Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY U.S. STATE OR ANY OTHER JURISDICTION. THE SECURITIES ARE
BEING OFFERED PURSUANT TO THE EXEMPTION FROM REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION CONTAINED IN SECTION 4(A)(2) OF THE
SECURITIES ACT OF 1933 AND/OR RULE 506 OF REGULATION D PROMULGATED THEREUNDER.
THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES
DESCRIBED HEREIN. THIS OFFERING IS RESTRICTED TO ACCREDITED INVESTORS WITHIN THE
MEANING OF RULE 501(a) UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE
INVESTMENT.

 

American Battery Metals Corporation

930 Tahoe Blvd. Suite 802-16

Incline Village, NV 89451

Attn:  Doug Cole, Chief Executive Officer

 

Dear Sir or Madam:

 

The undersigned (the “Subscriber”) hereby represents, warrants and agrees with
American Battery Metals Corporation (the “Company”) as follows:

 

1. Subscription. 

 

Subject to the terms and conditions hereof, the Subscriber hereby irrevocably
subscribes to purchase ________ Units of the Offering, each Unit (“Unit”) is
comprised of (i) five thousand (5,000) shares of Series C Preferred Stock, (each
share of Series C Preferred Stock is convertible into 80 shares of Common Stock
(equal to US$.125 per share) and (ii) a warrant to purchase four hundred
thousand (400,000) shares of common stock of the Company at twenty-five cents
(US$0.25) per share for a period (the “Warrant” as more fully described in
Section 3(f) below) at the price of U.S. $50,000 per Unit, for an aggregate
purchase price of U.S.$_______________.  The Subscriber understands that the
sale of the Units is being made without registration under the Securities Act of
1933, as amended (the “Securities Act”) or any state law in reliance upon an
exemption therefrom.  The Subscriber acknowledges that the Units will be subject
to restrictions on transfer pursuant to applicable law and the terms set forth
in this subscription agreement (the “Agreement”). All amounts for payments of
the Units shall be wired to the Company’s bank account as set forth in Exhibit A
attached hereto.

 

Summary:  Dollars Invested _______________ / $50,000 = ________________ Units

 

2. Acceptance of Subscription and Issuance of Units. 

 

It is understood and agreed that, upon execution and delivery by the Company of
this Subscription Agreement, the Company has, in reliance upon the
representations and warranties of the Subscriber and against payment for the
Units, accepted this subscription.  Notwithstanding anything in this Agreement
to the contrary, there shall be no obligation to issue any Units if such
issuance would constitute a violation of the Securities Act or any state law.

 

3. Representations, Warranties and Covenants of the Subscriber. 

 

The Subscriber hereby represents and warrants as follows:

 

(a)Restricted Securities.  The Subscriber acknowledges that the Company is
issuing and selling the Units in reliance upon an applicable exemption from the
registration requirements of the Securities Act and is relying in part upon
these representations of the Subscriber set forth herein and in the Subscriber
Questionnaire set forth in Exhibit B attached hereto. The Subscriber agrees that
the Units may only be transferred (i) if registered pursuant to an effective
registration statement under the Securities Act or (ii) pursuant to an exemption
from such registration requirements. The Subscriber understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow the
Subscriber to transfer all or any portion of the Units under the circumstances,
in the amounts or at the times the Subscriber might propose. 

--------------------------------------------------------------------------------

 

 

(b)Subscriber Bears Economic Risk.  The Subscriber is experienced in evaluating
and making investments of the type contemplated by this Agreement and is
financially able to bear the risks of the investment. The Subscriber understands
and acknowledges that it could lose their entire investment. 

 

(c)Acquisition for Own Account.  The Subscriber is acquiring the Units for its
own account for investment purposes only, not as nominee or agent, and not with
a view towards selling, granting any participation in or otherwise distributing
same; except with respect to transferring to employees, affiliates or family
members of Subscriber. 

