 and 2012, we had no employees. We utilize the services of independent contractors.

 

ITEM 1A. RISK FACTORS

 

An investment in our common stock involves a high degree of risk. Investors should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and investors may lose all or part of their investment. Investors should read the section entitled “Special Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements as well as the significance of such statements in the context of this Annual report.

 

Risks Related To Our Business And Financial Condition

 

Estimates of mineralized material are based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.

 

There are numerous uncertainties inherent in estimating quantities of mineralized material such as copper, gold and silver including many factors beyond our control and no assurance can be given that the recovery of mineralized material will be realized. In general, estimates of mineralized material are based upon a number of factors and assumptions made as of the date on which the estimates are determined, including:

 

  the geological and engineering estimates that have inherent uncertainties and the assumed effects of regulation by governmental agencies;
  the judgment of the engineers preparing the estimates;
  the estimates of future metals prices and operating costs;
  the quality and quantity of available data;
  the interpretation of that data; and
  the accuracy of various mandated economic assumptions all of which may vary considerably from actual results.

 

Until mineralized material is actually mined and processed, it must be considered an estimate only. These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling analysis which may prove to be unreliable. We cannot assure that these mineralized material estimates will be accurate or that this mineralized material can be mined or processed profitably. Any material changes in estimates of mineralized material will affect the economic viability of placing a property into production and such property’s return on capital. There can be no assurance that minerals recovered in small-scale metallurgical tests will be recovered at production scale.

 

7
 

 

We may have difficulty meeting our current and future capital requirements.

 

Our management and Board of Directors monitor overall costs and expenses and, if necessary, adjust programs and planned expenditures in an attempt to ensure sufficient operating capital. We continue to evaluate costs and planned expenditures for on-going development, care and maintenance efforts at our mineral properties. The continued development, care and maintenance of our mineral properties will require significant amounts of additional capital. As a result, we likely will need to explore raising additional capital during fiscal 2014 and beyond so that we can continue to fully fund our planned activities. Our ability to obtain this financing will depend upon, among other things, the price of minerals and the industry’s perception of its future price. The extraordinary conditions in the global financial and capital markets have currently limited the availability of this funding. Therefore, availability of funding is dependent largely upon factors outside of our control and cannot be accurately predicted. If the disruptions in the global financial and capital markets continue, debt or equity financing may not be available to us on acceptable terms, if at all. If we are unable to fund future operations by way of financing, including public or private offerings of equity or debt securities, our business, financial condition and exploration activities will be adversely impacted.

 

The volatility of the price of gold or silver and other precious metals could adversely affect our future operations and, if warranted, our ability to develop our properties.

 

The potential for profitability of our operations, the value of our properties and our ability to raise funding to conduct continued exploration and development, if warranted, are directly related to the market prices of gold, silver and other precious metals. The prices of such metals fluctuate widely and are affected by numerous factors beyond our control including interest rates, expectations for inflation, speculation, currency values (in particular the strength of the U.S. dollar), global and regional demand, political and economic conditions, global and regional demand, the sale of gold and silver by central banks, the political and economic conditions of major gold and silver producing countries throughout the world, and production costs in major metal producing regions of the world. The price of gold may also have a significant influence on the market price of our common stock and the value of our properties. Our decision to put a mine into production and to commit the funds necessary for that purpose must be made long before the first revenue from production would be received. A decrease in the prices of gold or silver may prevent our property from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold, zinc, lead, copper or silver prices.

 

The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses.

 

Exploration for and the production of minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Our operations are, and any future development or mining operations we may conduct will be, subject to all of the operating hazards and risks normally incident to exploring for and development of mineral properties, such as, but not limited to:

 

  economically insufficient mineralized material;
  fluctuation in production costs that make mining uneconomical;
  labor disputes;
  unanticipated variations in grade and other geologic problems;
  environmental hazards;
  water conditions;
  difficult surface or underground conditions;
  industrial accidents;
  metallurgic and other processing problems;
  mechanical and equipment performance problems;
  failure of pit walls or dams;
  unusual or unexpected rock formations;
  personal injury, fire, flooding, cave-ins and landslides; and
 

decrease in the value of mineralized material due to lower gold or silver prices.

 

8
 

 

Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures, potential revenues and production dates. We currently have limited insurance to guard against some of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write down of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable or result in additional expenses.

 

Difficult conditions in the global capital markets and the economy generally may materially and adversely affect our business and results of operations, and we do not expect these conditions to improve in the near future.

 

Our results of operations are materially affected by conditions in the domestic capital markets and the economy generally. The stress experienced by domestic capital markets that began in the second half of 2007 has continued and substantially increased into the present. Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectation for the economy and the markets going forward. These factors, combined with volatile oil and gas prices, declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a continued recession. In addition, the fixed-income markets are experiencing a period of extreme volatility that has negatively impacted market liquidity conditions.

 

Title to our properties may be challenged or defective.

 

Our planned future operations and exploration activities may require amendments to our currently approved permits from various governmental authorities. Our operations are and will continue to be governed by laws and regulations governing prospecting, mineral exploration, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, mining royalties and other matters. There can be no assurance that we will be able to acquire all required licenses, permits, amendments or property rights on reasonable terms in a timely manner, or at all, and that such terms will not be adversely changed, that required extensions will be granted or that the issuance of such licenses, permits or property rights will not be challenged by third parties.

 

We attempt to confirm the validity of our rights of title to, or contract rights with respect to, each mineral property in which we have a material interest. However, we cannot guarantee that title to our properties will not be challenged. Our mineral properties may be subject to prior unregistered agreements, interests or native land claims, and title may be affected by undetected defects. There may be valid challenges to the title of any of the claims comprising our mineral properties that, if successful, could impair possible development and/or operations with respect to such properties in the future. Challenges to permits or property rights, whether successful or unsuccessful; changes to the terms of permits or property rights or a failure to comply with the terms of any permits or property rights that have been obtained could have a material adverse effect on our business by delaying, preventing or making continued operations economically unfeasible.

 

We are subject to complex environmental and other regulatory risks, which could expose us to significant liability and delay, and potentially the suspension or termination of our development efforts.

 

Compliance with environmental quality requirements and reclamation laws imposed by federal, state, provincial and local governmental authorities may:

 

  require significant capital outlays;
  materially affect the economics of a given property;
  cause material changes or delays in our intended activities; and
 

expose us to lawsuits.

 

These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Applicable authorities may require us to prepare and present data pertaining to the effect or impact that any proposed exploration for or production of minerals may have upon the environment. The requirements imposed by any such authorities may be costly, time consuming, and delay operations. Future legislation and regulations designed to protect the environment, as well as future interpretations of existing laws and regulations, may require substantial increases in equipment and operating costs and delays, interruptions, or a termination of operations. We cannot accurately predict or estimate the impact of any such future laws or regulations, or future interpretations of existing laws and regulations, on our operations.

 

9
 

  

Historic mining activities have occurred on certain areas of our properties by unrelated parties prior to the general mining law of 1872, prior to the Federal Land Policy and Management Act of 1976, prior to the Resources Conservation & Recovery Act of October 21, 1978, and subsequent other Federal/State regulatory acts and statutes. If such historic activities have resulted in releases or threatened releases of regulated substances to the environment, potential for liability, however unlikely, may exist under federal or state remediation statutes. Such liability would include remediating any damage that we may have caused including costs for removing or remediating the release and damage to natural resources, including ground water, as well as the payment of fines and penalties. We are not aware of any such claims under these statutes at this time and cannot predict whether any such claims will be asserted in the future.

 

We may produce air emissions and pollutions that could fall under the jurisdiction of U.S. federal laws.

 

Under the U.S. Resource Conservation and Recovery Act, mining companies may incur costs for generating, transporting, treating, storing or disposing of hazardous waste, as well as for closure and post-closure maintenance once they have completed mining activities on a property. Our mining operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality laws. Permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the rules.

 

Legislation has been proposed that would significantly affect the mining industry.

 

Periodically, members of the U.S. Congress have introduced bills which would supplant or alter the provisions of the General Mining Law of 1872 which governs the unpatented claims that we control with respect to our U.S. properties. One such amendment has become law and has imposed a moratorium on the patenting of mining claims which reduced the security of title provided by unpatented claims such as those on our properties. If additional legislation is enacted, it could substantially increase the cost of holding unpatented mining claims by requiring payment of royalties and could significantly impair our ability to develop mineral estimates on unpatented mining claims. Such bills have proposed, among other things, to make permanent the patent moratorium, to impose a federal royalty on production from unpatented mining claims and to declare certain lands as unsuitable for mining. Although it is impossible to predict at this time what royalties may be imposed in the future, the imposition of such royalties could adversely affect the potential for development of such mining claims and the economics of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our business.

 

Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our mining properties.

 

Our operations, including ongoing exploration drilling programs, require permits from state and federal governments including permits for the use of water and for drilling wells for water. We may be unable to obtain these permits in a timely manner, on reasonable terms, on terms that provide us sufficient resources to develop our properties or at all. Even if we are able to obtain such permits, the time required by the permitting process can be significant. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for exploration of our properties will be adversely affected which may in turn adversely affect our results of operations, financial condition and cash flows.

 

We may face a shortage of water.

 

Water is essential in all phases of the exploration, development and operation of mineral properties. The nature of our operations requires water to be used in such processes as exploration, drilling, testing, dust suppression, milling and tailings disposal. The lack of available water and the cost of acquisition may make an otherwise viable project economically impossible to complete.

 

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Global climate change is an international concern and could impact our ability to conduct future operations.

 

Global climate change is an international issue and receives an enormous amount of publicity. We would expect that the imposition of international treaties or federal, state or local laws or regulations pertaining to mandatory reductions in energy consumption or emissions of greenhouse gasses could affect the feasibility of our mining projects and increase our operating costs.

 

Because access to the mineral property may be restricted by inclement weather or other hazards, we may be delayed in our development efforts.

 

We are subject to risks and hazards including environmental hazards, the existence of unusual or unexpected geological formations and the occurrence of cave-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. As a result, access to our mineral properties may be restricted during parts of the year. During the winter months, heavy snowfall can make it difficult to undertake work programs. Frequent inclement weather in the winter months can make development and mining activities difficult for short periods of time.

 

We may face a shortage of supplies, equipment and materials.

 

The mineral industry has experienced from time to time shortages of certain supplies, equipment and materials necessary in the exploration, evaluation, development and production of mineral deposits. The prices at which such supplies and materials are available have also greatly increased. Our planned operations could be subject to delays due to such shortages and further price escalations could increase our costs for such supplies, equipment and materials. Our experience and that of others in the industry is that suppliers are often unable to meet contractual obligations for supplies, equipment, materials and services and that alternate sources of supply do not exist.

 

The market for obtaining desirable properties, investment capital, and outside engineers and consultants is highly competitive.

 

Presently, we utilize outside consultants, and in large part rely on the personal efforts of our officers and director. Our success will depend, in part, upon the ability to attract and retain qualified outside engineers and other professionals to develop and operate our mineral properties in addition to obtaining investment capital to conduct our mining operations. We believe that we will be able to attract competent employees and consultants but no assurance can be given that we will be successful in this regard as competition for these professionals is highly competitive. If we are unable to engage and retain the necessary personnel, our business would be materially and adversely affected.

 

We depend upon a limited number of personnel and the loss of any of these individuals could adversely affect our business.

 

If any of our current executive employees were to die, become disabled or leave our company, we would be forced to identify and retain individuals to replace them. Mr. Michael Stanford is our CEO, President, Chairman and Sole Director and our critical employee at this time. There is no assurance that we can find suitable individuals to replace him or to add to our employee base if that becomes necessary. We are entirely dependent on Mr. Stanford as our critical personnel at this time. We have no life insurance on Mr. Stanford.

 

Our Chairman and CEO own 63.4% of the issued and outstanding Common Stock and thereby acting alone he has the ability to choose management or impact operations, which will limit your ability to influence the outcome of important transactions, including a change in control.

 

Our Chairman and CEO, Michael Stanford, owns 63.4% of the outstanding Common Stock and has voting power of 63.4% of our issued and outstanding Common Stock as of December 31, 2013. Consequently, Mr. Stanford has the ability to influence control of our operations and, acting alone, has the ability to influence or control substantially all matters submitted to stockholders for approval, including:

 

  Election of the Board of Directors;
  Removal of directors; and
  Amendment to the our certificate of incorporation or bylaws;

 

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Mr. Stanford thus has substantial influence over our management and affairs and other stockholders possess no practical ability to remove management or effect the operations of our business. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the Common Stock, and could deprive our stockholders of an opportunity to receive a premium for their Common Stock as part of a sale of our Company and might ultimately affect the market price of our Common Stock.

