Results of Operations
Summary of Financial Condition
The following table summarizes and compares our financial condition at March 31, 2017, to the year ended December 31, 2016.
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March 31, 2017
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December 31, 2016
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Working capital deficit
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$
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135,324
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$
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101,333
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Current assets
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$
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13,183
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$
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8,789
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Total liabilities
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$
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148,507
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$
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110,122
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Unproved mineral properties
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$
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500,000
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$
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500,000
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Common stock and additional paid in capital
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$
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765,592
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$
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765,592
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Deficit
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$
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400,916
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$
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366,925
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8
Selected Financial Results
Three Months Ended March 31, 2017 and 2016
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Three Months Ended
March 31,
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Percentage
Increase /
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2017
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2016
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(Decrease)
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Operating expenses
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Filing fees
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$
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9,419
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$
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3,434
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174.3%
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General and administrative
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2,607
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42
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6107.1%
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Professional fees
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22,688
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16,665
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36.1%
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Net operating expenses
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34,714
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20,141
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72.4%
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Foreign currency transaction gain
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(723)
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(4,830)
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(85.0)%
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Net and comprehensive loss
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$
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33,991
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$
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15,311
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122.0%
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Revenues
We did not generate any revenue during the three-month periods ended March 31, 2017 and 2016. Due to the exploration stage of our operations, we do not expect to have significant operating revenue in the foreseeable future.
Operating Expenses
During the three months ended March 31, 2017, our expenses increased by $14,573 or 72.4% from $20,141 for the three months ended March 31, 2016, to $34,714 for the three months ended March 31, 2017. The increase in our operating expenses was mainly associated with the acquisition of the mineral properties and change in our business operations, as well as with 15-day temporary halt trade order initiated by Alberta Securities Commission (the ASC) as a result of unauthorized promotional activities related to our stock. As such, our professional fees increased by $6,023, or 36.1%, from $16,665 we incurred during the three months ended March 31, 2016, to $22,688 we incurred during the three-month period ended March 31, 2017. Our general and administrative expenses increased by $2,565, from $42 we incurred during the three-month period ended March 31, 2016, to $2,607 we incurred during the three-month period ended March 31, 2017; and our filing fees increased by $5,985, or 174.3%, from $3,434 we incurred during the three-month period ended March 31, 2016, to $9,419 we incurred during the three-month period ended March 31, 2017.
Net Loss
Our net loss for the three-month period ended March 31, 2017, increased by $18,680 from $15,311 we incurred during the three-month period ended March 31, 2016, to $33,991 we incurred during the three months ended March 31, 2017. The increase was mainly associated with overall increase in our operating expenses as discussed above, which was augmented by the decrease in foreign currency transaction gains.
We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.
Liquidity and Capital Resources
Cash Flows
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Three Months
Ended
March 31, 2017
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Three Months
Ended
March 31, 2016
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Cash used in operations
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$
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(59,339)
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$
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(9,036)
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Cash provided by financing activities
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59,278
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9,000
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Net decrease in cash during the period
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$
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(61)
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$
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(36)
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9
During the three months ended March 31, 2017, we used $59,339 in our day-to-day operating activities. We used $33,967 to cover our cash operating costs and $4,455 to increase our prepaid expenses. These uses of cash were further increased by $9,775 decrease in our accounts payable and by $11,142 decrease in accrued liabilities. During the three-month period ended March 31, 2017, we borrowed $50,278 from an unelated parties in exchange for unsecured promissory notes, which are due on demand and bear interest at 5% per annum compounded monthly. During the same period we recorded $9,000 owed to our President and a director for services he performed during the first quarter of our Fiscal 2017.
During the three months ended March 31, 2016, we used $9,036 in our day-to-day operating activities. We used $15,110 to cover our cash operating costs, which was offset by an increase in our accounts payable of $3,668 and by an increase in our accrued liabilities of $2,406. During the three-month period ended March 31, 2016, we recorded $9,000 owed to our President and a director for services he performed during the first quarter of our Fiscal 2016.
We do not have sufficient funds to maintain our operations and support our exploration initiatives for the next twelve months, as such, we continue with our ongoing efforts to raise additional capital by conducting additional issuances of our equity and debt securities for cash. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. As such, our management has expressed doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations.
There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on our revenues from continuing operations.
We have not paid for expenses on behalf of our directors. Additionally, we believe that this fact shall not materially change.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Going Concern Consideration
Our financial statements have been prepared assuming that we will continue as a going concern. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated in the near future. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.
Unproved Mineral Properties
On October 4, 2016, we entered into an asset purchase agreement with Gold Exploration Management Inc. (GEM). Pursuant to the Agreement, GEM agreed to sell to us its title to 220 twenty-acre Crystal Basin Claims, 203 twenty-acre claim units entitled the Scottys Southeast Claims, 400 twenty-acre Cholla Claims, and 200 twenty-acre North Limb Claims (collectively the Claims or Portfolio). As consideration for the sale of the Claims, we issued thirty million (30,000,000) restricted shares of our common stock to GEM. Furthermore, we agreed to appoint David A. Bending to the Board of Directors.
