UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED:
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices, Zip Code)
(
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares of registrant’s common stock outstanding as of August 12, 2022 was
FORM 10-Q
GUSKIN GOLD CORP.
FKA INSPIRED BUILDERS, INC.
June 30, 2022
TABLE OF CONTENTS
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Item 1. | Condensed Consolidated Financial Statements |
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| Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and September 30, 2021 |
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| Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10-K which was filed with the SEC on January 31, 2022 (the “10-K”), in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
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| Table of Contents |
PART I. FINANCIAL INFORMATION
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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| June 30, 2022 (unaudited) |
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| September 30, 2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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Prepaid expenses |
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Total current assets |
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Fixed Assets, net |
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Total non current assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
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CURRENT LIABILITIES: |
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Accounts payable and Accrued Expenses |
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Loan payable - Related Party |
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Convertible notes payable (net of unamortized discount) |
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Notes payable |
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Stock based compensation payable |
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Derivative liability |
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TOTAL LIABILITIES |
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Commitments and Contingencies (See Note 11) |
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STOCKHOLDERS’ DEFICIT |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid in capital |
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Accumulated deficit |
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Stock subscription receivable |
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TOTAL STOCKHOLDERS’ DEFICIT |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Table of Contents |
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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| For Three Months Ended |
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Operating Expenses: |
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Stock based compensation |
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Professional fees |
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General and administrative expenses |
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Total Operating Expenses |
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Loss from operations |
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Other Income (Expense) |
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Change in fair value of derivative |
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Amortization of discount |
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Other income |
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Interest expense |
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Total other income (expense) |
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Net loss before income tax provision |
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Provision for income tax |
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Net income (loss) |
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Net income (loss) per common share Basic and diluted |
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Weighted average common shares outstanding |
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Basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
(UNAUDITED)
For the Nine Months ended June 30, 2022
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| Common Stock |
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| Stock subscription |
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| Accumulated |
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| Stockholders’ |
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| Shares |
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| Par Value |
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| Deficiency |
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| receivable |
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| Deficit |
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| Deficit |
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Balance - September 30, 2021 |
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Common stock subscriptions received |
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In-kind contribution |
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Net loss |
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Balance - December 31, 2021 |
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In-kind contribution |
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Common stock cancelled |
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Net loss |
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Balance - March 31, 2022 |
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In-kind contribution |
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Net loss |
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Balance - June 30, 2022 |
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| $ | ( | ) |
| $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
(UNAUDITED)
For the Nine Months ended June 30, 2021
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| Common Stock: Shares |
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| Common Stock: Par Value |
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| Additional Paid-in Capital |
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| Accumulated Deficit |
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| Totals |
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Balance – September 30, 2020 |
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In-kind service contribution |
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Net loss |
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Balance – December 31, 2020 |
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In-kind service contribution |
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Common stock issued for services – related party |
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Net loss |
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Balance – March 31, 2021 |
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In-kind service contribution |
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Common stock issued for conversion of convertible notes payable |
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Common stock issued for mineral rights |
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Net loss |
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Balance – June 30, 2021 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
| Table of Contents |
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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| For the Nine Months Ended |
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| For the Nine Months Ended |
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| June 30, 2022 |
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| June 30, 2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net Income (loss) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of debt discount |
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Change in fair value of derivative liability |
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In-kind contribution of service |
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Common stock issued for services |
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Depreciation expense |
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Changes in operating assets and liabilities: |
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Prepaid expense |
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Accounts payable and accrued expenses |
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Net Cash Used in Operating Activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Mining equipment purchase |
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Net Cash Used in Investing Activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from related party debt, net of repayment |
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Proceeds from promissory notes |
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Common stock subscription |
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Proceeds from convertible note payable |
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Repayment of related party debt |
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Net Cash Provided by Financing Activities |
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NET CHANGE IN CASH |
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CASH - BEGINNING OF PERIOD |
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CASH - END OF PERIOD |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for income taxes |
| $ |
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| $ |
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Cash paid for interest |
| $ |
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NON-CASH INVESTING AND FINANCING ACTIVITIES |
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Common stock issued for conversion of convertible notes payable |
| $ |
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| $ |
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Convertible notes payable converted to common stock |
| $ |
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Derivative liability extinguished upon conversion of convertible notes |
| $ |
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| $ |
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Investment in mineral rights |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 8 |
| Table of Contents |
GUSKIN GOLD CORP. AND SUBSIDIARIES
FKA INSPIRED BUILDERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2022
AND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
(Unaudited)
Note 1 - Organization and Basis of Accounting
Basis of Presentation and Organization
Guskin Gold Corp. (fka Inspired Builders, Inc.) (the “Company”,”Guskin”, “We”, and “Us”) was incorporated in the State of Nevada in February 2010. Until August 15, 2017, the Company was directing its focus on acquiring, investing in, developing and managing real estate properties and related investments. On August 15, 2017, pursuant to a change in control transaction, we relocated to Miami, Florida and ceased all operations as a real estate company.