 

We have incurred substantial losses since our inception and may never be profitable.

 

We have incurred losses since inception resulting in an accumulated stockholders’ equity deficit of $523,982 as of December 31, 2013, and further losses have continued through the first quarter of 2014 and are anticipated in the development of our business. As a development stage enterprise, there exists substantial doubt regarding our ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from stockholders and directors and the private placement of common stock.

 

We currently have not entered into forward sales, commodity, derivatives or hedging arrangements with respect to our mineral production and as a result we are exposed to the impact of any significant decrease in mineral prices.

 

We expect to sell the minerals we produce at prevailing market prices. Currently, we have not entered into forward sales, commodity, derivative or hedging arrangements to establish a price in advance for the sale of future production although we may do so in the future. As a result, we may realize the benefit of any short-term increase in prices but we are not protected against decreases; and if prices decrease significantly, our expected future revenues may be materially and adversely affected.

 

Our ability to become and remain profitable over the long term will depend on our ability to identify, explore and develop our current and additional properties.

 

Gold, silver, and other mineral properties are wasting assets. They eventually become depleted or uneconomical to continue mining. Our ability to become and remain profitable over the long term depends on our ability to finalize the design, permit, development and profitable extraction and recovery of mineral resources beyond our current planned mine life. If our ability to expand the operations beyond their current planned mined lives does not occur, we may seek to acquire other precious and base metals properties beyond our current properties. The acquisition of precious and base metals properties and their exploration and development are subject to intense competition. Companies with greater financial resources, larger staff, more experience and more equipment for exploration and development may be in a better position to compete for such mineral properties. If we are unable to find, develop and economically mine new properties, we most likely will not be profitable on a long-term basis and the price of our common stock may suffer.

 

Because we have a very limited operating history, investors have little basis to evaluate our ability to operate.

 

Our activities to date have been focused on raising capital funds, exploring our properties and preparing those properties for production. Although some of our mine and concentrating facilities have previously operated, these operations were carried out under different ownership and, therefore, we face all of the risks commonly encountered by other businesses that lack an established operating history including the need for additional capital personnel and intense competition. There is no assurance that our business plan will be successful.

 

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The construction of our mines and our mills are subject to all of the risks inherent in construction, start-up and operations.

 

These risks include potential delays, cost overruns, shortages of material or labor, construction defects, breakdowns and injuries to persons and property. We expect to engage self-employed personnel, subcontractors and material suppliers in connection with the construction and development of our mine projects. While we anticipate taking all measures that we deem reasonable and prudent in connection with construction of the mines and the operation of the mills, there is no assurance that the risks described above will not cause delays or cost overruns in connection with such construction or operation. Any delays would postpone our anticipated receipt of revenue and adversely affect our operations which in turn may adversely affect the price of our stock.

 

We do not insure against all of the risks to which we may be subject in our operations.

 

While we currently maintain insurance against general commercial liability claims and the physical assets at our projects, we do not maintain insurance to cover all of the potential risks associated with our operations. We might be subject to liability for environmental, pollution or other hazards associated with mineral exploration and development which risks may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of premium costs or other reasons. We may also not be insured against interruptions to our operations. Losses from these or other events may cause us to incur significant costs which could materially and adversely affect our financial condition and our ability to fund activities on our property. A significant loss could force us to reduce or terminate our operations.

 

We may require significant additional capital to fund our business plan.

 

We will be required to expend significant funds to determine if proven and probable mineral reserves exist at some of our properties, to continue exploration, and if warranted, develop our existing properties and to identify and acquire additional properties to diversify our property portfolio. There can be no assurance that any of the development properties we now hold, or which we may acquire, will contain a commercial ore reserve, and therefore, there can be no assurance that we will ever generate a positive cash flow from the sale of production on such properties. In addition, once we decide to place a property into production, risks still exist that the amount and grade of the reserves may be significantly less than predicted in geological and geophysical reserve reports prepared for us by third party professionals. We have spent and will be required to continue to spend significant amounts of capital for drilling, geological and geochemical analysis, assaying and feasibility studies with regard to the results of our exploration. We may not benefit from these investments if we are unable to identify commercially exploitable mineralized material.

 

Our ability to obtain necessary funding for these purposes, in turn, depends upon a number of factors including the status of the national and worldwide economy and the prices of gold and other precious and base metals. Capital markets worldwide have been adversely affected by substantial losses by financial institutions in turn caused by investments in asset-backed securities. We may not be successful in obtaining the required financing, or if we can obtain such financing, such financing may not be on terms that are favorable to us. Failure to obtain such additional financing could result in delay or indefinite postponement of further mining operations or exploration and development and the possible partial or total loss of our potential interest in our properties.

 

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

 

Our management has determined that as of December 31, 2013, we did not maintain effective internal controls over financial reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework as a result of identified material weaknesses in our internal control over financial reporting related to the omission of (i) receipt of funds for purchases of our common stock in the first, second and third quarters of 2013, (ii) an issuance of 230,426 shares of our common stock in September 2013, and (iii) the issuance of 5,360,000 shares of our common stock in August 2013. Further, a lack of controls over the accounting for surety bond costs resulted in the reclassification of surety bond costs from an expense to mineral rights on our balance sheet. These errors will require us to restate our consolidated financial statements for the three months ended March 31, 2013, the six months ended June 30, 2013 and the nine months ended September 30, 2013 to correct these errors. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. For a detailed description of these material weaknesses and our remediation efforts and plans, see “Part II — Item 9A) — Controls and Procedures.” If the result of our remediation of the identified material weaknesses is not successful, or if additional material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.

 

Our operating costs could be adversely affected by inflationary pressures especially to labor and fuel costs.

 

The global economy is currently in a period of high commodity prices and, as a result, the mining industry is attempting to increase production. This has caused significant upward price pressures in the operating costs of mining companies especially in the area of skilled labor. The skilled labor needed by the mining industry is in tight supply and its cost is increasing. Many of our competitors have lower costs and their mines are located in better locations that may give them a competitive advantage in employee hiring and retention.

 

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The cost of fuel to run machinery and generate electricity is closely correlated to the price of oil and energy. Over the past two years, the price of oil has risen significantly and has increased the operating cost of mines dependent on fuel to run their business. Continued upward price pressures in our operating costs may cause us to generate significantly less operating cash flows than expected which would have an adverse impact to our business.

 

We will continue to incur losses for the foreseeable future.

 

Prior to completion of the development and pre-production stage, we anticipate that we will incur increased operating expenses without realizing any significant revenues. We expect to incur continued and significant losses until such time that we achieve commercial production from our mining operations on our mineral claims. As a result of continuing losses, we may exhaust all of our resources and be unable to complete development of our planned mining operations. Our accumulated deficit will continue to increase as we continue to incur losses. We may not be able to generate profits or continue operations if we are unable to generate significant revenues from future mining of the mineral claims and our business will most likely fail.

 

Risks Related To Our Common Stock

 

There currently is only a minimal public market for our common stock. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for investors to sell shares.

 

There currently is only a minimal public market for shares of our common stock and an active market may never develop. Our common stock is quoted on the OTCQB tier of the OTC Markets Group Inc. under the symbol “JMSN”. We may not ever be able to satisfy the listing requirements for our common stock to be listed on a national exchange which are often a more widely-traded and liquid market. Some, but not all, of the factors that may delay or prevent the listing of our common stock on a more widely-traded and liquid market includes the following:

 

  our stockholders’ equity may be insufficient;
  the market value of our outstanding securities may be too low;
  our net income from operations may be too low;
  our common stock may not be sufficiently widely held;
  our inability to secure market makers for our common stock; and
  our inability to meet the rules and requirements mandated by the several exchanges and markets.

 

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting which would harm our business and result in a restatement of our financial statements.

 

Our management has determined that for the years ended December 31, 2013 and 2012, we did not maintain effective internal controls over financial reporting as a result of identified material weaknesses in our internal control over financial reporting described later in this report. There are no assurances that these material weaknesses will not result in errors in our financial statements in future periods. If we are required to restate our financial statements, we will incur additional costs and could be subject to litigation.

 

We cannot assure investors that the common stock will become liquid or that it will be listed on a national securities exchange.

 

Until our common stock is listed on a national securities exchange such as the New York Stock Exchange or the Nasdaq Stock Market, we expect our common stock to remain eligible for quotation on the OTCQB or other over-the-counter quotation systems. In such venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of our common stock. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on brokers or dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter brokers or dealers from recommending or selling our common stock which may further affect the liquidity of the common stock. This would also make it more difficult for us to raise capital.

 

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The application of the “penny stock” rules could adversely affect the market price of our common stock and increase transaction costs to sell those such stock.

 

The SEC has adopted rule 3a51-1 that establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires that a broker or dealer needs to:

 

  approve a person’s account for transactions in penny stocks, and
  receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

 

  obtain financial information and investment experience objectives of the person and
  make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market which, in highlight form:

 

  sets forth the basis on which the broker or dealer made the suitability determination and
  declares that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

 

The market price for our common stock is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits that could lead to wide fluctuations in our stock price. Investors may be unable to sell our common stock at or above the original purchase price, which may result in substantial losses.

 

The market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our stock price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our stock price is attributable to a number of factors. First, as noted above, our common stock is sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our stock could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date and uncertainty of future market acceptance for our potential products and services. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common stock regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time including as to whether our common stock will sustain their current market prices or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.

 

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We do not pay dividends on our common stock.

 

We have not paid any dividends on our common stock and do not anticipate paying dividends in the foreseeable future. We plan to retain earnings, if any, to finance the development and expansion of our business.

 

Rule 144 related risk.

 

The SEC adopted amendments to Rule 144 which became effective on February 15, 2008 that apply to securities acquired both before and after that date. Under these amendments, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that: (i) such person is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale and (iii) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale.

 

Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding a sale, would be subject to additional restrictions by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

 

  1% of the total number of securities of the same class then outstanding; or
 

the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;

 

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.

 

Restrictions on the reliance of Rule 144 by shell companies or former shell companies.

 

Historically, the SEC staff has taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check companies like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition, however, 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 14 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 Current Reports on Form 8-K; and
 

at least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

Not applicable to a smaller reporting company.

 

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ITEM 2. PROPERTIES

 

Administrative Offices

 

Our primary business office is located at 2300 West Sahara Ave., Suite 800, Las Vegas, NV 89102. Our phone number is 702-933-0808. Our residential office is leased from an entity controlled by the majority shareholder.

 

Star Mountain/Chopar Mine (Star Mining District)

 

On April 23, 2012, the Company paid and capitalized $22,113 to acquire 117 unpatented lode mining claims from the Bureau of Land Management related to the Star Mountain project near Milford, Utah. In addition, on May 1, 2012, the Company entered into a mineral lease agreement with the State of Utah for approximately 1,400 acres that are contiguous with the Star Mountain lode mining claims. The initial costs incurred and capitalized in connection with obtaining the lease was $1,599. Collectively, the Star Mountain claims and lease encompass a total area of approximately 3,740 acres.

 

Star Mountain Mining District Chopar Claim Map: showing claim corners and boundaries.

  

 

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Mineral Lease Tract Boundaries T28S, R12W, SLB&M, Sec. 2 [All], and T29S, R12W, SLB&M, Sec. 2 [All].

  

 

The Star Mountain lease has an initial term of 10 years, subject to certain extension provisions. The future minimum annual rental commitment is $1.00 per acre (or $1,408). The lease also provides for a minimum annual royalty payment of $4,224 beginning in the 11th year of the lease (if extended), and requires contingent production royalty payments based on 4% to 8% of the gross value (as defined in the lease) of non-fissionable and fissionable metalifferous minerals, respectively, extracted from the leased area.

 

The Company’s lode mining claim mineral rights on the Chopar Mine properties consist of lode mining claims on United States Forest Service land. The mineral rights were acquired by staking lode mining claims as per the Mining Law of 1872. Each lode mining claim in respect to the Chopar Mine project consists of Approx. 20 acres. All claims are subject to an annual maintenance fee of $140.00/claim due on or before September 1st each year. Mining claims are subject to the same risk of defective title that is common to all real property interests. Additionally, mining claims are self-initiated and self-maintained and therefore, possess some unique vulnerabilities not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims solely from an examination of public real estate records and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location and maintenance of a claim. Furthermore, as these interests are derived from multiple jurisdictions, the risk of a defective claim or other problems with ownership and development of the claim (including but not limited to the right of eminent domain) is compounded further. If the validity of a patented mining claim or mineral interest is challenged by an applicable governmental body on the grounds that mineralization has not been demonstrated, the claimant has the burden of proving the present economic feasibility of mining minerals located thereon. Such a challenge might be raised at any stage of development or at the commencement of production, or simply when the government seeks to include the land in an area to be dedicated to another use.

