MAGELLAN COPPER & GOLD Corp 10-K/A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We use the terms “Magellan,” “we,” “our,” and “us” to refer to Magellan Gold Corporation. The following discussion and analysis provides information that management believes is relevant for an assessment and understanding of our results of operations and financial condition. This information should be read in conjunction with our audited financial statements, which are included in our Annual Report on Form 10-K for the fiscal years ended December 31, 2022 and 2021. Forward-Looking Statements Some of the information presented in this Form 10-K constitutes “forward-looking statements”. These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations. Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made. Overview We were incorporated on September 28, 2010, in Nevada. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mineral rights contain mineral reserves that are economically recoverable. We have only had limited operations to date, and we rely upon the sale of our securities and borrowings from significant investors to fund our operations, as we have not generated any revenue. 26 Effective July 1, 2020, Magellan 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 near Elk City, Idaho. The Center Star Mine hosts high grade gold mineralization that was discovered in the early 1900’s. There was periodic historic production and development work done under different ownership through the 1980s. With the high-grade gold mineralization present, Magellan 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. In consideration for 100% of the issued and outstanding shares of Clearwater, Magellan has agreed to pay its sole shareholder 1,000,000 shares of Magellan common stock and $150,000 in cash. Of the 1,000,000 shares, 750,000 have been issued and 250,000 shares will be issued two years from the closing concurrent with the pay-off of the secured promissory note. The cash consideration of $25,000 was paid and the balance of $125,000 is evidenced by a secured promissory note due in two years. The Note is secured by the Clearwater shares and assets. During the year ended December 31, 2022, the Company evaluated the mineral rights and properties for impairment and recorded an impairment expense of $1,037,500. As of December 31, 2022 and 2021, the mineral rights and properties balance totaled $0 and $1,000,000, respectively. Our primary focus is to advance our 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 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. Results of Operations for the Years Ended December 31, 2022 and 2021 Years Ended December 31, 2022 2021 Operating expenses: General and administrative expenses $ 242,883 $ 1,770,847 Impairment expense 1,037,500 – Total operating expenses 1,280,383 1,770,847 Operating loss (1,280,383 ) (1,770,847 ) Other income (expense): Interest expense (282,334 ) (230,647 ) Gain (loss) on change in derivative liability 2,788 (55,238 ) Total other income (expense) (279,546 ) (285,885 ) Net loss $ (1,559,929 ) $ (2,056,732 ) Operating expenses During the year ended December 31, 2022, our total operating expenses included general and administrative expenses of $1,280,383 as compared to $1,770,847 during the year ended December 31, 2021. The $490,464 decrease is primarily associated with decreases in stock-based compensation and investor relation expenses and the $1,037,500 increase in impairment expense related to the Center Star Gold Mine. 27 Other income (expenses) During the year ended December 31, 2022, total other expenses were $279,546 as compared to$ 285,885 during the year ended December 31, 2021. The $6,339 change was related to a$51,687 increase in interest expense which was offset by a $58,026 increase in derivative liability related to the gain in derivative liability in 2022. Liquidity and Capital Resources: Our audited 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, 2022, we had not yet generated any significant revenues or achieved profitable operations and we have accumulated losses of $19,529,742. We expect to incur further losses in the development of our business, all of which casts substantial doubt about 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. During the year ended December 31, 2022, the Company entered into unsecured promissory notes totaling $78,000 and unsecured promissory notes with related parties totaling $53,000. During the year ended December 31, 2021, the Company entered into a debt agreement to borrow up to $200,000 and received $175,000 in cash proceeds. Additionally, the Company received $287,000 of proceeds from the exercise of warrants. We anticipate that additional funding will be in the form of additional loans from officers, directors or significant shareholders, or equity financing from the sale of our common stock but cannot assure that any future financings will occur. Cash Flows A summary of our cash provided by and used in operating, investing and financing activities is as follows: Years ended December 31, 2022 2021 Net cash used in operating activities $ (148,254 ) $ (312,882 ) Net cash used in investing (769 ) (80,537 ) Net cash provided by financing 131,000 412,185 Net change in cash (18,023 ) 18,766 Cash at beginning of period 18,766 – Cash at end of period $ 743 $ 18,766 28 At December 31, 2022, we had $743 in cash and a $1,692,051 working capital deficit. This compares to $18,766 in cash and a working capital deficit of $1,459,741 at December 31, 2021. Net cash used in operating activities during the year ended December 31, 2022 was $148,254 and was mainly comprised of our $1,559,929 net loss during the year, adjusted by $1,037,500 of impairment expense, $110,888 of stock compensation and accretion of discounts on notes payable of $201,815. In addition, it reflects changes in operating assets and liabilities of $64,260. Net cash used in operating activities during the year ended December 31, 2021 was $312,882 and was mainly comprised of our $2,056,732 net loss during the year, adjusted by $1,454,580 of stock compensation and accretion of discounts on notes payable of $164,465. In addition, it reflects changes in operating assets and liabilities of $69,567. Net cash used in investing activities during the years ended December 31, 2022 and 2021 was $769 and $80,537, respectively which was comprised of cash payments for development costs. Net cash provided by financing activities during the year ended December 31, 2022 was $131,000 comprised of $78,000 proceeds from notes payable and $53,000 proceeds from notes payable from related parties. Net cash provided by financing activities during the year ended December 31, 2021 was $412,185 comprised $287,500 proceeds from the sale of common stock and warrants, $175,000 proceeds from convertible debt from third parties, $605 proceeds from advances from related parties, offset by $30,420 payments on convertible notes from third parties and $20,000 payments on advances from related parties. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this item are located in Item 15 beginning on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.