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Dominion Minerals
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
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DMNM 2018-06-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 6. Exhibits
EX-31.1 s112315_ex31-1.htm
EX-31.2 s112315_ex31-2.htm
EX-32.1 s112315_ex32-1.htm

Dominion Minerals Earnings 2018-06-30

DMNM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 s112315_10q.htm 10-Q

 

 

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

 

For the transition period from ______ to _______

 

Commission File Number 000-52696

 

DOMINION MINERALS CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   22-3091075
(State of incorporation)   (I.R.S. Employer Identification No.)

 

3171 US Highway 9 North

 Suite 324

 Old Bridge, NJ 08857

 (Address of principal executive offices)

 

732-536-1600

 (Registrant’s telephone number)

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☐  No  ☒

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒  No  ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Do not check if a smaller reporting company    

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

As of July 31, 2018, the registrant had 101,453,678 shares of common stock, par value $.0001 per share issued and outstanding.

 

 

 

 

  

PART I – FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS 

 

Dominion Minerals Corp. and Subsidiaries

Consolidated Balance Sheet

 

   June 30,   December 31, 
   2018   2017 
    (Unaudited)      
           
Assets          
           
Cash and cash equivalents  $   $1,988 
           
Total assets  $   $1,988 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Accrued liabilities  $77,353   $70,335 
Convertible notes payable   2,482,293    2,458,826 
Loans from officers       388 
Compensation due to officers   4,513,795    4,247,603 
Contingency payable   155,000    135,000 
Total current liabilities  $7,228,441   $6,912,152 
           
COMMITMENTS AND CONTINGENCIES          
           
SHAREHOLDERS’ EQUITY:          
Preferred stock, Voting Series I, $0.0001 par value; 5,000,000 shares authorized; 200 shares issued and outstanding as of June 30, 2018 and December 31, 2017        
Common stock, $0.0001 par value; 700,000,000 shares authorized, 101,453,678 issued and outstanding as of June 30, 2018 and December 31, 2017   10,146    10,146 
Additional paid-in capital   35,998,253    35,998,253 
Accumulated deficit   (43,236,840)   (42,918,563)
Total shareholders’ equity   (7,228,441)   (6,910,164)
           
Total liabilities and shareholders’ equity  $   $1,988 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2 

 

Dominion Minerals Corp. and Subsidiaries

Consolidated Statements of Operations

 

   For the three   For the three   For the six   For the six 
   months ended   months ended   months ended   months ended 
   June 30,   June 30,   June 30,   June 30, 
   2018   2017   2018   2017 
                 
Revenue  $   $   $   $ 
Cost of sales                
                     
Gross profit                
                     
Professional fees                  
Officer compensation   143,750    143,750    287,500    287,500 
General and administrative expenses   5,785    2,938    7,310    4,477 
                     
Loss from operations   (149,535)   (146,688)   (294,810)   (291,977)
                     
Other (expense) income                    
Non-operating (expense) income, net                
Interest expense, net   (11,591)   (11,590)   (23,467)   (23,181)
Total other expense, net   (11,591)   (11,590)   (23,467)   (23,181)
                     
Loss before provision for income taxes   (161,126)   (158,278)   (318,277)   (315,158)
                     
Provision for income taxes                
                     
Net loss   (161,126)   (158,278)   (318,277)   (315,158)
                     
Loss per share                    
Basic and diluted loss per share  $   $         
                     
Basic and diluted weighted average number of common shares   101,453,678    101,453,678    101,453,678    101,453,678 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

  

3 

 

Dominion Minerals Corp. and Subsidiaries

Consololidated Statements of Cash Flows

 

   For the six months ended June 30,   For the six months ended June 30, 
   2018   2017 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(318,277)  $(315,158)
Adjustments to reconcile net loss to net cash used in operating activities:          
Interest   23,467    23,181 
Changes in operating assets and liabilities:          
Accrued liabilities   7,018    (3,374)
Compensation due to officers   266,192    241,602 
Net cash used in operating activities   (21,600)   (53,749)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Loans from officers       1,124 
Repayments of officer loans   (388)    
Proceeds received from Litigation Funding Contingency   20,000    52,625 
Net cash provided by financing activities   19,612    53,749 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (1,988)    
           
