On March 28, 2014, upon consummation of the Merger and resulting Reincorporation (see Note 1), all share and per share values for all periods presented in the accompanying condensed consolidated financial statements are retroactively restated for the effect of the Merger and Reincorporation.

Preferred Stock

As of September 30, 2014, there were 20,000,000 shares of Preferred Stock authorized.

As of September 30, 2014, there were 20,000 shares of Series A Preferred Stock authorized and 20,000 shares issued and outstanding.

As of September 30, 2014, there were 30,000 shares of Series B Preferred Stock authorized and 6,666 shares issued and outstanding.

Common Stock

As of September 30, 2014, there were 200,000,000 shares of Common Stock authorized and 9,510,950 shares issued and outstanding.

On September 29, 2014, the Company sold an aggregate of 200,000 units (“Units”) at a per Unit purchase price of $2.00, in a private placement to certain accredited investors (the “Investors”) for gross proceeds of $400,000. Each Unit consists of: forty (40) shares of the Company’s common stock or at the election of any purchaser who would, as a result of purchase of Units become a beneficial owner of five (5%) percent or greater of the outstanding Common Stock of the Company, four (4) shares of the Company’s newly designated Series C Preferred Stock, par value $0.0001 per share, with each share convertible into ten (10) shares of Common Stock. In September 2014, the Company issued 8 million shares of common stock from this private placement sale.

Stock Options

2014 Equity Incentive Plan

On January 21, 2014, the Board approved the adoption of a 2014 Equity Incentive Plan (the “2014 Plan”).  The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.  The 2014 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company’s employees, officers, directors and consultants.  Pursuant to the terms of the 2014 Plan, either the Board or a board committee is authorized to administer the plan, including by determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards.  Unless earlier terminated by the Board, the Plan shall terminate at the close of business on January 21, 2024.  Up to 226,667 shares of common stock are issuable pursuant to awards under the 2014 Plan, as adjusted in a single adjustment for an issuance no later than sixty (60) days following the date of shareholder approval of the Plan in connection with (i) a private placement of the Company’s securities in which the Corporation receives gross proceeds of at least $1,000,000 and (ii) an acquisition of at least 50 mining leases and/or claims in the Holbrook Basin.  

On January 21, 2014, the board approved non-employee director fees of $1,000 per month and issued to each of Mr. Uribe and Mr. Bhansali, the Company’s non-employee directors, a four year option to purchase up to 30,000 of the Company’s issued and outstanding common stock at a cashless exercise price of $0.015 per share.  The options vested immediately.  

The 60,000 options were valued on the grant date at approximately $3.00 per option or a total of $179,834 using a Black-Scholes option pricing model with the following assumptions: stock price of $3.00 per share (based on the quoted trading price on the grant date), volatility of 260%, expected term of 4 years, and a risk free interest rate of 0.81%. During the nine months ended September 30, 2014, the Company recorded stock based consulting expense related to options of $179,834.

Option activities for the nine months ended September 30, 2014 are summarized as follows:

Stock options outstanding at September 30, 2014 as disclosed in the above table have approximately $60,000 of intrinsic value at the end of the period.

Stock Warrants

The following table summarizes the Company’s stock warrants outstanding at September 30, 2014:

There were no changes that occurred during the nine months ended September 30, 2014.  There were 245,000 warrants outstanding as of September 30, 2014.