MAGELLAN COPPER & GOLD Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES The SEC, as required by Section 404 of the Sarbanes-Oxley Act, adopted rules requiring every company that files reports with the SEC to include a management report on the effectiveness of disclosure controls and procedures in its periodic reports and an annual assessment of the effectiveness of its internal control over financial reporting in its annual report. Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management's control objectives. Our management, with the participation of our CEO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based upon this evaluation, our CEO concluded that our disclosure controls and procedures were not effective because of the identification of material weaknesses in our internal control over financial reporting which are described below. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP. 27 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 dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. 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. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on this evaluation, management concluded that that our internal control over financial reporting was not effective as of December 31, 2021. Our CEO concluded we have a material weakness due to lack of segregation of duties and a limited corporate governance structure. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our system of internal control. Therefore, while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported material weaknesses related to the following: · Lack of segregation of duties in certain accounting and financial reporting processes including the initiation, processing, recording and approval of disbursements; · Lack of a formal review process that includes multiple levels of review. · Lack of independent directors. While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in many exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing. This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the SEC rules that permit us to provide only management's report in this Annual Report. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. Our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, Mr. Martinez concluded that the design and operation of our disclosure controls and procedures were not effective as of such date to provide assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management as appropriate, to allow timely decisions regarding disclosures. 28 Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 29 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers Our current executive officers and directors are: Name Age Position Michael Lavigne 65 CEO & Director Mark Rodenbeck 73 Director Deepak Malhotra 73 Director Greg Schifrin 62 Director Mark Rodenbeck, age 73, was appointed Director on June 16, 2020. Mr. Rodenbeck, age 73, served as an officer and director of Mascota Resources, a Nevada mining Company, from February 2015- October 2019. He graduated (cum laude with Dean's List honors) from Northwood Institute with a B.S. Degree in Business Administration in 1970. Between 1970 and 1976, Mark worked as General Manager, and then District Manager, for Foodplex Inc., a large operator of fast food restaurants. In 1976 he became President and 50% owner of Damark Inc. which owned and operated 6 fast food restaurants in Michigan. In 1981, Mr. Rodenbeck sold his restaurants and moved to Denver, Colorado, and became a stockbroker. In 1984, he was promoted to Branch Manager of Engler & Budd, a Minneapolis-based brokerage firm. In 1995, he co-founded Colorado Ceramic Tile, Inc. as a 50% owner and officer. Mr. Rodenbeck retired from Colorado Ceramic Tile in 2012. Gregory Schifrin, age 62, was appointed Director on July 1, 2020. Mr. Schifrin, age 62, has been a Geologist for more than 35 years, specializing in precious, base metals, rare earth and uranium exploration and development. Previously he served as the CEO and a member of the Board of Director at Blackrock Gold Corp. Michael Lavigne, age 65, was appointed CEO and Director on August 1, 2020. Mr. Lavigne has been involved in the mining industry since 1975, when he worked underground for Hecla Mining Company. After completing law school, Mr. Lavigne started a registered broker-dealer specializing in mining and resource companies. He was a member and on the board of directors for the Spokane Stock Exchange and was involved in a number of financings for exploration-stage companies. Mr. Lavigne has served in management and board positions for a number of exploration companies with projects in Idaho, Montana, Nevada, Utah, Wyoming and Alaska. Additionally, Mr. Lavigne is owner and Managing Partner of Capital Peak Partners, LLC, which provides consulting services in the area of corporate and business development to a number of mining companies. Mr. Lavigne received his BA in Accounting from the University of Idaho and JD from the Gonzaga University School of Law. Deepak Malhotra, age 73, was appointed Director on September 1, 2020. Dr. Malhotra, age 73, is a world-renowned processing expert, with over 48 years of mining industry experience, with expertise in process design, process development, plant auditing and troubleshooting, detailed engineering, and capital and operating cost management. His process work with mining organizations worldwide has led to the commercialization of about 15 plants, with capital ranging from $50 million to $750 million. After working for AMAX Inc. for 17 years, Dr. Malhotra founded Resource Development Inc. (RDI), a metallurgical testing and consulting company, in 1990. His clients include World Bank/IFC, international financial institutions, mining companies, and governments. The consulting business of RDI was later spun off as an independent company, Pro Solv Consulting LLC, where Dr. Malhotra is currently serving as President. 30 Dr. Malhotra has a Ph.D. in Mineral Economics (1978) and M.S., Metallurgical Engineering (1973) from the Colorado School of Mines and B.S., Metallurgical Engineering (1970) from the Indian Institute of Technology. He is a Registered Member of Society of Mining Engineers, Member of Canadian Institute of Mining and Metallurgical Engineering, and a Qualified Person (QP) under National Instrument 43-101 in Canada. He has been awarded the Gaudin Award and Arthur C. Daman Lifetime Achievement Award by the Society of Mining and Metallurgy and Exploration Engineers. Dr. Malhotra is also currently Director at Canarc Resource Corp. and Cardero Resource Corp., and Consultant at RDI. He holds four patents and has published over 80 articles and edited several books. Involvement in Certain Legal Proceedings During the last 10 years, none of our directors or officers has: a. had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; b. been convicted in a criminal proceeding or subject to a pending criminal proceeding; c. been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or d. been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. Family Relationships No family relationships exist among our directors. Additionally, there do not exist any arrangements or understandings between any director and any other person pursuant to which any director was elected as such. Director Independence Our common stock is listed on the OTC.QB of the OTC Markets Group, Inc. inter-dealer quotation systems, which does not have director independence requirements. Nevertheless, for purposes of determining director independence, we have applied the definition set forth in NASDAQ Rule 4200(a)(15). One of our four directors is an officer of the corporation and is not considered independent. Board Meetings During the years ended December 31, 2020 and 2021, our Board members engaged in frequent informal discussions; and all Board actions have been undertaken by unanimous written consent. Committees of the Board of Directors We currently do not have standing audit, compensation or nominating committees of the Board of Directors. We plan to form audit, compensation and nominating committees when it is necessary to do so to comply with federal securities laws or to meet listing requirements of a stock exchange or the Nasdaq Capital Market. Compliance with Section 16(a), Beneficial Ownership Under the Securities Laws of the United States, our directors, executive (and certain other) officers, and any persons holding more than ten percent (10%) of our common stock during any part of our most recent fiscal year are required to report their ownership of common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established and we are required to report in this Report any failure to file by these dates. During the year ended December 31, 2021, all of these filing requirements were satisfied by our officers, directors, and ten-percent holders. In making these statements, we have relied on the written representation of our directors and officers or copies of the reports that they have filed with the Commission. 31 Code of Ethics We have adopted a Code of Ethics that apples to, among other persons, our company’s principal executive officer, as well as persons performing similar functions. As adopted, our Code of Ethics sets forth written guidelines to promote: · honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; · full, fair, accurate, timely and understandable disclosure in all reports and documents that we file with, or submit to, the SEC and in other public communications made by us that are within the executive officer’s area of responsibility; · compliance with applicable governmental laws, rules and regulations; · the prompt internal reporting of violations of the Code; and · accountability for adherence to the Code. Our Code of Ethics is on file with the SEC. We will provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent to: Magellan Gold Corporation, 602 Cedar St., Ste. 205, Wallace, ID 83873. ITEM 11. EXECUTIVE COMPENSATION Director Compensation Our directors receive no compensation for their services as director. Executive Compensation The following table sets forth all compensation paid to our Named Executive Officers for the years ended December 31, 2021 and 2020: SUMMARY COMPENSATION TABLE Salary Bonus Stock Awards Option Awards Non equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation Total Name and Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($) Michael Lavigne CEO and Director (1) (2) 2021 – – 162,465 – – – – 162,465 2020 (partial) – – 84,600 – – – – 84,600 John Power CFO and Director (3) 2020 (partial) – – – – – – – – (1) Michael B. Lavigne was appointed CEO and as a Director on August 1, 2020. 