CASH AND CASH EQUIVALENTS, beginning of the period   1,988     
           
CASH AND CASH EQUIVALENTS, end of period      $ 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid during the year:          
Interest paid  $   $ 
Income tax paid  $   $ 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4 

 

Dominion Minerals Corp. and Subsidiaries

Notes to Financial Statements

June 30, 2018

 

1. Nature of Business and Significant Accounting Policies

 

  a. Nature of business – Dominion Minerals Corp. (“Company”) was incorporated January 4, 1996, under the laws of the state of Delaware. The Company is engaged in the exploration of precious and base metals including gold and copper. The current potential property under exploration is located in the Republic of Panama (“Panama”).

 

From September 2005 to November 2007, the Company changed its name 4 times to reflect the changing business plans. The original name of the Company was ObjectSoft Corporation. In June 2005, the name was changed to Nanergy, Inc. In June 2006, the name was changed to Xacord Corp., in January 2007, the name was changed to Empire Minerals Corp, and in November 2007, the name was changed to its current name, Dominion Minerals Corp.

 

  b. Basis of presentation – The interim condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position as of June 30, 2018 and December 31, 2017, the consolidated results of its operations for the three months ended June 30, 2018 and 2017 and its consolidated cash flows for the three months ended June 30, 2018 and 2017. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full fiscal year.

 

The interim condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries Empire Minerals Corp, a Nevada Corporation and Cuprum Resources Corp., a Panamanian Corporation. All significant inter-company transactions and balances have been eliminated in consolidation.

 

The Company is currently in a stage which is characterized by significant expenditures for the examination and development of exploration opportunities by its subsidiaries. The subsidiaries’ focus for the foreseeable future will continue to be on securing joint venture agreements to begin conducting mining operations.

 

Management has included all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented.

 

  c. Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. The significant estimates made in the preparation of the Company’s consolidated financial statements relate to the fair value of various accruals. Actual results could differ from those estimates.

 

  d. Cash and cash equivalents – For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with original maturities of three months or less. The Company has a cash balance of $0 and $1,988 as of June 30, 2018 and December 31, 2017, respectively, which is included in cash and cash equivalents.

 

  e. Concentration of risk – Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company maintains cash deposits in financial institutions that do not exceed the amounts insured by the U.S. government. As of June 30, 2018 and December 31, 2017, the Company’s bank balances did not exceed government-insured limits.

 

The Company has an investment in copper mining activities in Panama. Accordingly, the Company’s mining business, financial condition and results of operations may be influenced by the political, economic and legal environments in Panama, and by the general state of their economies. The Company’s foreign operations are subject to specific considerations and significant risks not typically associated with companies in the United States. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

5 

  

Dominion Minerals Corp. and Subsidiaries

 Notes to Financial Statements

June 30, 2018

 

  f. Net loss per share – In accordance with ASC 260, Earnings Per Share, basic earnings/loss per common share (“EPS”) is computed by dividing net earnings/loss for the period by the weighted average number of common shares outstanding during the period. Under ASC 260, diluted earnings/loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and dilutive. The total amount of additional shares that would be added on a fully diluted basis at June 30, 2018 and 2017 is 45,201,990 shares of the Company’s common stock.

 

  g. Income Taxes – The Company provides for income taxes under ASC 740 Income Taxes. ASC 740 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying afmounts and the tax bases of assets and liabilities using the enacted income tax rate expected to apply to taxable income in the period in which the deferred tax assets or liabilities are expected to be settled or realized. ASC 740 requires that a valuation allowance be established if necessary, to reduce the deferred tax assets to the amount that management believes is more likely than not to be realized. The provision for federal income tax differs from that computed amount by applying federal statutory rates to income before federal income tax expense mainly due to expenses that are not deductible and income that is not taxable for federal income taxes, including permanent differences such as non-deductible meals and entertainment.

