10-Q - Quarterly report [Sections 13 or 15(d)]

Document Info
Form Name: 10-Q
Filed: May 16, 2016
 
Atacama Form 10-Q 10-Q 1 atacama10q1q16v1.htm FORM 10-Q






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, 2016


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.

(f/k/a Arrakis Mining Research, 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 16, 2016 was 115,300,001.



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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

 

19

Item 4.  Controls and Procedures

 

19


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

 

21

 

 

 

SIGNATURES

 

23




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Table of Contents

Part I.  Financial Information

Item 1.  Financial Statements.

ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Balance Sheets

(Unaudited)


 

March 31, 2016

December 31, 2015

ASSETS

 

 

Current Assets

 

  Cash and cash equivalents

$   1,049

$   8,477

  Prepaid expenses

3,894

3,894

Total Current Assets

4,943

12,371

 

 

 

Investment

9,222

9,222

Intangible asset

155,000

155,000

 

164,222

164,222

 

 

 

TOTAL ASSETS

$169,165

$176,593

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

 

  Accounts payable

$161,577

$190,702

  Payable for Good2Drive LLC Acquisition

75,000

100,000

  Accrued interest

68,560

59,353

  Due to related party

18,716

8,803

  Note payable - related party

108,380

77,104

  Notes payable

199,880

199,880

Total Current Liabilities

632,113

635,842

 

 

 

Total Liabilities

632,113

635,842


COMMITMENTS AND CONTINGENCIES

 

 

Stockholders' Deficit

 

  Common stock: $0.0001 par value 500,000,000 authorized; 114,800,001 and   114,208,334 shares issued and outstanding, respectively

11,427

11,421

  Additional paid in capital

179,836

152,940

  Other comprehensive income

3,977

(2,088)

  Accumulated deficit

(658,188)

(621,522)

Total Stockholders' Deficit

(462,948)

(459,249)

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$   169,165

$ 176,593


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



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Table of Contents

ATACAMA RESOURCES INTERNATIONAL, INC.

Consolidated Statements of Operations

(Unaudited)


 

For the three months ended March 31, 2016

For the three months ended March 31, 2015

REVENUE

$           0

$           0

 

 

 

OPERATING EXPENSE

 

  Exploration costs

13,190

331

  Professional fees

13,918

8,135

  Selling, general and administrative expenses

93

2,832

Total operating expenses

27,201

11,298

 

 

 

Net loss from operations

(27,201)

(11,298)

 

 

 

Other income (expense)

  Interest expense

(9,465)

(5,208)

  Income tax

0

0

 

 

 

Net Income (Loss)

(36,666)

(16,506)

 

 

 

  Foreign exchange (loss)

6,065

0

 

 

 

Comprehensive (loss)

$(30,601)

$(16,506)

 

 

 

Basic and diluted loss per share

$(0.001)

$(0.001)

 

 

 

Weighted average number of shares outstanding

114,379,538

31,725,000


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, 2016

For the three months ended March 31, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss

$(36,666)

$(16,506)

Changes in assets and liabilities:

  (Increase) decrease in operating assets:

    Prepaid expense

0

(2,250)

  Increase (decrease) in operating liabilities:

    Accounts payable

(54,125)

(265)

    Accrued interest

9,207

5,208

Net cash provided by (used in) operating activities

(81,584)

(13,813)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

  Purchase of Good2Drive LLC

0

0

  Purchase of mineral rights

0

0

Net cash provided by (used in) investing activities

0

0

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from related party

9,914

2,739

  Proceeds from notes payable

31,276

11,059

  Proceeds from issuance of stock

26,901

0

Net cash provided by financing activities

68,091

13,798

 

 

 

Foreign Currency Translation

6,065

0

 

 

 

Net change in cash and cash equivalents

(7,428)

(15)

 

 

 

Cash and cash equivalents

  Beginning of period

$8,477

$1,693

  End of period

$1,049

$1,678

 

 

 

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, 2016

(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 2015 Annual Report on Form 10-K, filed on April 21, 2016.