 

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Star Mountain/Chopar Mine (Star Mining District) General Geology:

 

Stratigraphy. Rocks of the Star Range which encompass the Star Mining District include sedimentary, intrusive and extrusive igneous, metamorphosed sedimentary and igneous types. The intrusive igneous rocks are mostly quartz monzonite to granodiorite. A number of lamprophyre and aplite dikes cut the sedimentary and intrusives. Volcanic rocks are rhyolite, andesite, and basalt. Sedimentary and volcanic rocks have been contacted and hydrothermally metamorphosed. Contact metamorphic mineralization is also evident along the borders of the intrusives.

 

Geology General Statement. The area which encompasses the Star Mining District is located in a thrusted and fault-cut range about 13 km (8 miles) ESE from Milford, Utah. It hosts several distinct features that may be related to Tertiary-age plutons noted in the area. Field examination indicates Porphyry-epithermal gold-silver-copper system intruded into older Paleozoic and Mesozoic sedimentary units.

 

General Statement of Geophysical/Geochemical work completed. Recent field work completed on the property to date included ground magnetometer surveys, cross sectional modeling and deep penetrating 3D survey, geologic reconnaissance mapping, surface sampling and assaying, Reverse Circulation, Core Drilling, and assaying of selected targets, combined geophysical analysis, bulk sampling and bench scale testing for scale of economy for the beneficiation of Copper (Cu), Silver (Ag) and Gold (Au).

 

General Statement of Exploration Status. The company has been managing an ongoing diamond core drilling program within the Wild Bill area (approximately 900 acre area) at the northern most end of the Star Mountain, Chopar Mine. The company completed a reverse circulation (RC) drilling program of 15 drill holes to a depth of 500 feet each (7,500 feet drilled), then commenced diamond core drilling in August 2013.

 

Further Exploration. The diamond core drilling and analysis of the core and RC cuttings continued through the end of 2013. The company budgeted $1,200,000 for exploration expenses, and actually expensed $1,021,597 for exploration as of the year ended of December 31, 2013.

 

General Statement regarding Exploration and Mining Permits. The State of Utah, Division of Natural resources, Division of Oil, Gas, and Mining, Administrative Services, Minerals Program (the “Division”) which regulates all mining activities according to the Mined Land Reclamation Act, Title 40-8, Utah Code Annotated 1953, as amended in 1975, and the General Rules and Rules of Practice and Procedures, R647-1 through R647-5, required a Notice of Intent to conduct Exploration activities, and to place a Surety Reclamation Bond for exploration of $8,900/first acre and $4,900 each additional acre. Regarding drilling dry, and in addition to the above exploration costs the Division also requires a one-time mob/demob fee of $1,000 and $210 per each exploration hole drilled. Regarding drilling wet up to 7” diameter, and in addition to the above costs the Division requires $7,000 mod/demob charge for holes 800 feet or less plus $4.25/foot plus $210 for cap, $10,000 mob/demob charge for holes between 801 and 1,600 feet plus $210 for cap, $16,000 mob/demob for holes greater than 1,600 feet, and $5.44/foot plus $210 for cap. The Notices are amendable in time and scope and additional bonding may be assessed according to current or future plans, rules, and regulations.

 

The Chopar Mine property currently does not own a mine plant or mill or mining equipment, and is considered an “advanced stage” exploration project, and has no proven or probable reserves as defined by SEC Industry Guide 7.

 

Spor Mountain/Dugway Minerals (Spor Mountain Mining District)

 

On May 1, 2012, the Company entered into a mineral lease agreement with the State of Utah for approximately 1,920 acres related to the Dugway Minerals project near Delta, Utah (the “Dugway Minerals Lease”). The initial costs incurred and capitalized in connection with obtaining the lease were $2,157. The lease has an initial term of 10 years, subject to certain extension provisions. The future minimum annual rental commitment is $1.00 per acre (or $1,918). The lease also provides for a minimum annual royalty payment of $5,754 beginning in the 11th year of the lease, and requires contingent production royalty payments based on 4% to 8% of the gross value (as defined in the lease) of non-fissionable and fissionable metalifferous minerals extracted from the leased area.

 

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Mineral Lease Tract Boundaries T11S, R10W, SLB&M, Sec. 32 [All], T12S, R9W, SLB&M [All], T12S, R10W, SLB&M, Sec. 2 [All].

 

 

 

Spor Mountain/Dugway Minerals General Geology:

 

Stratigraphy General Statement. Paleozoic rocks, probably deformed during the Sevier orogeny, consist of Lower Cambrian Prospect Mountain Quartzite thrust over Middle Cambrian limestone. These rocks are unconformably overlain by Eocene andesite and latite. Subsidence of a newly recognized cauldron (approximately 5 km in diameter), between 39.4 and 36.2 million years ago, resulted in the formation of megabreccia. Eruption of a lithic-crystal ash-flow tuff may have accompanied subsidence and an inferred vent may mark the structural wall of the cauldron. Intrusion of several granodiorite stocks and plugs, about 36 million years ago, caused widespread alteration and mineralization. Later intrusions formed pebble dikes and granite plugs.

 

General Statement of Geophysical/Geochemical work completed. A joint Utah Geological and Mineral Survey (UGMS)-U. S. Geological Survey (USGS) investigation of the mineral potential began in the area covered by the Dugway Minerals Lease following the release of a report announcing the discovery of pyritized rocks with economic potential. Mapping in the area covered by this lease, in conjunction with the USGS Delta CUSMAP project, focused on the geologic setting of several little-explored occurrences of silver, lead, zinc, and copper mineralization. The company has performed grass roots prospecting, surface rock sampling, bulk sampling, and analysis of combined historical geophysical/geochemical data in the area covered by the Dugway Minerals Lease.

 

General Statement of Exploration Status. Exploration was limited to research and analysis of collected data, and geologic mapping through end of December 31, 2013.

 

Further Exploration. Mineralized rock in the area covered by the Dugway Minerals Lease consists of highly oxidized veins and stockwork zones containing potentially economic concentrations of silver, lead, copper, and bismuth as reported by the Utah Geological Survey. The company plans on performing further geophysical/geochemical work through a third party engineering firm on the properties beginning in the second quarter of 2014. Scope of work and associated costs will be based upon proposals and bids from several firms. The final budget and timeline are expected to be developed in 2014.

 

20
 

  

General Statement regarding Exploration and Mining Permits. The Dugway Minerals project currently does not have a mine plant, mill or mining equipment, and is considered an “early stage” exploration project, and has no proven or probable reserves as defined by SEC Industry Guide 7.

 

Ogden Bay Minerals

 

The Company’s plans for the Ogden Bay Minerals project consists of developing a mineral exploration and possible excavation project on federal protected wetlands, canals and river systems across 25 square miles of land area known as North Delta located in West Ogden, Utah. Excavation and harvesting rights are maintained through easement rights obtained from Weber County and a special use river/stream alteration permit as part of a State of Utah/Weber County flood mitigation project. We intend to continue to explore for silica, zircon, silver and gold.

 

Ogden Bay Minerals Exploration Base Map

 

 

 

Stratigraphy General Statement. The Ogden Bay site lies on an extensive lowland plain formed during the Quaternary Period by depositions of ancient Lake Bonneville and Great Salt Lake sediments, in combination with delta deposits, alluvial fans from the Weber River, and other siliceous mineral sands deposited from deep positive flow warm springs. Sand and soils consist of warm springs fine sandy loam, Lakeshore fine sand loam, Leland silt loam, and silica sand.

 

General Statement of Geophysical/Geochemical work completed. In 2010, the company completed augur soil sampling and assaying of mineralized zones of interest, analyzed combined historical geophysical/geochemical data located in the public realm for the Ogden Bay site. At year-end 2012 we had mined and stockpiled approximately 15,000 short tons of mineral sand for scale of economy and testing for the recovery of silica sand and other minerals of interest.

 

Further Exploration. Exploration for the Ogden Bay site is currently on hold pending results of bulk sampling for the mineral stockpiled on this site, as well as prospective future federal funding grants that may subsidize the project. The Company expects to resume exploration activities at the Ogden Bay site during 2014 and begin processing the heavier mineral fraction of excavated sands.

 

21
 

 

General Statement regarding Exploration and Mining Permits. Excavation rights are maintained through easement rights obtained from Weber County and a special use river/stream alteration permit as part of a State of Utah/Weber County flood mitigation project.

 

The Ogden Bay Minerals project currently does not have a mine plant, mill or mining equipment, and is considered an “early stage” exploration project, and has no proven or probable reserves as defined by SEC Industry Guide 7.

 

ITEM 3. LEGAL PROCEEDINGS

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that may materially affect us.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. At this time, we have no safety violations, orders, citations, related assessments or legal actions, or mining-related fatalities to report.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES

 

Market Information

 

Our common stock is quoted on the OTCQB under the symbol “JMSN”. Such trading of our common stock is limited and sporadic. Prior to June 29, 2012, our symbol was “MYOC.OB”.

 

The following table reflects the high and low bid information for our common stock for each fiscal quarter during the fiscal years ended December 31, 2013 and 2012. The bid information was obtained from the OTCQB and reflects inter-dealer prices without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

 

Quarter Ended  Bid High   Bid Low 
Fiscal Year 2013        
December 31, 2013  $.44   $.42 
September 30, 2013  $1.23   $1.23 
June 30, 2013  $.85   $.75 
March 31, 2013  $1.20   $1.20 
Fiscal year 2012          
December 31, 2012  $1.75   $1.75 
September 30, 2012  $0.00   $0.00 
June 30, 2012  $0.00   $0.00 
March 31, 2012  $0.00   $0.00 

 

We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

 

22
 

  

Recent Sales of Unregistered Securities

 

The following is related to issuance of our shares of common stock: 

 

On August 14, 2013, the Company issued 5,360,000 shares to an existing investor and relatives for consideration of $750,000.

 

On September 20, 2013, the Company issued 230,426 shares for services valued at $274,207.

 

On December 11, 2013, the Company issued the following shares:

 

  270,000 shares to a related party for payment of convertible debt for value of $135,000
  50,000 shares to a vendor for payment of accounts payable for value of $25,000
  72,332 shares to a related party for payment of accounts payable for the value of $36,166
  200,000 shares to a related party and 200,000 shares to a mining services company for exploration and development cost totaling $130,000.
  100,000 shares for professional services for the value of $65,000.
  750,000 shares to an officer of the company in settlement of claim for pre-merger shares of Bolcán Mining Corporation.

 

On February 27, 2014, the Company issued 650,000 shares to a professional services company controlled by an officer of the company for value of $455,000.

 

These shares of our common stock were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). In addition, the recipients of our shares were sophisticated investors and had access to information normally provided in a prospectus regarding us. In addition, the recipients of these shares had the necessary investment intent as required by Section 4(a)(2) since they agreed to allow us to include a legend on the shares stating that such shares are restricted pursuant to Rule 144 of the Securities Act. These restrictions ensure that these shares would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act for the above transactions.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable to a smaller reporting company.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following management’s discussion and analysis should be read in conjunction with our and Bolcán’s historical combined financial statements and the related notes. The management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “project,” “expect” and the like and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We disclaim any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. Please see “Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

 

As the result of the Merger and the change in our business and operations to engaging in exploration and production activities in the precious metal industry, a discussion of our past financial results is not pertinent and our historical financial results and those of Bolcán Mining, the accounting acquirer prior to the Merger, are considered the historical financial results.

 

23
 

  

The following discussion highlights our plan of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. The following discussion and analysis are based on consolidated financial statements, which we have prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The discussion and analysis should be read together with such financial statements and the related notes thereto.

 

The following discussion and analysis provides information which management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The discussion should be read in conjunction with our audited and unaudited financial statements and related notes and the other financial information included elsewhere in this Annual Report.

 

OVERVIEW AND OUTLOOK

 

Our current active projects include:

 

Star Mountain/Chopar Mine (Star Mining District) - The Star Mountain/Chopar Mine project consists of 117 lode-mining claims and four metalliferous mineral lease sections located in the Star Mountain range, Star Mining District, in Beaver County, Utah, approximately five miles west of Milford, Utah. The Star Mountain project involves total area of 3,740 acres. We intend to continue to explore for gold, silver, copper, lead and zinc.

