The following discussion should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in this Annual Report. See "Consolidated Financial Statements and Supplementary Data."

Cautionary Notice Regarding Forward Looking Statements

Readers are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with the "Special Note Regarding Forward-Looking Statements" appearing at the beginning of this Annual Report.

The information contained in Item 7 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements, which reflect management's current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words "believe," "expect," "intend," "anticipate," "estimate," "may," variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.





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Readers should not place undue reliance on these forward-looking statements, which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Water Pollution Control Permit

Through the Company's subsidiaries, a Water Pollution Control Permit ("WPCP") Application will need to be filed with the Nevada Department of Environmental Protection ("NDEP") Bureau of Mines and Mining Reclamation ("BMMR") for the approval of the permits necessary for a small-scale mineral processing facility planned for the Tonopah Property. The plant will perform laboratory testing, pilot testing, and custom processing of precious metal ores and concentrates from mining industry clients. Processing of ore materials will employ standard mineral processing techniques including gravity concentration, froth flotation and chemical leaching and carbon stripping.

The WPCP must be approved prior to commencing the planned construction of our processing plant in Tonopah, Nevada.

In connection with the WPCP application, NDEP suggested that we take the following actions: (i) retain a Nevada Certified Environmental Manager ("CEM"), (ii) perform Meteoric Profile II water testing on ground water directly below the mill as well as surrounding wells located off site, and (iii) determine baseline values of water using the Meteoric Profile II results. NDEP regulations require that the Company delay any new construction planned for "metal extraction" until after the permits are in place.

Advanced Surveying & Professional Services, a Professional Land Surveyor ("PLS"), completed surveys and testing of the Tonopah property required for the application of our required permits. After completion of the survey, it was determined the property is 1,186 acres. The scope of work the PLS completed includes: (i) setting a total of 19 permanent monuments at angle points along lines, (ii) setting eight permanent monuments locating US Hwy 95, (iii) recording a professional map indicating longitude and latitude for all corners, and (iv) providing a digital map accessible in AutoCAD software.





Site Preparation

We have completed the initial grading of specific designated areas on the 40 undisturbed acres of land including clearing all vegetation, removing of all scrap metal, and the excavation of the building pad for the preparation of the new 21,875 square foot processing plant and have completed the removal of all the extra and unnecessary materials and old equipment that have accumulated on the land. We refurbished a trailer that will act as our construction office.





Business Plan

The Company is reexamining its next steps for developing a processing facility. In an effort to move the Company's business plan forward, Management may evaluate opportunities to acquire, license or joint venture with other parties, which may include related parties, involved in toll milling, processing, or mining related activities, The Company is reexamining its next steps for developing a processing facility. In an effort to move the Company's business plan forward, Management may evaluate opportunities to acquire, license or joint venture with other parties, which may include related parties, involved in toll milling, processing, or mining related activities, which may include Granite Peak Resources, LLC and its affiliated entities including, but not limited to Sustainable Metal Solutions, LLC (f/k/a Nederland Mining Group, LLC), NovaMetallix, Inc, and Black Bear Natural Resources, LTD (f/k/a Calais Resources, Inc.).





                                       12

On March 27, 2020 the Company engaged NovaMetallix, Inc. ("NMX"), a member of the Sustainable Metal Solutions Group, a GPR affiliate, to conduct a study of the quantity and quality of our historic mine tailings, and the economic feasibility of processing them to reclaim their residual content of gold, silver, and other valuable metals. NMX, a firm comprised of world class mining, geological and metallurgical engineering professionals, is dedicated to the rapidly developing field of sustainable metal recovery. NMX has agreed to conduct the study of the Company's tailings at its cost and expense in exchange for the exclusive right to process the tailings should their economic assessment prove positive. The terms of such processing to be mutually agreed upon in the future based on the results of the assessment.





Results of Operations

Comparison of the Years Ended December 31, 2019 and December 31, 2018





Revenues

We had no revenues from any operations for the years ended December 31, 2019 and 2018. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.