On December 20, 2016, we amended the Agreement to reflect the change in the Portfolio we negotiated with GEM. Pursuant to the Agreement, as amended, the number of claims had changed as follows: the Crystal Basin Claims increased to 245 claims from the original 220 claims, the Scottys Southeast Claims increased form the original 203 claims to 312 claims, the Cholla Claims increased from the original 400 claims to 424 claims , and the North Limb Claims were decreased from the original 200 claims to 160 claims. North Limb claims were also renamed as North Lobe claims. In addition we added 224 twenty-acre generative claims that are located in the area of our interest, however, which have not been assigned to any specific group of claims.
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As of the date of the filing of this Quarterly Report on Form 10-Q, our Claims consist of 306 fully registered and renewed claim units totaling 6,120 acres and 1,059 claim units totaling 20,540 acres that have been located, however, for which required fees have not been paid. To finalize the registration of the located units we will be required to pay the filing fees within 90 days from the date they were located or re-located.
As part of our Agreement, as amended, we agreed to assume all financial liabilities of the Claims including registration fees and taxes payable to federal, state, and county government agencies.
The mineral titles are subject to payment of annual maintenance fees as of August 31, 2017, and the Company is fully prepared to meet these requirements as warranted by the results of the exploration work. No minimum field or assessment expenditures are required by either the US Bureau of Land Management (BLM) or the Agreement. Exploration work is planned purely on the basis of the financial capacity and objectives of the Company, save and except the annual maintenance fees but Horizon plans an efficient and focused effort to rank and advance the targets to the discovery stage or decisions to negotiate farm out transactions or termination.
Crystal Basin Claims
The Crystal Basin Claims consist of 245 twenty-acre unpatented mining claims located in Southern Nye County. 154 of the 245 original claims have been filed and renewed with the BLM and will expire on September 1, 2017, if we do not renew the claims. The Crystal Basin Claims are held in irrevocable trust by GEM based on the terms of the Agreement, as amended, with 91 claims pending filing. They are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Crystal Basin lies in southern Nye County at the SE corner of the Amargosa Valley in a structurally defined secondary closed basin between 2 and 10 km (1.24 to 6.21 miles) SW of Nevada highway 95, 70 km (43.50 miles) northeast of the City of Las Vegas and 25 km (15.53 miles) northwest of the unincorporated community of Pahrump, Nevada. The claims are traversed by roads developed for the adjoining complex of clay mining operations, power lines and a history of surface disturbance and prospecting. The clay deposits overlie the basinal sediments of interest and the surface is dominated by very young felsic ash deposits which have been altered to the commercially significant saponite, montmorillonite and zeolite deposits that have generated a local mining culture and infrastructure. The village of Crystal offers low cost lodging within 3.21 km (2 miles) of the subject property in this area. The elevation of the area is 609.6 to 640 meters (2000 to 2100 feet) above mean sea level, and the climate is typical of the Amargosa/ Mojave Desert with hot summers and cool dry winters. Annual rainfall is about 5 cm (1.97 inches ) per year.
No exploration has been carried out by the Company on the Crystal Basin Claims to date and the Company has no immediate exploration plans.
Scottys Southeast Claims
The Scottys Southeast Claims consisted of 312 twenty-acre unpatented mining claims located in Central Nye County. The only retained interest the Company has in these claims are referred to as the SFE Property. The Scottys Southeast Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Scottys Southeast Claims were located September 14 to 18, 2016, in south Central Nye County 24 KM (15 miles) south of Scottys Junction Airport, two to four miles southwest of US Highway 95. The claims lie in south central Nye County, 16 to 32 km (10 to 20 miles) north of the mining community of Beatty, Nevada, 129 km (80 miles) south of Goldfield, 5 to 13 km (3 to 8 miles) west of Nevada Highway 95, and 249 km (155 miles) north of Las Vegas. The elevation of the area is 609.6 to 640 meters (2000 to 2100 feet) above mean sea level, and the climate is typical of the Amargosa/ Mojave Desert with hot summers and cool dry winters. Annual rainfall is about 5 cm (1.97 inches) per year.
The location and climate of these Claim areas permit exploration work at all times of the year, subject to very rare periods in which transient rainfall renders the salina or mudflat surface soft but still accessible to ATV and four wheel drive conventional vehicles.
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With the exception of SFE Property, no exploration has been carried out by the Company on the Scottys Southeast Claims to date and the Company has no immediate exploration plans.
Cholla Claims
The Cholla Claims consist of 424 unpatented twenty-acre claims located in eastern San Bernardino County between Barstow and Needles, California, which were located in September and October and relocated in the period December 2 to December 5 and further relocated on March 20, 2017. As of the date of the filing of this Quarterly Report on Form 10-Q Cholla Claims are yet to be filed with the BLM or San Bernardino County. We have until June 18, 2017, to file our Cholla Claims with San Bernardino County, and until June 16, 2017, to file the Cholla Claims with BLM at which time filings fees will be required to be paid. The funds to file these claims have not been available during this phase of work but the documentation is ready to be filed.
