MAGELLAN GOLD CORPORATION We use the terms "Magellan," "we," "our," and "us" to refer to
The following discussion and analysis provides information that management
believes is relevant for an assessment and understanding of our results of
operations and financial condition. This information should be read in
conjunction with our audited financial statements, which are included in our
Annual Report on Form 10-K for the fiscal year ended
COVID-19 Pandemic
In
The COVID-19 pandemic is rapidly evolving. The information in this Annual Report is based on data currently available to us and will likely change as the pandemic progresses. As COVID-19 continues to spread throughout areas in which we operate, we believe the outbreak has the potential to have a material negative impact on our operating results and financial condition. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our operators, employees and vendors, and the impact on the Company's ability to obtain debt and equity financing to fund ongoing exploration activities, all of which are uncertain and cannot be predicted. Given these uncertainties, we cannot reasonably estimate the related impact to our business, operating results and financial condition.
We expect the trends highlighted above with respect to the impact of the COVID-19 pandemic to continue and, in some cases, accelerate. The extent of the COVID-19 pandemic's continued effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, the pace at which jurisdictions across the country re-open and restrictions begin to lift, the availability of government financial support to our business, tenants and operators and whether a resurgence of the outbreak occurs. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows but it could be material.
Forward-Looking Statements
Some of the information presented in this Form 10-Q constitutes "forward-looking statements". These forward-looking statements include, but are not limited to, statements that include terms such as "may," "will," "intend," "anticipate," "estimate," "expect," "continue," "believe," "plan," or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
Overview
We were incorporated on
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We have only had exploration and project development operations to date and we rely upon the sale of our securities and borrowings from officers, directors and other significant investors to fund our operations, as we have not generated any revenue.
Magellan entered into a stock purchase agreement to acquire
In consideration for 100% of the issued and outstanding shares of Clearwater,
Magellan has agreed to pay its sole shareholder 1,000,000 shares of Magellan
common stock and
Effective
Effective
On
As a result of these agreements, the assets, liabilities and operations of the Gulf+Western, MAC and MV2 have been reflected as discontinued operations in the Company's consolidated balance sheets, consolidated statements of operations, consolidated statements of cash flows and consolidated statements of other comprehensive income (loss) for the periods presented.
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Certain prior period amounts have been reclassified to conform to the current period financial statement presentation, including the discontinued operations presentation resulting from the disposition of the Company's Gulf+Western, MAC and MV2 operations in 2020.
Results of Operations for the three months ended
Three months ended June 30,
2021 2020
Operating expenses:
General and administrative expenses $ 531,550 $ 123,580
Total operating expenses 531,550 123,580
Operating loss (531,550 ) (123,580 )
Other income (expense):
Interest expense (84,893 ) (74,241 )
Other income - 26,980
Loss on settlement of liabilities - (765,659 )
Loss on conversion of debt - (1,309,588 )
Loss on change in derivative liability (16,491 ) -
Total other expense (101,384 ) (2,122,508 )
Net loss from continuing operations (632,934 ) (2,246,088 )
Net loss from discontinued operation - (566 )
Net loss $ (632,934 ) $ (2,246,644 )
Operating expenses
During the three months ended
Other income (expense)
During the three months ended
Discontinued operations
The net loss from discontinued operations during the three months ended
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Results of Operations for the six months ended
Six months ended June 30,
2021 2020
Operating expenses:
General and administrative expenses $ 1,250,987 $ 293,565
Total operating expenses 1,250,987 293,565
Operating loss (1,250,987 ) (293,565 )
Other income (expense):
Interest expense (148,494 ) (148,973 )
Other income - 26,980
Loss on settlement of liabilities - (765,659 )
Loss on conversion of debt - (1,309,588 )
Loss on change in derivative liability (7,392 ) -
Total other expense (155,886 ) (2,197,240 )
Net loss from continuing operations (1,406,873 ) (2,490,805 )
Net loss from discontinued operation - (30,249 ) Net loss$ (1,406,873 ) $ (2,521,054 ) Operating expenses
During the six months ended
Other income (expense)
During the six months ended
Discontinued operations
The net loss from discontinued operations during the six months ended
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Liquidity and Capital Resources
Our unaudited consolidated financial statements have been prepared on a going
concern basis, which assumes that we will be able to meet our obligations and
continue our operations during the next fiscal year. Asset realization values
may be significantly different from carrying values as shown in our consolidated
financial statements and do not give effect to adjustments that would be
necessary to the carrying values of assets and liabilities should we be unable
to continue as a going concern. At
During the six months ended
Additionally, the Company received
We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financings will occur.
Cash Flows
A summary of our cash provided by and used in operating, investing and financing
activities is as follows:
Six months ended June 30,
2021 2020
Net cash used in operating activities from
continuing operations $ (198,359 ) $ (61,848 )
Net cash used in operating activities from
discontinued operations - (50,141 )
Net cash used in operating activities (198,359 ) (111,989 )
Net cash used in investing activities from
continuing operations (36,727 ) -
Net cash used in investing activities from
discontinued operations - -
Net cash used in investing activities (36,727 ) -
Net cash provided by financing activities from
continuing operations 412,185 96,716
Net cash provided by financing activities from
discontinued operations - -
Net cash provided by financing activities 412,185 96,716
Effect of foreign currency exchange - 68,636
Net change in cash and cash equivalents 177,099 53,363
Cash beginning of period - 167
Cash end of period $ 177,099 $ 53,530
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At
Net cash used in operating activities from continuing operations during the six
months ended
During the six months ended
Off Balance Sheet Arrangements
We do not have and have never had any off-balance sheet arrangements.
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
Our consolidated financial statements include our accounts and the accounts of
our 100% owned subsidiary,
Use of Estimates
The preparation of financial statements in conformity with
We make our estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.
Fair Value of Financial Instruments
We value our financial assets and liabilities using fair value measurements. Our financial instruments primarily consist of cash and cash equivalents, accounts payable, accrued liabilities, amounts due to related parties and notes payable to related parties. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount of cash and cash equivalents, accounts payable, accrued liabilities, notes payable to related parties and other amounts due to related parties approximates fair value because of the short-term nature of these financial instruments.
21 Concentrations of Credit Risk
Our financial instruments which potentially subject us to credit risk are our cash. We maintain our cash at reputable financial institutions and currently, we are not exposed to significant credit risk.
Cash and Cash Equivalents
We consider all amounts on deposit with financial institutions and highly liquid investments with an original maturity of three months or less to be cash equivalents at the date of purchase.
Notes Payable - Related Parties
Notes payable to related parties are classified as current liabilities as the note holders either have the ability to control the repayment dates of the notes or the notes are due within twelve months of the balance sheet date.
Net Loss per Common Share
We compute basic net loss per common share by dividing our net loss attributable
to common shareholders by our weighted-average number of common shares
outstanding during the period. Computation of diluted net loss per common share
adds the weighted-average number of potential common shares outstanding to the
weighted-average common shares outstanding, as calculated for basic net loss per
share, except for instances in which there is a net loss. For the six months
ended
Stock-based Compensation
The Company measures the cost of employee services received in exchange for an award of equity instruments (share-based payments, or SBP) based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the SBP award-the requisite service period (vesting period). For SBP awards subject to conditions, compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option-pricing model. The Company adopted ASU 2018-07 which aligns the accounting for share-based payment awards issued to employees and nonemployees.
Recently Adopted Accounting Standards
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
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