AMERICAN BATTERY TECHNOLOGY Co - Quarter Report: 2018 December (Form 10-Q)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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. Yes [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically on its corporate Web site, if any, 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). Yes [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company" and “emerging growth company” Rule 12b-2 of the Exchange Act.

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. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [   ] No [X]

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PART I – FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited consolidated balance sheets of Oroplata Resources, Inc. at December 31, 2018 (with comparative figures as at September 30, 2018) and the consolidated statements of operations for the three months ended December 31, 2018 and 2017 and the statements of cash flows for the three months ended December 31, 2018 and 2017 have been prepared by the Company's management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the three months ended December 31, 2018 are not necessarily indicative of the results that can be expected for the year ended September 30, 2019.

OROPLATA RESOURCES, INC.

Condensed Consolidated Financial Statements

For the Period Ended December 31, 2018(unaudited) and September 30, 2018

3

OROPLATA RESOURCES, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

4

OROPLATA RESOURCES, INC.

Condensed Consolidated Statements of Operations

(unaudited)

5

OROPLATA RESOURCES, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

6

OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

1.Organization and Nature of Operations 

The accompanying unaudited consolidated financial statements of Oroplata Resources, Inc. and its subsidiary (“Oroplata” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended September 30, 2018, included in our Annual Report on Form 10-K for the year ended September 30, 2018. 

The Company was incorporated under the laws of the state of Nevada on October 6, 2011 for the purpose of acquiring and developing mineral properties. The Company has a wholly-owned subsidiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated in the Dominican Republic on January 10, 2012.  On July 26, 2016, the Company incorporated Lithortech Resources Inc., a Nevada company, as a wholly-owned subsidiary.  On June 29, 2018, Lithortech Resources Inc. changed its name to LithiumOre Corp.  The Company currently holds mineral rights in the Dominican Republic and in the Western Nevada Basin of Nye County in the state of Nevada.  

Going Concern

These unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2018, the Company has not earned revenue, has a working capital deficit of $3,640,486, and an accumulated deficit of $39,835,140. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. If the Company is able to obtain financing, there is no certainty that terms will be favorable to the Company. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.Summary of Significant Accounting Policies 

(a)Basis of Presentation 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is September 30.

(b)Principles of Consolidation 

These condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL and Lithortech Resources Inc. All inter-company accounts and transactions have been eliminated on consolidation.

7

OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

3.Convertible Notes Payable 

(a)On February 16, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $250,000. On February 16, 2017, the Company received proceeds of $32,428, net of issuance fees of $2,948. On February 24, 2017, the Company received proceeds of $77,000, net of issuance fees of $7,000. On April 17, 2017, the Company received proceeds of $13,750, net of issuance fees of $1,250. On April 26, 2017, the Company received proceeds of $88,000, net of issuance fees of $8,000. On June 13, 2017, the Company received proceeds of $38,822 net of issuance fees of $3,882. The aggregate principal amount owed of $250,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.10 per share. In September 2017, the conversion price was amended to $0.115 per share. On December 11, 2017, the due date for all tranches was extended to December 11, 2018. On May 23, 2018, the Company issued 817,391 common shares for the conversion of $94,000 of note payable and $nil of interest payable. On November 6, 2018, the Company issued 443,478 common shares for the conversion of $38,822 of note payable.  As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $38,822), and accrued interest of $29,999 (September 30, 2018 - $29,999) has been recorded in accounts payable and accrued liabilities.   

(b)On July 25, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $550,000. On July 25, 2017 the Company received proceeds of $44,000, net of issuance fees of $4,000. On August 17, 2017, the Company received proceeds of $110,000, net of issuance fees of $10,000. The aggregate principal amount owed of $154,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.115 per share. On October 23, 2017, the Company received proceeds of $82,500, net of issuance costs of $7,500. On December 1, 2017, the Company received proceeds of $55,000, net of issuance costs of $5,000. On December 11, 2017, the due date was extended to December 11, 2018. On December 15, 2017, the Company received proceeds of $55,000, net of issuance costs of $5,000. On February 9, 2018, the Company received proceeds of $56,100, net of issuance costs of $5,100. On November 20, 2018, the Company issued 420,870 common shares for the conversion of $44,000 of note payable and $4,400 of accrued interest.  On December 13, 2018, the Company issued 448,696 common shares for the conversion of $51,600 of note payable.  On December 21, 2018, the Company issued 420,870 common shares for the conversion of $48,400 of notes payable.  As at December 31, 2018, the carrying value of the note payable is $258,600 (September 30, 2018 - $397,825), the unamortized discount on the note is $nil (September 30, 2018 - $4,775), and accrued interest of $24,954 (September 30, 2018 - $28,060) has been recorded in accounts payable and accrued liabilities.   