On January 16, 2020, Santa Alba, LLC sold the
On April 30, 2020, Custodian Ventures, LLC, a Wyoming limited liability company (“CVL”) and the Company entered into a Stock Purchase Agreement (the “Agreement”) with U Green Enterprise, a Ghana corporation (the “Purchaser”). The Agreement closed upon execution on April 30, 2020 (“Closing”). Pursuant to the Agreement, CVL agreed to sell and Purchaser agreed to purchase
Guskin Gold Corporation (“GGC”) was incorporated in May 28, 2020 in the state of Nevada. GGC’s business activity is the early-stage development of a business focusing on the acquisition of gold properties, and the exploration and potential development of small-scale gold mining operations in the Republic of Ghana, West Africa.
On September 3, 2020, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with GGC, and the controlling stockholders of GGC (the “GGC Shareholders”). Pursuant to the Share Exchange Agreement, the Company acquired One Hundred Percent (
The Share Exchange is accounted for as a reverse recapitalization under U.S. GAAP as the Share Exchange results in a change of control of the Company. GGC was determined to be the accounting acquirer based upon the terms of the Share Exchange and other factors including: (i) GGC’s shareholders are expected to own approximately
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As of September 22, 2020 (the “Closing Date”), GGC provided us with valid and accepted audited financial statements, accordingly the transactions contemplated by the Share Exchange Agreement have been satisfied, accordingly the Share Exchange Agreement is closed (“Closing”).
The Company filed the Amended Articles of Incorporation effecting the Name Change with the Nevada Secretary of State, effective November 30, 2020. As previously reported, shareholders approved the Name Change and Symbol Change on September 22, 2020, in connection with the Closing of the Share Exchange Agreement between the Company and Guskin Gold Corp.
On December 3, 2020, the Financial Industry Regulatory Authority (“FINRA”) announced the effectiveness of a change in the Company’s name from “Inspired Builders, Inc.” to “Guskin Gold Corp.” (the “Name Change”) and a change in the Company’s ticker symbol from “ISRB” to the new trading symbol ”GKIN” (the “Symbol Change”). Trading under the new ticker symbol began at market opening December 4, 2020. The Company’s CUSIP also changed to 40330L100
Note 2 - Summary of significant accounting policies
Principles of Consolidation
The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, GGC and Guskin Gold Ghana #1 Limited from June 02, 2021, inception date. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at June 30, 2022.
Cash and Cash Equivalents
For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash and cash equivalents. There were cash equivalents of $
Fixed Assets
Fixed assets are stated at historical cost less accumulated depreciation. The historical cost of acquiring an item of fixed assets includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Costs associated with repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 7 years.
Earnings (Loss) per Share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. As of June 30, 2022, the Company had $
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in valuation of equity-based transactions, valuation of derivative liabilities and valuation of deferred taxes.
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Revenue Recognition
The Company accounts for revenue under Accounts Standard Codification (“ASC”) ASC 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
The Company has only recently changed its business focus to its current business of exploration, development, production, and export of gold in Ghana, and to smartly find, build, and operate profitable gold and precious metal properties. Consequently, we have only limited operating history and an unproven business strategy, no current properties and prospects that have yet to be developed. As such, no revenue has been recognized to date.
Impairment of Long-lived Assets
We review and evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated undiscounted pretax future cash flows are less than the carrying amount of the asset. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups. An impairment loss is measured by discounted estimated future cash flows and recorded by reducing the asset’s carrying amount to fair value. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold prices (considering current and historical prices, trends, and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans.
Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves are included when determining the fair value of mine site asset groups at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold, silver, lead, and zinc that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those risk factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.
Gold prices are volatile and affected by many factors beyond the Company’s control, including prevailing interest rates and returns on other asset classes, expectations regarding inflation, speculation, currency values, governmental decisions regarding precious metals stockpiles, global and regional demand and production, political and economic conditions and other factors may affect the key assumptions used in the Company’s impairment testing. Various factors could impact our ability to achieve forecasted production levels from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. Actual results may vary from the Company’s estimates and result in additional Impairment of Long-lived Assets.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.
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Derivative Instrument Liability
The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. At June 30, 2022 and September 30, 2021, the Company had a derivative liability of $
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update (ASU) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU No. 2020-06 simplifies the accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock will be reported as a single equity instrument, with no separate accounting for embedded conversion features. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. In addition, ASU No. 2020-06 simplifies the diluted earnings per share (EPS) calculation in certain areas. ASU No. 2020-06 is effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, ASU No. 2020-06 will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in fiscal years beginning after December 15, 2020. An entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact of this accounting pronouncement on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.
Note 3 - Reverse Merger
On September 03, 2020, the Company and its controlling stockholders entered into a Share Exchange Agreement (the “Share Exchange”) with GGC and the shareholders of GGC. GGC’ current plan of operation consists of identifying, assessing and vetting various gold and mineral properties, specifically focusing on gold properties and the exploration and potential development of small-scale gold mining operations in the Republic of Ghana, West Africa.