 

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 

  h. Stock-based compensation – The Company records stock-based compensation in accordance with ASC 718. ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period.

 

The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the Company’s expected stock price volatility over a period equal to or greater than the expected life of the options. Because changes in the subjective assumptions can materially affect the estimated value of the Company’s employee stock options, it is management’s opinion that the Black-Scholes option-pricing model may not provide an accurate measure of the fair value of the Company’s employee stock options. Although the fair value of employee stock options is determined by using an option-pricing model,,that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The Company’s volatility is based on the historical volatility of the Company’s stock or the expected volfatility of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 

Further, for stock, opftions, and warrants issued to service providers and founders, the Company follows ASC 505-50-30-11 (previously EITF 96-1f8) which requires recording the options and warrants at the fair value of the service provided and expensing over the related service periods.

  

6 

 

Dominion Minerals Corp. and Subsidiaries

Notes to Financial Statements

June 30, 2018

 

  i. Recently Issued Accounting Pronouncements – The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

2. Going Concern

 

The Company has had no revenues or cash flows from operations. The Company has an accumulated deficit of $43,236,840 and $42,918,563 as of June 30, 2018 and December 31, 2017, respectively, and has insufficient sources of cash to execute its business plan, raising substantial doubt about its ability to continue as a going concern. In response to these conditions, management is continuing to seek both debt and equity financing from various sources, although there are no guarantees that they will be successful in their endeavors. No adjustment has been made to the accompanying consolidated financial statements as a result of this uncertainty.

 

3. Convertible Note Payable and Short Term Loan

 

  a. On November 27, 2009, Dominion Minerals Corp. (the “Company”) entered into and closed on a Convertible Loan Agreement (the “Loan Agreement”) to sell to non-US persons the convertible note due 2010 (the “Note”) in the aggregate principal amount of $2,000,000 and warrants to purchase up to 10,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), with an exercise price of $0.15 per share for a total purchase price of $2,000,000.

 

The Note matured one year after the date of issuance. The Note pays interest at a rate of 2.28% per annum, which is payable at maturity, and is convertible into shares of Common Stock at a conversion price equal to $0.10 per share (the “Conversion Price”). The Conversion Price is subject to adjustment for certain events, including the dividends, distributions or split of the Company’s Common Stock, or in the event of the Company’s consolidation, merger or reorganization. In the event of a conversion, accrued interest shall be automatically converted into common stock. In addition, the Company has the right to prepay the entire outstanding principal due under the Notes upon a three business day notice.

 

The Company’s obligations under the Loan Agreement and the Note are secured by the pledge of 5,000,000 shares of Cuprum Resources Corp., a corporation organized under the laws of the Republic of Panama (“Cuprum”), owned by the Company pursuant to a Pledge Agreement dated as of November 30, 2009 by and among the Company, Cuprum and the investor. The pledged shares represent all of the issued and outstanding equity shares of Cuprum.

 

Warrants to purchase shares of Common Stock expired one year from the closing of the Note.

 

On May 3, 2010, the Ministry of Commerce and Industry of the Republic of Panama declared the Company’s Mineral Concession as a Mining Reserve by posting a Resolution in the Gaceta Oficial of Panama. Pursuant to the Resolution, no further exploration activities are to be performed on the concession site. The Company has disputed the declaration and Resolution by MICI and has commenced legal action against the Republic of Panama. Accordingly, the Company notified the Note Holder of such events and how it relates to their inability to perform pursuant to the terms of the Concession Agreement and subsequently the terms of the Note, to support its claim of a force majeure and its inability to repay the Note. To date, because of the Company’s inability to resume exploration activities on the Mineral Concession, the Company has been unable to repay the Note and the Note Holder has not converted the Note. The Company incurred interest expense in the amounts of $22,806 as of June 30, 2018 and June 30, 2017. As of June 30, 2018 and December 31, 2017, the total amount due for the Convertible Note payable is $2,391,585 and $2,368,775, respectively.