32 (2) Effective August 1, 2020, the Company and Michael B. Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of Common Stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of December 31, 2021, 255,000 restricted stock units may be settled in shares of Common Stock. During the year ended December 31, 2021, the Company recognized $162,465 of expense related to the agreement. As of December 31, 2020, 75,000 restricted stock units may be settled in shares of Common Stock. During the year ended December 31, 2020, the Company recognized $84,600 of expense related to the agreement. (3) Mr. John Power resigned as President on August 1, 2020. He continued to continue to serve as Chief Financial Officer and a member of the Board of Directors until his resignation from such positions on November 24, 2020. Restricted Stock Unit Agreement Effective August 1, 2020, the Company and Michael B. Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of common stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of December 31, 2021, 255,000 restricted stock units may be settled in shares of common stock. During the year ended December 31, 2021, the Company recognized $162,465 of expense related to the agreement. Employment Agreements 2017 Equity Incentive Plan We have not adopted any equity compensation or stock option plans, except as follows: The Board of Directors of the Company concluded, in order to attract and hire key technical personnel and management as our Company grows, it will be necessary to offer option packages in order to compete effectively with other companies seeking the support of these highly qualified individuals. After careful consideration, the Board recommended the approval of the Company’s 2017 Equity Incentive Plan as being in the best interests of Stockholders. Effective September 1, 2017, the 2017 Equity Incentive Plan was approved by written consent of stockholders holding 75% of the Company’s outstanding common stock and was adopted by the Board of Directors. The Company is authorized to grant rights to acquire up to a maximum of 200,000 shares of common stock under the Plan. The Plan is authorized to grant incentive stock options that qualify under Section 422 of the Internal Revenue Code of 1986, as amended. The 2017 Plan provides for the grant of (1) both incentive and nonstatutory stock options, (2) stock bonuses, (3) rights to purchase restricted stock and (4) stock appreciation rights (collectively, "Stock Awards"). Incentive stock options granted under the 2017 Plan are intended to qualify as "incentive stock options" within the meaning of Section 422 of the Code. Nonstatutory stock options granted under the 2017 Plan are intended not to qualify as incentive stock options under the Code. As of the date of this Annual Report, there have been grants made under the Plan exercisable to purchase 72,000 shares of common stock. 33 Indemnification of Directors and Officers Nevada Revised Statutes provide that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Nevada Revised Statutes also provide that to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense. Our Articles of Incorporation authorize us to indemnify our directors and officers to the fullest extent permitted under Nevada Revised Statutes. Our bylaws set forth the procedures that must be followed in order for directors and officers to receive indemnity payments from us. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth information with respect to beneficial ownership of our common stock by: * each person who beneficially owns more than 5% of our common stock; * each of our executive officers named in the Management section; * each of our directors; and * all executive officers and directors as a group. The following table shows the number of shares owned and the percentage of outstanding common stock owned as of April 9, 2021. Each person has sole voting and investment power with respect to the shares shown, except as noted. Name and Address of Beneficial Owner (1) Amount and Nature of Beneficial Ownership (2) Ownership as a Percentage of Outstanding Common Shares (3) John Gibbs 807 Wood N Creek Ardmore, OK 73041 3,612,489 (4) 31.30% Michael Lavigne (6) 300,000 (6) 2.60% Mark Rodenbeck nil Greg Schifrin 750,000 6.51% Deepak Malhotra 305,000 (5) 2.65% All officers and directors as a group (four persons) 1,355,000 11.76% 34 (1) Unless otherwise stated, address is 602 Cedar St., Ste. 205, Wallace, ID 83873 (2) Under SEC Rules, we include in the number of shares owned by each person, the number of shares issuable under outstanding options or warrants if those options or warrants are exercisable within 60 days of the date of this Annual Report. In calculating percentage ownership, we calculate the ownership of each person who owns exercisable options by adding (i) the number of exercisable options for that person only to (ii) the number of total shares outstanding and dividing that result into (iii) the total number of shares and exercisable options owned by that person. (3) Shares and percentages beneficially owned are based upon 11,520,403 shares outstanding on April 7, 2022. (4) Includes 3,582,159 shares owned individually, warrant exercisable to purchase 20,000 shares of Common Stock at $0.20 per share, 1,000 shares owned by Redwood Microcap Fund, Inc. controlled by Mr. Gibbs. and 9,330 shares owned by Tri Power Resources, Inc., controlled by Mr. Gibbs. (5) Includes 50,000 shares owned individually and a warrant exercisable to purchase 5,000 shares of Common Stock at $0.50 per share and a warrant exercisable to purchase 250,000 shares of Common Stock at $0.20 per share. (6) Does not include an aggregate of 255,000 Restricted Stock Units that may be settled for shares of common stock under certain circumstances. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Except as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. Management Fees At December 31, 2021 and 2020, $7,000 of the management fees owed to prior management had not been paid and are included in accounts payable on the accompanying consolidated balance sheets. Accrued Interest - Related Parties Accrued interest due to related parties is included in our consolidated balance sheets as follows: December 31, 2021 December 31, 2020 Accrued interest payable – Mr. Gibbs $ 6,597 $ 2,597 Accrued interest payable – Dr. Carson – 752 Accrued interest payable – Mr. Schifrin 5,629 1,880 Accrued interest payable – Mr. Malhotra 1,041 241 $ 13,268 $ 5,470 35 Advances Payable – Related Party We borrowed and repaid non-interest bearing advances from/to related parties as follows: Year Ended December 31, 2021 Advances Repayments Mr. Schifrin $ – $ (20,000 ) Totals $ – $ (20,000 ) Year Ended December 31, 2020 Advances Repayments Mr. Power $ 15,830 (156,011 ) Mr. Schifrin 10,000 – Mr. Gibbs 20,000 – Totals $ 45,830 (156,011 ) During the year ended December 31, 2021, a Director paid expenses on behalf of the Company of $30,528 and the Company made payments on advances of $20,000. During the year ended December 31, 2020, Mr. Gibbs advanced $20,000 and Mr. Schifrin advanced $10,000 to the Company. During the year ended December 31, 2020, Mr. Power advanced $15,830 cash and paid expenses using his personal credit card on behalf of the Company of $118,384, and the Company made repayments to Mr. Power and/or his credit card of $156,011. On May 31, 2020, the Company issued 475,000 shares of common stock to Mr. Gibbs with a fair value of $332,500 for the settlement of advances in the amount of $95,000, resulting in a loss on settlement of $237,500. In addition, the Company issued 475,000 warrants exercisable for a period of twelve months at an exercise price of $0.20 per share. The Company recognized an additional $288,046 loss related to the issuance of warrants for the settlement of liabilities. As of March 31, 2021, Mr. Power and Dr. Carson are no longer considered related parties, and therefore all amounts due to them have been reclassified out of related party accounts. As of December 31, 2021 and 2020, the advances from related party balance were $20,252 and $47,762, respectively. Notes Payable – Related Parties The Series 2017 Notes were in default as of December 31, 2019. Consequently, on March 31, 2020, the Company entered into an Agreement to Accept Collateral in Full Satisfaction of Obligations (the “Agreement”) with the holders of the Series 2017 Notes (the “Lenders”) due December 31, 2019 in the aggregate principal amount of $1.14 million. The Company is indebted under the Series 2017 Notes to the Lenders and the Company’s obligations to the Lenders are secured by a Stock Pledge and Security Agreement covering 100 shares of common stock of MAC and one (1) share of MV2 (the “Collateral”) held under a Collateral Agent Agreement. MAC and MV2 own the SDA Mill and El Dorado prospect in Nayarit, Mexico. The Series 2017 Notes matured on December 31, 2019 and remain unpaid and in default. The Lenders have accelerated the Company’s indebtedness. Pursuant to terms set forth in the Agreement, the Lenders have agreed to accept the Collateral in full satisfaction of the Series 2017 Notes and unconditionally and irrevocably waive any entitlement or right to receive payment of (i) the initial 10% Financing Fee included in the principal amount of the Notes, (ii) the 5% Rollover Fee agreed to in an Allonge and Modification Agreement. The effective date of the Agreement was March 31, 2020 . Convertible Note Payable Series 2019A 10% Unsecured Convertible Notes In 2019, the Company sold $135,000 of Series 2019A 10% Unsecured Convertible Notes. The purchase price of the Note is equal to the principal amount of the Note. The Series 2019A Notes are convertible into shares of Common Stock at a conversion price of $1.00 during the life of the Note. The lenders were issued 100,000 common stock warrants with an exercise price of $2.00 per share. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in August and December 2019. The $135,000 debt discount is amortized over the term of the loan. The Notes will accrue interest at the rate of 10% per annum, payable quarterly in arrears. The Notes mature twelve (12) months from the date of issue. The maturity date can be extended at the option of the Company for an additional one (1) year. There are two Series 2019A 10% Unsecured Convertible Notes that were due and payable in August 2020 and are currently past due and in default. The default interest rate on the notes is 12%. As of December 31, 2021 and 2020, the balance due under these notes is $75,000, with accrued interest of $17,481 and $8,481, respectively. 36 On October 1, 2019, the Company sold a 10% Unsecured Convertible Note for $145,978 due on demand to settle accounts payable. The purchase price of the 10% Unsecured Convertible Note is equal to the principal amount of the Note. The 10% Unsecured Convertible Note is convertible into shares of Common Stock at a conversion price of $1.00 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital in October 2019. The debt discount will be amortized over the term of the loan. The 10% Unsecured Convertible Note will accrue interest at the rate of 10% per annum payable quarterly, accruing from the date of issuance. As of December 31, 2021 and 2020, the balance due under the note is $145,978, with accrued interest of $32,835 and $18,237, respectively. Series 2020A 8% Unsecured Convertible Notes In 2020, the Company sold $285,000 of Series 2020A 8% Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note. The lenders were issued 142,500 common stock warrants with an exercise price of $0.50 per share for a term of 5 years. Two related parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as of December 31, 2020. The $237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into 50,000 shares of common stock at a conversion price of $0.50 per share. As of December 31, 2021 and 2020, the balance due to a related party under these notes is $60,000, with accrued interest of $7,638 and $2,838, respectively. As of December 31, 2021and 2020, the balance due to a third party under these notes is $200,000, with accrued interest of $24,297 and $8,297, respectively. 3% Secured Convertible Note On July 1, 2020, the Company issued a $125,000 Secured Convertible Note to a related party for the as part of the purchase of Clearwater Mining Corporation. The convertible note is secured by common stock of the Company, matures on July 1, 2022 and will accrue interest at the rate of 3% per annum, payable yearly in arrears beginning July 1, 2021. The Note is convertible into shares of Common Stock at a conversion price of $0.50 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in July 2019. The $87,500 debt discount will be amortized over the term of the loan. Amortization expense of $43,750 and $21,935 was recognized during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the balance due to a related party under this note net of unamortized discount of $21,815, is $103,185, with accrued interest of $5,630. As of December 31, 2020, the balance due to a related party under this note net of unamortized discount of $65,592, is $59,435, with accrued interest of $1,880. AJB Convertible Note On February 10, 2021, the Company entered into a debt agreement to borrow $200,000. The secured note has an original issuance discount of $16,000 along with $9,000 in legal and finder fees recorded as a discount, which will be amortized over the life of the note. The loan is secured by common stock of the Company, bears interest at a rate of 10% and has a six-month maturity. In August 2021, the note was extended six months and the interest rate was increase to 15%. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price shall be the less of 90% of the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period ending on date of conversion of this note. The Company issued the debtholder 266,667 common shares as a commitment fee. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $95,715 was recorded as a discount on the convertible notes payable. As of December 31, 2021, the balance on the loan, net of unamortized discount of $0 is $200,000, with accrued interest of $0. Gulf + Western Industries. Effective July 1, 2020, Magellan Gold Corporation, a Nevada corporation (the “Company”), executed a Stock Purchase Agreement with Tripower Resources, Inc. (“Tripower”) pursuant to which the Company sold 100% of the issued and outstanding stock of its wholly-owned subsidiary Gulf + Western Industries, Inc. (“GW”) in consideration of the surrender for cancellation of an aggregate of 50,000 shares of Series A Preferred Stock owned by John Gibbs, who is a control person of Tripower. GW owns a portfolio of mining claims comprising the Silver District Project in Arizona. 37 Deferred Compensation Effective June 1, 2019, the Company and David E. Drips, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Drips, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 10,000 units for each month of service. The units will vest upon successful completion of a $1.25 million financing on or before November 30, 2019. Upon settlement if the common stock is less than $1.50 addition shares will be issued such that each month of service will have a value of $15,000. The agreement was extended through May 31, 2020 and eliminated the $1.25 million in financing as a condition of vesting and clarified that a total of 120,000 shares of stock will be issued to settle all services received. As of December 31, 2021 and 2020, $78,000 has been accrued under this arrangement. On June 2, 2020, the Company received the written resignation of David E. Drips as President, CEO and Director of the Company, effective May 31, 2020. Effective August 1, 2020, the Company and Michael Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of common stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of December 31, 2021 and 2020, 255,000 and 75,000 restricted stock units may be settled in shares of common stock, respectively. During the years ended December 31, 2021 and 2020, the Company recognized $162,465 and $84,600 of stock-based compensation related to the agreement, respectively. Director Independence Our common stock is not listed on a national securities exchange or inter-dealer quotation system. Under NASDAQ Rule 5605(a)(2) and Item 407(a) of Regulation S-K, a director is not considered to be independent if he or she is also an executive officer of the corporation. Our director is considered an executive officer under Rule 3b-7 of the Exchange Act. Therefore, our director is not independent. As a result of our limited operating history and minimal resources, we believe that we will have difficulty in attracting independent directors. In addition, we would likely be required to obtain directors’ and officers’ insurance coverage in order to attract and retain independent directors. We believe that the costs associated with maintaining such insurance is prohibitive at this time. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES We understand the need for our principal accountants to maintain objectivity and independence in their audit of our financial statements. To minimize relationships that could appear to impair the objectivity of our principal accountants, our Board of Directors has restricted the non-audit services that our principal accountants may provide to us primarily to tax services and audit-related services. We are only to obtain non-audit services from our principal accountants when the services offered by our principal accountants are more effective or economical than services available from other service providers, and, to the extent possible, only after competitive bidding. These determinations are among the key practices adopted by the Board of Directors. Our Board has adopted policies and procedures for pre-approving work performed by our principal accountants. The aggregate fees billed for the fiscal years 2021 and 2020 for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by our accountants in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows: 2021 2020 Audit fees - audit of annual financial statements and review of financial statements included in our quarterly reports, services normally provided by the accountant in connection with statutory and regulatory filings $ – $ 50,000 Audit-related fees - related to the performance of audit or review of financial statements not reported under "audit fees" – – Tax fees - tax compliance, tax advice and tax planning – 4,500 All other fees - services provided by our principal accountants other than those identified above – – Total fees $ – $ 54,500 After careful consideration, the Board of Directors has determined that payment of the audit fees is in conformance with the independent status of our principal independent accountants. 