We use the terms "Athena," "we," "our," and "us" to refer to Athena Gold
Corporation.
The following discussion and analysis provide information that management
believes is relevant for an assessment and understanding of our results of
operations and financial condition. This information should be read in
conjunction with our audited consolidated financial statements which are
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2020, and our interim unaudited consolidated financial statements and notes
thereto included with this report in Part I. Item 1.
Forward-Looking Statements
Some of the information presented in this Form 10-Q constitutes "forward-looking
statements". These forward-looking statements include, but are not limited to,
statements that include terms such as "may," "will," "intend," "anticipate,"
"estimate," "expect," "continue," "believe," "plan," or the like, as well as all
statements that are not historical facts. Forward-looking statements are
inherently subject to risks and uncertainties that could cause actual results to
differ materially from current expectations. Although we believe our
expectations are based on reasonable assumptions within the bounds of our
knowledge of our business and operations, there can be no assurance that actual
results will not differ materially from expectations.
All forward-looking statements speak only as of the date on which they are made.
We undertake no obligation to update such statements to reflect events that
occur or circumstances that exist after the date on which they are made.
Business Overview
We were incorporated on December 23, 2003, in Delaware and our principal
business is the acquisition and exploration of mineral resources.
In January 2021, the company's Board of Directors approved a name change from
Athena Silver Corporation, to Athena Gold Corporation. Athena Gold Corporation
("we," "our," "us," or "Athena") is engaged in the acquisition and exploration
of mineral resources. We began our mining operations in 2010.
In December 2009, we formed and organized a new wholly-owned subsidiary, Athena
Minerals, Inc. ("Athena Minerals") which owned and operated our mining interests
and properties in California. On December 31, 2020 we sold the subsidiary to
Tripower Resources Inc., a company controlled by Mr. John Gibbs, a related
party, in a non-cash exchange. Further information regarding this transaction is
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2020.
In December 2020, Athena entered into a definitive Property Option Agreement
with Nubian Resources Ltd. ("Nubian") (TSXV: NBR), pursuant to which Athena
acquired a 10% interest in Nubian's Excelsior Springs exploration project
located in Esmeralda County, Nevada and has an option to acquire the remaining
90% held by Nubian.
The Option is exercisable in two tranches: the first tranche was exercised
immediately pursuant to which the Company acquired a 10% interest in Excelsior
Springs in consideration of issuing to Nubian an aggregate of 5,000,000 shares
of Athena Gold Corporation common stock. The Company issued the 5,000,000 shares
of its common stock valued at $0.03 per share totaling $150,000 in December
2020. The second tranche is exercisable on or before December 31, 2021 to
purchase an additional 90% interest in Excelsior Springs in consideration of
issuing to Nubian an additional 45 million shares of Athena common stock. Should
both options be exercised, Nubian will hold 50 million shares of Athena common
stock, which will be subject to a six-month lockup.
Athena's agreement with Nubian includes 100% of the 140 unpatented claims at
Excelsior Springs with two additional patented claims held under a lease option
that are subject to a 2% net smelter returns royalty on gold production. Under
the terms of the Option Agreement, Nubian will retain a 1% net smelter returns
royalty ("NSR Royalty") on the Excelsior Springs Project if Athena fully
exercises the option. Athena will have the right to purchase 0.5% (being one
half) of the NSR Royalty for CAD $500,000 and the remaining 0.5% of the NSR
Royalty at fair market value.
14
Excelsior Springs is our flagship project and we have completed a N.I. 43-101
Technical Report to support our planned listing on the Canadian Stock Exchange
that details historical exploration activities on the property, recent
exploration activities conducted by Athena and also highlights future
exploration plans to advance the Property.
We have not presently determined whether our mineral properties contain mineral
reserves that are economically recoverable.
Reclassifications: Certain reclassifications may have been made to our prior
year's consolidated financial statements to conform to our current year
presentation. These reclassifications had no effect on our previously reported
results of operations or accumulated deficit.
COVID-19 pandemic: An occurrence of an uncontrollable event such as the COVID-19
pandemic may negatively affect our operations. The occurrence of an
uncontrollable event such as the COVID-19 pandemic may negatively affect our
operations. A pandemic typically results in social distancing, travel bans and
quarantine, and this may limit access to our facilities, customers, management,
support staff and professional advisors. These factors, in turn, may not only
impact our operations, financial condition and demand for our goods and services
but our overall ability to react timely to mitigate the impact of this event.
