# EDGAR Filing Document

**Accession Number:** 0001072772
**File Stem:** 0001477932-23-000645
**Filing Date:** 2023-1
**Character Count:** 302199
**Document Hash:** 222bff429e54b5e16da4245990ad3278
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001477932-23-000645.hdr.sgml**: 20230131

**ACCESSION NUMBER**: 0001477932-23-000645

**CONFORMED SUBMISSION TYPE**: 20-F/A

**PUBLIC DOCUMENT COUNT**: 175

**CONFORMED PERIOD OF REPORT**: 20211231

**FILED AS OF DATE**: 20230131

**DATE AS OF CHANGE**: 20230131

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TOMBSTONE EXPLORATION CORP
- **CENTRAL INDEX KEY:** 0001072772
- **STANDARD INDUSTRIAL CLASSIFICATION:** METAL MINING [1000]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-29922
- **FILM NUMBER:** 23572758

**BUSINESS ADDRESS:**
- **STREET 1:** 6529 E. FRIESS DRIVE
- **CITY:** SCOTTSDALE
- **STATE:** AZ
- **ZIP:** 85254
- **BUSINESS PHONE:** 480-588-8920

**MAIL ADDRESS:**
- **STREET 1:** 6529 E. FRIESS DRIVE
- **CITY:** SCOTTSDALE
- **STATE:** AZ
- **ZIP:** 85254

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PURE CAPITAL INC
- **DATE OF NAME CHANGE:** 20041117

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** UNIVERSAL DOMAINS INC
- **DATE OF NAME CHANGE:** 20000711

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FOUR CROWN FOODS INC
- **DATE OF NAME CHANGE:** 19981029

?xml version='1.0' encoding='ASCII'? tomb_20f.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 20-F/A**

**Amendment No. 1**

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended **December 31, 2021**

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

For the transition period from ____________ to ____________

☐ SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report __________________

Commission file number: 000-29922

---

| |
|:---|
| **TOMBSTONE EXPLORATION CORPORATION** |
| (Exact name of Registrant as specified in its charter) |

---

**<u>Not Applicable</u>**

(Translation of Registrant's name into English)

**<u>Canada</u>**

(Jurisdiction of incorporation or organization)

**6529 E. Friess Drive**

**<u>Scottsdale, AZ 85254</u>**

(Address of principal executive offices)

**Alan Brown**

**6529 E. Friess Drive**

**Scottsdale, AZ 85254**

**<u>(480) 588-8920</u>**

(Name, address and telephone of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

---

| | |
|:---|:---|
| Title of Class | Name of exchange on which registered |
| **Not Applicable** | **Not Applicable** |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act

**<u>Common Shares Without Par Value</u>**

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

**<u>Not Applicable</u>**

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

There were 12,210,746 Common Shares without par value issued and outstanding as at June 28, 2022.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ YES ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☒ Yes ☐ NO

Indicate by check mark whether the registrant (1) has 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 ☐ NO

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 ☐ NO (Not Applicable)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

---

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|:---|:---|:---|:---|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated Filer | ☒ | Emerging growth company | ☐ |

---

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YES&nbsp;&nbsp;&nbsp;&nbsp; ☒ NO

&nbsp;&nbsp;&nbsp;&nbsp;

**EXPLANATORY NOTE** 

This Amendment No. 1 to Form 20-F (the "Form 20-F/A") amends our annual report on Form 20-F for the year ended December 31, 2021 (the "Annual Report"), which was originally filed with the U.S. Securities and Exchange Commission on June 29, 2022. The purpose of this Form 20-F/A is to amend: (i) various disclosure relating to the risk factors associated with mining, "Item 3.D. Risk Factors — Risks Associated with Mining" section of the Report, (ii) various disclosure relating to the Bonanza Project, "Item 4.B.Information on the Company — The Bonanza Project" section of the Report; (iii) various disclosure relating to "Item 4.B. Information on the Company — Recent Developments On Operations" section of the Report; (iv) various disclosure relating to "Item 4.B. Information on the Company — 2021 Updates" section of the Report; and, (v) various disclosure relating to "Item 4.B. Information on the Company — Tombstone Project" section of the Report.

This Form 20-F/A does not reflect events occurring after the filing of the Annual Report and does not modify or update the disclosure therein in any way except as described above. No other changes have been made to the Annual Report. The filing of this Form 20-F/A should not be understood to mean that any statements contained in the Annual Report, as amended by this Form 20-F/A, are true or complete as of any date subsequent to the original filing date of the Annual Report. Accordingly, this Form 20-F/A should be read in conjunction with the Annual Report.

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| 2 |
| *[**Table of Contents**](#toc1)* |

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**<u>**TABLE OF CONTENTS**</u>**

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| | | | |
|:---|:---|:---|:---|
|  |  |  | **Page** |
|  |  | [Forward-Looking Statements](#fls) | 4 |
|  |  | [PART I](#p1) |  |
|  |  | [Financial Information and Accounting Principles](#fiacp) | 5 |
| [Item 1](#i1) |  | [Identity of Directors, Senior Management and Advisers](#i1) | 5 |
| [Item 2](#i2) |  | [Offer Statistics and Expected Timetable](#i2) | 5 |
| [Item 3](#i3) |  | [Key Information](#i3) | 5 |
|  | [A.](#i3a) | [Selected Financial Data](#i3a) | 5 |
|  | [B.](#i3b) | [Capitalization and Indebtedness](#i3b) | 5 |
|  | [C.](#i3c) | [Reasons for the Offer and Use of Proceeds](#i3c) | 5 |
|  | [D.](#i3d) | [Risk Factors](#i3d) | 6 |
| [Item 4](#i4) |  | [Information on the Company](#i4) | 10 |
|  | [A.](#i4aa) | [History and Development of the Company](#i4aa) | 10 |
|  | [B.](#i4b) | [Business Overview](#i4b) | 11 |
|  | [C.](#i4c) | [Organizational Structure](#i4c) | 26 |
|  | [D.](#i4d) | [Property, Plants and Equipment](#i4d) | 26 |
| [Item 4A](#i4a) |  | [Unresolved Staff Comments](#i4a) | 30 |
| [Item 5](#i5) |  | [Operating and Financial Review and Prospects](#i5) | 30 |
|  | [A.](#i5a) | [Operating Results](#i5a) | 30 |
|  | [B.](#i5b) | [Liquidity and Capital Resources](#i5b) | 30 |
|  | [C.](#i5c) | [Research and Development, Patents and Licenses, etc.](#i5c) | 31 |
|  | [D.](#i5d) | [Trend Information](#i5d) | 31 |
|  | [E.](#ige) | [Off-Balance Sheet Arrangements](#ige) | 31 |
|  | [F.](#i5f) | [Tabular Disclosure of Contractual Obligations](#i5f) | 31 |
|  | [G.](#i5g) | [Safe Harbor](#i5g) | 32 |
| [Item 6](#i6) |  | [Directors, Senior Management and Employees](#i6) | 33 |
|  | [A.](#i6a) | [Directors and Senior Management](#i6a) | 33 |
|  | [B.](#i6b) | [Compensation](#i6b) | 33 |
|  | [C.](#i6c) | [Board Practices](#i6c) | 34 |
|  | [D.](#i6d) | [Employees](#i6d) | 35 |
|  | [E.](#i6e) | [Share Ownership](#i6e) | 35 |
| [Item 7](#i7) |  | [Major Shareholders and Related Party Transactions](#i7) | 36 |
|  | [A.](#i7a) | [Major Shareholders](#i7a) | 36 |
|  | [B.](#i7b) | [Related Party Transactions](#i7b) | 36 |
|  | [C.](#i7c) | [Interests of Experts and Counsel](#i7c) | 36 |
| [Item 8](#i8) |  | [Financial Information](#i8) | 36 |
|  | [A.](#i8a) | [Consolidated Statements and Other Financial Information](#i8a) | 36 |
|  | [B.](#i8b) | [Significant Changes](#i8b) | 37 |
| [Item 9](#i9) |  | [The Offer and Listing](#i9) | 37 |
| [Item 10](#i10) |  | [Additional Information](#i10) | 37 |
|  | [A.](#A) | [Share Capital](#A) | 37 |
|  | [B.](#B) | [Articles of Incorporation and By-laws](#B) | 37 |
|  | [C.](#C) | [Material Contracts](#C) | 40 |
|  | [D.](#D) | [Exchange Controls](#D) | 40 |
|  | [E.](#E) | [Taxation](#E) | 41 |
|  | [F.](#F) | [Dividends and Paying Agents](#F) | 46 |
|  | [G.](#G) | [Statement by Experts](#G) | 46 |
|  | [H.](#H) | [Documents on Display](#H) | 46 |
|  | [I.](#I) | [Subsidiary Information](#I) | 47 |
| [Item 11](#i11) |  | [Quantitative and Qualitative Disclosures About Market Risk](#i11) | 47 |
| [Item 12](#i12) |  | [Description of Securities Other than Equity Securities](#i12) | 47 |
|  |  | [PART II](#p2) | 48 |
| [Item 13](#i13) |  | [Defaults, Dividend Arrearages and Delinquencies](#i13)  | 48 |
| [Item 14](#i14) |  | [Material Modifications to the Rights of Security Holders and Use of Proceeds](#i14)  | 48 |
| [Item 15](#i15) |  | [Controls and Procedures](#i15)  | 49 |
| [Item 16](#i16) |  | [\[Reserved\]](#i16) | 49 |
| [Item 16A](#i16a) |  | [Audit Committee Financial Expert](#i16a) | 49 |
| [Item 16B](#i16b) |  | [Code of Ethics](#i16b) | 49 |
| [Item 16C](#i16c) |  | [Principal Accountant Fees and Services](#i16c) | 50 |
| [Item 16D](#i16d) |  | [Exemptions from the Listing Standards for Audit Committees](#i16d) | 50 |
| [Item 16E](#i16e) |  | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](#i16e) | 50 |
| [Item 16F](#i16f) |  | [Changes in Registrant's Certifying Accountant](#i16f) | 50 |
| [Item 16G](#i16g) |  | [Corporate Governance](#i16g) | 51 |
| [Item 16H](#i16h) |  | [Mine Safety Disclosure](#i16h) | 51 |
|  |  | [PART III](#p3) | 52 |
| [Item 17](#i17) |  | [Financial Statements](#i17)  | 52 |
| [Item 18](#i18) |  | [Not Applicable](#i18) | 52 |
| [Item 19](#i19) |  | [Exhibits](#i19) | 52 |
|  |  | [SIGNATURES](#sig) | 54 |

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**GENERAL**

We use the U.S. dollar as our reporting currency. All references in this Annual Report to "dollars" or "$" are expressed in U.S. dollars, unless otherwise indicated. See also "Item 3. Key Information" for more detailed currency and conversion information. Our consolidated financial statements which form part of this Report are presented in U.S. dollars and are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").

**FORWARD-LOOKING STATEMENTS**

*Except for the statements of historical fact contained herein, some information presented in this Report constitutes forward-looking statements. When used in this Report, the words "estimate", "project", "believe", "anticipate", "intend", "expect", "predict", "may", "should", the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, changes in project parameters as plans continue to be refined, future prices of silver, as well as those factors discussed in the section entitled "Risk Factors". Although our Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause actual results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, prospective investors should not place undue reliance on forward-looking statements. The forward-looking statements in this Report speak only as to the date hereof. Our Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.* 

*Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.* 

*As used in this report, the terms "we", "us", "our", "Tombstone", "Tombstone Exploration", and "TMBXF" means Tombstone Exploration Corporation, unless otherwise indicated.*

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**PART I**

**FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES**

The consolidated financial statements and summaries of financial information contained in this document are reported in U.S. dollars ("$") unless otherwise stated. All such consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles.

The consolidated financial statements of the Company for the years ended December 31, 2021 have been audited by RBSM LLP, 770 East Warm Springs Road, Suite 225, Las Vegas, NV, 89119. The consolidated financial statements of the Company for the years ended December 31, 2020 and 2019 were audited by Sadler, Gibb & Associates, 344 West 13800 South, Suite 250, Draper, UT 84020.

**Item 1. Identity of Directors, Senior Management and Advisers** 

*Not Required.* 

**Item 2. Offer Statistics and Expected Timetable** 

*Not Required.* 

**Item 3. Key Information** 

***A. Selected Financial Data***

The following tables set forth the data of our fiscal years ended December 31, 2017 to December 31, 2021. We derived all figures from our financial statements as prepared by our management, approved by our audit committee. This information should be read in conjunction with our financial statements included in this annual report.

Our financial statements included in this Report have been prepared in accordance with accounting principles generally accepted ("GAAP") in the United States ("US"). All amounts are expressed in United States dollars.

**<u>SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY'S FINANCIAL STATEMENTS</u>**

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|:---|:---|:---|:---|:---|:---|
|  | **2017<sup>(1)</sup>**<br>**$** | **2018<sup>(1)</sup>**<br>**$** | **2019<sup>(1)</sup>**<br>**$** | **2020<sup>(1)</sup>**<br>**$** | **2021<sup>(1)</sup>**<br>**$** |
| **OPERATING DATA:** |  |  |  |  |  |
| Revenue |  |  |  |  |  |
| Gross Profit |  |  |  |  |  |
| Net Income (Loss) | (931290) | (558974) | (1702424) | (1369470) | (1846151) |
| Earnings (Loss) Per Share | (0.44) | (0.18) | (0.35) | (0.16) | (0.17) |
| **BALANCE SHEET DATA:** |  |  |  |  |  |
| Cash | 51311 | 39858 | 466377 | 176120 | 166747 |
| Total Assets | 51311 | 39858 | 1278150 | 3052512 | 3039690 |
| Total Liabilities | 372452 | 515381 | 690030 | 545827 | 845456 |
| Stockholders' Equity (Deficit) | (321141) | (475523) | (588120) | 2506685 | 2194234 |

---

<sup>(1)</sup> As of December 31 of the respective fiscal year.

***B. Capitalization and Indebtedness***

*Not required.* 

***C. Reasons for the Offer and Use of Proceeds***

*Not required.* 

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***D. Risk Factors***

*This Report contains forward-looking statements which relate to future events or our future performance, including our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", or "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks enumerated in this section entitled "Risk Factors", that may cause our Company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.* 

*While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Report. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.* 

*An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this Report in evaluating our Company and our business before purchasing shares of our Company's common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below are not the only ones facing our Company. Additional risks not presently known to us may also impair our business operations. You could lose all or part of your investment due to any of these risks.* 

**<u>Risks Related to Pandemics</u>**

***The near-term effects of the recent COVID-19 coronavirus pandemic are known, as they adversely affected our business. Longer term effects are not immediately known and may adversely affect our business, results of operations, financial condition, liquidity and cash flow.***

While the negative impact of COVID pandemic is lessening, the impact of COVID-19 has had adverse effects on our business by slowing down our ability to work with third parties outside of Arizona throughout much of 2021. The Company suffered Covid related schedule delays in relation to the leach pad construction such as losing most of the liner crew for almost three months, permit delays in the final water well approval, and finding a water well driller, everything is finally coming together for start-up. We believe Covid related issues affected our schedule by as much as five months in 2020 and affected various aspect of our construction, purchase, and location of parts and equipment. It is difficult to predict what other adverse effects, if any, COVID-19 can have on our business, or against the various aspects of same.

***General securities market uncertainties resulting from the COVID-19 pandemic.*** 

Since the outset of the pandemic the United States and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of the pandemic and the resulting reactions and outcomes of government, business and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the pandemic has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

**Risks Associated with Mining**

***We have not established proven or probable mineral reserves at our only producing property, the Bonanza Harquahala Mine project.***

We are considered an exploration stage company under the SEC criteria because we have not established mineral reserves on any of our properties. Under Regulation S-K Section1300, the SEC defines a "mineral reserve" as "an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project." To have mineral resources, there must be reasonable prospects for economic extraction. Per the SEC, "probable mineral reserves" are the economically mineable part of an indicated and, in some cases, a measured mineral resource and "proven mineral reserves" can only result from measured mineral resources. Mineral reserves cannot be considered proven or probable unless and until they are supported by a preliminary feasibility study or feasibility study, indicating that the mineral reserves have had the requisite geologic, technical, and economic work performed and are economically and legally extractable.

Due to the size of the Bonanza Harquahala Mine deposit, at the present time we do not believe it is necessary to incur the expense and delay involved in preparing a bankable feasibility study in order to bring the Bonanza Harquahala Mine project into production. Our production and after-tax cash flow estimates at the Bonanza Harquahala Mine are based in part on the mineralized material estimate, therefore, and because the estimate does not constitute proven reserves under Regulation S-K Section 1300, the production and after-tax cash flow estimates which are derived therefrom are inherently more uncertain than would otherwise be the case if the Bonanza Harquahala Mine were supported by a bankable feasibility study and estimate of proven reserves established in accordance with Regulation S-K Section 1300.

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In making the decision to commence mining the Bonanza Harquahala Mine, we made certain assumptions regarding operating and capital costs and project economic returns. These estimates of average cash operating costs are based upon, among other things (i) anticipated tonnage, grades and metallurgical characteristics of the ore to be mined and processed; (ii) anticipated recovery rates of silver and other metals from the ore; (iii) cash operating costs of comparable facilities and equipment; and (iv) anticipated climatic conditions. Actual cash operating costs, production and economic returns may differ significantly from those anticipated by our internal studies and estimates.

***Our mineralized material estimates are inherently imprecise.***

We have released estimates of mineralized material at the Bonanza Harquahala Mine. Mineralized material figures based on estimates made by geologists are inherently imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling that may prove to be unreliable or inaccurate. We cannot assure you that these estimates are accurate, and even if the estimates are accurate, the economic viability of the project may not justify exploitation.

***The exploration of all mineral properties is highly speculative in nature, involves substantial expenditures and is frequently non-productive.***

Mineral exploration is highly speculative in nature and frequently results in no or very little return on amounts invested to evaluate a particular property. Substantial expenditures are required to (i) establish the existence of a potential ore body through drilling and metallurgical and other testing techniques; (ii) determine metal content and metallurgical recovery processes to process metal from the ore; (iii) determine the feasibility of mine development and production; and (iv) construct, renovate or expand mining and processing facilities. If we discover a deposit or ore at a property, it usually takes several years from the initial phases of exploration until production is possible, if at all. During this time, the economic feasibility of a project may change because of increased costs, lower metal prices or other factors. As a result of these uncertainties, our exploration programs may not result in the identification of proven and probable reserves in sufficient quantities to justify developing a particular property.

***We face intense competition in the mineral exploration and exploitation industry, and we compete with our competitors for financing, for new mineral resource properties and for qualified managerial and technical employees.***

Our competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than those available to us. As a result of this competition, we may have to compete for financing and be unable to acquire financing on terms we consider acceptable. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. We may also have to compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration programs may be slowed down or suspended. If we are unable to successfully compete for the acquisition of suitable prospects for exploration in the future, there can be no assurance that we will acquire any interest in additional mineral resource properties. The occurrence of any of these things may cause us to cease operations as a company.

***Because of the inherent dangers involved in mineral exploration and exploitation, there is a risk that we may incur liability or damages as we conduct our business.***

The search for valuable minerals involves numerous hazards that may subject us to liability including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time, we have a general liability policy of $2 million for the Bonanza Harquahala Mine operations to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial position.

***Title to our resource properties may be challenged by third parties which could result in the loss of substantial amounts of money and resources and could cause our interests in our properties to expire or be forfeited.***

We have investigated the status of our titles to our mineral resource properties, and we are satisfied that the title to these properties is properly registered in the name of our Company, but we cannot guarantee that the rights to explore our claims will not be revoked or altered to our detriment. The ownership and validity of mining claims and concessions are often uncertain and may be contested. Should such a challenge to the boundaries or registration of ownership arise, the resolution of disputes or the process of clarifying the accuracy of our mining license registration could take substantial time and money. Further, the preservation of our title to our mineral claims requires that we continue to expend money or work the claims. If we fail to expend the necessary amount of money or if we fail to work our mineral claims, then our title to our mineral claims could expire or be forfeited.

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***Mineral prices are subject to dramatic and unpredictable fluctuations.***

The market price of precious metals and other minerals is volatile and has fluctuated widely, particularly in recent years. The prices of various metals are affected by numerous factors beyond our control, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities, and increased production due to improved mining and production methods. The supply of and demand for metals are affected by various factors, including political events, economic conditions and production costs in major mineral producing regions. Variations in the market prices of metals may have an impact on our ability to raise funding to continue exploration of our claims. In addition, any significant fluctuations in metal prices will impact our decision to accelerate or reduce our exploration activities. If the price of precious metals and other minerals should drop significantly, the cost of mineral extraction may be higher than is economically feasible. The marketability of minerals is also affected by numerous other factors beyond our control, including government regulations relating to royalties, allowable production and importing and exporting of minerals, the effect of which cannot be accurately predicted.

***Mineral operations are subject to government regulations which could have the effect of reducing or preventing us from exploiting any possible mineral reserves on our claims.***

Exploration activities are subject to national and local laws and regulations governing prospects, taxes, labor standards, occupational health, land use, environmental protection, mine safety, and others which may in the future have a substantial adverse impact on our Company's prospects. In order to comply with applicable laws, we may be required to make capital expenditures until a particular problem is remedied. Existing and possible future environmental legislation, regulation and action could cause additional expense, capital expenditure, restriction, and delay in the activities of our Company, the extent of which cannot be reasonably predicted. If we violate any applicable law or regulation, we could be forced to stop work and we could be fined. If we are forced to suspend our activities or if we are required to pay a large fine for a violation of these applicable laws and regulations, our business could be adversely affected.

***Our operations may be subject to environmental regulations which may result in the imposition of fines and penalties.***

Our operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. Environmental legislation is evolving in a manner which means stricter standards, and enforcement; fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers, and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

**Risks Related to Our Company** 

***The fact that we have not generated any operating revenues for the last ten years raises substantial doubt about our ability to continue as a going concern.***

We have not generated any operating revenues since our inception and, in all likelihood, will continue to incur operating expenses without revenues until our mining claims are fully developed and in commercial production. As a result, we need to generate significant revenues from our operations or obtain financing. We cannot assure that we will be able to successfully explore and develop our mining claims or assure that viable reserves exist on the claims for extraction. These circumstances raise substantial doubt about our ability to continue as a going concern. It is unlikely that we will generate any funds internally until we discover commercially viable quantities of precious metals and other minerals. If we are unable to generate revenue from our business in the next twelve months, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these actions were to become necessary, we may not be able to continue to explore our properties or operate our business and if either of those events happen, then there is a substantial risk our business would fail.

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***We have not generated any revenue from our business, and we may need to raise additional funds in the near future. If we are not able to obtain future financing when required, we might be forced to discontinue our business.***

Because we have not generated any revenue from our business and we cannot anticipate when we will be able to generate revenue from our business, we will need to raise additional funds for the further exploration and future development of our mining claims and to respond to unanticipated requirements or expenses. Although we have been successful in the past in obtaining financing, there can be no assurance that we will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain such additional financing could result in a delay or indefinite postponement of further exploration and development of our projects with the possible loss of such properties.