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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 $1,049 at March 31, 2016 and $8,477 at December 31, 2015.


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, 2016 and 2015, the Company recorded exploration costs of $13,190 and $331, 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, 2016 and December 31, 2015. 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, 2016 or December 31, 2015.




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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, 2016 and December 31, 2015.  As of March 31, 2016, 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.  

 

Share-based expense was $-0- for the three months ending March 31, 2016; $-0- for the three months ending March 31, 2015.


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, 2016 and December 31, 2015, respectively.     




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NOTE 5.  INVESTMENTS


 

March  31,

2016

December 31,

2015

Allsopp Properties: Mineral Rights acquired in the Kirkland  Lake Gold's Macassa mine Complex Ontario Canada. Consists of 1,680 acres.

  $   9,222

 $      9,222


NOTE 6.  INTANGIBLE ASSET


The Company purchased Good2Drive LLC. from Engaged Mobility LLC for a cost of $155,000. The purchase was made by issuing 16,500,000 shares of Atacama International Resources Inc. Good2Drive, which also includes Good2Roll and Good2Pilot, is a smartphone application that establishes a baseline to test driver's alertness.


NOTE 7. NOTES PAYABLE


 

 

March 31,

2016

 

December 31,

2015

Glenn Grant, CEO, President and director to the Company executed a demand note with the Company.  The note carries an Eight percent (8%) annual percentage rate.  Accrued interest at March 31, 2016 and December 31, 2015 was $4,896 and $2,168, respectively.

$

108,380

$

77,104


New Opportunity Business Solutions, Inc., a non-related party 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, 2016 and December 31, 2015 was $63,663 and $57,185, respectively.

 

199,880

 

199,800

 

 

 

 

 

Total notes payable

$

293,260

$

276,984

 

 

 

 

 

Current portion

$

293,260

$

276,984


NOTE 8. INCOME TAXES


At March 31, 2016, 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.




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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.


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, 2016

 

For the Period Ended

March 31, 2015

Tax expense (benefit) at the statutory rate

$

(10,404)

$

(5,612)

State income taxes, net of federal income tax benefit

 

(1,102)

 

(594)

Change in valuation allowance

 

11,506

 

6,206

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, 2016 and for the year ended December 31, 2015, 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, 2016 and December 31, 2015 is as follows:


 

 

March 31,

2016

 

December 31,

2015

Deferred tax assets

$

225,475

$

233,800

Valuation allowance

 

(225,475)

 

(233,800)

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, 2015.  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, 2015.


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 March 24, 2014, the Company issued 325,000 shares, at $0.10 per share, to Soellingen Advisory Group, Inc., a non-related party, in exchange for consulting services totaling $32,500.   




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In August 2014, the Board of Directors cancelled 12 million shares that were issued in anticipation of services to be performed. The following shares were cancelled due to non-performance.  The shares were originally issued at par $0.0001.


1. Foster Smith  6,000,000

2. Bruce Hartley  2,000,000

3. Gerald Ernst  2,000,000

4. Kavita Khandelwal  2,000,000


On August 29, 2014, the Company issued at $0.0001 per share 1,200,000 shares to Ken Olsen, Former CEO and director, 2,098,600 shares to Glenn Grant, CEO and director, 125,000 shares to Raymond Skaff, director, 1,648,840 shares to Nelson Riis, advisor and 6,927,560 shares to other non-related parties that have been instrumental in the progress of the company for services rendered.  The Company issued a total of 12 million shares at par value of $0.0001 per share for consulting services totaling $1,200.


On August 7, 2015, the Company issued at $0.0001 per share 12,000,000 shares to 1172321 Alberta Ltd., a related party, 12,000,000 shares to BOWER Solutions, a related party, 8,400,000 shares to Daniel Finch, COO and director, and on September 21, 2015, 10,000,000 shares to Richard Roy, CFO and director for services that have been instrumental in the progress of the company.