(c)On April 3, 2018, the Company entered into a loan agreement with a non-related party for $85,800, net of an original issue discount of $7,800.  The amount owing is unsecured, bears interest at 12% per annum, is due on January 15, 2019, and is convertible into common shares at $0.15 per share until October 3, 2018 (180 days following the issuance date of the loan) when the conversion price is equal to 75% of the lowest closing bid price during the fifteen trading days prior to conversion. Upon the due date on January 15, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. During the three months ended December 31, 2018, the Company issued 1,105,708 common shares for the conversion of $85,800 of note payable and $4,680 of accrued interest.  As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $82,892), the unamortized discount on the note is $nil (September 30, 2018 - $2,908), and accrued interest of $nil (September 30, 2017 - $5,106) has been recorded in accounts payable and accrued liabilities.   

(d)On April 9, 2018, the Company entered into a loan agreement with a non-related party for $150,000, net of an original issue discount of $2,500, of which $75,000 is a front-end note and $75,000 is a back-end note. The amounts owing are unsecured, bear interest at 10% per annum, are due on April 8, 2019, and are convertible into common shares at 66% of the lowest trading price for the twenty trading days prior to conversion. During the period ended December 31, 2018, the Company issued 2,044,753 common shares for the conversion of $150,000 of notes payable and $6,562 of accrued interest.  As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $13,524), the unamortized discount on the note is $nil (September 30, 2018 - $136,476), accrued interest of $nil (September 30, 2018 - $7,125) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $nil (September 30, 2018 - $170,764).   

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OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

3.Convertible Notes Payable (continued) 

(e)On April 20, 2018, the Company entered into a loan agreement with a non-related party for $58,800, net of an original issue discount of $5,800. The amount owing is unsecured, bears interest at 12% per annum, is due on January 30, 2019, and is convertible into common shares at $0.15 per share until October 20, 2018 (180 days following the issuance date of the loan) when the conversion price is equal to 75% of the lowest trading price during the fifteen trading days prior to conversion.  Upon the due date on January 30, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. On October 25, 2018, the Company issued 869,285 common shares for the conversion of $58,800 of note payable and $3,180 of accrued interest. As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $56,317), the unamortized discount on the note is $nil (September 30, 2018 - $2,483), and accrued interest of $nil (September 30, 2018 - $3,170) has been recorded in accounts payable and accrued liabilities.  

(f)On May 25, 2018, the Company entered into a loan agreement with a non-related party for $150,000, net of an original issue discount of $2,500, of which $75,000 is a front-end note and $75,000 is a back-end note.  The amounts owing are unsecured, bears interest at 10% per annum, and are due on May 25, 2019, and are convertible into common shares at 66% of the lowest trading price for the twenty trading days prior to conversion.  As at December 31, 2018, the carrying value of the note payable is $137,000 (September 30, 2018 - $129,177), the unamortized discount on the note is $13,000 (September 30, 2018 - $20,823), accrued interest of $9,082 (September 30, 2018 - $5,301) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $299,748 (September 30, 2018 - $168,191).   

(g)On June 11, 2018, the Company entered into a loan agreement with a non-related party for $60,500 net of an original issue discount of $5,500. The amount owing is unsecured, bears interest at 12% per annum, is due on March 30, 2019, and is convertible into common shares at $0.15 per share until November 11, 2018 (180 days following the issuance date of the loan) when the conversion price is equal to 75% of the lowest trading price during the fifteen trading days prior to conversion.  Upon the due date on March 30, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. On December 7, 2018, the Company repaid $60,500 of note payable and $3,600 of accrued interest.  As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $54,591), the unamortized discount on the note is $nil (September 30, 2018 - $5,909), and accrued interest of $nil (September 30, 2018 - $2,228) has been recorded in accounts payable and accrued liabilities.   

(h)On June 18, 2018, the Company entered into a loan agreement with a non-related party for proceeds up to $165,000. On June 26, 2018, the Company received proceeds of $55,000, net of an original issue discount of $5,500. The amount owing is unsecured, bears interest at 10% per annum, is due on June 18, 2019, and is convertible into common shares at 65% of the lowest trading price for the twenty trading days prior to conversion. Upon the due date on June 18, 2019, if the loan remains unpaid, the interest will increase to 15% per annum.  On December 12, 2018, the Company repaid $55,000 of note payable and $2,658 of accrued interest.  As at December 31, 2018, the carrying value of the note payable is $nil (September 30, 2018 - $1,900), the unamortized discount on the note is $nil (September 30, 2018 - $53,100), accrued interest of $nil (September 30, 2018 - $1,567) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $nil (September 30, 2018 - $92,012). 

(i)On June 29, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $82,500, net of an original issue discount of $7,500. On July 17, 2018, the Company received the proceeds of the loan. The amount owing is unsecured, bears interest at 12% per annum, is due on March 29, 2019, and is convertible into common shares at the lesser of (i) $0.15 per common share, (ii) 75% of the lowest trading price for the fifteen trading days prior to the date of the note, or (iii) 75% of the lowest trading price for the fifteen trading days prior to conversion. Upon the due date on March 29, 2019, if the loan remains unpaid, the interest will increase to 24% per annum. As at December 31, 2018, the carrying value of the note payable is $38,088 (September 30, 2018 - $16,550), the unamortized discount on the note is $44,412 (2017 - $65,950), accrued interest of $3,402 (September 30, 2018 - $2,495) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $106,150 (September 30 2018 - $87,288).  