General and Administrative Expenses

General and administrative expenses were $43,875 for the year ended December 31, 2019 as compared to $123,057 for the same period in 2018. For the year ended December 31, 2019, general and administrative expenses and professional fees were severely cut due to lack of funding. During the year ended December 31, 2018, the nature of expenses were relatively the same, however we were able to incur and pay normal professional and legal fees and other necessary expenses due to greater liquidity. We anticipate that future administration and operating expenses will increase for fiscal 2020 as we continue to build the infrastructure to proceed with our planned custom processing toll milling services.





Other Income and Expenses

Each year we receive monthly payments of $608 per month from American Tower Corporation for a cellular tower located on our Tonopah land. In addition, during the year ended December 31, 2018, the Company recognized gains due to write off of numerous accrued claims that were no longer enforceable or settled for less than face amount aggregating $1,064,480. There were no similar circumstances during the year ended December 31, 2019.

Interest expense for the year ended December 31, 2019 was $641,430, compared to $885,801 for the respective period in 2018. The $244,371 decrease during 2019 compared to 2018 is principally related to the Company's resumption of accruing interest on the Flechner judgement in 2018, which it had ceased accruing in 2016 and 2017 in anticipation of a likely settlement of the judgement and its interest in full between the parties which became unlikely in early 2018. The remaining interest expense relates primarily to the interest due at rates ranging from 6% to 10% on notes payable to related parties and our convertible promissory notes outstanding during both periods.

Liquidity and Capital Resources

Liquidity is a measure of an entity's ability to secure enough cash to meet its contractual and operating needs as they arise. We have funded our operations and satisfied our capital requirements through the issuance of short-term debt, convertible debt and through equity capital we have received via certain shareholders exercising their warrants and loans from related parties during the years ended December 31, 2019 and 2018. We do not anticipate generating sufficient positive cash flows from our operations to fund the next 12 months. We had a working capital deficit of $9,903,959 at December 31, 2019. Cash was $1,945 at December 31, 2019, as compared to cash of $1,001 at December 31, 2018.

Our cash reserves will not be adequate to meet our operational needs and thus, we need to raise additional capital to pay for our operational expenses and provide for capital expenditures. Our basic operational expenses are currently estimated at approximately $10,500 per month, without regard to accrued interest of approximately $54,000 per month. Above our basic monthly expenses, we estimate that we need approximately $10,000,000 to begin limited toll milling operations. If we are not able to raise additional working capital, we may have to cease operations altogether.





                                       13





Recent Financings

On January 22, 2018, the Company received cash proceeds of $15,000 and issued a promissory note in exchange for the cash proceeds. The promissory note accrues interest at 6% per annum and is due one year from the date of issuance. The note is convertible into shares of common stock at $0.05 per share, with no adjustments to the conversion price.

On January 22, 2018, the Company received cash proceeds of $8,000 and issued a promissory note in exchange for the cash proceeds. The promissory note accrues interest at 6% per annum and is due one year from the date of issuance. The note is convertible into shares of common stock at $0.05 per share, with no adjustments to the conversion price.

On January 26, 2018, the Company received cash proceeds of $40,000 and issued a promissory note in exchange for the cash proceeds. The promissory note accrues interest at 6% per annum and is due one year from the date of issuance. The note is convertible into shares of common stock at $0.05 per share, with no adjustments to the conversion price.

In January 2018 the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. In May and June 2018, the Company issued three convertible promissory notes in the principal amounts of $32,500, 12,500 and $10,000. The notes are due one year from date of issuance and accrue interest at 6%. At September 30, 2018 five of the notes were converted into common shares at conversion price of $0.25 to$ 0.09, with no adjustments to the conversion price, leaving an aggregate remaining balance for all outstanding convertible promissory notes of $168,000.

During the year ended December 31, 2019, Granite Peak Resources, LLC ("GPR"), a related party, advanced $205,655 in direct payments on the Company's behalf, to reduce certain accounts payable by $137,655 and outstanding convertible promissory notes by $68,000. In December 2019, GPR was issued a promissory note for $192,080 which it exchanged as consideration for exercising a stock option for 4,500,000 restricted common shares at an approved reduced conversion price of $0.0426, which was the market price on exercise. The remaining $13,575 of advance was subsequently included in a line of credit evidenced by a convertible promissory note . Accordingly, the $13,575 advance has been so classified as such at December 31, 2019.

