UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission
File Number:
333-180424
VALMIE
RESOURCES, INC.
(Exact
Name of Registrant as Specified in its Charter)
Nevada
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3721
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45-3124748
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(State
or Other Jurisdiction of
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(Primary
Standard Industrial
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(IRS
Employer
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Incorporation or Organization)
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Classification
Code Number)
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Identification
Number)
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National
Registered Agents Inc.
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1001
S Dairy Ashford Road, Suite 100
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311
South Division Street
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Houston,
TX 77077
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Carson
City, NV 89703
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(713)
595-6675
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(775)
888-4070
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(Address,
including zip code, and telephone number, including area code, of
registrant’s
executive office)
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(Name,
address, including zip code, and telephone number, including area code,
of
agent for service)
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Please
send copies of all correspondence to:
Christopher
Little
Bacchus
Law Corporation
925
West Georgia Street, Suite 1820
Vancouver,
British Columbia
Canada V6C 3L2
Phone:
(604) 632-1281
Fax:
(604) 632-1370
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement is declared effective
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 please check the following box. [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
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” and “smaller
reporting company” in Rule 12b2 of the Exchange Act.
Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[X]
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CALCULATION
OF REGISTRATION FEE
Title
of Each Class Of Securities to be Registered
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Amount to be
Registered (1)
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Proposed
Maximum
Aggregate
Offering Price
per share
(2)
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Proposed
Maximum
Aggregate
Offering Price (2)
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Amount
of
Registration
fee
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Common Stock, $0.001 par value
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2,212,765
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$
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1.555
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$
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3,440,849.58
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$
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346.49
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(1)
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As
further discussed herein, this registration statement registers for resale 2,212,765 shares of common stock, par value $0.001
per share, of the registrant, as follows: (a) 2,000,000 shares issued in a private placement transaction, and (b) 212,765
shares issued pursuant to an asset purchase agreement with our sole officer and director, Gerald B. Hammack, by which we acquired
all of the right, title and interest in and to certain intellectual property related to the AIMD platform. In the event of
stock splits, stock dividends or similar transactions involving the common stock, the number of shares registered shall, unless
otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”).
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(2)
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Estimated
pursuant to Rule 457(c) under the Securities Act solely for the purpose of computing the amount of the registration fee based
on the average of the high and low prices reported on OTC Bulletin Board and OTC Pink marketplace on June 24, 2016, which
was $1.555.
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THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the U.S. Securities and Exchange Commission (“SEC”) is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
PRELIMINARY
PROSPECTUS
SUBJECT
TO COMPLETION, DATED JUNE 29, 2016
2,212,765
SHARES OF COMMON STOCK
The
selling shareholders identified in this prospectus may offer and sell up to 2,212,765 shares of our common stock consisting of
(a) 2,000,000 shares issued to Crystal Resource Corp. (“Crystal”) in a private placement transaction, and (b) 212,765
shares issued pursuant to an asset purchase agreement with our sole officer and director, Gerald B. Hammack, by which we acquired
all of the right, title and interest in and to certain intellectual property related to the AIMD platform.
We
are not selling any shares of our common stock in this offering and will not receive any proceeds from this offering; however,
we did receive $200,000 from Crystal in the private placement transaction.
Mr. Hammack, our officer and director,
is deemed to be an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”), in connection with the resale of his shares of our common stock being registered hereunder.
The
selling shareholders may offer the shares covered by this prospectus at fixed prices, at prevailing market prices at the time
of sale, at varying prices or negotiated prices, in negotiated transactions, or in trading markets for our common stock. We will
bear all costs associated with the registration of the shares covered by this prospectus; provided, however, we will not be required
to pay any underwriters’ discounts or commissions relating to the securities covered by the registration statement.
We
qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, sometimes called the
JOBS Act. For more information, see “Risk Factors”, starting on page 6.
Our
common stock trades on the OTC Bulletin Board and OTC Pink marketplace under the symbol “VMRI.” The closing price
of our common stock on such markets on June 24, 2016, was $1.73 per share.
THE
PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND
CONSIDER THE SECTION OF THIS
PROSPECTUS ENTITLED “RISK FACTORS” BEGINNING ON PAGE 8 BEFORE BUYING ANY
SHARES OF OUR COMMON STOCK.
NEITHER
THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE
OF CONTENTS
This
prospectus is part of a registration statement we filed with the SEC. Under this registration process, the selling shareholders
may, from time to time, offer and sell up to 2,212,765 shares of our common stock, as described in this prospectus, in one or
more offerings. This prospectus provides you with a general description of the common stock the selling shareholders may offer.
You should read this prospectus carefully before making an investment decision.
You
may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to
provide you with additional or different information. This prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any securities other than the shares of our common stock offered by this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances or any jurisdiction in
which such offer or solicitation is not permitted. You should not assume that the information contained in this prospectus is
accurate as of any date other than the date on the front cover of this prospectus regardless of the time of delivery of this prospectus
or any sale of our common stock. The rules of the SEC may require us to update this prospectus in the future.