***Canada Business Corporations Act provides for the indemnification of our officers and directors against all costs, charges and expenses incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding.***

The Canada Business Corporations Act contains provisions limiting the liability of our officers and directors for their acts and failures to act and for any loss, damage or expense incurred by our Company which shall happen in the execution of their duties of such officers or directors, unless the officers or directors did not act honestly and in good faith with a view to the best interests of our Company. Such limitations on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our shareholders from suing our officers and directors based upon breaches of their duties to our Company, though such an action, if successful, might otherwise benefit our Company and our shareholders.

**Risks Relating to our Securities**

***Investors' interests in our Company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.***

We are currently without a source of revenue and will most likely be required to issue additional shares to finance our operations and, depending on the outcome of our exploration programs, may issue additional shares to finance additional exploration programs of any or all of our projects or to acquire additional properties. If we are required to issue additional shares to raise financing, your interests in our Company will be diluted and you may suffer dilution in your net book value per share depending on the price at which such securities are sold. Further, if we issue any share purchase warrants or share purchase options, and they are exercised, there will be a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the market price of our common shares.

***Investors' interests in our Company will be diluted and investors will suffer dilution in their net book value per share if we issue employee/director/consultant options.***

We may in the future grant to some or all of our directors, officers, insiders, and key employees, options to purchase our common shares as non-cash incentives to those persons. Such options may be granted at exercise prices equal to market prices, or at such other price as may be permitted under the policies of any stock exchange upon which our securities are traded (currently, our common shares are listed for trading on the OTCQB Venture Market), when the public market is depressed. The issuance of additional shares will cause our existing shareholders to experience dilution of their ownership interests.

***We do not plan to pay any Dividends in the foreseeable future.***

The Company has never paid a dividend and it is unlikely that the Company will declare or pay a dividend until warranted based on the factors outlined below. The declaration, amount, and date of distribution of any dividends in the future will be decided by the Board of Directors from time-to-time, based upon, and subject to, the Company's earnings, financial requirements and other conditions prevailing at the time.

***In the event that key employees leave the Company, the Company would be harmed since we are heavily dependent upon them for all aspects of our activities.***

The Company is heavily dependent on our officers and directors, key employees and contractors, the loss of whom could have, in the short-term, a negative impact on our ability to conduct our activities and could cause a decline in profitability of our properties or additional costs from a delay in development or exploration of properties. The Company has consulting agreements with key employees and contractors, and an employment agreement with our President and CEO, Alan Brown.

***We face exposure to fluctuations in the price of our common stock due to the very limited cash resources we have.***

The Company has very limited resources to pay its professionals. If we are unable to pay professionals in order to perform various professional services for the Company, it may be difficult, if not impossible, for the Company to maintain its reporting status under the Exchange Act. If the Company is not able to maintain its reporting status, it would become "delisted" and this would potentially cause an investor or an existing shareholder to lose all or part of his investment.

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***The Company does not anticipate any contingency upon which it would voluntarily cease filing reports with the SEC, even though it may cease to be required to do so.***

It is in the compelling interest of the Company to report its affairs annually and currently, as the case may be, generally to provide accessible public information to interested parties, and also specifically to maintain its qualification for the OTCQB, if and when the Company's intended application for submission is effective.

***The success of the Company will depend on the developments of an active trading market.***

While the Company's common shares are included on Over the Counter Markets (OTCQB), there can be no assurance that an active trading market for the common shares will develop. In the absence of such a market, investors may be unable to readily liquidate their investment in the common shares. The market for equity securities in general has been volatile and the trading price of the common shares could be subject to wide fluctuations in response to general market trends, changes in general conditions in the economy, the financial markets and other factors that may be unrelated to the Company's performance.

***Low-Priced Stocks are subject to greater Disclosure Requirements.***

The Securities and Exchange Commission adopted rules ("Penny Stock Rules") that regulate broker-dealer practices in connection with transactions in penny stocks. The common shares of the Company fall within the Commission's definition of a penny stock. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current prices and volume information with respect to transactions in such securities is provided by the exchange or system). The Penny Stock Rules require a broker-dealer, prior to effecting a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the Penny Stock Rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that is subject to the Penny Stock Rules. At any time when the Company's common stock is subject to the Penny Stock Rules, shareholders may find it more difficult to sell their shares.

**Item 4. Information on the Company** 

***A. History and Development of the Company***

The Company was incorporated as a federal company pursuant to the laws of Canada under the *Canada Business Corporations Act* (the "Act") on October 30, 1997, under the name 3430502 Canada Ltd. In December 1997, the Company changed its name to Four Crown Foods Inc. At the time, the Company was involved in the food and beverage retail business. Then in June 2000, the Company changed its name to Universal Domains Incorporated and operated in the domain registration business upon the acquisition of the license rights to a domain registration agreement for the ".cc" internet registration domain.

In November 2003, the Company ceased all operations and in September 2004, the Company changed its name to Pure Capital Incorporated. From that time until November 1, 2006, the Company's goals were to continue to reduce the liabilities of the Company in an effort to obtain additional financing and explore the possibilities of starting a new operating business, and/or merge with or become acquired by another company or entity.

On November 27, 2006, the Company acquired full rights and title to certain mining and exploration claims located in the State of Arizona along with other equipment and properties from Redhawk Exploration & Development, Inc., a Texas corporation.

Then on February 6, 2007, the Company changed its name to Tombstone Exploration Corporation to reflect its current operations in the mining and exploration industry. Since that time, we have been operating in the mineral resource business and the primary focus of operations has been to generate revenue from the production of silver and gold, as well as additional base minerals such as copper, lead and zinc. The goal is to produce metals and minerals at or below standard industry costs. The historical nature of mining activities of our present holdings and the acceptance of governmental agencies will enable easier startup here than in non-mining oriented locations.

Following identification of suitable areas during our drilling programs, which we anticipate will continue in the future, the Company may initiate mineral extraction if sufficient funding and permitting are secured. These efforts will provide an operating financial base from which to expand. Continuing geological research, testing and drilling is planned based on the initial geological report. This will assist in the identification of key target areas, as well as establish reserve categories.

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Discussions with precious metal processing and consulting companies to assist in the design of the overall operation of our mining claims have been initiated. Relationships have already been established with refineries, assay companies and engineering firms supporting worldwide mineral processing operations.

***B. Business Overview***

&nbsp;&nbsp;&nbsp;&nbsp;

We are a mining company, holding a 40% interest in the Bonanza Project property in Salome, Arizona ("Bonanza Property"), a 100% interest in the Stardust Project in Yuma County, Arizona (the "Stardust Property"), and a 100% interest in the Tombstone Project in Tombstone, Arizona ("Tombstone Property"). The Bonanza Property, Stardust Property, and the Tombstone Property are the Company's only material properties as determined pursuant to Item 1303(a) of Regulation S-K as we have a direct economic intertest in these properties.

This business generally consists of three stages: exploration, development, and production. We are a mineral resource company in the exploration stage because we have not yet found mineral resources in commercially exploitable quantities and are engaged in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage.

Mineral resource exploration can consist of several stages. The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not they are or have in the past been extracted.

After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources. This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease, or concession). After acquisition, exploration would probably begin with a surface examination by a prospector or professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues underground, possibly trenching in these covered areas to allow sampling of the underlying rock. Exploration also commonly includes systematic regularly spaced drilling in order to determine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock. If minerals are found, exploration might culminate in a feasibility study to ascertain if the mining of the minerals would be economic. A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage.

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***<u>The Bonanza Project</u>***

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| LOCATION: | Salome, Arizona lat. <br>33° 40.131'N long. <br>113° 35.177'W |
| OWNERSHIP: | 40% Tombstone |
|  | 60% Goldrock Resources, Inc. |
| MINERALS: | Gold, Silver, and Copper |
| PROPERTY SIZE: | 2,656 acres |
| ANNUAL PRODUCTION: | 2021 = See "Bonanza Mine Production Statistics" table on page 14 below. |
|  | 2020 = Zero |
|  | 2019 = Zero |
| TITLES, MINERAL RIGHTS, LEASES OR OPTIONS: | BLM Land Claims, 2,065 acres |
| PROJECTSTAGE: | Production; |
| KEY PERMIT CONDITIONS: | ADEQ Permit to Process good until 2027 |
| MINE TYPES/MINERALIZATION STYLES: | Gold and Silver |
| PROCESSING PLANTS AND OTHER AVAILABLE FACILITIES: | Heap Leach Carbon Processing Facility |

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![tomb_20fimg2.jpg](tomb_20fimg2.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;

Gold was discovered in the Harquahala area in 1862. There were a reported 120,560 ounces of gold from the mine from 1891 to 1929. Grades of gold were reported to be over an ounce per ton of gold from the Bonanza mine. The disclosure of the estimates set forth herein, including, but not limited to, volumetric calculations, sampling, and metallurgic testing are derived directly from the "Technical Report on the Preliminary Economic Assessment of the Harquahala Project, La Paz County, Arizona"(the "Technical Report") which was last updated June 2018, (a copy of which is included as an exhibit 96.1 to this Report). We believe these estimations are accurate and that all tonnage and grade estimations are exploration targets.

The TR was prepared on behalf of the Company by Todd S Fayram, QP and Peter Mejstrick of Continental Metallurgical Services, LLC Geological Consultant.

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| The Bonanza Mine Area is 5 miles North of I-10 Exit 53 (Hovatter Rd), ~110 miles West of Phoenix Airport. |
| +180,000 oz Au (Gold) mined 1880s-early 1900s, @ 1+ oz Au/ton: high angle shear zones on thrust sheets |
| Mine water table at ~200'; Gold Zone continued; mill could not process sulfides, so not mined |
| Potential low-grade targets along miles long thrust plate. |
| Bonanza mine/mill left 500,000+ tons dumps/tails @ 0.04-0.10 oz Au/ton containing 25-40,000+ oz Au |
| Previous/current leach test-work on tailings/dumps indicate recovery of Au @ 88%+; Ag @ 25% + |
| The tonnage and grade estimates are all reported as exploration targets.  |

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The Bonanza Project is Tombstone's latest acquisition, and the property includes the Harquahala and Golden Eagle mines, located approximately eight miles south of Salome, Arizona. The project totals 2,656 acres and has significant underground workings, from which some 180,000-200,000 ounces of gold were reportedly produced from high-grade ore in the late 1800's and early 1900's. Mined rock and tailings from previous operations represent an additional potential resource. The project will be in partnership with Richard Moores, CEO and Director of Goldrock Resources, Inc., and Todd Fayram, Director of Goldrock Resources, Inc., who have a 60% majority investment in the project, and Tombtsone owns a 40% interest. Bonanza Area Claim Block with Defined 250-350k oz Au Target Areas.1-1.5+ MM oz Au Overall Potential.

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| $3 MM Bonanza Heap Leach to generate US$20-35+ million within 12 months of startup. |
| 2-4 months final conformations/design/bids, condemnation drill/trench, initiate permitting. |
| Permitting to take 9-15 months, US$125-150,000; similar to nearby heap leach (Phase 1 – Moss Mine). |
| +/- US$3.0 MM capital (Vendor bids,+0.5MM Contingency), 4-6 months construction, 4-8 months operation. |
| 3.5k oz Au (Gold) of 20-30k+oz Au projected, yields capital/ops break-even; US$1,200/oz Au; $16 /oz Ag |
| –Additional nearby dumps & tailings could add 4-6,000+ oz Au to leach pad inventory. |

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*Note on Exploration Targets: The ranges of potential tonnage and grade (or quality) of the exploration target are conceptual in nature; there has been insufficient exploration of the relevant property or properties to estimate a mineral resource; it is uncertain if further exploration will result in the estimation of a mineral resource; and, (iv) the exploration target therefore does not represent, and should not be construed to be, an estimate of a mineral resource or mineral reserve.*

<u>Facility Description:</u>

Bonanza Mining Company (Bonanza) will operate the Harquahala Mine to reprocess historical (pre-1986) surface gold bearing ores and tailings. The operation will collect the historic ores and tailings to extract and recover the gold.

Approximately 242,000 cubic yards of historic ores and tailings will be consolidated in controlled areas prior to being sized and placed onto a newly constructed double-lined heap leach pad (approximately 314,000 square feet (sq. ft)). The gold will be extracted in the newly constructed 4,126,239-gallon double-lined pregnant solution pond, with a maximum operational storage requirement estimated to be 3,965,780 gallons. The extraction operation will consist of loading and hauling; primary and secondary crushing; agglomeration and stacking; heap leaching using cyanide solution, storage of process solutions in ponds; and precious metals recovery using granular activated carbon (GAC). The final phase of the gold extraction from the GAC will be performed off-site. The facility will includes an intermediate stockpile that will be permitted under a Type 2.02 general permit.

<u>Update to the permitting:</u>

The three permits necessary to operate are: Aquifer Protection Permit (APP), BLM Mine Plan of Operations for Public Land (MPO), and a Reclamation Plan for private property are all well into the permitting process. All permits are considered administratively complete as of December 31, 2020.

In January 2020, Arizona State Mining Inspector concluded the Company met all criteria required to commence operations on the Bonanza Mining Project. Tombstone has completed all steps of the permitting process and is awaiting the approval of the final necessary permit to begin construction. Extensive exploration of the property has revealed significant gold and silver reserves, as previously described in the April 15, 2020 press release.

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This letter states, "The Reclamation Plan submittal for the Bonanza Mining Company - Harquahala Mine Project operation has been found to meet the applicable requirements of the Mined Land Reclamation Act and the Rules and plan approval criteria as established under A.R.S. Title 27, Chapter 5, 27-971. The site is located approximately 8 miles south of Salome, La Paz County, Arizona, within Sections 15, 16, 21-23, 27 and 28, Township 4 North, Range 13 West, of the Gila and Salt River Baseline and Meridian. The site is accessed via Harquahala Mine Road and Hovatter Road from Interstate 10."

In February 2020, The Company announced the Arizona Department of Environmental Quality (ADEQ) proposes to issue an Aquifer Protection Permit (APP) for the subject facility that covers the life of the facility, including operational, closure, and post-closure periods unless suspended or revoked pursuant to Arizona Administrative Code (A.A.C.) R18-9-A213. The requirements contained in this Permit will allow the permittee to comply with the two key requirements of the Aquifer Protection Program: 1) meet Aquifer Water Quality Standards (AWQS) at the Point of Compliance (POC); and 2) demonstrate Best Available Demonstrated Control Technology (BADCT). BADCT's purpose is to employ engineering controls, processes, operating methods or other alternatives, including site-specific characteristics (i.e., the local subsurface geology), to reduce discharge of pollutants to the greatest degree achievable before they reach the aquifer or to prevent pollutants from reaching the aquifer.

**Best Available Demonstrated Control Technology (BADCT):**

Facilities regulated by this permit shall be designed, constructed, operated, and maintained to meet requirements specified by A.R.S. §49-243(B) and A.A.C. R18-9-A202(A)(5).

**<u>Heap Leach Pad:</u>**

Heap leaching is an industrial mining process used to extract precious metals and other compounds from ore using a series of chemical reactions that absorb specific minerals and re-separate them after their division from other earth materials. Similar to in situ mining, heap leach mining differs in that it places ore on a liner, then adds the chemicals via drip systems to the ore, whereas in situ mining lacks these liners and pulls pregnant solution up to obtain the minerals. Heap leaching is widely used in modern large-scale mining operations as it produces the desired concentrates at a lower cost compared to conventional processing methods such as flotation, agitation, and vat leaching.

This facility will cover an area of approximately 314,000 square feet, and contain approximately 242,000 cubic yards of existing gold bearing ores and tailings. The ore and tailings will be consolidated into controlled areas prior to being sized and placed on the lined leach pad. The liner system for the leach pad shall be placed on 6 inches of prepared subgrade. The bottom liner shall consist of 30-mil scrim laminated low-density polyethylene (LDPE) with LDPE film geomembrane that is equivalent to 60 mil HDPE geomembrane. The upper liner shall consist of an ultra violet (UV) resistant 45-mil double scrim high-density polyethylene (HDPE) with LDPE coating geomembrane. A uniaxial geonet shall be placed between the two liners. The liners shall be secured around the perimeter of the leach pad in an anchor trench that is 2 feet wide and 2 feet deep. A minimum of 18 inches of ¾-inch minus drain rock shall be placed on upper liner. To promote pregnant solution transfer, 3-inch and 6-inch perforated collection pipes will terminate adjacent to the 12-inch pipe, and solution will pass through the drain rock and into the 12-inch collection pipe. Two 12-inch HDPE perforated pipes shall be located in a solution collection channel near the center of the leach pad to convey solutions to the Pregnant Solution Pond. A containment berm shall be constructed 12 feet from and 2 feet higher than the adjacent toe of the leach pad. The containment berm shall be capable of containing run off a 100-year, 24-hour storm and solution drain down and routing the fluids to the Pregnant Solution Pond. Liquid collected in the containment berm will flow by gravity over the double-lined liner system before cascading over this double liner system into the pregnant solution pond. Surface water run-on shall be collected in channels capable of handling stormwater from a 100 year, 24-hour storm event and diverted around the facility. The finish grade (maximum elevation) of the heap leach pile shall not exceed 1,760 feet above mean sea level (AMSL).

**<u>Pregnant Solution Pond:</u>**

This facility shall be located adjacent to the west side of the Heap Leach Pad. Pregnant solution shall be collected in a double-lined pond having a capacity of 4,126,239 gallons including 2 feet of freeboard. The liner system for the lead pond shall be placed on 6 inches of prepared subgrade overlaid by 6 inches of geosynthetic clay liner. The bottom liner shall consist of 30-mil scrim laminated LDPE with LDPE film geomembrane that is equivalent to 60 mil HDPE geomembrane. The upper liner shall consist of an UV resistant 45-mil double scrim HDPE with LDPE coating geomembrane. A uniaxial geonet shall be placed between the two liners. The liners shall be secured around the perimeter of the pond in an anchor trench that is 2 feet wide and 2 feet deep. An LCRS sump shall be constructed between the two liners near the southeastern portion of the pond. The LCRS shall be equipped with a dedicated, automatic, fluid-level activated pump capable of pumping 15,500 gallons per day. Surface water run-on shall be collected in channels capable handling stormwater from a 100 year, 24-hour storm event and diverted around the facility.

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**Compliance with Aquifer Water Quality Standards (AWQS):**

To ensure that site operations do not result in violation of Aquifer Water Quality Standards, the point of compliance well located 200 feet west of the Leach pad shall be sampled and analyzed for the parameters listed in Section 4.2, Table 4.2.4 in the permit. Facility inspection and operational monitoring shall be performed on a routine basis in Section 4.2, Table 4.2.1, in the permit for the Pregnant Solution Pond and the Heap Leach Pad.

<u>Recent Developments on Operations:</u>

In 3rd quarter 2019, the Bonanza Mining Company (Joint Venture Company) (Bonanza) identified that their permitting engineers, CDM Smith, submitted the Air Quality permit on July 2nd and received a determination of completeness letter the same day. The completeness determination effectively starts the clock for air permit engineering review with expectations of completing the air permitting in November 2019.

The Arizona Department of Environmental Quality (ADEQ) received the required Aquifer Protection Permit (APP) for the Bonanza Mining Company. The Department considered the application administratively complete on August 12, 2019.

February 27, 2020, the Company announced the ADEQ received the mandatory cash deposit for financial assurance for the approved cost estimate in the amount of Two hundred and Eight Thousand, Five Hundred and Fourteen dollars ($208,514**)** for the Aquifer Protection Permit for the Harquahala Mine Permit.

On April 15, 2020, the Company announced that it had received the final permit necessary to launch construction, and shortly after, active gold production at the Harquahala Mine. The ADEQ specifically authorized Bonanza Mining Company to "operate the Harquahala Mine, a gold mine located in an unincorporated area 8 miles south of the Town of Salome, La Paz County, Arizona" based on the issuance of AQUIFER PROTECTION PERMIT NO. P-512944, which will remain effective for the life of the facility.

The issuance of this permit allows for the construction of a 242,000 cubic yard heap leach pad and a 4,126,239 gallon double-lined pregnant solution pond, where consolidated historic ores and tailings at Harquahala will be subject to gold extraction through conventional cyanide leaching.

The initial portion of the Phase One leach pad is expected to accommodate 500,000 tons of already mined material that have been tested to show upwards or more of 26,000 - 50,000oz of gold. The foregoing tonnage and grade estimations are exploration targets derived from the Technical Report (see Exhibit 96.1, attached hereto and incorporated herein by reference).

Further, on April 21, 2020, the Company provided an update as to the status as construction begins.

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| Location of On-site Water Well. The Company is excited to report that the Partners have discovered an on-site water well capable of fully supplying the construction and production process at Harquahala, including the leaching extraction process following the construction of the heap leach pad. Management notes that this discovery will significantly reduce the cost of production on a per-unit basis and shorten total time to market extracted gold. |
| Full Permissions in Place. Further to the Company's release dated April 15, the Arizona Department of Environmental Quality ("ADEQ") has now confirmed that all permissions are in place to allow for full development and Construction at the Harquahala Mine site. |
| Construction Timeline. Construction of the 242,000 cubic yard heap leach pad and 4,126,239 gallon double-lined pregnant solution pond are slated to begin in May. Management now expects the construction phase to last 60-90 days, after which time the Company will begin to extract tangible gold from the site and bring it to market. |

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On May 20, 2020, the Company announced the execution of a contract with 5D Mining & Construction, Inc. ("5D") for the building of the heap leach pad for the Bonanza Harquahala Mine. Phase One construction of the Bonanza Heap Leach Project is anticipated to start on or about May 25, 2020, with full project completion expected by mid-September. Per the contract, 5D will supply labor, equipment and materials to perform all of the civil work and liner installation for phase one. Phase Two, currently under consideration, includes a much bigger package where we have potentially identified 150,000 – 300,000 oz of Au in defined underground targets in and around the old Harquahala mine with significant upside potential. The 5D contract for construction for this first phase of the Bonanza Heap Leach Project includes all survey work required for layout and grading, debrushing the work area, demolishing obstructing concrete structures, relocating and stockpiling the existing tailings, mass grading for the PLS pond and leach pad, all trenching and backfill for the liner anchor trench, fine grading for the liner, installation of the liner and perforated drain pipe, including required support work.

In June 2020, the Company announced construction has begun on the leach pad at the Harquahala Mine in La Paz County, Arizona. The 5D Mining and Construction Company effectively grubbed and staked the whole pad area and was halfway through the excavation of the leach pond by end of June 2020. The completion of the construction phase is on track for completion by the end of the summer and production will commence immediately after that.

