Clifton Mining : 4th Qtr Audited Financials

CLIFTON MINING COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 AND 2022

Clifton Mining Company

Index to the Consolidated Financial Statements

December 31, 2023 and 2022

	Page
Report of Independent Registered Public Accounting Firm	2
Consolidated Financial Statements
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Cash Flows	6
Consolidated Statements of Changes in Stockholders' Equity	7
Notes to the Consolidated Financial Statements	8
Disclosure Statement	22

MAC

MAC ACCOUNTING GROUP & CPAS, LLP

CERTIFIED PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BOARD OF DIRECTORS AND SHAREHOLDERS

CLIFTON MINING COMPANY

OPINION ON THE FINANCIAL STATEMENTS

WE HAVE AUDITED THE ACCOMPANYING CONSOLIDATED BALANCE SHEETS OF CLIFTON MINING COMPANY AS OF DECEMBER 31, 2023 AND 2022, AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS, STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE YEARS THEN ENDED, AND THE RELATED NOTES (COLLECTIVELY REFERRED TO AS THE

"FINANCIAL STATEMENTS"). IN OUR OPINION, THE FINANCIAL STATEMENTS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF CLIFTON MINING COMPANY AS OF DECEMBER 31, 2023 AND 2022, AND THE RESULTS OF ITS

OPERATIONS AND ITS CASH FLOWS FOR EACH OF THE YEARS THEN ENDED, IN CONFORMITY WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA.

BASIS FOR OPINION

THESE FINANCIAL STATEMENTS ARE THE RESPONSIBILITY OF THE ENTITY'S MANAGEMENT. OUR RESPONSIBILITY IS TO EXPRESS

AN OPINION ON THESE 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 CLIFTON MINING 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 AND IN ACCORDANCE WITH AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. 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. CLIFTON MINING 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 ENTITY'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.

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. THE COMMUNICATION OF CRITICAL AUDIT MATTERS DOES NOT ALTER IN ANY WAY OUR OPINION ON THE FINANCIAL STATEMENTS, TAKEN AS A WHOLE, AND WE ARE NOT, BY

WWW.MACACCOUNTINGGROUP.COM

1070 MECHAM LANE, MIDVALE, UTAH 84047

801.414.3664

COMMUNICATING THE CRITICAL AUDIT MATTERS BELOW, PROVIDING SEPARATE OPINIONS ON THE CRITICAL AUDIT MATTERS OR ON THE ACCOUNTS OR DISCLOSURES TO WHICH THEY RELATE.

IMPAIRMENT OF LONG-LIVEDASSETS

THE COMPANY HAS SIGNIFICANT IDLE PROPERTY AND EQUIPMENT THAT REQUIRES SIGNIFICANT JUDGEMENTS WITH REGARD TO ANALYZING THEM FOR POSSIBLE IMPAIRMENT. AS DISCUSSED IN NOTE 1 OF THE FINANCIAL STATEMENTS, MANAGEMENT ESTIMATES THE NET REALIZABLE VALUE OF THE LONG-LIVED ASSETS BASED ON THE ESTIMATED UNDISCOUNTED FUTURE CASH FLOWS THAT WILL BE GENERATED FROM OPERATIONS. IF UNDISCOUNTED CASH FLOWS ARE LESS THAN THE CARRYING VALUE OF AN ASSET, AN IMPAIRMENT LOSS WILL BE MEASURED AS THE AMOUNT BY WHICH THE CARRYING AMOUNT EXCEEDS THE ASSETS FAIR VALUE.

AUDITING THE COMPANY'S IMPAIRMENT ANALYSIS FOR THEIR PROPERTY AND EQUIPMENT WAS CHALLENGING DUE TO THE AUDITOR JUDGEMENT REQUIRED. TO FORM OUR OVERALL OPINION IN LIGHT OF THESE DIFFICULTIES, WE INSPECTED THE COMPANY'S BUILDINGS AND MILLING EQUIPMENT NOTING THERE WERE QUESTIONS REGARDING THE RECOVERABILITY OF

THE COMPANY'S MILLING EQUIPMENT. THEREFORE, THE COMPANY'S MILLING EQUIPMENT WITH A CARRYING VALUE OF $265,084 WAS FULLY IMPAIRED. REGARDING THE COMPANY'S MINERAL PROPERTIES, WE REVIEWED MANAGEMENT'S

ESTIMATED UNDISCOUNTED FUTURE CASH FLOWS NOTING THEY APPEARED REASONABLE.