Also, it may hamper our efforts to comply with our filing obligations with the
Securities and Exchange Commission.
Results of Operations for the Three Months Ended June 30, 2021 and 2020
A summary of our results from operations is as follows:
Three Months Ended June 30,
2021 2020
Operating expenses:
Exploration costs $ 26,099 $ -
General and administrative expenses 116,844 30,561
Total operating expenses 142,943 30,561
Operating loss (142,943 ) (30,561 )
Total other income (expenses), net 59,178 (32,696 )
Net loss $ (83,765 ) $ (63,257 )
During the three months ended June 30, 2021, our net loss was $83,765 as
compared to a net loss of $63,257 during the same period in 2020. The 2021
operating loss of $142,943 increased $112,382 over the prior year period and was
mainly attributable to stock-based compensation resulting from the issuance of
incentive stock options, as well as increased legal and professional fees
associated with the acquisition and maintenance of the Excelsior Springs
project. The 2021 operating loss was partially offset by a $62,093 gain in the
change in value of the warrant derivative liability associated with a private
placement concluded on May 25, 2021.
Operating expenses:
Our total operating expenses increased $112,382, from $30,561 to $142,943 for
the three months ended June 30, 2020 and 2021, respectively.
During the three months ended June 30, 2021, we incurred $26,099 of exploration
costs, which include a $15,000 payment associated with the lease of two patented
claims within the Excelsior Springs project. We have also begun initial
activities on our future exploration programs which has resulted in an
additional $11,099 of exploration costs. During the three months ended June 30,
2020, we incurred no exploration costs.
Our general and administrative expenses increased by $86,283, from $30,561 to
$116,844 for the three months ended June 30, 2020 and 2021, respectively.
15
Legal and professional fees and other expenses were $94,438 and $27,833 for
three months ended June 30, 2021 and 2020, respectively, an increase of $66,605.
The majority of the legal and other professional fees associated with our
planned listing on the Canadian Stock Exchange ("CSE"). The Company is currently
in the comment stage with the CSE and will be submitting an updated application
in the third quarter.
On March 22, 2021, the Company issued a total of 2,000,000 non-statutory stock
options to four individuals, three of which are Directors of the Company, the
other an independent technical consultant. Upon vesting, each option is
exercisable to purchase one share of common stock at a price of $0.09 per share.
The options vest 50% upon issuance, and 25% on each of the 1st and 2nd
anniversaries of the grant date.
We estimated the fair value of the options using the Black-Scholes option
pricing model, which includes assumptions for expected dividends, expected share
price volatility, risk-free interest rate, and expected life of the options. Our
expected volatility assumption is based on our historical weekly closing price
of our stock over a period equivalent to the expected remaining life of the
options. The total estimated fair value of the options utilized the following
assumptions:
Expected volatility 184%
Contractual term 5 years
Risk free interest rate 0.87%
Expected dividend rate 0%
The calculations resulted in the total fair value of the options issued to be
$197,552. During each vesting period or upon the vesting date a percentage of
the total value of the options issued and outstanding is charged to stock-based
compensation. As such, an administrative expense charge of $18,520 was recorded
for the three months ended June 30, 2021.
Other income and expense:
Our total other income, net was $59,178 during the three months ended June 30,
2021, as compared to total other expenses, net of $32,696 during the three
months ended June 30, 2020.
For the three months ended June 30, 2021, other income, net included $2,915 of
interest expense associated with a convertible note payable originating in April
2015, from the conversion of certain amounts due our primary legal counsel.
Interest expense on the convertible note payable includes $1,831 of interest
expense resulting from the amortization of the note discount. As of June 30,
2021, all the discount associated with the note has been fully amortized.
For the three months ended June 30, 2020, interest expense included $27,984 in
interest expense associated with our related party convertible credit facility,
$1,050 of interest expense associated with a convertible note payable
originating in April 2015 from the conversion of certain amounts due our primary
legal counsel, as well as $3,662 resulting from the amortization of the discount
on a convertible note payable.