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*<u>2021 updates:</u>*

In February 2021, the Company announced that construction of the pad is complete with the finish of the liner installation. Field Lining Systems Inc. were able to complete the liner install and the final report will be sent to the Arizona Department of Environmental Quality. Crushing material and laying of the 18-inch liner protection layer has started using low grade material from the south side of the mine area. Stacking will commence towards the end of next week with completion of laying the protection layer and leaching will commence shortly thereafter. The carbon columns required for gold recovery are now set-up with all piping and electrical installation to be completed this week. The cyanide tank was also delivered and is being set-up and prepped for production. The long-awaited water well has been drilled to 706 feet and produces approximately 310 gallons per minute; the well however will potentially produce twice this amount of water. The pipeline and well pumps are being installed and should be ready to pump water towards the end of next week. Items such as the office trailer and storage are in transit to the location.

In April 2021, the Company announced approximately 25,000 tons of rock have been crushed to the appropriate size; the crushing is a precursor to stacking. The crushed rock is the highest known gold grade material on the site and will allow for a quick start to leaching and recovery.

An agglomerator for ore agglomeration was located approximately four weeks ago and moved to site and set-up for operation. All ore feeding equipment, conveyors, cement silo, stacker and feeder will be put in place early this week with electrical being installed shortly thereafter. The agglomerator was the final piece of equipment needed at the site and agglomeration and pad stacking will start towards the end of the week.

The leach pad and all of the associated piping and processing equipment have been installed. Final electrical installation will be completed this week. Testing of the pumps and equipment will take place early in the week with no problems expected. The water well was finished and provides well over 250 gallons per minute. The water infrastructure is in place and water is now being provided to the Harquahala site through our permitted pipeline system. An automated water filling system for the onsite tank is being installed. All cyanide related infrastructure is on site and in place. An office trailer has also been placed on site for administrative functions.

The Bonanza Mine was completely built out and commenced production June 3, 2021, when the pH levels increased to allow for safe sustained leaching. Approximately 35,000 tons of rock have been placed on the leach pad with the entire area under leach. Carbon has been placed in all four carbon columns and is collecting gold & silver from solution. Bonanza expects to ship its first carbon in approximately two weeks depending on how fast the rock leaches and how quickly the carbon loads.

In July 2021, the Company announced first results were received from production in June that started at the Bonanza Harquahala Mine. Production of 83.7 oz of Dore was stripped from the Bonanza's activated carbon by Metals Research and sent to Metalore Inc. for final disposition. First payment from the Dore is expected during the week beginning on July 12, 2021.

In August, 2021, the Company announced the second pour from production of 262.59 oz of Dore was stripped from the Bonanza's activated carbon by Metals Research and sent to Metalor USA Refining Corp. for final disposition. This is more than a 300% increase from the 83.7 oz of Dore from the first pour announced on July 13, 2021. At or around July-August 2021, the price of gold remained stable and strong at the price $1,780/oz.

In October 2021, the Company announced the third pour production of 210 oz of Dore stripped from the Bonanza's activated carbon by Metals Research and sent to Metalor USA Refining Corp. for final disposition.

The table below indicates the aggregate annual production from Bonanza Mine in the last three fiscal years:

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| | | | |
|:---|:---|:---|:---|
| **Bonanza Mine Production Statistics:** | **Bonanza Mine Production Statistics:** | **Bonanza Mine Production Statistics:** | **Bonanza Mine Production Statistics:** |
| **Year** | **Tonnage** | **Gold** <br>**Recovered/Sold** <br>**(oz)**  | **Silver Recovered/Sold**<br>**(oz)** |
| 2019 | Nil | Nil | Nil |
| 2020 | Nil  | Nil  | Nil |
| 2021 | 25,000 | 174.105 | 160.692 |

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*The Company owns 40% of the Bonanza Mine which is disclosed in our 20-F Financial Statements and identified in note 3, thereto*. The Company has recorded its investment in Bonanza in accordance with ASC 323-10, *Investments – Equity Method and Joint Ventures*"

*<u>2022 updates:</u>*

In January 2022, the Company announced that as of the end of January 2022 the processing facility at the Bonanza Harquahala Mine will be operating 24/7. Between July 2021 and January 2022, the Company and the Bonanza Mining Corporation had six successful pours of gold and silver since starting its Heap Leach Operation in Arizona, July 2021, and work is continuing to build the much bigger operation going into 2022. The crushing contract has been awarded to DV Gravel and Exploration of Eureka, NV. DV Gravel has begun to move their equipment to site. Conveyors and dozer have arrived on site, and the remaining equipment is to be transported this week and ready to start. The site preparation for the crusher and set up to follow. We will start the rock crushing and expect to be putting 25,000 tons monthly of rock on the pad over the next three months and then increasing to 50,000 tons per month

In March 2022, the Company announced its first ore shipment in 2022 with approximately five tons of carbon that carried the Gold and Silver to Metals Research in Kimberly, Idaho for final processing of the minerals. The results of the processed material from March 17, 2022 produced 341.98 oz of ore which delivered 70.42 oz of Au and 63.77 oz of Ag.

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In April 2022, the Company announced its second shipment in 2022 of approximately five tons of carbon that carried the Gold and Silver to Metals Research in Kimberly, Idaho for final processing of the minerals. The results of the processed material from April 7, 2022 produced 456.80 oz of dore which delivered 83.34 oz of Au and 78.66 oz of Ag.

In May 2022, the results of the third shipment on May 3, 2022 of processed material produced 303.85 oz of dore which delivered 65.96 oz of Au and 58.51 oz of Ag.

***<u>Stardust Project.</u>****<u>The Stardust Mine, Yuma County Arizona, Eagletail Mining District</u>*

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| | |
|:---|:---|
| LOCATION:  | Yuma County, Arizona (Eagletail Mining District) |
| OWNERSHIP: | 100% Tombstone |
| MINERALS: | Gold, Silver, Copper and Molybdenum |
| PROPERTY SIZE: | 400 acres |
| ANNUAL PRODUCTION: | 2021 = Zero |
|  | 2020 = Zero |
|  | 2019 = Zero |
| TITLES, MINERAL RIGHTS, LEASES OR OPTIONS: | BLM Land Claims (See Below) |
| PROJECT STAGE: | Exploration |
| KEY PERMIT CONDITIONS: |  |
| MINE TYPES/MINERALIZATION STYLES: | Gold, Silver, Copper |
| PROCESSING PLANTS AND OTHER AVAILABLE FACILITIES:  | None.  |

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![tomb_20fimg3.jpg](tomb_20fimg3.jpg)

The Company holds the mineral rights to approximately 400 acres of BLM lode claims which includes the Stardust Mine in Yuma County Arizona, the Eagletail Mining District. Exploration work began on the property starting in October 1, 2015. The Stardust Mine is a disseminated Gold Property.

Tombstone holds US Federal unpatented lode claims over the Stardust project area. Tombstone has staked these claims by locations.

Stardust Project, Yuma Co AZ: 100% interest in 20 unpatented federal lode claims found within Sections 1,2, T2S,R11W, Yuma County, Arizona, USA.

Stardust claims acquired by staking of lode claims. Surface and mineral rights are authorized under United States locatable mining rights - The General Mining Law of 1872. An annual Maintenance fee system under which federal claims are held is established by section 314 of the FLPMA (43 USC 1744 and 43 CFR 3833).

The current lode claims "Star1 – Star20" held from dates:

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| Location date of Claims Star1 thru Star4 - located Star4 May 19, 2015 to Sept 1 2021. |
| Location of Claims Star5 thru Star20 - located Sept 12<sup>th</sup>,2015 to Sept 1<sup>st</sup> 2021. |
| Stardust claims (Star1 –Star20) are United States federal unpatented lode claims. |
| Stardust project is an Exploration project. |
| Project name: Stardust |
| Claim names: Star1 through Star20 |
| List of claims at Stardust project included in below compiled listing of Stardust project claims: |

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These claims can be found recorded in the Phoenix BLM system and accessed through the online LR2000 system found at: https://www.blm.gov/lr2000/

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| | | | | |
|:---|:---|:---|:---|:---|
| *AMC Number* | *Name* | *Loc Date* | *Maintenance Paid to* | *Type* |
| AMC433664 | Star1 | 5/19/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433665 | Star2 | 5/19/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433666 | Star3 | 5/19/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433667 | Star4 | 5/19/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433914 | Star5 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433915 | Star6 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433916 | Star7 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433917 | Star8 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433918 | Star9 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433919 | Star10 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433920 | Star11 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433921 | Star12 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433922 | Star13 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433923 | Star14 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433924 | Star15 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433925 | Star16 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433926 | Star17 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433927 | Star18 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433928 | Star19 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |
| AMC433928 | Star20 | 9/12/2015 | 1-Sep-22 | Lode<br> BLM |

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| A yearly maintenance payment is due prior to Sept 1<sup>st</sup> of each year. |
| Tombstone Exploration Corporation responsible for paying fees. |
| Stardust project currently has area of approximately 413.2 acres. |
| Stardust Project / property: A block of continuous claims (a claim block) of 20 claims called Star claims (Star1 – Star20). |
| The Star claims are found within Sections 1 & 2, T2S,R11W, Gila and Salt Base and Meridian, Yuma County, Arizona, USA. |

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See attached Stardust Project maps:

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|:---|
| A State scale map titled *"Tombstone Exploration Corporation, State Index map & location of Stardust project."* – This map shows an inset US map, as well as a larger scale Arizona map showing relative position of the Stardust project area within the State. |
| A regional scale map titled: *"Regional Access Map – Stardust Project – Tombstone Exploration Corp." with the Stardust claims, county, Interstate, and regional urban areas displayed, as well as 100k scale USGS topographic background.* |
| A project scale map plotted at 1" = 1000' - Map Titled "*Tombstone Exploration, Stardust claims, Yuma Co."* shows the Stardust project area and lode claims held by Tombstone Exploration Corporation. Additionally, a USGS quadrangle 7.5 minute background image is present within the map showing planimetric, topographic features, and roads within and outside the project area. |

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An Application to conduct exploration trenching and drilling on the Stardust Claim block was received by the Bureau of Land Management on March 18, 2016. This work program started mid 2017 subsequent to the Company's Reclamation Bond's acceptance by the US Bureau of Land Management on May 17, 2017. Prior to May 2017, the Company's Notice Application to conduct exploration drilling plan was accepted. The Company has engaged Harris Exploration Drilling and Associates, Inc., a Nevada company, to commence drilling on the Stardust Claim.

This property lies along the northern flanks of the Gila Bend Mountains, which are underlain by Precambrian schist and granitic rocks of probable Cretaceous age, uncomformably overlying and intruding the older rocks are Tertiary volcanic rocks.

The geology of the Stardust claims is dominated by three types or phases of granitic rocks. The age of the intrusive rocks is probably Cretaceous, but they could be Precambrian or mid-Tertiary; we currently believe they are most likely to be Cretaceous. Ninety-five percent of the mapped area is encompassed by granitic rocks. The other five percent is divided evenly between Precambrian chlorite schist and mid-Tertiary andesite dikes.

The granitics are subdivided into three units. They may all be related to the same magma or be of different ages or a combination of the two. All three are easily identifiable in the field bases on their megascopic characteristics. The first and most abundant unit is leucocratic granite. It is white in color, fine to medium-grained, and does not contain mafic minerals. The presence of chlorite is almost ubiquitous in the leuco-granite, and occurs mainly along fracture surfaces. Chlorite is probably an alteration product associated with fracturing and/or mineralization. The second granitic unit is quartz monzonite. It forms the main portion of South Hill (see Plate 1). It is equigranular and contains hornblende and biotite. Narrow (1-3) silicified and brecciated zones are hosted by this unit; and are commonly anomalous in gold. The third unit is also quartz monzonite in composition, but contains anhedral pink feldspars which distinguish it from the other two units. Alteration and mineralization are completely lacking in this unit.

Chlorite schist crops out at three localities which average about 50-75 feet in width and 300 feet in length. The schist unit is a roof pendant and probably continues at depth for only a few hundred feet. The age of the chlorite schist is probably Precambrian, based on its resemblance to other Precambrian schist units in western Arizona. Mineralization does occur within the schist, generally near andesite dikes.

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The andesite dikes crop out as narrow (5-10 feet), sinuous bodies and crosscut the leucogranite and chlorite schist. Intrusion of the dikes is tentatively dated as Oligocene to early-Miocene. In the north-central position of the mapped area, the andesite seems to "blossom" into a stock-like body with minimum dimensions of 100 feet by 400 feet; see section B-B', Plate 3 for configuration. Strike direction of the dikes varies from east-west to N70 degrees West and dips average 70 degrees to the North. Alteration of the andesite consists of silicification, brecciation, and iron-oxides; however, some andesite is devoid of alteration, especially in the eastern portion of mapped area.

Due to the paucity of outcrop on the property, structures were difficult to define. In a broad sense, the entire mapped area has been intensely fractured along an east-west structure, this fracturing is at least a ½ mile in length and 300-500 feet in width. The zone could be much wider, but colluvium to the north covers any extension.

Gold and silver mineralization with copper occurs along an east-west trend and is spatially related to an andesite dike. The dike is variably silicified and iron-stained. Silicification consists of silica replacement and drusy quart crystals in open-space veins. Hematite staining and vein fillings are commonly associated with gold.

On November 25, 2015, Zonge International completed ground geophysics across the 400 Acre claim block owned by Tombstone in the Eagletail Mining District, Yuma County, Arizona. Zonge has been well respected for geophysical data acquisition in the minerals industry since 1970. They are an industry leader in methods such as IP (induced polarization) and CSEM/AMT, as well as SP, seismic, and gravity/magnetic data acquisition.

Zonge has performed a ground magnetic survey across the claim block to determine the extent of the Stardust Fault. Previous reports state that the two shafts on the property were sunk along a high angled structure which trends E-NE across the area of outcrop. This structure is thought to be the 'feeder' for the Gold Silver mineralization in the project area. Several reports reference 'free milling gold' from drifts along this fault. Abundant dump material contains anomalous gold and silver values as well as visible copper oxides. Due to the extensive surface disturbance in this area, performing a ground magnetic survey will give a better understanding of the subsurface character of the fault. This method details changes in density in the subsurface and is used to define faults, fractures, and changes in rock types. As a result, this geophysical data will be used to better define the Phase I scope of work, which will involve detailed surface mapping, rock/soil sampling, and delineation of drill targets.

The Stardust property has two shafts on this property that are secured with wire fencing. We have not entered either of these shafts at this time. There has been minimal surface disturbance on this property and we are not aware of any trenching, mine dumps, ponds or any contaminations released by former processing or assay/testing activities.

The encouraging results from the rock sampling program over the Stardust project indicate the presence of a high angle detachment related precious metals vein system. The mineralization present at the Stardust project appears to be located within detachment related veins & locally intensively chloritic and hematitic host rocks. The vein system has been sampled over a strike of approximately 3,200 feet (975 meters). These veins appear to be a feeder system of an extensive partially eroded low angle fault system over the Stardust.

The results of the latest tranche of rock samples combined with field observations, and existing data, appear to fit the USGS detachment fault model of USGS Bulletin 2004 by Long, K.R.: Preliminary Descriptive Deposit Model for Detachment-Fault-Related Mineralization. Other productive detachment fault related precious and base metal systems occur through the Basin and Range areas of Southern California, Western Arizona, and Southern Nevada. An example in Arizona includes the Copperstone Mine, previously mined by Cypress which produced one half million ounces of gold by open pit methods from 1987-1993. Copperstone is currently being evaluated for additional resources.

Quartz veins are present in outcrop, subcrop, float, & in historical mining dumps. In addition to these strong precious metal values found in samples, additional observations at Stardust include:

· The presence of chalcedonic quartz veins.

· Crushed veins & and multi-phase cemented - banded silica veins, & silicification.

· Abundant drusy textures (boiling level and vapor phase)

Footwall host rocks are a metasediment matrix with strong hematite & intensive chloritic alteration + copper oxides.

The Property is without known Reserves and the property is exploratory in nature based on prior work on this property over many years.

The current service on this claim block has disturbances of which has been identified in our exploration plan previously filed with the BLM. Any further surface disturbance from the result of our Exploration Work that has been filed with the Bureau of Land Management will be required to be remediated.

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Stardust Mine Events for years ended December 31, 2017 - 2021:

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| As announced on May 30, 2017, the Company's Reclamation Bond was accepted on May 17, 2017, by the BLM, and prior to this, the Notice Application to conduct exploration drilling plan was accepted. The Company has engaged Harris Exploration Drilling and Associates Inc. (Harris Drilling), a Nevada company to commence drilling on the Stardust property the first week of June. Harris Drilling has been in business for over fifty years and has worked for many of the top mining and exploration companies in the world. This first phase drilling program is designed to establish strike length and test grades over a large enough width within the defined chlorite hematite hosted vein system. The drilling will attempt to define structural continuity (vein continuity along strike), grade of veins and hosting chl-hem zone, and find the width of structures. The program, as designed, should also demonstrate grade at reasonably shallow depths. The lowest drilling angle -45 degrees is envisioned for this program. This phase will include approximately 3000 ft of drilling. The mineralization present at the Stardust Project appears to be located within detachment related veins hosted by intensively chloritic and hematitic host rocks. The vein system has been sampled over a strike of approximately 3200 feet (975 meters). These veins appear to be a feeder system of an extensive partially eroded low angle fault system regionally present. |
| As announced on July 5, 2017, the first two holes Core(HQ) of drilling were completed. The first hole (SDD1) was completed at a depth of 350 ft and the second hole (SDD2) was completed at 290ft at the 100% owned Stardust claim block located in Yuma County, Arizona. This first drill program is expected to drill 6–8 holes totaling 3000 ft. The Stardust drilling campaign is targeting an epithermal precious metals (gold, silver) system. Harris Exploration Drilling and Associates Inc. (Harris Drilling), a Nevada company, commenced drilling on June 10th. The core samples from the first two holes were delivered to Skyline Assayers and Laboratories in Tucson, Arizona on July 3rd. The samples will be crushed and pulverized with standard steel and then proceed to be fire assayed for Gold and a 24 multi-element Geochemistry for Silver and multiple other trace elements. This first phase drilling program is designed to establish strike length and test grades over a large enough width within the defined chlorite hematite hosted vein system. The drilling will attempt to define structural continuity (vein continuity along strike), grade of veins and hosting chl-hem zone, and find the width of structures. The program, as designed, should also demonstrate grade at reasonably shallow depths. The lowest drilling angle -45 degrees is envisioned for this program. |
| As announced on August 30, 2017, the third and fourth holes Core(HQ) of drilling were completed by Harris Drilling and Associates Inc. on July 26, 2017. The third hole (SDD3) was completed at a depth of 175 ft and the fourth hole (SDD4) was completed at 293 ft at the 100% owned Stardust claim block located in Yuma County, Arizona. Phase 2 drilling is scheduled for September. The Stardust drilling campaign is targeting an epithermal precious metals (gold, silver) system. The core samples from the third and fourth holes were delivered to Skyline Assayers and Laboratories in Tucson, Arizona, on July 28th. The samples will be crushed and pulverized with standard steel and then proceed to be fire assayed for gold and a 24 multi-element Geochemistry for silver and multiple other trace elements. |
| This first phase drilling program is designed to establish strike length and test grades over a large enough width within the defined chlorite hematite hosted vein system. The drilling will attempt to define structural continuity (vein continuity along strike), grade of veins and hosting chl-hem zone, and find the width of structures. The program, as designed, should also demonstrate grade at reasonably shallow depths. The lowest drilling angle -45 degrees is envisioned for this program. |
| Holes 3 and 4 are designed to test projection of gold mineralization in outcrop veins and silicification found just NE of one of the original shafts on the property. We look forward to receiving and reviewing the assay results and sharing with our shareholders, as there have been multiple locations of veins throughout the core that we have sent for assay." |

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| The overall Stardust epithermal system appears differentially eroded from east to west. East of the historic mine shafts, exposures are good. Rock chip gold-silver results improve nearer to the historic Stardust mine shafts, which are located in a central corridor where the precious metals zone is better preserved from erosion, but incompletely covered by gravel. Drill holes SDR 5 and 6 tested this corridor. Drill holes SDR 7 through SDR 13 targeted quartz veins beneath gravel cover up to 300' north and 1500' west of the historic shafts. These holes encountered the strongest quartz vein intervals, up to 55' thick. Quartz vein intervals were encountered through a depth range from just below the gravel cover to downhole depths up to 615', suggesting good preservation of the precious metals zone at depth. About 1300' west of the Stardust shaft, a prominent NE structure further down-drops tertiary volcanic rocks into fault contact with older intrusive and metamorphic rocks that host the known quartz veins. SDR 12 was collared in the hanging wall of this structure and encountered a thicker gravel sequence, tertiary volcanic rocks, and quartz veining at the fault contact between the tertiary volcanic rocks and pre-tertiary basement rocks, as well as additional quartz veins and silicification in the basement rocks. Strong alteration and structurally-controlled quartz veining continue to the western extent of the 2017 drilling, leaving the Stardust epithermal system open to the west and potentially still strengthening to the west. This drill program clearly shows the Stardust project contains an epithermal alteration system much larger and stronger than indicated by the restricted historic workings and surface exposures and requires further drilling to determine its size. The strength and extent of quartz veining and silicification observed during the drill program suggest excellent potential for significant gold and silver results. <br>In summary, the completed 9-hole drill program at Stardust has successfully confirmed the presence of quartz veins outside of previously tested areas at the Stardust property. The drilling identified strong quartz vein structures along the trend for over 1500 feet west of the historic Stardust shafts. Drilling encountered quartz veins and metallic mineralization in the area outside the historic underground workings. This suggests that there could be additional precious metal resources in known structures west of the historic mines. |

| The overall Stardust epithermal system appears differentially eroded from east to west. East of the historic mine shafts, exposures are good. Rock chip gold-silver results improve nearer to the historic Stardust mine shafts, which are located in a central corridor where the precious metals zone is better preserved from erosion, but incompletely covered by gravel. Drill holes SDR 5 and 6 tested this corridor. Drill holes SDR 7 through SDR 13 targeted quartz veins beneath gravel cover up to 300' north and 1500' west of the historic shafts. These holes encountered the strongest quartz vein intervals, up to 55' thick. Quartz vein intervals were encountered through a depth range from just below the gravel cover to downhole depths up to 615', suggesting good preservation of the precious metals zone at depth. About 1300' west of the Stardust shaft, a prominent NE structure further down-drops tertiary volcanic rocks into fault contact with older intrusive and metamorphic rocks that host the known quartz veins. SDR 12 was collared in the hanging wall of this structure and encountered a thicker gravel sequence, tertiary volcanic rocks, and quartz veining at the fault contact between the tertiary volcanic rocks and pre-tertiary basement rocks, as well as additional quartz veins and silicification in the basement rocks. Strong alteration and structurally-controlled quartz veining continue to the western extent of the 2017 drilling, leaving the Stardust epithermal system open to the west and potentially still strengthening to the west. To date all drill results had lower grade gold than expected on this small area of drilling. Tombstone has drilled through incredible large quartz vein intercepts with this drill campaign and nearly every section sent for assay carried gold, leaving Tombstone highly optimistic on identifying greater quantities on the remaining 396 acres of the Stardust Property.<br>In addition to the gold assays Tombstone also had its lab prepare Analysis of 29 additional elements which included lithium. There were interesting lithium numbers in all the drill holes of which we did not expect. Although the lithium numbers are also considered low grade it will now be added to our exploration plan. Lithium is hosted in a pregmatite composition that is similar to granite with abundant quartz. The third phase drill area has a number of pregmatite outcrops of which we will be included in our next drill targets.<br>The first two phases of drilling were designed to establish strike length and test grades over a large enough width within the defined chlorite hematite hosted vein system. The drilling was to define structural continuity (vein continuity along strike), grade of veins and hosting chl-hem zone, and find the width of structures.<br>The Company has not conducted any work at the Stardust Mine since 2018, however, the Company still holds all of the claims. |

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**The Tombstone Project**. *<u>The State of Main Mine and others as well as Section 16 of the Tombstone Mining District Copper Exploration, Cochise County, Tombstone Arizona</u>*

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| | |
|:---|:---|
| LOCATION: | Tombstone, Arizona |
| OWNERSHIP: | 100% Tombstone |
| MINERALS: | Gold, Silver and Copper |
| PROPERTY SIZE: | 641 acres |
| ANNUAL PRODUCTION: | 2021 =Zero |
|  | 2020 =Zero |
|  | 2019 =Zero |
| TITLES, MINERAL RIGHTS, LEASES OR OPTIONS: | Arizona State Mining Lease |
| PROJECT STAGE: | Exploration |
| KEY PERMIT CONDITIONS: |  |
| MINE TYPES/MINERALIZATION STYLES: | Gold, Silver, Copper |
| PROCESSING PLANTS AND OTHER AVAILABLE FACILITIES: |  |

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&nbsp;&nbsp;&nbsp;&nbsp;

![tomb_20fimg4.jpg](tomb_20fimg4.jpg)

The Property is without known Reserves and the State of Main Mine is exploratory in nature based on prior work completed on this property over many years. There are multiple areas that were worked on the State of Maine Mine from the 1930's, they have been described in many reports that previous geologists have rendered that are historic in nature. Most of this work was completed underground and access was through mine shafts and decline entrance ways. We have not completed any work in the interior of this property. We have not encountered any previous contamination on these properties related to former processing or assay testing activities.