38 PART IV ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Ex. No. Title (1) 3.1 Certificate of Incorporation filed September 28, 2010 (1) 3.2 Bylaws (4) 3.3 Amended and Restated Bylaws (6) 3.4 Second Amended and Restated Bylaws (1) 4.1 Specimen Common Stock Certificate (1) 10.1 Cowles’ Option and Mining Lease (1) 10.2 Mining Lease – Randall Claims (1) 10.3 Assignment of Randall Mining Lease Agreement (1) 10.4 Mining Lease – Secret Claims (1) 10.5 Consulting Agreement (2) 10.6 Promissory Note Dated August 23, 2011, in favor of John C. Power (2) 10.7 Promissory Note Dated August 23, 2011, in favor of John D. Gibbs (3) 10.8 First Amendment to Mining Lease – Secret Claims (3) 10.9 Second Amendment to Mining Lease – Randall Claims (5) 10.10 Promissory Note Dated February 28,2012, in favor of John D. Gibbs (7) 10.11 Third Amendment to Mining Lease – Randall Claims (8) 10.12 Option Agreement – Columbus Silver (9) 10.13 Amendment No. 1 to Promissory Note in favor of John C. Power (10) 10.14 Credit Agreement dated December 31, 2012 in favor of John D. Gibbs (11) 10.15 Amendment No. 1 to Silver District Option Agreement (12) 10.16 Allonge and Modification Agreement with John D. Gibbs (13) 10.17 Promissory Note in favor of John Power (14) 10.18 Silver District / Columbus Silver Purchase Agreement (14) 10.19 Promissory Note in favor of Clifford Neuman (15) 10.20 Second Allonge and Modification Agreement with John D. Gibbs (16) 10.21 Employment Agreement - W. Pierce Carson (17) 10.22 Employment Agreement – W. Pierce Carson (Magellan) (18) 10.23 Agreement and Plan of Merger (19) 10.24 Mining Option Agreement (19) 10.25 Lock-Up/Voting Trust Agreement (19) 10.26 Intuitive Pty, Ltd. Agreement (19) 10.27 Mining Clip LLC Agreement (19) 10.28 Promissory Note (20) 10.29 Memorandum of Understanding (7) 14.1 Code of Ethics (21) 10.30 Consulting Agreement (21) 10.31 Promissory Note in favor of W. Pierce Carson (21) 10.32 Promissory Note in favor of John Power (21) 10.33 Promissory Note in favor of John Gibbs (22) 10.34 Promissory Note in favor of John Power (22) 10.35 Stock Pledge Agreement (23) 10.36 Amendment No. 1 to Memorandum of Understanding (24) 10.37 Stock Purchase Agreement (25) 10.38 Confirmation Letter (26) 10.39 Amendment to Stock Purchase Agreement (27) 10.40 Certificate of Amendment (28) 10.41 Securities Purchase Agreement (28) 10.42 Promissory Note (29) 10.43 Securities Purchase Agreement (29) 10.44 Promissory Note 39 (30) 10.45 Interim Milling Agreement (31) 10.46 Amendment No. 2 to Stock Purchase Agreement (31) 10.47 Closing Escrow Agreement (31) 10.48 Form of Secured Note (31) 10.49 Form of Stock Pledge Agreement (31) 10.50 Form of Security Agreement (31) 10.51 Form of Collateral Agent Agreement (32) 10.52 Termination Agreement (33) 10.53 Combined financial statements of SDA Mill as of and for the periods ended November 30, 2017 and December 31, 2016 (33) 10.54 Magellan Gold Corporation Unaudited Pro Forma Condensed Combined Financial Information (34) 10.55 Amendment No. 1 to EMA Financial Note (35) 10.56 Amendment No. 1 to Auctus Fund Note (36) 10.57 Agreement to Convert Debt (37) 10.58 Restricted Stock Award Agreement (38) 10.59 Convertible Promissory Note (39) 10.60 Securities Purchase Agreement (40) 10.61 Agreement for Exploration (41) 10.62 Amendment to Agreement for Exploration (42) 10.63 EMA Amendment (43) 10.64 Auctus Amendment (44) 10.65 Promissory Note (45) 10.66 Securities Purchase Agreement (46) 10.67 Amendment No. 1 Convertible Promissory Note (47) 10.68 Letter Agreement (48) 10.69 Form of 10% Convertible Promissory Note – Note Offering (49) 10.70 Form of 36% Convertible Promissory Note – Bridge Note Offering (50) 10.71 Restricted Stock Unit Agreement (51) 10.72 Deferred Compensation and Equity Award Plan (52) 10.73 Certificate of Designations – Series A Convertible Preferred Stock (53) 10.74 Option to Purchase Agreement (54) 10.75 Letter of Intent (55) 10.76 Agreement to Accept Collateral in Full Satisfaction of Obligations (56) 10.77 Share Purchase Agreement (57) 10.78 Promissory Note (58) 10.79 Stock Pledge Agreement (59) 10.80 Security Agreement (60) 10.81 Stock Purchase Agreement (61) 10.82 Restricted Stock Unit Agreement (62) 10.83 Restricted Stock Unit Agreement (63) 10.84 Promissory Note (64) 10.85 Securities Purchase Agreement * 31 Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document ( the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)* 101.SCH Inline XBRL Taxonomy Extension Schema Document** 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document** 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document ** 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document ** 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document** 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)** 40 (1) Incorporated by reference as an Exhibit to Form S-1 as filed with the Commission on May 18, 2011. (2) Incorporated by reference to the Registrant’s Current Report on Form 8-K, as filed with the Commission on August 25, 2011. (3) Incorporated by reference as an Exhibit to Quarterly Report on Form 10-Q as filed with the Commission on November 14, 2011. (4) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on February 7, 2012. (5) Incorporated by reference as an Exhibit to Current Report on Form 8-K/A-1 as filed with the Commission on March 29, 2012. (6) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on March 30, 2012. (7) Incorporated by reference as an Exhibit to Annual Report on Form 10-K as filed with the Commission on March 30, 2012. (8) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 30, 2012. (9) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on February 4, 2013. (10) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on February 4, 2013. (11) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 23, 2013. (12) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on January 2, 2014. (13) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on April 29, 2014. (14) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 2, 2014. (15) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on February 3, 2015. (16) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 11, 2015. (17) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 2, 2016. (18) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 27, 2016. (19) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 27, 2016. (20) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on March 7, 2017. (21) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 20, 2017. (22) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 21, 2017. (23) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 1, 2017. (24) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on September 12, 2017. (25) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 11, 2017. (26) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 18, 2017. (27) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 30, 2017. (28) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 6, 2017. (29) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 7, 2017. (30) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 8, 2017. (31) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on December 6, 2017. (32) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on January 10, 2018. (33) Incorporated by reference as an Exhibit to Current Report on Form 8-K/A as filed with the Commission on April 24, 2018. (34) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 19, 2018. (35) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 19, 2018. (36) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 30, 2018. (37) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 30, 2018. (38) Incorporated by reference as an Exhibit to Current Report on Form 8-K/A as filed with the Commission on August 1, 2018. (39) Incorporated by reference as an Exhibit to Current Report on Form 8-K/A as filed with the Commission on August 1, 2018. (40) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 20, 2018. (41) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 20, 2018. (42) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 24, 2018. (43) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 24, 2018. (44) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 24, 2018. (45) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on August 24, 2018. (46) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on September 5, 2018. (47) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on September 25, 2018. (48) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 6, 2018. (49) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 6, 2018. (50) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 26, 2019. (51) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on June 26, 2019. 41 (52) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 7, 2019. (53) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on October 18, 2019. (54) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on January 15, 2020. (55) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on May 7, 2020. (56), (57), (58), (59) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 20, 2020. (60), (61) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on July 30, 2020. (62) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on November 12, 2020. (63), (64) Incorporated by reference as an Exhibit to Current Report on Form 8-K as filed with the Commission on April 23, 2021. * Filed herewith. ** Furnished, not filed. 42 MAGELLAN GOLD CORPORATION FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 43 MAGELLAN GOLD CORPORATION TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 206 ) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Shareholders’ Deficit F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Magellan Gold Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Magellan Gold Corporation and its subsidiary (collectively, the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, 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 the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern Matter The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The 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 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/ MaloneBailey, LLP www.malonebailey.com We have served as the Company's auditor since 2011. Houston, Texas June 1, 2022 F- 2 MAGELLAN GOLD CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2021 December 31, 2020 ASSETS Current assets Cash $ 18,766 $ – Prepaid expenses and other current assets 10,091 2,168 Total current assets 28,857 2,168 Mineral rights and properties 1,000,000 1,000,000 Development costs 193,505 112,968 Total assets $ 1,222,362 $ 1,115,136 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable $ 207,406 $ 195,951 Accounts payable - related party 12,500 25,139 Accrued liabilities 206,468 618,480 Convertible note payable, net - related party 163,185 119,435 Convertible note payable, net - third party 620,978 420,978 Accrued interest - related parties 13,268 5,470 Accrued interest 75,365 35,015 Advances payable - related party 20,252 47,762 Advances payable - third party 18,223 10,000 Derivative liability 150,953 – Total current liabilities 1,488,598 1,478,230 Total liabilities 1,488,598 1,478,230 Commitments and contingencies – – Shareholders' deficit: Preferred shares, 25,000,000 