The Cholla Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The Cholla Claims consist of 53 association placer claim blocks, representing the equivalent of 424 claim units totaling 7,840 acres, in San Bernardino County, 3.2 to 9.7 km (two to six miles) south of the historic route 66, approximately midway between the communities of Barstow and Needles in the Mojave Desert in California. They are located in four discrete parcels called the Northwest, West, East and Turtle trend Blocks. Although the geological data available suggest that the prospective environment is far more extensive than the current land position most of the area selected for consolidation in early 2016 was alienated from mineral development by the new Mojave Trails National Monument. The claims which were relocated and retained for evaluation after systematic study of the area lie in the Bristol Basin east and northeast of the Bristol Lake Salt Flats.
No exploration has been carried out by the Company on the Cholla Claims to date and the Company has no immediate exploration plans.
North Lobe Claims
The North Lobe Claims originally called North Limb Claims consist of 160 unpatented twenty-acre claims located in northeastern Nevada in Elko County along the border with Utah, approximately 16 to 24 km (10 to 15 miles) north of Wendover, Nevada. The original package of 200 claims was reduced to 160 claim units, and lies 8 to 19 km (5 to 12 miles) north of U.S. Interstate Highway 80 and is accessible along unpaved roads and four-wheel-drive trails. As of the date of this filing we have yet to file these claims with Elko County and the BLM. In order to keep our interest in these claims we have to file them with both Elko County and BLM by mid June 2017.
The North Lobe Claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
The North Lobe Claims cover the eastern portion of a salt flat which is part of the Great Salt Lake north of Bonneville Salt Flats, an area in which drillhole data released by a joint publication of the USGS and the Nevada Bureau of Mines and Geology documented strongly anomalous lithium concentrations in brines.
The North Lobe Claims are similar in climate and topography to the other properties but lie at an elevation of 1,250 meters (4,100 feet) above mean sea level. Mean annual rainfall is 4.5 cm (1.77 inches) and mean daily temperatures range from 46.1°C (115°F ) during July to -15°C ( 5°F) during December and January. Access to the area is generally good via Interstate Highway 80 which traverses the Great Salt Lake to the local population center of Wendover, at the frontier between Utah (Toole County) and Nevada (Elko County). Access to the salt and mud flats which cover the target areas is generally very good via local roads and trails, with the exception that after periods of rain or snowmelt the surface can become soft and surface travel uncertain. This is a factor primarily between February and May of each year.
No exploration has been carried out by the Company on the North Lobe Claims to date and the Company has no immediate exploration plans.
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Generative Claims
In addition to the above Claims, during month of December 2016 we have located an additional 28 association placer claim blocks consisting of 224 claim units totalling 4,480 acres. These generative claims are located in Toole County, Utah and are in close proximity to our North Lobe Claims within the Great Salt Lake area. As of the date of the filing of this Quarterly Report on Form 10-Q, these claims have not been assigned to any specific group of claims.
As of the date of this filing we have yet to file these claims with Toole County and the BLM. In order to keep our interest in these claims we have to file them with both Toole County and BLM by mid June 2017.
The above generative claims are held in irrevocable trust by GEM based on the terms of the Agreement and are 100% controlled by Horizon without underlying obligations or encumbrances save and except a 2% Gross Production Royalty to GEM.
SFE Property
We are currently focusing our resources on the exploration of a section of the Scottys Southeast Claims, described above, (the SFE Property). The SFE Property is located in southern Nevada, approximately 29 kms (18 miles) northwest of Beatty, Nevada. The Property centroid is UTM 501,449mE, 4,105,700mN (UTM WGS84, zone 11N) or Longitude 116.984° by Latitude 37.09761°. The claim block comprising the SFE Property lies within portions of the northwest quadrant of the Springdale SW, and the northeast quadrant of Bonnie Claire SE 7.5 (1:24,000 scale) US Geological Survey topographic base maps. The SFE Property is located approximately 11 kms (7 miles) north of the northern boundary of Death Valley National Monument.
The mineral claims comprising the SFE Property include 21 association placer claims accruing 2,229 acres covering portions of sections 36, T9S, R44E; section 31, T9S, R45E; sections 1, 12, T10S, R44E; and sections 5, 6, 7, 8, T10S, R45E of the Mount Diablo Base and Meridian.
As of the date of this Quarterly Report on Form 10-Q, of the 21 association placer claims, 16 claims have been located in the field and registered with full fees paid to Nye County and the BLM and renewed for the 2017 assessment year as valid, adjudicated, and active claims. The claims cover either 80 acres (4 - 20 acre units) or 160 acres (8 - 20 acre units). An additional five association placer claims have been located in the field with fees paid to Nye County. The required BLM fees have not yet been paid for these five claims, as such, the claims cannot be considered to be fully valid.
In addition to the 21 located association placer claims described above, an additional 20 association placer claims (160 acres each, 8 - 20 acre units), were located in the field on December 18, 2016. These claims have not yet been filed with Nye County or BLM, and fees required for full validation have not yet been paid.