The Company holds the mineral rights to approximately 640 acres in the historical western Tombstone silver mining district. Our property area lies within the historic Tombstone Mining District Cochise County, Arizona. The town of Tombstone, Arizona is approximately 70 miles (miles, 110 kilometers (km)) southeast of Tucson and 24 miles (40 km) northwest of Bisbee, Arizona. The San Pedro River lies about 2 miles (3 km) west of the property's westernmost boundary.

The Tombstone mining district is one of 12 mining districts in Cochise County, Arizona. Copper, lead, zinc, silver, and gold were the principal metals produced from the different mines in the County. Management has structured and positioned the Company to capitalize on today's increasing demand and prices for precious metals and base metals such as copper, lead and zinc.

The Tombstone property is composed of three non-contiguous parcels totaling approximately 640 acres. The parcels consist of 8 patented lode claims totaling 145.6 acres (58.9 ha) in Section 16, and 1 Arizona State Land Department (ASLD) exploration permits totaling 495 acres. The Company owns the mineral rights to the patented claims; the surface rights are owned by various individuals. The Arizona state trust lands exploration permits grant the Company the exclusive exploration rights for up to 5 years from the date the exploration applications were filed. Surface and mineral rights are variously owned by the U.S. federal government, the State of Arizona, and individual persons.

The Company has conducted several drilling programs on the Tombstone property in the past, as described in greater detail below. However, the reader is cautioned that the following summaries are historical in nature and that currently the Company is not now and does not have imminent plan to commence material exploration activities on our Tombstone Property. As we own the Tombstone Property, we will continually reassess and evaluate recommencing activities on the property.

***2009/2010 Drill Program - Phase II***

In February 2009, the Company extracted six additional samples from the Tombstone property which were sent to Copper State Analytical for assay for gold, silver, manganese, copper, lead and zinc. Three of the samples were taken from the State of Maine Mine and three from Randolph Mine, both located on the Tombstone property. The Company suspended the 2009 Drill Program due to general economic factors leading to difficulty in obtaining the requisite financing to fund the program.

In April 2010, the Company resumed the 2009 Drill Program, with the two targets drilled and both having intersected mineralized zones. The Company utilized a portable x-ray diffraction (XRF) machine to get on-site reading of metal levels in the drill cuttings. The results helped the exploration team manage the drilling program. Tombstone's property is underlain by Uncle Sam porphyry and units of the Bisbee Group. Mineralized fissures strike consistently northeast, and many of the fissures exhibit consistent orientation for hundreds of feet along strike. Many fissures have parallel orientations, forming fissure sets. The main mines in this area occur along these northeast-striking fissures. The State of Maine mine occurs in fissures that cut both Bisbee sediments and Uncle Sam porphyry. These structural mineralized fissures are the primary focus of the current exploration program.

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As of June 30, 2010, 4,080 feet of drilling had been completed. Also, during this period, additional geologist investigation was undertaken to further assess the potential for porphyry copper exploration targets on the Tombstone property. The Company has been in contact with geophysical contractors to develop a plan, budget, and timeline for this phase of the project. Planning is on-going and work may include geochemical surveys as well.

The Company has not conducted further drilling on the Tombstone Property since June 2010. The State of Main mine is without known Reserves and the property is exploratory in nature based on prior work on this property over many years.

***2010 Report on a Helicopter-Borne Z-Axis Tipper Electromagnetic (ZTEM) and Aero Magnetic Geophysical Survey***

From June 29, 2010 to July 4, 2010, Geotech Ltd. carried out a helicopter-borne geophysical survey for the Company over the Tombstone project area. Principal geophysical sensors included a Z-Axis Tipper electromagnetic (ZTEM) system, and a caesium magnetometer. Ancillary equipment included a GPS navigation system and a radar altimeter. ZTEM was selected for its ability to achieve unparalleled resolution and depth of investigation. The system is well suited to imaging buried porphyry deposits and is capable of gathering data over 6,000 feet (1.25 miles) below ground surface.

The airborne ZTEM survey covered over 200 line miles and most of the Tombstone Mining District. A total of 373.5 line kilometers of geophysical data were acquired during the survey. In a ZTEM survey, a single vertical-dipole air-core receiver coil is flown over the survey area in a grid pattern, similar to regional airborne EM surveys. Two orthogonal, air-core horizontal axis coils are placed close to the survey site to measure the horizontal EM reference fields. Data from the three coils are used to obtain the Z/X and Z/Y Tipper (Vozoff, 1972) components at six frequencies in the 30 to 720 Hz band. The ZTEM was used to map geology using resistivity contrasts and magnetometer data were also collected to help map geology using magnetic susceptibility contrasts.

The crew was based in Tombstone, Arizona for the acquisition phase of the survey. Survey flying started on June 29, 2010 and was completed on July 4, 2010. Data quality control and quality assurance, and preliminary data processing were carried out on a daily basis during the acquisition phase of the project. Final reporting, data presentation and archiving were completed from the Aurora office of Geotech Ltd. in October, 2010. A quality control step consisted of re-examining all data in order to validate the preliminary data processing and to allow for final adjustments to the data. Attitude corrections were re-evaluated, and re-applied, on component by component, flight by flight, and frequency by frequency bases. Any remaining line to line system noise was removed by applying a mild additional levelling correction.

As a result of the survey, Geotech identified a number of conductive structures across the property that resemble known porphyry deposits and reported that the magnetic results also contained worthwhile information in support of exploration targets of interest. Based on the geophysical results obtained, Geotech recommended a more detailed interpretation of the available geophysical data, including Versatile Time-Domain Electromagnetic survey (VTEM), in conjunction with the geology, prior to ground follow up and drill testing.

***2012 Technical Report***

In January 2012, SRK completed a Technical Report on the Tombstone property.

SRK made the following conclusions in the Report:

The Tombstone property represents a beginning exploration project with a limited amount of historical and current data. The data are insufficient to take the property to resource classification by current industry standards at this time.

The historic silver deposits in the central mining district are well documented through various reports in the literature and several master- and doctoral-level theses. Although west of the largest historical ore deposits, the Tombstone West Area property nonetheless represents an opportunity to target a resource by current methodologies of mapping, drilling, and geophysical surveys that may be successfully extracted with present-day mining techniques. In light of silver commodity price increases in recent years, the recent emphasis on potential porphyry copper and gold targets in the Tombstone area, and recent gold and copper commodity prices, the Tombstone Project warrants a current evaluation.

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SRK made the following recommendations in the Report:

☐ Compile and analyze all available district-wide data and use that analysis to define and prioritize future targets.

☐ Convert historical and current drill logs to digital format logs, re-logging holes that have incomplete logs.

☐ Digitize all geochemical data.

☐ Use industry-standard software for mapping and record-keeping.

☐ Conduct surface geophysical surveys over targets identified by the ZTEM airborne survey.

☐ Compile all data in a GIS database, and analyze coincident anomalies to define drill targets.

☐ Define a drill program and budget.

***Summary of Exploration Activities***

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| **SUMMARY OF EXPLORATION HISTORY AND FUTURE EXPLORATION PLANS**  | **SUMMARY OF EXPLORATION HISTORY AND FUTURE EXPLORATION PLANS**  | **SUMMARY OF EXPLORATION HISTORY AND FUTURE EXPLORATION PLANS**  | **SUMMARY OF EXPLORATION HISTORY AND FUTURE EXPLORATION PLANS**  | **SUMMARY OF EXPLORATION HISTORY AND FUTURE EXPLORATION PLANS**  |
| **Year** | **Expenditures /** <br>**Budget** | **Source of Funding** | **Exploration Activities** | **Persons Conducting Exploration and Qualifications** |

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| **2020-21** | $4320000  | Private Placement/<br>Private Investors | Build out of Heap Leach Pad for Bonanza<br>Staking of Mining Claims at Stardust Mine; drilling and bond reclamation<br>Geophysical Mapping & Sampling<br>Additional Sampling and Trenching of<br>properties<br>Drilling<br>Assays<br>Strategic joint ventures | Professional Geologists sampling of Stardust<br>Various Professional Engineers and Geologists from the State of Arizona<br>|
| **2021-22** | $5000000  | Private Placement/<br>Private Investors | Build out of Heap Leach Pad for Bonanza<br>Production Phase 1 at Bonanza<br>Stardust Mine; additional drilling <br>Additional Drilling at Tombstone<br>Assays<br>Strategic joint ventures | Professional Geologists conducting exploration<br>Various Professional Engineers building and processing at Bonanza Mine  |
| **2022-23** | $5000000 <sup>(1)(2)</sup> | Private Placement/<br>Private Investors | <br>Production at Bonanza<br>General Operations<br>Assays<br>Strategic joint ventures | Professional Geologists conducting exploration<br>Various Professional Engineers building and processing at Bonanza Mine  |

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<sup>(1)</sup> Our budget for 2022-2023 consists of the following expenses for a total of $5,000,000 which are based on management's best estimates:

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|  | ·  | Production at Bonanza Mine $2,000,000; |
|  | ·  | General Operations at Tombstone $2,000,000 |
|  | ·  | Management, Office and Employee Expenses: $500,000; |
|  | ·  | Professional Service Expenses: Legal, Accounting, Audits: $250,000; |
|  | ·  | BLM Claims and Permit Expenses: $150,000 |
|  | ·  | Miscellaneous $100,000 |
| <sup>(2)</sup>  | We raised approximately $1,089,000 during the year ended December 31, 2021 to cover the operating expenses of the Company and require an additional ~$4M for our proposed 2022-2023 activities. | We raised approximately $1,089,000 during the year ended December 31, 2021 to cover the operating expenses of the Company and require an additional ~$4M for our proposed 2022-2023 activities. |

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***Revenues***

To date we have not generated any revenues, however, with commencement of production at the Bonanza Mine we anticipate revenues to commence in the third quarter of fiscal 2022.

***Principal Market***

We do not currently have any market, as we have not yet identified mineral resources that are of a commercially exploitable quantity. While production at the Bonanza mine produced 219oz of gold in 2021, we cannot predict whether the production will continue in exploitable quantities. If we succeed in identifying a mineral resource in commercially exploitable quantities, our principal markets should consist of metal refineries and base metal traders and dealers.

***Seasonality of our Business***

Our mineral exploration activities are not subject to extreme seasonal variation since the Tombstone Property and Bonanza mines are located in Arizona. Field work, however, is best carried out in temperatures averaging 10 to 15 degrees Celsius. Our other operations, such as metallurgical review and analysis of geochemical survey results, can be carried out all year round.

***Local Resources***

Tombstone, Arizona is the nearest town to the Tombstone Project. Services at Tombstone are marginally adequate to support the requirements of a mining exploration and development project, but other nearby towns (Wilcox, Benson, Bisbee, and Sierra Vista) have services such as drilling contractors, equipment rental and services, engineering services, and a labor force that are more able to support our drilling program. Sierra Vista is about 18 miles from the project area. The nearest large city, Tucson—located 70 miles northwest of Tombstone along Interstate 10—has a population of more than 526,116 (2013 U.S. Census Bureau estimate) and has company, service, and contractor resources that may not be available locally. Other cities at a greater distance (Phoenix, Arizona; Las Cruces and Albuquerque, New Mexico) also are able to provide services to support exploration and mining in the area.

Surface water is scarce and groundwater supplies are somewhat limited. Walnut Gulch to the north is an ephemeral stream, as is the San Pedro River to the west. In 1882 a pipeline was constructed to bring drinking water to Tombstone from the Huachuca Mountains, 27 miles to the west. The town has municipal wells that supply the needs of the town population. Ranchers in outlying areas obtain domestic and stock water from private wells. Water supplies for development and mining would come from groundwater sources in the area. Arizona Department of Water Resources (ADWR) well records for the area indicate the water table is generally shallow, 200 to 400 feet below ground surface.

Telephone and electric power are available to the area, providing service to local ranchers and small service companies located outside of the town. Telephone service is provided by Qwest. Internet and television services also are available locally. Electric power is supplied through Sulphur Springs Valley Electric Cooperative, with 440V, three-phase lines nearby. One-ten and 220 power lines cross the property. Postal services are available by post office boxes and ground delivery. UPS, DHL, and Federal Express also are available locally.

Gas and diesel stations are 2 miles from the property, and major fuel supply stations are 15 miles away in Sierra Vista. El Paso Gas has a gas line that crosses the northeast corner of Sec. 7, T20S-R22E. Section 7 is held by Arizona State Exploration Permit 08-111864. The Southern Pacific railroad line parallels the San Pedro River.

***Patents and Licenses; Industrial, Commercial and Financial Contracts; and New Manufacturing Processes***

In conducting our business operations, we are not dependent on any patented or licensed processes, technology, industrial, commercial or financial contract or new manufacturing processes.

***Competitive Conditions***

We compete with other mining companies, some of which have greater financial resources and technical facilities, for the acquisition of mineral interests, as well as for the recruitment and retention of qualified employees.

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The mineral property exploration business, in general, is intensely competitive and there is not any assurance that even if commercial quantities of ore are discovered, a ready market will exist for sale of the same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations; the proximity and capacity of natural resource markets and processing equipment; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of mineral and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may make it difficult for us to receive an adequate return on investment.

We compete with many companies possessing greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees. Low metal prices and an instable market, even among competition, leads us to assume that we will not face any difficulties retaining geologists or other consultants compared to our competition.

Competition in the usual context, and as experienced by manufacturers of automobiles, durable goods, clothing, electronics, and the providers of most services simply is not a factor in the minerals market. The demand for minerals always exceeds supply, and historically prices have consistently risen. The only major factor for competition is the cost of production.

Although competition over cost of production exists, there is little competition in the marketplace for the Company's products. The market absorbs all precious metals and most base metals produced at prevailing prices. Larger producers can hedge future production to enable easier management of expected revenue in times of price fluctuation, whereas junior companies usually sell at market prices. In today's market larger producers have pulled back from hedging.

The primary competition in the precious metals market is for talent in the workforce. As prices have risen many new companies have started operations or are in the midst of exploration and proving of reserves. It is in this area that competition exists for experienced geologists, project managers, and mining executives. In many areas there also is a shortage of mining labor.

The Company believes it can overcome this competition due to its location in a historical mining area, year-round working conditions and nearness to major population centers of Tucson and Phoenix, Arizona. Additionally, experienced mining professionals have assisted in developing the corporation and have many contacts in the industry.

***Environmental Regulations***

Mineral property exploration in Arizona is governed by the State of Arizona Office of Mine Inspector as well as Title 30 of the Code of Federal Regulations, both seek to regulate and promote the development of safe and environmentally conscious mining operations. To date, our compliance with these regulations has had no material effect on our operations, capital, earnings, or competitive position, and the cost of such compliance has not been material. We are unable to assess or predict at this time what effect additional regulations or legislation could have on our activities.

***Governmental Regulations***

Mining operations are subject to a wide range of government regulations such as restrictions on production, price controls, tax increases, expropriation of property, environmental protection, protection of agricultural territory or changes in conditions under which minerals may be marketed. Mining operations may also be affected by claims of native peoples, any of which could have the effect of reducing or preventing us from exploiting any of our properties. We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the State of Arizona and in the United States generally. Our mineral claims entitle our Company to continue exploration activities on our properties, subject to our compliance with various United States federal and state laws governing land use, the protection of the environment and related matters.

To maintain state mineral exploration permits in good standing, the permit holder must renew each permit annually (up to four times, for 5 years total) for a fee of $500.00 per application for renewal. A maximum of 640 acres or one whole section is allowed per application. Additionally, an initial rental fee of $2.00 per acre is due within thirty days upon notification of the intent to issue the permit. The $2.00 rental fee is for the first and second year of the permit. However, although the rent is prepaid for the second year, the permit must still be renewed for that year. Rental fees for years three thru five are $10.00 per acre per year and due annually when the permit is renewed. A bond (typically in the amount of $3,000 for a single permit or a blanket bond of $15,000 for five or more permits held by an individual or company) is also due within thirty days upon notification of the intent to issue the permit. Bond amounts may be increased during the life of the permit as determined by the Arizona State Land Department ("ASLD") upon review of the proposed exploration activities as detailed in the Exploration Plan of Operation that must be submitted and approved by the ASLD prior to the startup of any exploration activities.

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The state lands are covered by Arizona State Mineral Exploration Permits, which are administered by the ASLD. Permits to conduct drilling in Arizona are administered by the Arizona Department of Water Resources (ADWR). Permits to conduct exploration drilling on BLM lands require either a Notice of Intent or a Plan of Operations, depending upon the amount of new surface disturbance that is planned. A Notice of Intent is for planned surface activities that anticipate less than 5.0 acres of surface disturbance, and usually can be obtained within a 30 to 60 day time period. A Plan of Operations will be required if there is greater than 5.0 acres of new surface disturbance involved with the planned exploration work. A Plan of Operations can take several months to be approved, depending on the nature of the intended work, the level of reclamation bonding required, the need for archeological surveys, and other factors as may be determined by the BLM. No other permits are required for exploration drilling.

The Company has a Notice of Intent – Mineral Exploration Drilling AZA33591 to conduct drilling on BLM claims in Secs. 9 and 10, T20S-R22E. The permitted drilling was partially completed in 2007 with the drilling of holes TEM 1, TEM 2, and TEM 3. The Company also has received conditional approval, upon completion of archaeological and cultural resource surveys, to drill in Sec. 16, T20SR22E under Arizona State Exploration Permit 08-111868.

***C. Organizational Structure***

We have one wholly owned subsidiary, Tombstone Exploration and Mining Corporation, a Nevada corporation ("TEMC") that is qualified to do business in the State of Arizona. All of our operations are conducted through TEMC. Tombstone Exploration Corp. owns 40% of the Bonanza Mining Company, an entity incorporated in Nevada and qualified to do business in the State of Arizona.

***D. Property, Plants and Equipment***

Our principal executive office is located at 6529 E. Friess Drive, Scottsdale, AZ 85254. Additionally, we share this space with our wholly owned subsidiary, TEMC. We currently do not pay any rent. We believe that this existing space is adequate for our current needs. Should we require additional space, we believe that such space can be secured on commercially reasonable terms.

***Our Properties***

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|:---|:---|:---|:---|:---|:---|:---|
| **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** | **SUMMARY OF THE COMPANY'S MINING CLAIMS** |
| **Number / Type of Claims** | **Ownership / Interest in Property** | **Duration of Interest** | **Location** | **Acreage** | **Agreements / Royalties** | **Annual Fees / Maintenance / Permits** |
| **8 Patented Lode Claims** | Undivided 100 percent mineral interest in the claims as both the record mineral owner and the assessed mineral owner<br>No surface rights | Claims are valid as long as the Company continues to hold title. | Private Land | 145.58 acres | -- |  |
| **1 State of Arizona Mineral Exploration Permits** | Exclusive right to explore for and develop minerals on the lands.<br>State of Arizona is the record surface and mineral owner of land.<br>Company is the record permittee of the state lands. | These permits are valid and each must be renewed every year. | Arizona state lands | 450<br>acres | State mineral exploration permits, if converted to mining leases, will have royalties assigned to them by the State of Arizona. | Must be renewed each year, for up to 5 years, for a fee of $500.00 / permit. Additionally, an initial rental fee of $2.00 / acre is due within 30 days upon notification of the intent to issue the permit, for the 1st and 2nd year. Rental fees for the 3rd thru 5th years are $10.00/acre/year and due annually when the permit is renewed. A bond (typically $3,000 for a single permit or a blanket bond of $15,000 for 5 or more permits) is due within 30 days upon notification of the intent to issue the permit. |
| **20 Unpatented Lode Claims** | Fully controlled by the Company.<br>Company has the right to enter for exploration purposes.<br>No surface rights. | These claims are valid and each must be renewed each year. | U.S. federal lands administered by U.S. Bureau of Land Management (BLM). | 400 acres | No royalty agreements on federal mining claims. | Annual maintenance fees for the claims, as follows: $155 for claim annual maintenance renewal fee to the BLM, in lieu of annual assessment work. |

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| **THE COMPANY'S PATENTED MINING CLAIMS** | **THE COMPANY'S PATENTED MINING CLAIMS** | **THE COMPANY'S PATENTED MINING CLAIMS** |
| **CLAIM NAME** | **MINERAL**<br>**SURVEY NO.** | **CLAIM**<br>**ACREAGE** |
| Maine | M.S. # 579 | 18.33 |
| Merrimac | M.S. # 175 | 20.61 |
| Clipper | M.S. # 273 | 13.41 |
| Triple X | M.S. # 577 | 15.27 |
| Brother Jonathan | M.S. # 578 | 17.28 |
| Lowell | M.S. # 797 | 20.59 |
| May | M.S. # 317 | 19.43 |
| Red Top | M.S. # 190 | 20.66 |
| **TOTAL ACREAGE OF PATENTED MINING CLAIMS:** | **TOTAL ACREAGE OF PATENTED MINING CLAIMS:** | **145.58** |

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***Industry of Interest***

The precious metals and base metals industry produces over $100B in metal production per year. The industry is essentially two sectors: the major producers and the junior exploration and mining companies.