MAC ACCOUNTING GROUP & CPAS, LLP

WE HAVE SERVED AS CLIFTON MINING COMPANY'S AUDITOR SINCE 2016.

MIDVALE, UTAH

APRIL 8, 2024

CLIFTON MINING COMPANY

Consolidated Balance Sheets

ASSETS		As of December 31,
CURRENT ASSETS		2023		2022
Cash	$	1,368,281	$	2,097,882
Receivables		10,851		12,125
Prepaid expenses		18,652		20,467
Total Current Assets		1,397,784		2,130,474
PROPERTY AND EQUIPMENT - IDLE PROPERTY
Mineral properties (Note 3)		1,068,215		1,080,515
Buildings, net (Note 6)		117,732		127,204
Milling equipment, net (Notes 1, 6)		-		303,770
Total Property and Equipment, Net		1,185,947		1,511,489
OTHER ASSETS
Equity investment in affiliate (Notes 1, 2)		1,798,922		1,434,977
Equity securities in affiliate (Notes 1, 12)		-		1,627,031
Restricted cash-reclamation bonds (Note 4)		260,833		258,768
Patent filings (Note 6)		6,213		8,013
Deposit		350		350
Total Other Assets		2,066,318		3,329,139
Total Assets	$	4,650,049	$	6,971,102
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	4,373	$	4,252
Total Current Liabilities		4,373		4,252
LONG-TERM LIABILITIES
Reclamation and remediation liabilities (Note 4)		62,973		59,332
Total Liabilities		67,346		63,584
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 154,584
and 154,584 shares issued and outstanding, respectively (Note 7)		155		155
Common stock, $0.001 par value, 70,000,000 shares authorized; 59,370,791 and
58,770,791 shares issued, respectively, 55,235,892 and 54,785,849 shares
outstanding, respectively (Note 7)		59,371		58,771
Additional paid-in capital		17,199,250		17,078,484
Retained deficit		(11,935,822)		(9,505,914)
Less: Treasury stock, at cost, 4,134,899 and 3,984,942 shares as of December
31, 2023 and 2022, respectively (Note 7)		(770,508)		(754,609)
Total Clifton Mining Stockholders' Equity		4,552,446		6,876,887
Non-controlling interest		30,257		30,631
Total Stockholders' Equity		4,582,703		6,907,518
Total Liabilities and Stockholders' Equity	$	4,650,049	$	6,971,102

See accompanying notes to consolidated financial statements.

4

CLIFTON MINING COMPANY

Consolidated Statements of Operations

			Years Ended December 31,
			2023			2022
REVENUE	$		-	$		-
EXPENSES
Exploration and depletion costs			27,498			33,146
General and administrative			46,253			29,327
Professional fees			70,190			35,360
Accretion expense			3,641			3,431
Depreciation and amortization			49,958			49,958
Impairment expense			265,084			-
Salaries and employee benefits			264,441			282,609
Stock based compensation			74,866			117,553
Property and claim taxes, filing fees and insurance			122,779			112,970
Total Expenses			924,710			664,354
Loss From Operations			(924,710)			(664,354)
OTHER INCOME (EXPENSE)
Interest income			2,763			659
Dividend income			84,181			24,768
Gain from equity investment			217,648			182,704
Gain (loss) on equity securities - net			(1,627,031)			(4,183,794)
Gain (loss) from affiliate stock transactions			(139,674)			(6,592)
Other Income (Expense)			(1,462,113)			(3,982,255)
Income (Loss) Before Income Taxes			(2,386,823)			(4,646,609)
Income Taxes			(43,459)			-
Net Income (Loss)			(2,430,282)			(4,646,609)
Less: Net Loss Attributable to Noncontrolling Interest			374			335
Net Income (Loss) Attributable to Clifton Mining	$		(2,429,908)	$		(4,646,274)
Net income (loss) per share - basic	$		(0.04)	$		(0.08)
Net income (loss) per share - fully diluted	$		(0.04)	$		(0.08)
Weighted average number of common shares outstanding
during the year:
Basic			54,863,961			54,930,869
Diluted			54,863,961			54,930,869

See accompanying notes to consolidated financial statements.