As
used in this prospectus, the terms “we,” “our,” “us,” the “Company” and similar
terms refer to Valmie Resources, Inc. and its subsidiaries, unless the context indicates otherwise.
PROSPECTUS
SUMMARY
The
following summary highlights material information contained in this prospectus. This summary does not contain all of the information
you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus
carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should
also review the other available information referred to in the section entitled “Where You Can Find More Information”
in this prospectus and any amendment or supplement hereto.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information
included or incorporated by reference in this prospectus may contain forward-looking statements. This information may involve
known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be
materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally
identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,”
“believe,” “intend” or “project” or the negative of these words or other variations on these
words or comparable terminology.
The
forward-looking statements contained in this prospectus are based on current expectations and beliefs concerning future developments
and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting
us will be those anticipated. These developments may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements.
The
forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements
are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made
or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents we refer to in this prospectus
and have filed as exhibits to this prospectus completely and with the understanding that our actual future results may be materially
different from what we expect.
Overview
We
were incorporated pursuant to the laws of the State of Nevada on August 26, 2011. We have a wholly owned subsidiary, Vertitek
Inc., a Wyoming corporation (“Vertitek”), and a 50% interest in a joint venture entity, AeroLift eXpress LLC, a Wyoming
limited liability corporation (“AeroLift”). From our inception until the quarter ended August 31, 2014, we were a
mineral exploration company exploring for precious metals, or gold and silver targets. Our property, known as the Carico Lake
Valley Property (the “Property”), was located in Lander County, Nevada.
In
July 2014, the landowner notified us that our option to acquire an interest in the Property had been terminated and that the Property
had been sold to a third party. Our efforts from that date until our fiscal year end on November 30, 2014 were primarily directed
to identifying new development properties.
In
early December 2014, our majority shareholder determined it was in the best interests of our shareholders to change our business
focus from mining to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding
technology industry. We therefore sought to develop or acquire concepts with valid business models positioned to make a significant
impact within the four key technology “megasectors”: software, hardware, networking and semiconductors.
Business
Strategy
The
first major step in our shift to the technology sector was the appointment of Gerald B. Hammack as our sole officer and director
on December 8, 2014. Mr. Hammack has more than 30 years of experience in a variety of technology-related fields, including programming,
digital telephony and database management, as well as substantial expertise in the setup and management of complex data processing
systems.
Over
the past several years, Mr. Hammack has been developing a series of software platforms and technologies designed to provide the
near real-time data processing required by the ever-expanding use of commercial Unmanned Aerial Vehicles or UAVs (more commonly
referred to as drones). Towards the end of 2014 we rebranded Mr. Hammack’s development efforts to date as the AIMD (Automated
Intelligence for Mobile Devices) data processing platform and adopted them as our own. On July 15, 2015, we entered into an asset
purchase agreement with Mr. Hammack pursuant to which we acquired all of the right, title and interest in and to the intellectual
property relating to the AIMD platform in consideration for the issuance of $100,000 worth of our common stock to Mr. Hammack
on that date at a deemed price of $0.47 per share. Since we did not acquire any patents from Mr. Hammack, we recognized an intangible
asset value of $100,000 related to the acquisition.
While
in the process of launching the AIMD platform, we determined that it would be necessary to find a partner that had the technology
and experience in the design and manufacture of UAVs in order to design and build a prototype unit to test and refine our product
and service offerings. After extensive investigation we located a UAV manufacturer, Vertitek. Vertitek’s hardware and software
technology is being designed to enable a sophisticated level of autonomy for UAVs and other autonomous mobilized devices, including
precision guidance controls and advanced safety features. Vertitek’s under development commercial V-1 Drone
SM
is a multi-rotor platform that incorporates an integrated, fully autonomous autopilot, which could be connected to, and controlled
from, the AIMD platform.
After
significant discussion with Vertitek and its principal shareholder, on January 20, 2015 we entered into a letter of intent (the
“LOI”) with Vertitek to acquire 100% of the capital stock of Vertitek in exchange for the issuance of shares of our
common stock to the principal shareholder of Vertitek, contingent upon certain due diligence requirements. On January 27, 2015
we entered into a share exchange agreement with Vertitek and the sole shareholder of Vertitek, Masamos Services Ltd., a Cypriot
corporation (“Masamos”), on substantially the same terms as the LOI. On March 31, 2015, the closing of the share exchange
agreement occurred and we issued 1,000,000 shares of our common stock to Masamos in exchange for 100% of the issued and outstanding
shares of Vertitek. As a result, Vertitek became our wholly owned subsidiary.