On August 7, 2015, the Company issued at $0.0001 per share 12,000,000 shares to 1778928 Alberta Ltd., a related party, 2,400,000 shares to Nelson Riis, advisor, 2,400,000 shares to Arnold Allsopp, advisor and 2,400,000 shares to Seal River Exploration Ltd., a non-related party, and on September 21, 2015, 3,600,000 shares to Dianne Finch, a related party, and 300,000 shares to Tammy Kaleta, a non-related party for exchange of services instrumental to the progress of the company.


On September 21, 2015, the Company issued 333,333 shares at $0.06 per share to Don Swartz, a non- related party for $20,000.


On October 31, 2015, the Company issued 100,000 shares at $0.10 Canadian per share to Shawn Rich, a non-related party for $10,000 Canadian.


On December 18, 2015, the Company issued 25,000 shares at $0.13 Canadian per share to Bob Fisher, a non-related party, for $3,250 Canadian; 25,000 shares at $0.13 Canadian per share to Lynda Fisher, a non-related party, for $3,250 Canadian.


On December 10, 2015, the Company issued 16,500,000 shares at $0.00939 per share to Engaged Mobility LLC, a related company, for the purchase of Good2Drive LLC.


On January 27, 2016, the Company issued 25,000 shares at $0.10 per share to Ben Stewart, a non-related party for $2,500.


On March 4, 2016, the Company issued 100,000 shares at $0.10 per share to Kort Clair, a non-related party for $10,000 and 100,000 shares at $0.10 per share to Karen Clair, a non-related party for $10,000.


On March 8, 2016, the Company issued 266,667 shares at $0.04 per share to Don Swartz, a non-related party for $10,000 and 100,000 shares at $0.05 per share to Shawn Rich, a non-related party for $5,000.


There were 114,800,001 shares of common stock issued and outstanding at March 31, 2016.




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NOTE 10. RELATED PARTY TRANSACTIONS


DUE TO RELATED PARTIES

During the three months ended March 31, 2016, Glenn Grant, CEO and director paid certain expenses on behalf of the Company and is due reimbursement. As of March 31, 2016 the balance due to the related party was $16,550.


 During the three month ended March 31, 2016, Richard Roy, CFO and director paid for certain operating expenses on behalf of the Company and is due reimbursement. As of March 31, 2016, the balance due to the related party was $2,166.


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, 2016 and December 31, 2015 were $108,380 and $77,104, respectively.


INTANGIBLE ASSET

In December 2015, the Company purchased 100% of Good2Drive LLC in exchange for cash and common stock of Atacama Resources International Inc. The total cost of the acquisition is $155,000. The negotiation and acquisition was directed by Dan Finch, COO of Atacama Resources International Inc., who held a five (5%) interest in Good2Drive LLC.


EQUITY TRANSACTIONS

On August 29, 2014 through approval of its Board of Directors, the Company issued 2,098,600 shares at $0.05 per share to Glen Grant, CEO and director in exchange for services totaling $104,930.


On August 7, 2015 through approval of its Board of Directors, the Company issued at par value $0.0001 the followings shares to related parties for exchange of services instrumental to the progress of the company:


1172321 Alberta Ltd

12,000,000 shares

1778928 Alberta Ltd.

12,000,000 shares

Bower Solutions Ltd.

12,000,000 shares

Daniel Finch (COO and director)

  8,400,000 shares


 On September 21, 2015 through approval of its Board of Directors, the Company issued at par value $0.0001  3,600,000 shares to Dianne Finch and 10,000,000 shares to Richard Roy, CFO and director  for exchange of services instrumental to the progress of the company.


NOTE 11. COMMITMENTS AND CONTINGENCIES


There are no commitments and contingencies of the Company as of March 31, 2016.


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, 2016.




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NOTE 13. SUBSEQUENT EVENTS


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


The Company received approval from FINRA to use the Company's new stock symbol: ACRL and has full reporting status with the SEC. Shares in ACRL will be listed on the OTC Markets website as Pink Current Information until it eventually moves to the OTCQB.


