Item
2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
may, should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles. The following discussion should be read in
conjunction with our financial statements and the related notes that appear
elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this quarterly report.
Unless otherwise specified in this quarterly report, all dollar
amounts are expressed in United States dollars and all references to common
stock refer to shares of our common stock.
As used in this quarterly report, the terms we, us, our
and our company mean Asian Development Frontier Inc., unless otherwise
indicated. We have no subsidiaries.
Corporate Overview
We were incorporated in the State of Nevada on February 2,
2005. Our original business plan was to develop fuel cell technology and produce
fuel cells in China for indoor forklifts, scooters, underwater equipment (e.g.
shallow underwater sightseeing submarines) that require a small size, longevity
of use and silent operation. During fiscal 2008 we suspended the development of
our products and business plan until we were able to raise sufficient additional
financing.
Since the suspension of our original business plan, our
management has been analyzing various alternatives available to our company to
ensure our survival and to preserve our shareholders' investment in our common
shares.
On July 31, 2012, we filed Articles of Merger with the Nevada
Secretary of State to change the name of the company from Intervia Inc. to
Blue Sky Petroleum Inc., by way of a merger with our wholly-owned subsidiary
Blue Sky Petroleum Inc., which was created solely for the name change.
Also on July 31, 2012, we filed a Certificate of Change with
the Nevada Secretary of State to give effect to a forward split of our
authorized and issued and outstanding shares of common stock on a 3 new for 1
old basis and, consequently, our authorized capital increased from 75,000,000 to
225,000,000 shares and correspondingly, our issued and outstanding shares of
common stock increased from 15,740,000 to 47,220,000 shares of common stock, all
with a par value of $0.001. These amendments became effective on August 7, 2012
upon approval from the Financial Industry Regulatory Authority (FINRA).
5
Effective September 19, 2012, our stock symbol changed from
ITVA to BSKY to better reflect the new name of our company. The symbol
change became effective with the OTC Markets at the opening of trading on
September 19, 2012.
On June 10, 2015, our board of directors approved an agreement
and plan of merger to merge with our wholly-owned subsidiary Asian Development
Frontier Inc., a Nevada corporation, to effect a name change from Blue Sky
Petroleum Inc. to Asian Development Frontier Inc. Asian Development Frontier
Inc. was formed solely for the change of name.
Articles of Merger to effect the merger and change of name were
filed and became effective with the Nevada Secretary of State on July 9, 2015.
The name change became effective with the OTC Markets at the opening of trading
on July 9, 2015 under the symbol "ADFI". Our CUSIP number is 04521W101.
The address of our principal executive office is 65/10-12 Floor
1, Chamnan Phenjati Business Center Building. Rama IX Rd, Huai Khwang, Bangkok,
Thailand. Our telephone number is 852-3106-3133.
Our Current Business
During our last two fiscal years, we have been a company with
no operations.
On July 15, 2010, we entered into an option agreement to
purchase a 100% undivided right, title and interest in the Proteus property
located near Cobalt, Ontario, an area known historically for the mining of
silver ore. The Proteus Property consists of three mineral claims comprised of
nine units covering approximately 360 acres located in the Larder Lake Mining
Division in Ontario, Canada. In order to acquire the Proteus Property pursuant
to the agreement, our company was to make the cash payments and incur amounts on
exploration and development.
We have been unsuccessful in raising additional capital for
this exploration project and therefore do not have sufficient funds to make the
required option payments. Consequently, effective August 13, 2012, we entered
into an assignment agreement among Timber Wolf Gold Inc., a Nevada corporation
and Gino Chitaroni, wherein we have assigned all of our rights, title and
interest in and to the option agreement for the Proteus Property to Timber Wolf,
with no further obligations to our company.
We continue to look for properties and opportunities. However,
at this time we have not yet been successful in finding a transaction that has
warranted pursuing.
Research and Development
We do not currently have a formal research and development
effort. We did not spend any funds on research and development during the last
two fiscal years.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the
twelve months ending April 30, 2017.
Employees
Currently, we do not have any employees. Additionally, we have
not entered into any consulting or employment agreements with our president,
chief executive officer, treasurer, secretary or chief financial officer. Our
directors, executive officers and certain contracted individuals play an
important role in the running of our company. We do not expect any material
changes in the number of employees over the next 12 month period. We do and will
continue to outsource contract employment as needed.
6
We engage contractors from time to time to consult with us on
specific corporate affairs or to perform specific tasks in connection with our
programs.
Plan of Operation
You should read the following discussion of our financial
condition and results of operations together with our unaudited financial
statements and the notes to those unaudited financial statements included
elsewhere in this filing prepared in accordance with accounting principles
generally accepted in the United States. This discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those anticipated in these
forward-looking statements.