Although
we have acquired intellectual property both as a result of the Vertitek acquisition and from Mr. Hammack, we have not yet filed
for any patent protection in relation to such intellectual property. We intend to protect our intellectual property rights, including
trademark and servicemark opportunities, to the maximum extent possible in all jurisdictions in which we may operate. In the near
term, we anticipate protecting the trademark and service mark opportunities related to Vertitek, the V-series drones and the AIMD
platform.
On
February 10, 2016, we were granted an exemption (No. 14749, Regulatory Docket No. FAA–2015–4694) from Section 333
of Public Law 112-95 by the Federal Aviation Administration to operate two models of the V-series drones to perform aerial data
collection, and in particular, to conduct aerial based agricultural applications, search and rescue operations, power-line inspections,
pipe-line inspections, infrastructure surveying and aerial imaging. The exemption is subject to industry standard weight, speed
and altitude limitations, as well as certain visual line of sight, visual observer, operating document, safety and pre-flight
inspection measures, among others.
The
exemption will terminate on February 28, 2018, and we do not anticipate being unable to comply with any conditions of the exemption
during the term.
On April 15, 2016, we entered into a joint
venture agreement with James Stafford to form AeroLift (the “Joint Venture Agreement”). Pursuant to the Joint
Venture Agreement, we currently own 50% of AeroLift and have committed funding up to $500,000 to launch the AeroLift business
model. AeroLift is led by a team of military trained pilots, mission commanders and specialists with more than 60 years of combined
aviation experience. AeroLift’s aircraft are military grade construction adapted for commercial applications. Together with
state of the art ground control stations and flight control software, AeroLift intends to deliver cutting edge unmanned services
to clients in a variety of challenging environments.
To
date, we have not generated any revenue through the sales of UAVs or the provision of software, hardware or cloud based services.
As we are still developing our technologies, we have not yet launched our manufacturing, sales or marketing operations and have
not yet identified any customers for our systems or solutions.
We
have never declared bankruptcy, receivership or any similar proceedings nor have we had any material reclassifications, mergers,
consolidations, or purchases or sales of a significant amount of assets not in the ordinary course of business.
Where
You Can Find Us
Our
principal executive office is located at 1001 S Dairy Ashford Road, Suite 100, Houston, TX 77077 and our telephone number is (713)
595-6675. Our website address is www.valmie.com.
THE
OFFERING
The
Issuer
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Valmie
Resources, Inc.
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Shares
being Offered
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Up
to 2,212,765 shares of common stock, $0.001 par value. Our common stock is described in further detail in the section of this
prospectus titled “Description of Securities.”
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Shares
Outstanding
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There
are 66,769,755 shares of common stock issued and outstanding as of the date of this prospectus (which includes the
2,212,765 previously issued and outstanding shares being registered hereunder).
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Registration
Costs
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We
estimate our total costs relating to the registration herein shall be approximately $15,000.
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Use
of Proceeds
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We
received net proceeds of $200,000 from the sale of promissory notes in the private placement transaction. See “Use of
Proceeds” for a complete description.
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Trading
Market
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Our
common stock is traded on the OTC Bulletin Board and OTC Pink marketplace under the symbol “VMRI.”
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Risk
Factors
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An
investment in our common stock involves a high degree of risk. You should carefully consider the risk factors set forth under
“Risk Factors” on page 6 and the other information contained in this prospectus before making an investment decision
regarding our common stock.
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Background
of the Offering
The
Private Placement Transaction
During
the period from July 30, 2015 to April 26, 2016, we entered into a series of promissory notes with Crystal in the aggregate principal
amount of $200,000 plus simple interest at an annual interest rate of 15%. These notes were secured by all of the assets, properties,
goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts,
intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks,
service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or
thereafter acquired, and all proceeds thereof. On April 26, 2016, the Company and Crystal entered into a debt conversion agreement
(the “Conversion Agreement”) pursuant to which the Company issued 2,000,000 shares of its common stock to Crystal
in consideration for the cancellation of the debt. Upon the issuance of such shares, Crystal agreed to waive any then due and
payable interest. As a result of the conversion, Crystal released all security interests it previously held in the Company’s
assets.
In
connection with the Conversion Agreement, we also entered into a Registration Rights Agreement (the “Registration Rights
Agreement”) with Crystal. Pursuant to the Registration Rights Agreement, we were obligated to file a registration statement
with the SEC covering the shares of common stock underlying the Conversion Agreement within 60 days after the execution of the
agreement. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared
effective by the SEC within 90 days after the date the registration statement is filed and maintain the effectiveness of such
registration statement until the date on which Crystal has sold all of the shares registered thereunder.
We
issued the foregoing shares in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.
Our reliance on Section 4(a)(2) was based on the fact that none of the issuances involved a “public offering” and
Crystal provided representations to us that they acquired the shares for investment purposes and not with a view to the distribution
thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any
other applicable jurisdiction.