At the closing of the transactions contemplated by the Share Exchange (the “Closing”), in exchange for
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For accounting purposes, GGC is considered to be the acquiring company and the Share Exchange was accounted for as a reverse recapitalization of the Company by GGC because (i)
The following is the fair value of the assets acquired and the liabilities assumed by GGC in the Share Exchange:
Total Assets assumed |
| $ |
| |
Total Liabilities assumed |
|
| ( | ) |
Net Liabilities assumed |
| $ | ( | ) |
Note 4 - Going Concern
As reflected in the accompanying consolidated financial statements, the Company has net loss of $
The accompanying consolidated financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional funding. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops or initiates collaboration agreements thereon. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Note 5 - Investment in mineral rights
On June 10, 2021, the Board of Directors of the Company ratified entry into a Joint Venture & Partnership Agreement (the “JV Agreement”) with Africa Exploration & Minerals Group Limited, a company incorporated in Ghana (the “AEMG”), dated June 1, 2021, Additionally, AEMG granted to the Company an exclusive option to earn and acquire up to a
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In the beginning of November 2021, Company management, while visiting our operations in Ghana, noticed various accounting discrepancies and expenses irregularities relating to AEMG’s activities at the Concession. Additionally, during this time the Company was informed that, on information and belief, AEMG was not the rightful owner of the Concession and in fact had no legal right to enter the Partnership with the Company. Thereafter, the Company met with AEMG on several occasions seeking to resolve these matters in a manner that would be mutually agreeable to both parties. All attempts, as of the date of this report, to resolve the dispute amicably have been unsuccessful. The Company has retained Ghanaian counsel to represent and protect its interests relating to the disputed funds and our ongoing operation in Ghana. Also, on advice of counsel, the Company has turned all evidence of the foregoing over to the proper authorities and currently the matter is under review by the lead prosecutors in Accra, Ghana.
On January 24, 2022, Guskin Gold Corp., by and through a new wholly owned subsidiary, Guskin Gold Ghana #1 Limited., a company incorporated under the Laws of the Republic of Ghana (collectively, Guskin Gold Corp. and its subsidiary Guskin Gold Ghana Ltd. shall be referred to hereinafter as the “Company”) and Danampco Company Ltd., a company incorporated under the Laws of the Republic of Ghana (the “DCL”) entered into a Joint Venture & Partnership Agreement (the “JV Agreement”) which sets forth the terms and conditions of a joint venture and partnership (the “Partnership”) between themselves relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Per the Agreement DCL granted the Company an exclusive seventy (70%) percent ownership interest in that certain project, located in the Country of Ghana in which DCL has an interest known as the Kukuom Shewn Edged Pink Concession (the “Kukuom Concession”). The Kukuom Concession covers a total surface area of one-hundred fifty-six (156) square kilometers and is located between the cities of Goaso and Bibiani in the Ahafo District of Ghana. The Parties intent this to be an unincorporated contractual joint venture in respect of the exploration, development, exploitation, and operation of the Concession. Each additional project relating to the Ghana Option Interest, and agreed to be made part of, and undertaken by the Partnership, shall be governed by individual “Operating Agreements” setting forth the terms and conditions relating to each project specifically. As consideration for the Partnership, the Company shall provide all financing (“Financing”), to be remitted in accordance with a work program and budget, necessary to begin exploration of the Kukuom Concession. Additionally, the Company shall issue DCL
On February 7, 2022, Guskin Gold Corp., enter into that certain Joint Venture & Partnership Agreement (the “Ensuro JV Agreement”) by and through Guskin Gold Ghana Ltd., a company incorporated under the Laws of the Republic of Ghana, and the Corporation’s wholly owned subsidiary, (collectively, Guskin Gold Corp. and its subsidiary Guskin Gold Ghana Ltd. shall be referred to hereinafter as the “Company”) with Ensuro Group of Companies Limited, a company incorporated under the Laws of the Republic of Ghana (the “Ensuro”). The Ensuro JV Agreement sets forth the terms and conditions of an unincorporated joint venture and partnership (the “Partnership”) between the parties relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Per the Agreement DCL shall grant the Corporation an exclusive seventy (70%) percent ownership interest in that certain project, located in the Country of Ghana in which DCL has an interest known as the Tepa Concession (the “Tepa Concession”) which covers a total surface area of fifty (50) acres and is located in the Ashanti Region of Ghana in exchange the Corporation shall provide all such financing necessary to exploit the Tepa Concession in accordance with a preapproved work program and budget. Additionally, the Corporation shall pay to Ensuro an access fee of Three Hundred Thousand (GH₵300,000) Ghana Cedi upon execution of the Ensuro JV Agreement (the “Access Fee”). The Access Fee shall be treated as a loan to Ensuro which will be repaid from the initial monies earned form the exploration, development, or exploitation of the Tepa Concession.