Anticipated Cash Requirements
Based on our net loss of $8,612 incurred during the three month
period ended April 30, 2016, our monthly usage rate is approximately $2,900. We
estimate our operating expenses and working capital requirements for the twelve
month period beginning May 1, 2016 to be as follows:
Estimated
Expenses For the Twelve Month Period ending October 31, 2016
|
|
|
|
Professional fees
|
$
|
60,000
|
|
General and administrative
|
$
|
150,000
|
|
Total
|
$
|
210,000
|
|
We had $Nil in cash as of April 30, 2016, and a working capital
deficit of $217,180. Until we complete another transaction, acquisition or
business combination, our cash requirements will be in regards to maintaining
our corporate existence, and ensuring compliance with our Securities and
Exchange Commission continuous disclosure obligations, including our financial
reporting requirements. In addition, we will require additional capital in order
to investigate and conclude any future transaction, acquisition or business
combination. In order to improve our liquidity, we plan to pursue additional
equity financing from private investors or possibly a registered public
offering. We do not currently have any definitive arrangements in place for the
completion of any further private placement financings and there is no assurance
that we will be successful in completing any further private placement
financings. If we are unable to achieve the necessary additional financing, then
we plan to reduce the amounts that we spend on our business activities and
administrative expenses in order to be within the amount of capital resources
that are available to us.
Results of Operations
Three months ended April 30, 2016 compared to three months
ended April 30, 2015.
|
|
Three months
|
|
|
Three months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
April 30, 2016
|
|
|
April 30, 2015
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating Expenses
|
$
|
8,612
|
|
$
|
9,395
|
|
Net Loss
|
$
|
(8,612
|
)
|
$
|
(9,395
|
)
|
7
Expenses
Our operating expenses for the three month periods ended April
30, 2016 and April 30, 2015 are outlined in the table below:
|
|
Three months
|
|
|
Three months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
April 30, 2016
|
|
|
April 30, 2015
|
|
|
|
|
|
|
|
|
Professional fees
|
$
|
7,980
|
|
$
|
4,328
|
|
General and administrative
|
$
|
632
|
|
$
|
5,067
|
|
Operating expenses for the three months ended April 30, 2016
decreased by 8.33% as compared to the comparative period in April 30, 2015
primarily as a result of a decrease in general and administrative expenses.
Revenue
We have not had any revenues from operations since inception
(February 2, 2005). We do not anticipate that we will earn any revenues from
operations unless and until we acquire and operate a profitable business. This
might never happen and we can offer no assurance that even if we acquire a
business that we will ever be profitable.
Liquidity and Capital Resources
Working Capital
|
|
As at
|
|
|
As at
|
|
|
Percentage
|
|
|
|
April 30,
|
|
|
January 31,
|
|
|
Increase/
|
|
|
|
2016
|
|
|
2016
|
|
|
(Decrease)
|
|
Current Assets
|
$
|
Nil
|
|
$
|
Nil
|
|
|
0%
|
|
Current Liabilities
|
$
|
217,180
|
|
$
|
208,568
|
|
|
4.13%
|
|
Working Capital (deficiency)
|
$
|
(217,180
|
)
|
$
|
(208,568
|
)
|
|
4.13%
|
|
Cash Flows
|
|
Three months
|
|
|
Three months
|
|
|
|
Ended April 30,
|
|
|
Ended
|
|
|
|
2016
|
|
|
April 30, 2015
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
$
|
Nil
|
|
$
|
(13,560
|
)
|
Net cash provided by financing activities
|
$
|
Nil
|
|
$
|
119,837
|
|
Net cash used in investing activities
|
$
|
Nil
|
|
$
|
Nil
|
|
Net increase in cash
|
$
|
Nil
|
|
$
|
106,277
|
|
Operating Activities
Net cash used in operating activities for the three months
ended April 30, 2016 was $Nil compared with $13,560 for the three months ended
April 30, 2015. Our management believes that we will need additional funding in
order to meet our operating expenses.
Financing Activities
Net cash provided by financing activities for the three months
ended April 30, 2016 was $Nil compared with $119,837 for the three months ended
April 30, 2015.
8
We have suffered recurring losses from operations. The
continuation of our company is dependent upon our company attaining and
maintaining profitable operations and raising additional capital as needed.
Future Financings
We will require additional funds to implement our growth
strategy in our new business. These funds may be raised through equity
financing, debt financing, or other sources, which may result in further
dilution in the equity ownership of our shares.
There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis should it be required, or generate significant
material revenues from operations, we will not be able to meet our other
obligations as they become due and we will be forced to scale down or perhaps
even cease our operations.
Off-Balance Sheet Arrangements
We have 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 are material to
stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and
results of operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by managements application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
The accompanying unaudited interim financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the rules and regulations of the Securities
and Exchange Commission. They do not include all information and footnotes
required by United States generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there have been no
material changes in the information disclosed in the notes to the financial
statements for the year ended January 31, 2016 included in our companys Form
10-K filed with the Securities and Exchange Commission. The unaudited interim
financial statements should be read in conjunction with those financial
statements included in the Form 10-K. In the opinion of management, all
adjustments considered necessary for a fair presentation, consisting solely of
normal recurring adjustments, have been made. Operating results for the three
months ended April 30, 2016 are not necessarily indicative of the results that
may be expected for the full year.