 

(d)Subscriber Can Protect Its Interest.  The Subscriber represents that by
reason of its, or of its management’s, business or financial experience, the
Subscriber has the capacity to protect its own interests in connection with the
transactions contemplated herein.  Further, the Subscriber is aware of no
publication of any advertisement or form of general solicitation utilized by the
Company in connection with the transactions contemplated in this Agreement. 

 

(e)Company Information.  The Subscriber has reviewed the financial statements
and other information set forth in the Company’s filings located on the
Securities and Exchange Commission’s (“SEC”) EDGAR website1 and the Company’s
website2 and has had an opportunity to discuss the Company’s business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company’s operations and
facilities. The Subscriber has also had the opportunity to ask questions of, and
receive answers from, the Company and its management regarding this investment. 

 

(f)Risk Factors. The undersigned understands that an investment in the Company
is speculative and involves a high degree of risk, and the undersigned has
carefully reviewed and is aware of all of the risk factors related to the
purchase of the Units, including those set forth on Exhibit C attached hereto. 

 

_____initials

 

(g)Warrants.  The Warrants have an expiration date of December 31, 2023 and are
subject to redemption by the Company prior to such date if the closing share
price of the Company’s common stock is a minimum of $.50 per share for twenty
(20) consecutive trading days. The Subscriber has reviewed the form of Warrant
set forth as Exhibit D and has had the opportunity to ask questions from the
management of the Company regarding the Warrants. 

 

_____initials

 

(h)Certificate of Designation. The undersigned has read and reviewed the Form of
Certificate of Designation of Rights Preferences and Limitations of Series C
Preferred Stock attached hereto as Exhibit E. The Company intends to file the
Certificate of Designation with the Secretary of State of Nevada upon the
closing of the first tranche of investment in the Series C Preferred Stock.
Section 5.b of the Certificate of Designation provides that the Series C
Preferred Stock is subject to mandatory conversion at the option of the Company
if the closing share price of the Company’s common stock is a minimum of $.25
per share for twenty (20) consecutive trading days 

 

_____initials

 

4. Waiver, Amendment; Binding Effect. 

 

Neither this Agreement nor any provisions hereof shall be modified, changed,
discharged or terminated except by an instrument in writing, signed by the party
against whom any waiver, change, discharge or termination is sought.  The
provisions of this Agreement shall be binding upon and accrue to the benefit of
the parties hereto and their respective heirs, legal representatives, successors
and assigns.

 

5. Assignability. 

 

Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the Company or the
Subscriber without the prior written consent of the other.

 

 

________________________

1 https://www.sec.gov/edgar/searchedgar/companysearch.html

2 https://batterymetals.com

--------------------------------------------------------------------------------

 

 

6. Applicable Law; Jurisdiction and Venue. 

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of Nevada, without regard to the conflict of laws provisions thereof.
 Subscriber agrees that the sole forum for resolving disputes arising out of or
relating to this Agreement are the federal and state courts located in Reno,
Nevada and the parties hereby irrevocably consent to the jurisdiction of such
courts and agree to said venue.

 

7. Counterparts. 

 

This Agreement may be executed in any number of counterparts and by facsimile,
each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same agreement.

 

8. Survival. 

 

All representations, warranties and covenants contained in this Agreement shall
survive the acceptance of the subscription by the Company and the delivery of
the Units.

 

(Signature page immediately follows)

 

Date:

 

Number of Units Subscribed For:

 

Purchase Price per Unit:

$50,000

(Minimum purchase is one Unit unless waived by the Company)

Aggregate Purchase Price:

$

 

 

 

 

 

Taxpayer I.D. Number

 

Signature of Subscriber

As (check one) Individual _____Tenants in Common____

 

Capacity in which signed:

Existing Partnership ____Joint Tenants _____

 

 

 Corporation ____Trust ____

 

Subscriber’s mailing address

Minor with Adult Custodian under UGMA _____

 

(if different than business address)

Subscriber’s name and business

 

 

address (please type or print)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxpayer I.D. Number of Co-Subscriber

 

Signature of Co-Subscriber

Co-Subscriber’s name and business

 

Co-Subscriber’s mailing address

address (please type or print)

 

(if different than business address)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accepted:

 

American Battery Metals Corporation

 

By:

 

 

Date:

 

Title:

 

 

 

 

--------------------------------------------------------------------------------

 

 

Exhibit A

Wiring Instructions

 

Account Name:

American Battery Metals Corporation

Routing Number:

121000248

Account Number:

--

Beneficiary Address:

930 Tahoe Blvd., Suite 802-16, Incline Village, NV 89451

Bank Name:

Wells Fargo Bank, N.A.