shares Series A preferred stock - $ 10.00 stated value; 2,500,000 authorized; 0 and 192,269 shares issued and outstanding, respectively – 1,922,690 Common shares, $ 0.001 par value; 1,000,000,000 shares authorized; 11,340,403 and 7,098,394 shares issued and outstanding, respectively 11,341 7,099 Additional paid-in capital 17,692,236 13,540,086 Accumulated deficit ( 17,969,813 ) ( 15,832,969 ) Shareholders' deficit ( 266,236 ) ( 363,094 ) Total liabilities and shareholders' deficit $ 1,222,362 $ 1,115,136 See accompanying notes to the consolidated financial statements F- 3 MAGELLAN GOLD CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Years Ended December 31, 2021 2020 Operating expenses: General and administrative expenses $ 1,770,847 $ 1,175,110 Total operating expenses 1,770,847 1,175,110 Loss from continuing operations 1,770,847 1,175,110 Other income (expense): Interest expense ( 230,647 ) ( 424,858 ) Other income – 26,980 Loss on settlement of liabilities – ( 2,110,047 ) Loss on change in derivative liability ( 55,238 ) – Total other income (expense) ( 285,885 ) ( 2,507,925 ) Net loss from continuing operations ( 2,056,732 ) ( 3,683,035 ) Net loss from discontinued operations, net of tax – ( 31,599 ) Net loss ( 2,056,732 ) ( 3,714,634 ) Series A preferred stock dividend ( 80,112 ) ( 215,610 ) Net loss attributable to common shareholders ( 2,136,844 ) ( 3,930,244 ) Other comprehensive income: Foreign currency translation – 68,636 Total other comprehensive income – 68,636 Net comprehensive loss $ ( 2,136,844 ) $ ( 3,861,608 ) Basic and diluted net loss per common share: Continuing operations $ ( 0.23 ) $ ( 0.73 ) Discontinued operations $ – $ ( 0.01 ) Net loss attributable to common shareholders $ ( 0.23 ) $ ( 0.74 ) Basic and diluted weighted-average: Common shares outstanding 9,478,636 5,328,740 See accompanying notes to the consolidated financial statements F- 4 MAGELLAN GOLD CORPORATION Consolidated Statements of Shareholders' Deficit For the years ended December 31, 2021 and 2020 Additional Accumulated Other Preferred Stock Common Stock Paid - in Comprehensive Accumulated Shares Amount Shares Par Value Capital Gain (Loss) Deficit Total Balance, December 31, 2019 242,269 $ 2,422,690 3,651,042 $ 3,651 $ 8,383,929 $ ( 68,636 ) $ ( 11,902,725 ) $ ( 1,161,091 ) Stock and warrants issued for cash – – 155,000 155 38,345 – – 38,500 Stock based compensation – – – – 290,171 – – 290,171 Stock issued for services – – 500,000 500 344,250 – – 344,750 Stock and warrants issued for liabilities – – 773,770 774 962,774 – – 963,548 Stock and warrants issued for convertible notes and accrued interest – – 1,268,582 1,269 1,639,744 – – 1,641,013 Debt discount from warrants and beneficial conversion feature – – – – 324,763 – – 324,763 Preferred shares returned and cancelled in exchange for Gulf + Western Industries Inc ( 50,000 ) ( 500,000 ) – – 500,000 – – – Stock issued for purchase of Clearwater Gold Mining Corp – – 750,000 750 849,250 – – 850,000 Disposition of assets, related party – – – – 206,860 – – 206,860 Series A preferred stock dividend – – – – – – ( 215,610 ) ( 215,610 ) Net loss – – – – – – ( 3,714,634 ) ( 3,714,634 ) Other comprehensive loss – – – – – 68,636 – 68,636 Balance, December 31, 2020 192,269 1,922,690 7,098,394 7,099 13,540,086 – ( 15,832,969 ) ( 363,094 ) Exercise of warrants – – 1,435,000 1,435 285,565 – – 287,000 Stock based compensation – – 266,667 267 1,454,313 – – 1,454,580 Stock issued to settle liabilities – – 261,538 262 135,738 – – 136,000 Series A preferred stock dividend – – – – – – ( 80,112 ) ( 80,112 ) Conversion of series A preferred stock and accrued dividend ( 192,269 ) ( 1,922,690 ) 2,278,804 2,278 2,276,534 – – 356,122 Net loss – – – – – – ( 2,056,732 ) ( 2,056,732 ) Balance, December 31, 2021 – $ – 11,340,403 $ 11,341 $ 17,692,236 $ – $ ( 17,969,813 ) $ ( 266,236 ) See accompanying notes to the consolidated financial statements F- 5 MAGELLAN GOLD CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2021 2020 Operating activities: Net loss from continuing operations $ ( 2,056,732 ) $ ( 3,683,035 ) Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: Accretion of discounts on notes payable 164,465 346,781 Stock based compensation 1,454,580 634,921 Loss on settlement of liabilities – 2,153,183 Loss on change in derivative liability 55,238 – Changes in operating assets and liabilities: Prepaid expenses and other assets ( 7,923 ) 16,499 Accounts payable and accrued liabilities 41,981 318,796 Accounts payable - related party ( 12,639 ) 30,000 Accrued interest 48,148 46,052 Net cash used in operating activities from continuing operations ( 312,882 ) ( 136,803 ) Net cash used in operating activities from discontinued operations – ( 51,491 ) Net cash used in operating activities ( 312,882 ) ( 188,294 ) Investing activities: Cash paid for development costs ( 80,537 ) ( 101,328 ) Cash paid for mineral rights – ( 12,500 ) Net cash used in investing activities from continuing operations ( 80,537 ) ( 113,828 ) Net cash used in investing activities from discontinued operations – – Net cash used in investing activities ( 80,537 ) ( 113,828 ) Financing activities: Payments on convertible debt from third parties – ( 10,000 ) Proceeds from convertible debt from third parties 175,000 235,000 Proceeds from convertible debt from related parties – 60,000 Proceeds from advances from related parties – 45,830 Payments on advances from related parties ( 20,000 ) ( 156,011 ) Payments on advances from third parties ( 30,420 ) – Proceeds from advances from third parties 605 20,000 Proceeds from sale of common stock and warrants 287,000 38,500 Net cash provided by financing activities from continuing operations 412,185 233,319 Net cash provided by financing activities from discontinued operations – – Net cash provided by financing activities 412,185 233,319 Effect of foreign currency exchange – 68,636 Net change in cash 18,766 ( 167 ) Cash at beginning of period – 167 Cash at end of period $ 18,766 $ – Supplemental disclosure of cash flow information Cash paid for interest $ 17,333 $ 3,250 Cash paid for income taxes $ – $ – Non-cash financing and investing activities: Series A preferred stock dividend $ 80,112 $ 215,610 Expenses paid on behalf of the Company $ 30,528 $ 118,384 Common stock and warrants issued for settlement liabilities $ 136,000 $ 137,500 Disposition of assets, related party $ – $ 206,860 Conversion of debt and accrued interest $ 95,715 $ 296,624 Debt discount from warrants and beneficial conversion feature $ – $ 324,763 Common stock issued for accounts payable $ – $ 17,254 Conversion of Series A preferred stock and accrued dividend $ 2,278,814 $ – Preferred stock returned and cancelled $ – $ 500,000 Noncash consideration for purchase of Clearwater Gold Mining Corp $ – $ 987,500 Noncash consideration for development costs $ – $ 11,640 See accompanying notes to the consolidated financial statements F- 6 MAGELLAN GOLD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 – Organization, Basis of Presentation, and Nature of Operations Organization and Nature of Operations Magellan Gold Corporation (“we” “our”, “us”, the “Company” or “Magellan”) was incorporated on September 28, 2010, under the laws of the State of Nevada. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable. Our primary focus is to explore and develop mineral properties in the United States. Effective March 31, 2020, we divested our subsidiary holding all of our international assets and plan to advance our recently acquired Idaho Gold project towards resource definition and eventual development, and possibly to acquire additional mineral rights and conduct additional exploration, development and permitting activities. Our mineral lease payments, permitting applications and exploration and development efforts will require additional capital. We rely upon the sale of our securities as well as advances and loans from executive management and significant shareholders to fund our operations as we have not generated any significant revenue. Note 2 – Summary of Significant Accounting Policies Basis of Presentation On July 1, 2020, the Company entered into a Stock Purchase Agreement to acquire Clearwater Gold Mining Corporation (“Clearwater”) which owns certain unpatented mining claims in Idaho County, Idaho. The Company will be evaluating the historic mine data to assess the potential to develop a gold resource at Center Star. The project area is located 45 miles from Grangeville, Idaho and near the town of Elk City, Idaho. On August 25, 2020 the Company, formed a new wholly owned subsidiary, M Gold Royalty (“M Gold”), to expand into the royalty business. M Gold Royalty will engage in organically generating royalties derived from a portfolio of mineral property interests in North America. Royalties from this portfolio will be complemented by royalties from selected acquisitions as well as income from other strategic investments. Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiary, Clearwater and M Gold. All intercompany transactions and balances have been eliminated. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the period presented. 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. F- 7 Recent Accounting Pronouncements 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. Fair Value of Financial Instruments We value our financial assets and liabilities using fair value measurements. Our financial instruments primarily consist of cash, prepaid expenses, other current assets, 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, 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. Concentrations of Credit Risk Our financial instruments which potentially subject us to credit risk are our cash and cash equivalents. We maintain our cash and cash equivalents 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. Mineral Rights We have determined that our mineral 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. The net carrying value of our mineral rights represents the fair value at the time the mineral rights were acquired less accumulated depletion and any abandonment or impairment losses. Proven and probable reserves have not been established for mineral rights as of December 31, 2021. There were no impairment charges recognized for during the years ended December 31, 2021 and 2020, respectively. Impairment of Long-lived Assets and Mining Rights 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 flow. If the future undiscounted cash flow is 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. F- 8 Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation. Property and equipment is amortized on a straight-line basis over its estimated life: · Office and Warehouse – 10 years Notes Payable – Related Parties Notes payable to related parties are classified as current liabilities as either the note holders have the ability to control the repayment dates of the notes or maturity dates are within one year of the reported balance sheet date. 