ATHENA GOLD CORPORATION We use the terms "Athena," "we," "our," and "us" to refer to
The following discussion and analysis provide 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 consolidated financial statements which are
included in our Annual Report on Form 10-K for the fiscal year ended
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.
Business Overview
We were incorporated on
In
In
In
The Option is exercisable in two tranches: the first tranche was exercised
immediately pursuant to which the Company acquired a 10% interest in
Athena's agreement with Nubian includes 100% of the 140 unpatented claims at
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Excelsior Springs is our flagship project and we have completed a N.I. 43-101
Technical Report to support our planned listing on the
We have not presently determined whether our mineral properties contain mineral reserves that are economically recoverable.
Reclassifications: Certain reclassifications may have been made to our prior year's consolidated financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19
pandemic may negatively affect our operations. The occurrence of an
uncontrollable event such as the COVID-19 pandemic may negatively affect our
operations. A pandemic typically results in social distancing, travel bans and
quarantine, and this may limit access to our facilities, customers, management,
support staff and professional advisors. These factors, in turn, may not only
impact our operations, financial condition and demand for our goods and services
but our overall ability to react timely to mitigate the impact of this event.
Also, it may hamper our efforts to comply with our filing obligations with the
Results of Operations for the Three Months Ended
A summary of our results from operations is as follows:
Three Months Ended June 30,
2021 2020
Operating expenses:
Exploration costs $ 26,099 $ -
General and administrative expenses 116,844 30,561
Total operating expenses 142,943 30,561
Operating loss (142,943 ) (30,561 )
Total other income (expenses), net 59,178 (32,696 )
Net loss $ (83,765 ) $ (63,257 ) During the three months ended
Operating expenses:
Our total operating expenses increased
During the three months ended
Our general and administrative expenses increased by
15
Legal and professional fees and other expenses were
On
We estimated the fair value of the options using the Black-Scholes option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected remaining life of the options. The total estimated fair value of the options utilized the following assumptions:
Expected volatility 184% Contractual term 5 years Risk free interest rate 0.87% Expected dividend rate 0%
The calculations resulted in the total fair value of the options issued to be
Other income and expense:
Our total other income, net was
For the three months ended
For the three months ended
On
The warrants have an exercise price in Canadian dollars while the Company's functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
At inception date of
Fair value assumptions - derivative warrants: May 25, 2021 June 30, 2021 Risk free interest rate 0.30% 0.47% Expected term (years) 3.0 2.9 Expected volatility 180% 179% Expected dividends 0% 0% 16
Results of Operations for the Six Months Ended
A summary of our results from operations is as follows:
Six Months Ended June 30,
2021 2020
Operating expenses:
Exploration costs $ 61,776 $ -
General and administrative expenses 330,947 64,936
Total operating expenses 392,723 64,936
Operating loss (392,723 ) (64,936 )
Total other income (expenses), net 51,986 (61,937 )
Net loss $ (340,737 ) $ (126,873 ) During the six months ended
Operating expenses:
Our total operating expenses increased
During the six months ended
Our general and administrative expenses increased by
Legal and professional fees for the six months ended
On
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We estimated the fair value of the options using the Black-Scholes option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected remaining life of the options. The total estimated fair value of the options utilized the following assumptions:
Expected volatility 184% Contractual term 5 years Risk free interest rate 0.87% Expected dividend rate 0%
The calculations resulted in the total fair value of the options issued to be
Other income and expense:
Total other income, net was
For the six months ended
On
The warrants have an exercise price in Canadian dollars while the Company's functional currency is US dollars. Therefore, in accordance with ASU 815 - Derivatives and Hedging, the warrants have a derivative liability value.
At inception date of
Fair value assumptions - derivative warrants: May 25, 2021 June 30, 2021 Risk free interest rate 0.30% 0.47% Expected term (years) 3.0 2.9 Expected volatility 180% 179% Expected dividends 0% 0% 18
For the six months ended
Liquidity and Capital Resources
Going Concern
Our 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
We have financed our capital requirements primarily through borrowings from related parties and equity financings. We expect to meet our future financing needs and working capital and capital expenditure requirements through additional borrowings and offerings of debt or equity securities, although there can be no assurance that our future financing efforts will be successful. The terms of future financing could be highly dilutive to existing shareholders. Currently, there are no arrangements in place for additional equity funding or new loans.
Liquidity
As of
During the six months ended
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 $ (267,600 ) $ (54,240 )
Net cash provided by financing activities 529,925 55,464
Net increase in cash 262,325 1,224
Cash, beginning of period 8,986 117
Cash, end of period $ 271,311 $ 1,341
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Net cash used in operating activities:
Net cash used in operating activities was
Cash used in operating activities during the six months ended
Cash used in operating activities during the six months ended
Net cash provided by financing activities:
Cash provided by financing activities during the six months ended
During the six months ended
On
During the six months ended
For the six months ended
On
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Off Balance Sheet Arrangements:
We do not have and never had any off-balance sheet arrangements.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
Critical Accounting Policies
The preparation of financial statements in conformity with
We believe that the significant estimates, assumptions and judgments used when accounting for items and matters such as capitalized mineral rights, asset valuations, recoverability of assets, asset impairments, taxes, and other provisions were 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.
Foreign Currency
The Company is exposed to currency risk on transactions and balances in currencies other than the functional currency. The Company has not entered any contracts to manage foreign exchange risk. The functional currency of the Company is the US dollar; therefore, the Company is exposed to currency risk from financial assets and liabilities denominated in Canadian dollars.
Mineral Rights
We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, our direct costs to acquire or lease mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease mineral properties.
If we establish proven and probable reserves for a mineral property and
establish that the mineral property can be economically developed, mineral
rights will be amortized over the estimated useful life of the property
following the commencement of commercial production or expensed if it is
determined that the mineral property has no future economic value or if the
property is sold or abandoned. For mineral rights in which proven and probable
reserves have not yet been established, we assess the carrying values for
impairment at the end of each reporting period and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Proven
and probable reserves have not been established for any mineral rights as of
Impairment of Long-lived Assets
We continually monitor events and changes in circumstances that could indicate that our carrying amounts of long-lived assets, including mineral rights, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
21 Exploration Costs
Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our consolidated balance sheets.
Share-based Payments
We measure and recognize compensation expense or professional services expense for all share-based payment awards made to employees, directors and non-employee consultants based on estimated fair values. We estimate the fair value of stock options on the date of grant using the Black-Scholes-Merton option pricing model, which includes assumptions for expected dividends, expected share price volatility, risk-free interest rate, and expected life of the options. Our expected volatility assumption is based on our historical weekly closing price of our stock over a period equivalent to the expected life of the options.
We expense share-based compensation, adjusted for estimated forfeitures, using the straight-line method over the vesting term of the award for our employees and directors and over the expected service term for our non-employee consultants. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. Our excess tax benefits, if any, cannot be credited to stockholders' equity until the deduction reduces cash taxes payable; accordingly, we realized no excess tax benefits during any of the periods presented in the accompanying consolidated financial statements.
Income Taxes
We account for income taxes through the use of the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and for income tax carry-forwards. A valuation allowance is recorded to the extent that we cannot conclude that realization of deferred tax assets is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
We follow a two-step approach to recognizing and measuring tax benefits associated with uncertain tax positions taken, or expected to be taken in a tax return. The first step is to determine if, based on the technical merits, it is more likely than not that the tax position will be sustained upon examination by a taxing authority, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement with a taxing authority. We recognize interest and penalties, if any, related to uncertain tax positions in our provision for income taxes in the consolidated statements of operations. To date, we have not recognized any tax benefits from uncertain tax positions.
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