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OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

3.Convertible Notes Payable (continued) 

(j)On June 29, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $27,500. On July 17, 2018, the Company received proceeds of $25,000, net of an original issue discount of $2,500. The amount owing is unsecured, bears interest at 12% per annum, is due on March 29, 2019, and is convertible into common shares at the lesser of (i) $0.15 per common share, (ii) 75% of the lowest trading price for the fifteen trading days prior to the date of the note, or (iii) 75% of the lowest trading price for the fifteen trading days prior to conversion. Upon the due date on March 29, 2019, if the loan remains unpaid, the interest will increase to 24% per annum. As at December 31, 2018, the carrying value of the note payable is $4,741 (September 30, 2018 - $669), the unamortized discount on the note is $22,759 (2017 - $26,831), accrued interest of $1,503 (September 30, 2018 - $835) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $35,395 (September 30, 2018 - $29,335).  

(k)On June 29, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $27,500. On August 31, 2018, the Company received proceeds of $25,000, net of an original issue discount of $2,500. The amount owing is unsecured, bears interest at 10% per annum, is due on June 18, 2019, and is convertible into common shares at 65% of the lowest trading price for the twenty trading days prior to conversion. Upon the due date on June 18, 2019, if the loan remains unpaid, the interest will increase to 15% per annum. As at December 31, 2018, the carrying value of the note payable is $1,874 (September 30, 2018 - $306), the unamortized discount on the note is 25,626 (September 30, 2018 - $27,194), accrued interest of $1,001 (September 30, 2018 - $306) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $57,005 (September 30, 2018 - $51,080).  

(l)On July 10, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $58,800. On July 12, 2018, the Company received proceeds of $50,000, net of an original issue discount of $5,800. The amount owing is unsecured, bears interest at 12% per annum, is due on April 30, 2019, and is convertible into common shares at $0.15 per common share until January 10, 2019 when the conversion price is equal to 75% of the lowest trading price for the fifteen trading days prior to conversion. Upon the due date on April 30, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. As at December 31, 2018, the carrying value of the note payable is $56,433 (September 30, 2018 - $54,618), the unamortized discount on the note is $2,367 (September 30, 2018 - $4,182), accrued interest of $3,402 (September 30, 2018 - $1,604) has been recorded in accounts payable and accrued liabilities.  

(m)On September 10, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $53,000. On July 12, 2018, the Company received proceeds of $47,200, net of an original issue discount of $5,800. The amount owing is unsecured, bears interest at 12% per annum, is due on June 30, 2019, and is convertible into common shares at the lesser of (i) $0.15 per common share, (ii) 61% of the lowest trading price for the fifteen trading days prior to the date of the note, or (iii) 61% of the lowest trading price for the fifteen trading days prior to conversion. Upon the due date on June 30, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. As at December 31, 2018, the carrying value of the note payable is $2,997 (September 30, 2018 - $353), the unamortized discount on the note is $50,003 (September 30, 2018 - $52,647), accrued interest of $1,961 (September 30, 2018 - $353) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $90,967 (September 30, 2018 - $52,223).   

(n)On September 27, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $130,000. The amount owing is unsecured, bears interest at 12% per annum, is due on September 27, 2019, and is convertible into common shares at the lesser of (i) $0.15 per common share, (ii) 60% of the lowest trading price for the fifteen trading days prior to the date of the note, or (iii) 60% of the lowest trading price for the fifteen trading days prior to conversion. Upon the due date on September 27, 2019, if the loan remains unpaid, the interest will increase to 22% per annum. As at December 31, 2018, the carrying value of the note payable is $3,607 (September 30, 2018 - $108), the unamortized discount on the note is $126,393 (September 30, 2018 - $129,892), accrued interest of $3,394 (September 30, 2018 - $108) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $245,841 (September 30, 2018 - $150,080).  

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OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

3.Convertible Notes Payable (continued) 

(o)On October 16, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $43,000. The amount owing is unsecured, bears interest at 12% per annum, is due on July 30, 2019, and is convertible into common shares at 61% of the lowest trading price of the Company’s common stock in the ten trading days prior to the date of the notice of conversion. As at December 31, 2018, the carrying value of the note payable is $1,971 (September 30, 2018 - $nil), the unamortized discount on the note is $41,029 (September 30, 2018 - $nil), accrued interest of $1,971 (September 30, 2018 - $nil) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $76,595 (September 30, 2018 - $nil).  

(p)On October 22, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $27,500. The amount owing is unsecured, bears interest at 10% per annum, is due on June 18, 2019, and is convertible into common shares at 61% of the lower of the lowest trading price or closing price of the Company’s common stock in the twenty trading days prior to the date of the notice of conversion.  If the conversion price is lower than $0.10 per share, an additional discount of 15% is added to the conversion price.  As at December 31, 2018, the carrying value of the note payable is $527 (September 30, 2018 - $nil), the unamortized discount on the note is $26,973 (September 30, 2018 - $nil), accrued interest of $527 (September 30, 2018 - $nil) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $54,344 (September 30, 2018 - $nil).  