Bank Address:

420 Montgomery, San Francisco, CA 94104

--------------------------------------------------------------------------------

 

 

Exhibit B

Investor Questionnaire

 

To: American Battery Metals Corporation

 

American Battery Metals Corporation, a Nevada corporation (the “Company”), is
offering (the “Offering”), pursuant to an accompanying Subscription Agreement
(the “Subscription Agreement) Series C Preferred Stock and Warrants (as defined
therein).

 

I.The undersigned subscriber (the “Subscriber”) represents and warrants that he,
she or it comes within one category marked below and that for any category
marked, he, she or it has truthfully set forth, where applicable, the factual
basis or reason the Subscriber comes within that category. ALL INFORMATION IN
RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL EXCEPT AS NECESSARY
FOR THE COMPANY TO COMPLY WITH LAW AND/OR ANY RULES PROMULGATED BY ANY
REGULATORY AGENCY. The undersigned shall furnish any additional information
which the Company deems necessary in order to verify the answers set forth
below.  

 

CATEGORY A _____

The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000 (excluding the value of Subscriber’s principal residence).

 

 

CATEGORY B _____

The undersigned is an individual (not a partnership, corporation, etc.) who had
an individual income in excess of $200,000 in each of the two most recent years,
or joint income with his or her spouse in excess of $300,000 in each of those
years.

 

 

CATEGORY C _____

The undersigned is a director or executive officer of the Company, which is
issuing and selling the Units.

 

 

CATEGORY D _____

The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities, where the purchase is
directed by a “sophisticated person” as defined in Regulation 506(b)(2)(ii)
under the Securities Act of 1933.

 

 

CATEGORY E _____

The undersigned is an entity (other than a trust) all the equity owners of which
are “accredited investors” within one or more of the above categories. If
relying upon this category alone, each equity owner must complete a separate
copy of this Questionnaire.

 

 

 

 

 

(describe entity)

 

II.SUITABILITY (Please answer each question) 

 

(a)please state whether you have you participated in other private placements
before: 

 

YES

 

NO

 

 

(b)If your answer to question (d) above was “YES”, please indicate frequency of
such prior participation in private placements of: 

 

 

Public

Companies

 

Private

Companies

Frequently

 

 

 

Occasionally

 

 

 

Never

 

 

 

 

(c)Do you have any other investments or contingent liabilities which you
reasonably anticipate could cause you to need sudden cash requirements in excess
of cash readily available to you? 

 

YES

 

NO

 

 

(d)Are you familiar with the risk aspects and the non-liquidity of investments
such as the securities for which you seek to subscribe? 

 

YES

 

NO

 

--------------------------------------------------------------------------------

 

 

(e)Do you understand that there is no guarantee of financial return on this
investment and that you run the risk of losing your entire investment? 

 

YES

 

NO

 

 

III.FINRA AFFILIATION. 

 

Are you affiliated or associated with a FINRA member firm (please check one)?

 

YES

 

NO

 

If yes, please explain:

 

 

(a)Certain Criminal Convictions. 

 

Have you been convicted, within the past ten (10) years (or five (5) years, in
the case of the Company, its predecessors and affiliated issuers), of any felony
or misdemeanor:

 

·in connection with the purchase or sale of any security; 

 

·involving the making of any false filing with the U.S. Securities and Exchange
Commission (the “SEC”); or 

 

·arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment advisor or paid solicitor of purchasers
of securities? 

 

YES

 

NO

 

If yes, please explain:

 

 

(b)Certain Court Injunctions and Restraining Orders. 

