Atacama Resources International (ACRL) 10-Q 2017 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2017 or [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________. Commission file number 333-192217
ATACAMA RESOURCES INTERNATIONAL, INC.
(Exact Name of Registrant as specified in its charter)
Florida	46-3105245
(State or jurisdiction of Incorporation or organization	(I.R.S Employer Identification No.)
10820 68th Place, Kenosha, WI	53142
(Address of principal executive offices) Registrant’s telephone number, including area code	(Zip Code) 613-868-6157

Indicate by check mark whether the registrant (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.  

(x) 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).   

(_x_) Yes (__) No

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” “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  (_) Non-accelerated filer (_) (Do not check if a smaller company)	Accelerated filer (_) Smaller reporting company (X)

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

The number of shares of the issuer’s common stock, par value $.0001 per share, outstanding as of May 25, 2017 was 141,900,818.

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

	Page
Item 1.  Financial Statements (Unaudited)	3
Item 2.  Management's Discussion and Analysis of   Financial Condition and Results of Operations	15
Item 3.  Quantitative and Qualitative Disclosures   About Market Risk	18
Item 4.  Controls and Procedures	18

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings	20
Item 1A.  Risk Factors	20
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.  Defaults upon Senior Securities	20
Item 4.  Mine Safety Disclosures	20
Item 5.  Other Information	20
Item 6.  Exhibits	20
SIGNATURES	21

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Part I.  Financial Information

Item 1.  Financial Statements.

ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Balance Sheets

(Unaudited)

	March 31, 2017	December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents	$   23,516	$  17,670
Accounts receivable	3,975
Prepaid expenses	3,895	3,895
Total Current Assets	31,386	21,565
Mineral rights	9,647	-
TOTAL ASSETS	$41,033	$21,565
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$649,482	$567,528
Accrued interest	29,513	27,903
Due to related party	99,773	5,608
Derivative Liability	108,556	-0-
Convertible notes net of discount of $79,512 and $0	32,238	-0-
Notes payable	99,800	99,800
Total Current Liabilities	1,019,362	700,839
Total Liabilities	1,019,362	700,839
COMMITMENTS AND CONTINGENCIES
Stockholders' Deficit
Common stock: $0.0001 par value 500,000,000 authorized; 141,900,818 and 114,800,001 shares issued and outstanding, respectively	14,190	13,990
Additional paid in capital	1,669,795	1,466,801
Other comprehensive income	(7,825)	(8,165)
Accumulated deficit	(2,654,489)	(2,151,900)
Total Stockholders' Deficit	(978,329)	(679,274)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$   41,033	$ 21,565

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

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ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Statements of Operations

(Unaudited)

	For the three months ended March 31, 2017	For the three months ended March 31, 2016
REVENUE	$           0	$           0
OPERATING EXPENSE
Exploration costs	1,261	13,190
Professional fees	49,705	13,918
Stock based compensation	170,000
Related party consulting fees	121,000
Selling, general and administrative expenses	96,515	93
Total operating expenses	438,481	27,201
Net loss from operations	(438,481)	(27,201)
Other income (expense)
Interest expense	(1,869)	(9,465)
Interest expense related to derivative liability	(32,238)
Gain (loss) on issuance of stock	(30,000)	0
Net Income (Loss)	(502,588)	(36,666)
Foreign exchange (loss)	340	6,065
Comprehensive (loss)	$(502,248)	$(30,601)
Basic and diluted loss per share	$(0.003)	$(0.001)
Weighted average number of shares outstanding	141,900,818	114,379,538

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

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ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Statements of Cash Flows

(Unaudited)

	For the three months ended March 31, 2017	For the three months ended March 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(502,588)	$(36,666)
Changes in assets and liabilities:
(Increase) decrease in operating assets:
Accounts receivable	(3,976)	0
Increase (decrease) in operating liabilities:
Accounts payable	81,954	(54,125)
Stock based compensation	170,000
Beneficial conversion of derivative convertible notes	32,238
Accrued interest	1,610	9,207
Net cash provided by (used in) operating activities	(220,762)	(81,584)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of mineral rights	(9,647)	0
Net cash provided by (used in) investing activities	(9,647)	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party	94,165	9,914
Proceeds from notes payable	0	31,276
Proceeds from derivative liability	111,750	0
Proceeds from issuance of stock	30,000	26,901
Net cash provided by financing activities	235,915	68,091
Foreign Currency Translation	340	6,065
Net change in cash and cash equivalents	5,846	(7,428)
Cash and cash equivalents
Beginning of period	17,670	$8,477
End of period	$23,516	$1,049
Supplemental cash flow information
Cash paid for interest	$            0	$              0
Cash paid for taxes	$            0	$              0

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

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Atacama Resources International, Inc.