The specific terms and conditions relating to the operations of the Tepa Concession are set forth in that certain Operating Agreement (“Operating Agreement”), which is attached to the JV Agreement as Schedule A.
The foregoing description of the JV Agreement and Operating Agreement (as Schedule A to the JV Agreement) do not purport to be complete and are qualified in their entirety by reference to the full text of both documents which were filed as Exhibit 10.1 to our Form 8-K filed on February 8, 2022 (the Operating Agreement is Schedule A to the JV Agreement) and is incorporated herein by reference.
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Note 6 - Loans Payable - Related Party and Related Party Transactions
On June 1, 2020, the Company entered into a loan agreement with Naana Asante, our Chief Executive Officer, in the amount of $
On June 1, 2020, the Company entered into a loan agreement with an entity controlled by a shareholder in the amount of $
On September 22, 2020, the Company assumed, as part of the reverse merger and share exchange agreement a related party loan payable dated April 30, 2020, owed to U Green Enterprise, a Ghana corporation controlled by our Board of Directors. As of June 30, 2022, and September 30, 2021, the Company had a loan payable of $
On January 4, 2021, the Company entered into a loan agreement in the amount of $
Note 7 - Note payable
On September 22, 2020, the Company entered into a loan agreement with a third party in the amount of $
On May 25, 2022, the Company entered into a promissory note agreement with a third party in the amount of $
On May 31, 2022, the Company entered into a promissory note agreement with a third party in the amount of $
On June 24, 2022, the Company entered into a promissory note agreement with a third party in the amount of $
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Note 8 - Convertible notes
On September 22, 2020, the Company assumed a convertible note offering of up to $
On April 16, 2021, the holder of the note in the amount of $
On April 17, 2021, the holder of the note in the amount of $
On April 18, 2021, the holder of the note in the amount of $
On October 27, 2021, the Company received $
On November 16, 2021, the Company received $34,978 in exchange for a convertible promissory note, in the same amount, from an independent third party. The note is
On January 13, 2022, the Company received $
On February 02, 2022, the Company received $
On February 15, 2022, the Company received $
On March 01, 2022, the Company received $
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On March 16, 2022, the Company received $
On April 12, 2022, the Company received $25,000 in exchange for a convertible promissory note, in the same amount, from an independent third party. The
A summary of value changes to the notes for the nine months ended June 30, 2022, and the year ended September 30, 2021 is as follows:
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| June 30, 2022 |
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| September 30, 2021 |
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Carrying value of Convertible Notes |
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Convertible notes issued |
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Less: Conversion of principal |
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Less: debt discount |
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Add: amortization of discount |
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Carrying value of Convertible Notes, net |
| $ |
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| $ |
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Note 9 - Derivative liability
The Company has determined that the variable conversion prices under its convertible notes caused the embedded conversion feature to be a financial derivative. The derivative instruments were valued at loan origination date, date of debt conversion and at June 30, 2022 and September 30, 2021. The fair values of the derivative liabilities related to the conversion options of these notes was estimated on the transaction dates (loan original date and reporting date) using the Black Scholes option pricing model, under the following assumptions:
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| June 30, 2022 |
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| September 30, 2021 |
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Shares of common stock issuable upon exercise of debt |
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Estimated market value of common stock on measurement date |
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| $ |
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Exercise price |
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Risk free interest rate (1) |
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Expected dividend yield (2) |
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Expected volatility (3) |
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Expected exercise term in years (4) |
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(1) | The risk -free interest rate was determined by management using the one-month Treasury bill yield as of the valuation dates. |
(2) | The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. |
(3) | The volatility was determined by referring to the average historical volatility of a peer group of public companies because we do not have sufficient trade history to determine our historical volatility. |
(4) | The exercise term is the remaining contractual term of the convertible instrument at the valuation date. |
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The change in fair values of the derivative liabilities related to the Convertible Notes for the nine months ended June 30, 2022 is summarized as:
|
| Fair value at June 30, |
|
| Quoted market prices for identical assets/liabilities |
|
| Significant other observable inputs |
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| Significant unobservable inputs |
| ||||
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| 2022 |
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| (Level 1) |
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| (Level 2) |
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| (Level 3) |
| ||||
Derivative Liability |
| $ |
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| $ |
|
| $ |
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| $ |
| ||||
|
| Derivative Liability |
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Derivative liability as of September 30, 2021 |
| $ |
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Change in fair value of derivative liability |
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Addition of new derivative liability |
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Derivative liability as of June 30, 2022 |
| $ |
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| Change in Fair Value of Derivative Liability** |
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Change in fair value of derivative liability at the beginning of period |
| $ | ( | ) |
Day one gains/(losses) on valuation |
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Gains/(losses) from the change in fair value of derivative liability |
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Change in fair value of derivative liability at the end of the period |
| $ |
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** | The fair value at the remeasurement date is equal to the carrying value on the balance sheet. |
The change in fair values of the derivative liabilities related to the Convertible Notes for the fiscal year ended September 30, 2021 is summarized as:
|
| Fair value at September 30, |
|
| Quoted market prices for identical assets/liabilities |
|
| Significant other observable inputs |
|
| Significant unobservable inputs |
| ||||
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| 2021 |
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| (Level 1) |
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| (Level 2) |
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| (Level 3) |
| ||||
Derivative Liability |
| $ |
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| $ |
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| $ |
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| $ |
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| Derivative Liability |
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Derivative liability as of September 30, 2020 |
| $ |
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Change in fair value of derivative liability |
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Reclassification to additional paid-in capital for financial instruments that ceased to be a derivative liability |
|
| ( | ) |
Derivative liability as of September 30, 2021 |
| $ |
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|
| Change in Fair Value of Derivative Liability** |
| |
Change in fair value of derivative liability at the beginning of period |
| $ |
| |
Day one gains/(losses) on valuation |
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Gains/(losses) from the change in fair value of derivative liability |
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Change in fair value of derivative liability at the end of the period |
| $ |
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** | The fair value at the remeasurement date is equal to the carrying value on the balance sheet. |
Note 10 - Commitment and Contingencies
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However, this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.