 

Are you subject to any order, judgment or decree of any court of competent
jurisdiction that was entered within the past five (5) years and currently
restrains or enjoins you from engaging in any conduct or practice:

 

·in connection with the purchase or sale of any security; 

 

·involving the making of any false filing with the SEC; or 

 

·arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor of purchasers
of securities? 

 

YES

 

NO

 

If yes, please explain:

 

 

(c)Final Orders of Certain State and Federal Regulators. 

 

Are you subject to a Final Order1 (as defined below) of state regulators of
securities, insurance, banking, savings associations or credit unions; federal
banking agencies; the Commodity Futures Trading Commission; the National Credit
Union Administration?

 

YES

 

NO

 

If yes, please explain:

 

 

(d)SEC Disciplinary Orders or Cease-and-Desist Orders. 

 

Have you been the subject to any disciplinary order of the SEC or an order that
orders you to cease and desist from committing or causing a future violation of
any of the federal securities laws?

 

YES

 

NO

 

If yes, please explain:

 

 

 

______________________________

1 The term “Final Order” means a written directive or declaratory statement
issued by a federal or state agency described in Rule 506(d)(1)(iii) under the
Securities Act of 1933 under applicable statutory authority that provides for
notice and an opportunity for a hearing, which constitutes a final disposition
or action by that federal or state agency

--------------------------------------------------------------------------------

 

 

V.REPRESENTATIONS.   

 

(a)The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in this Questionnaire contained
herein and such answers have been provided under the assumption that the Company
will rely on them. 

 

(b)In furnishing the above information, the undersigned acknowledges that the
Company will be relying thereon in determining, among other things, whether
there are reasonable grounds to believe that the undersigned qualifies as a
Purchaser under Section 4(2) and/or Regulation D of the Securities Act of 1933
and applicable state securities laws for the purposes of the proposed
investment. 

 

(c)The undersigned understands and agrees that the Company may request further
information of the undersigned in verification or amplification of the
undersigned’s knowledge of business affairs, the undersigned’s assets and the
undersigned’s ability to bear the economic risk involved in an investment in the
securities of the Company. 

 

(d)The undersigned represents that (a) the information contained herein is
complete and accurate on the date hereof and may be relied upon by the Company,
(b) the undersigned will notify the Company immediately of any change in any
such information occurring prior to the acceptance of the subscription and will
promptly send you written confirmation of such change. The undersigned hereby
certifies that he, she or it has read and understands the Subscription Agreement
related hereto and (c) the undersigned acknowledges that the Company may be
required to publicly disclose the information provided in this Questionnaire and
that he, she or it consents to such public disclosure. 

 

(e)Subscriber (and any beneficial owners of Subscriber), are currently (a) in
compliance with the regulations of the Office of Foreign Assets Control (“OFAC”)
of the U.S. Department of Treasury and any statute, executive order, or
regulation relating thereto, (b) not listed on be listed on, the Specially
Designated Nationals and Blocked Persons List maintained by OFAC and/or on any
other similar list maintained by OFAC or other governmental authority pursuant
to any authorizing statute, executive order, or regulation, and (c) not a person
or entity with whom a U.S. person is prohibited from conducting business under
the OFAC Rules. 

 

(Signature page immediately follows).

--------------------------------------------------------------------------------

 

 

INVESTOR QUESTIONNAIRE EXECUTION PAGE

 

 

 

 

 

Signature

 

Signature (if purchasing jointly)

 

 

 

 

 

 

Name Typed or Printed

 

Name Typed or Printed

 

 

 

 

 

 

Entity Name

 

Entity Name

 

 

 

 

 

 

Address

 

Address

 

 

 

 

 

 

City, State and Country

 

City, State and Country

--------------------------------------------------------------------------------

 

 

Exhibit C

Risk Factors

 

An investment in our securities is subject to numerous risks, including the risk
factors described below. You should carefully consider the risks, uncertainties
and other factors described below, in addition to the other information set
forth in this Subscription Agreement, before making an investment decision with
regard to our securities. Any of these risks, uncertainties and other factors
could materially and adversely affect our business, financial condition, results
of operations, cash flows or prospects. Additional risks and uncertainties that
are not yet identified may also materially harm our business, financial
condition and results of operations.