Notes to the Consolidated Financial Statements

For the period ending March 31, 2017

(unaudited)

NOTE 1. NATURE OF BUSINESS

ORGANIZATION

Atacama Resources International, Inc. (hereinafter “ARII”) is a company incorporated in the State of Florida in June 2013. We were formed as a consultant to the mining industry.  The mining industry is subject to constant change due to market trends, thereby making it extremely competitive. The mining industry is complex, because several segments are regulated by both federal and state governments. ARII’s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by ARII, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.

Atacama Resources International Inc. purchase 100% of Good2Drive LLC, a smartphone application company that establishes a baseline to test driver’s alertness, in December 2015.  The acquisition includes the rights to two filed patent applications. The financial operations of Good2Drive LLC have been consolidated in the unaudited financial statements of Atacama Resources International Inc.

NOTE 2. GOING CONCERN

The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources.  Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses.  However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company.  In addition, profitability will ultimately depend upon the level of revenues received from business operations.  However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

UNAUDITED INTERIM FINANICAL STATEMENTS

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles. For complete financial statements please refer to our 2016 Annual Report on Form 10-K, filed on April 17, 2017.

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In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the consolidated financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

BASIS OF PRESENTATION AND USE OF ESTIMATES

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require 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 consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents.  Cash and cash equivalents totaled $23,516 at March 31, 2017 and $17,670 at December 31, 2016.

CASH FLOWS REPORTING

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.

EXPLORATION AND DEVELOPMENT COSTS

Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities – Mining.  Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized.  Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.  Costs of abandoned projects are charged to operations upon abandonment.  The Company evaluates at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded.  The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.

Capitalized costs are expensed in the period when the termination has been made that economic production does not appear reasonably certain.

During the three months ending March 31, 2017 and 2016, the Company recorded exploration costs of $1,261 and $13,190, respectively.

RELATED PARTIES

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.  Related party transactions are summarized in Note 7.

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FINANCIAL INSTRUMENTS

The Company’s consolidated balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

REVENUE RECOGNITION

The Company follows ASC 605, Revenue Recognition. The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company derives revenue from consulting arrangements with clients.  Revenue is generated by hourly fee structure or fixed contract costs, based on expected time to complete, additionally, costs incurred may be billed, as defined by the contractual arrangements.  

DEFERRED INCOME TAXES AND VALUATION ALLOWANCE

The Company accounts for income taxes under ASC 740, Income Taxes.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  No deferred tax assets or liabilities were recognized as of March 31, 2017 or December 31, 2016.

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NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.”  The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share.  Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding.  Dilutive potential common shares are additional common shares assumed to be exercised.

Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at March 31, 2017 and December 31, 2016.  As of March 31, 2017, the Company had no dilutive potential common shares.

SHARE-BASED EXPENSE

ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired.  Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.  Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.  

RECENT ACCOUNTING PRONOUNCEMENTS

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.  Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.

We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-10”) and have applied the standard as of the dates during the periods reported.

We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-9”).  The Company does not believe that the new or modified principal will not have a material effect on these financial statements.

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

NOTE 4. PREPAID EXPENSE

The Company’s prepaid expense consists of a retainer fee paid the law offices of Clifford J. Hunt, P.A. of $2,250 retainer and a last month rental fee for a storage facility of $1,644.  The prepaid balance was $3,894 and $3,894, on March 31, 2017 and December 31, 2016, respectively.     