As of May 10, 2016, the Company has issued 500,000 of additional common stock for $50,000. Therefore, the total amount of common stock issued and outstanding as of May 10, 2016 is 115,300,001.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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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, 2016 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 the Sections; Description of Business, Management's Discussion and Analysis of Financial Condition and Results of Operations contain 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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12 Month Growth Strategy and Milestones


While a strategic and wisely executed marketing campaign is key to expanding our customer base; providing innovative strategies developed and implemented for our clients and customers, will provide a solid platform upon which our operations will continue to grow and deliver long-term success.


Note: The following milestones are based on our business development strategy.


0-3 Months

Initiate revenue targets for the sale/subscription of Good2Drive.

Complete assay results for the first two drills at Atacama one mine site.

Produce marketing materials and explore online marketing options.

Research and determine future priority market opportunities

Establish marketing and communications strategy.

4-6 Months

Build business development and support team.

Create expanded growth and corporate development strategy for business expansion in certain US regions that have been identified as high-potential market opportunities for the company.

Implement Investor Relations program.

Implement a communication schedule for internal and external stakeholders in accordance with SEC guidelines and best practices.

7-9 Months

Expand Board of Directors to include independent directors.

Commence long-range financial and growth planning for successive 2 and 3 year periods.

10-12 Months

Any need for outside services in which we cannot provide will all be initially outsourced in order to cut costs by not having facilities in excess of our needs.  The company will not attempt to establish relationships with providers of outsourcing services until the company will be able to utilize such services.


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.

 



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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 2015 Annual Report on Form 10-K.


Results of Consolidated Operations for the three months ended March 31, 2016 and 2015.


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 foreign exchange gains of $6,065. As a result, we had a net comprehensive loss of $30,601 for the three months ended March 31, 2016.


Comparatively, the Company did not record any revenues during the three months ended March 31, 2015. We expensed exploration costs of $331, professional fees of $8,135, and selling and administrative costs of $2,832, resulting in total operating expenses of $11,298. We accrued interest expenses of $5,208, resulting in a net loss of $16,506 for the three months ended March 31, 2015.


The $14,095, or 85.3%, increase in net comprehensive loss for the three months ended March 31, 2015 compared to the three months ended March 31, 2015 is primarily due to increase exploration costs during the three months ended March 31, 2016.


Consolidated Financial Condition


Total Assets.  Total assets at were $169,165 and $176,593 at March 31, 2016 and December 31, 2015.  Total assets at March 31, 2016 and December 31, 2015 consisted of cash of $1,049 and $8,477, respectively; prepaid expense of $3,894 and $3,894, respectively; investments of $9,222 and $9,222, respectively; and intangible assets of $155,000 and $155,000, respectively.  Total assets were due to cash received via subscription agreements and a consulting contract. The prepaid expense was due to a legal retainer payment. The investment was due to purchased mineral rights of $9,222 and the intangible asset was due to the acquisition of an application company, Good2Drive LLC of $155,000.




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Total Liabilities.  Total liabilities were $632,113 and $635,842 at March 31, 2016 and December 31, 2015.  Total liabilities at March 31, 2016 and December 31, 2015 consisted of accounts payable of $236,577 and $290,702, respectively; notes payable of $308,260 and $276,984, respectively; due to related parties of $18,716 and $8,803, respectively and accrued interest of $68,560 and $59,353, respectively.  Total liabilities were due to the promissory note related to consulting contracts and a payable associated with the preparation of the S1 registration statement.


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, 2016 of $36,666.  The Company has an accumulated loss of $658,188 as of March 31, 2016.  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, 2016 we had working capital deficit of $627,170.  Our working capital deficit is due to the results of operations.


Net cash used in operating activities for the three months ended March 31, 2016 and 2015 was ($81,584) and ($13,813), 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, 2016 and 2015 was $68,091 and $13,798, respectively.  Net cash provided by financing activities included proceeds from related parties of $9,914 and $2,739, respectively, proceeds from notes payable of  $31,276 and $11,059, respectively, and proceeds from the issuance of common stock of $26,901 and $-0-, respectively.