The major producers such as Freeport McMoran, Rio Tinto, and BHP Billiton produce the majority of precious and base metals from large scale, geologically scattered operations. Property expansion by the majors typically comes from joint venture, consolidation or acquisition with junior exploration and mining companies. This occurs usually because a junior finds it difficult to initiate full scale operations due to the significant front end development costs. The majors can absorb and develop the newly discovered fields with little impact to overhead operations and can fund direct operations through forward sale of metals.

Juniors typically spend the majority of their money locating new potential areas, proving up a portion of reserves through geological studies, analyses and drilling, and then initialing small scale operations. During that period most successful juniors draw the attention of and team up in some way with a major producer.

Cost of operations/production is the driver in the industry. All product produced, particularly in the precious metals industry, is absorbed by the market. Demand exceeds supply. The most profitable companies have the lowest per ounce/pound cost of production. The highest return to investors, however, comes from junior companies, when successful, where per share prices are lower until a viable project is proven. Risk, though, is often higher with junior companies, unless and until they locate and acquire viable projects and adequate funding.

The prime customers for the precious metals sector of the industry are the refiners such as Englehart, Johnson Maffey, etc. These companies serve as the distributor of product between the producers and the consumers. The majority of precious metals produced are utilized by the industrial and electronics industry, the automotive industry, the jewelry industry and the investment community.

As metal prices have risen, so too has the interest in new areas for exploration and eventual production. The past two decades have seen a significant expansion of interest into Central and South America, as well as developing third world countries. Today's price levels combined with the political uncertainties of many foreign projects, and the inability for year-round operations in portions of Alaska and northern Canada, have produced a resurgence of junior companies in the mainland United States. However, many juniors target only one or two categories of metals. This model of operation limits their chance of success for production or buyout.

The keys to success for today's junior exploration and mining companies are four: 1. Property holdings and potential; 2. location; 3. metal diversity; and 4. cost of development and operation.

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***The Tombstone Property***

Most of the historic mines in the Tombstone Mining District were polymetallic, with the principal ores produced being silver from bonanza grade deposits. However, anomalous copper, lead, zinc, manganese, and gold have been identified, and some of these metals have been produced from different mines in Cochise County (i.e., copper from Bisbee, lead from the Charleston Mining District, and silver and manganese from the Tombstone Mining District).

The principal exploration concept pursued by the Company since 2010 is for low-grade, large tonnage porphyry copper mineralization, largely buried beneath basin fill. The concept is based upon the regional geology that includes the Tombstone caldera complex with related intrusives and complex fault systems; porphyry copper mineralization intersected at depths greater than 3,000 ft by Asarco and other major mining companies that drilled the area in the 1970s, 1980s, and 1990s; and geochemically anomalous values and zoning patterns of Cu, Ag, Pb, and Zn ratios in rock chip samples from mine dumps in the western part of the district that broadly coincide with the Lowell and Guilbert (1970) porphyry copper model.

Silver mineralization also is an exploration target, in particular in the western area of the Company's landholdings. The silver exploration concept is seeking to tie together the northeast-striking mineralized fissures into silver deposits that are projected to connect historic deposits and prospects along strike and to extend the depths of mineralization to perhaps hundreds of feet beneath the water table; the exploration potential below the water table was minimally explored and/or mined in the past. The horizontal and vertical extensions of the fissure veins are expected to be more definable by current exploration methods and would be amenable to underground or open pit mining methods.

Gold exploration is a concept based upon historic geochemical and geophysical exploration, shallow drilling, and reported gold grades in the Stardust area from the 1900s intermittently through the 1990s.

***Stratigraphy***

Rocks in the Tombstone area range from Precambrian to Quaternary in age. The oldest rock is fine- grained, grayish Precambrian Pinal schist, intruded by Precambrian granitic and porphyritic rocks, and unconformably overlain by a thick sequence of Paleozoic sedimentary rocks that change from mainly limestone to mainly sandstone and shale. The uppermost unit, the Naco limestone is an erosion surface unconformably overlain by the Mesozoic Bisbee group, a series of conglomerate, sandstone, quartzite, shale, and limestone with two or three lenses of soft, bluish-gray limestone.

The deposition of the Mesozoic sedimentary rocks was followed by a period of deformation and igneous activity. Late Cretaceous time was marked by eruptive and intrusive activity associated with the Tombstone volcanic center that probably formed within a continental-margin arc. The Tombstone volcanic center erupted the Uncle Sam Tuff at 73.5 +/- 2.8 Ma, and an irregularly shaped caldera formed as a consequence of collapse into the evacuated magma chamber. These events were accompanied by emplacement of the Schieffelin granodiorite, diorite stocks and plugs, and andesite dikes. Silver mineralization is directly associated with the folding, faulting, igneous intrusions, and fissuring of this period: north-south (dike) fissures, faults, anticlines and rolls, and—in the western area in particular—with the north-south trending dikes and cross-cutting northeast-trending fissures. Most of the silver deposits are associated with at least two structural features, often at their intersection. Rocks of the Tombstone volcanic center postdate Laramide thrust faulting and are little deformed.

The Basin and Range province was formed during the Cenozoic Era when east-west crustal extension resulted in vertical movement on generally north-south trending faults. Extension gave rise to the emplacement of extensive granitic stocks and batholiths with associated volcanic activity. Locally steep tilting and minor normal faulting occurred during Basin and Range block faulting.

Bromeyerite is the main supergene silver mineral; the main hypogene silver-bearing minerals are hessite, tetrahedrite, and galena. Base metal mineralization, often oxidized, occurs in fault and fracture zones in Laramide volcanics and the Uncle Sam tuff. The most common base minerals are sphalerite, galena, and chalcopyrite. Chalcopyrite is widespread, most commonly as exsolution blebs in sphalerite. Manganese mineralization is widespread throughout the Tombstone district and has occurred in various amounts with most of the oxidized silver-lead mineralization. The manganiferous mineralization exists as replacements in limestone.

***Development Strategy & Plan of Operations for the Next Twelve Months***

The Company's development strategy is to focus on the fundamental keys to success for a junior exploration and mining concern. These keys were identified in the Industry discussion.

Property holdings and potential.

Plan: Continue geological analyses including mapping, and identification of drill targets. Focus on these targets for drilling, sampling and identifying potential reserves. Expand target areas as drilling progresses and studies expand knowledge of properties.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Location

Plan: The Company's Tombstone property is located in a known metal and mineral area with easy access, historical production, mining friendly community and ease of permitting puts the Company in a position for success. The Company will continue to identify areas on the properties for mill site operation, improve off-road access and work closely with the community at large to offer employment opportunities. The Company will also interface with the state level in Arizona to establish itself as a significant contributor to the state economy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Metal diversity

Plan: A significant number of metals and minerals have already been identified on the Tombstone property including silver and gold. The Company, with the help of consulting organizations, will further explore the range of metals and minerals, and the ability to extract/produce product for market. In the non-precious metals areas, the Company will likely seek joint venture partners who will add to the success and financial returns for our shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Cost of development and operation

Plan: The Company may establish a small production operation, subject to permitting, financing and sufficient resources, to begin silver and gold production with material from existing known sites. As drill targets identify key areas for drilling, the operation will be expanded to two large scale mill sites. The Company firmly believes from the sampling and historical production in the area, that a low cost / high profit operation will be developed.

**Item 4A Unresolved Staff Comments**

*Not required.*

**Item 5. Operating and Financial Review and Prospects** 

The following discussion and analysis of our financial condition and results of operations for the fiscal years ended December 31, 2021, 2020, and 2019, should be read in conjunction with our financial statements and related notes included in this Report. Our financial statements included in this Report were prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").

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***A. Operating Results***

Our results of operations have been, and may continue to be, affected by many factors of a global nature, including economic and market conditions, the availability of capital, the level and volatility of prices and interest rates, currency values, commodities prices and other market indices, technological changes, the availability of credit, inflation and legislative and regulatory developments. Factors of a local nature, which include the political, social, financial and economic stability, the availability of capital, technology, workers, engineers and management, geological factors and weather conditions, also affect our results of operations. See "Key Information – Risk Factors". As a result of the economic and competitive factors discussed above, our results of operations may vary significantly from period to period.

**Year Ended December 31, 2021 compared to Years Ended December 31, 2020 and 2019** 

For the years ended December 31, 2021, 2020, and 2019, we did not receive any revenue from various mining claims and properties.

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| | | |
|:---|:---|:---|
| **Year ended December 31,** | **Net Loss** | **Loss per Share** |
| 2021 | $1846151 | $0.17 |
| 2020 | $1369470 | $0.16 |
| 2019 | $1702424 | $0.35 |

---

The net loss for the year ended December 31, 2021 of $1,846,151 was attributed to directors and management fees of $669,800 which was primarily related to management fees of $144,000 to the President and Director of the Company along with the issuance of common shares of the Company to officers and directors of the Company, consulting services of $274,950 related to ancillary services for its mineral property exploration costs, professional fees of $51,581 for audit, accounting, and legal fees incurred by the Company in its operations, and a proportionate loss on the Company's investment in Bonanza Project of $783,165.

The net loss for the year ended December 31, 2020 was attributed to directors and management fees of $762,947 which was primarily related to the issuance of common shares of the Company, consulting services of $556,760, professional fees of $41,318 for audit, accounting, and legal fees incurred by the Company in its operations, a loss on settlement of debt of $43,068, and a proportionate loss on the Company's investment in Bonanza Project of $85,028. The loss was offset by a gain of $198,801 relating to the forgiveness of non-recourse loans that were issued in the prior year.

The net loss for the year ended December 31, 2019 was attributed to directors and management fees of $825,177 which was primarily related to the issuance of common shares of the Company, $355,991 of mineral property costs including the impairment of the Bahamas Aggregate investment of $350,000, consulting services of $111,392, professional fees of $71,264 for audit, accounting, and legal fees incurred by the Company in its operations, a loss on settlement of debt of $243,065 which included $228,750 loss on the settlement of a loan payable with the issuance of common shares, and interest expense of $65,870 which included accrued interest on promissory notes payable of $397,500 which included $362,000 of new notes payable issued during the year that bear interest at 15% per annum.

Overall, the Company continues to incur operating losses while it continues its development of its projects and properties, with no significant changes in the nature of our operations, with the exception of fiscal 2021 which saw the first full year of operating results related to the Bonanza Project. As more costs are being invested into Bonanza, we have relied less on external consultants and no longer have floating rate convertible debentures to fund our operations, as was evident in fiscal 2018 and previous years.

***B. Liquidity and Capital Resources***

Since our incorporation, we have financed our operations almost exclusively through the sale of our common shares to investors and issuance of convertible notes payable. As we are now focusing on mining exploration with no producing resource properties, we do not generate operating income or cash flow from our business operations. Until a significant body of ore is found, our working capital requirements are not significant, and we expect to continue to finance operations through the sale of equity in future years. There is no guarantee that we will be successful in arranging financing on acceptable terms.

To a significant extent, our ability to raise capital is affected by trends and uncertainties beyond our control. These include the market prices for base and precious metals and results from our exploration programs. Our ability to attain our business objectives may be significantly impaired if prices for metals such as gold and uranium fall or if results from our intended exploration programs on our properties are unsuccessful.

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*<u>December 31, 2021, 2020, and 2019</u>*

At December 31, 2021, we had cash on hand of $166,747 as compared to $176,120 as at December 31, 2020. The decrease in cash was due to the net effect of use of cash raised from financing activities for its operations and additional $780,000 of investment into the Bonanza Project. We had total assets of $3,039,690 at December 31, 2021 compared to total assets of $3,052,512 at December 31, 2020. Overall, our total assets were consistent with the prior year.

We had current liabilities of $845,456 at December 31, 2021 compared to current liabilities of $545,827 at December 31, 2020. The increase in current liabilities is due to additional issuances of notes payable during the current year of $279,000 from related parties. We also saw an increase in accounts payable and accrued liabilities of $20,929 due to timing differences in the payment of outstanding obligations as they become due.

We had a working capital deficit of $498,709 at December 31, 2021 compared to a deficit of $369,707 at December 31, 2020 The decrease in the working capital was due to the use of the loan proceeds to support its ongoing cash investment in Bonanza Project as well as for general and operating expenditures incurred during the year.

*<u>Application of Critical Accounting Policies</u>*

The preparation of financial statements in conformity with applicable generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. Our significant accounting policies are disclosed in the Notes to our financial statements included in this Report.

***C. Research and Development, Patents and Licenses, etc.***

We do not currently, and did not previously, have research and development policies in place. Over the past five fiscal years, we have not expended any material amounts on research or development.

***D. Trend Information***

Our business is the exploration for and development of mineral deposits. The market price of precious metals and other minerals is volatile and has fluctuated widely, particularly in recent years. The prices of various metals are affected by numerous factors beyond our control, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. The commodity price of precious metals has a direct impact on our revenue prospects and our ability to raise capital. Although there is no assurance that this trend will continue, management is optimistic that the current price level will continue for the foreseeable future.

***E. Off-Balance Sheet Arrangements***

We do not have any 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 resource that is material to investors.

***F. Tabular Disclosure of Contractual Obligations***

The following table sets forth our contractual obligations by specified categories as of December 31, 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Contractual** <br>**Obligations** | **Total** | **Less than 1 year** | **1-3 years** | **3-5+ years** |
| Notes payable | $577500 | $577500 |  |  |
| **Total** | $**577500** | $**577500** |  |  |

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Other than the contractual obligations set forth above, we do not have any contractual obligations that are long-term debt obligations, capital (finance) lease obligations, purchase obligations or other long-term liabilities reflected on our balance sheet.

***G. Safe Harbor***

**Forward Looking Statements**

This annual report contains forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements can be identified by words or phrases such as "shall," "may," "will," "expect," "should," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to" or other similar expressions. These forward-looking statements include, among other things, statements relating to our goals and strategies, our competitive strengths, our expectations and targets for our results of operations, our business prospects and our expansion strategy. Those statements appear in a number of places and include statements regarding our intent, belief or current expectations with respect to:

· our direction and future operation;

· the implementation of our principal operating strategies, including our potential participation in acquisition, divestiture or joint venture transactions or other investment opportunities;

· the implementation of our financing strategy and capital expenditure plans;

· the exploration of mineral reserves and development of mining facilities;

· trends in commodity prices and demand for commodities;

· the future impact of competition and regulation;

· the payment of dividends or interest on shareholders' equity;

· industry trends, including the direction of prices and expected levels of supply and demand; and

· other factors or trends affecting our financial condition or results of operations.

We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Although we believe that we have a reasonable basis for each forward-looking statement contained in this annual report, we caution shareholders that these statements are based on our projections of the future that are subject to known and unknown risks and uncertainties and other factors that may cause our actual results to differ materially from those in the forward-looking statements.

The forward-looking statements included in the annual report are subject to risks, uncertainties and assumptions about our company. Our actual results of operations may differ materially from the forward-looking statements as a result of risk factors described under "Risk Factors" and elsewhere in this annual report. These risks are not exhaustive. 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 our actual results to differ materially from those contained in any forward-looking statement. An investor in our Company should not rely upon forward looking statements as predictions of future events. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information or future events or otherwise.

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**Item 6 Directors, Senior Management and Employees**

***A. Directors and Senior Management***

The following table sets forth the names, business experience and function/areas of expertise of each of our directors and officers as of the date of this report:

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| | |
|:---|:---|
| **Name, Office Held, Age** | **Area of Experience and Functions in Our Company** |
| Alan M. Brown<br>CEO, CFO,<br>Director & President<br>Age 55 | As President, Chief Executive Officer, Chief Financial Officer, and a Director, Mr. Brown is responsible for the development of our strategic direction and the management and supervision of our overall business. |
| Daniel A. Cistone<sup>(1)</sup><br>Director<br>Age 72 | Chairman of the Board of Directors of the Company  |
| Donald Rauch<sup>(2)</sup><br>Director<br>Age 75 | Director of the Company |
| Mark Mehok<sup>(3)</sup><br>Director<br>Age 54 | Director of the Company |

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<sup>(1)</sup> Mr. Cistone was appointed as a member of the Board of Directors on January 7, 2016.

<sup>(2)</sup> Mr. Rauch was appointed as a member of the Board of Directors on October 12, 2017

<sup>(3)</sup> Mr. Mehok was appointed as a member of the Board of Directors on July 1, 2018

**Alan M. Brown, President & CEO –** Mr. Brown is the company's President and Chief Executive Officer. He has an extensive background in accounting and mining exploration, along with experience in corporate mergers and acquisitions, real estate acquisitionand development. Prior to founding TMBXF, Mr. Brown spent several years working for a Chartered Accounting firm on Vancouver Island. He was also the chief controller for a Canadian real estate development company involved in multi-million dollar projects. Mr. Browns has been involved in the Public Markets since 2001 as senior board member of all companies that he has worked with.

**Daniel A. Cistone, Chairman of the Board -** Mr. Cistone brings his broad technical background and proven boardroom leadership experience to the role of Chairman. He has strong experience and expertise in finance, which includes acquisitions and startups both domestically and abroad, as well as management of those companies, and will be a huge asset to the Company. Mr. Cistone is the President of Daniel A. Cistone's Consulting LLC. and serves as a Director on several corporate and local boards in his community. Previously, he spent 40 years with M&C Specialties Co., a global fabrication company as CFO/CEO. He received his BSBA in Accounting from Villanova University, Villanova, PA.

**Donald Rauch, Director -** Mr. Rauch graduated in 1969 from Michigan State University cum laude in Business Administration. Mr. Rauch was President and CEO from 1995-2007 of M & C Specialties Co, a leading global fabricator/converter of pressure sensitive materials. He grew the business from a one plant operation in Philadelphia to an international business with plants in Ireland, Mexico, China and California. M & C Specialties was sold to ITW in June of 2007. His Board experience is extensive being M&C Specialties 1973 through 2007, Creative Financial Group Advisory Council, Warminster Hospital, Gasket Fabricators Assoc., Delaware Valley Industrial Resource Center, Laminators Inc., and Airline Hydraulics Inc.

**Mr. Mark Mehok** – Mr. Mehok graduated in 1991 from the University of Pittsburgh with a BS in Sports Medicine. He then went on to obtain his Master of Science from Widener University in 1996 and then his MBA from Penn State University in 2001. He was a practicing Physical Therapist prior to establishing 2M Sales and Development which is an independent Sales and Distribution company in the Healthcare and Medical device space. He still acts as the President of 2M Sales and Development. He is an Investor in numerous start up companies, many of which he acts as an advisor to.

**Additional Information**

There are no familial relationships between our officers and directors.

The above listed officers and directors were not selected as directors or members of senior management pursuant to any arrangement or understanding with major shareholders, customers, suppliers or others.

***B. Compensation***

During the fiscal year ended December 31, 2021, 2020, and 2019 the aggregate remuneration paid to directors in their capacity as directors of our Company was $144,000, $144,000, and $156,000, respectively. Management fees totaling $669,800, $762,947, and $825,177, was paid to directors and officers for each of the years ended December 31, 2021, 2020, and 2019, respectively.

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**Executive Compensation** 

The following table provides a summary of compensation paid by us during the fiscal years ended December 31, 2021, 2020, and 2019, to our executive officers who received a salary:

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| | | | |
|:---|:---|:---|:---|
| **SUMMARY COMPENSATION TABLE** | **SUMMARY COMPENSATION TABLE** | **SUMMARY COMPENSATION TABLE** | **SUMMARY COMPENSATION TABLE** |
| | | **Annual Compensation** | **Long Term Compensation** |
| <br>**Name and Principal Position** | <br>**Year** | **Salary** | **Shares or units**<br>**subject to resale**<br>**restrictions<sup>(1)</sup>** |
| **Alan M. Brown** <sup>(2)</sup> | 2021 | $144000 NIL | 60000 NIL |
| President, CEO, CFO and Director | 2020 | $144000 NIL | 100000 NIL |
|  | 2019 | $150000 NIL | 141667 NIL |
| **Daniel A. Cistone**<sup>(3)</sup> | 2021 | NIL | 80000 NIL |
| Director  | 2020 | NIL | 133334 NIL |
|  | 2019 | NIL | 241667 NIL |
| **Donald Rauch**<sup>(4)</sup> | 2021 | NIL | 40000 NIL |
| Director | 2020 | NIL | 66667 NIL |
|  | 2019 | NIL | 108333 NIL |
| **Mark Mehok**<sup>(5)</sup> | 2021 | NIL | 40000 NIL |
| Director | 2020 | NIL | 66667 NIL |
|  | 2019 | NIL | 108333 NIL |

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<sup>(1)</sup> The shares have been adjusted to reflect the 200-for-1 reverse stock split effective July 24, 2019.

<sup>(2)</sup> On June 1, 2019, the Company entered into a Consulting Agreement (the "Agreement") with Alan Brown, and addendum thereto, which supersedes the prior Employment Agreement between the Company and Mr. Brown. Pursuant to the Agreement, Mr. Brown shall continue to be employed as President, Chief Executive Officer and Chief Financial Officer of the Company and to continue to perform any and all duties relevant to such positions. The initial term of the Agreement is for two (2) years (the "Term"). In exchange for his services, Mr. Brown shall receive a base salary of $12,000 per month during the Term. Under the Agreement, Mr. Brown shall receive additional compensation in the form of the Company's common stock per year during the Term and thereafter until the Agreement is terminated. As of June 1, 2020, 100,000 shares were issued as compensation through May 31, 2021. As of December 31, 2021, 60,000 shares were issued as compensation through May 31, 2022.

<sup>(3)</sup> Mr. Cistone was appointed as a member of the Board of Directors on January 7, 2016.

<sup>(4)</sup> Mr. Rauch was appointed as a member of the Board of Directors on October 12, 2017.

<sup>(5)</sup> Mr. Mehok was appointed as a member of the Board of Directors on July 1, 2018.

***C. Board Practices***

All of the directors of the Company are elected annually by the shareholders and hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified, unless they sooner resign or cease to be directors in accordance with our Certificate of Incorporation and Bylaws. Our incumbent directors continue their service, in their current capacity, until they either resign or are removed and until their successors are elected. The Company's last annual regular general meeting was held on September 6, 2001, at which time Alan Brown was elected as a Director. Mr. Brown has continued in his office as Director since his election in 2001. Director vacancies may be filled by a majority of the remaining directors or by a sole remaining director. On January 28, 2010, Steven Radvak was elected to serve as a member of the Board of Directors by the sole remaining director, Alan Brown. Mr. Radvak resigned from all positions on August 13, 2015. On May 18, 2011, Laird Cagan was elected as a Director to the Company. On December 31, 2012, Laird Cagan resigned as a Director of the Company. On August 22, 2014, Mr. Barry Klein was appointed to serve as a member of the Board of Director and served until June 1, 2015 when he resigned. On August 1, 2015 Mr. Schnur was appointed as a member of the Board of Directors. On January 7, 2016, Mr. Cistone was appointed as a member of the Board of Directors February 1, 2016 on January 7, 2016, Mr. Hughes was appointed as a member of the Board of Directors. On August 1, 2016, the Company elected not to renew Mr. Schnur's agreement to provide services and he was terminated as a director of the company. On March 2, 2017 Mr. Hughes resigned as a member of the board of directors. On October 12, 2017, Mr. Rauch was appointed as a member of the Board of Directors. On July 1, 2018 Mr. Mehok was appointed as a member of the Board of Directors.