(q)On December 6, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $55,000. The amount owing is unsecured, bears interest at 12% per annum, is due on September 30, 2019, and is convertible into common shares at 68% of the lowest trading price for the Company’s common stock in the twenty trading days prior to the date of the notice of conversion.  As at December 31, 2018, the carrying value of the note payable is $458 (September 30, 2018 - $nil), the unamortized discount on the note is $54,113 (September 30, 2018 - $nil), accrued interest of $1,840 (September 30, 2018 - $nil) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $100,255 (September 30, 2018 - $nil).  

(r)On December 6, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $265,000. The amount owing is unsecured, bears interest at 10% per annum, is due on December 6, 2019, and is convertible into common shares at 68% of the lowest trading price for the Company’s common stock in the twenty trading days prior to the date of the notice of conversion.  As at December 31, 2018, the carrying value of the note payable is $1,840 (September 30, 2018 - $nil), the unamortized discount on the note is $263,160 (September 30, 2018 - $nil), accrued interest of $1,546 (September 30, 2018 - $nil) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $535,368 (September 30, 2018 - $nil).  

(s)On December 10, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $265,000. The amount owing is unsecured, bears interest at 10% per annum, is due on December 10, 2019, and is convertible into common shares at 68% of the lowest trading price for the Company’s common stock in the twenty trading days prior to the date of the notice of conversion.  As at December 31, 2018, the carrying value of the note payable is $1,546 (September 30, 2018 - $nil), the unamortized discount on the note is $263,454 (September 30, 2018 - $nil), accrued interest of $458 (September 30, 2018 - $nil) has been recorded in accounts payable and accrued liabilities, and had a derivative liability of $535,302 (September 30, 2018 - $nil).  

11

OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

4.Related Party Transactions 

(a)As of December 31, 2018, the Company owes $120,146 (September 30, 2018 - $120,146) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations.  The amounts owing are unsecured, non-interest bearing, and due on demand.   

(b)As of December 31, 2018, the Company owes $85,500 (September 30, 2018 - $85,500) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees.  The amounts owing are unsecured, non-interest bearing, and due on demand.   

(c)As of December 31, 2018, the Company owes $368,350 (September 30, 2018 - $280,639) to the Chief Executive Officer of the Company for accrued management fees.  The amounts owing are unsecured, non-interest bearing, and due on demand.   

(d)As of December 31, 2018, the Company owes $59,091 (September 30, 2018 – $96,592) to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.   

5.Investment in Joint Venture 

On October 8, 2018, the Company entered into a joint venture agreement with CINC Industries Inc. (“CINC”), a Nevada company, for a period of five years whereby the joint venture will propagate the sale of a new process for extraction of lithium salt from salt brine solutions using CINC’s existing and future processing equipment.  As part of the joint venture, each of CINC and the Company holds a 50% interest in the joint venture.  CINC is responsible for completing testing on the pilot project, providing training to the Company for use of its processing equipment, manufacturing up to 20 test units, and support and product development, as well as shared costs on other personnel utilized in the joint venture company.  The Company is responsible for the initial funding for all equipment and associated expenses, the cost of the lease space, and marketing and sales of the joint venture agreement.  The joint venture is committed to acquiring a minimum amount of processing equipment, goods, accessories, and/or materials totaling: (i) $1,000,000 by October 8, 2020; (ii) $3,000,000 by October 8, 2021; (iii) $6,000,000 by October 8, 2022; and (v) $10,000,000 by October 8, 2023.  In the event that the joint venture fails to meet the minimum amounts above, the Company will lose the exclusive right to market, promote and sell the processing equipment provided by CINC.

As part of the joint venture agreement, the Company issued 250,000 common shares to CINC.  Refer to Note 7(b).

6.Derivative Liabilities 

The Company records the fair value of the conversion price of the convertible debentures as disclosed in Note 4 in accordance with ASC 815, Derivatives and Hedging.  The fair value of the derivatives was calculated using a multi-nominal lattice model.  The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations.  For the three months ended December 31, 2018, the Company recorded a loss on the change in the fair value of derivative liability of $708,155 (2017 - $nil).  As at December 31, 2018, the Company recorded a derivative liability of $2,136,970 (September 30, 2018 - $800,973).

The following inputs and assumptions were used to value the derivative liabilities outstanding during the periods ended December 31, 2018 and September 30, 2018:

12

OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

6.Derivative Liabilities (continued) 

A summary of the activity of the derivative liability is shown below:

7.Common Shares 

The Company’s authorized common stock consists of 500,000,000 shares of common stock, with par value of $0.001. 

(a)On October 8, 2018, the Company issued 2,500,000 common shares with a fair value of $356,250 for services, including 1,000,000 common shares to the Chief Executive Officer of the Company and 1,000,000 shares to a director of the Company. 

(b)On October 10, 2018, the Company issued 250,000 common shares with a fair value of $35,250 as part of the joint venture agreement with CINC. 

(c)On October 11, 2018, the Company issued 193,986 common shares with a fair value of $22,308 for the conversion of $20,000 of notes payable resulting in a loss on settlement of debt of $2,308. 