  

7 

 

Dominion Minerals Corp. and Subsidiaries 

Notes to Financial Statements

June 30, 2018

 

  b. On July 1, 2013, the   Company executed 4 Convertible Promissory Notes (“Convertible Promissory Notes”) in the aggregate amount of $75,000. The Convertible Promissory Notes were payable in 1 year, bearing interest at a rate of 1% annum for the term of the note. On November 1, 2014, the Company and each Note Holder entered into an agreement known as Amendment to Convertible Promissory Note to extend the maturity date of the Notes to the earlier of December 31, 2016 or the date of any award granted to the Company in the litigation action between the Company and the Republic of Panama. On December 26, 2017, the Company and each Note Holder entered into an agreement known as Amendment Number 2 to Convertible Promissory Note to extend the maturity date of the Notes to the earlier of December 31, 2018 or the date of any award granted to the Company in the litigation action between the Company and the Republic of Panama. The Holders of the Convertible Promissory Notes may convert the principal amount for shares of the Company’s common stock equal to the aggregate of 7.5% of the total issued and outstanding shares of the Company’s common stock. The Company incurred interest expense in the amounts of $188 for the three months ended June 30, 2018 and 2017. As of June 30, 2018 and December 31, 2017, the total amounts due for the Convertible Promissory Notes is $78,750 and $78,375, respectively.

 

4. Contingent Liability

 

On June 18, 2015, the Company entered into a Litigation Funding Agreement (“LFA”) with Therium Capital Management Limited (“Therium”), to fund its litigation against the Republic of Panama. The terms of the LFA allow for funding of up to $8,000,000 of the Company’s litigation costs and require repayment of 2.5 times of the amount funded to the Company for such legal costs. The Company will be required to share a percentage of any amount awarded to the Company with Therium. In addition to the litigation costs funded, Therium has directly funded the Company certain operating expenses necessary for the Company to meet its listing requirements. Such expenses included auditor, legal and transfer agent expenses, which shall be repaid under the same terms as the litigation costs funded by Therium. The Company has recorded such advances as a Contingent Liability. As of June 30, 2018 and December 31, 2017, Therium advanced the Company a total of $155,000 and $135,000, respectively, for operating expenses which the Company recorded as a Contingent Liability. The Company will only be required to repay such expenses in the event of an award to the Company.

 

5. Shareholders’ equity

 

The Company is authorized to issue 705,000,000 shares: 700,000,000 shares of $0.0001 par value common stock and 5,000,000 shares of $0.0001 par value preferred stock. As of June 30, 2018 and December 31, 2017, the Company has 101,453,678 shares of common stock outstanding and 200 shares of Series A preferred stock outstanding.

 

The Company’s authorized Series A preferred stock consists of 200 shares and has relative rights, preferences, privileges and limitations as follows:

 

  The Series A has a super voting right in that it votes together with the common stock and any other class of stock entitled to vote with the common stock all as a single class, with each 100 shares of Series A entitled to 40% of all votes to be cast on any matter;

 

  The Series A is not convertible and is not entitled to any dividends or any distribution in liquidation of the Company;

 

  The Series A is not transferable in any manner without the unanimous vote of the Company’s Board of Directors;

 

  Without the unanimous consent of the holders of the Series A stock, there shall not be any change made to the Rights of the Series A or to create any stock with equal or superior voting right to the Series A stock or authorize any additional shares of Series A stock; and

 

Upon the occurrence of a Qualified IPO by the Company, the Series A stock shall be automatically cancelled and returned to the status of undersigned authorized but unissued preferred stock. “Qualified IPO” means the sale of common stock of the Company in an underwritten public offering or resale registration under the Securities Act of 1933 which results in the Company having a market capitalization in excess of $100,000,000, based on the average closing price of the Company’s common stock for 10 consecutive trading days.