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, 2016.




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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, 2016, 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.

 

Based upon our evaluation regarding the period ending March 31, 2016, 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, 2016 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 2015 Annual Report on Form 10K.



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Part II.  Other Information


Item 1.  Legal Proceedings.


None.


Item 1A.  Risk Factors


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


On January 27, 2016, the Company issued 25,000 shares at $0.10 per share to Ben Stewart, a non-related party for $2,500.


On March 4, 2016, the Company issued 100,000 shares at $0.10 per share to Kort Clair, a non-related party for $10,000 and 100,000 shares at $0.10 per share to Karen Clair, a non-related party for $10,000.


On March 8, 2016, the Company issued 266,667 shares at $0.04 per share to Don Swartz, a non-related party for $10,000 and 100,000 shares at $0.05 per share to Shawn Rich, a non-related party for $5,000.


As of May 10, 2016, the Company has issued 500,000 common shares at $0.10 per share to Barbara Bush, a non-related party for $50,000.


These shares are exempt from registration under Section 4(a)(2) of the Securities Act.  All of the shares were issued to people who have enough knowledge and experience in finance and business matters to be considered "sophisticated investors", they had access to the type of information normally provided in a prospectus for a registered securities offering, and they agreed not to resell or distribute the securities to the public.


Item 3.  Defaults Upon Senior Securities


None.


Item 4.  Mine Safety Disclosures


Not applicable.


Item 5. Other Information.


None.





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Item 6. Exhibits


Exhibit Number and Description

 

Location Reference

(a)

Financial Statements

 

Filed herewith

(b)

Exhibits required by Item 601, Regulation S-K

 

 

 

(3.0)

Articles of Incorporation

 

 

 

 

(3.1)

Initial Articles of Incorporation filed with S-1 Registration Statement on November 8, 2013.

 

See Exhibit Key

 

 

(3.2)

Amendment to Articles of Incorporation dated January 15, 2015

 

See Exhibit Key

 

 

(3.3)

Bylaws filed with S-1 Registration Statement on November 8, 2013

 

See Exhibit Key

 

(10.0)

Material Contracts

 

 

 

 

(10.1)

Consulting Agreement dated June 19, 2013

 

See Exhibit Key

 

(11.0)

Statement re: computation of per share Earnings

 

Note 3 to Financial Stmts


 

(14.0)

Code of Ethics

 

See Exhibit Key

 

(31.1)

Certificate of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

(31.2)

Certificate of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

 

 

 

 

(101.INS)

XBRL Instance Document

 

Filed herewith

(101.SCH)

XBRL Taxonomy Ext. Schema Document

 

Filed herewith

(101.CAL)

XBRL Taxonomy Ext. Calculation Linkbase Document

 

Filed herewith

(101.DEF)

XBRL Taxonomy Ext. Definition Linkbase Document

 

Filed herewith

(101.LAB)

XBRL Taxonomy Ext. Label Linkbase Document

 

Filed herewith

(101.PRE)

XBRL Taxonomy Ext. Presentation Linkbase Document

 

Filed herewith




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Exhibit Key

3.1

Incorporated by reference herein to the Company's S-1 Registration Statement filed with the Securities and Exchange Commission on November 8, 2013.

3.2

Incorporated by reference herein to the Company's Form 8-K

Current Report filed with the Securities and Exchange Commission on January 15, 2015.

3.3

Incorporated by reference herein to the Company's S-1 Registration Statement filed with the Securities and Exchange Commission on November 8, 2013.

10.1

Incorporated by reference herein to the Company's S-1 Registration Statement filed with the Securities and Exchange Commission on June 19, 2013.

14.0

Incorporated by reference herein to the Company's S-1 Registration Statement filed with the Securities and Exchange Commission on November 8, 2013.




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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 16, 2016

Glenn Grant

 

 

 

 






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