On June 1, 2020, (the “commencement date”) the Company entered into a consulting agreement with Dr. Kweku Ainuson to provide consulting services on as needed basis. The consultant shall be responsible for advising the Chief Executive Officer, President, Chief Geologist, and Chairman of the Board of Directors on all legal matters of the Company. In addition, the consultant is to provide legal advice on areas including but not limited to business contracts or any other legal documentation that requires legal expertise; assisting in the management of internal and external legal resources; reading and reviewing legal documents that the Client receives and making sure that they are properly drafted and any other legal services. As compensation for the services provided by Consultant, the Consultant should vest
On August 31, 2020, (the “commencement date”) the Company entered into a three-month term consulting agreement to provide consulting services on as needed basis. The consultant shall be responsible to perform business development and general consulting services on a non -exclusive basis for and on behalf of the Client in relation to business development, developing and creating operation documents, and will consult with and advise, as necessary and requested, The Client on matters pertaining to its general business operations. As compensation for the services provided by Consultant, the company shall pay the consultant $
On January 12, 2021, the Company, entered into a Consulting Agreement with Edward Somuah, (“Mr. Somuah”) an individual, to memorialize and formalize Mr. Somuah’s commitment and services to the Company. Mr. Somuah was a member of the Company’s Board of Directors, the Chief Financial Officer (“CFO”), and Secretary. The Company paid Mr. Somuah a monthly salary in the total amount $
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On June 10, 2021, the Board of Directors of the Company ratified entry into a Joint Venture & Partnership Agreement (the “JV Agreement”) with Africa Exploration & Minerals Group Limited, a company incorporated in Ghana (the “AEMG”), dated June 1, 2021, which sets forth the terms and conditions of a joint venture and partnership (the “Partnership”) between AEMG and the Company relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Additionally, AEMG granted to the Company an exclusive option to earn and acquire up to a
The specific terms and conditions relating to the operations of the Concession are set forth in that certain Operating Agreement (“Operating Agreement”), which is attached to the JV Agreement as Schedule A.
The Company has formed a wholly owned subsidiary incorporated in Ghana and duly authorized to conduct business in precious metals and in mining activities in Ghana named Guskin Gold Ghana #1 Limited. All operations relating to the Concession will be undertaken by Guskin Gold Ghana #1 Limited.
As consideration for the Partnership and the Ghana Option Interest, the Company shall advance to AEMG, or other parties as directed by AEMG, and as mutually agreed to by the Parties, a financing (“Financing”) in the aggregate of Five Hundred Thousand ($
On January 24, 2022, Guskin Gold Corp., by and through a new wholly owned subsidiary, Guskin Gold Ghana #1 Limited., a company incorporated under the Laws of the Republic of Ghana (collectively, Guskin Gold Corp. and its subsidiary Guskin Gold Ghana Ltd. shall be referred to hereinafter as the “Company”) and Danampco Company Ltd., a company incorporated under the Laws of the Republic of Ghana (the “DCL”) entered into a Joint Venture & Partnership Agreement (the “JV Agreement”) which sets forth the terms and conditions of a joint venture and partnership (the “Partnership”) between themselves relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Per the Agreement DCL granted the Company an exclusive seventy (
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On February 7, 2022, Guskin Gold Corp., enter into that certain Joint Venture & Partnership Agreement (the “Ensuro JV Agreement”) by and through Guskin Gold Ghana Ltd., a company incorporated under the Laws of the Republic of Ghana, and the Corporation’s wholly owned subsidiary, (collectively, Guskin Gold Corp. and its subsidiary Guskin Gold Ghana Ltd. shall be referred to hereinafter as the “Company”) with Ensuro Group of Companies Limited, a company incorporated under the Laws of the Republic of Ghana (the “Ensuro”). The Ensuro JV Agreement sets forth the terms and conditions of an unincorporated joint venture and partnership (the “Partnership”) between the parties relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Per the Agreement DCL shall grant the Corporation an exclusive seventy (
The specific terms and conditions relating to the operations of the Tepa Concession are set forth in that certain Operating Agreement (“Operating Agreement”), which is attached to the JV Agreement as Schedule A.