 

8 

 

Dominion Minerals Corp. and Subsidiaries 

Notes to Financial Statements

 June 30, 2018

 

6. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2018 and June 30, 2017 are as follows:

 

   June 30,
2018
   June 30,
2017
 
Net operating loss  $318,277   $315,158 
Adjustment for unpaid accrued salaries   (266,192)   (241,602)
Adjusted net operating loss   52,085    73,556 
Effective income tax rate   40%   40%
Total deferred tax assets   20,834    29,422 
Less: valuation allowance   (20,834)   (29,422)
Total deferred tax assets      $ 

 

The Company’s deferred tax assets as of June 30, 2018 and December 31, 2017 of $17,294,736 and $17,167,425, respectively, was fully offset by a valuation allowance, resulting in net deferred tax assets of $0 because of the uncertainty of the Company’s ability to utilize the net operating loss carry-forward against future earnings.

 

The reconciliation of the effective income tax rate to the federal statutory rate for the period ended June 30, 2018 and June 30, 2017 is as follows: 

 

   2018   2017 
Federal income tax rate   34%   34%
State tax, net of federal benefit   6%   6%
Increase in valuation allowance   (40)%   (40)%
Effective income tax rate   %   %

 

The deferred tax assets result from net operating loss carry-forwards. These assets will therefore reverse either upon their utilization against taxable income or upon their statutory expiration. Net operating loss carry-forwards will expire beginning in 2026 through 2035.

 

The Company’s last tax return submitted was for the year ended December 31, 2007. The Company’s tax returns for the years ended December 31, 2008 through 2017 are open for examination by the tax federal and state tax authorities.

 

9 

 

 

Dominion Minerals Corp. and Subsidiaries

Notes to Financial Statements

June 30, 2018

 

7. Commitments and contingencies – On December 1, 2007, the Company entered into Employment Agreements with its Chief Executive Officer and its Chief Financial Officer. The agreements have terms of five years and three years, respectively. The agreements are automatically renewed for one-year term unless the Company or Executive gives 90 days prior written notice to terminate the agreement.

 

8. Legal Proceedings – On December 5, 2013, the Company notified the Panamanian government of the Company’s intent to initiate arbitration proceedings under the U.S.-Panama Bilateral Investment Treaty (“U.S.-Panama BIT”) and the US.-Panama Trade Promotion Agreement (“U.S.-Panama TPA”).  As the Panamanian government has not responded to the Company’s requests to discuss a negotiated settlement, The Company has filed a formal Request for Arbitration at the International Centre for Settlement of Investment Disputes (“ICSID”) on March 30, 2016.  The Company is seeking relief in the amount of $268.3 million in the arbitration. There can be no assurance that it will be successful or recover any amount.

 

The dispute involves the Panamanian government’s interference with the Company’s investment in the mining concession.  Cuprum owns the exploration rights to the Cerro Chorcha concession.  As discussed above, the Panamanian Ministry of Commerce and Industry (“MICI”) was named as a defendant in a lawsuit brought by Cesar Salazar in December 2009, which led to the “provisional suspension” on all actions involving the Cerro Chorcha.  Awaiting resolution of the lawsuit, the Company filed an application for an extension of its exploration rights in March 2010, one month before the initial exploration concession was to expire.  However, despite the provisional suspension placed on the Cerro Chorcha, the Panamanian government designated the Cerro Chorcha as a “mining reserve” in April 2010 without considering the Company’s extension request, with the purpose and intent of reverting ownership of the concession to the Panamanian government.  Furthermore, the Panamanian government subsequently passed legislation that annulled existing mining concessions in the area encompassing Cerro Chorcha in March 2013.  The Company believes that these actions of the Panamanian government are unlawful and contravene Panama’s international obligations under the U.S.-Panama BIT and the U.S.-Panama TPA.