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NOTE 5.  INVESTMENTS

	March 31, 2017	December 31, 2016
CJP Properties: Mineral rights acquired in Biron Bay, Ontario Canada. Consists of 2,720 acres.	$    9,647		-
Allsopp Properties: Mineral Rights acquired in the Kirkland Lake Gold’s Macassa mine Complex Ontario Canada. Consists of 1,680 acres. Exploration costs of $50,000 annually for the first two years of the agreement are required to meet contractual commitments and have been incurred by December 2016. The valuation of these mineral rights have been re-measured and deemed to have no carrying value at March 31, 2017.	$           -		$     9,222

NOTE 6.  INTANGIBLE ASSET

The Company had no intangible assets at March 31, 2017

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NOTE 7. NOTES PAYABLE

		March 31, 2017		December 31, 2016
On February 14, 2017, Auctus Fund, LLC an unrelated party has entered into a convertible note with the Company in the amount of $68,750. The note states an 12% interest rate with a maturity date of November 14, 2017, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 25 trading days.		68,750		-
On January 27, 2017, Power Up Lending Group, LTD an unrelated party has entered into a convertible note with the Company in the amount of $43,000. The note states an 8% interest rate with a maturity date of November 2, 2017, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 42% to the lowest trading day during the previous 15 trading days.		43.000		-
New Opportunity Business Solutions, Inc., a related party by virtue of common ownership in various companies that hold stock, for consulting services to the Company. Atacama Resources International, Inc. (ARII) is a client of New Opportunity Business Solutions, Inc. The original amount of the note payable was $199,800.  The note states a 10% interest rate with no set maturity date and is due on demand. Payment of principal and interest is due on demand and is not contingent. However, to the extent that the Company incurs expense to accomplish the goal of the consulting agreement, the obligation of the company shall be reduced an equal amount. The note is as support for the consulting fee which was owed by ARII but not paid as required.  Accrued interest at March 31, 2017 and December 31, 2016 was $27,902 and $63,663, respectively.		99,800		99,800
Total notes payable	$	211,550	$	276,984
Current portion	$	211,550	$	276,984

NOTE 8. INCOME TAXES

At March 31, 2017, the Company had a net operating loss carry–forward for Federal income tax purposes of approximately $599,661 that may be offset against future taxable income through 2032  No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets   calculated at the effective rates note below, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the valuation allowance.

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

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The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.6% to income before taxes), as follows:

		For the Period Ended March 31, 2017		For the Period Ended March 31, 2016
Tax expense (benefit) at the statutory rate	$	(159,255)	$	(10,404)
State income taxes, net of federal income tax benefit		(6,710)		(1,102)
Change in valuation allowance		165,965		11,506
Total	$	---	$	---

The tax effects of the temporary differences between reportable consolidated financial statement income and taxable income are recognized as deferred tax assets and liabilities.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

For the period ending March 31, 2017 and for the year ended December 31, 2016, the Company has net operating losses from operations. The carry forwards expire through the year 2032. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.

The Company’s net deferred tax asset as of March 31, 2017 and December 31, 2016 is as follows:

		March 31, 2017		December 31, 2016
Deferred tax assets	$	743,672	$	225,475
Valuation allowance		(743,672)		(225,475)
Net deferred tax asset	$	---	$	---

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the period from inception ended December 31, 2013 through the year ended December 31, 2016.  The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest through the year ended December 31, 2016.

NOTE 9. SHAREHOLDERS’ EQUITY

The Company, through approval of its Board of Directors, authorized common shares of 500,000,000 with a par value of $0.0001.

COMMON STOCK

On February 1, 2017, the Company issued 2,000,000 shares, at $0.085 per share, to William D. Webb, Jr., a related party, in exchange for consulting services totaling $170,000.   The market price on February 1 was $0.10 resulting in a loss of $30,000 which is reflected in the financial statements.

There were 141,900,818 shares of common stock issued and outstanding at March 31, 2017.

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NOTE 10. RELATED PARTY TRANSACTIONS

DUE TO RELATED PARTIES

During the three months ended March 31, 2017, Glenn Grant, CEO and director paid certain expenses on behalf of the Company and is due reimbursement. As of March 31, 2017 the balance due to the related party was $16,550.

NOTE PAYABLE

On December 4, 2014, Glenn Grant, advisor to the Company executed a demand note with the Company.  The note carries an Eight percent (8%) annual percentage rate.  The balance of the related party note as of March 31, 2017 and December 31, 2016 were $108,380 and $77,104, respectively.

EQUITY TRANSACTIONS

On February 1, 2017 through approval of its Board of Directors, the Company issued 2,000,000 shares at $0.085 per share to William D. Webb, Jr, CFO and in exchange for services totaling $170,000. The market price was $.10 resulting in a loss of $30,000.

NOTE 11. COMMITMENTS AND CONTINGENCIES

There are no commitments and contingencies of the Company as of March 31, 2017.

