| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”)
and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated
financial statements include the accounts of the Company and its wholly-owned subsidiaries, Goldbase and Patriot Canada. Collectively,
they are referred to herein as “the Company”. Inter-company accounts and transactions have been eliminated. Management’s Estimates and Assumptions The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Management believes that all applicable
estimates and adjustments are appropriate. Actual results could differ from those estimates. Going Concern Management believes they will have sufficient
funds to support their business based on the following: (a) revenues derived from the Moss royalty, given the Moss Mine is now
in production; (b) the Company’s marketable securities are relatively liquid; (c) the Company believes it can raise additional
funds if needed to support our business plan, although there can be no assurance that the Company can raise any additional funds,
or if it can, that such funds will be on terms acceptable to the Company. Exploration and Development Costs Mineral exploration costs and payments related
to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically
developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will
be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve.
No costs have been capitalized through June 30, 2020. Cash and Cash Equivalents and Concentration
of Credit Risk The Company considers all investment instruments
purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment
purposes. The Company has no cash equivalents as of June 30, 2020 and December 31, 2019. Financial instruments that potentially
subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at banks in the United States
are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, while accounts at banks in Canada
are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to $100,000. At June 30, 2020 and December 31,
2019, the Company had $202,636 and $0 in excess of the FDIC and CDIC insured limits, respectively. Marketable Securities Investment securities are classified in one
of three categories: held to maturity, available for sale, or trading. Management determines the appropriate classification of
securities at the time of purchase. Investment securities are classified as held to maturity when the Company has the positive
intent and ability to hold the securities to maturity. As of June 30, 2020, and December 31, 2019, the Company has no investments
in held to maturity securities. Investment securities that are bought and held
principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with
unrealized gains and losses included in earnings. Investment securities that are not considered
to be held to maturity or trading are classified as available for sale. This type of investment is stated at fair value with unrealized
gains and losses, net of tax, reported in a separate component of shareholders’ equity (“accumulated other comprehensive
income”). Gains and losses from sales of investments classified as available for sale are determined using the specific identification
method. As of June 30, 2020, and December 31, 2019, the Company has no investments classified as available for sale. The Company’s short-term marketable securities
classified as trading securities are comprised of Northern Vertex Mining Corp. and Strata Power Corporation (“Strata”)
stock. The Company acquired the Northern Vertex stock on May 26, 2016 as part of the Moss Mine sale. The Company purchased Strata
common stock through multiple private placement offerings as an investment in lithium mining extraction technologies (see Note
9). Royalties Receivables Royalties Receivables consist of amounts due
from Golden Vertex related to the net smelter return royalty on the Moss Mine in Arizona (see Note 4). An allowance for uncollectible
receivables is based on historical collection trends and write-off history. As of June 30, 2020, and December 31, 2019, there was
no allowance recorded. Foreign Currency Translation The Company’s functional currency and
reporting currency is the U.S. dollar. Monetary items denominated in foreign currency are translated to U.S. dollars at exchange
rates in effect at the balance sheet date and non-monetary items are translated at rates in effect when the assets were acquired,
or obligations incurred. Revenue and expenses are translated at rates in effect at the time of the transactions. Foreign exchange
gains and losses are included in the consolidated statements of operations. Concentration of Credit Risk The Company has no off-balance-sheet concentrations
of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains
the majority of its cash balances with two financial institutions in the form of demand deposits. Income/Loss per Share Basic earnings per share is computed by dividing
the net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by
dividing net income by the weighted-average number of common shares plus dilutive potential common shares outstanding during the
period. The following is a reconciliation of the number
of shares used in the calculation of basic earnings per share and diluted earnings per share:
For the period ended June 30,
2020 2019
Numerator:
Net income (loss) available to common stockholders $ 466,859 $ (19,471 )
Denominator:
Weighted-average shares, basic 74,280,354 65,256,857
Effect of dilutive shares:
Incremental shares from the assumed exercise of dilutive stock warrants - 49,290
Weighted-average shares diluted 74,280,354 65,306,147
Net income (loss) per common share, basic $ 0.01 $ (0.00 )
Net income (loss) per common share, diluted $ 0.01 $ (0.00 ) The following were excluded from the computation
of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s loss from continuing operations
and loss from discontinued operations. In periods where the Company has a net loss, all dilutive securities are excluded.