 

RISKS RELATING TO OUR COMPANY 

 

We have incurred significant losses since our inception. We expect to incur
losses over the next several years and have no timeframe when or if we will
become profitable.

 

We have incurred significant operating losses in every year since inception and
expect to incur net operating losses for the foreseeable future. To date, we
have not generated any revenues from mining activities product sales and have
financed our operations primarily through private placements of our equity
securities. We are still in the early stages of development of our exploration
activities. We expect to continue to incur significant expenses and operating
losses over the next several years. Our net losses may fluctuate significantly
from quarter to quarter and year to year. Net losses and negative cash flows
have had, and will continue to have, an adverse effect on our stockholders’
deficit and working capital. Our ability to become and remain profitable depends
on our ability to successfully locate and commercialize one or more minerals. We
are only in the preliminary stages of most of these activities and have not yet
commenced other of these activities. We may never succeed in these activities
and, even if we do, may never generate revenues that are significant enough to
achieve profitability.

 

Our independent auditors have expressed substantial doubt about our ability to
continue as a going concern. If we do not continue as a going concern, investors
will lose their entire investment.

 

In their report on our financial statements included in this prospectus, our
independent auditors have expressed substantial doubt about our ability to
continue as a going concern. Our ability to continue as a going concern is an
issue raised as a result of ongoing operating losses and a lack of financing
commitments then in place to meet expected cash requirements. Our ability to
continue as a going concern is subject to our ability to generate a profit
and/or obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities, increasing sales or
obtaining loans and grants from various financial institutions where possible.
If we do not continue as a going concern, investors will lose their entire
investment. 

 

We must effectively manage the growth of our operations, or our company will
suffer.

 

Our ability to successfully implement our business plan requires an effective
planning and management process. If funding is available, we may elect to
increase the scope of our operations and acquire complimentary businesses.
Implementing our business plan will require significant additional funding and
resources. If we grow our operations, we will need to hire additional employees
and make significant capital investments. If we grow our operations, it will
place a significant strain on our existing management and resources.
Additionally, we will need to improve our financial and managerial controls and
reporting systems and procedures, and we will need to expand, train and manage
our workforce. Any failure to manage any of the foregoing areas efficiently and
effectively would cause our business to suffer.

 

Our results of operations may fluctuate from quarter to quarter, which could
affect our business, financial condition and results of operations.

 

Our results of operations may fluctuate from quarter to quarter depending upon
several factors, some of which are beyond our control. These factors include,
but are not limited to:

 

·Risks relating to the exploration efforts to expand our mineral deposits,
determining the feasibility and economic viability of commencing mining,
discover any deposits of minerals which can be mined at a profit, raise the
necessary capital to finance exploration and potential expansion, and our
ability to obtain or amend the necessary permits, consents, or authorizations
needed to advance expansion of the deposit or any processing facility; 

 

·Our ability to acquire additional mineral targets; 

 

·Our ability to obtain additional external funding; 

 

·Our ability to achieve any meaningful revenue; 

--------------------------------------------------------------------------------

 

 

·Our ability to engage or retain geologists, engineers, consultants and other
key management and mining personnel necessary to successfully operate and grow
our business; 

 

·The volatility of the market price of our common stock or our intention not to
pay any cash dividends in the foreseeable future; 

 

·Changes in any federal, state or local laws and regulations or possible
challenges by third parties or contests by the federal government that increase
costs of operation or limit our ability to explore on certain portions of our
property; 

 

·The market price for minerals and political events affecting the market prices
for minerals which may be found on our exploration properties; and 

 

·The other factors set forth under this “Risk Factors” section. 

 

These, as well as other factors, could affect our business, financial condition
and results of operations, and this makes the prediction of our financial
results on a quarterly basis difficult. Also, it is possible that our quarterly
financial results may be below the expectations of public market analysts.

 

We may be unable to maintain an effective system of internal control over
financial reporting, and as a result we may be unable to accurately report our
financial results.