The foregoing description of the JV Agreement and Operating Agreement (as Schedule A to the JV Agreement) do not purport to be complete and are qualified in their entirety by reference to the full text of both documents which were filed as Exhibit 10.1 to our Form 8-K filed on February 8, 2022 (the Operating Agreement is Schedule A to the JV Agreement) and is incorporated herein by reference.
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
Note 11 - Common stock
On May 28, 2020, the Company issued
On September 3, 2020, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with GGC, and the controlling stockholders of GGC (the “GGC Shareholders”). Pursuant to the Share Exchange Agreement, the Company acquired One Hundred Percent (
On January 11, 2021, the Company issued
On April 16, 2021, the holder of the note in the amount of $
On April 17, 2021, the holder of the note in the amount of $
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On April 18, 2021, the holder of the note in the amount of $
On April 19, 2021, the holder of the note in the amount of $
On June 10, 2021, in accordance with the JV Agreement, AEMG is entitled to receive approximately
During the period from July 1, 2021, to December 31, 2021, the Company received funds from an unrelated third party in the amount of $110,000 in exchange for
On October 21, 2021, the Company and Bonsu entered into a Release and Settlement Agreement (“Bonsu Release and Settlement Agreement”) whereby Bonsu agreed to cause the cancellation and return of
On October 21, 2021, GKIN and U Green Enterprises, a Ghana corporation (“UGE”), and Edward Somuah, an individual (“Somuah”) entered into a Release and Settlement Agreement whereby Somuah resigned as a member of the Company’s Board of Directors and as the Company’s Chief Financial Officer and Secretary and Somuah agreed to cancel and return to the Company’s treasury
As of June 30, 2022 and September 30, 2021, a total of
Note 12 - Subsequent Events
During the period July 1 through August 15, 2022, the Company received $
On August 8, 2022, the Company entered into an agreement (the “Service Agreement”) with Terranet Limited, a corporation formed under the laws of Ghana (“Terranet”) setting forth the terms and conditions whereby Terranet will carry out an Induced Polarization (IP) and a Ground Magnetic Surveys over the Company’s leased property known as the Kukuom’s. Terranet is based in Accra, Ghana and will be conducting the survey over the Kukuom “Open Pit” prospect. The field crew will be starting the survey mid-August which covers an estimated area of 1.6 sq. kms, with appropriately 16.8-line kms of IP, employing the pole-dipole array with a dipole spacing of 25-meter using 8 dipoles. The Ground Magnetics survey will cover approx. 40-line kms. The survey is scheduled to take approximately 6 weeks to complete, followed by analysis and interpretation of the resulting data. The Company shall pay Terranet an aggregate price of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Development
This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the nine months ended June 30, 2022. The discussion and analysis that follows should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.
Overview
On September 22, 2020, Inspired Builders, Inc., a Nevada corporation (the “Company”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Guskin Gold Corporation, a Nevada limited liability company (“GGC”), and the controlling stockholders of GGC (the “GGC Shareholders”). Pursuant to the Share Exchange Agreement, the Company acquired One Hundred Percent (100%) the issued and outstanding equity interest of GGC from the GGC Shareholders (the “GGC Shares”) and in exchange the Company issued to GGC an aggregate of Twenty-Eight Million Two Hundred Thousand (28,200,000) shares of restricted common stock of the Company.
As a result of the acquisition, we acquired all of the business operations and will continue the existing business operations of GGC as a wholly-owned subsidiary of our publicly-traded company.
As the result of this acquisition and the change in business and operations of the Company, a discussion of the past financial results of the Company is not pertinent, and under applicable accounting principles the historical financial results of GGC, the accounting acquirer, prior to the acquisition are considered the historical financial results of the Company.
The Company’s fiscal year end is September 30.
In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have had a minimal impact on our day to day operations. However, this could impact our efforts to enter into a business combination as other businesses have had to adjust, reduce or suspend their operating activities. The extent of the impact will vary depending on the duration and severity of the economic and operational impacts of COVID-19. The Company is unable to predict the ultimate impact at this time.
The following discussion highlights GGC’s results of operations and the principal factors that have affected its financial condition as well as its liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s audited consolidated financial statements contained in this report, which were prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such consolidated financial statements and the related notes thereto.
Results of Operations
For the three months ended June 30, 2022 and 2021
For the three months ended June 30, 2022 and 2021, we incurred operating expenses of $306,073 and $73,350, respectively. The increase in operating expenses during the three months ended June 30, 2022 as compared to the comparable period ended June 30, 2021 is primarily attributable to the increase in of stock based compensation of $119,000 as well as professional fees such as audit and legal of $102,086 during the three months ended June 30, 2022.