 

Star Mountain/Chopar Mine Location Map

 

 

 

24
 

 

Spor Mountain/Dugway Minerals (Spor Mountain Mining District) - The Spor Mountain/Dugway Minerals project consists of three metalliferous mineral lease sections located in Juab County, Utah, approximately six miles southwest of the Dugway Military Proving Grounds, and 50 miles northwest of Delta, Utah. The Dugway Minerals project involves total area of 1,920 acres. Project activities at Dugway Minerals in 2012 were limited to prospecting and exploration. Assuming economic feasibility, we anticipate startup of production operations in 2014. We intend to continue to explore for silver, gold, bismuth and beryllium.

 

Spor Mountain/Dugway Minerals Location Map

 

 

 

Ogden Bay Minerals - Ogden Bay Minerals is a developing mineral excavation project on federal protected wetlands, canals and river systems across 25 square miles of land area known as North Delta located in West Ogden, Utah. Our excavation and harvesting rights are maintained through easement rights obtained from Weber County and a special use river/stream alteration permit as part of a State of Utah/Weber County flood mitigation project. We intend to continue to explore for silica, zircon, silver and gold.

 

25
 

  

Ogden Bay Minerals Location Map

 

 

 

Plan of Operations

 

Since the Merger, we have operated as a minerals exploration company focused on acquiring and consolidating mining claims and mineral leases with potential production and future growth through exploration discoveries. Our current growth strategy is focused on the initiation and expansion of operations through the exploration and development of our current mining claims and mineral properties into producing projects.

 

Results of our minerals exploration activities for the fiscal year ended December 31, 2013 included the following:

 

Core drilling, geophysical, and geochemical analysis mineralized targets at Star Mountain Chopar Mine including:

 

  Skarn deposits – The Chopar claims clearly indicate potential for several metallic deposit types. Much of the eastern edge of the property is host to historically mined ore, and numerous shafts and adits. Modern exploration using standard geophysical techniques identifies numerous drillable targets. A field examination of several of the larger skarn mines and adits show vein and mantos style mineralization, though there are probably more forms of the mineralization in the subsurface. Chimney type deposits also occur throughout the area.
     
  Porphyry Targets – Examination of our magnetometer survey and geophysical modeling provides information of this type of target including depth. Additional geophysical techniques including IP (induced polarization), SP (spontaneous potential) and gravity provide a series of targets based on sulphide and alteration levels. A consideration for a deep penetrating 3D survey should be examined as well. At this stage, however, the mag survey and a proper modeling of values of Au, Ag, Cu, Pb and Zn in the tailings piles provide a zoning pattern that better narrow down where the best potential for a mineralized porphyry could exist. This work is ongoing.
     
  Structural Related - The magnetometer imaging of the property shows a strong lineament running NNW-SSE. This lineament is probably a structural contact. There is one known adit near this structural break; however, it is also spatially related to a low magnetometer image. This structural break could be a good target as it may have been a predominant conduit during emplacement of the intrusives. This zone will be field examined first, and then depending of data (soils/streams/alteration analysis for example), areas for follow up geophysical surveys will be targeted.
     
  Carlin-Like Target - Examination of a tailings area on the eastern portion of the claimed area provided hints of another potential target type. Several pieces of decalcificated carbonate material were located, providing clues of a potential of a Carlin-like potential in the area. This area is being examined and sampled to determine if there is potential for this type of deposit.

 

26
 

  

  Commenced drilling program (“Reverse Circulation”) and prospect pit mining on the Star Mountain Chopar mining claims of selected targets during the fourth quarter of 2012. At year-end 2013, we had completed 30 exploration drill holes to a depth of 2,000’ (two thousand feet) each completing a total of 60,000’ (sixty thousand feet). Third party analysis results are pending. Up to one hundred fifty (150) more exploratory drilling holes are planned for 2014.
   
  Discovered approximately thirty thousand (30,000) short tons of mine dump hard rock material at the Star Mountain, Chopar Mine property that is currently being marketed to local/regional mills for gold, silver, zinc, lead, and copper recovery.
   
  Commenced small mining start-up preparation activities at the Star Mountain, Chopar Mine for anticipated feedstock supply run of mine rock to local/regional mills, as well as providing mining and metallurgical services beginning second quarter 2014.

 

Immediate plans for operations in 2014 are as follows:

 

 

Convert current natural resource sites into producing assets.

   
 

Identify under-explored mines on our properties and consider additional under-explored mines for acquisition in the mining districts we are currently operating that are either built, permitted, or have been idled.

   
 

Continue current exploration and drilling programs and invest resources necessary to discover new ore bodies and open additional mines.

 

Results of Operations for fiscal years ended December 31, 2013 and December 31, 2012.

 

   Years Ended 
   Dec 31, 2013   Dec 31, 2012 
Revenue  $-   $- 
Cost of revenue   -    - 
Gross profit   -    - 
Operating expenses          
Executive compensation   883,713    180,000 
Exploration and development costs   1,021,597    151,848 
Exploration and development costs - related party   -    70,272 
General and administrative   1,056,534    224,063 
General and administrative - related party   10,783    - 
Total Operating Expenses   2,972,926    626,183 
           
Net Loss from Operations   (2,972,926)   (626,183)
           
Other Expenses          
Loss on extinguishment of debt   (118,850)   - 
Interest expense, related party   (15,957)   - 
Interest expense   (172,896)   (22,088)
Gain on disposition of asset   960      
Net Loss  $(3,279,669)  $(648,271)

 

27
 

  

Revenue. No revenue was generated for the fiscal years ended December 31, 2013 and 2012.

 

Cost of revenue. The cost of revenue for fiscal years ended December 31, 2013 and 2012 was zero.

 

Operating Expenses. Operating expenses for the fiscal year ended December 31, 2013 totaled $2,972,926 as compared to operating expenses totaling $626,183 for the fiscal year ended December 31, 2012. The increase is due to increased costs for legal and professional fees related to public filings and compliance and increased exploration activity.

 

Operating Loss. Our operating loss during the fiscal year ended December 31, 2013 totaled $2,972,926 as compared to an operating loss of $626,183 for the fiscal year ended December 31, 2012. The increased operating loss is due to increased costs for legal and professional fees relative to the merger and increased exploration costs.

 

Interest Expense. Interest expense for the fiscal year ended December 31, 2013 totaled $188,853 as compared to interest expense of $22,088 for the fiscal year ended December 31, 2012.

 

Net Loss. Our net loss for the fiscal year ended December 31, 2013 totaled $3,279,669 as compared to a net loss of $648,271 for the fiscal year ended December 31, 2012.

 

Liquidity and Capital Resources

 

Liquidity is a measure of a company’s ability to meet potential cash requirements. From inception, our capital requirements have been met primarily through private debt and equity placements. As such, we are reliant upon these sources to fund operations

 

We had $79 and $0 of cash as of December 31, 2013 and December 31, 2012, respectively.

 

Cash Flow Analysis

 

Net cash used in operating activities is primarily attributable to amounts paid for exploration costs (which were expensed as incurred), and legal and professional fees. We do not expect to have positive cash flow from operations until 2014 and give no assurance that such will occur.

 

Cash used in investing activities is attributable to purchase of transportation and laboratory equipment and mineral rights.

 

Net cash provided by financing activities relates primarily to the issuance of convertible debt and sales of restricted common shares.

 

During the year ended December 31, 2013, a total of 7,492,758 shares were issued. At the end of December 31, 2013, the total shares issued and outstanding were 38,792,758.

 

As noted above, we believe that we do not have sufficient liquidity to satisfy our cash requirements for the next twelve months which will require us to raise additional equity and /or debt capital in order to fully implement our business strategy. We intend to develop a significant capital investment program to scale our production capacity which will require us to raise additional debt or equity capital. Any issuance of equity securities will result in dilution to our stockholders. Issuance of debt or convertible securities could also involve substantial dilution to our stockholders or operational and financial covenants that might inhibit our ability to follow our business plan. Additional financing may not be available in amounts or on terms acceptable to us or at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned exploration activities which could harm our financial conditions and operating results.

 

28
 

  

Related Party Transactions

 

At December 31, 2013 and December 31, 2012, we had outstanding net advances and loans from related parties of $91,772 and $280,335, respectively.

 

Off-Balance Sheet Arrangements

 

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

 

Critical Accounting Policies and Estimates

 

Mineral rights. The costs of acquiring mineral rights are considered tangible assets. Significant acquisition payments are capitalized. If a mineable ore body or other material is discovered, such costs are amortized when production begins using the units-of-production method. If no mineable ore body is discovered or such rights are otherwise determined to have diminished value, such costs are expensed in the period in which the determination is made.

 

General, administrative and holding costs to maintain unproven claims are expensed as incurred. Exploration costs are charged to expense as incurred. Costs to identify new mineral resources, to evaluate potential resources and to convert mineral resources into proven and probable reserves are considered exploration costs.

 

Income Taxes. The Company applies the provisions of Financial Accounting Standards Board Accounting Standard Codification (“ASC”) 740 Income Taxes. The Standard requires an asset and liability approach for financial accounting and reporting for income taxes and the recognition of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Due to a loss from inception, the Company has no tax liability. At this time the Company has no deferred taxes arising from temporary differences between income for financial reporting and income tax purposes.

 

The Company classifies tax-related penalties and net interest on income taxes as income tax expense. As of December 31, 2013 and 2012, no income tax expense had been incurred or accrued.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has experienced a loss during its initial period of operations and does not currently have sufficient resources to accomplish its objectives during the next twelve months. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should it be unable to continue in operation. Our present plans, the realization of which cannot be assured, to overcome these difficulties include, but are not limited to, the continuing effort to raise capital in public and private markets.

 

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable for a smaller reporting company.

 

29
 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 to F-12 of this Form 10-K.

 

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

    PAGES
Reports of Independent Registered Public Accounting Firms   F-1 & F-2
Consolidated balance sheets   F-3
Consolidated statements of operations   F-4
Consolidated statement of shareholders’ deficit   F-5
Consolidated statements of cash flows   F-6
Notes to the consolidated financial statements   F-7

 

30
 

  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Jameson Stanford Resources Corporation

(An Exploration Stage Company)

 

We have audited the accompanying consolidated balance sheet of Jameson Stanford Resources Corporation (an exploration stage company) and subsidiary as of December 31, 2013, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended and for the period from inception of the exploration stage on October 12, 2010 through December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 about whether the consolidated 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 consolidated financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jameson Stanford Resources Corporation and subsidiary as of December 31, 2013, and the results of their operations and their cash flows for the year then ended and for the period from inception of the exploration stage on October 12, 2010 through December 31, 2013 in conformity with U.S. generally accepted accounting principles.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

  

/s/ HJ & Associates, LLC  
HJ & Associates, LLC  
Salt Lake City, Utah  
April 15, 2014  

 

F-1
 

 

Report of Independent Registered Public Accounting Firm

 

The Board of Directors

Jameson Stanford Resources Corporation

 

We have audited the accompanying consolidated balance sheet of Jameson Stanford Resources Corporation (An Exploration Stage Company) as of December 31, 2012 and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2012 and for the period from inception [October 12, 2010] through December 31, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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, 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Jameson Stanford Resources Corporation as of December 31, 2012 and the consolidated results of operations and cash flows for the year ended December 31, 2012 and for the period from inception [October 12, 2010] through December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred significant losses since inception. The Company has not established operations with consistent revenue streams and has a working capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Mantyla McReynolds, LLC  
Mantyla McReynolds, LLC  
Salt Lake City, Utah  
April 16, 2013  

  

F-2
 

 

 

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

 

   Dec 31, 2013   Dec 31, 2012 
         
ASSETS          
           
CURRENT ASSETS          
Cash  $79   $- 
Prepaid expenses   31,620    - 
Deposits   17,975    - 
           
Total current assets   49,674    - 
           
Property and equipment, net   95,616    40,367 
Mineral rights   25,869    25,869 
Surety Bond   24,325    - 
           
TOTAL ASSETS  $195,484   $66,236 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $420,470   $330,298 
Accrued compensation   4,000    180,000 
Convertible debt, related party   -    185,000 
Contract payable   24,366    - 
Stipulated agreement, related party   91,772    - 
Loans payable   -    45,342 
Advances from related party shareholders, including accrued interest   -    49,993 
           
Total current liabilities   540,608    790,633 
           
Convertible debt, net of discount of $812,142   178,858    - 
           
Total Liabilities   719,466    790,633 
           
STOCKHOLDERS’ DEFICIT          
Common stock, authorized 350,000,000 shares, $.0001 par value, 38,792,758 and 31,300,000 shares issued and outstanding, respectively  $38,792   $31,300 
Additional Paid in Capital (Deficit in par value)   $3,419,424    (53,168)
Accumulated deficit during exploration stage   (3,982,198)   (702,529)
           