The
Hammack Technology Acquisition
On
July 15, 2015, we entered into an asset purchase agreement with Gerald B. Hammack, our sole officer and director, pursuant to
which we acquired all of the right, title and interest in and to the intellectual property relating to the AIMD platform from
Mr. Hammack in consideration for the issuance of $100,000 worth of our common stock to Mr. Hammack on that date at a deemed price
of $0.47 per share.
The assets include, but are not limited to, all intellectual property, trade
names, trade secrets, trademarks, personnel contracts, web site domains and content, strategic partnerships, publications, operating
models, manuals, licenses, and all other confidential information relating to the AIMD platform concept.
As a result, Mr.
Hammack received an aggregate of 212,765 shares of our common stock.
Mr.
Hammack determined the value of his intellectual property based on a good faith estimate of the cost to recreate such intellectual
property. While the intellectual property acquired from Mr. Hammack does not include any patents or immediately patentable innovations,
we did acquire the software foundation for our under construction AIMD platform. We believe the acquisition reduced our software
development schedule by six to nine months.
We
issued the foregoing shares in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.
Our reliance on Section 4(a)(2) was based on the fact that none of the issuances involved a “public offering” and
Mr. Hammack provided representations to us that he acquired the shares for investment purposes and not with a view to the distribution
thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any
other applicable jurisdiction.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the
other information in this prospectus before investing in our common stock. If any of the following risks occur, our business,
operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to
any of these risks, and you may lose all or part of your investment.
Risks
Related to Our Business and Industry
We
have a history of operating losses and there can be no assurance that we can achieve or maintain profitability.
We
have a history of operating losses and may not achieve or sustain profitability. We cannot guarantee that we will become profitable.
Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may be unable
to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise
additional funds.
Because
our auditors have issued a going concern opinion, there is substantial uncertainty that we will be able to continue our operations.
Our
auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue to operate over
the next 12 months. Our financial statements do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue
in existence. As such, if we are unable to obtain new financing to execute our business plan we may be required to cease our operations.
Product
development is a long, expensive and uncertain process.
The
development of both UAV software and hardware is a costly, complex and time-consuming process, and investments in product development
often involve a long wait until a return, if any, can be achieved on such investment. We anticipate making significant investments
in research and development relating to our products and services, but such investments are inherently speculative. Any unforeseen
technical obstacles and challenges that we encounter in the research and development process could result in delays in or the
abandonment of product commercialization, may substantially increase development costs, and may negatively affect our results
of operations.
Successful
technical development of our products does not guarantee successful commercialization.
We
may successfully complete the technical development of the AIMD platform, the V-1 Drone
SM
or both, but still fail to
achieve commercial success for a number of reasons, including the following:
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failure
to obtain the required regulatory approvals for their use;
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prohibitive
production costs;
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competing
products;
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lack
of product innovation;
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ineffective
distribution and marketing;
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insufficient
cooperation from our partners; and
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product
demonstrations not aligning with or meeting customer needs.
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Our
success in the market for the products and services we develop will depend largely on our ability to properly demonstrate their
capabilities. Upon demonstration, the AIMD platform and the V-1 Drone
SM
may not have the capabilities they were designed
to have or that we believed they would have. Furthermore, even if we do successfully demonstrate our products’ capabilities,
potential customers may be more comfortable doing business with a larger, more established, more proven company than us. Significant
revenue from new product investments may not be achieved for a number of years, if at all.
If
we fail to protect our intellectual property rights, we could lose our ability to compete in the marketplace.
Our
acquired and under development intellectual property and proprietary rights are important to our ability to remain competitive
and for the success of our products and our business. Patent protection can be limited and not all intellectual property can be
patented. While we have acquired intellectual property from both Vertitek and Mr. Hammack, we have not yet filed for patent protection
in relation to such intellectual property. We intend to protect our intellectual property rights, including trademark and servicemark
opportunities, to the maximum extent possible in all jurisdictions in which we may operate. In the near term, we anticipate protecting
the trademark and service mark opportunities related to Vertitek, the V-series drones and the AIMD platform.
We
expect to rely on a combination of patent, trademark, copyright, and trade secret laws as well as confidentiality agreements and
procedures, non-competition agreements and other contractual provisions to protect our intellectual property, other proprietary
rights and our brand. We have little protection when we must rely on trade secrets and nondisclosure agreements. Our intellectual
property rights may be challenged, invalidated or circumvented by third parties. We may not be able to prevent the unauthorized
disclosure or use of our technical knowledge or other trade secrets by employees or competitors. Furthermore, our competitors
may independently develop technologies and products that are substantially equivalent or superior to our technologies and products,
which could result in decreased revenues. Litigation may be necessary to enforce our intellectual property rights which could
result in substantial costs to us and substantial diversion of management attention. If we do not adequately protect our intellectual
property, our competitors could use it to enhance their products. Our inability to adequately protect our intellectual property
rights could adversely affect our business and financial condition, and the value of our brand and other intangible assets.
Other
companies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability
to generate future revenue and profit.