NOTE 12. WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional shares of common stock of the Company as of March 31, 2017.

NOTE 13 Convertible Debt

On January 27, 2017, The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $43,000 together with an interest rate of eight percent (8%) per annum and a maturity date of November 2, 2017. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid.

The holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal sixty-one percent (58%) of the e of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (42%).

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At March 31, 2017, the fair value of beneficial conversion feature was $88,829.

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 3 months ended March 31, 2017 the total interest expense recorded was $15,050 resulting in a debt discount balance of $27,950.

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	March 31, 2017	December 31, 2016
Power Up Lending Group, Ltd., a non-related party convertible promissory note:	$43,000	$      0
Debt discount	(27,950)	0
Convertible notes payable net of debt discount	15,050	0
Accrued interest	594	0
Current portion of convertible note payable and interest	$15,644	$0

On February 14, 2017, The Company executed a convertible promissory note with Auctus Fund, LLC. The note carries a principal balance of $68,750 together with an interest rate of eight percent (12%) per annum and a maturity date of November 14, 2017. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.

The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal sixty-one percent (55%) of the e of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).

The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At March 31, 2017, the fair value of beneficial conversion feature was $96.880.

The Company recorded the fair value of beneficial conversion feature as debt discount. For the 3 months ended March 31, 2017 the total interest expense recorded was $17,188 resulting in a debt discount balance of $51,562.

Convertible Note payable consisted of the following as of March 31, 2017:

	March 31, 2017	December 31, 2016
Auctus Fund, LLC, a non-related party convertible promissory note:	68,750	0
Debt discount	(51,562)	0
Convertible notes payable net of debt discount	17,188	0
Accrued interest	1,017	0
Current portion of convertible note payable and interest	18,205	0

NOTE 14. SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date the consolidated financial statements were issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward Looking Statements.

This quarterly report on Form 10-Q of Atacama Resources International, Inc. for the period ended March 31, 2017 contains certain 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, which are intended to be covered by the safe harbors created thereby.  To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties.  In particular, statements under this section contains forward looking statements.  Where in any forward looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the cost and effects of legal proceedings.

You should not rely on forward looking statements in this quarterly report.  This quarterly report contains forward looking statements that involve risks and uncertainties.  We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements.  Prospective investors should not place undue reliance on these forward looking statements, which apply only as of the date of this quarterly report.  Our actual results could differ materially from those anticipated in these forward-looking statements.

Our Business Overview

ARII is an operating company that provides consulting services to companies and individuals participating in the mining industry, manages actual mining operations and owns and sells smartphone Apps. We have conducted our mining operations in the Kirkland Lake region of Ontario, Canada,

Plan of Operation

Our plan of operation for the next twelve months is to expand our client base to the extent that we pursue the corporate advisory market in the mining sector and continue to acquire mining claims, run geophysical testing, core drilling, analysis and assays to determine proven reserves appropriate steps to take in actual mining processes.  We will also develop international marketing and sales strategies for our Good2Drive App. As we continue to grow, we will need to raise additional funds. We do anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. We do not have need for the purchase of any property or equipment at this time. ARII will not have any significant changes in the current number of employees.

Our plan of operation for the next twelve months is to raise capital to continue to expand our operations.  We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(a)(2) of the Securities Act of 1933.  

In order to continue as a going concern, we will need, among other things, additional capital resources.  Management’s plan to obtain such resources include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses.  However, management cannot provide any assurance that we will be successful in accomplishing any of its plans.

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Implications of Being an Emerging Growth Company

We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

• A requirement to have only two years of audited financial statements and only two years of related MD&A;

• Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

• Reduced disclosure about the emerging growth company’s executive compensation arrangements; and

• No non-binding advisory votes on executive compensation or golden parachute arrangements.

We have already taken advantage of these reduced reporting burdens in this Form 10-Q, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.  We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act.  This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

We are a reporting company and file all reports required under sections 13 and 15d of the Exchange Act.

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions.  On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our consolidated financial statements.  

While we believe that the historical experience, current trends and other factors considered support the preparation of our consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 Annual Report on Form 10-K.

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Results of Consolidated Operations for the three months ended March 31, 2017 and 2016.