Total Stockholders’ Deficit   (523,982)   (724,397)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $195,484   $66,236 

 

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

 

F-3
 

 

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

 

                Period from  
                Inception  
    For Years Ended     (Oct 12, 2010) to  
    Dec 31, 2013     Dec 31, 2012     Dec 31, 2013  
                   
OPERATING REVENUES                        
Revenue   $ -     $ -     $ 89,994  
                         
OPERATING EXPENSES                        
 Cost of Revenue     -       -       66,227  
                         
Total Direct Cost of Services     -       -       66,227  
                         
Gross Profit     -       -       23,767  
                         
Operating Expenses                        
Executive Compensation     883,713       180,000       1,063,713  
Exploration and development costs     1,021,597       151,848       1,176,578  
Exploration and development costs - related party     -       70,272       109,922  
General and administrative     1,056,833       224,063       1,288,500  
General and administrative - related party     10,783       -       38,283  
                         
Total Operating Expenses     2,972,926       626,183       3,676,996  
                         
Net Loss from Operations     (2,972,926 )     (626,183 )     (3,653,229 )
                         
OTHER INCOME AND (EXPENSE)                        
Loss on extinguishment of debt     (118,850 )     -       (118,850 )
Interest expense, related party     (15,957 )     -       (15,957 )
Interest expense     (172,896 )     (22,088 )     (195,122 )
Gain on disposition of asset     960       -       960  
                         
Total Other Income (Expense)     (306,743 )     (22,088 )     (328,969 )
                         
NET LOSS     (3,279,669 )     (648,271 )     (3,982,198 )
                         
Basic and Diluted Loss Per Share   $ (0.10 )   $ (0.02 )        
                         
Weighted Average Number of Common Shares Outstanding     33,690,055       26,084,426          

  

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

 

F-4
 

 

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the period from inception (Oct 12, 2010) thorugh December 31, 2013

 

               Deficit     
              Accumulated   Total 
   Common Shares   Additional   During Exploration   Stockholders’ 
   Shares   Amount   Paid in Capital   Stage   Deficit 
                     
Balance at inception   25,000,000   $25,000   $(25,000)   $    $ 
                          
Net loss from inception (October 12, 2010 ) to December 31, 2010                  -    - 
                          
Balance at December 31, 2010   25,000,000    25,000    (25,000)   -      
                          
Capital contribution             100         100 
                          
Net (Loss)                  (54,258)   (54,258)
                          
Balance at December 31, 2011   25,000,000    25,000    (24,900)   (54,258)   (54,158)
                          
Imputed interest on convertible debt-related party             17,614         17,614 
                          
Recapitalization with merger   6,300,000    6,300    (45,882)        (39,582)
                          
Net (Loss)                  (648,271)   (648,271)
                          
Balance at December 31, 2012   31,300,000    31,300    (53,168)   (702,529)   (724,397)
                          
Imputed interest on convertible debt-related party             15,957         15,957 
                          
Shares contributed by shareholder for debt extinguishment             110,000         110,000 
                          
Shares issued for liability conversion, issued at $.65 per share on December 11, 2013.   392,332    392    254,623         255,015 
                          
Shares issued for services, issued at $.65 to $1.20 per share from April 2, 2013 to December 11, 2013.   990,426    990    910,484         911,474 
                          
Shares issued in settlement of pre-merger claim, issued at $.65 per share on December 11, 2013.   750,000    750    486,750         487,500 
                          
Shares sold to existing shareholder, issued at $. 14 per share on August 14, 2013.   5,360,000    5,360    744,640         750,000 
                          
Benefial conversion feature of convertible debt             950,138         950,138 
                          
Net (Loss)                  (3,279,669)   (3,279,669)
                          
Balance at December 31, 2013   38,792,758   $38,792   $3,419,424   $(3,982,198)  $(523,982)

 

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

 

F-5
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

                Period from  
                Inception  
    For Years Ended     (Oct 12, 2010)  
    Dec 31, 2013     Dec 31, 2012     Dec 31, 2013  
                   
Cash flows from operating activies                        
Net loss   $ (3,279,669 )   $ (648,271 )   $ (3,982,198 )
Adjustments to reconcile net loss to net cash used in operating activities:                        
Depreciation     11,691       6,955       19,693  
Inputed interest     15,957       17,614       33,571  
Shares issued for services     1,398,973       -       1,398,973  
Loss in extinguishment of debt     118,850       -       118,850  
Amortization of debt discount     128,996       -       128,996  
Gain on dispositon of assets     (960 )     -       (960 )
Changes in operating assets and liabilities                        
Prepaid expenses     (31,620 )     -       (31,620 )
Deposits     (17,975 )     -       (17,975 )
Surety bonds     (24,325 )     -       (24,325 )
Accounts payable and accrued expenses     118,013       289,938       408,729  
Accrued interest     29,983       4,474       34,595  
Accrued compensation     (176,000 )     180,000       4,000  
Contract payable     24,366       -       24,366  
Stipulated agreement liability, related party     91,772       -       91,772  
                         
Net cash used in operating activities     (1,591,948 )     (149,290 )     (1,793,533 )
                         
Cash flows from investing activities                        
Acquisition of mineral rights     -       (25,869 )     (25,869 )
Purchase of equipment     (65,980 )     (14,968 )     (114,349 )
                         
Net cash used in investing activities     (65,980 )     (40,837 )     (140,218 )
                         
Cash flows from financing activities                        
Proceeds from issuance of convertible debt, related party     -       100,000       185,000  
Proceeds from issuance of convertible debt     1,000,000       -       1,000,000  
Proceeds from issuance of common stock     750,000       -       750,000  
Loan payable     (42,000 )     42,000       -  
Advances from related party shareholders     (49,993 )     41,136       (1,270 )
Members contribution     -       -       100  
                         
Net cash provided by financing activities     1,658,007       183,136       1,933,830  
                         
Net increase (decrease) in cash     79       (6,991 )     79  
                         
Cash, beginning of year     -       6,991       -  
                         
Cash, end of year   $ 79     $ -     $ 79  
                         
Supplemental Information:                        
Cash paid for:                        
Taxes   $ -     $ -     $ -  
Interest Expense   $ -     $ -     $ -  
Liabilities assumed in merger   $ -     $ 39,582     $ 39,582  
Settlement of debt with contributed capital   $ 306,166     $ -     $ 306,166  
Non-cash investing and financing activities:                        
Debt converted to shares of common stock   $ 365,016     $ -     $ 365,016  
Warrants issued with convertible debt   $ 950,138     $ -     $ 950,138  

 

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

 

F-6
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

On October 29, 2012, Jameson Stanford Resources Corporation (the “Company”) merged with Bolcán Mining Corporation (Note 2). Prior to the Merger, the Company was a publically traded shell company with no business operations. The shell company was originally incorporated under the laws of the state of Nevada in June 2009 as MyOtherCountryClub.com for the purpose of developing a website that would offer reciprocal golf privileges, and other related services, to members of private country clubs throughout the United States. As a result of the Merger, the Company is no longer considered a shell company.

 

The current operating activities of the Company include exploration and pre-extraction activities related to certain mining claims, mineral leases and excavation rights (collectively referred to herein as “mineral rights”) for mining projects located in (a) Star Mining District in Beaver County, Utah, (b) Spor Mountain Mining District in Juab County, Utah, and (c) Ogden Bay Wildlife Management Area in Weber County, Utah. We have not established proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a “final” or “bankable” feasibility study for our mineral rights. Furthermore, we have no plans to establish proven or probable reserves for any of our mineral rights.

 

NOTE 2 – MERGER

 

Effective May 7, 2012, the Company entered into an Agreement and Plan of Merger with Jameson Stanford Resources Corporation, (“Jameson Stanford”), and JSR Sub Co, (“JSR”), both unrelated parties. On July 24, 2012, the above parties entered into an Extension Agreement in order to extend the effective time of the merger to August 3, 2012. On October 24, 2012, the parties entered into a second Extension Agreement extending the closing date for the Merger to October 29, 2012. On October 29, 2012, the Merger was closed. Effective as of the closing of the Merger, the CEO and Director of Jameson Stanford resigned from all positions with the Company and he returned, for cancellation, 52,500,000 shares of the Jameson Stanford’s common stock held in his name. Also at closing, the shareholder of Bolcán Mining was issued 25,000,000 shares of Jameson Stanford’s common stock. The merger has been treated as a reverse acquisition and recapitalization of a public company. Accordingly, the historic financial statements of the Company are the historical statements of Bolcán Mining Corporation, which was incorporated on April 11, 2012 in the State of Nevada.

 

NOTE 3 – GOING CONCERN

 

The Company is an exploration stage enterprise as defined under generally accepted accounting principles in the United States (“GAAP”). The financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in a deficit accumulated during exploration stage of $3,982,198 as of the year ended December 31, 2013. Further losses are anticipated in the development of its business.

 

The Company’s ability to continue as a going concern is dependent upon the Company generating profitable operations and cash flows in the near-term future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations. Management plans to finance the Company’s operating costs as necessary over the next twelve months with advances from owners and directors, and the private placement of the Company’s equity ownership. If management is unsuccessful in these efforts, discontinuance of operations is possible. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

F-7
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting and Presentation

 

The Company is in the exploration stage and its primary activities to date have included conducting research and exploration, developing markets for its products, securing strategic alliances, recruiting personnel and obtaining financing. As an exploration stage enterprise, the Company is required to present cumulative amounts from inception (October 12, 2010) through the latest period presented herein.

 

Property and Equipment

 

Property and equipment consists of a vehicle and laboratory equipment that is stated at cost of $101,948 and $48,368, less accumulated depreciation of $6,332 and $8,001 at December 31, 2013 and 2012, respectively. Depreciation expense was $11,691 and $6,955 for the years ended December 31, 2013 and 2012, respectively. Depreciation expense is computed using the straight-line method over the estimated useful life of the assets, which is five years for vehicles and six years for laboratory equipment.

 

Revenue

 

The Company recognizes revenue when products are fully delivered and title has transferred or services have been provided and collection is reasonably assured. The Company’s only revenues to date consist of a dredging agreement for the Weber River for which the earnings process was complete as of December 31, 2011.

 

Income Taxes

 

The Company applies the provisions of Financial Accounting Standards Board Accounting Standard Codification (“ASC”) 740 Income Taxes. The Standard requires an asset and liability approach for financial accounting and reporting for income taxes, and the recognition of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Due to a loss from inception, the Company has no tax liability. At this time the Company has no deferred taxes arising from temporary differences between income for financial reporting and income tax purposes.

 

Mineral Rights

 

The Company concluded that mineral rights meet the definition of tangible assets. Accordingly, the Company capitalizes certain costs related to the acquisition of mining claims and mineral lease rights. Costs of exploring, carrying and retaining unproven properties, if any, are expensed as incurred under Industry Guide 7.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Restricted cash is excluded from cash and cash equivalents and is included in other current and long-term assets.

 

Surety Bond

 

The Company maintains a cash surety bond with the State of Utah. The purpose of the bond is to ensure compliant that remediation and reclamation procedures are followed in our exploration activities.

 

F-8
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

Consolidation

 

The Company retains Bolcán Mining Corporation as a 100% wholly owned subsidiary and consolidates combined operations of both entities in our financial statements. Any intercompany transactions have been eliminated.

 

Long-Lived Assets

 

We regularly evaluate whether events or circumstances have occurred that indicate the carrying value of our long-lived assets may not be recoverable. When factors indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of the asset to determine if impairment exists. If the expected future net cash flows are less than the carrying value, an impairment charge is recognized based on the fair value of the asset. No impairments were indicated or recorded during the years ended December 31, 2013 and 2012.

 

NOTE 5 - MINERAL RIGHTS

 

At December 31, 2013, the Company had certain mining claims, mineral leases and excavation rights for mining projects located in (a) Star Mining District in Beaver County, Utah, (b) Spor Mountain Mining District in Juab County, Utah, and (c) Ogden Bay Wildlife Management Area in Weber County, Utah. These mineral rights were acquired through staking and purchase, lease or option agreements and are subject to varying royalty interests, some of which are indexed to the sale price of minerals excavated from these properties. The Company has not established proven or probable reserves on any of its mineral projects and no minerals have been extracted from these properties as of December 31, 2013. Capitalized cost of mineral rights $25,869 as of December 31, 2013 and December 31, 2012, respectively.