5

CLIFTON MINING COMPANY

Consolidated Statements of Cash Flows

		Years Ended December 31,
Cash Flows From Operating Activities:		2023				2022
Net income (loss)	$	(2,430,282)	$	(4,646,609)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization expense		49,958				49,958
Depletion expense		12,300				12,300
Accretion expense		3,641				3,431
Impairment expense		265,084				-
Loss (gain) from equity investment		(217,648)				(182,704)
Loss (gain) from equity securities - net		1,627,031				4,183,794
Loss (gain) from affiliate stock transactions		139,674				6,592
Valuation for stock-based compensation expense related to options		74,866				117,553
Changes in operating assets and liabilities:
Decrease (increase) in receivables, prepaid expenses, and other assets		1,024				(14,310)
Increase (decrease) in accounts payable and accrued liabilities		121				(3,295)
Net Cash Used in Operating Activities		(474,231)				(473,290)
Cash Flows From Investing Activities:
Purchase of treasury stock		(15,899)				(78,048)
Purchase of equity investment		(472,626)				-
Distributions from equity investment		186,655				190,625
Net Cash Provided by (Used in) Investing Activities		(301,870)				112,577
Cash Flows From Financing Activities:
Proceeds from options exercised		46,500				-
Net Cash Provided by Financing Activities		46,500				-
Net (decrease) increase in cash		(729,601)				(360,713)
Cash, beginning of year		2,097,882				2,458,595
Cash, end of year	$	1,368,281	$	2,097,882
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid	$	-	$	-
Taxes paid	$	43,459	$	-
NON CASH INVESTING & FINANCING ACTIVITIES:
Noncontrolling interest income allocation	$	374	$		335

See accompanying notes to consolidated financial statements.

6

CLIFTON MINING COMPANY

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2023 and 2022

		Series A Preferred Stock			Common Stock												Treasury	Clifton Mining		Non-		Total
							Additional				Retained		Stock, at	Stockholders'	controlling	Stockholders'
		Shares			Amount			Shares				Amount			Paid-in Capital				Deficit		Cost		Equity		Interest		Equity
Balance, December 31, 2021	154,584			$	155			58,770,791			$	58,771			$	16,960,931			$	(4,859,640	)		$	(676,561	)		$	11,483,656			$	30,966			$	11,514,622
Compensation related to options	-				-	-				-				117,553				-				-				117,553				-				117,553
Purchase of Treasury Stock at Cost	-				-	-				-				-				-				(78,048)			(78,048)			-				(78,048)
Net income at December 31, 2022	-				-	-				-				-				(4,646,274)			-				(4,646,274)			(335)			(4,646,609)
Balance, December 31, 2022	154,584			$	155			58,770,791			$	58,771			$	17,078,484			$	(9,505,914	)		$	(754,609	)		$	6,876,887			$	30,631			$	6,907,518
Compensation related to options	-				-	-				-				74,866				-				-				74,866				-				74,866
Proceeds issuance of common stock	-				-	600,000				600				45,900				-				-				46,500				-				46,500
Purchase of Treasury Stock at Cost	-				-	-				-				-				-				(15,899)				(15,899)			-				(15,899)
Net income at December 31, 2023	-				-	-				-				-				(2,429,908)			-				(2,429,908)			(374)			(2,430,282)
Balance, December 31, 2023		154,584			$	155			59,370,791			$	59,371			$	17,199,250			$	(11,935,822	)		$	(770,508	)		$	4,552,446			$	30,257			$	4,582,703

See accompanying notes to consolidated financial statements.

7

CLIFTON MINING COMPANY

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2023 and 2022

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Organization

Clifton Mining Company (the Company), was incorporated on June 8, 1993 under the laws of the State of Utah. In the beginning years, the Company was engaged in the process of acquiring, exploring, and developing properties or selling the properties at an appreciated value. The Company has acquired several claims which have previously been in production, with historical production records. The Company has obtained a report calculating mineralized material for the Clifton shear zone property (see Note 3 - Mineral Properties) and is no longer considered to be in the exploration stage. The Company is now primarily engaged in property management by joint venturing the properties to other companies including the use of the Company's equipment to bring the claims into production and investing in other businesses.