 

On June 18, 2015, the Company entered into a Litigation Funding Agreement (“LFA”) with Therium Capital Management Limited, to fund its litigation against the Republic of Panama. The terms of the LFA allow for funding of up to $8,000,000 of the Company’s litigation costs and require repayment of 2.5 times of the amount funded to the Company for such legal costs. In addition, the Company will be required to share a percentage of any amount awarded to the Company with Therium.

 

9. Subsequent Events

 

For the purpose of the accompanying consolidated financial statements, subsequent events have been evaluated through the date these financial statements were issued.

 

10 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD-LOOKING STATEMENTS

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

Recent Developments

 

Panamanian Venture

 

On December 5, 2013, the Company notified the Panamanian government of the Company’s intent to initiate arbitration proceedings under the U.S.-Panama Bilateral Investment Treaty (“U.S.-Panama BIT”) and the U.S.-Panama Trade Promotion Agreement (“U.S.-Panama TPA”).  

 

The dispute involves the Panamanian government’s interference with the Company’s investment in the mining concession.  Cuprum owns the exploration rights to the Cerro Chorcha concession.  The Panamanian Ministry of Commerce and Industry (“MICI”) was named as a defendant in a lawsuit brought by Cesar Salazar in December 2009, which led to the “provisional suspension” on all actions involving the Cerro Chorcha.  Awaiting resolution of the lawsuit, the Company filed an application for an extension of its exploration rights in March 2010, one month before the initial exploration concession was to expire.  However, despite the provisional suspension placed on the Cerro Chorcha, the Panamanian government designated the Cerro Chorcha as a “mining reserve” in April 2010 without considering the Company’s extension request, with the purpose and intent of reverting ownership of the concession to the Panamanian government.  Furthermore, the Panamanian government subsequently passed legislation that annulled existing mining concessions in the area encompassing Cerro Chorcha in March 2013.  The Company believes that these actions of the Panamanian government are unlawful and contravene Panama’s international obligations under the U.S.-Panama BIT and the U.S.-Panama TPA.

 

As the Panamanian government has not responded to the Company’s requests to discuss a negotiated settlement, The Company filed a formal request for arbitration at the International Centre for Settlement of Investment Disputes (“ICSID”) on March 29, 2016. This request was filed with the Secretary-General of the ICSID under the terms of the U.S.-Panama Bilateral Investment Treaty (the U.S.-Panama BIT). The Request for Arbitration is the result of the above mentioned longstanding dispute arising from Panama’s expropriation of Dominion’s substantial investment in the Cerro Chorcha mining concession. The status of the case today is pending. The Company and the Republic of Panama have selected a panel and awaiting dates for future hearings.

 

The Request for Arbitration sets forth Dominion’s claims as follows:

 

  Panama’s actions amounted to an expropriation of Dominion’s investment within the meaning of Article IV of the U.S.-Panama BIT, as they had the effect of depriving Dominion of all or substantially all of its investment in Cerro Chorcha; and

 

  Panama’s actions breached its obligations under Article II of the U.S.-Panama BIT to accord fair and equitable treatment to Dominion with respect to its investment in Cerro Chorcha.

 

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The amount of relief that the Company is seeking in the Request of Arbitration is $268,300,000. There can be no assurance that it will be successful or recover any amount.

 

Results of Operations for the three months ended June 30, 2018 and 2017

 

The following gives a summary of the most recent Statement of Operations data of Dominion Minerals Corp. for the three months ended June 30, 2018 and 2017.

 

   Three Months
Ended
   Three Months
Ended
 
   June 30,
 2018
   June 30,
2017
 
Statement of Operations          
           
Revenue  $   $ 
Net Loss   (161,126)   (158,278)
Net Loss Per Share  $(0.00)  $(0.00)

 

Revenue and Gross Profit

 

During the three months ended June 30, 2018 and 2017 the Company had no revenue, no costs affiliated with earning revenue aand gross profit for the three months ended June 30, 2018 and 2017 was $0.