 

NOTE 6 – INCOME TAXES

 

The provision for income taxes consists of the following as of December 31, 2013 and 2012:

 

   12/31/2013   12/31/2012 
         
Current taxes  $-   $- 
Deferred Tax Benefit   (877,000)   (182,309)
Benefits of Operating Loss Carryforwards   877,000    182,309 
Actual provision  $-   $- 

 

Any deferred tax asset is considered immaterial and has been fully offset by a valuation allowance because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has cannot predict when or if it will have taxable income in the future.

 

   12/31/2013   12/31/2012 
         
DEFERRED TAX ASSETS          
Current  $-   $63,000 
Noncurrent   -    - 
Net operating losses   964,700    119,309 
Total DTA  $964,700   $182,309 
DEFERRED TAX LIABILITIES          
Current   -    - 
Noncurrent   (20,600)   - 
Valuation Allowance   (914,100)   (182,309)
NET DEFERRED TAXES  $-   $- 

 

F-9
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

The Company’s provision for income taxes was $0 for the year ended December 31, 2013 since the Company incurred net operating losses since inception that have a full valuation allowance through December 31, 2013. The Company’s net federal operating loss carry forward of approximately $2,474,000 begins to expire in 2033.

 

Operating Losses 
Expires   Amount 
2032   $224,956 
2033   $2,248,734 
Total   $$2,476,690

 

 

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The total deferred tax asset is calculated by multiplying a 39% marginal tax rate by the cumulative Net Operating Loss (“NOL”) of $964,700. The total valuation allowance is equal to the total deferred tax asset of $964,700, less the total deferred tax liability of $20,600, showing an increase of $877,000 from the year ended December 31, 2012.

 

A reconciliation between income taxes at statutory tax rates (39%) and the actual income tax provision for continuing operations as of December 31, 2013 and 2012 is as follows:

 

   12/31/2013   12/31/2012 
         
Expected provision (based on statutory rate)  $(1,279,100)  $(226,895)
Effect of:          
Increase in valuation allowance   877,000    182,309 
Loss from LLC   -    41,032 
Non-deductible expenses   402,100    3,554 
Actual provision  $-   $- 

 

The Company has not made any adjustments to deferred tax assets or liabilities. The Company did not identify any material uncertain tax positions of the Company on returns that have been filed or that will be filed. The Company has not had income from operations and has deferred items consisting entirely of unused net operating losses as disclosed above. Since it is unknown whether this net operating loss will ever produce a tax benefit, even if examined by taxing authorities and disallowed entirely, there would be no effect on the financial statements.

 

The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended December 31, 2013 and 2012, the Company did not recognize any interest or penalties, nor did we have any interest or penalties accrued as of December 31, 2013 and 2012 related to unrecognized benefits.

 

The Company has not filed the federal income tax return in the U.S for the year ended December 31, 2013. An extension has been filed for which the federal return will be due on September 15, 2014. The tax years ended December 31, 2013 and 2012 are open for examination for federal income tax purposes and by other major taxing jurisdictions to which we are subject.

 

NOTE 7 – TRANSACTIONS WITH MAJORITY OWNER AND OFFICER

 

Michael Stanford, the Company’s Chief Executive Officer and its majority shareholder (the “Majority Owner”) has made periodic advances to the Company to fund operations, which are unsecured and payable on demand. Interest is charged at the rate of 12%. The Majority Owner advanced $48,723 to the Company and recorded interest expense of $1,270 during the year ended December 31, 2012.

 

The Company has contracted for minerals testing, laboratory services, project management and administrative services from several entities that are operated by common management or are otherwise controlled by the Majority Owner, The Bolcán Group being the most active. Payments to such related party totaled $0 and $70,272 for the periods ended December 31, 2013 and December 31, 2012, respectively.

 

F-10
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

NOTE 8 – CONVERTIBLE NOTE-RELATED PARTY

 

In connection with a memorandum of understanding dated October 27, 2011, the Company received certain initial cash advances totaling $105,000 from a related party. The advances were unsecured, did not bear interest and were payable on demand. However, interest expense has been imputed at 12%. The imputed interest incurred for the years ended December 31, 2013 and 2012 was $15,957 and $17,614, respectively.

 

Additional advances were made in 2011 and 2012, bringing the total borrowed to $185,000. In April 2013, $50,000 of the note was completely forgiven and extinguished by one of the related parties. Concurrent with the extinguishment of debt, 100,000 shares of Company common stock were transferred from an existing shareholder to the related party. No consideration or assets were transferred from the Company to the related party at the time of extinguishment. The 100,000 shares transferred to the related party came from an existing shareholder. The existing shareholder making the transfer of 100,000 shares did so with no consideration or compensation.

 

On December 11, 2013, the Company issued 270,000 shares as full payment for the remaining $135,000 debt.

 

note 9 - stipulated Agreement LIABILITY, RELATED PARTY

 

The Company entered into an agreement with Michael Christiansen, an officer of the Company (“Christiansen”) on August 13, 2013 (the “Stipulated Agreement”) to pay Christiansen $123,272 (the “Amount Due”) relating to a promissory note, accrued compensation and out-of-pocket expenses incurred on behalf of the Company. The Amount Due was agreed to be paid as follows: $10,500 on or before August 15, 2013; $10,500 on or before September 15, 2013; $10,500 on or before October 15, 2013; and the balance in installments of $15,000 beginning on the earlier of (a) the first day of the month following the date on which the company receive at least three million dollars ($3,000,000) of equity funding, or (b) December 31, 2014. The Company has the right to prepay any part of this amount without any prepayment penalty. In no event, however, shall the balance due be paid later than December 31, 2014. In the event of a change of control, the Company is obligated to pay in full the portion of the Amount Due that remains unpaid. Subject to completion of the payments due under the agreement, the parties agreed to release certain claims against each other related to or arising in connection with the matters that gave rise to our agreement to pay the Amount Due. At December 31, 2013, the Company’s remaining liability of $91,772 has been recorded as Stipulated Agreement Liability, Related Party in the accompanying financial statements.

 

NOTE 10 – LOAN PAYABLE

 

On May 11, 2012, Christiansen loaned the Company $42,000. The loan was guaranteed by the Majority Owner, called for interest at 12% per annum and was extended to a due date of August 24, 2012. Effective July 1, 2013, the entire balance of $48,598, including accrued interest of $6,598, was incorporated into the Stipulated Agreement settlement with Christiansen and is included in the Amount Due. See NOTE 9.

 

F-11
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

NOTE 11 – CONVERTIBLE NOTES

 

On August 19, 2013 the Company issued a $500,000 convertible promissory note (the “Note”) and warrants to purchase shares of common stock to an individual investor. The overall terms of the Note are as follows:

 

  Interest rate: 12% per annum.
     
  Due date: September 14, 2015. The Company is to pay the principal amount and all accrued and unpaid interest on or before the due date.
     
  Redemption right: Any time the closing price of the Company’s common stock has been at or above $2.00 for 20 consecutive trading days, the Company has the right to redeem all or any part of the principal and accrued interest of the Note, following written notice to the holder of the Note.
     
  Optional Conversion: At the option of the holder, the Note may be converted into shares of the Company’s common stock at a conversion price equal to $0.50 per share.
     
  Additionally, if the Company elects to exercise the redemption right, the holder has the opportunity to elect to take the cash payment or to convert all or any portion of the Note into shares of the Company’s common stock.
     
  The conversion price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.
     
  The Note is senior in rank to any other debt held by our officers, directors or affiliates and may not be subordinated to any other debt issued by us without the written consent of the holder.
     
  Warrants: The holder of the Note is granted the right through September 30, 2015 to purchase 500,000 additional shares of common stock at $1.00 per share.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets. The Note ranks pari passu in right of payment with the other convertible promissory notes executed under the offering.
     
  During the time that any portion of this Note is outstanding, if any Event of Default occurs and such Default is not cured by the Company within sixty (60) days of the occurrence of the Event of Default (the “Cure Period”), the amount equal to one hundred fifty percent (150%) of the outstanding principal amount of this Note, together with accrued interest and other amounts owing shall become at the holder’s election, immediately due and payable in cash. The holder at its option has the right, with three (3) business days advance written notice to the Company after the expiration of the Cure Period, to elect to convert the Note into shares of the Company’s common stock pursuant to the Optional Conversion rights disclosed above.
     
  The Company’s Consolidated Balance Sheets report the following related to the convertible promissory note:

 

   December 31, 2013 
Principal amount  $500,000 
Unamortized debt discount   (370,940)
Net carrying amount  $129,060 

 

For the year ended December 31, 2013, the Company recorded $23,833 of accrued interest expense for the contractual interest related to the convertible promissory note and additional interest expense of $78,198 as amortization of the debt discount. At December 31, 2013, none of the debt had been converted and no warrants to purchase common stock had been exercised.

 

Under the guidance of ASC 470-20 Debt With Conversion and Other Options, the Company recorded the value of the above warrants to purchase 500,000 shares of its common stock.

 

F-12
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

Using the Black-Scholes method, such warrants were valued at $160,1375. The following weighted-average assumptions were used in the Black-Scholes calculation:

 

   December 31, 2013 
Expected term (years)   2.1 
Expected volatility   125.5%
      
Risk-free interest rate   0.36%
Dividend yield   0%

 

On October 18, 2013 the Company issued another $500,000 convertible promissory note (the “Note”) and warrants to purchase shares of common stock to a second individual investor. The overall terms of the Note are as follows:

 

  Interest rate: 12% per annum.
     
  Due date: October 31, 2015. The Company is to pay the principal amount and all accrued and unpaid interest on or before the due date.
     
  Redemption right: Any time the closing price of the Company’s common stock has been at or above $2.00 for 20 consecutive trading days, the Company has the right to redeem all or any part of the principal and accrued interest of the Note, following written notice to the holder of the Note.
     
  Optional Conversion: At the option of the holder, the Note may be converted into shares of the Company’s common stock at a conversion price equal to $0.50 per share.
     
  Additionally, if the Company elects to exercise the redemption right, the holder has the opportunity to elect to take the cash payment or to convert all or any portion of the Note into shares of the Company’s common stock.
     
  The conversion price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.
     
  The Note is senior in rank to any other debt held by our officers, directors or affiliates and may not be subordinated to any other debt issued by us without the written consent of the holder.
     
  Warrants: The holder of the Note is granted the right through September 30, 2015 to purchase 500,000 additional shares of common stock at $1.00 per share.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets. The Note ranks pari passu in right of payment with the other convertible promissory notes executed under the offering.
     
  During the time that any portion of this Note is outstanding, if any Event of Default occurs and such Default is not cured by the Company within sixty (60) days of the occurrence of the Event of Default (the “Cure Period”), the amount equal to one hundred fifty percent (150%) of the outstanding principal amount of this Note, together with accrued interest and other amounts owing shall become at the holder’s election, immediately due and payable in cash. The holder at its option has the right, with three (3) business days advance written notice to the Company after the expiration of the Cure Period, to elect to convert the Note into shares of the Company’s common stock pursuant to the Optional Conversion rights disclosed above.
     
  The Company’s Consolidated Balance Sheets report the following related to the convertible promissory note:

 

    December 31, 2013  
Principal amount   $ 500,000  
Unamortized debt discount     (450,202 )
Net carrying amount   $ 49,798  

 

For the year ended December 31, 2013, the Company recorded $12,833 of accrued interest expense for the contractual interest related to the convertible promissory note and additional interest expense of $49,798 as amortization of the debt discount. At December 31, 2013, none of the debt had been converted and no warrants to purchase common stock had been exercised.

 

F-13
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

Under the guidance of ASC 470-20 Debt With Conversion and Other Options, the Company recorded the value of the above warrants to purchase 500,000 shares of its common stock.

 

Using the Black-Scholes method, such warrants were valued at $209,503. The following weighted-average assumptions were used in the Black-Scholes calculation:

 

   December 31, 2013 
Expected term (years)   2.0 
Expected volatility   125.5%
Risk-free interest rate   0.33%
Dividend yield   0%

 

Aggregate maturities of Convertible Notes in each of the next five years ending December 31st are as follows:

 

2014  $- 
2015   1,000,000 
2016   - 
2017   - 
2018   - 
   $1,000,000 

 

NOTE 12 – CONTRACTS AND LEASE COMMITMENTS

 

Office Leases

 

Commencing February 1, 2013 and continuing to January 31, 2014, the Company is renting residential office space from an entity controlled by the Majority Owner. The lease obligates the Company to monthly lease payments of $6,250. The Company was required to submit a refundable deposit of $12,875, equal to two month’s rent and estimated utility expenses.