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Members of the Board of Directors are elected by the holders of the Company's shares to represent the interests of all shareholders. The Board of Directors meets periodically to review significant developments affecting the Company and to act on matters requiring Board approval. Although the Board of Directors delegates many matters to others, it reserves certain powers and functions to itself. The only standing committee of the Board of Directors of the Company is the Audit Committee. The Audit Committee of the Company's Board of Directors currently consists of Alan Brown. This committee is directed to review the scope, cost and results of the independent audit of the Company's books and records, the results of the annual audit with management and the adequacy of the Company's accounting, financial and operating controls; to recommend annually to the Board of Directors the selection of the independent auditors; to consider proposals made by the Company's independent auditors for consulting work; and to report to the Board of Directors, when so requested, on any accounting or financial matters. The Company does not have an Executive Committee.

The Company's executive officers are appointed by and serve at the pleasure of the Board of Directors.

***D. Employees***

As of December 31, 2021, 2020, and 2019, we had 1 employee, Alan Brown. The Company engages various consultants as independent contractors to assist the Company with its drilling programs. The Company has no relationship with any labor/trade unions.

***E. Share Ownership***

There were 12,210,746 common shares issued and outstanding as of June 28, 2022 and 11,540,746 as of December 31, 2021. Of the shares issued and outstanding, our directors and officers owned the following common shares:

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| | | | |
|:---|:---|:---|:---|
| **Name and Position** | **Number of Common Shares** <br>**Beneficially Owned as of** <br>**June 28, 2022<sup>(1)</sup>** |  | **Percentage** |
| **Alan M. Brown** <br>President, CEO, CFO and Director | 756720 | (2) | 6.20% |
| **Daniel A. Cistone**<br>Director | 830002 | (3) | 6.80% |
| **Donald Rauch**<br>Director | 540002 | (4) | 4.42% |
| **Mark Mehok**<br>Director | 933753 | (5) | 7.64% |
| **Aggregate owned by Officers and Directors** | 2060477 |  | 25.06% |

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<sup>(1)</sup> The voting rights attached to the common shares owned by our officers and directors do not differ from those voting rights attached to shares owned by people who are not officers or directors of our Company.

<sup>(2)</sup> The beneficial ownership of Alan Brown includes shares directly held by Mr. Brown and 142,763 common shares owned by his wife.

<sup>(3)</sup> The beneficial ownership of Daniel Cistone includes shares indirectly held in trust for benefit of Mr. Cistone and by his wife.

<sup>(4)</sup> The beneficial ownership of Donald Rauch includes shares directly held by Mr. Rauch and 50,000 shares held by Cama Sdira LLC fbo Bonnie Rauch IRA.

<sup>(5)</sup> The beneficial ownership of Mark Mehok includes shares directly held by Mr. Mehok, and 283,334 shares held by Cama Sdira LLC fbo Mark Mehok IRA and 18,750 common shares owned by his three children, for which he has dispositive voting control.

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**Item 7 Major Shareholders and Related Party Transactions**

***A. Major Shareholders***

There were 12,210,746 common shares issued and outstanding as of June 28, 2022. As of June 28, 2022, the following table shows beneficial owners of more than five (5%) of our common shares. The shareholders listed below have the same voting rights as all other shareholders.

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| | | |
|:---|:---|:---|
| **Name**  | **Number of Common Shares** <br>**Beneficially Owned**  | **Percentage** |
| **See Item 6, for Officers and directors** | 2060477 | 25.06% |

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Aside from our officers and directors, there are no beneficial owners of more than five (5%) of our common shares.

***B. Related Party Transactions***

As at December 31, 2021, the Company owed $206,928 (2020 - $207,228) to the President of the Company for management fees and financing of day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended December 31, 2021, the Company incurred $144,000 (2020 - $144,000; 2019 - $156,000) to the President of the Company for management fees.

During the year ended December 31, 2021, the Company incurred $525,800 (2020 - $618,947; 2019 - $669,176) to directors of the Company for services.

As at December 31, 2021, the Company owed $147,500 (2020- $147,500) of notes payable to a significant shareholder of the Company which is unsecured, non-interest bearing, and due on demand. During the year ended December 31, 2021, the Company received advances of $nil (2020 - $100,000).

As at December 31, 2021, the Company owed $150,000 (2020- $50,000) of notes payable to a significant shareholder of the Company which is unsecured, bears interest at 10% per annum upon maturity, of which $50,000 was due on January 1, 2021 and $100,000 was due on May 26, 2021. During the year ended December 31, 2021, the Company received an additional $100,000 of funding and recorded accrued interest of $10,956 (2020 - $nil).

As at December 31, 2021, the Company owed $50,000 (2020- $50,000) of notes payable to a director and shareholder which is unsecured, bears interest at 10% per annum upon maturity, and was due on December 31, 2020. As at December 31, 2021, the Company has recorded accrued interest of $4,986 (2020 - $nil).

As at December 31, 2021, the Company owed $230,000 (2020- $50,000) of notes payables to a significant shareholder of the Company which is unsecured, bears interest at 10% per annum upon maturity, of which $50,000 was due on December 31, 2020, $100,000 is due on June 3, 2022, and $80,000 is due on April 5, 2022. As at December 31, 2021, the Company has recorded accrued interest of $4,986 (2020 - $nil).

***C. Interests of Experts and Counsel***

None.

**Item 8 Financial Information**

***A. Financial Statements and Other Financial Information***

The Company's financial statements can be found on page F-1 of this Report, are incorporated into this Report by reference.

<u>Legal Proceedings</u>

On August 21, 2014, the Company filed a lawsuit in the United States District Court for the District of Utah against EuroGas Utah, EuroGas, A.G., a Swiss stock corporation ("EuroGas Swiss"), ZB Capital, A,G., a Swiss corporation and Riata Minerals, Inc., *et al.* (collectively, the "Defendants") for breaches of various agreements, including the Stock-for-Stock Exchange Agreement dated December 10, 2013 and Defendants financing commitment to the Company. The Company engaged in settlement negotiations to resolve the matter. In November 2014, the lawsuit against EuroGas Swiss was dismissed as a result of the parties' agreement to certain terms for EuroGas, Inc. to continue with its financing commitment. Subsequently, in March 2015, the Company refiled the lawsuit as a result of non-performance by the defendants. The litigation against Eurogas was settled in 2018. On November 20, 2018, the judge entered an order in favor of Tombstone for $190,248 in attorney's fees and costs. To date Eurogas has not attempted to pay the judgment voluntarily and the Company has not taken any formal action to enforce the judgment but intends to pursue collection and other legal remedies. There is no certainty the Company will be successful in collecting on the judgment.

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Other than the foregoing, we know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

<u>Dividends</u>

The Company has not and does not currently intend to pay any dividends on any of its shares. The Company intends to follow a policy of retained earnings to finance the growth of the business. Any future determination to pay dividends will be at the discretion of the Board of Directors of the basis of earnings, financial requirements and other relevant factors.

***B. Significant Changes***

Except as otherwise disclosed in this annual report or in the reports filed on Form 6-K filed to date, no significant changes have occurred since December 31, 2021.

**Item 9 The Offer and Listing**

The following table lists the high and low closing sale prices for the Company's common stock for the periods indicated as reported by the Over the Counter Markets:

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| | | |
|:---|:---|:---|
| **YEAR/PERIOD** | **HIGH<sup>(1)</sup>** | **LOW<sup>(1)</sup>** |
| **Q1 2019** | 1.38 | .60 |
| Q2 2019 | 1.70 | .52 |
| Q3 2019 | 3.04 | 1.02 |
| Q4 2019 | 1.99 | 1.49 |
| **Q1 2020** | 2.99 | 1.77 |
| Q2 2020 | 2.98 | 1.50 |
| Q3 2020 | 3.00 | 1.95 |
| Q4 2020 | 2.80 | 1.90 |
| **Q1 2021** | 2.80 | 2.03 |
| Q2 2021 | 2.50 | 2.11 |
| Q3 2021 | 2.38 | 1.80 |
| Q4 2021 | 2.00 | 1.02 |

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<sup>(1)</sup> All prior periods reflect the 1-for-200 reverse stock split made effective July 24, 2019.

*<u>Markets</u>*

The shares of the Company commenced trading on the Over the Counter Bulletin Board on July 14, 1999. The Company's common shares began trading on the OTCQB on August 27, 2019.

**Item 10. Additional Information**

***A. Share Capital***

Not Applicable.

***B. Articles of Incorporation & By-Laws***

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***<u>Directors</u>***

A director who is, in any way, directly or indirectly interested in a proposed contract or transaction, shall disclose the nature and extent of his interest at a meeting of the directors in accordance with the provisions of the Canada Business Corporations Act ("CBCA"). A director shall not vote in respect of any contract or transaction with our Company in which he is interested, and any such proposed contract or transaction shall be referred to the Board of Directors or shareholders for approval even if such contract or transaction is one that the ordinary course of the Company's business would not require approval by the Board of Directors or shareholders.

(1) Subject to the provisions of any unanimous shareholder agreement, the remuneration of the directors may from time to time be determined by the directors themselves, and such remuneration may be in addition to any reimbursement for travel and other expenses.

(2) The directors may, at their discretion and subject to the provisions of any unanimous shareholder agreement or By-Laws or the CBCA, authorize the Company to borrow any sum of money or incur indebtedness for the purpose of the Company and may raise or secure the repayment of such sum of money in such manner and upon such terms and conditions as the directors think fit.

(3) There are no provisions with respect to the retirement of a director or the non-retirement of a director under an age requirement.

(4) A director is not required to hold a share in the capital of our Company as qualification for his office.

With respect to the above noted matters, there are generally no significant differences between Canadian and U.S. law.

***<u>Objects and Purposes of the Company</u>***

Our Certificate of Incorporation places no restrictions upon our objects and purposes.

***<u>Rights, Preference and Restrictions</u>***

<u>Common Shares</u>

All of the authorized common shares of the Company, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common shares are entitled to one vote for each common share held of record on all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the board of directors, in its discretion, out of funds legally available therefore. The Company's By-Laws do not provide for cumulative voting.

Upon liquidation, dissolution or winding up of the Company, holders of common shares are entitled to receive pro rata our assets, if any, remaining after payments of all debts and liabilities. No common shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. There are no restrictions on the repurchase or redemption of common shares by our Company while there is any arrearage in the payment of dividends or sinking fund installments.

With respect to the rights, preferences and restrictions attaching to the Company's common shares, there are generally no significant differences between Canadian and United States law as the board of directors, or the applicable corporate statute, will determine the rights, preferences and restrictions attaching to each class of a Company's shares.

<u>Changes to Common Shares</u>

Provisions as to the modification, amendment or variation of the rights attaching to the common shares are contained in the CBCA. The CBCA requires approval by a special resolution (i.e. approved by at least two-thirds of the votes cast at a meeting of the shareholders of our Company or consented to in writing by each of our shareholders) of our Company's shareholders in order to effect any of the following changes:

(1) change any maximum number of shares that the Company is authorized to issue;

(2) create new classes of shares;

(3) reduce or increase its stated capital, if its stated capital is set out in the articles;

(4) change the designation of all or any of its shares and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued;

(5) change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;

(6) divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

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(7) authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof;

(8) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

(9) revoke, diminish or enlarge any authority conferred under paragraphs (7) and (8); and,

(10) add, change or remove restrictions on the issue, transfer or ownership of shares.

Generally, there are no significant differences between Canadian and United States law with respect to changing the rights of shareholders as most state corporation statutes require shareholder approval (usually a majority) for any such changes that affect the rights of shareholders.

***<u>Annual General Meetings and Extraordinary General Meetings</u>***

Annual General Meetings (an "AGM") must be held once every fiscal year, within 15 months of the previous AGM. If the Company fails to hold an AGM, the Supreme Court of British Columbia may, on the application of a director or shareholder of the Company, call or direct an AGM. Under the CBCA, we must give our shareholders written notice of an AGM not less than 21 days before the AGM is to be held.

Our directors may, whenever they think fit, convene an Extraordinary General Meeting (an "EGM").

An AGM or EGM may also be requisitioned by one or more shareholders of our Company so long as such shareholders own not less than 5% of the issued and outstanding shares at the date such shareholders requisition an EGM. After receiving such requisition, our directors must within 21 days call the meeting.

All shareholders entitled to attend and vote at an AGM or an EGM will be admitted to the meeting.

Most state corporation statutes require a public company to hold an annual meeting for the election of directors and for the consideration of other appropriate matters. The state statutes also include general provisions relating to shareholder voting and meetings. Apart from the timing of when an AGM must be held and the percentage of shareholders required to call a AGM or EGM, there are generally no material differences between Canadian and United States law respecting AGMs and EGMs.

***<u>Rights to Own Securities</u>***

There are no limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights.

Except as provided in the Investment Canada Act, there are no limitations under the applicable laws of Canada or by the Company's charter or other constituent documents of the Company on the right of foreigners to hold or vote common shares or other securities of the Company.

The Investment Canada Act will prohibit implementation, or if necessary, require divestiture of an investment deemed "reviewable" under the Investment Canada Act by an investor that is not a "Canadian" as defined in the Investment Canada Act (a "non-Canadian"), unless after review the Minister responsible for the Investment Canada Act ("the Minister") is satisfied that the "reviewable" investment is likely to be of net benefit to Canada. An investment in our common shares by a non-Canadian would be reviewable under the Investment Canada Act if it was an investment to acquire control of our Company and the value of our assets was $5 million or more. A non-Canadian would be deemed to acquire control of our Company for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of our outstanding common shares (or less than a majority but controlled our Company in fact through the ownership of one-third or more of our outstanding common shares) unless it could be established that, on the acquisition, our Company was not controlled in fact by the acquirer through the ownership of such common shares. Certain transactions in relation to our common shares would be exempt from review under the Investment Canada Act, including, among others, the following:

(1) acquisition of common shares by a person in the ordinary course of that person's business as a trader or dealer in securities;

(2) acquisition of control of our Company in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act; and

(3) acquisition of control of our Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control of our Company, through the ownership of voting interests, remains unchanged.

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The Investment Canada Act was amended with the World Trade Organization Agreement to provide for special review thresholds for "WTO Investors" of countries belonging to the World Trade Organization, among others, nationals and permanent residents (including "WTO Investor controlled entities" as defined in the Investment Canada Act). Under the Investment Canada Act, as amended, an investment in our common shares by WTO Investors would be reviewable only if it was an investment to acquire control of our Company and the value of our assets was equal to or greater than a specified amount (the "Review Threshold"), which published by the Minister after its determination for any particular year. The Review Threshold for Private sector WTO investments as of 2022 is 1.141 billion in enterprise value.

***<u>Change in Control</u>***

There are no provisions in the Company's By-Laws that would have the effect of delaying, deferring or preventing a change in control of our Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company.

The CBCA does not contain any provisions that would have the effect of delaying, deferring or preventing a change of control of the Company. Generally, there are no significant differences between Canadian and United States law in this regard, as many state corporation statutes also do not contain such provisions and only empower a company's board of directors to adopt such provisions.

***<u>Ownership Threshold</u>***

There are no provisions in our Certificate of Incorporation or Bylaws or in the CBCA governing the threshold above which shareholder ownership must be disclosed. The Securities Act (British Columbia) requires that the Company disclose, in its annual general meeting proxy statement, holders who beneficially own more than 10% of the Company's issued and outstanding shares. Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. United States federal securities laws require a company to disclose, in its Annual Report on Form 20-F, holders who own more than 5% of a company's issued and outstanding shares.

***<u>Changes in the Capital of our Company</u>***

There are no conditions imposed by our By-Laws which are more stringent than those required by the CBCA.

***C. Material Contracts***

With the exception of the contracts listed below, or those described elsewhere in this Form 20-F or in the Company's Form 6-K filings, we have not entered into any material contracts during the last twenty-four months other than those in the ordinary course of business.

***D. Exchange Controls***

Except as discussed in Item E below, the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of common shares. The Company is not aware of any limitations on the right of non-Canadian owners to hold or vote common shares imposed by Canadian federal or provincial law or by the Company. However, the Investment Canada Act (Canada) (the "Investment Act") has rules regarding certain acquisitions of shares by non-Canadians, along with other requirements under that legislation.

The following discussion summarizes the principal features of the Investment Act for a "non-Canadian" (as defined under the Investment Act) who proposes to acquire common shares of our Company. The discussion is general only; it is not a substitute for independent legal advice from an investor's own advisor; and it does not anticipate statutory or regulatory amendments.

The Investment Act is a federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures (each an "entity"). Investments by non-Canadians to acquire control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Act. If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Act, the Investment Act generally prohibits implementation of the investment unless, after review, the Minister of Innovation, Science and Economic Development Canada (the "Minister") is satisfied that the investment is likely to be of net benefit to Canada.

A non-Canadian would acquire control of our Company for the purposes of the Investment Act through the acquisition of common shares if the non-Canadian acquired a majority of the common shares of our Company.

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Further, the acquisition of less than a majority but one-third or more of the common shares of our Company by a non-Canadian would be presumed to be an acquisition of control of our Company unless it could be established that, on the acquisition, our Company was not controlled in fact by the acquirer through the ownership of common shares.

For a direct acquisition that would result in an acquisition of control of our Company, subject to the exception for "WTO-investors" that are controlled by persons who are nationals or permanent residents of World Trade Organization ("WTO") member nations, a proposed investment generally would be reviewable where the value of the acquired assets is CAD$5 million or more.

For a proposed indirect acquisition by an investor other than a so-called "WTO investor" that would result in an acquisition of control of our Company through the acquisition of a non-Canadian parent entity, the investment generally would be reviewable where the value of the assets of the entity carrying on the Canadian business, and of all other entities in Canada, the control of which is acquired, directly or indirectly is CAD$50 million or more.

In the case of a direct acquisition by a WTO investor, the threshold is significantly higher. An investment in common shares of our Company by a WTO investor that is not a state-owned enterprise would be reviewable only if it was an investment to acquire control of the company and the enterprise value of the assets of the company was equal to or greater than a specified amount, which is published by the Minister after its determination for any particular year. For 2022, this amount is CAD$1.141 billion (unless the investor is controlled by persons who are nationals or permanent residents of countries that are party to one of a list of certain free trade agreements, in which case the amount is CAD$1.711 billion for 2022); each January 1, both thresholds are adjusted by a GDP (Gross Domestic Product) based index.

The higher WTO threshold for direct investments and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on a "cultural business". The acquisition of a Canadian business that is a "cultural business" is subject to lower review thresholds under the Investment Act because of the perceived sensitivity of the cultural sector.

In 2009, amendments were enacted to the Investment Act concerning investments that may be considered injurious to national security. If the Minister has reasonable grounds to believe that an investment by a non-Canadian "could be injurious to national security," the Minister may send the non-Canadian a notice indicating that an order for review of the investment may be made. The review of an investment on the grounds of national security may occur whether or not an investment is otherwise subject to review on the basis of net benefit to Canada or otherwise subject to notification under the Investment Act.

Certain transactions, except those to which the national security provisions of the Investment Act may apply, relating to Common Shares of the Company are exempt from the Investment Act, including:

(a) the acquisition of our Common Shares by a person in the ordinary course of that person's business as a trader or dealer in securities;

(b) the acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act, if the acquisition is subject to approval under the *Bank Act, Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act; and*

(c) the acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company through the ownership of Common Shares, remained unchanged.

***E. Taxation***

The following summary of the material Canadian federal income tax consequences generally applicable in respect of the common stock reflects the Company's opinion. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder's particular circumstances. This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm's length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.

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This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act" or "ITA")and the Canada-United States Tax Convention (the "Tax Convention") as at the date of the Annual Report and the current administrative practices of Canada Customs and Revenue Agency. This summary does not take into account provincial income tax consequences.

**MANAGEMENT URGES EACH HOLDER TO CONSULT HIS OWN TAX ADVISOR WITH RESPECT TO THE INCOME TAX CONSEQUENCES APPLICABLE TO HIM IN HIS OWN PARTICULAR CIRCUMSTANCES.**

**CANADIAN INCOME TAX CONSEQUENCES**

**Disposition of Common Stock.**

The summary below is restricted to the case of a holder (a "Holder") of one or more common shares ("Common Shares") who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arm's length with the Company.

**Dividends**

A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on their common shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

**Disposition of Common Shares**

A Holder who disposes of common shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common share constituted "taxable Canadian property" as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arm's length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.

A Holder who is a resident of the United States and realizes a capital gain on disposition of common shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the common shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common shares when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of common shares must include one half of the capital gain ("taxable capital gain") in computing his taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one half of any capital loss ("allowable capital loss") arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.

**UNITED STATES FEDERAL INCOME TAX CONSEQUENCES**

The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company. This discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended ("the Code"), Treasury Regulations, published Internal Revenue Service ("IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time. In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company.

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Each holder and prospective holder of common shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company applicable to their own particular circumstances.

**U.S. Holders**

As used herein, a ("U.S. Holder") includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a "functional currency" other than the U.S. dollar, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.

This summary is limited to U.S. Holders who own common shares as capital assets. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.

**Distribution on Common Shares of the Company**

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal Income tax liability or, alternatively, individuals may be deducted in computing the U.S. Holder's United States Federal taxable income by those individuals who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.

Dividends paid on the common shares of the Company will not generally be eligible for the dividends received or deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a "foreign personal holding company" or a "passive foreign investment company", as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company. The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.

Under current Treasury Regulations, dividends paid on the Company's common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Company's common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder's U.S. federal income tax liability, provided the required information is furnished to the IRS.

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**Foreign Tax Credit**

For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(j), the limitation on credit does not apply.

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation. The various items of income and deduction must be classified into foreign and domestic sources.

Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income. Dividends distributed by the Company will generally constitute "passive income" or, in the case of certain U.S. Holders, "financial services income" for these purposes. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.

**Disposition of Common Shares of the Company**

A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in the common shares of the Company. Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts. This gain or loss will be capital gain or loss if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders, which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses. For U.S. Holders, which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

**Other Considerations**

In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company.

**Foreign Personal Holding Company**

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company's outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% (50% after the first tax year) or more of the Company's gross income for such year was derived from certain passive sources (e.g. from interest income received from its subsidiaries), the Company would be treated as a "foreign personal holding company." In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allocable portions of such passive income to the extent the Company does not actually distribute such income.