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 balance sheets. Income Taxes We recognize deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements and the effect of net operating losses based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. At December 31, 2021 and 2020, the Company had no uncertain tax positions. 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 year ended December 31, 2021, 72,000 of stock options, 423,635 of warrants, and 1,560,778 shares issuable from convertible notes were considered for their dilutive effects. For the year ended December 31, 2020, 72,000 of stock options, 1,858,635 of warrants, 192,269 shares issuable from Series A Preferred Stock and 990,978 shares issuable from convertible notes were considered for their dilutive effects. Stock-based Compensation The Company determines the fair value of stock option awards granted to employees and nonemployees in accordance with FASB ASC Topic 718 – 10. Compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Derivative Financial Instruments Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company’s sequencing policy is to evaluate for reclassification contracts with the earliest maturity date first. Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. F- 10 Recent Accounting Pronouncements 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. Liquidity and 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 December 31, 2021, we had a working capital deficit of $ 1,459,741 , we had not yet generated any significant revenues or achieved profitable operations and we have accumulated losses of $ 17,969,813 . We expect to incur further losses in the development of our business, all of which raises substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. 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 than any future financings will occur. Note 3 – Mineral Rights and Properties Center Star Gold Mine On July 1, 2020, the Company entered into a Stock Purchase Agreement to acquire Clearwater Gold Mining Corporation (“Clearwater”) which owns certain unpatented mining claims in Idaho County, Idaho that include the historic Center Star Gold Mine (“Center Star”) near Elk City, Idaho. As a result of the Clearwater acquisition, Gregory Schifrin, the sole shareholder of Clearwater, was appointed to serve as a member of the Company’s Board on July 1, 2020. In consideration for 100% of the issued and outstanding shares of Clearwater, the Company has agreed to pay Clearwater’s sole shareholder 1,000,000 shares of Magellan common stock, $125,000 convertible note and $25,000 in cash. The 1,000,000 shares are to be issued to the shareholder on and under the terms as follows: 250,000 shares at the time of closing, 250,000 shares at the time the Center Mine receives its permit to reopen the main portal of the mine, 250,000 shares at the point the main portal has been reopened and 250,000 shares two-years from closing concurrent the pay-off of the $125,000 convertible note. As of September 30, 2021, the total purchase price for the Clearwater was determined to be $1,000,000 which consisted of $ 12,500 cash paid, $ 12,500 accrued in accounts payable – related party, a $ 125,000 convertible promissory note, and 1,000,000 shares of common stock with a fair value of $ 850,000 . The Company concluded the transaction qualified as an asset acquisition and all such acquisition costs have been capitalized. As of December 31, 2021 and December 31, 2020, the Company had $ 193,505 and $ 112,968 in capitalized development cost to develop gold resources at Center Star, respectively. Note 4 – Disposition of Business Mexico Operations On March 3, 2017 the Company entered into a Memorandum of Understanding (“MOU”) with Rose Petroleum plc (“Rose”), a multi-asset natural resource business, to purchase an operating floatation plant that also includes a precious metals leach circuit and associated assets, licenses and agreements (together, the “SDA Mill”) located in the State of Nayarit, Mexico. F- 11 Prior to closing, all of the assets and operations related to the SDA Mill were transferred to a newly incorporated entity, Minerales Vane 2 S.A. de C.V. (“Minerales Vane 2”). Effective November 30, 2017, the Company’s newly incorporated wholly owned subsidiary, Magellan Acquisition Corporation (“MAC”), acquired 100% of the issued and outstanding shares of Minerales Vane 2 (“MV2”). Effective March 31, 2020 the Company entered into an Agreement to Accept Collateral in Full Satisfaction of Obligations (the “Agreement”) with certain holders of Promissory Notes (the “Lenders”) due December 31, 2019 (the “Notes”) in the aggregate principal amount of $1.05 million. The Company is indebted under the Notes to the Lenders and the Company’s obligations to the Lenders are secured by a Stock Pledge and Security Agreement covering 100 shares of common stock of Magellan Acquisition Corporation and one (1) share of MV2 (the “Collateral”) held under a Collateral Agent Agreement. Magellan Acquisition Corp. and MV2 own the SDA Mill and El Dorado prospect in Nayarit, Mexico. The Notes matured on December 31, 2019 and remain unpaid and in default. The Lenders have accelerated the Company’s indebtedness. Pursuant to terms set forth in the Agreement, the Lenders have agreed to accept the Collateral in full satisfaction of the Notes and unconditionally and irrevocably waive any entitlement or right to receive payment of (i) the initial 10% Financing Fee included in the principal amount of the Notes, (ii) the 5% Rollover Fee agreed to in an Allonge and Modification Agreement. The effective date of the Agreement was March 31, 2020. Silver District On July 21, 2020, the Company entered into a Stock Purchase agreement with Tri Power Resources, LLC to sell 1,000 shares representing 100% ownership of Gulf+Western Industries, Inc (“Gulf+Western”) to Tri Power in consideration for the return and cancellation of 50,000 shares of the Company’s Series A Preferred Stock with a stated value of $10 per share. John Gibbs, a majority shareholder in the Company, is the Managing Member and Chief Executive Officer of Tri Power Resources, LLC. Due to the related party nature of the above transactions, the gain of $ 206,860 associated with the disposals was recorded to additional paid in capital. Summary The agreements qualify as a discontinued operation in accordance with U.S. GAAP. As a result, operating results and cash flows related to the Gulf+Western, MAC and MV2 operations have been reflected as discontinued operations in the Company’s consolidated statements of operations and comprehensive loss and consolidated statements of cash flows. Schedule of discontinued operations December 31, 2021 December 31, 2020 Revenue $ – $ – Cost of sales – – Exploration costs – – General and administrative expenses – ( 31,599 ) Operating loss – ( 31,599 ) Other expense – – Net loss from discontinued operations $ – $ ( 31,599 ) Note 5 – Fair Value of Financial Instruments Financial assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels: Level 1 – Quoted market prices in active markets for identical assets or liabilities at the measurement date. Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data. Level 3 – Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments. F- 12 A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying values for cash and cash equivalents, prepaid assets, accounts payable and accrued liabilities, related party line of credit and notes payable approximate their fair value due to their short-term maturities. Fair Value Measurements The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy. The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2021 and 2020: Schedule of fair value measurements on a recurring basis Level 1 Level 2 Level 3 Fair value at December 31, 2021 Liabilities: Derivative liability $ – $ – $ 150,953 $ 150,953 Level 1 Level 2 Level 3 Fair value at December 31, 2020 Liabilities: Derivative liability $ – $ – $ – $ – There were no transfers between Level 1, 2 or 3 during the period. The table below presents the change in the fair value of the derivative liability during the year ended December 31, 2021: Schedule of fair value of the derivative liability Fair value as of December 31, 2020 $ – Fair value on the date of issuance recorded as a debt discount 95,715 Loss on change in fair value of derivatives 55,238 Fair value as of December 31, 2021 $ 150,953 Note 6 – Advances Unsecured advances – related party During the year ended December 31, 2021, a Director paid expenses on behalf of the Company of $ 30,528 and the Company made payments on advances of $ 20,000 . During the year ended December 31, 2020, Mr. Gibbs advanced $ 20,000 and Mr. Schifrin advanced $ 10,000 to the Company. During the year ended December 31, 2020, Mr. Power advanced $ 15,830 cash and paid expenses using his personal credit card on behalf of the Company of $ 118,384 , and the Company made repayments to Mr. Power and/or his credit card of $ 156,011 . On May 31, 2020, the Company issued 475,000 shares of common stock to Mr. Gibbs with a fair value of $ 332,500 for the settlement of advances in the amount of $ 95,000 , resulting in a loss on settlement of $ 237,500 . In addition, the Company issued 475,000 warrants exercisable for a period of twelve months at an exercise price of $ 0.20 per share. The Company recognized an additional $ 288,046 loss related to the issuance of warrants for the settlement of liabilities. As