(d)On October 12, 2018, the Company issued 240,096 common shares with a fair value of $27,611 for the conversion of $20,000 of notes payable resulting in a loss on settlement of debt of $7,611. 

(e)On October 15, 2018, the Company issued 216,086 common shares with a fair value of $21,047 for the conversion of $18,000 of notes payable resulting in a loss on settlement of debt of $3,047. 

(f)On October 16, 2018, the Company issued 280,505 common shares with a fair value of $40,673 for the conversion of 20,000 of notes payable resulting in a loss on settlement of debt of $20,673. 

(g)On October 17, 2018, the Company issued 175,035 common shares with a fair value of $25,800 for the conversion of $7,800 of notes payable and $4,680 of accrued interest resulting in a loss on settlement of debt of $13,320. 

(h)On October 19, 2018, the Company issued 550,000 common shares with a fair value of $90,750 for consulting services. 

(i)On October 23, 2018, the Company issued 150,000 common shares with a fair value of $42,000 for consulting services. 

(j)On October 25, 2018, the Company issued 869,285 common shares with a fair value of $139,086 for the conversion of $58,800 of notes payable and $3,180 of accrued interest resulting in a loss on settlement of debt of $77,106. 

(k)On October 26, 2018, the Company issued 414,785 common shares with a fair value of $66,366 for the conversion of $25,000 of notes payable and $1,281 of accrued interest resulting in a loss on settlement of debt of $40,085. 

(l)On November 7, 2018, the Company issued 443,478 common shares with a fair value of $51,000 as part of a conversion of notes payable at $0.115 per share. 

13

OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

7.Common Shares (continued) 

(m)On November 13, 2018, the Company issued 833,895 common shares with a fair value of $179,287 for the conversion of $50,000 of notes payable and accrued interest of $2,836 resulting in a loss on settlement of debt of $126,451. 

(n)On November 19, 2018, the Company issued 796,073 common shares with a fair value of $151,254 for the conversion of $75,000 of notes payable and accrued interest of $2,445 resulting in a loss on settlement of debt of $73,809.   

(o)On November 21, 2018, the Company issued 420,870 common shares with a fair value of $48,400 for the conversion of notes payable at $0.115 per share. 

(p)On December 18, 2018, the Company issued 448,696 common shares with a fair value of $51,600 for the conversion of notes payable at $0.115 per share. 

(q)On December 26, 2018, the Company issued 420,870 common shares with a fair value of $48,400 for the conversion of notes payable at $0.115 per share. 

8.Share Purchase Warrants 

Additional information regarding share purchase warrants as of December 31, 2018, is as follows:

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OROPLATA RESOURCES, INC.

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2018

(unaudited)

9.Subsequent Events 

(a)On January 3, 2019, the Company issued a convertible note payable for $54,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 10% per annum, and is due on January 3, 2020.  The note is also convertible into common shares of the Company at 66% of the lowest trading price of the Company’s common share for the twenty trading days prior to the date of conversion.  

(b)On January 4, 2019, the Company issued a convertible note payable for $55,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 12% per annum which increases to 22% per annum if the note is in default, and is due on October 30, 2019.  The note is convertible into common shares of the Company at 61% of the lowest trading price of the Company’s common share for the ten trading days prior to the date of conversion. 

(c)On January 8, 2019, the Company issued 708,006 common shares upon the conversion of $75,000 of convertible notes payable and $4,438 of accrued interest. 

(d)On January 9, 2019, the Company issued a convertible note payable for $220,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 10% per annum, and is due on January 9, 2020.  The note is also convertible into common shares of the Company at 66% of the lowest trading price of the Company’s common share for the twenty trading days prior to the date of conversion. 

(e)On January 9, 2019, the Company issued a convertible note payable for $220,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 10% per annum, and is due on January 9, 2020.  The note is also convertible into common shares of the Company at 66% of the lowest trading price of the Company’s common share for the twenty trading days prior to the date of conversion. 

(f)On January 11, 2019, the Company issued 12,700,000 common shares for services, including 2,000,000 common shares the Chief Executive Officer of the Company, and 4,000,000 common shares to directors of the Company.   

(g)On January 11, 2019, the Company issued 180,181 common shares upon the conversion of $15,000 of convertible notes payable. 

(h)On January 14, 2019, the Company issued 180,180 common shares upon the conversion of $15,000 of convertible notes payable.   

(i)On January 25, 2019, the Company issued a convertible note payable for $110,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 10% per annum which increases to 24% per annum if the note is in default, and is due on October 25, 2019.  The note is also convertible into common shares of the Company at 68% of the lowest trading price of the Company’s common share for the twenty trading days prior to the date of conversion. 

(j)On January 25, 2019, the Company issued a convertible note payable for $82,000.  Under the terms of the note, the amount owing is unsecured, bears interest at 10% per annum which increases to 24% per annum if the note is in default, and is due on October 25, 2019.  The note is also convertible into common shares of the Company at 68% of the lowest trading price of the Company’s common share for the twenty trading days prior to the date of conversion. 