 

Commencing October 1, 2013 and continuing to March 31, 2014, the Company is leasing executive office space totaling 280 square feet, increasing to 430 square feet on November 1, 2013. The lease required an initial setup fee of $500 and a security deposit equal to one month’s rent. The Company is obligated to monthly lease payments of $3,000 for October, increasing to $5,300 on November 1, 2013. The agreement is renewable at the option of the Company in three month increments. The current lease expires June 30, 2014. The Company was required to submit a refundable deposit of $5,100.

 

Service Contracts

 

In February 2013, the Company contracted with a consulting group to receive consulting, investor relations and development services. This consulting agreement called for the issuance of 200,000 shares of our unregistered common stock. The value of the services was based on the closing common share value on the share issuance date of April 2, 2013 which was $1.20 per share. For the period ended December 31, 2013, the entire $240,000 value of the contract has been recorded as an expense.

 

Also in February 2013, the Company contracted with a public relations company to provide the Company investor relations and development services, video production and distribution, public relations as well as various social media outreach and promotion services. This service contract required the issuance of 60,000 shares of our unregistered common stock and minimum quarterly fees totaling $20,000 to be paid over a six month service period. The value of the services was based on the share value of the Company’s common stock on the closing common share issuance date of April 2, 2013 which was $1.20 per share. For the period ended December 31, 2013, the entire $72,000 value of the contract has been recorded as an expense.

 

F-14
 

 

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

Effective July 31, 2013, the Company entered into an agreement with Christiansen to serve as Executive Vice President, Corporate Development. The initial term of six months calls for monthly compensation of $6,000 increasing to $10,000 per month once the company has raised $1,000,000 in new equity funding, $15,000 per month once the company has raised $3,000,000 and $20,000 per month once the company has raised $5,000,000. The Company is further obligated to reimburse Christiansen for usual and customary business related expenses. This contract was not renewed and expired on January 31, 2014.

 

Royalty Agreement

 

Under a memorandum of understanding, the Company is obligated to pay an existing investor, a royalty equal to $.50 per metric tonne (approx 2,200 lbs) for any sales of ore until the investor has recouped their investment of $750,000. No royalty expense has been incurred or recorded related to this agreement for the years ended December 31, 2013 and 2012.

  

NOTE 13 – CONVERSION OF LIABILITIES

 

On December 11, 2013, the Company issued an aggregate of 392,332 shares of its restricted common stock, upon the conversion of the following Company liabilities.

 

Liability Converted  Amount of
Liability Converted
   Conversion Price
per Share
   Shares
Issued
 
Accounts payable  $51,166   $0.50    122,332 
Convertible debt, related party   135,000   $0.50    270,000 
Total  $186,166   $0.50    392,332 

 

Based on a closing common share value of $.65 on the issuance date of December 11, 2013, a loss on Conversion of Debt of $58,849 was recognized.

 

NOTE 14 – EQUITY TRANSACTIONS

 

On April 2, 2013, the Company issued 200,000 shares of restricted common stock to a consulting company. The contract calls for various consulting and investor relations services to be performed over six months.

 

On April 2, 2013, the Company issued 60,000 shares of restricted common stock to a marketing company. The contract calls for various social media and public relations services to be performed over six months.

 

On August 14, 2013, the Company issued 5,360,000 restricted common shares to an existing shareholder for total consideration of $750,000.

 

On September 20, 2013 the Company issued 230,426 restricted common shares to an existing shareholder for professional services. Based on a closing common share value of $1.19 on the issuance date, total expense of $274,206 was recognized.

 

On December 11, 2013, the Company issued 200,000 restricted common shares to a related party and an additional 200,000 restricted common shares to a mining services company for exploration and development costs. Also on December 11, 2013, the Company issued 100,000 restricted common shares to an officer of the Company for professional services. Based on a closing common share value of $.65 on the issuance date, total expense of $325,000 was recognized.

 

On December 11, 2013, the Company issued 750,000 restricted common shares to Christiansen in settlement of claim for pre-merger shares of Bolcán Mining Corporation, for which Christiansen had paid $9,000. Based on a closing common share value of $.65 on the issuance date, net executive compensation expense of $478,500 was recognized.

 

F-15
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

On December 11, 2013, the Company issued 392,332 restricted common shares in conversion of $186,166 liabilities. Based on a closing common share value of $.65 a loss on extinguishment of debt on the issuance date of $58,849 was recognized. See Footnote 13.

 

NOTE 15 – SUBSEQUENT EVENTS

 

Convertible Notes

 

On January 22, 2014 the Company issued a $200,000 convertible promissory note (the “Note”) and warrants to purchase shares of common stock to an individual investor. The overall terms of the Note are as follows:

 

  Interest rate: 12% per annum.
     
  Due date: October 15, 2015. The Company is to pay the principal amount and all accrued and unpaid interest on or before the due date.
     
  Redemption right: Any time the closing price of the Company’s common stock has been at or above $2.00 for 20 consecutive trading days, the Company has the right to redeem all or any part of the principal and accrued interest of the Note, following written notice to the holder of the Note.
     
  Optional Conversion: At the option of the holder, the Note may be converted into shares of the Company’s common stock at a conversion price equal to $0.50 per share.
     
  Additionally, if the Company elects to exercise the redemption right, the holder has the opportunity to elect to take the cash payment or to convert all or any portion of the Note into shares of the Company’s common stock.
     
  The conversion price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.
     
  The Note is senior in rank to any other debt held by our officers, directors or affiliates and may not be subordinated to any other debt issued by us without the written consent of the holder.
     
  Warrants: The holder of the Note is granted the right through October 15, 2015 to purchase 200,000 additional shares of common stock at $1.00 per share.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets. The Note ranks pari passu in right of payment with the other convertible promissory notes executed under the offering.
     
  During the time that any portion of this Note is outstanding, if any Event of Default occurs and such Default is not cured by the Company within sixty (60) days of the occurrence of the Event of Default (the “Cure Period”), the amount equal to one hundred fifty percent (150%) of the outstanding principal amount of this Note, together with accrued interest and other amounts owing shall become at the holder’s election, immediately due and payable in cash. The holder at its option has the right, with three (3) business days advance written notice to the Company after the expiration of the Cure Period, to elect to convert the Note into shares of the Company’s common stock pursuant to the Optional Conversion rights disclosed above.

  

On March 12, 2014 the Company issued a $300,000 convertible promissory note (the “Note”) and warrants to purchase shares of common stock to an individual investor. The overall terms of the Note are as follows:

 

  Interest rate: 12% per annum.
     
  Due date: October 15, 2015. The Company is to pay the principal amount and all accrued and unpaid interest on or before the due date.
     
  Redemption right: Any time the closing price of the Company’s common stock has been at or above $2.00 for 20 consecutive trading days, the Company has the right to redeem all or any part of the principal and accrued interest of the Note, following written notice to the holder of the Note.
     
  Optional Conversion: At the option of the holder, the Note may be converted into shares of the Company’s common stock at a conversion price equal to $0.50 per share.

 

F-16
 

  

JAMESON STANFORD RESOURCES CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

 

  Additionally, if the Company elects to exercise the redemption right, the holder has the opportunity to elect to take the cash payment or to convert all or any portion of the Note into shares of the Company’s common stock.
     
  The conversion price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.
     
  The Note is senior in rank to any other debt held by our officers, directors or affiliates and may not be subordinated to any other debt issued by us without the written consent of the holder.
     
  Warrants: The holder of the Note is granted the right through October 15, 2015 to purchase 300,000 additional shares of common stock at $1.00 per share.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets.
     
  The Note is secured by all of the mineral ownership and mining rights held by the Company in the Star Mountain Mining District and proceeds and distributions from such assets. The Note ranks pari passu in right of payment with the other convertible promissory notes executed under the offering.
     
  During the time that any portion of this Note is outstanding, if any Event of Default occurs and such Default is not cured by the Company within sixty (60) days of the occurrence of the Event of Default (the “Cure Period”), the amount equal to one hundred fifty percent (150%) of the outstanding principal amount of this Note, together with accrued interest and other amounts owing shall become at the holder’s election, immediately due and payable in cash. The holder at its option has the right, with three (3) business days advance written notice to the Company after the expiration of the Cure Period, to elect to convert the Note into shares of the Company’s common stock pursuant to the Optional Conversion rights disclosed above.

 

Under the guidance of ASC 470-20 Debt With Conversion and Other Options, the Company will record the value of the above warrants to purchase shares of its common stock.

 

Equity Transactions

 

On February 27, 2014, the Company issued 650,000 restricted common shares to a professional services company controlled by an officer of the Company. Based on a closing common share value of $.70 on the issuance date, professional services expense of $455,000 will be recognized.

 

Severance Payment

 

On March 6, 2014, the Company paid severance expense of $28,000 to Christiansen.

 

The Company has evaluated subsequent events pursuant to ASC 855. Other than the events noted above, no additional material subsequent events exist.

 

F-17
 

   

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report. Based on that evaluation, it was concluded that our disclosure controls and procedures are ineffective in timely alerting us to material information required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports filed or submitted under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control, as defined in the Securities Exchange Act of 1934. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

 

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

 

Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon this evaluation, our management concluded that, due to the material weaknesses described below, our internal control over financial reporting was ineffective as of December 31, 2013.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.

 

The specific material weaknesses identified by our management relates to limited resources and our inadequate number of personnel to allow for proper segregation duties and the requisite internal controls and application of U.S. GAAP. Michael Stanford functions as the CEO, President, Chairman and Sole Director and as such, has not established adequate processes and channels of communication to provide the timely and accurate flow of information to the CFO and others. This weakness in internal controls has prevented the timely recording of company transactions and execution of reliable financial closing procedures. In addition, management has determined that the lack of controls over the accounting for issuances of common stock resulted in the omission of (i) receipt of funds for purchases of our common stock in the first, second and third quarters of 2013, (ii) an issuance of 230,426 shares of our common stock in September 2013, and (iii) the issuance of 5,360,000 shares of our common stock in August 2013. Further, a lack of controls over the accounting for surety bond costs resulted in the reclassification of surety bond costs from an expense to mineral rights on our balance sheet. These errors will require us to restate our consolidated financial statements for the three months ended March 31, 2013, the six months ended June 30, 2013 and the nine months ended September 30, 2013 to correct these errors. Management has determined that our internal audit function is also significantly deficient due to insufficient resources to perform internal audit functions. Finally, management determined that the lack of an Audit Committee of our Board of Directors also contributes to insufficient oversight of our accounting and audit functions.

 

31
 

  

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

Changes in Internal Control

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation of our controls performed during the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The following table sets forth the names and ages of each of the Executive Officers and Director.

 

Name   Age   Positions and Offices to be Held
Michael Stanford   46   Chief Executive Officer, President, Chairman and Sole Director
Robbie Chidester   56   Chief Financial Officer

 

32
 

  

The director named above will serve until the first annual meeting of our stockholders or until his respective successor has been appointed and duly qualified. Thereafter, directors will be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement. There is no arrangement or understanding between any of the directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current directors to our board. There are also no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.

 

Duties, Responsibilities and Experience

 

Michael Stanford, 46, Chief Executive Officer, President, Chairman and Sole Director. Michael Stanford joined Jameson Stanford Resources Corporation in May 2012 and serves as President, Chief Executive Officer and Director. Mr. Stanford also serves as President, Chief Executive Officer and Director of Bolcán Mining Corporation. Mr. Stanford has more than 20 years of experience in the mining and metallurgy industries as an owner and operator of companies specializing in the exploration, development, recovery, refining and marketing of precious metals from mined mineral ore bodies. Mr. Stanford has managed and directed over 2,000 employees and is highly experienced in administering environmental controls and process systems in mining and metallurgy operations. From 1997 to 2008, Mr. Stanford managed and directed projects under contract with Rio Tinto and Kennecott Utah Copper. From 1995 to 2012, Mr. Stanford managed projects under contract with Chubu Electric Power Company, Techno Chubu Company, Kiewit Western Corporation, United States Department of Agriculture Natural Resource Conservation Service (NRCS), United States Bureau of Land Management (BLM), Utah Department of Natural Resources Wildlife Division (DNR). From 1989 to 2012, Mr. Stanford operated two commercial analytic laboratories as Stanford Laboratories.

 

As the Chief Executive Officer of our company, Mr. Stanford brings our board his considerable experience in the strategic planning and growth of companies and qualifies him to continue to serve as a director or our company.