of March 31, 2021, Mr. Power and Dr. Carson are no longer considered related parties, and therefore all amounts due to them have been reclassified out of related party accounts. As of December 31, 2021 and 2020, the advances from related party balance were $ 20,252 and $ 47,762 , respectively. F- 13 Unsecured advances –third party During the year ended December 31, 2021, the Company received $ 605 in cash advances, had expenses paid on its behalf of $ 276 and made repayments on advances of $ 30,420 . During the year ended December 31, 2020, $ 20,000 in unsecured advances were received from third parties with the intention to convert to shares in the Company. On May 31, 2020, the Company converted $ 42,500 of advances from third parties into 212,500 shares of common stock. The common shares had a fair value of $ 153,750 , resulting in a loss on settlement of $ 111,250 . In addition, the Company issued 212,500 warrants exercisable for a period of twelve months at an exercise price of $0.20 per share. The Company recognized an additional $ 128,863 loss related to the issuance of warrants for the settlement of liabilities. As of December 31, 2021 and 2020, the advances from third party balance were $ 18,223 and $ 10,000 , respectively. Note 7 – Convertible Note Payable and Derivative Liability Series 2019A 10% Unsecured Convertible Notes In 2019, the Company sold $ 135,000 of Series 2019A 10 % Unsecured Convertible Notes. The purchase price of the Note is equal to the principal amount of the Note. The Series 2019A Notes are convertible into shares of Common Stock at a conversion price of $ 1.00 during the life of the Note. The lenders were issued 100,000 common stock warrants with an exercise price of $2.00 per share. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in August and December 2019. The $ 135,000 debt discount is amortized over the term of the loan. The Notes will accrue interest at the rate of 10% per annum, payable quarterly in arrears. The Notes mature twelve (12) months from the date of issue. The maturity date can be extended at the option of the Company for an additional one (1) year. There are two Series 2019A 10% Unsecured Convertible Notes that were due and payable in August 2020 and are currently past due and in default. The default interest rate on the notes is 12%. As of December 31, 2021 and 2020, the balance due under these notes is $ 75,000 , with accrued interest of $ 17,481 and $ 8,481 , respectively. On October 1, 2019, the Company sold a 10 % Unsecured Convertible Note for $ 145,978 due on demand to settle accounts payable. The purchase price of the 10% Unsecured Convertible Note is equal to the principal amount of the Note. The 10% Unsecured Convertible Note is convertible into shares of Common Stock at a conversion price of $ 1.00 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital in October 2019. The debt discount will be amortized over the term of the loan. The 10% Unsecured Convertible Note will accrue interest at the rate of 10% per annum payable quarterly, accruing from the date of issuance. As of December 31, 2021 and 2020, the balance due under the note is $ 145,978 , with accrued interest of $ 32,835 and $ 18,237 , respectively. Series 2020A 8% Unsecured Convertible Notes In 2020, the Company sold $ 285,000 of Series 2020A 8 % Unsecured Convertible Notes with a maturity date of November 30, 2020. The purchase price of the Note is equal to the principal amount of the Note. The Series 2020A Notes are convertible into shares of Common Stock at a conversion price of $ 0.50 during the life of the Note. The lenders were issued 142,500 common stock warrants with an exercise price of $ 0.50 per share for a term of 5 years. Two related parties purchased $60,000 of the 2020A notes. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature as a debt discount and additional paid in capital as of December 31, 2020. The $ 237,263 debt discount will be amortized over the term of the loan. The Notes will accrue interest at the rate of 8% per annum, payable quarterly in arrears. In July 2020, $25,000 of Series 2020A 8% Unsecured Convertible Notes were converted into 50,000 shares of common stock at a conversion price of $0.50 per share. As of December 31, 2021 and 2020, the balance due to a related party under these notes is $ 60,000 , with accrued interest of $ 7,638 and $ 2,838 , respectively. As of December 31, 2021and 2020, the balance due to a third party under these notes is $ 200,000 , with accrued interest of $ 24,297 and $ 8,297 , respectively. F- 14 3% Secured Convertible Note On July 1, 2020, the Company issued a $ 125,000 Secured Convertible Note to a related party for the as part of the purchase of Clearwater Mining Corporation. The convertible note is secured by common stock of the Company, matures on July 1, 2022 and will accrue interest at the rate of 3 % per annum, payable yearly in arrears beginning July 1, 2021. The Note is convertible into shares of Common Stock at a conversion price of $ 0.50 during the life of the Note. The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital in July 2019. The $ 87,500 debt discount will be amortized over the term of the loan. Amortization expense of $ 43,750 and $ 21,935 was recognized during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the balance due to a related party under this note net of unamortized discount of $ 21,815 , is $ 103,185 , with accrued interest of $ 5,630 . As of December 31, 2020, the balance due to a related party under this note net of unamortized discount of $ 65,592 , is $ 59,435 , with accrued interest of $ 1,880 . AJB Convertible Note On February 10, 2021, the Company entered into a debt agreement to borrow $ 200,000 . The secured note has an original issuance discount of $ 16,000 along with $ 9,000 in legal and finder fees recorded as a discount, which will be amortized over the life of the note. The loan is secured by common stock of the Company, bears interest at a rate of 10 % and has a six-month maturity. In August 2021, the note was extended six months and the interest rate was increase to 15%. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price shall be the less of 90% of the lowest trading price during the previous twenty (20) trading day period ending on the issuance date, or during the previous twenty (20) trading day period ending on date of conversion of this note. The Company issued the debtholder 266,667 common shares as a commitment fee. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $ 95,715 was recorded as a discount on the convertible notes payable. As of December 31, 2021, the balance on the loan, net of unamortized discount of $ 0 is $ 200,000 , with accrued interest of $ 0 . As of December 31, 2021, the total derivative liability on the above note was adjusted to a fair value of $ 150,953 . During the year ended December 31, 2021, $ 120,715 of the discount was amortized leaving an unamortized balance of $ 0 . The fair value of the conversion option was estimated using the Black-Scholes option pricing model and the following assumptions during the period: fair value of stock $ 0.53 - 1.03 , volatility of 91.27 % - 135.17 % based on a comparable company peer group, expected term of 0.50 years, risk-free rate of 0.05 % - 0.19 % and a dividend yield of 0 %. Note 8 – Stockholders’ Deficit Common Stock 2021 On February 10, 2021, the Company issued the 266,667 common shares as a commitment fee. The shares were valued at $ 0.92 , the closing price of the Company’s stock on February 10, 2021. During the year ended December 31, 2021, the Company recognized $ 245,334 of stock-based compensation related to this issuance. On August 6, 2020, the Company entered into a one-year investor relations consulting agreement. As consideration for its services under the Agreement, the Company agreed to pay to the consultant 261,538 restricted shares of the Company’s common stock. The shares were valued at $ 1.56 , the closing price of the Company’s stock on August 6, 2020. As of December 31, 2020, the Company had not issued the shares and accrued $ 136,000 related to this agreement. During the year ended December 31, 2021, the Company issued the 261,538 shares related to this agreement, settled the prior year accrual of $ 136,000 for 2020 services and recognized $ 272,000 of stock-based compensation for services provided during the year ended December 31, 2021. During the year ended December 31, 2021, the Company received net proceeds of $ 10,000 from the exercise of 50,000 warrants. On July 15, 2020, the Company issued 500,000 shares for services rendered pursuant to two investor relations agreements: 200,000 shares under a Services Agreement and 300,000 shares under a Consulting Agreement. The shares were valued at $1.29, the closing price of the Company’s stock on July 15, 2020. The Services Agreement is $7,500 per month and has a term of twelve months The Consulting Agreement is $7,500 per month and has an initial term of six months. If the Consulting Agreement is not terminated at least thirty days prior to the end of the initial term, the term will continue for an additional six months. During the year ended December 31, 2021 the Company recognized $ 322,250 of expense related to these shares. F- 15 2020 On May 31, 2020, the Company agreed to issue 86,270 common shares to settle of accounts payable related to services provided in 2019 and 2020 of $17,254. The common shares had a fair value of $ 60,389 resulting in a loss on settlement of accounts payable of $43,135. On May 31, 2020, the Company agreed to issue 687,500 common shares and warrants to settle advances from third parties of $ 42,500 and settle advances from related parties of $ 95,000 . Additionally, the Company issued 1,183,635 common shares and warrants to settle convertible notes payable of $ 236,727 including accrued interest. The common shares had a fair value of $ 486,250 resulting in a loss on settlement of liabilities of $ 348,750 . During the year ended December 31, 2020, the Company received net proceeds of $ 38,500 from the exercise of 155,000 warrants. On July 15, 2020, the Company issued 500,000 shares for services rendered pursuant to two investor relations agreements: 200,000 shares