(k)On January 25, 2019, the Company acquired 113 acres of land in the county of Nye, Nevada for 100,000 common shares of the Company and $220,000, of which $170,000 is a loan from the seller which is secured against the property, bears interest at 6% per annum and is due by monthly payments of $3,992 commencing February 2019 to January 2023.     

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Forward-Looking Statements

You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in the Form 10-Q. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q.

Background

We are a start-up, lithium exploration mining company whose purpose is to explore mineral properties which, hopefully, will contain lithium and other economic minerals. We were incorporated under the laws of the State of Nevada on October 6, 2011 for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company, if and when it ever occurs. We have limited operating history and have not yet generated or realized any revenues from our activities. Our principal executive offices are located at 930 Tahoe Blvd., Suite 802-16, Incline Village, NV 89451.

Currently, the Board of Directors (consisting of Mr. Douglas Cole, Mr. Douglas MacLellan and Mr. William Hunter) are significantly involved in guiding the Company though a significant management reorganization, and to reorient the company’s goals and objective to solely focus on the exploration and development of Lithium deposits in the State of Nevada and related projects, primarily through new capital commitments which the Mr. Cole is actively seeking.

On August 8, 2016, the Company formed Lithortech Resources Inc. as a wholly owned subsidiary of the Company to serve as its operating subsidiary for lithium resource exploration and development. On June 29, 2018, the Company changed the name of Lithortech Resources to Lithiumore Corp. (“Lithiumore”).  Lithiumore currently has mining claims on 5200 acres in the area known as the Western Nevada Basin, situated in Railroad Valley in Nye County, Nevada (the “WNB Claim”). In the second half of 2017, we engaged experts to evaluate the region and the WNB Claim to target on-site exploration efforts and determined that 260 claims of the WNB Claim were appropriate for the Company’s planned exploration, which we expect to begin in the second or third quarter of 2018. With many features similar to Clayton Valley and with no exploration work targeting lithium to date, Railroad Valley represents a new and untested target for lithium brine. The Railroad Valley brine exploration can build on both the dense existing oil field data and the experiences at Clayton Valley and other Li-brine basins to target potential brine aquifers. Please see the Company’s new website at: www.lithiumore.net.

The growth in demand for lithium batteries is predicted to far outpace lithium production in the coming decade. Lithium-ion batteries for the automotive industry are expected to advance demand to nearly unserviceable levels. These industry trends enhance the Company’s new business model.

The Company is currently a pre-revenue organization and we do not anticipate earning revenues until such time as we have undertaken sufficient exploration work to identify Lithium and or other battery metals reserves. Exploration work will take several years and there is no certainty we will ever reach a production stage. Our Company is considered to be in the exploration stage due to not having done exploration work which would result in a development decision. On January 25, 2019, we completed the purchase of 113 acres in Railroad Valley, NV to be used for possible future exploration. Other than mineral rights in the Nye County properties located in Nevada, United States, the only real property owned by the Company is the Railroad Valley property recently acquired.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we intend to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

allowance to provide only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; 

reduced disclosure about our executive compensation arrangements; 

no non-binding advisory votes on executive compensation or golden parachute arrangements; and 

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exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. 

We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering (our “IPO”); (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you have beneficial ownership. In addition, we have elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Exchange Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Employees

Other than our Board of Directors that are engaged by the Company as a consultant and our one officer, Mr. Cole, we do not have any employees. Our officer is involved full time in the operation of the Company’s business.

Investigation of Prior Agreements.

At the request of the Board of Directors, the Company is reviewing all prior agreements and stock issuances of the Company entered into by the previous management of the Company to ensure their validity.      

Oroplata has not realized any revenue from its exploration activities on the Mogollon concession or the Nye County properties and it is extremely doubtful that the mineral property will be able to produce any revenue for many years. Without an ore reserve Oroplata cannot seek substantial investors to further fund the Company so that production can be achieved. Not until commercial production is realized will Oroplata have any chance of recognizing any form of revenue.

Results of Operations

Revenues

During the three months ended December 31, 2018 and 2017, the Company has not realized any revenues.

Expenses

Three Months Ended December 31, 2018

During the three months ended December 31, 2018, the Company incurred $1,162,216 of operating expenses compared to $2,493,828 of operating expenses during the three months ended December 31, 2017. The decrease in operating expenses is due to a decrease in stock-based compensation as the Company issued 3,300,000 shares with a fair value of $504,750 for compensation compared to 19,000,000 shares with a fair value of $1,900,000 during the three months ended December 31, 2017.  The decrease is offset by a general increase in operating expenses due to an increase in operating activity as the Company has initiated more work to marketing and promotion as well as day-to-day costs with respect to its lithium properties and the proposed joint venture agreement with CINC Industries that was signed during the current period.  

In addition to operating expenses, the Company incurred interest and accretion expense of $277,690, loss on settlement of debt of $421,745 relating to conversion of convertible notes during the period, and a loss of $708,155 relating to the change in fair value of the derivative liability during the period.  During the three months ended December 31, 2017, the Company incurred interest and accretion expense of $24,149.

Net Loss

During the three months ended December 31, 2018, the Company incurred a net loss of $2,569,806 or $0.03 loss per share compared to a net loss of $2,517,977 or $0.04 loss per share during the three months ended December 31, 2017.