The Company does not believe that it currently has the status of a "foreign personal holding company". However, there can be no assurance that the Company will not be considered a foreign personal holding company for the current or any future taxable year.

**Foreign Investment Company**

If 50% or more of the combined voting power or total value of the Company's outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a "foreign investment company" as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.

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**Passive Foreign Investment Company**

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company ("PFIC"), as defined in Section 1297 of the Code, depending upon the percentage of the Company's income which is passive, or the percentage of the Company's assets which is held for the purpose of producing passive income.

The rule governing PFICs can have significant tax effects on U.S. shareholders of foreign corporations who are subject to U.S. Federal income taxation under alternative methods at the election of each such U.S. shareholder. As a PFIC, each U.S. shareholder's income or gain, with respect to a disposition or deemed disposition of the PFIC's shares or a distribution payable on such shares will generally be subject to tax at the highest marginal rates applicable to ordinary income and certain interest charges, unless the U.S. shareholder has timely made a "qualified electing fund" election or a "mark-to-market" election for those shares.

A U.S. shareholder who elects to treat the PFIC as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his income, for any taxable year in which the corporation qualifies as a PFIC, his pro-rata share of the corporation's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which (or with which) the corporation's taxable year ends, regardless of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the pledge of his common shares) as capital gain; treat his share of the corporation's net capital gain, if any, as long-term capital gain instead of ordinary income, and either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the corporation's annual realized net capital gain and ordinary earnings

The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the corporation is a PFIC. If the U.S. shareholder makes a QEF election in such first year, then the U.S. shareholder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files a tax return for such first year. If, however, the corporation qualified as a PFIC in a prior year during the U.S. shareholder's holding period, then the U.S. shareholder may make a retroactive QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains IRS permission.

If a U.S. shareholder has not made a QEF Election at any time (a "Non-electing U.S. Holder"), then special taxation rules under Section 1291 of the Code will apply to gains realized on the disposition (or deemed to be realized by reason of a pledge) of his common shares, and certain "excess distributions" by the corporation. An excess distribution is a current year distribution received by the U.S. shareholder on PFIC stock to the extent that the distribution exceeds its ratable portion of 125% of the average amount received by the U.S. shareholder during the preceding three years.

A Non-electing U.S. shareholder generally would be required to pro-rate all gains realized on the disposition of his common shares and all excess distributions over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. shareholder (other than years prior to the first taxable year of the corporation during such U.S. Holder's holding period and beginning after January 1, 1987 for which it was a PFIC) would be taxed at the highest marginal tax rate for each such prior year applicable to ordinary income. The Non-electing U.S. shareholder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing non-corporate U.S. shareholder must treat this interest charge as "personal interest" which is wholly non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.

If a corporation is a PFIC for any taxable year during which a Non-electing U.S. shareholder holds common shares, then the corporation will continue to be treated as a PFIC with respect to such common shares, even if it is no longer by definition a PFIC. A Non-electing U.S. shareholder may terminate this deemed PFIC status by electing to recognize a gain, which will be taxed under the rules for Non-Electing U.S. Holders, as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC. If the corporation no longer qualifies as a PFIC in a subsequent year, then normal Code rules and not the PFIC rules will apply with respect to a U.S. shareholder who has made a QEF election.

In certain circumstances, a U.S. Holder of stock in a PFIC can make a "qualified electing fund election" to mitigate some of the adverse tax consequences of holding stock in a PFIC by including in income its share of the corporation's income on a current basis. However, we do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. Management urges U.S. persons to consult with their own tax advisors with regards to the impact of these rules.

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**Controlled Foreign Corporation**

A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporation's tax year, owned (directly or indirectly) by U.S. Shareholders. If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company could be treated as a "controlled foreign corporation" under Subpart F of the Code. This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC's Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFC's earnings invested in U.S. property.

The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was "controlled") attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.

The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holder's federal income tax liability.

***Filing of Information Returns***. Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and management urges United States Investors to consult their own tax advisors concerning these requirements.

**ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES OF OUR COMPANY.**

***F. Dividends and Paying Agents***

Not required.

***G. Statement by Experts***

The financial statements of our Company included in this report have been audited by RBSM LLP ("RBSM") for the year ended December 31, 2021 and Sadler, Gibb & Associates, LLC for the years ended December 31, 2020 and 2019, as stated in the report appearing in this filing and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

***H. Documents on Display***

We are subject to the informational requirements of the *Securities Exchange Act of 1934*, as amended, and, as such, we file reports and other information with the SEC. You may read and copy any of our reports and other information at, and obtain copies upon payment of prescribed fees from, the Public Reference Room maintained by the SEC located at 100 F Street, N.E., Washington, DC 20549. You can also access these reports and other filings electronically on the SEC's web site, www.sec.gov. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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We will provide without charge to each person, including any beneficial owner, on the written or oral request of such person, a copy of any or all documents referred to above which have been or may be incorporated by reference in this report (not including exhibits to such incorporated information that are not specifically incorporated by reference into such information). Requests for such copies should be directed to us in writing at our address.

***I. Subsidiary Information***

We conduct all operations through our wholly owned subsidiary, Tombstone Exploration and Mining Corporation, a Nevada corporation, and Bonanza Mining Company, a Nevada corporation of which we own a 40% interest.

**Item 11. Quantitative and Qualitative Disclosures About Market Risk**

Our Tombstone and Bonanza property are located within the United States, currently at the exploration stage and our operations are limited to exploring these properties. Therefore, our market risks are minimal. We may, however, have future property exploration requirements due in currencies other than United States dollars. As a Canadian company, our cash balances are kept in Canadian funds, and then converted to United States funds for accounting purposes. Therefore, we may become exposed to some interest rate risks. We consider the amount of risk to be manageable and do not currently, nor will we likely in the foreseeable future, conduct hedging to reduce our market risks.

Furthermore, changes in the regulatory environment in the U.S. may affect the costs of operating, mineral exploration and other factors having a material impact upon the business. The Company works diligently and in good faith to meet or exceed all applicable permitting requirements, reclamation obligations, and other regulations, but is subject to the authoritative changes.

**Item 12. Description of Securities Other Than Equity Securities**

Not Applicable.

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**<u>PART II</u>**

**Item 13 Defaults, Dividend Arrearages and Delinquencies.** 

None.

**Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds.** 

Not Applicable.

**Item 15 Controls and Procedures** 

**Evaluation of Disclosure Controls and Procedures.**

Based on an evaluation as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the year ended December 31, 2021, management identified the following weaknesses, which were deemed to be material weaknesses in internal controls:

1. Certain entity level controls establishing a "tone at the top" were considered material weaknesses. Due to the size of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in a lack of segregation of duties. Additionally, the Company does not have an audit committee financial expert serving on its audit committee. A whistleblower policy is not necessary given the small size of the organization.

2. Due to the significant number and magnitude of adjustments identified during the year-end closing process, management has concluded that the controls over the period-end financial reporting process were not operating effectively. Specifically, controls were not effective to ensure that significant non-routine transactions, accounting estimates, and other adjustments were appropriately reviewed, analyzed, and monitored on a timely basis.

**Management's Annual Report on Internal Control over Financial Reporting.**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and chief financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 *Internal Control-Integrated Framework*. Based on its evaluation, management has concluded that the Company's internal control over financial reporting was not effective as of December 31, 2021.

Pursuant to Regulation S-K Item 308(b), this Annual Report on Form 20-F does not include an attestation report of our company's registered public accounting firm regarding internal control over financial reporting.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. 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 cost.

**Changes in Internal Control and Financial Reporting.**

There have been no changes in our internal control over financial reporting in the fiscal year ended December 31, 2021, which were identified in connection with our management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

***Continuing Remediation Efforts to address deficiencies in Company's Internal Control over Financial Reporting***

Once the Company has sufficient personnel available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:

1. We will appoint additional personnel to assist with the preparation of the Company's monthly financial reporting. 

2. Establish written documentation of the company's policies and procedures, to use as a tool for monitoring and reviewing employees' best practices.

3. We plan to adopt an Audit Committee Charter as a part of our continuing remediation efforts to address deficiencies in the Company's internal control over financial reporting and to seek a qualified financial expert to join the Audit Committee.

**Item 16. [Reserved]** 

**Item 16A. Audit Committee Financial Expert** 

The Company does not have an audit committee financial expert serving on its audit committee due to its inability to attract such a person.

**Item 16B. Code of Ethics** 

The Company has a Code of Business Conduct and Ethics that was approved by the Company's Board of Directors on June 1, 2007. A written copy of the Code is available on written request to the Company and was filed with the SEC on August 10, 2007 as part of the Company's Amended Annual Report on Form 20-F/A and is incorporated herein by reference.

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**Item 16C. Principal Accountant Fees and Services** 

The aggregate fees billed by the Company's external auditors in each of the last two fiscal years for audit fees are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Financial Year** <br>**Ending** | **Audit** <br>**Fees<sup>(1)</sup>** | **Audit** <br>**Related Fees<sup>(2)</sup>** | **Tax Fees<sup>(3)</sup>** | **All Other Fees<sup>(4)</sup>** |
| 2019 | $13000 | $0 | $0 | $0 |
| 2020 | $15000 | $0 | $0 | $0 |
| 2021 | $52000 | $0 | $0 | $0 |

---

<sup>(1)</sup> The aggregate audit fees billed.

<sup>(2)</sup> The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements which are not included under the heading ''Audit Fees''.

<sup>(3)</sup> The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.

<sup>(4)</sup> The aggregate fees billed for products and services other than as set out under the headings ''Audit Fees'', ''Audit Related Fees'' and ''Tax Fees''.

The Board of Directors must approve in advance any non-audit related services provided by the auditor to the Company, and the fees for such services, with a view to ensure independence of the Auditor, and in accordance with applicable regulatory standards, including applicable stock exchange requirements with respect to approval of non-audit related services performed by the auditors; and as necessary, taking or recommending appropriate action to oversee the independence of the auditors.

**Item 16D. Exemptions from the Listing Standards for Audit Committees.** 

Not Applicable.

**Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.** 

Not Applicable.

**Item 16F. Change in Registrant's Certifying Accountant.**

On April 27, 2022, the Board of Directors of the Company approved the dismissal of Sadler, Gibb & Associates, LLC ("SGA") as its independent certifying accountants. SGA has served as the Company's independent certifying accountants since March 4, 2019.

The reports of SGA on the Company's consolidated financial statements for the fiscal years ended December 31, 2020 and 2019 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such report contained an explanatory paragraph in respect to uncertainty as to the Company's ability to continue as a going concern.

During the Company's two most recent fiscal years and any subsequent interim period preceding the dismissal of SGA, there were (i) no disagreements (as that term is described in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions) with SGA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s) if not resolved to the satisfaction of SGA, would have caused SGA to make reference to the subject matter of the disagreement(s) in connection with its report, and (ii) no reportable events of the type required to be disclosed by Item 304(a)(1)(v) of Regulation S-K.

On April 27, 2022, the Company engaged RBSM LLP ("RBSM") to be its independent certifying accountants for the year ended December 31, 2021.

During the Company's most recent two fiscal years and through the subsequent interim period on or prior to April 27, 2022, neither the Company nor anyone on its behalf has consulted with RBSM on either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, or (b) any matter that was the subject of a disagreement, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto) or a reportable event as set forth in Item 16F(a)(1)(v)(A) through (D) of Form 20-F.

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Prior to April 27, 2022, the Company did not consult with RBSM regarding (1) the application of accounting principles to specified transactions, either completed or proposed, (2) the type of audit opinion that might be rendered on the Company's financial statements, (3) written or oral advice was provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issues, or (4) any matter that was the subject of a disagreement between the Company and its predecessor auditor as described in Item 304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.

On May 2, 2022, the Company provided SGA with a copy of the disclosures it is making on this Report on Form 6-K, and requested that SGA furnish it with a letter addressed to the SEC stating whether it agrees with the above statements. A copy of the letter from SGA dated May 2, 2022, is filed as Exhibit 99.1 to our Report on Form 6-K file with the SEC on May 2, 2022.

**Item 16G. Corporate Governance.**

Currently, our common shares are listed for trading on the OTCQB. We were uplisted from the OTCPK to the OTCQB on August 27, 2019. As a "foreign private issuer," as defined by the SEC, we are permitted to follow home country corporate governance practices, instead of certain corporate governance practices required by the SEC for U.S. domestic issuers. In the opinion of management, the Company's corporate governance practices do not differ in any significant way from those followed by U.S. domestic companies listed on the OTCQB.

**Item 16H. Mine Safety Disclosures.**

Not Applicable.

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**<u>PART III</u>**

**Item 17. Financial Statements**

Balance sheets of the Company as at December 31, 2021, 2020, and 2019, the Statements of Operations and Stockholders' Deficit and Cash Flows for each of the years ended December 31, 2021, 2020, and 2019, begin on page F-1 of this Form 20-F.

**Item 18. Financial Statements**

Not Applicable.

**Item 19. Exhibits**

Exhibits Required by Form 20-F.

---

| | | |
|:---|:---|:---|
| **Exhibit** <br>**Number**  | <br>**Description of Exhibit**  | <br>**Filing** |
| [1.01](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | [Certificate of Incorporation under the Canada Business Corporations Act dated October 30, 1997.](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002. |
| [1.02](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | [Bylaws](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002. |
| [1.03](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | [Certificate of Name Change dated June 5, 2000.](http://www.sec.gov/Archives/edgar/data/1072772/999999999702046977/9999999997-02-046977.paper) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002. |
| [1.04](http://www.sec.gov/Archives/edgar/data/1072772/000132875905000020/namechange.htm) | [Certificate of Name Change dated September 20, 2004.](http://www.sec.gov/Archives/edgar/data/1072772/000132875905000020/namechange.htm) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 15, 2005. |
| [1.05](http://www.sec.gov/Archives/edgar/data/1072772/000132875907000018/financing6k.htm) | [Certificate of Name Change dated February 6, 2007.](http://www.sec.gov/Archives/edgar/data/1072772/000132875907000018/financing6k.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on February 8, 2007. |
| [2.01](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001919/tombstone6k071911ex101.htm) | [Form of U.S. Private Placement Subscription Agreement and Common Stock Purchase Warrant](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001919/tombstone6k071911ex101.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on July 19, 2011. |
| [2.02](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001887/tombstone6k071511ex101.htm) | [Form of Non-U.S. Private Placement Subscription Agreement and Common Stock Purchase Warrant](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001887/tombstone6k071511ex101.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on July 15, 2011. |
| [4.01](http://www.sec.gov/Archives/edgar/data/1072772/000107878209000999/tombstone20f123108ex426.htm) | [Employment Agreement by and between the Company and Alan Brown dated January 1, 2009.](http://www.sec.gov/Archives/edgar/data/1072772/000107878209000999/tombstone20f123108ex426.htm) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 10, 2009. |
| [4.02](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001512/tombstone6k052411ex101.htm) | [Director Service Agreement between the Company and Laird Cagan dated May 18, 2011.](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001512/tombstone6k052411ex101.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on May 25, 2011. |
| [4.03](http://www.sec.gov/Archives/edgar/data/1072772/000107878211002506/tombstone6k082611ex101.htm) | [Settlement Agreement by and among the Company, RedStone Communications, LLC and Marlin Molinaro dated August 16, 2011](http://www.sec.gov/Archives/edgar/data/1072772/000107878211002506/tombstone6k082611ex101.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on August 29, 2011. |
| [4.04](http://www.sec.gov/Archives/edgar/data/1072772/000107878214000940/f20f123113_ex4z04.htm) | [Employment Agreement by and between the Company and Alan Brown dated November 15, 2013.](http://www.sec.gov/Archives/edgar/data/1072772/000107878214000940/f20f123113_ex4z04.htm) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on May 16, 2014 |
| [4.05](http://www.sec.gov/Archives/edgar/data/1072772/000107878213002452/f96k121313_ex10z1.htm) | [Stock-for-Stock Exchange Agreement by and among the Company, EuroGas, Inc. and EuroGas AG dated December 10, 2013](http://www.sec.gov/Archives/edgar/data/1072772/000107878213002452/f96k121313_ex10z1.htm) | Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on December 16, 2013. |
| [4.06](http://www.sec.gov/Archives/edgar/data/1072772/000107878214000940/f20f123113_ex4z06.htm) | [First Amendment to the Stock-for-Stock Exchange Agreement by and among the Company, EuroGas, Inc. and EuroGas AG dated January 13, 2014](http://www.sec.gov/Archives/edgar/data/1072772/000107878214000940/f20f123113_ex4z06.htm) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on May 16, 2014 |
| [4.07](http://www.sec.gov/Archives/edgar/data/1072772/000107878214001019/f6k052914_ex4z01.htm) | [Second Amendment to the Stock-for-Stock Exchange Agreement by and among the Company, EuroGas, Inc, and Eurogras AG, dated May 13, 2014](http://www.sec.gov/Archives/edgar/data/1072772/000107878214001019/f6k052914_ex4z01.htm) | Incorporated herein by reference to our current report on Form 6-K filed with the SEC on May 30, 2014 |
| [8.01](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001917/tombstone20f123110ex81.htm) | [Subsidiaries of the Company](http://www.sec.gov/Archives/edgar/data/1072772/000107878211001917/tombstone20f123110ex81.htm) | Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 19, 2011. |
| [96.1](tomb_ex961.htm) | [Technical Report on the Preliminary Economic Assessment of the Harquahala Project, dated June 30, 2017, updated June 25, 2018](tomb_ex961.htm) | Filed herewith. |
| [11.01](http://www.sec.gov/Archives/edgar/data/1072772/000107878207000791/tombstone20fa2006ex325.htm) | [Code of Ethics](http://www.sec.gov/Archives/edgar/data/1072772/000107878207000791/tombstone20fa2006ex325.htm) | Incorporated herein by reference to our Amended Annual Report on Form 20-F/A filed with the SEC on August 10, 2007. |
| 12.01 | Certification of Chief Executive Officer of the Company required by rule 13A-14(A) or rule 15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |

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| 12.02 | Certification of Chief Financial Officer of the Company required by rule 13A-14(A) or rule 15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |
| 13.01 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith. |
| 101.INS\* | Inline XBRL Instance Document | Filed herewith. |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document | Filed herewith. |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | Filed herewith. |

---

\*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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**<u>SIGNATURES</u>**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

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| | |
|:---|:---|
|  | **TOMBSTONE EXPLORATION CORPORATION** |
| Date: January 31, 2023 | */s/ Alan Brown*  |
|  | Alan Brown |
|  | President, Chief Financial Officer (Principal Financial and Accounting Officer), Chief (Principal) Executive Officer, and Director |
| Date: January 31, 2023 | */s/ Daniel A. Cistone*  |
|  | Daniel A. Cistone |
|  | Director |
| Date: January 31, 2023 | */s/ Donald Rauch*  |
|  | Donald Rauch |
|  | Director |
| Date: January 31, 2023 | */s/ Mark Mehok*  |
|  | Mark Mehok |
|  | Director |

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**Tombstone Exploration Corporation**

December 31, 2021

Index

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| | |
|:---|:---|
| [Reports of Independent Registered Public Accounting Firms](#re) | F-2 |
| [Consolidated Balance Sheets](#bs) | F-4 |
| [Consolidated Statements of Operations](#op) | F-5 |
| [Consolidated Statements of Stockholders' Equity (Deficit)](#st) | F-6 |
| [Consolidated Statements of Cash Flows](#cf) | F-7 |
| [Notes to the Consolidated Financial Statements](#nt) | F-8 |

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![tomb_20fimg1.jpg](tomb_20fimg1.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Stockholders of

Tombstone Exploration Corp

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Tombstone Exploration Corp (The "Company") as of December 31, 2021 and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the fiscal year ended December 31, 2021, and the related consolidated notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the fiscal year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

**The Company's Ability to Continue as a Going Concern**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has sustained significant operating losses and needs to obtain additional financing to continue its operations. These conditions 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 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

**Critical Audit Matters**

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

PCAOB ID 587

**RBSM LLP**

We have served as the Company's auditor since 2022

Las Vegas, Nevada

June 29, 2022

New York \| Washington, DC \| California \| Nevada

China \| India \| Greece

Member of ANTEA International with offices worldwide

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**<u>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

To the Board of Directors and Shareholders of Tombstone Exploration Corporation:

<u>Opinion on the Financial Statements</u>

We have audited the accompanying consolidated balance sheet of Tombstone Exploration Corporation ("the Company") as of December 31, 2020, the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

<u>Basis for Opinion</u>

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

*/s/ Sadler, Gibb & Associates, LLC*

We have served as the Company's auditor since 2019.