 

Operating Expenses

 

Operating expenses for the three months ended June 30, 2018 and 2017 consisted primarily of compensation to officers of $143,750 and general and administrative expenses of $5,785 and $2,938, respectively.   General & administrative expenses consisted of travel, transfer agent, office, telephone, internet and supplies expense to support the day to day operations.  

 

Loss from Operations

 

Loss from operations for the three months ended June 30, 2018 and 2017 was $149,535 and $146,688, respectively. The losses for the three months ended June 30, 2018 and 2017 were primarily attributable to the officer compensation and general and administrative expenses described above of $149,535 and $146,688, respectively.

 

Net Loss

 

Net loss from operations for the three months ended June 30, 2018 and 2017 was $161,126 and $158,278, respectively. The net losses were primarily attributable to the loss from operations and interest expense for the Convertible Promissory Notes entered into by the Company and various investors. Inflation did not have a material impact on the Company’s operations for the period. Management knows of no trends, demands, or uncertainties that are reasonably likely to have a material impact on the Company’s results of operations.

 

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Results of Operations for the six months ended June 30, 2018 and 2017

 

The following gives a summary of the most recent Statement of Operations data of Dominion Minerals Corp. for the six months ended June 30, 2018 and 2017.

 

   Six Months
Ended
   Six Months
Ended
 
   June 30,
 2018
   June 30,
2017
 
Statement of Operations          
           
Revenue  $   $ 
Net Loss   (318,277)   (315,158)
Net Loss Per Share  $(0.00)  $(0.00)

 

Revenue and Gross Profit

 

During the six months ended June 30, 2018 and 2017 the Company had no revenue, no costs affiliated with earning revenue aand gross profit for the six months ended June 30, 2018 and 2017 was $0.

 

Operating Expenses

 

Operating expenses for the six months ended June 30, 2018 and 2017 consisted primarily of compensation to officers of $287,500 and general and administrative expenses of $7,310 and $4,477, respectively.   General & administrative expenses consisted of travel, transfer agent, office, telephone, internet and supplies expense to support the day to day operations.  

 

Loss from Operations

 

Loss from operations for the six months ended June 30, 2018 and 2017 was $294,810 and $291,977, respectively. The losses for the six months ended June 30, 2018 and 2017 were primarily attributable to the officer compensation and general and administrative expenses described above of $294,810 and $291,977, respectively.

 

Net Loss

 

Net loss from operations for the six months ended June 30, 2018 and 2017 was $318,277 and $315,158, respectively. The net losses were primarily attributable to the loss from operations and interest expense for the Convertible Promissory Notes entered into by the Company and various investors. Inflation did not have a material impact on the Company’s operations for the period. Management knows of no trends, demands, or uncertainties that are reasonably likely to have a material impact on the Company’s results of operations.

 

Liquidity and Capital Resources

 

Cash and Working Capital

 

As of June 30, 2018 and December 31, 2017, we had a working capital deficit of $7,228,441 and $6,910,164, respectively.  Our current liabilities as of June 30, 2018 and December 31, 2017 of $7,228,441 and $6,912,152, respectively, exceeded our current assets as of June 30, 2018 and December 31, 2017 of $0 and $1,988, respectively.  We had an accumulated deficit of $43,236,840 and 42,918,563 on June 30, 2018 and December 31, 2017, respectively.  

 

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We had a cash balance of $0 and $1,988 on June 30, 2018 and December 31, 2017, respectively.  Net cash used for operating activities for the six months ended June 30, 2018 and 2017 was $21,600 and $53,749, respectively. The net loss for the six months ended June 30, 2018 and 2017 was $318,277 and $315,158, respectively. Cash used in operating activities was for general and administrative expenses.