On May 25, 2021, we completed a private placement in which we sold 6,250,000
units. Each unit was priced at CAD$0.08 and consisted of one share of the
Company's common stock and one stock purchase warrant granting the holder the
right to purchase one additional share of common stock at a price of CAD$0.15.
The warrants expire three years from the date of issuance. An additional 173,810
warrants were granted to a Canadian broker as a placement fee. We realized total
proceeds of $401,823 net of offering costs.
The warrants have an exercise price in Canadian dollars while the Company's
functional currency is US dollars. Therefore, in accordance with ASU 815 -
Derivatives and Hedging, the warrants have a derivative liability value.
At inception date of May 25, 2021, we determined the warrants fair value to be
$485,052. As of June 30, 2021, the warrant liability was valued at $422,959,
resulting in a gain on revaluation of warrant liability of $62,093 based on the
following assumptions:
Fair value assumptions - derivative warrants: May 25, 2021 June 30, 2021
Risk free interest rate 0.30% 0.47%
Expected term (years) 3.0 2.9
Expected volatility 180% 179%
Expected dividends 0% 0%
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Results of Operations for the Six Months Ended June 30, 2021 and 2020
A summary of our results from operations is as follows:
Six Months Ended June 30,
2021 2020
Operating expenses:
Exploration costs $ 61,776 $ -
General and administrative expenses 330,947 64,936
Total operating expenses 392,723 64,936
Operating loss (392,723 ) (64,936 )
Total other income (expenses), net 51,986 (61,937 )
Net loss $ (340,737 ) $ (126,873 )
During the six months ended June 30, 2021, our net loss was $340,737 as compared
to a net loss of $126,873 during the same period in 2020. The $213,864 increase
in our loss was mainly attributable to exploration costs associated with the
Excelsior Springs project, stock-based compensation resulting from the issuance
of incentive stock options and restricted stock units, as well as increased
legal and professional fees associated with the sale of Athena Minerals, Inc.
and the acquisition of the Excelsior Springs project. The loss for the six
months ended June 30, 2021 is also partially offset by a $62,093 gain on the
change in fair value of a derivative liability established as a result of the
June 30, 2021 valuations of warrants attached to the common stock sold in a
private placement concluded on May 25, 2021.
Operating expenses:
Our total operating expenses increased $327,787, from $64,936 to $392,723 for
the six months ended June 30, 2020 and 2021, respectively.
During the six months ended June 30, 2021, we incurred $61,776 of exploration
costs. In March 2021, we issued 300,000 restricted stock units at a price of
$0.10 per share to the independent technical consultant. However, the shares
shall not be issued until such time the individual either provides a written
request or his termination date, whichever is sooner. As such, we have recorded
stock-based compensation in the amount of $30,000 which was charged to
exploration costs. In May 2021, we made the $15,000 annual lease payment for two
patented claims within the Excelsior project. We have also begun preliminary
work on our future exploration programs which has resulted in an additional
$16,776 of exploration costs. During the six months ended June 30, 2020, we
incurred no exploration costs.
Our general and administrative expenses increased by $266,011, from $64,936 to
$330,947 for the six months ended June 30, 2020 and 2021.
Legal and professional fees for the six months ended June 30, 2021 totaled
$206,392 and are attributed to legal and other professional fees associated with
the acquisition and maintenance of the Excelsior Springs project and our planned
listing on the CSE as previously discussed. Total legal costs for the six months
ended June 30, 2020, totaled $55,242, an increase of $151,150 as compared to the
six months ended June 30, 2021.
On March 22, 2021, the Company issued a total of 2,000,000 non-statutory stock
options to four individuals, three of which are Directors of the Company, the
other an independent technical consultant that is helping design our 2021
exploration programs at Excelsior Spring. Upon vesting, each option is
exercisable to purchase one share of common stock at a price of $0.09 per share.
The options vest 50% upon issuance, and 25% on each of the 1st and 2nd
anniversaries of the grant date.