under a Services Agreement and 300,000 shares under a Consulting Agreement. The shares were valued at $1.29, the closing price of the Company’s stock on July 15, 2020. The Services Agreement is $7,500 per month and has a term of twelve months The Consulting Agreement is $7,500 per month and has an initial term of six months. If the Consulting Agreement is not terminated at least thirty days prior to the end of the initial term, the term will continue for an additional six months. During the year ended December 31, 2020 the Company recognized $ 322,750 of expense related to these shares. Preferred Stock In September 2020, the Company established a Series B Convertible Preferred Stock (“Series B Preferred”) and authorized an aggregate of 5,000 shares with a par value of $0.001 per share and a stated value of $1,250.00 per share. The holders of outstanding Series B Preferred shall be entitled to receive dividends at the annual rate of 10% based on the stated value per share. Dividends on the share of Series B Preferred shall be cumulative. During the years ended December 31, 2021 and 2020, the Company accrued $ 80,112 and $ 276,011 for the Series A preferred stock dividend. Effective May 31, 2021, the Company received notices of Conversion from five of its Series A Convertible Preferred stockholders that they had elected to convert a total of 192,269 shares of Series A Convertible Preferred Stock into an aggregate of 1,922,690 shares of Common Stock and $356,123 in accrued but unpaid dividends on the Series A Shares into an aggregate of 356,123 shares of Common Stock Each share of Series A Convertible Preferred Stock was convertible into ten shares of Common Stock. The Conversion Price of the Dividend Shares was $1.00 per share. On June 30, 2021, the Company issued 2,278,804 shares of common stock for the conversion of preferred stock and accrued dividends. Stock Warrants, Stock Options and the 2017 Equity Incentive Plan: Under the 2017 Equity Incentive Plan, the Company is authorized to grant rights to acquire up to a maximum of 200,000 shares of common stock. The 2017 Plan provides for the grant of (1) both incentive and nonstatutory stock options, (2) stock bonuses, (3) rights to purchase restricted stock and (4) stock appreciation rights. As of December 31, 2021, the Company had 128,000 shares available for future grant. On September 15, 2020, John Gibbs, a related party, transferred 330,000 warrants to purchase common stock back to the Company. The warrants were accounted for as if they were returned and re-granted. Deepak Malhotra, a member of the board, received 300,000 of the transferred warrants as compensation for services to be performed over a one year term. The warrants were valued $386,764 and will recognized over the one year service period. During the year ended December 31, 2021, the Company recognized $ 257,842 of expense related to the issuance of these warrants. Mr. Malhotra exercised 50,000 warrants in the third quarter of 2020. On May 31, 2021, Mr. Malhotra’s remaining 250,000 warrants were extended until May 31, 2022. The incremental value of the warrant modification of $194,687 will be recorded over the remaining service period ending September 30, 2021. During the year ended December 31, 2021, the Company recognized $ 194,687 of expense related to the warrant modification. F- 16 In May 2021, John Gibbs, a related party, transferred 75,000 warrants and five other warrant holders transferred 1,310,000 warrants to purchase common stock to various other holders. The transferred warrants were all set to expire on May 31, 2021 and had an exercise price of $0.20. In May 2021, 1,185,000 of the warrants were exercised resulting in proceeds to the Company of $ 237,000 . On May 31, 2021 the remaining 200,000 transferred warrants were extended to May 31, 2022. These remaining warrants were exercised in June 2021 and resulted in proceeds to the Company of $ 40,000 . Stock option activity within the 2017 Equity Incentive Plan and warrant activity outside the plan, for the years ended December 31, 2021 and 2020 is as follows: Schedule of stock option and warrant activity Stock Options Stock Warrants Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Outstanding at December 31, 2019 72,000 $ 2.00 335,000 $ 1.70 Granted – – 2,393,635 0.21 Cancelled – – ( 715,000 ) 0.90 Expired – – – – Exercised – – ( 155,000 ) 0.25 Outstanding at December 31, 2020 72,000 2.00 1,858,635 0.67 Granted – – – – Cancelled – – – – Expired – – – – Exercised – – ( 1,435,000 ) 0.20 Outstanding at December 31, 2021 72,000 $ 2.00 423,635 $ 0.28 Exercisable at December 31, 2021 72,000 $ 2.00 423,635 $ 0.28 During the year ended December 31, 2020, the Company valued the warrants using the Black-Scholes model with the following key assumptions ranging from: Stock price, $ 0.85 - $ 1.57 , Exercise price, $ 0.20 -$ 0.50 , Term 5 years, Volatility 195.66 % - 225.13 %, and Discount rate 0.12 % - 0.36 %. As of December 31, 2021, the outstanding stock options have a weighted average remaining term of 5.82 years and has no intrinsic value, and the outstanding stock warrants have a weighted average remaining term of 1.25 years and an intrinsic value of $ 104,550 . As of December 31, 2020, the outstanding stock options have a weighted average remaining term of 6.82 years and no intrinsic value, and the outstanding stock warrants have a weighted average remaining term of 0.22 years and an intrinsic value of $ 1,451,658 . Note 9 – Commitments and Contingencies Mining Claims As part of our acquisition of the Center Star gold mine project, we acquire 15 Bureau of Land Management (“BLM”) unpatented mining claims and subsequently staked another 16 unpatented mining claims. In order to maintain the BLM lode \ claims, annual payments are required before the end of August of each year. As of December 31, 2021, all of these claims are in good standing. Note 10 – Executive Employment Agreement Effective August 1, 2020, the Company and Michael Lavigne, executed a Restricted Stock Unit Agreement pursuant to which the Company agreed to grant to Mr. Lavigne, in consideration of services to be rendered as President, CEO and Director, restricted stock units consisting of 15,000 units for each month of service. The vested stock units will be settled in shares of common stock upon or as soon as practicable (a) upon written request any time after December 31, 2020 or (b) following the termination date, whichever occurs first. As of December 31, 2021 and 2020, 255,000 and 75,000 restricted stock units may be settled in shares of common stock, respectively. During the years ended December 31, 2021 and 2020, the Company recognized $ 162,465 and $ 84,600 of stock-based compensation related to the agreement, respectively. F- 17 Note 11 – Related Party Transactions Conflicts of Interests Athena Silver Corporation (“Athena”) is a company under common control. Mr. Gibbs is a significant investor in both Magellan and Athena. Magellan and Athena are both exploration stage companies involved in the business of acquisition and exploration of mineral resources. Silver Saddle Resources, LLC is also a company under common control. Mr. Gibbs are significant investors and managing members of Silver Saddle. Magellan and Silver Saddle are both exploration stage companies involved in the business of acquisition and exploration of mineral resources. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Magellan, Athena and Silver Saddle been autonomous. As of March 31, 2021, Mr. Power and Dr. Carson are no longer considered related parties, and therefore all amounts due to them have been reclassified out of related party accounts. Accrued Interest - Related Parties Accrued interest due to related parties is included in our consolidated balance sheets as follows: Schedule of related party transactions (accrued interest) December 31, 2021 December 31, 2020 Accrued interest payable – Mr. Gibbs $ 6,597 $ 2,597 Accrued interest payable – Dr. Carson – 752 Accrued interest payable – Mr. Schifrin 5,629 1,880 Accrued interest payable – Mr. Malhotra 1,041 241 $ 13,268 $ 5,470 Note 12 – Income Taxes Our net operating loss carry forward as of December 31, 2021 was $ 4,256,000 , which may be used to offset future income taxes. Our net operating loss carry forward as of December 31, 2020 was $ 3,874,000 , which may be used to offset future income taxes. Our reconciliation between the expected federal income tax benefit computed by applying the federal statutory rate to our net loss and the actual benefit for taxes on net loss for 2021 and 2020 is as follows: Components of income tax benefit Years Ended December 31, 2021 2020 Expected federal income tax benefit at statutory rate 80,314 $ 46,457 State taxes 13,386 7,743 Change in valuation allowance ( 93,700 ) ( 54,200 ) Income tax benefit $ – $ – Our deferred tax assets as of December 31, 2021 and 2020 were as follows: Schedule of deferred tax assets December 31, 2021 2020 Deferred tax asset 1,042,742 $ 949,042 Valuation allowance ( 1,042,742 ) ( 949,042 ) Deferred tax assets, net of allowance $ – $ – F- 18 Note 13 – Subsequent Events On February 9, 2022, the Company agreed to extend the maturity of the AJB note to May 10, 2022. In consideration for the extension, the Company issued 180,000 shares of common stock at a price of $0.30 per share. On March 4, 2022, the Company entered into two unsecured promissory notes totaling $40,000. The promissory notes bear interest at 12% per annum and are payable on demand. On May 11, 2022, the Company agreed to extend the maturity of the AJB note to August 10, 2022. In consideration for the extension, the Company issued 233,334 shares of common stock at a price of $0.30 per share. F- 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. MAGELLAN GOLD CORPORATION Date: June 1, 2022 By: /s/ Michael B. Lavigne President, Principal Executive Officer, Principal Accounting Officer & Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Michael B. Lavigne Principal Executive and Accounting Officer & Director June 1, 2022 Michael B. Lavigne /s/ Mark Rodenbeck Director June 1, 2022 Mark Rodenbeck /s/ Greg Schifrin Director June 1, 2022 Greg Schifrin /s/ Deepak Malhotra Director June 1, 2022 Deepak Malhotra 44