Draper, UT

May 5, 2021

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**Tombstone Exploration Corporation**

Consolidated Balance Sheets

(Expressed in U.S. dollars)

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| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2021**<br>**$** | **December 31,**<br>**2020**<br>**$** |
| **ASSETS** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | 166747 | 176120 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan receivable (Note 3) | 180000 | - |
| Total current assets | 346747 | 176120 |
| Non-current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment (Note 3) | 2691807 | 2874972 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 1136 | 1420 |
| Total non-current assets | 2692943 | 2876392 |
| **Total assets** | **3039690** | **3052512** |
| **LIABILITIES AND STOCKHOLDERS' EQUITY**  |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities (Note 5) | 61028 | 40099 |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to related parties (Note 7) | 206928 | 207228 |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes payable to related parties, current (Note 5) | 577500 | 298500 |
| **Total liabilities** | **845456** | **545827** |
| Nature of Operations and Continuance of Business (Note 1) |  |  |
| Subsequent Events (Note 9) |  |  |
| Stockholders' Equity  |  |  |
| Common stock  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Authorized: unlimited common shares, with no par value Issued and outstanding: 11,540,746 and 10,472,079 shares, respectively | 28656154 | 27638254 |
| Common stock issuable  | 675800 | 160000 |
| Additional paid-in capital  | 5339652 | 5339652 |
| Accumulated deficit  | (32477372) | (30631221) |
| **Total stockholders' equity**  | **2194234** | **2506685** |
| **Total liabilities and stockholders' equity**  | **3039690** | **3052512** |

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

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**Tombstone Exploration Corporation**

Consolidated Statements of Operations

(Expressed in U.S. dollars)

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,**<br>**2021** | **Year Ended December 31,**<br>**2020** | **Year Ended December 31,**<br>**2019** |
| **Operating expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consulting services | 274950 | 556760 | 111392 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative  | 33854 | 17239 | 29665 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of mineral property |  |  | 350000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Management and directors' fees (Note 7) | 669800 | 762947 | 825177 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mineral property costs  | 11872 | 9791 | 5991 |
| &nbsp;&nbsp;&nbsp;&nbsp;Professional fees | 51581 | 41318 | 71264 |
| **Total operating expenses** | **1042057** | **1388055** | **1393489** |
| **Loss before other income (expense)** | **(1042057)** | **(1388055)** | **(1393489)** |
| **Other income (expense)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accretion and interest expense | (20929) | (52120) | (65870) |
| &nbsp;&nbsp;&nbsp;&nbsp;Forgiveness of loans payable and accrued interest |  | 198801 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on settlement of debt |  | (43068) | (243065) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proportionate loss on equity-method investment (Note 3) | (783165) | (85028) | - |
| **Total other income (expense)** | **(804094)** | **18585** | **(308935)** |
| **Net loss**  | **(1846151)** | **(1369470)** | **(1702424)** |
| **Net loss per share – basic and diluted** | **(0.17)** | **(0.16)** | **(0.35)** |
| **Weighted average shares outstanding** | **11118595** | **8784726** | **4849806** |

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

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**Tombstone Exploration Corporation**

Consolidated Statement of Stockholders' Equity (Deficit)

From January 1, 2019 to December 31, 2021

(Expressed in U.S. dollars)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Common Stock**  | <br>**Common Stock**  | | |
|  | **Shares** |  | | |
|  | **#**  | $ | **Additional**<br>**Paid-In** <br>**Capital**<br> **$** | **Common**<br>**Stock** <br>**Issuable** <br>$ |
| Balance, December 31, 2018 | 3333256 | 22117962) |  |  |
| Issuance of common stock for cash | 2601898 | 1561000 |  |  |
| Issuance of common stock for services and settlement of related party debt and accounts payable | 867893 | 1044228) |  |  |
| Issuance of common stock for services | 125000 | 303750 |  |  |
| Shares issuable for interest |  |  |  |  |
| Net loss for the year | – | - |  |  |
| Balance, December 31, 2019 | 6928047 | 25026940) |  |  |
| Issuance of common stock for cash | 2896677 | 1830000 |  |  |
| Issuance of common stock for services and settlement of related party debt and accounts payable | 647355 | 781314) |  |  |
| Net loss for the year | – | - |  |  |
| Balance, December 31, 2020 | 10472079 | 27638254) |  |  |
| Issuance of common stock for cash | 943667 | 820250) |  |  |
| Share subscriptions received |  |  |  |  |
| Shares issuable for director's fees |  |  |  |  |
| Shares issued for service | 125000 | 197650 |  |  |
| Net loss for the year | – | - |  |  |
| **Balance, December 31, 2021** | **11540746** | **28656154** |  |  |

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

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**Tombstone Exploration Corporation**

Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

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| | | | |
|:---|:---|:---|:---|
|  | **For Years Ended** | **For Years Ended** | **For Years Ended** |
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** | **December 31,**<br>**2019** |
| **Operating Activities** |  |  |  |
| Net loss | (1846151) | (1369470) | (1702424) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issued for services | 197650 | 997158 | 698766 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issuable for directors' fee | 525800 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense | 284 | 353 | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on forgiveness of loans payable |  | (198801) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of mineral property |  |  | 350000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on settlement of debt |  | 43068 | 243065 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proportionate loss on equity-method | 783165 | 85028 |  |
| Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 20929 | 72032 | 65106 |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to related parties | (300) | - | 779 |
| **Net cash used in operating activities** | **(318623)** | **(370632)** | **(344647)** |
| **Investing Activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Advance on investments | (780000) | (2150000) | (810000) |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of mineral property rights  |  |  | (350000) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment  | - | - | (1834) |
| **Net cash used in investing activities**  | **(780000)** | **(2150000)** | **(1161834)** |
| **Financing Activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock | 810250 | 1980000 | 1571000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of notes payable |  | 150000 | 362000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advances from related parties | 279000 | 100375 | - |
| **Net cash provided by financing activities** | **1089250** | **2230375** | **1933000** |
| **Change in cash**  | **(9373)** | **(290257)** | **426519** |
| **Cash, beginning of year** | **176120** | **466377** | **39858** |
| **Cash, end of year** | **166747** | **176120** | **466377** |
| **Non-cash Investing and Financing Activities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issued to settle accounts payable |  | 62980 | 25051 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issued to settle CEO loan |  |  | 150000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issued to settle shareholder loan |  |  | 303750 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock issuable for interest expense |  |  | 17500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-recourse loans and interest applied as paid-in capital |  | 255397 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement of common stock issuable | - | 10000 | - |
| **Supplemental Disclosures** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest paid |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax paid | - | - | - |

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

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**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**1. Nature of Operations and Continuance of Business**

Tombstone Exploration Corporation (the "Company") was incorporated under the Canada Business Corporations Act on October 30, 1997 as 3430502 Canada Ltd. On December 4, 1997, the Company changed its name to Four Crown Foods Inc. On June 5, 2000, the Company changed its name to Universal Domains Incorporated. In 2001, the Company withdrew from the domain registration business and acquired 100% of the issued and outstanding common shares of VCL Communications Corp. ("VCL"), a teleconferencing services company that targeted clients throughout North America. In November 2003, given the Company's liabilities and the lack of profitability, the Company ceased all operations. On September 20, 2004, the Company changed its name to Pure Capital Inc., and focused its operations on the exploration and production of crude oil and natural gas properties. On November 1, 2006, the Company acquired 100% of the mineral claims located in Tombstone, Arizona in exchange for $100,000 and the issuance of 8,000,000 common shares of the Company. Effectively, on February 6, 2007, the Company changed its name to Tombstone Exploration Corporation.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at December 31, 2021, the Company did not record any revenues, and an accumulated deficit of $32,477,372. During the year ended December 31, 2021, the Company incurred a net loss of $1,846,151. In addition, the Company has defaulted on various notes payable from creditors due to insufficient cash flow to repay principal balances when they became due (refer to Note 5). The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's plan of action over the next twelve months is to raise capital financing to conduct exploration and drilling on its mineral property claims held in Tombstone, Arizona as well as exploring for new mineral property claims in the United States.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. Although the impact of COVID-19 on the Company's operations was not material, the Company continues to monitor the potential impacts of the pandemic on future operations and business opportunities.

**2. Summary of Significant Accounting Policies**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Basis of Presentation and Principles of Consolidation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The consolidated financial statements include the accounts of the Company and its subsidiary, Tombstone Exploration and Mining Corporation. All inter-company accounts and transactions have been eliminated. The Company's fiscal year-end is December 31.

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**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**2. Summary of Significant Accounting Policies** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of property and equipment, impairment of intangible assets, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2021 and 2020, the Company had no cash equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Property and Equipment

Property and equipment are recorded at the lower of cost or net book value, and are amortized based on the following rates:

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|:---|:---|
| Equipment | 5 years straight-line |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Impairment of Long-Lived Assets

In accordance with ASC 360, *Property Plant and Equipment*, management tests long-lived assets to be held and used for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Mineral Properties

Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, *Share-Based Payments*, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, *Accounting for Income Taxes,* as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

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**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**2. Summary of Significant Accounting Policies** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Comprehensive Loss

ASC 220, *Comprehensive Income,* establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2021 and 2020, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Beneficial Conversion Features

From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, *Earning per Share*. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At December 31, 2021 and 2020, the Company had no potentially dilutive shares

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:

*Level 1*

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

*Level 2*

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

*Level 3*

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

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**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**2. Summary of Significant Accounting Policies** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Financial Instruments (continued)

The Company's financial instruments consist principally of cash, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

The Company's operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. As at December 31, 2021 and 2020, the Company had no outstanding derivative liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Foreign Currency Translation

The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830 *Foreign Currency Translation Matters,* using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. There were no recent accounting pronouncements that would have a material impact on the financial statements, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

**3. Investment**

On April 1, 2019, the Company entered into an option agreement (the "Agreement") with Goldrock Resources Inc. ("Goldrock"), a non-related party incorporated in the state of Nevada, for a 40% interest in the Bonanza Project. Under the terms of the Agreement, the Company would earn its 40% interest by: (i) pay Goldrock $310,000 for funding of the project on the closing date of the agreement (paid); (ii) pay $500,000 for additional funding within 3 months of the closing date of the agreement (paid); and (iii) pay $2,750,000 of additional funding within 6 months of the closing date of the agreement. As the Company has made initial payments of $2,960,000 within the time frames of the Agreement, the Company can receive their initial investment back from Goldrock, without interest, from 20% of any net proceeds received from the Bonanza Project and the Agreement is still in good standing.

On December 10, 2020, the Company were issued 4,000 shares of Bonanza Mining Company ("Bonanza"), which entitled the Company for 40% interest in the Bonanza Project and significant influence in Bonanza. The Company has recorded its investment in Bonanza in accordance with ASC 323-10, *Investments – Equity Method and Joint Ventures*.

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**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**3. Investment** (continued)

During the year ended December 31, 2021, the Company completed its final investment of $600,000 to satisfy the initial terms of the Agreement. In addition, the Company invested a further $180,000 to the Bonanza Project for cost overruns and additional expenditures incurred. As at December 31, 2021, the Company has not amended the Agreement terms with Goldrock and the additional investment has been treated as a loan receivable from Bonanza until such time the Agreement has been amended for the Company's proportionate interest into Bonanza. The loan receivable is unsecured, non-interest bearing, and due on demand.

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|:---|
| Balance, December 31, 2019 |
| Cash investment |
| Proportionate net loss from December 10, 2020 to December 31, 2020) |
| Balance, December 31, 2020 |
| Cash investment |
| Proportionate net loss for the year) |
| **Balance, December 31, 2021** |

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**4. Mineral Property**

In January 2019, the Company acquired royalty rights from Bahamas Aggregates Inc. ("BAI"), a non-related party, where the Company would earn a royalty fee of $0.50 per tonne of aggregate minerals owned by BAI in exchange for $500,000. During the year ended December 31, 2019, the Company made total payments of $350,000 and the royalty fee was amended from $0.50 per tonne to $0.35 per tonne.

During the year ended December 31, 2019, the Company received $nil from BAI as production on the property was halted due to a natural disaster. BAI is currently seeking legal advice to recover the lost value of aggregate minerals that were damaged due to the effects of the natural disaster. As a result, the Company recorded an impairment loss of $350,000 for the year ended December 31, 2019 which is recorded in the consolidated statement of operations.

**5. Notes Payable – Related Party**

(a) As at December 31, 2021, the Company owed $147,500 (2020 - $147,500) of notes payable to a significant shareholder of the Company which is unsecured, non-interest bearing, and is due on demand. During the year ended December 31, 2021, the Company received advances of $nil (2020 - $100,000).

(b) As at December 31, 2021, the Company owed $150,000 (2020 - $50,000) of notes payable to a significant shareholder of the Company which is unsecured, bears interest at 10% per annum upon maturity, of which $50,000 was due on January 1, 2021 and $100,000 was due on May 26, 2021. During the year ended December 31, 2021, the Company received an additional $100,000. As at December 31, 2021, the Company has recorded accrued interest of $10,956 (2020 - $nil).

(c) As at December 31, 2021, the Company owed $50,000 (2020 - $50,000) of notes payable to a significant shareholder of the Company which is unsecured, bears interest at 10% per annum upon maturity, and was due on December 31, 2020. As at December 31, 2021, the Company has recorded accrued interest of $4,986 (2020 - $nil).

(d) As at December 31, 2021, the Company owed $230,000 (2020 - $50,000) of notes payable to a significant shareholder of the Company which is unsecured, bears interest at 10% per annum upon maturity, of which $50,000 was due on December 31, 2020, $100,000 is due on June 3, 2022, and $80,000 is due on April 5, 2022. As at December 31, 2021, the Company has recorded accrued interest of $4,986 (2020 - $nil).

---

| |
|:---|
| F-12 |
| *[**Table of Contents**](#toc2)* |

---

**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**6. Common Stock**

The fair value of common shares issued for services or settlement of debt is based on the end of day trading price of the Company's common stock on the date of issuance. The Company has an unlimited number of authorized common shares with no par value.

*<u>Year Ended December 31, 2021</u>*

---

| | |
|:---|:---|
| (a) | On January 7, 2021, the Company issued 213,333 common shares at $0.75 per share for proceeds of $160,000, which was received as at December 31, 2020. |
| (b) | On January 21, 2021, the Company issued 227,000 common shares at $0.75 per share for proceeds of $170,250. |
| (c) | On January 21, 2021, the Company issued 5,000 common shares with a fair value of $12,450 to third party consultants for consulting services. |
| (d) | On February 8, 2021, the Company issued 53,334 common shares at $0.75 per shares for proceeds of $40,000. |
| (e) | On February 22, 2021, the Company issued 10,000 common shares at $1.00 per shares for proceeds of $10,000. |
| (f) | On May 12, 2021, the Company issued 75,000 common shares at $1.00 per shares for proceeds of $75,000 |
| (g) | On June 1, 2021, the Company agreed to issue 220,000 common shares with a fair value of $525,800 for compensation services to officers and directors of the Company as at June 1, 2021. As at December 31, 2021, the amounts are recorded as shares issuable. Refer to Note 9. |
| (h) | On July 29, 2021, the Company issued 100,000 common shares at $1.00 per shares for proceeds of $100,000. |
| (i) | On August 2, 2021, the Company issued 40,000 common shares with a fair value of $86,000 to third party consultants for consulting services. |
| (j) | On October 21, 2021, the Company issued 150,000 common shares at $1.00 per share for proceeds of $150,000. |
| (k) | On November 5, 2021, the Company issued 80,000 common shares for services with a fair value of $99,200. |
| (l) | On November 10, 2021, the Company issued 50,000 common shares at $1.00 per share for proceeds of $50.000. |
| (m) | On November 18, 2021, the Company issued 25,000 common shares at $1.00 per share for proceeds of $25,000. |
| (n) | On November 23, 2021, the Company issued 40,000 common shares at $1.00 per share for proceeds of $40,000. |
| (o) | On December 20, 2021, the Company received share subscription proceeds of $150,000 for common shares issued subsequent to December 31, 2021. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<u>Year Ended December 31, 2020</u>* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<u>Year Ended December 31, 2020</u>* |
| (a) | On January 13, 2020, the Company issued 358,334 common shares at $0.60 per share for proceeds of $215,000, of which $10,000 was received as at December 31, 2019. |
| (b) | On February 27, 2020, the Company issued 41,667 common shares at $0.60 per share for proceeds of $25,000. |
| (c) | On March 20, 2020, the Company issued 16,521 common shares with a fair value of $31,390 to settle outstanding accounts payable. |

---

---

| |
|:---|
| F-13 |
| *[**Table of Contents**](#toc2)* |

---

**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**6. Common Shares** (continued)

*<u>Year Ended December 31, 2020</u>* (continued)

(d) On March 25, 2020, the Company issued 333,335 common shares at $0.60 per shares for proceeds of $200,000.

(e) On June 1, 2020, the Company issued 366,668 common shares with a fair value of $320,835 for compensation services to officers and directors of the Company.

(f) On June 9, 2020, the Company issued 125,000 common shares with a fair value of $198,750 to third party consultants for consulting services.

(g) On June 9, 2020, the Company issued 183,334 common shares at $0.60 per share for proceeds of $110,000.

(h) On July 2, 2020, the Company issued 473,337 common shares at $0.60 per share for proceeds of $284,000.

(i) On July 24, 2020, the Company issued 693,335 common shares at $0.60 per share for proceeds of $416,000.

(j) On August 27, 2020, the Company issued 100,000 common shares at $0.60 per share for proceeds of $60,000.

(k) On August 28, 2020, the Company issued 125,000 common shares with a fair value of $198,750 to third party consultants for consulting services.

(l) On August 31, 2020, the Company issued 100,000 common shares at $0.60 per share for proceeds of $60,000.

(m) On September 3, 2020, the Company issued 66,667 common shares at $0.60 per share for proceeds of $50,000.

(n) On September 23, 2020, the Company issued 280,000 common shares at $0.60 per share for proceeds of $210,000.

(o) On October 7, 2020, the Company issued 14,166 common shares for consulting services with a fair value of $31,500.

(p) On October 8, 2020, the Company issued 133,334 common shares at $0.60 per share for proceeds of $100,000.

(q) On October 23, 2020, the Company issued 133,334 common shares at $0.60 per share for proceeds of $100,000.

(r) On December 31, 2020, the Company received proceeds of $160,000 for common shares issued subsequent to December 31, 2020. As at December 31, 2020, the amounts are recorded as shares issuable.

*<u>Year Ended December 31, 2019</u>*

(s) On May 31, 2019, the Company issued 725,000 common shares at $0.60 per share for proceeds of $435,000, of which 333,333 common shares for proceeds of $200,000 were issued to directors of the Company.

(t) On May 31, 2019, the Company issued 17,893 common shares with a fair value of $25,051 to settle debt of $10,736, resulting in a loss on settlement of debt of $14,315.

(u) On May 31, 2019, the Company issued 250,000 common shares to settle debt owed to the President and Director of the Company of $150,000. The Company used a fair value of $350,000, being the end of day trading price of the Company's common shares on the date of issuance, to value the shares issued which resulted in the excess charge of $200,000 recorded against additional paid-in capital.

(v) On June 18, 2019, the Company issued 416,667 common shares at $0.60 per share for proceeds of $250,000, of which 83,333 common shares for proceeds of $50,000 were issued to a director of the Company.

(w) On June 18, 2018, the Company issued 600,000 common shares with a fair value of $669,176 to directors and officers of the Company for services.

(x) On August 5, 2019, the Company issued 133,333 common shares at $0.60 per share for proceeds of $80,000, of which 100,000 common shares for proceeds of $60,00 were issued to a director of the Company.

(y) On August 30, 2019, the Company issued 311,668 common shares at $0.60 per share for proceeds of $187,000, of which 70,000 common shares for proceeds of $42,000 were issued to a director of the Company.

(z) On September 27, 2019, the Company issued 358,335 common shares at $0.60 per share for proceeds of $215,000, of which 108,333 common shares for proceeds of $65,000 were issued to a director or family member of a director of the Company.

(aa) On November 7, 2019, the Company issued 50,000 common shares at $0.60 per share for proceeds of $30,000.

(bb) On November 20, 2019, the Company issued 83,334 common shares at $0.60 per share for proceeds of $50,000.

(cc) On December 5, 2019, the Company issued 420,000 common shares at $0.60 per share for proceeds of $252,000.

(dd) On December 20, 2019, the Company issued 103,334 common shares at $0.60 per share for proceeds of $62,000, of which 50,000 common shares for proceeds of $30,000 were issued to a director of the Company.

(ee) On December 20, 2019, the Company issued 125,000 common shares with a fair value of $303,750 to a shareholder of the Company to settle shareholder loan with a fair value of $75,000, resulting in a loss on settlement of debt of $228,750.

**7. Related Party Transactions**

(a) As at December 31, 2021, the Company owed $206,928 (2020 - $207,228) to the President of the Company for management fees and financing of day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended December 31, 2021, the Company incurred $144,000 (2020 - $144,000; 2019 - $156,000) to the President of the Company for management fees.

(b) During the year ended December 31, 2021, the Company incurred $525,800 (2020 - $618,947; 2019 - $669,176) to directors of the Company for services.

---

| |
|:---|
| F-14 |
| *[**Table of Contents**](#toc2)* |

---

**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**8. Income Taxes** 

The Company has $16,925,200 of net operating losses to carry forward to offset taxable income in future years which expire through fiscal 2041.

The components of the net deferred tax asset at December 31, 2021 and 2020, the statutory tax rate, the effective tax rate and the amount of the valuation allowance for the years ended December 31, 2021, 2020, and 2019 are indicated below:

---

| | | | |
|:---|:---|:---|:---|
|  | **2021**<br>**$** | **2020**<br>**$** | **2019**<br>**$** |
| Loss Before Taxes | (1846151) | (1369470) | (1702424) |
| Statutory rate | 21% | 21% | 21% |
| &nbsp;&nbsp;&nbsp;&nbsp;Computed expected tax recovery | (387692) | (287589) | (357509) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-deductible expenses | 60 | (32631) | 51044 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in valuation allowance | 387632 | 320220 | 306465 |
| Income tax expense | - | - | - |

---

---

| | | |
|:---|:---|:---|
|  | **2021**<br>**$** | **2020**<br>**$** |
| Deferred tax asset |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cumulative net operating losses | 3566071 | 3178439 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less valuation allowance | (3566071) | (3178439) |
| Net deferred tax asset | - | - |

---

The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating:

---

| | |
|:---|:---|
| <br>**Period Incurred** | **Expiry Date of**<br>$**Operating Losses** |
| December 31, 2006 | 2026 |
| December 31, 2007 | 2027 |
| December 31, 2008 | 2028 |
| December 31, 2009 | 2029 |
| December 31, 2010 | 2030 |
| December 31, 2011 | 2031 |
| December 31, 2012 | 2032 |
| December 31, 2013 | 2033 |
| December 31, 2014 | 2034 |
| December 31, 2015 | 2035 |
| December 31, 2016 | 2036 |
| December 31, 2017 | 2037 |
| December 31, 2018 | 2038 |
| December 31, 2019 | 2039 |
| December 31, 2020 | 2040 |
| December 31, 2021 | 2041 |

---

---

| |
|:---|
| F-15 |
| *[**Table of Contents**](#toc2)* |

---

**Tombstone Exploration Corporation**

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars

**9. Subsequent Events**

(a) On January 11, 2022, the Company issued 250,000 common shares at $1.00 per share for proceeds of $250,000, of which $150,000 was received as of December 31, 2021

(b) On January 12, 2022, the Company contributed an additional capital investment of $100,000 to the Bonanza Project.

(c) On January 18, 2022, the Company issued 220,000 common shares to officers and directors of the Company relating to fiscal 2021 compensation. Refer to Note 6(g).

(d) On January 18, 2022, the Company issued 100,000 common shares with a fair value of $146,000 to a third party for consulting services. The fair value of common shares was based on the end of day trading price of the Company's common stock on the date of issuance.

(e) On January 22, 2022, the Company issued 50,000 common shares with a fair value of $83,500 to the spouse of the Chief Executive Officer of the Company for consulting services. The fair value of common shares was based on the end of day trading price of the Company's common stock on the date of issuance.

(f) On January 22, 2022, the Company issued 50,000 common shares at $1.00 per share for proceeds of $50,000.

## Exhibit 12.1

**EXHIBIT 12.01**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14**

I, Alan Brown, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 20-F of Tombstone Exploration Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial 66 reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: January 31, 2023 |  | */s/ Alan Brown* |
|  | By:  | Alan Brown |
|  | Its:  | Chief Executive Officer  |

---

## Exhibit 12.2

**EXHIBIT 12.02**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14**

I, Alan Brown, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Annual Report on Form 20-F of Tombstone Exploration Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial 66 reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: January 31, 2023 |  | */s/ Alan Brown* |
|  | By:  | Alan Brown |
|  | Its:  | Chief Financial Officer (Principal Financial and Accounting Officer) |

---

## Exhibit 13.1

**EXHIBIT 13.01**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Tombstone Exploration Corporation (the "Company") on Form 20-F for the year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan Brown, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

---

| |
|:---|
| */s/ Alan Brown* |
| By: Alan Brown |
| Chief (Principal) Executive Officer and Chief Financial Officer (Principal Financial and Accounting Officer) |

---

Date: January 31, 2023

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 96.1

**EXHIBIT 96.1**

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