17
We estimated the fair value of the options using the Black-Scholes option
pricing model, which includes assumptions for expected dividends, expected share
price volatility, risk-free interest rate, and expected life of the options. Our
expected volatility assumption is based on our historical weekly closing price
of our stock over a period equivalent to the expected remaining life of the
options. The total estimated fair value of the options utilized the following
assumptions:
Expected volatility 184%
Contractual term 5 years
Risk free interest rate 0.87%
Expected dividend rate 0%
The calculations resulted in the total fair value of the options issued to be
$197,552. Upon each vesting date a percentage of the total value of the options
issued and outstanding is charged to stock-based compensation. As such,
administrative expense charges of $117,295 have been recorded through June 30,
2021.
Other income and expense:
Total other income, net was $51,986 during the six months ended June 30, 2021,
as compared to total other expense, net of $61,937 during the six months ended
June 30, 2020.
For the six months ended June 30, 2021, other income, net included interest
expense associated with a convertible note payable originating in April 2015,
from the conversion of certain amounts due our primary legal counsel. Interest
expense on the convertible note payable includes $7,324 of interest expense
resulting from the amortization of the note discount. As of June 30, 2021, all
the discount associated with the note has been fully amortized. For the six
months ended June 30, 2020 interest expense totaled $61,937 which included
$55,557 in interest expense associated with our related party convertible credit
facility, $2,070 of interest expense associated with a convertible note payable
originating in April 2015 from the conversion of certain amounts due our primary
legal counsel, $3,662 resulting from the amortization of the discount on a
convertible note payable, as well as $648 of interest associated with the
resolution of a 2019 franchise tax obligation which was paid during the quarter.
On May 25, 2021, we completed a private placement in which we sold 6,250,000
units. Each unit was priced at CAD$0.08 and consisted of one share of the
Company's common stock and one stock purchase warrant granting the holder the
right to purchase one additional share of common stock at a price of CAD$0.15.
The warrants expire three years from the date of issuance. An additional 173,810
warrants were granted to a Canadian broker as a placement fee. We realized total
proceeds of $401,823 net of offering costs.
The warrants have an exercise price in Canadian dollars while the Company's
functional currency is US dollars. Therefore, in accordance with ASU 815 -
Derivatives and Hedging, the warrants have a derivative liability value.
At inception date of May 25, 2021, we determined the warrants fair value to be
$485,052. For the six months ending June 30, 2021, the warrant liability was
valued at $422,959, resulting in a gain on revaluation of warrant liability of
$62,093 based on the following assumptions:
Fair value assumptions - derivative warrants: May 25, 2021 June 30, 2021
Risk free interest rate 0.30% 0.47%
Expected term (years) 3.0 2.9
Expected volatility 180% 179%
Expected dividends 0% 0%
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For the six months ended June 30, 2020 interest expense totaled $61,937 which
included $55,557 in interest expense associated with our related party
convertible credit facility, $2,070 of interest expense associated with a
convertible note payable originating in April 2015 from the conversion of
certain amounts due our primary legal counsel, $3,662 resulting from the
amortization of the discount on a convertible note payable, as well as $648 of
interest associated with the resolution of a 2019 franchise tax obligation which
was paid during the quarter.
Liquidity and Capital Resources
Going Concern
Our consolidated financial statements have been prepared on a going concern
basis, which assumes that we will be able to meet our obligations and continue
our operations during the next fiscal year. Asset realization values may be
significantly different from carrying values as shown in our consolidated
financial statements and do not give effect to adjustments that would be
necessary to the carrying values of assets and liabilities should we be unable
to continue as a going concern.
At June 30, 2021, we had not yet achieved profitable operations and we have
accumulated losses of $10,329,622 since our inception. We expect to incur
further losses in the development of our business, all of which casts
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern depends on our ability to generate future profits
and/or to obtain the necessary financing to meet our obligations arising from
normal business operations when they come due.
We have financed our capital requirements primarily through borrowings from
related parties and equity financings. We expect to meet our future financing
needs and working capital and capital expenditure requirements through
additional borrowings and offerings of debt or equity securities, although there
can be no assurance that our future financing efforts will be successful. The
terms of future financing could be highly dilutive to existing shareholders.
Currently, there are no arrangements in place for additional equity funding or
new loans.
Liquidity
As of June 30, 2021, we had $271,311 of cash and working capital of $157,092.
This compares to cash on hand of $8,986 and negative working capital of $235,696
at December 31, 2020.