After the foregoing note conversions and advance received, there was $113,575 of principal and $96,659 of accrued interest outstanding on convertible debentures at December 31, 2019. With exception of the $13,575 of principal advanced by a related party during the year ended December 31, 2019, a pre-existing $100,000 convertible note is in default.





Going Concern

The consolidated financial statements contained in this annual report on Form 10-K have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses from inception through the period ended December 31, 2019 of $103,862,127, and a working capital deficit of $9,903,959, as well as negative cash flows from operating activities. Presently, the Company does not have adequate cash resources to meet its debt obligations in the 12 months following the date of this filing. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in order to finance its capital requirements, as well as for general and administrative expenses. These alternatives include raising funds through public or private equity markets and either through institutional or retail investors. Although there is no assurance that the Company will be successful with its fund-raising initiatives, management believes that the Company will be able to secure the necessary financing as a result of ongoing financing discussions with third party investors and existing shareholders.





                                       14

The consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. If the Company raises additional funds through the issuance of equity, the percentage ownership of current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to the rights, preferences and privileges of the Company's common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict its future plans for developing its business and achieving commercial revenues. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.





Working Capital Deficiency



                             December 31,      December 31,
                                 2019              2018
Current assets               $       1,945     $       1,001
Current liabilities              9,905,904         9,419,875
Working capital deficiency   $  (9,903,959 )   $  (9,418,874 )

Current assets remained stable between periods. The increase in current liabilities is primarily due to an increase in accrued interest relating to the Company's convertible debentures and notes payable, as well as the increase of convertible debt balances as a result of increasing advances from related party, Granite Peak Resources, LLC.





Cash Flows



                                                          Years Ended
                                                          December 31,
                                                      2019         2018

Net cash provided by (used in) operating activities $ 944 $ (139,184 ) Net cash provided by investing activities

                 -             --
Net cash provided by financing activities               ---        138,000
Increase (decrease) in cash                           $ 944     $   (1,184 )




Operating Activities

Net cash provided by operating activities was $944 for the year ended December 31, 2019.

Net cash used in operating activities was $139,184 for the year ended December 31, 2018, primarily due to the derecognition of certain accounts payable and accrued expenses of $1,064,480, and a loss of $10,154, offset by amortization of debt issuance costs.





Investing Activities

For the year ended December 31, 2019 and 2018 the Company conducted no investing activities.





 Financing Activities

The Company's financing during 2019 was from advances from a related party paid to certain vendors and noteholders on the Company's behalf totaling $205,655. For the year ended December 31, 2018, net cash provided by financing activities was $138,000, which was from the issuance of short term convertible promissory notes and the proceeds from the exercise of an option on 250,000 shares of common stock.at the reduced price of $25,000.





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Off-Balance Sheet Arrangements

During the year ended December 31, 2019, we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the SEC's Regulation S-K.





Effects of Inflation

We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.

Impairment of Long-lived Assets

We are reviewing the property and equipment, intangible assets subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted cash flows. There were no impairment charges in the year ended December 31, 2019, however, we decided to combine the carrying value of our mining and mineral assets as they are inseparable and depend upon each other in value creation.





Income Taxes

Income taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period.

Accounting guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company believes its income tax filing positions and deductions will be sustained upon examination and accordingly, no reserves, or related accruals for interest and penalties have been recorded at December 31, 2019 and 2018. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the "Tax Reform Law"). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. The Company believes that this reduction in the federal corporate rate will have a favorable effect on the consolidated financial statements of its, as well as those other similarly situated small businesses.





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Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted this standard on January 1, 2018, however, as there have been no revenues to date, the Company does not expect the adoption to have a material impact.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019 and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has adopted the standard in 2018, but as the Company does not have any significant leases, it does not expect it to have a material impact on its financial position or results of operations.

During the period covered by this report, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's consolidated financial statements.

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