 

Our reporting obligations as a public company place a significant strain on our
management, operational and financial resources and systems. We do not currently
have effective internal controls. If we fail to maintain an effective system of
internal control over financial reporting, we could experience delays or
inaccuracies in our reporting of financial information, or non-compliance with
the Commission, reporting and other regulatory requirements. This could subject
us to regulatory scrutiny and result in a loss of public confidence in our
management, which could, among other things, cause our stock price to drop.

 

We have been and expect to be significantly dependent on consulting agreements
for the development of our exploratory activities, which exposes us to the risk
of reliance on the performance of third parties.

 

In conducting our exploratory activities, we currently rely, and expect to
continue to rely, on consulting agreements with third parties as the Company
does not have the resources to employ the necessary staff required for such
activities. The failure to obtain and maintain such consulting agreements would
substantially disrupt or delay our exploratory activities. Any such loss would
likely increase our expenses and materially harm our business, financial
condition and results of operation.

 

If we are not successful in attracting and retaining highly qualified personnel,
we may not be able to successfully implement our business strategy. In addition,
the loss of the services of certain key employees would adversely impact our
business prospects.

 

If we are not successful in attracting and retaining highly qualified personnel,
we may not be able to successfully implement our business strategy. In addition,
the loss of the services of certain key employees, including Douglas Cole, our
Chief Executive Officer and Ryan Melsert, Chief Technology Officer, would
adversely impact our business prospects. Our ability to compete in the highly
competitive mining industry depends in large part upon our ability to attract
highly qualified managerial, geological, and mining personnel. In order to
induce valuable employees to remain with us, we intend to provide employees with
stock options that vest over time. The value to employees of stock options that
vest over time will be significantly affected by movements in our stock price
that we will not be able to control and may at any time be insufficient to
counteract more lucrative offers from other companies. Other mining companies
with which we compete for qualified personnel have greater financial and other
resources, different risk profiles, and a longer history in the industry than we
do. They also may provide more diverse opportunities and better chances for
career advancement. Some of these characteristics may be more appealing to
high-quality candidates than what we have to offer. If we are unable to continue
to attract and retain high-quality personnel, the rate and success at which we
can develop and commercialize products would be limited.

--------------------------------------------------------------------------------

 

 

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

 

Mineral exploration is a highly competitive and speculative business and we may
not be successful in seeking available opportunities.

 

The process of mineral exploration is a highly competitive and speculative
business. In seeking available opportunities, we will compete with a number of
other companies, including established, multi-national companies that have more
experience and resources than us. We compete with other exploration companies
looking for mineral deposits. Because we may not have the financial and
managerial resources to compete with other companies, we may not be successful
in our efforts to acquire projects of value, which, ultimately, become
productive. However, while we compete with other exploration companies, there is
no competition for the exploration or removal of mineral from our claims.

 

Since mineral exploration is a highly speculative venture, any potential
investor purchasing our stock under this offering might likely lose their entire
investment.

 

Potential investors should be aware of the difficulties normally encountered by
new mineral exploration companies such as American Battery Metals Corporation
and the high rate of failure of companies such as ours. Exploration for minerals
is a speculative venture necessarily involving substantial risk. The
expenditures to be made by us on our exploration program may not result in the
discovery of commercially exploitable reserves of valuable minerals.

 

We are sensitive to fluctuations in the price of minerals, which is beyond our
control. The price of minerals is volatile and price changes are beyond our
control.

 

The price of minerals can fluctuate. The prices of minerals have been and will
continue to be affected by numerous factors beyond our control. Factors that
affect the price of minerals include the demand from consumers for products that
use minerals, economic conditions, over supply from secondary sources and costs
of production. Price volatility and downward price pressure, which can lead to
lower prices, could have a material adverse effect on the costs or the viability
of our projects.

 

There are no proven reserves of minerals on our mineral claims and we cannot
guarantee that we will find any commercial quantities of minerals.