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Net Loss
For the three months ended June 30, 2022, we incurred net loss of $5,315,484 as compared to a net loss of $7,743,479 during the comparable period ended June 30, 2021. This is attributable to an decrease in the value of the derivative liability of $2,683,616 during the three months ended June 30, 2022.
For the nine months ended June 30, 2022 and 2021
For the nine months ended June 30, 2022 and 2021, we incurred operating expenses of $781,288 and $2,547,159, respectively. The decrease in operating expenses during the nine months ended June 30, 2022 as compared to the comparable period ended June 30, 2021 is primarily attributable to the decrease in of stock based compensation of $2,060,500 during the nine months ended June 30, 2022.
Net Loss
For the nine months ended June 30, 2022, we incurred net loss of $1,338,221 as compared to a net loss of $10,286,903 during the comparable period ended June 30, 2021. This is attributable to an decrease in the value of the derivative liability by $7,151,973 as well as the absence of stock based compensation of $2,060,500 during the nine months ended June 30, 2022 compared to the comparable period ended June 30, 2021.
Liquidity and Capital Resources
As of June 30, 2022, we have $18,164 in current assets and $13,109,789, in current liabilities. We had $9,274 in cash and our working capital deficit was $13,091,625.
Cash Flows:
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| For the Nine Months Ended June 30, 2022 |
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| For the Nine Months Ended June 30, 2021 |
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| (Unaudited) |
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Cash Flows Used in Operating Activities |
| $ | (448,032 | ) |
| $ | (131,458 | ) |
Cash Flows Used in Investing Activities |
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| (98,500 | ) |
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| - |
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Cash Flows Provided by Financing Activities |
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| 549,763 |
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| 118,967 |
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Net change in cash |
| $ | 3,231 |
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| $ | (12,491 | ) |
The Company has not had revenues since its inception and to date, has relied on the support of its Chief Executive Officer and majority shareholder. A withdrawal of this support, for any reason, will have a material adverse effect on the Company’s financial position and its operations. If the Company does not begin to generate revenue or raise additional funds through a financing, the Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence. There are currently no plans or agreements in place to provide such funding. The Company will require additional funding to finance the growth of its future operations as well as to achieve its strategic objectives. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and generate revenue. Our unaudited condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Our independent registered public accounting firm has included its audit report to the audited financial statements for the year ended September 30, 2021 stating substantial doubt about our ability to continue as a going concern.
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The COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The Company is unable to predict the ultimate impact at this time.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
On June 1, 2020, (the “commencement date”) the Company entered into a consulting agreement with Dr. Kweku Ainuson to provide consulting services on as needed basis. The consultant shall be responsible for advising the Chief Executive Officer, President, Chief Geologist, and Chairman of the Board of Directors on all legal matters of the Company. In addition, the consultant is to provide legal advice on areas including but not limited to business contracts or any other legal documentation that requires legal expertise; assisting in the management of internal and external legal resources; reading and reviewing legal documents that the Client receives and making sure that they are properly drafted and any other legal services. As compensation for the services provided by Consultant, the Consultant should vest 50,000 shares common shares valued at $0.001 every quarter for total compensation value of 200,000 shares. In addition, every 90 days, from the commencement date, the company shall pay the consultant $5,000 plus additional fees per quarter. During the fiscal year ended September 30, 2021, a total of $15,000 in cash has been paid to Mr. Anuison. As of June 30, 2022, a total of $5,000 in cash compensation and 200,000 shares valued at $253,500 in stock-based compensation is owed to Mr. Anuison.
On August 31, 2020, (the “commencement date”) the Company entered into a three-month term consulting agreement to provide consulting services on as needed basis. The consultant shall be responsible to perform business development and general consulting services on a non -exclusive basis for and on behalf of the Client in relation to business development, developing and creating operation documents, and will consult with and advise, as necessary and requested, The Client on matters pertaining to its general business operations. As compensation for the services provided by Consultant, the company shall pay the consultant $7,500 in month one, $2,500 in month two and $2,500 in month three. On December 15, 2020, the Company amended the consulting contract for an additional six months from the amendment date. As compensation for the services provided, the Company shall pay the consultant $2,500 per month.
On January 12, 2021, the Company, entered into a Consulting Agreement with Edward Somuah, (“Mr. Somuah”) an individual, to memorialize and formalize Mr. Somuah’s commitment and services to the Company. Mr. Somuah was a member of the Company’s Board of Directors, the Chief Financial Officer (“CFO”), and Secretary. The Company paid Mr. Somuah a monthly salary in the total amount $4,500 per month. Additionally, on January 11, 2021, the Company issued 13,000,000 shares of restricted common stock for services valued at $2,340,000 to Edward Somuah as compensation for services rendered. On July 13, 2021, Edward Somuah, the Company’s current Chief Financial Officer (“CFO”), resigned from his position as CFO and Treasurer. Upon his resignation, Mr. Somuah will no longer receive a monthly salary of $4,500 per month.