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Liquidity and Capital Resources

At December 31, 2018, the Company had cash of $52,717 and total assets of $168,967 compared to cash of $122,769 and total assets of $308,769 as at September 30, 2018. The decrease in cash was due to the use of proceeds received from issuance of convertible notes to finance operating activity including the repayment of $180,000 of notes payable during the period.  In addition to the decrease in cash, there was a decrease in prepaid expense of $105,000 due to the services rendered for the prepayment of consulting and management fees from the issuance of common shares in previous periods.  The decrease was offset by an increase of $35,250 for the common shares issued as part of the joint venture agreement with CINC Industries in October 2018.

The Company had total current liabilities of $3,774,203 at December 31, 2018 compared to $1,327,646 at September 30, 2018. The increase in liabilities is due to an increase in derivative liabilities of $1,335,997 for the fair value of the conversion feature on convertible debentures and is due to an increase in the number of convertible notes issued compared to September 30, 2018, and an increase in amounts due to related parties of $50,210 for unpaid management and consulting fees to officers and directors of the Company.  The increase was offset by a decrease in accounts payable and accrued liabilities of $15,315 and a decrease in the carrying value of notes payable of $337,970 as the Company entered into four new convertible notes during the period which carries large discounts due to the fair value of the conversion feature at the inception of the notes.  As at December 31, 2018, the Company has $1,442,971 of face value of convertible notes compared to $1,380,822 of face value of convertible notes as at September 30, 2018.   

As at December 31, 2018, the Company had a working capital deficit of $3,640,486 compared to a working capital deficit of $1,018,877 at September 30, 2018. The increase in the working capital deficit was due to the fact that the Company financed its operating costs, through the issuance of convertible debentures and did not earn any cash flow from operating activities.

During the three months ended December 31, 2018, the Company issued 3,300,000 common shares for services with a fair value of $504,750, issued 5,653,660 common shares to convert outstanding notes payable and accrued interest of $430,550, and issued 250,000 common shares with a fair value of $35,250 for compensation as part of the joint venture agreement with CINC Industries.

As at December 31, 2018 and 2017, the Company does not have any issued or outstanding stock options.

Cash Flows

Cash from Operating Activities.

During the three months ended December 31, 2018, the Company used $518,802 of cash for operating activities as compared to $141,932 during the three months ended December 31, 2017.  The increase in the use of cash for operating activities was due to the fact that the Company raised more funding from financing activities which allowed them to incur more operating costs to further the Company’s development and operations.  

Cash from Investing Activities

During the three months ended December 31, 2018 and 2017, the Company did not have any investing activities.

Cash from Financing Activities

During the three months ended December 31, 2018, the Company received $628,750 of funding from the issuance of convertible notes payable offset by repayment of notes payable of $180,000 compared to proceeds received of $175,000 from convertible notes during the three months ended December 31, 2017.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

In presenting Oroplata's financial statements in conformity with U.S. generally accepting accounting principles, or GAAP, Oroplata is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.

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Some of the estimates and assumptions Oroplata is required to make relate to matters that are inherently uncertain as they pertain to future events. Oroplata bases these estimates and assumptions on historical experience or on various other factors that it believes to be reasonable and appropriate under the circumstances. On an ongoing basis, Oroplata reconsiders and evaluates its estimates and assumptions. Actual results may differ significantly from these estimates.

Oroplata believes that the critical accounting policies listed below involve its more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on its financial statements. In addition, Oroplata believes that a discussion of these policies is necessary to understand and evaluate the financial statements contained in this filing.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Mineral claim acquisition and exploration costs

The cost of acquiring mineral properties or claims is initially capitalized and then tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Mineral exploration costs are expensed as incurred.

Income Taxes

Oroplata utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Recent Accounting Pronouncements

Oroplata does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

 The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed pursuant to the Securities Exchange Act of 1934 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, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In addition, The Company contracts with an independent firm to review and test its internal controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

As of December 31, 2018, the Company’s management carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, it was concluded the disclosure controls and procedures were not effective as of December 31, 2018.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In January 2018, the Company filed a complaint in Nevada seeking the return or cancellation of 16 million common shares which the Company believes were fraudulently issued as well as claims against the former CEO of the Company, Craig Alford. The Company has entered into agreements to cancel eleven million shares. The remaining five million shares were cancelled and reissued after the Company determined that the recipients provided proper consideration for such shares. The litigation continues against Alford and certain other relief defendants. Alford has filed a counterclaim against the Company for amounts allegedly owed to him that the Company believes is entirely without merit. Other than the preceding, to the best of our knowledge, we are not currently a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.

ITEM 1A. RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 8, 2018, the Company issued 2,500,000 common shares with a fair value of $356,250 for services, including 1,000,000 common shares to the Chief Executive Officer of the Company and 1,000,000 shares to a director of the Company.

On October 10, 2018, the Company issued 250,000 common shares with a fair value of $35,250 as part of the joint venture agreement with CINC.

On October 11, 2018, the Company issued 193,986 common shares with a fair value of $22,308 for the conversion of $20,000 of convertible notes.