We
do not believe that our technologies infringe on the proprietary rights of any third party, but claims of infringement are becoming
increasingly common and third parties may assert infringement claims against us. It may be difficult or impossible to identify,
prior to receipt of notice from a third party, the trade secrets, patent position or other intellectual property rights of a third
party, either in the United States or in foreign jurisdictions. Any such assertion may result in litigation or may require us
to obtain a license for the intellectual property rights of third parties. If we are required to obtain licenses to use any third
party technology, we would have to pay royalties, which may significantly reduce any profit on our products. In addition, any
such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities. If
any of our products were found to infringe other parties’ proprietary rights and we are unable to come to terms regarding
a license with such parties, we may be forced to modify our products to make them non-infringing or to cease production of such
products altogether.
The
nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnity.
We
have developed and plan to sell products and services in circumstances where insurance or indemnification may not be available;
for example, in connection with the collection and analysis of various types of information. In addition, our products and services
raise questions with respect to issues of civil liberties, intellectual property, trespass, conversion and similar concepts, which
may create legal issues. Indemnification to cover potential claims or liabilities resulting from the failure of any technologies
that we develop or deploy may be available in certain circumstances but not in others. We may not be able to maintain insurance
to protect against all operational risks and uncertainties. Substantial claims resulting from an accident, product failure, or
liability arising from our products and services in excess of any indemnity or insurance coverage (or for which indemnity or insurance
coverage is not available or is not obtained) could harm our financial condition, cash flows and operating results. Any accident,
even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more
difficult for us to compete effectively.
If
we are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected.
For
our business to be successful, we need to attract and retain highly qualified technical, management and sales personnel. The failure
to recruit additional key personnel when needed with specific qualifications and on acceptable terms, or to maintain positive
relationships with our partners might impede our ability to continue to develop, commercialize and sell our products and services.
To the extent the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting and training costs
in order to attract and retain such employees. The loss of any members of our management team may also delay or impair achievement
of our business objectives and result in business disruptions due to the time needed for their replacements to be recruited and
become familiar with our business. We face competition for qualified personnel from other companies with significantly more resources
available to them and thus may not be able to attract the level of personnel needed for our business to succeed.
We
may indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase
our operating costs.
Our
Bylaws allow us to indemnify our officers and directors against claims associated with carrying out the duties of their offices.
Our Bylaws also allow us to reimburse them for the costs of certain legal defenses. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our officers, directors or control persons, we have been advised by the SEC
that such indemnification is against public policy and is therefore unenforceable.
Since
our officers and directors are aware that they may be indemnified for carrying out the duties of their offices, they may be less
motivated to meet the standards required by law to properly carry out such duties, which could increase our operating costs. Further,
if any of our officers and directors files a claim against us for indemnification, the associated expenses could also increase
our operating costs.
We
may pursue strategic transactions in the future, which could be difficult to implement, disrupt our business or change our business
profile significantly.
We
intend to consider potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures
or investments in businesses, products or technologies that expand, complement or otherwise relate to our current or future business.
We may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third
parties to address particular market segments. These activities create risks such as, among others: (i) the need to integrate
and manage the businesses and products acquired with our own business and products; (ii) additional demands on our resources,
systems, procedures and controls; (iii) disruption of our ongoing business; and (iv) diversion of management’s attention
from other business concerns. Moreover, these transactions could involve: (a) substantial investment of funds or financings by
issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration;
and (c) the acquisition or disposition of product lines or businesses. Also, such activities could result in one-time charges
and expenses and have the potential to either dilute the interests of our existing stockholders or result in the issuance of,
or assumption of debt. Such acquisitions, investments, joint ventures or other business collaborations may involve significant
commitments of financial and other resources. Any such activities may not be successful in generating revenue, income or other
returns, and any resources we committed to such activities will not be available to us for other purposes. Moreover, if we are
unable to access capital markets on acceptable terms or at all, we may not be able to consummate acquisitions, or may have to
do so on the basis of a less than optimal capital structure. Our inability to take advantage of growth opportunities or address
risks associated with acquisitions or investments in businesses may negatively affect our operating results. Additionally, any
impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated
with any acquisition or investment activity, may materially reduce our earnings. Future acquisitions or joint ventures may not
result in their anticipated benefits and we may not be able to properly integrate acquired products, technologies or businesses
with our existing products and operations or successfully combine personnel and cultures. Failure to do so could deprive us of
the intended benefits of those acquisitions.
Risks
Relating to our Common Stock
Because
there is a limited public trading market for our common stock, investors may not be able to resell their shares.
There
is currently a limited public trading market for our common stock. We cannot assure investors that there will be a liquid market
in the future for our common stock. The trading of securities on the OTC Bulletin Board and OTC Pink marketplace is often sporadic
and investors may have difficulty buying and selling our shares or obtaining market quotations for them, which may have a negative
effect on the market price of our common stock. Investors may not be able to sell shares at their purchase price or at any price
at all.