During the six months ended June 30, 2021, we have sold 11,250,000 shares of
common stock in private placements realizing proceeds of $551,823. We anticipate
that future funding will be in the form of additional equity financing from the
sale of our common stock, or loans from officers, directors or significant
shareholders.
Cash Flows
A summary of our cash provided by and used in operating, investing and financing
activities is as follows:
Six Months Ended June 30,
2021 2020
Net cash used in operating activities $ (267,600 ) $ (54,240 )
Net cash provided by financing activities 529,925 55,464
Net increase in cash 262,325 1,224
Cash, beginning of period 8,986 117
Cash, end of period $ 271,311 $ 1,341
19
Net cash used in operating activities:
Net cash used in operating activities was $267,600 and $54,240 during the six
months ended June 30, 2021 and 2020, respectively.
Cash used in operating activities during the six months ended June 30, 2021 is
primarily attributed to our $340,737 net loss. Non-cash charges to operating
activities included $7,324 of amortization of the debt discount on our
convertible note payable, total stock based compensation of $147,295, and the
gain on change in value of the derivative liability of $62,093. We also realized
a decrease in accounts payable of $21,545, and an increase in other accrued
liabilities of $2,156.
Cash used in operating activities during the six months ended June 30, 2020 is
primarily attributed to our $126,873 net loss. A non-cash charge of $3,662 to
operating activities represents amortization of the debt discount on our
convertible note payable We also realized increases in accounts payable of
$8,844, accrued interest on our notes payable of $55,557, and an increase in
other accrued liabilities of $4,570.
Net cash provided by financing activities:
Cash provided by financing activities during the six months ended June 30, 2021
was $529,925 compared to cash provided by financing activities of $55,464 during
the same period in 2020.
During the six months ended June 30, 2021 the Company's President had advanced a
total of $12,012, and was repaid a total of $33,910. At June 30, 2021 there were
no unpaid advances.
On May 25, 2021 we completed a private placement in which we sold 6,250,000
units. Each unit was priced at CAD$0.08 and consisted of one share of the
Company's common stock and one stock purchase warrant granting the holder the
right to purchase one additional share of common stock at a price of CAD$0.15.
The warrants expire three years from the date of issuance. All securities issued
in connection with the offering are subject to restrictions on resale in Canada
and the United States pursuant to applicable securities laws and the policies of
any applicable stock exchange. An additional 173,810 warrants were granted to a
Canadian broker as a placement fee. We realized total proceeds of $401,823 net
of offering costs. Of the total units sold, 2,200,000 were sold to a significant
shareholder related party, and an additional 300,000 were sold to the Company's
President and CEO.
During the six months ended June 30, 2021, we also sold 5,000,000 shares of our
common stock in private placements at a price of $0.03 per share, resulting in
total proceeds of $150,000. Of the total shares sold, 250,000 were sold to a
significant shareholder related party.
For the six months ended June 30, 2020 borrowings under our convertible credit
facility were $42,750. Also, during the period the Company's President had
advanced a total of $33,401, and was repaid a total of $20,687 associated with
advances outstanding at December 31, 2019. We also paid $10,000 that was due on
June 1ston our deed amendment liability.
On June 23, 2020, the Company entered into a stock subscription agreement
whereby the subscriber agreed to purchase an aggregate of 17,142,857 shares of
the Company's common stock at a private offering price of $0.007 per share, or
an aggregate purchase price of $120,000. The purchase price was to be paid in
twelve equal monthly installments of $10,000 each with the first installment due
on or before June 15, 2020 and continuing thereafter on or before the 15th day
of each succeeding month until paid in full. Shares were not to be deemed
purchased until the purchase price has been paid in full. We received the first
$10,000 payment in June as scheduled. Subsequently, on September 18, 2020 the
Company and the subscriber agreed to terminate the subscription agreement. As a
result of this Settlement Agreement and Release, the Company agreed to issue
500,000 shares of common stock at $0.02 per share for total proceeds of $10,000,
and released both parties of any further obligations regarding the June 23, 2020
subscription agreement.
20
Off Balance Sheet Arrangements:
We do not have and never had any off-balance sheet arrangements.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to
have a significant impact on our results of operations, financial position or
cash flow.
Critical Accounting Policies
The preparation of financial statements in conformity with U.S. GAAP requires us
to make estimates, assumptions and judgments that affect the amounts reported in
our financial statements. The accounting positions described below are
significantly affected by critical accounting estimates.
