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Page 20 & 21 Annual Report filed 12/15/2021 for period ending 9/30/2021 Discovery Minerals. LTD.
As shown in the accompanying financial statements, the Company has incurred recurring net losses from operations resulting in an accumulated deficit of $13,786,460, cash of $58,406 and a working capital deficit of $713,117 as of September 30, 2021.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 – Related Party Transactions The Company and Russell Smith, CEO and Director entered into a service agreement whereby Mr. Smith will provide office accommodations, telephone connections, computer time and space as well as maintain all files and corporate records for a quarterly fee of $37,500. During the year ended September 30, 2021, the Company issued 600,000,000 shares of common stock upon conversion of $600,000 of the related party debt to Mr. Smith. As of September 30, 2021 Mr. Smith is owed the amount of $154,490.
Note 4 – Convertible Notes Payable On April 10, 2018 the Company issued a convertible promissory note to in the amount of $300,000. The note was due on April 10, 2019 and bears no interest. The loan may be converted into shares of the Company’s common stock at a rate of 95% multiplied by the lowest trading price during the previous ten (10) day trading period ending on the latest complete trading day prior to the conversion date. Pursuant to current accounting guidelines, the Company recorded a note discount of $300,000 to account for the note's derivative liability. In addition the Company recorded an amount of discount in excess if the note principal of $8,909 that was expensed as a financing cost. During the year ended September 30, 2021 the entire principal was converted into 60,000,000 shares of common stock. During the year ended September 30, 2021 the Company issued net convertible promissory notes to in the amount of $198,000. The notes are due twelve months from the issue date and bears interest at 1% per annum. The notes may be converted into shares of the Company’s common stock at a conversion price of $.001 per share.
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