Fen
Holdings & Investments Ltd. has voting control over matters submitted to a vote of the stockholders, and it may take actions
that conflict with the interests of our other stockholders and holders of our debt securities.
Our
majority stockholder, Fen Holdings & Investments Ltd. (“Fen”), owns 2,000,000 shares of our Series “A”
preferred stock, each of which carries a voting weight equal to 50 shares of our common stock. As a result, Fen controls approximately
60.9% of the votes eligible to be cast by our stockholders and has the power to control all matters requiring the approval of
our stockholders, including the election of directors and the approval of mergers and other significant corporate transactions.
The
sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material
adverse effect on our earnings.
Any
sale of common stock by us in a future private placement offering could result in dilution to our existing stockholders as a direct
result of the issuance of additional shares of our capital stock. In addition, our business strategy may include expansion through
acquisitions or business combinations with entities operating in our industry. In order to do so, or to finance the cost of our
operations, we may issue additional equity securities that could dilute our stockholders’ ownership positions. We may also
pursue debt financing, if and when available, and this could negatively impact our earnings and results of operations.
We
are subject to penny stock regulations and restrictions and investors may have difficulty selling shares of our common stock.
Our
common stock is subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny
stock rules”. Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates
the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny
stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. We are subject
to the SEC’s penny stock rules.
Since
our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice
requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited
investors” are generally persons with assets in excess of $1,000,000 (excluding the value of such person’s primary
residence) or annual income exceeding $200,000 or $300,000 together with their spouse. For transactions covered by these rules,
broker-dealers must make a special suitability determination for the purchase of such security and must have the purchaser’s
written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt,
the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market.
A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks
held in an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of
a broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of our stockholders to sell their
shares of common stock.
There
can be no assurance that our common stock will qualify for exemption from the penny stock rules. In any event, even if our common
stock was exempt from the penny stock rules, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the
SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction
would be in the public interest.
We
do not expect to pay dividends for the foreseeable future.
We
do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the
development and growth of our business. Therefore, our stockholders will not receive any funds unless they sell their common stock,
and stockholders may be unable to sell their shares on favorable terms or at all.
Investors
may face significant restrictions on the resale of their shares due to state “blue sky” laws.
Each
state has its own securities laws, commonly known as “blue sky” laws, which (1) limit sales of securities to a state’s
residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the
reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state,
there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer
must also be registered in that state.
We
do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination
regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock.
There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities.
Investors should therefore consider the resale market for our common stock to be limited, as they may be unable to resell their
shares without the significant expense of state registration or qualification.
BUSINESS
DESCRIPTION
Overview
We
were incorporated pursuant to the laws of the State of Nevada on August 26, 2011. We have one wholly owned subsidiary, Vertitek.
From our inception until the quarter ended August 31, 2014, we were a mineral exploration company exploring for precious metals,
or gold and silver targets. Our property, known as the Carico Lake Valley Property (the “Property”), was located in
Lander County, Nevada.
On
April 16, 2014, Fen, a company incorporated in the British Virgin Islands and our majority stockholder, acquired an aggregate
of 237,360,000 shares, or approximately 80.1% of our then issued and outstanding common stock from Khurram Shroff, our former
sole officer and director.
In
July 2014, the landowner notified us that our option to acquire an interest in the Property had been terminated and that the Property
had been sold to a third party. Our efforts from that date until the end of our fiscal year ended November 30, 2014, were primarily
directed to identifying new development properties.
In
early December 2014, Fen determined it was in the best interests of our shareholders to change our business focus from mining
to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding technology
industry. We therefore sought to develop or acquire concepts with valid business models positioned to make a significant impact
within the four key technology “megasectors”: software, hardware, networking and semiconductors.
Business
Strategy
The
first major step in our shift to the technology sector was the appointment of Gerald B. Hammack as our sole officer and director
on December 8, 2014. Mr. Hammack has more than 30 years of experience in a variety of technology-related fields, including programming,
digital telephony and database management, as well as substantial expertise in the setup and management of complex data processing
systems.
Over
the past several years, Mr. Hammack has been developing a series of software platforms and technologies designed to provide the
near real-time data processing required by the ever-expanding use of commercial Unmanned Aerial Vehicles or UAVs (more commonly
referred to as drones). Towards the end of 2014 we rebranded Mr. Hammack’s development efforts to date as the AIMD (Automated
Intelligence for Mobile Devices) data processing platform and adopted them as our own. On July 15, 2015 we entered into an asset
purchase agreement with Mr. Hammack pursuant to which we acquired all of the right, title and interest in and to the intellectual
property relating to the AIMD platform in consideration for the issuance of $100,000 worth of our common stock to Mr. Hammack
on that date at a deemed price of $0.47 per share. Since we did not acquire any patents from Mr. Hammack, we recognized an intangible
asset value of $100,000 related to the acquisition.