 

We have not found any mineral reserves on our claims and there can be no
assurance that any of our mineral claims contain commercial quantities of any
minerals. Even if we identify commercial quantities of minerals in any of our
claims, there can be no assurance that we will be able to exploit the reserves
or, if we are able to exploit them, that we will do so on a profitable basis.

 

Compliance with environmental considerations and permitting could have a
material adverse effect on the costs or the viability of our projects. The
historical trend toward stricter environmental regulation may continue, and, as
such, represents an unknown factor in our planning process.

 

All mining is regulated by government agencies. Compliance with such regulation
has a material effect on the economics of our operations and the timing of
project development. Our primary regulatory costs have been related to obtaining
licenses and permits from government agencies before the commencement of mining
activities. An environmental impact study that must be obtained on each property
in order to obtain governmental approval to mine on the properties is also a
part of the overall operating costs of a mining company. 

 

The possibility of more stringent regulations exists in the areas of worker
health and safety, the dispositions of wastes, the decommissioning and
reclamation of mining and milling sites and other environmental matters, each of
which could have an adverse material effect on the costs or the viability of a
particular project. Compliance with environmental considerations and permitting
could have a material adverse effect on the costs or the viability of our
projects.

 

Mining and exploration activities are subject to extensive governmental
regulation. Future changes in governments, regulations and policies, could
adversely affect our result of operations for a particular period and our
long-term business prospects.

 

Mining and exploration activities are subject to extensive regulation by
government agencies. Such regulation relates to production, development,
exploration, exports, taxes and royalties, labor standards, occupational health,
waste disposal, protection and remediation of the environment, mine and mill
reclamation, mine and mill safety, toxic substances and other matters.
Compliance with such laws and regulations has increased the costs of exploring,
drilling, developing, constructing, operating mines and other facilities.
Furthermore, future changes in governments, regulations and policies, could
adversely affect our results of operations in a particular period and our
long-term business prospects. 

--------------------------------------------------------------------------------

 

 

The development of mines and related facilities is contingent upon governmental
approvals, which are complex and time consuming to obtain and which, depending
upon the location of the project, involve various governmental agencies. The
duration and success of such approvals are subject to many variables outside our
control.

 

RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES

 

We expect to experience volatility in the price of our Common Stock, which could
negatively affect stockholders’ investments.

 

The trading price of our Common Stock may be highly volatile and could be
subject to wide fluctuations in response to various factors, some of which are
beyond our control. The stock market in general has experienced extreme price
and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of companies with securities traded in those markets.
Broad market and industry factors may seriously affect the market price of
companies’ stock, including ours, regardless of actual operating performance.
All of these factors could adversely affect your ability to sell your shares of
Common Stock or, if you are able to sell your shares, to sell your shares at a
price that you determine to be fair or favorable. 

 

The relative lack of public company experience of our management team could
adversely impact our ability to comply with the reporting requirements of U.S.
securities laws.

 

Our management team lacks significant public company experience, which could
impair our ability to comply with legal and regulatory requirements such as
those imposed by the Sarbanes-Oxley Act of 2002. Our senior management has
little experience in managing a publicly traded company. Such responsibilities
include complying with federal securities laws and making required disclosures
on a timely basis. Our senior management may not be able to implement programs
and policies in an effective and timely manner that adequately respond to such
increased legal, regulatory compliance and reporting requirements, including the
establishing and maintaining of internal controls over financial reporting. Any
such deficiencies, weaknesses or lack of compliance could have a materially
adverse effect on our ability to comply with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is
necessary to maintain our public company status. If we were to fail to fulfill
those obligations, our ability to continue as a U.S. public company would be in
jeopardy, we could be subject to the imposition of fines and penalties and our
management would have to divert resources from attending to our business plan. 

 

Our Common Stock is categorized as “penny stock,” which may make it more
difficult for investors to sell their shares of Common Stock due to suitability
requirements.