We believe that the significant estimates, assumptions and judgments used when
accounting for items and matters such as capitalized mineral rights, asset
valuations, recoverability of assets, asset impairments, taxes, and other
provisions were reasonable, based upon information available at the time they
were made. Actual results could differ from these estimates, making it possible
that a change in these estimates could occur in the near term.
Foreign Currency
The Company is exposed to currency risk on transactions and balances in
currencies other than the functional currency. The Company has not entered any
contracts to manage foreign exchange risk. The functional currency of the
Company is the US dollar; therefore, the Company is exposed to currency risk
from financial assets and liabilities denominated in Canadian dollars.
Mineral Rights
We have determined that our mining rights meet the definition of mineral rights,
as defined by accounting standards, and are tangible assets. As a result, our
direct costs to acquire or lease mineral rights are initially capitalized as
tangible assets. Mineral rights include costs associated with: leasing or
acquiring patented and unpatented mining claims; leasing mining rights including
lease signature bonuses, lease rental payments and advance minimum royalty
payments; and options to purchase or lease mineral properties.
If we establish proven and probable reserves for a mineral property and
establish that the mineral property can be economically developed, mineral
rights will be amortized over the estimated useful life of the property
following the commencement of commercial production or expensed if it is
determined that the mineral property has no future economic value or if the
property is sold or abandoned. For mineral rights in which proven and probable
reserves have not yet been established, we assess the carrying values for
impairment at the end of each reporting period and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Proven
and probable reserves have not been established for any mineral rights as of
June 30, 2021.
Impairment of Long-lived Assets
We continually monitor events and changes in circumstances that could indicate
that our carrying amounts of long-lived assets, including mineral rights, may
not be recoverable. When such events or changes in circumstances occur, we
assess the recoverability of long-lived assets by determining whether the
carrying value of such assets will be recovered through their undiscounted
expected future cash flows. If the future undiscounted cash flows are less than
the carrying amount of these assets, we recognize an impairment loss based on
the excess of the carrying amount over the fair value of the assets.
21
Exploration Costs
Mineral exploration costs are expensed as incurred. When it has been determined
that it is economically feasible to extract minerals and the permitting process
has been initiated, exploration costs incurred to further delineate and develop
the property are considered pre-commercial production costs and will be
capitalized and included as mine development costs in our consolidated balance
sheets.
Share-based Payments
We measure and recognize compensation expense or professional services expense
for all share-based payment awards made to employees, directors and non-employee
consultants based on estimated fair values. We estimate the fair value of stock
options on the date of grant using the Black-Scholes-Merton option pricing
model, which includes assumptions for expected dividends, expected share price
volatility, risk-free interest rate, and expected life of the options. Our
expected volatility assumption is based on our historical weekly closing price
of our stock over a period equivalent to the expected life of the options.
We expense share-based compensation, adjusted for estimated forfeitures, using
the straight-line method over the vesting term of the award for our employees
and directors and over the expected service term for our non-employee
consultants. We estimate forfeitures at the time of grant and revise those
estimates in subsequent periods if actual forfeitures differ from our estimates.
Our excess tax benefits, if any, cannot be credited to stockholders' equity
until the deduction reduces cash taxes payable; accordingly, we realized no
excess tax benefits during any of the periods presented in the accompanying
consolidated financial statements.
Income Taxes
We account for income taxes through the use of the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis, and for income tax carry-forwards. A valuation allowance is recorded to
the extent that we cannot conclude that realization of deferred tax assets is
more likely than not. 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
operations in the period that includes the enactment date.
We follow a two-step approach to recognizing and measuring tax benefits
associated with uncertain tax positions taken, or expected to be taken in a tax
return. The first step is to determine if, based on the technical merits, it is
more likely than not that the tax position will be sustained upon examination by
a taxing authority, including resolution of any related appeals or litigation
processes. The second step is to measure the tax benefit as the largest amount
that is more than 50% likely to be realized upon ultimate settlement with a
taxing authority. We recognize interest and penalties, if any, related to
uncertain tax positions in our provision for income taxes in the consolidated
statements of operations. To date, we have not recognized any tax benefits from
uncertain tax positions.
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