The Company did not record any revenues during the three months ended March 31, 2017. We expensed exploration costs of $1,261, professional fees of $49,705, stock based compensation of $291,000 and selling and administrative costs of $96,514, resulting in total operating expenses of $438,481. We accrued interest expenses of $258, recorded a loss on the conversion of debt of $30,000 and recorded foreign exchange gains of $340. As a result, we had a net comprehensive loss of $468,399 for the three months ended March 31, 2017.

Comparatively, the Company did not record any revenues during the three months ended March 31, 2016. We expensed exploration costs of $13,190, professional fees of $13,918, and selling and administrative costs of $93, resulting in total operating expenses of $27,201. We accrued interest expenses of $9,465 and recorded foreign exchange gain of $6,065 resulting in a net loss of $36,666 for the three months ended March 31, 2017.

The $437,798, or 1,431%, increase in net comprehensive loss for the three months ended March 31, 2017 compared to the three months ended March 31, 2017 is primarily due to compensation costs during the three months ended March 31, 2017.

Consolidated Financial Condition

Total Assets.  Total assets at were $41,033 and $21,565 at March 31, 2017 and December 31, 2016.  Total assets at March 31, 2017 and December 31, 2016 consisted of cash of $23,516 and $17,670, respectively; prepaid expense of $3,894 and $3,894, respectively; investments of $-0- and $9,222, respectively; and intangible assets of $-0- and $155,000, respectively.  Total assets were due to cash received.

Total Liabilities.  Total liabilities were $988,707 and $700,839 at March 31, 2017 and December 31, 2016.  Total liabilities at March 31, 2017 and December 31, 2016 consisted of accounts payable of $649,482 and $569,528, respectively; notes payable of $43,000 and $99,800, respectively; due to related parties of $268,323 and $5,608, respectively and accrued interest of $27,902 and $29,903, respectively.  Total liabilities were due to increase in related party loans acts and compensation expenses.

Consolidated Liquidity and Capital Resources

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.  

The Company sustained a loss for the three months ending March 31, 2017 of $468,399.  The Company has an accumulated loss of $2,620,640 as of March 31, 2017.  Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of services.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We are presently unable to meet our obligations as they come due.  At March 31, 2017 we had working capital deficit of $947,674.  Our working capital deficit is due to the results of operations.

Net cash provided and used in operating activities for the three months ended March 31, 2017 and 2016 was $32,647 and ($75,519), respectively.   Net cash used in operating activities includes our net loss, prepaid expenses, accounts payable and accrued interest.

Net cash provided by financing activities for the three months ended March 31, 2017 and 2016 was $(26,801) and $68,091, respectively.  Net cash provided by financing activities included proceeds from related parties of $232,715 and $9,914, respectively, proceeds from notes payable of $(56,800) and $31,276, respectively, and proceeds from the issuance of common stock of $170,000 and $26,901, respectively.

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We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from the private sources and/or debt financing.  However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability.  Our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our company’s securities after the completion of this offering.  We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933.  See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”

We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.

Capital Resources.

We had no material commitments for capital expenditures as of March 31, 2017.

Off-Balance Sheet Arrangements

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures.

(a)   

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

With respect to the period ending March 31, 2017, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

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Based upon our evaluation regarding the period ending March 31, 2017, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, have added a Chief Financial Officer to oversee the financial information at multiple levels. Though there may be material weaknesses from a lack of a majority of outside directors on the board of directors, the placement of a Chief Financial Officer has compensated for this weakness. Through the use of external consultants and the review process, management believes that the consolidated financial statements and other information presented herewith are materially correct. Based on this evaluation, management concluded that our financial disclosure controls and procedures were not effective so as to timely identify, correct and disclose information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  However, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

(b)

Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the period ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

For a full discussion of controls and procedures refer to Item 9A, Controls and Procedures, in our 2016 Annual Report on Form 10K.

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Part II.  Other Information

Item 1.   Legal Proceedings  

None

Item 1A.  Risk Factors

Not applicable for smaller reporting company.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds  

None

Item 3.   Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

Not Applicable

Item 5.   Other Information

None

Item 6.   Exhibits

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**   XBRL Instance Document

101.SCH**   XBRL Taxonomy Extension Schema Document

101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**   XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**   XBRL Taxonomy Extension Label Linkbase Document

101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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Signatures

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

Atacama Resources International, Inc., (f/k/a Arrakis Mining Research, Inc.)

NAME	TITLE	DATE
/s/ Glenn Grant	Principal Executive Officer, Principal Accounting Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors	May 25, 2017
Glenn Grant

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