While
in the process of launching the AIMD platform, we determined that it would be necessary to find a partner that had the technology
and experience in the design and manufacture of UAVs in order to design and build a prototype unit to test and refine our product
and service offerings. After extensive investigation, we located a UAV manufacturer, Vertitek. Vertitek’s hardware and software
technology is being designed to enable a sophisticated level of autonomy for UAVs and other autonomous mobilized devices, including
precision guidance controls and advanced safety features. Vertitek’s under development commercial V-1 Drone
SM
is a multi-rotor platform that incorporates an integrated, fully autonomous autopilot, which could be connected to, and controlled
from, the AIMD platform.
After
significant discussion with Vertitek and its principal shareholder, Masamos, on January 20, 2015 we entered into the LOI with
Vertitek to acquire 100% of the capital stock of that company in exchange for the issuance of shares of our common stock to the
principal shareholder of Vertitek, contingent upon certain due diligence requirements. On January 27, 2015 we entered into the
Share Exchange Agreement with Vertitek and Masamos on substantially the same terms as the LOI, and on March 31, 2015 the closing
of the Share Exchange Agreement occurred and we issued 1,000,000 shares of our common stock to Masamos in exchange for 100% of
the issued and outstanding shares of Vertitek. As a result, Vertitek became our wholly owned subsidiary.
Although
we have acquired intellectual property both as a result of the Vertitek acquisition and from Mr. Hammack, we have not yet filed
for any patent protection in relation to such intellectual property. We intend to protect our intellectual property rights, including
trademark and servicemark opportunities, to the maximum extent possible in all jurisdictions in which we may operate. In the near
term, we anticipate protecting the trademark and service mark opportunities related to Vertitek, the V-series drones and the AIMD
platform.
On February 10, 2016, we were granted
an exemption (No. 14749, Regulatory Docket No. FAA–2015–4694) from Section 333 of Public Law 112-95 by the Federal
Aviation Administration to operate two models of the V-series drones to perform aerial data collection, and in particular, to conduct
aerial based agricultural applications, search and rescue operations, power-line inspections, pipe-line inspections, infrastructure
surveying and aerial imaging. The exemption is subject to industry standard weight, speed and altitude limitations, as well as
certain visual line of sight, visual observer, operating document, safety and pre-flight inspection measures, among others.
The exemption will terminate on February
28, 2018, and we do not anticipate being unable to comply with any conditions of the exemption during the term.
On
April 15, 2016, we entered into the Joint Venture Agreement to form AeroLift. We currently own 50% of AeroLift and have committed
funding up to $500,000 to launch the AeroLift business model. AeroLift is led by a team of military trained pilots, mission commanders
and specialists with more than 60 years of combined aviation experience. AeroLift’s aircraft are military grade construction
adapted for commercial applications. Together with state of the art ground control stations and flight control software, AeroLift
intends to deliver cutting edge unmanned services to clients in a variety of challenging environments.
To
date, we have not generated any revenue through the sales of UAVs or the provision of software, hardware or cloud based services.
As we are still developing our technologies, we have not yet launched our manufacturing, sales or marketing operations and have
not yet identified any customers for our systems or solutions.
We
have never declared bankruptcy, receivership or any similar proceedings nor have we had any material reclassifications, mergers,
consolidations, or purchases or sales of a significant amount of assets not in the ordinary course of business.
Our
Corporate History and Background
On
December 3, 2013, the holders of a majority of our issued and outstanding common stock approved an amendment to our bylaws (the
“Bylaw Amendment”) and an increase in our authorized capital from 100,000,000 shares of common stock, par value $0.001,
to 750,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”). The purpose of the Bylaw
Amendment was to update our bylaws and make them more comprehensive, while the purpose of the Authorized Capital Increase was
to reorganize our capital structure in connection with the stock dividend described below. We formally effectuated the Authorized
Capital Increase on December 4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.
Also
on December 3, 2013, our former sole director approved a stock dividend of 59 authorized but unissued shares of our common stock
on each one (1) issued and outstanding share of our common stock. On December 13, 2013, we received approval from FINRA to effectuate
the stock dividend by way of a forward split, and on December 17, 2013, our shareholders of record on December 16, 2013 received
the dividend. As a result of the stock dividend, our issued and outstanding common stock increased from 4,940,000 shares to 296,400,000
shares.
On
September 1, 2014, we entered into a consulting agreement with Constant Consulting Corp., a Wyoming corporation (“Constant”),
pursuant to which Constant agreed to provide certain consulting services to us, including operational plan and business model
structuring, identifying potential development partners, interfacing with third parties to ensure compliance with regulatory requirements,
and interfacing with other vendors as requested, for a period of one year in exchange for the payment of $25,000 per month. On
February 28, 2015, the parties agreed to terminate the monthly obligation to Constant and that any future work would be compensated
on an hourly basis. Our agreement with Constant expired on August 31, 2015 and was not renewed. Other than with regard to the
agreement, we are unaware of any relationship between Constant and any of our officers, directors or shareholders.