 

Net cash provided by all financing activities for the three months ended June 30, 2018 and 2017 was $19,612 and $53,749, respectively. This consisted of $20,000 and $52,625 for the six months ended June 30, 2018 and 2017, respectively, in proceeds from the litigation funding company recorded as a contingent liability.  For the six months ended June 30, 2018 and 2017, we had net cash flows of ($1,988) and $0, respectively.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Disclosure in response to this item is not required of a smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosures Control and Procedures

 

Our management, including our principal executive officer and principal financial officer, evaluated the disclosure controls and procedures related to the recording, processing, summarization and reporting of information in the periodic reports that we file with the SEC. These disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2018.

 

Changes in internal controls over financial reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting:

 

This quarterly report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly Report on Form 10-Q.

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Neither the Company or the Nevada Subsidiary nor any of their property is a party or subject to any pending legal proceeding. The Company is not aware of any contemplated or threatened legal proceeding against it or the Nevada Subsidiary by any governmental authority or other party.

 

On December 5, 2013, the Company notified the Panamanian government of the Company’s intent to initiate arbitration proceedings under the U.S.-Panama Bilateral Investment Treaty (“U.S.-Panama BIT”) and the U.S.-Panama Trade Promotion Agreement (“U.S.-Panama TPA”).  

 

The dispute involves the Panamanian government’s interference with the Company’s investment in the mining concession.  Cuprum owns the exploration rights to the Cerro Chorcha concession.  The Panamanian Ministry of Commerce and Industry (“MICI”) was named as a defendant in a lawsuit brought by Cesar Salazar in December 2009, which led to the “provisional suspension” on all actions involving the Cerro Chorcha.  Awaiting resolution of the lawsuit, the Company filed an application for an extension of its exploration rights in March 2010, one month before the initial exploration concession was to expire.  However, despite the provisional suspension placed on the Cerro Chorcha, the Panamanian government designated the Cerro Chorcha as a “mining reserve” in April 2010 without considering the Company’s extension request, with the purpose and intent of reverting ownership of the concession to the Panamanian government.  Furthermore, the Panamanian government subsequently passed legislation that annulled existing mining concessions in the area encompassing Cerro Chorcha in March 2013.  The Company believes that these actions of the Panamanian government are unlawful and contravene Panama’s international obligations under the U.S.-Panama BIT and the U.S.-Panama TPA.

 

As the Panamanian government has not responded to the Company’s requests to discuss a negotiated settlement, The Company filed a formal request for arbitration at the International Centre for Settlement of Investment Disputes (“ICSID”) on March 29, 2016. This request was filed with the Secretary-General of the ICSID under the terms of the U.S.-Panama Bilateral Investment Treaty (the U.S.-Panama BIT). The Request for Arbitration is the result of the above mentioned longstanding dispute arising from Panama’s expropriation of Dominion’s substantial investment in the Cerro Chorcha mining concession. 

 

The Request for Arbitration sets forth Dominion’s claims as follows:

 

  Panama’s actions amounted to an expropriation of Dominion’s investment within the meaning of Article IV of the U.S.-Panama BIT, as they had the effect of depriving Dominion of all or substantially all of its investment in Cerro Chorcha; and

 

  Panama’s actions breached its obligations under Article II of the U.S.-Panama BIT to accord fair and equitable treatment to Dominion with respect to its investment in Cerro Chorcha.

 

The amount of relief that the Company is seeking in the Request of Arbitration is $268,300,000. There can be no assurance that it will be successful or recover any amount.

 

ITEM 6.  EXHIBITS

 

Exhibit
Number
  Description of Exhibit   Filing
Reference
         
31.1   Certification of Principal Executive Officer Pursuant to Rule 13a-14.   Filed herewith.
         
31.2   Certification of Principal Executive Officer Pursuant to Rule 13a-14.   Filed herewith.
         
32.1   CRO and COO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act.   Filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  DOMINION MINERALS CORP.  
     
Dated: August 27, 2018 /s/ Diego E. Roca  
  By: Diego E. Roca  
  Title: Chief Financial Officer  

 

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