 

Robbie Chidester, CPA, 56, Chief Financial Officer. Mr. Chidester joined Jameson Stanford Resources Corporation in July 2012. Prior to joining the Company, he provided outsourced accounting, financial management and advisory services to various clients. Mr. Chidester has spent over 20 years as VP Finance, Chief Financial Officer, Board Member and Advisor. Working the past six years as an outsourced or interim financial officer, Mr. Chidester has provided financial management and advisory services to over 30 emerging businesses. He provided such services for CFO Solutions, LC from 2006 to 2008 and has worked for CFO Advantage Consulting, LC from 2008 to present. Mr. Chidester has personally assisted in the placement of over $335M in private debt and equity funding. While working from 1987 to 2006 as a fulltime financial officer for various emerging companies, ranging in size from startup to over $160M in revenue, he supervised financial teams ranging in size from small, hands-on groups to a diverse, international team of over 40 professionals located on four continents. Beginning his career in 1981 with the international audit, tax and advisory firm KPMG, LLC, Mr. Chidester establishing himself as a specialist in corporate compliance, public reporting, M&A/IPO support, due diligence, business transformation/turn-around services and management consulting. He has provided financial services to a vast array of clients, including successful companies in the exploration, extraction and processing of natural resources. He is a licensed Certified Public Accountant. Mr. Chidester received a Bachelor’s Degree in Accounting, with honors, from the University of Utah.

 

All executive officers are elected by the Board and hold office until the next annual meeting of stockholders and until their successors are elected and qualify.

 

Director Qualifications, Committees of our Board of Directors and the Role of our Board in Risk Oversight Director qualifications

 

Mr. Stanford is the founder of Bolcán Mining, functions as a Sole Director and continues to be involved in our day to day operations. We believe that the professional experience of Mr. Stanford within the mining industry provides him with an enhanced understanding of our operations which provides an additional dimension to his role as a director.

 

33
 

  

Committees of our Board of Directors

 

We have not established any committees including an Audit Committee, a Compensation Committee, a Nominating Committee or any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. Because we have only one director who is not independent, we believe that the establishment of these committees would be more form over substance.

 

We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates nor has our Board of Directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any shareholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.

 

Neither of our directors is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

 

  understands generally accepted accounting principles and financial statements,
  is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
  has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
  understands internal controls over financial reporting, and
 

understands audit committee functions.

 

Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

 

Board oversight in risk management

 

Our Chief Executive Officer also serves as Chairman of the Board of Directors and Sole Director, we do not have a lead director. In the context of risk oversight, we believe that our selection of one person to serve in both positions provides the Board with additional perspective which combines the operational experience of a member of management with the oversight focus of a member of the Board. The business and operations of our Company are managed by our Board as a whole, including oversight of various risks, such as operational and liquidity risks, that our Company faces. Because our Board is comprised solely of a member of our management, this individual is responsible for both the day-to-day management of the risks we face as well as the responsibility for the oversight of risk management.

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2013 with the exception of Mr. Chidester who failed to file a Form 4 reporting two transactions.

 

34
 

  

ITEM 11. EXECUTIVE COMPENSATION

 

The following table sets forth certain compensation information for: (i) our principal executive officer or other individual serving in a similar capacity during fiscal 2013; (ii) our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2013 whose compensation exceed $100,000; and (iii) up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2013. Compensation information is shown for the fiscal years ended December 31, 2013 and 2012:

   

SUMMARY COMPENSATION TABLE

 

Name and
principal position
  Year   Salary   Bonus   Stock
Awards
   Option
Awards
   Non-Equity
Incentive Plan
Compensation
   Nonqualified
Deferred
Compensation
Earnings
   All Other
Compensation
   Total 
Michael Stanford, Sole Director, President and CEO (1)   2013   $369,233    0   $0    0    0    0   $478,500   $847,733 
    2012   $120,000    0    0    0    0    0    0   $120,000 
                                              
Robbie Chidester, CFO (2)   2013   $66,789    0   $65,000    0    0    0   $0   $131,789 
    2012   $36,617    0    0    0    0    0   $0   $36,617 

  

(1) Mr. Stanford was appointed as President on May 4, 2012 and CEO and Sole Director on October 29, 2012. Other compensation reflects the value of 750,000 shares of the Company’s common stock issued to a former officer of the Company in settlement of claim against Mr. Stanford for shares of Bolcán Mining Corporation prior to its merger with the Company.

 

(2) Mr. Chidester was appointed as CFO on October 29, 2012. Mr. Chidester received 100,000 shares of our unregistered common stock in fiscal 2013.

 

Employment Agreements

 

We do not have any written employment contracts with our executive officers. We have an oral agreement to pay Mr. Stanford $15,000 per month as compensation as our Chief Executive Officer. This arrangement may be terminated by either party at any time with or without cause. In addition, on February 27, 2014 we issued 650,000 shares of our unregistered common stock to CFO Advantage Consulting, LC which provides the services of our Chief Financial Officer as an incentive award for services provided to our company.

 

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2012

 

OPTION AWARDS  STOCK AWARDS
Name  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
  Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
  Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
Michael Stanford  NONE  NONE  NONE  NONE  NONE  NONE  NONE  NONE  NONE
Robbie Chidester  NONE  NONE  NONE  NONE  NONE  NONE  NONE  NONE  NONE

  

35
 

  

Discussion of Director Compensation

 

The Company did not pay any director compensation during the fiscal years ended December 31, 2013 and December 31, 2012, respectively. The Company may begin to compensate its directors at some time in the future.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information, as of April 11, 2014 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five percent, (ii) each of our executive officers and directors, and (iii) our directors and executive officers as a group. The information relating to the ownership interests of such shareholders is provided after giving effect to the Merger.

 

Name and Address of Beneficial Owner(1)  Amount and Nature of
Beneficial Ownership
   Percent of Class(1)  
   Common stock   Common stock  
Michael Stanford, CEO, President, and Director   25,000,000   63.4 %
Robbie Chidester, CFO(2)   800,000   2.0 %
All directors and officers as a group (2 persons)   25,800,000   65.4 %
Summit Capital USA, Inc.(3)   2,228,173   5.6 %
Donald and Susan Sutherland (4)   5,983,000   15.2 %

 

(1) Based on an aggregate of 39,442,758 common shares outstanding as of April 11, 2014. The address for each officer and/or director is 2300 West Sahara Ave., Suite 800, Las Vegas, NV 89102, the address of the Company.

 

(2) Includes 100,000 shares owned directly and 700,000 share owned by CFO Advantage Consulting, LC which is owned or controlled by Mr. Chidester.

 

(3) The mailing address for Summit Capital USA, Inc. is 605 W. Knox Road, Suite 202, Tempe, AZ 85284. The beneficial owners of Summit Capital are 50% owned by Summit Capital Corp, 2 Anthony Henday Center, 4914-55 St., Red Deer, AB, Canada T4N 2J4 (Summit Capital Corp is beneficially owned by Gregg C.E. Johnson and Cheryl L. McRobbie-Johnson); 25% owned by Gregg C.E. Johnson, 6081 W. Park Ave, Chandler, AZ 85226; and 25% owned by Thomas P. Madden, 1192 W. Sunrise Place, Chandler, AZ 85248.

 

(4) Shares are owned by SCS MRHS Irrevocable Trust (1,493,334 shares), MRHS 2013 Irrevocable Trust (1,786,666 shares) and Donald W. Sutherland and Susan C. Sutherland Revocable Trust (2,703,000 shares). Donald and Susan Sutherland, Trustees, have voting and dispositive control over these shares. Their address is 7413 East Leland St, Mesa, AZ 85207.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

At December 31, 2013 and 2012, we had outstanding liabilities due to related parties as follows:

 

   2013   2012 
         
Stipulated agreement  $91,772   $- 
Convertible debt   -    185,000 
Loan payable   -    45,342 
Advances from majority shareholder   -    49,993 
Total  $91,772   $280,335 

 

36
 

  

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table shows the fees that were billed for the audit and other services provided by HJ & Associates, LLC for the fiscal year ended December 31, 2013 and by and Mantyla McReynolds, LLC for the fiscal year ended December 31, 2012.

 

   2013   2012 
         
Audit Fees  $20,000   $25,000 
Audit-Related Fees   34,720    4,575 
Tax Fees        6,300 
All Other Fees          
Total  $54,720   $35,875 

 

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

 

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.

 

Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

 

All Other Fees — This category consists of fees for other miscellaneous items.

 

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2013 and 2012 were pre-approved by the Board of Directors.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

  (a) 1. Financial Statements
     
    The consolidated financial statements and Reports of Independent Registered Public Accounting Firms are listed in the “Index to Financial Statements and Schedules” on page 30 and included on pages F-2 through F-17.
     
  2. Financial Statement Schedules
     
    All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
     
 

Exhibits (including those incorporated by reference)

 

37
 

  

Exhibit Number   Description of Exhibit
     
2.1   Acquisition Agreement and Plan of Merger dated May 7, 2012 (Incorporated by reference to our Form 8-K filed with the SEC on November 2, 2012).
     
2.1(a)   Extension Agreement dated July 24, 2012 (Incorporated by reference to our Form 8-K filed with the SEC on November 2, 2012).
     
2.1(b)   Extension Agreement dated October 24, 2012 (Incorporated by reference to our Form 8-K filed with the SEC on November 28, 2012).
     
3.1   Articles of Incorporation, as amended (Incorporated by reference to the Registration Statement on Form S-1 filed with the SEC on April 6, 2010).
     
3.2   Amended and Restated Bylaws (Incorporated by reference to the Registration Statement on Form S-1 filed with the SEC on April 6, 2010).
     
10.1   Asset Purchase Agreement between The Bolcán Group LLC and Bolcán Mining Corporation effective June 30, 1012 (Incorporated by reference to our Form 8-K filed with the SEC on November 23, 2012).
     
10.2   12% Convertible Redeemable Promissory Note dated August 19, 2013 between Jameson Stanford Resources Corporation and Joseph Marchal (Incorporated herein by reference to Exhibit 10.1 in the Company’s Form 8-K as filed with the Commission on August 29, 2013).
     
10.3   Pledge and Security Agreement dated August 19, 2013 between Jameson Stanford Resources Corporation and Joseph Marchal (Incorporated herein by reference to Exhibit 10.2 in the Company’s Form 8-K as filed with the Commission on August 29, 2013).
     
10.4   Common Stock Purchase Warrant dated August 19, 2013 between Jameson Stanford Resources Corporation and Joseph Marchal (Incorporated herein by reference to Exhibit 10.3 in the Company’s Form 8-K as filed with the Commission on August 29, 2013).
     
10.5   Amendment to Convertible Redeemable Promissory Note and Pledge Agreement dated October 18, 2013 between Jameson Stanford Resources Corporation and Joseph Marchal (Incorporated herein by reference to Exhibit 10.5 in the Company’s Form 8-K as filed with the Commission on October 24, 2013).
     
10.6   12% Convertible Redeemable Promissory Note dated October 18, 2013 between Jameson Stanford Resources Corporation and Edward F. Brogan (Incorporated herein by reference to Exhibit 10.1 in the Company’s Form 8-K as filed with the Commission on October 24, 2013).
     
10.7   Pledge and Security Agreement dated October 18, 2013 between Jameson Stanford Resources Corporation and Edward F. Brogan (Incorporated herein by reference to Exhibit 10.2 in the Company’s Form 8-K as filed with the Commission on October 24, 2013).
     
10.8   Common Stock Purchase Warrant dated October 18, 2013 between Jameson Stanford Resources Corporation and Edward F. Brogan (Incorporated herein by reference to Exhibit 10.3 in the Company’s Form 8-K as filed with the Commission on October 24, 2013).
     
10.9   Subscription Agreement accepted on October 18, 2013 between Jameson Stanford Resources Corporation and Edward F. Brogan (Incorporated herein by reference to Exhibit 10.4 in the Company’s Form 8-K as filed with the Commission on October 24, 2013).
     
14.1   Code of Business Conduct and Ethics*
     
21.1   Subsidiaries of the Registrant (Incorporated by reference to the Annual Report on Form 10-K filed with the SEC on April1 6, 2013).
     
31.1   Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
     
31.2   Rule 13a-14(a)/15d-14(a) Certification of Chief Financial and Accounting Officer*
     
32.1   Section 1350 Certification of Chief Executive Officer*
     
32.2   Section 1350 Certification of Chief Financial and Accounting Officer*
     
101.INS   XBRL INSTANCE DOCUMENT**
     
101.SCH   XBRL TAXONOMY EXTENSION SCHEMA**
     
101.CAL   XBRL TAXONOMY EXTENSION CALCULATION LINKBASE**
     
101.DEF   XBRL TAXONOMY EXTENSION DEFINITION LINKBASE**