Principles of Consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and include the accounts of its 61% owned subsidiary, Woodman Mining Company. All intercompany accounts have been eliminated in consolidation.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash includes all cash and investments with original maturities to the Company of three months or less. As of December 31, 2023 and 2022, the Company had no cash equivalents.

Equity Securities

In accordance with ASC 321 Investment - Equity Securities, equity securities are measured at fair value with the changes in fair value recognized in net income.

For the years ended December 31, 2023 and 2022, the Company had net loss on equity securities of $1,627,031 and $4,183,794 respectively, which were recorded within other income (expense) on the Consolidated Statements of Operations.

As of December 31, 2023 and 2022, the Company owned 5,810,824 shares of common stock or a 21.7% interest in Desert Hawk Gold Corp. Although ownership percentages above 20% would normally be accounted for using the equity method, the Company is accounting for this investment as an investment in equity securities due to the Company not having any significant influence over Desert Hawk Gold Corp. The Company elected to measure this investment at fair value with changes recognized in net income. This election was made for all identical or similar investments of Desert Hawk Gold Corp., including future purchases, and is irrevocable.

For the year ended December 31, 2023, the Company determined that the fair value of their Desert Hawk Gold Corp. shares was $0 due to Desert Hawk Gold Corp. being in default on significant liability contracts and there being questions regarding the recoverability of the asset value. For the year ended December 31, 2022, the fair value of the Desert Hawk Gold Corp. shares of common stock of $0.28 per share was determined by an independent valuation specialist. As of December 31, 2023 and 2022, the investment in the affiliate was therefore valued at $0 and $1,627,031, respectively. (See Note 12 - Fair Value of Financial Instruments). This investment is classified as other assets on the Consolidated Balance Sheet due to the investments being made for the purposes of control or affiliation, in accordance with ASC 210-10 Balance Sheet - Overall.

8

CLIFTON MINING COMPANY

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2023 and 2022

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Equity Investments

The Company accounts for its investments in companies subject to significant influence using the equity method of accounting, under which, the Company's pro-rata share of the net income (loss) of the affiliate is recognized as income (loss) in the Company's income statement. The Company also records its share of the change in equity of the affiliate in the Company's income statement and is added to the investment on the balance sheet. Distributions received from the affiliate are treated as a return of capital and are accordingly deducted from the carrying value of the investment. Purchases of additional investments are recorded at cost and increase the carrying value of the investment (See Note 2)

Depreciation

Property and equipment are recorded at cost. Depreciation is determined using the straight-line method over the estimated useful lives of the assets over periods ranging from three to thirty-nine years. Expenditures for maintenance and repairs which do not extend the useful lives of the related assets are expensed as incurred.

Patent

The measurable patent costs that were initially capitalized totaled $29,695. The patent was granted December 14, 2010 and is being amortized over a 16.5 year life beginning December 2010. The Company evaluates the recoverability of intangibles and reviews the amortization period on a continual basis utilizing the guidance of ASC Topic 350, "Intangibles - Goodwill and Other." Several factors are used to evaluate intangibles, including, but not limited to, management's plans for future operations. Costs incurred to renew or extend the term of the patent applications will be expensed as incurred. (See Note 6)

Stock - Based Compensation

ASC Topic 718 and 505, requires that share-based payments be reflected as an expense based upon the grant-date fair value of those awards. The expense is recognized over the remaining vesting periods of the awards. The Company estimates the fair value of these awards using the Black-Scholes model. This model requires management to make certain estimates in the assumptions used in this model, including the expected term the award will be held, volatility of the underlying common stock, discount rate and forfeiture rate. We develop our assumptions based on our past historical trends as well as consider changes for future expectations. (See Note 11)

Fair Value Measurements

The fair values of the Company's financial instruments are defined as 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 fair value estimates presented in this report are based on information available to the Company as of December 31, 2023 and 2022.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value. The authoritative guidance issued by the FASB includes a fair value three-tier hierarchy which prioritizes the inputs used in measuring the fair value. The hierarchy requires the Company to use observable inputs when available and to minimize the use of unobservable inputs when determining fair value. The first two levels of inputs are considered observable and the last level is considered unobservable, that may be used to measure fair value as follows:

Level 1 - Quoted prices in active markets for identical assets;

9