On June 10, 2021, the Board of Directors of the Company ratified entry into a Joint Venture & Partnership Agreement (the “JV Agreement”) with Africa Exploration & Minerals Group Limited, a company incorporated in Ghana (the “AEMG”), dated June 1, 2021, which sets forth the terms and conditions of a joint venture and partnership (the “Partnership”) between AEMG and the Company relating to precious metal, minerals and mining exploration activities in the Country of Ghana. Additionally, AEMG granted to the Company an exclusive option to earn and acquire up to a 50% ownership interest in certain project, properties and concession located in the Country of Ghana in which AEMG has an interest (the “Ghana Option Interest”). The initial project that the Parties shall endeavor to undertake pursuant to the Partnership is approximately 1 square km or 247 acres of land, (which is approximately 61.75 Ghana acers) of the Shewn Edged Pink Concession (the “Concession”). The Parties intend this to be an unincorporated contractual joint venture in respect of the exploration, development, exploitation and operation of the Concession. Each additional project relating to the Ghana Option Interest, and agreed to be made part of, and undertaken by the Partnership, shall be governed by individual “Operating Agreements” setting forth the terms and conditions relating to each project specifically.
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The Company has formed a wholly owned subsidiary incorporated in Ghana and duly authorized to conduct business in precious metals and in mining activities in Ghana named Guskin Gold Ghana #1 Limited. All operations relating to the Concession will be undertaken by Guskin Gold Ghana #1 Limited.
As consideration for the Partnership and the Ghana Option Interest, the Company shall advance to AEMG, or other parties as directed by AEMG, and as mutually agreed to by the Parties, a financing (“Financing”) in the aggregate of Five Hundred Thousand ($500,000) dollars, to be remitted in accordance with a work program and budget. Such funds advanced as part of the Financing shall not be considered a capital contribution relating to the operations of the Partnership but shall be a debt due from the operations of the Partnership to the Company which shall be repaid from proceeds derived from operations, or upon the dissolution and liquidation of the operation. Additionally, the Company shall issue an aggregate 2,000,000 restricted common shares the Company’s common stock, at a per share valuation to be determined based on separate performance obligations (the “Shares”). Such Shares shall be earned and issued based on reaching and completion of certain milestones, which are fully set forth in the JV Agreement and Operating Agreement. In accordance with the JV Agreement, AEMG received approximately 250,000 shares of restricted common stock valued at $0.0217 per share for a total fair value of $5,426 were issued to AEMG.
In the beginning of November 2021, Company management, while visiting our operations in Ghana, noticed various accounting discrepancies and expenses irregularities relating to AEMG’s activities at the Concession. Additionally, during this time the Company was informed that, on information and belief, AEMG was not the rightful owner of the Concession and in fact had no legal right to enter the Partnership with the Company. Thereafter, the Company met with AEMG on several occasions seeking to resolve these matters in a manner that would be mutually agreeable to both parties. All attempts, as of the date of this report, to resolve the dispute amicably have been unsuccessful. The Company has retained Ghanaian counsel to represent and protect its interests relating to the disputed funds and our ongoing operation in Ghana. Also, on advice of counsel, the Company has turned all evidence of the foregoing over to the proper authorities and currently the matter is under review by the lead prosecutors in Accra, Ghana.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our condensed consolidated financial statements for the nine months ended June 30, 2022, and are included elsewhere in this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and the Company’s Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of June 30, 2022. Based upon that evaluation, the Company’s CEO concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2022 due to the Company’s limited internal resources and lack of ability to have segregation of duties and multiple levels of transaction review.
Identified Material Weakness
A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
Management identified the following material weakness during its assessment of internal controls over financial reporting: (i) due to the size of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in a lack of segregation of duties and, (ii) the Company does not have an audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.
Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in the reports that we file or submit under the Exchange Act have been recorded, processed, summarized and reported accurately. Our management intends to develop procedures to address the current deficiencies to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the nine months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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Item 6. Exhibits
The following exhibits are included with this report.
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| Certificate of Amendment to Articles of Incorporation, dated December 18, 2017.(1) | |
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| Certificate of Amendment to Articles of Incorporation, dated November 30, 2020(1) | |
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| Stock Purchase Agreement dated April 30, 2020 between U Green and Custodian Ventures(1) | |
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10.6 |
| Service Agreement by and between Guskin Gold Corp. and Terranet Limited(1) |
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| Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)(2) | |
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| Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)(2) | |
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101.INS* |
| Inline XBRL Instance Document |
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101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document |
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101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104* |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
(1) | Previously Filed |
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(2) | Filed Herewith |
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* | Filed Herewith. |
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SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Guskin Gold Corp. |
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Date: August 15, 2022 | By: | /s/ Naana Asante |
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| Name: | Naana Asante |
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| Title: | Chief (Principal) Executive Officer |
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Date: August 15, 2022 | By: | /s/ Mario Beckles |
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| Name: | Mario Beckles |
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| Title: | Chief Financial Officer (Principal Accounting Officer) |
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