 

Our Common Stock is categorized as “penny stock”. The SEC has adopted Rule 15g-9
which generally defines “penny stock” to be any equity security that has a
market price (as defined therein) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. The price of
our Common Stock is significantly less than $5.00 per share, and is therefore
considered “penny stock.” This designation imposes additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and accredited investors. The penny stock rules require a
broker-dealer buying our securities to disclose certain information concerning
the transaction, obtain a written agreement from the purchaser and determine
that the purchaser is reasonably suitable to purchase the securities given the
increased risks generally inherent in penny stocks. These rules may restrict the
ability and/or willingness of brokers or dealers to buy or sell our Common
Stock, either directly or on behalf of their clients, may discourage potential
stockholders from purchasing our Common Stock, or may adversely affect the
ability of stockholders to sell their shares.

 

Financial Industry Regulatory Authority, Inc. (“FINRA”) sales practice
requirements may also limit a stockholder’s ability to buy and sell our Common
Stock, which could depress the price of our Common Stock.

 

In addition to the “penny stock” rules described above, FINRA has adopted rules
that require a broker-dealer to have reasonable grounds for believing that the
investment is suitable for that customer before recommending an investment to a
customer. Prior to recommending speculative low-priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low-priced securities
will not be suitable for at least some customers. Thus, the FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy
our Common Stock, which may limit your ability to buy and sell our shares of
Common Stock, have an adverse effect on the market for our shares of Common
Stock, and thereby depress our price per share of Common Stock. 

--------------------------------------------------------------------------------

 

 

The elimination of monetary liability against our directors, officers and
employees under Nevada law and the existence of indemnification rights for or
obligations to our directors, officers and employees may result in substantial
expenditures by us and may discourage lawsuits against our directors, officers
and employees.

 

Our Articles of Incorporation contain a provision permitting us to eliminate the
personal liability of our directors to us and our stockholders for damages for
the breach of a fiduciary duty as a director or officer to the extent provided
by Nevada law. We may also have contractual indemnification obligations under
any future employment agreements with our officers. The foregoing
indemnification obligations could result in us incurring substantial
expenditures to cover the cost of settlement or damage awards against directors
and officers, which we may be unable to recoup. These provisions and the
resulting costs may also discourage us from bringing a lawsuit against directors
and officers for breaches of their fiduciary duties, and may similarly
discourage the filing of derivative litigation by our stockholders against our
directors and officers even though such actions, if successful, might otherwise
benefit us and our stockholders.

 

We may issue additional shares of Common Stock or preferred stock in the future,
which could cause significant dilution to all stockholders.

 

Our Articles of Incorporation authorize the issuance of up to 1,200,000,000
shares of Common Stock with a par value of $0.001 per share. As of September 11,
2020, we had 449,989,317 shares of Common Stock outstanding; however, we may
issue additional shares of Common Stock in the future in connection with a
financing or an acquisition. Such issuances may not require the approval of our
stockholders. In addition, certain of our outstanding rights to purchase
additional shares of Common Stock or securities convertible into our Common
Stock are subject to some form of anti-dilution protection, which could result
in the right to purchase significantly more shares of Common Stock being issued
or a reduction in the purchase price for any such shares or both. Any issuance
of additional shares of our Common Stock, or equity securities convertible into
our Common Stock, including but not limited to, preferred stock, warrants and
options, will dilute the percentage ownership interest of all stockholders, may
dilute the book value per share of our Common Stock, and may negatively impact
the market price of our Common Stock.

 

Anti-takeover effects of certain provisions of Nevada state law hinder a
potential takeover of us.

 

Certain provisions of the Nevada Revised Statutes have anti-takeover effects and
may inhibit a non-negotiated merger or other business combination. These
provisions are intended to encourage any person interested in acquiring us to
negotiate with, and to obtain the approval of, our board of directors in
connection with such a transaction. However, certain of these provisions may
discourage a future acquisition of us, including an acquisition in which the
stockholders might otherwise receive a premium for their shares. As a result,
stockholders who might desire to participate in such a transaction may not have
the opportunity to do so.

--------------------------------------------------------------------------------

 

 

Exhibit D

Form of Warrant

 

 

(Attached)

--------------------------------------------------------------------------------

 

 

Exhibit E

Form of Designation of Rights Preferences and Limitations of Series C Preferred
Stock

 

 

(Attached)