For the period ended June 30,
2020 2019
Common stock equivalents:
Stock options 7,465,000 7,465,000
Stock warrants 11,660,000 11,460,000
Total 19,125,000 18,925,000 Comprehensive Income Comprehensive income consists of net income
and other gains and losses affecting shareholders’ equity that, under generally accepted accounting principles, are excluded
from net income. For the Company, such items consist primarily of foreign currency translation gains and losses. Accumulated other comprehensive income at June
30, 2020 and December 31, 2019, consists of foreign currency adjustments related to the Company changing its functional currency
from Canadian to U.S. dollar in 2003. Stock Options The Company measures all employee stock-based
compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements
over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based
compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option
lives, expected volatility, and risk-free interest rates. The Company accounts for non-employee stock-based
awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718):
The Company uses the Black-Scholes pricing
model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make
assumptions regarding option lives, expected volatility, and risk-free interest rates. Stock-based Compensation We account for equity-based transactions with
nonemployees awards in accordance with the Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation
(Topic 718): We account for employee stock-based compensation
in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, The Company has granted Restricted Common Stock,
where the Restricted Common Stock is restricted for a period of three years following the date of grant. During the three-year
period the recipient may not sell or otherwise dispose of the shares. The Company has applied a discount for illiquidity to the
price of the Company’s stock when determining the amount of expense to be recorded for the Restricted Common Stock issuance.
The discount for illiquidity for the Restricted Common Stock was estimated on the date of grant by taking the average close price
of the freely traded common shares for the period in which the services were provided, and applying an illiquidity discount of
10% for each multiple that the total Restricted Common Stock is of the average daily volume for the period, to a maximum of 50%. Fair Value of Financial Instruments The carrying value of the Company's financial
instruments, including prepaids, accounts payable and accrued liabilities, at June 30, 2020 and December 31, 2019 approximates
their fair values due to the short-term nature of these financial instruments. Management is of the opinion that the Company is
not exposed to significant interest or credit risks arising from these financial instruments. The Company carries other company’s
equity instruments at fair value as required by U.S. GAAP, which are valued using level 1 inputs under the fair value hierarchy. In general, investments with original maturities
of greater than 90 days and remaining maturities of less than one year are classified as short-term investments. Investments with
maturities beyond one year may also be classified as short-term based on their highly liquid nature and can be sold to fund current
operations. Fair Value Hierarchy Fair value is defined within the accounting
rules as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The rules established a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. As presented in the tables below, this hierarchy consists of three broad levels: Level 1 Level 2. Level 3 Assets measured at fair value on a recurring
basis by level within the fair value hierarchy are as follows:
Fair Value Measurement at Fair Value Measurement at
June 30, 2020 December 31, 2019
Using Total Using Total
Assets:
Marketable securities $ 126,252 $ 126,252 $ 158,282 $ 158,282
Revenue Recognition On June 1, 2018, the Company adopted Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers
1. Identify the contract with the customer. The contract with Golden Vertex is documented in the Purchase and Sale Agreement dated 5/12/16 and the Royalty Deed dated 5/25/16.
2. Identify the performance obligations in the contract. The performance obligation in the contract required Patriot to relinquish its 30% interest in the Moss Mine. The Company conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress from the claims appurtenant thereto, and in which the Company had any interest.
3. Determine the transaction price. The transaction price was C$1,500,000 plus 3% of the Net Smelter Returns on the future production of the Moss Mine. See Note 3 for definition of Net Smelter Returns.
4. Allocate the transaction price to the performance obligations in the contract. The Company only has one performance obligation, the transfer of the rights to the Moss Mine, which has already been fulfilled.
5. Recognize revenue when (or as) the entity satisfies a performance obligation. The C$1,500,000 was recognized as a sale of the mining rights in 2016, resulting in a gain from the disposition of the property. The 3% net smelter returns royalty will be recognized as revenue in the period that Golden Vertex produces and sells minerals from the Moss Mine, which began in March 2018. The royalties that have been received to date have been highly variable, as the amounts are dependent upon the monthly production, the demand of the buyers, the spot price of gold and silver, the costs associated with refining and transporting the product, etc. As such, management has determined that the revenue recognition shall be treated as variable consideration as defined in ASC 606. Variable consideration should only be recognized to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Given the fact that royalties to date have been highly variable with a great degree of uncertainty, and any attempts to estimate future revenue would likely result in a significant reversal of revenue, royalty revenue will be recognized when payments and settlement statements are received from Golden Vertex, in the period for which the sales were made by Golden Vertex. It is at that time that any uncertainty related to royalty payments is resolved. The Company applied ASC 606 using the modified retrospective method applied to contracts not yet completed as of the date of adoption. Related Party Transactions A related party is generally defined as (i)
any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management,
(iii) an entity or person who directly or indirectly controls, is controlled by or is under common control with the Company, or
(iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to
be a related party transaction when there is a transfer of resources or obligations between related parties. Income Taxes The Company follows ASC 740-10-30, which requires
recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which
the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in the Statements of Income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized. The Company adopted ASC 740-10-25 (“ASC
740-10-25”) with regard to uncertainty of income tax positions. ASC 740-10-25 addresses the determination of whether tax
benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25,
we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and
penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments
to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25. New Accounting Pronouncements In June
2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The pronouncement revises
the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance
is effective for the Company beginning in the first quarter of fiscal year 2023 with early adoption permitted. The Company is currently
evaluating the potential impact of this guidance on it consolidated financial statements. The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company 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. |