On October 12, 2018, the Company issued 240,096 common shares with a fair value of $27,611 for the conversion of $20,000 of convertible notes.

On October 15, 2018, the Company issued 216,086 common shares with a fair value of $21,047 for the conversion of $18,000 of convertible notes.

On October 16, 2018, the Company issued 280,505 common shares with a fair value of $40,673 for the conversion of 20,000 of convertible notes.

On October 16, 2018, the Company issued a 12% Convertible Promissory Note principal amount $43,000 with a purchase price of $43,000 to Power Up Lending Group Ltd. The note is due July 30, 2019. The holder shall have the right from time to time, and at any time during the period beginning on the date which is 180 days after the date of the note and ending on the later of: (i) the maturity date and (ii) the date of payment of the default amount, each in respect of the remaining outstanding principal amount of this note to convert all or any amount of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock.  The conversion price is equal to 61% of the lowest trading price or closing price of the Company’s common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The note may be prepaid until 170 days from the issuance date at a price of 115% - 140% of the face amount plus any accrued interest as of the date of prepayment. The default rate on the note is 22% per annum.

On October 17, 2018, the Company issued 175,035 common shares with a fair value of $25,800 for the conversion of $7,800 of convertible notes and $4,680 of accrued interest.

On October 19, 2018, the Company issued 550,000 common shares with a fair value of $90,750 for consulting services.

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On October 23, 2018, the Company issued 150,000 common shares with a fair value of $42,000 for consulting services.

On October 25, 2018, the Company issued 869,285 common shares with a fair value of $139,086 for the conversion of $58,800 of convertible notes and $3,180 of accrued interest.

On October 26, 2018, the Company issued 414,785 common shares with a fair value of $66,366 for the conversion of $25,000 of convertible notes and $1,281 of accrued interest.

On November 7, 2018, the Company issued 443,478 common shares with a fair value of $51,000 as part of a conversion of convertible notes at $0.115 per share.

On November 13, 2018, the Company issued 833,895 common shares with a fair value of $179,287 for the conversion of $50,000 of convertible notes and accrued interest of $2,836.

On November 19, 2018, the Company issued 796,073 common shares with a fair value of $151,254 for the conversion of $75,000 of convertible notes and accrued interest of $2,445.  

On November 21, 2018, the Company issued 420,870 common shares with a fair value of $48,400 for the conversion of convertible notes at $0.115 per share.

On December 6, 2018, the Company issued a 12% Convertible Promissory Note principal amount $55,000 with a purchase price of $55,000 to Power Up Lending Group Ltd. The note is due September 30, 2019. The holder shall have the right from time to time, and at any time during the period beginning on the date which is 180 days after the date of the note and ending on the later of: (i) the maturity date and (ii) the date of payment of the default amount, each in respect of the remaining outstanding principal amount of this note to convert all or any amount of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock.  The conversion price is equal to 61% of the lowest trading price or closing price of the Company’s common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The note may be prepaid until 170 days from the issuance date at a price of 115% - 140% of the face amount plus any accrued interest as of the date of prepayment. The default rate on the note is 24% per annum.

On December 6, 2018, the Company issued a 10% Convertible Promissory Note principal amount $265,000 with a purchase price of $253,000 to GS Capital Partners, LLC. The note is due December 6, 2019. The holder shall have the right from time to time, and at any time during the period beginning on the date of the note and ending on the later of: (i) the maturity date and (ii) the date of payment of the default amount, each in respect of the remaining outstanding principal amount of this note to convert all or any amount of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock.  The conversion price is equal to 68% of the lowest VWAP Company’s common stock during the 20 (20) trading day period ending on the latest complete trading day prior to the conversion date. The note may be prepaid until 180 days from the issuance date at a price of 115% - 135% of the face amount plus any accrued interest as of the date of prepayment. The default rate on the note is 22% per annum.

On December 10, 2018, the Company issued a 10% Convertible Promissory Note principal amount $265,000 with a purchase price of $253,000 to Eagle Equities, LLC. The note is due December 10, 2019. The holder shall have the right from time to time, and at any time during the period beginning on the date of the note and ending on the later of: (i) the maturity date and (ii) the date of payment of the default amount, each in respect of the remaining outstanding principal amount of this note to convert all or any amount of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock.  The conversion price is equal to 68% of the lowest VWAP Company’s common stock during the 20 (20) trading day period ending on the latest complete trading day prior to the conversion date. The note may be prepaid until 180 days from the issuance date at a price of 115% - 135% of the face amount plus any accrued interest as of the date of prepayment. The default rate on the note is 22% per annum.

On December 18, 2018, the Company issued 448,696 common shares with a fair value of $51,600 for the conversion of convertible notes at $0.115 per share.

On December 26, 2018, the Company issued 420,870 common shares with a fair value of $48,400 for the conversion of convertible notes at $0.115 per share.

The foregoing securities were issued under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. In the case of the promissory notes, each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act. Any proceeds issued from the above issuances were used for working capital purposes of the Company.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES 

None

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

(a) (3) Exhibits

The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:

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SIGNATURES

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