On
December 10, 2014, the holders of a majority of our issued and outstanding common stock approved a set of amended and restated
articles of incorporation that, among other things, increased our authorized capital to 760,000,000 shares, consisting of 750,000,000
shares of common stock, par value $0.001, and 10,000,000 shares of “blank check” preferred stock, par value $0.001
(the “Blank Check Preferred Stock”). We formally effectuated the authorized capital increase and the creation of the
Blank Check Preferred Stock by filing the amended and restated articles of incorporation accompanied by the required certificate
with the Nevada Secretary of State on December 11, 2014.
On
December 11, 2014, our former sole director approved the designation of 2,000,000 shares of the Blank Check Preferred Stock as
Series “A” preferred stock (the “Designation”). We formally effected the Designation by filing a Certificate
of Designation with the Nevada Secretary of State on January 15, 2015.
The
shares of Series “A” preferred stock carry certain rights and preferences. The Designation provides that the Series
“A” Preferred Stock may be converted into shares of our common stock on a 10 for one (1) basis at any time after 18
months from the date of issuance, and that each share of Series “A” preferred stock has voting rights and carries
a voting weight equal to 50 shares of common stock.
On
January 16, 2015, Fen agreed to cancel an aggregate of 237,360,000 shares, or approximately 80.1% of our issued and outstanding
common stock, in exchange for the issuance of the 2,000,000 shares of Series “A” preferred stock described above.
As a result, the number of issued and outstanding shares of our common stock decreased from 296,400,000 to 59,040,000.
Between
August 18, 2014 and March 20, 2015, we issued eight promissory notes to three investors (Shield Investments, Inc. a British Virgin
Islands corporation (“Shield”), Tuverga Finance Ltd., a Cypriot corporation (“Tuverga”) and Fairwinds
Consulting LLC, a Texas limited liability corporation (“Fairwinds”)) in the aggregate amount of $365,000 in exchange
for advances to us in an identical amount. Each of the promissory notes bears simple interest at an annual rate of 15% and matures
two years from the date of issuance. Seven of the eight promissory notes, in the aggregate amount of $350,000, were secured by
all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents,
instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents,
patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by us
on the date of the applicable note or thereafter acquired, and all proceeds thereof.
On
April 6, 2015, we entered into debt conversion agreements with Shield and Tuverga pursuant to which those investors converted
an aggregate of $350,000 in debt into 3,500,000 shares of our common stock at a price of $0.10 per share. As part of those debt
conversion agreements, Shield and Tuverga agreed to forgive any and all accrued interest and release their respective security
interests in our assets, rights or other property.
Also on April 6, 2015, we entered into a debt
conversion agreement with Dome Capital LLC, a Wyoming limited liability corporation, pursuant to which it converted an aggregate
of $33,927 in debt into 339,270 shares of our common stock at a deemed price of $0.10 per share.
On
July 15, 2015, we entered into an asset purchase agreement with Gerald B. Hammack, our sole officer and director, pursuant to
which we acquired all of the right, title and interest in and to the intellectual property relating to the AIMD platform from
Mr. Hammack in consideration for the issuance of $100,000 worth of our common stock to Mr. Hammack on that date at a deemed price
of $0.47 per share.
The assets include, but are not limited to, all intellectual property, trade
names, trade secrets, trademarks, personnel contracts, web site domains and content, strategic partnerships, publications, operating
models, manuals, licenses, and all other confidential information relating to the AIMD platform concept.
As a result, Mr.
Hammack received an aggregate of 212,765 shares of our common stock.
Mr.
Hammack determined the value of his intellectual property based on a good faith estimate of the cost to recreate such intellectual
property. While the intellectual property acquired from Mr. Hammack does not include any patents or immediately patentable innovations,
we did acquire the software foundation for our under construction AIMD platform. We believe the acquisition reduced our software
development schedule by six to nine months.
During
the period from July 30, 2015 to April 26, 2016, we entered into a series of promissory notes with Crystal in the aggregate principal
amount of $200,000 plus simple interest at an annual interest rate of 15%. These notes were secured by all of the assets, properties,
goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts,
intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks,
service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or
thereafter acquired, and all proceeds thereof. On April 26, 2016, the Company and Crystal entered into a debt conversion agreement
pursuant to which the Company issued 2,000,000 shares of its common stock to Crystal in consideration for the cancellation of
the debt. Upon the issuance of such shares, Crystal agreed to waive any then due and payable interest. As a result of the conversion,
Crystal released all security interests it previously held in the Company’s assets.
The
Vertitek Acquisition
On
the Closing Date, we completed the Vertitek acquisition and Vertitek became our wholly owned subsidiary. Vertitek was established
to provide unmanned vehicle software, hardware and cloud services for a wide range of commercial applications around the globe.
Vertitek is in the process of developing the V-1 Drone
SM
, a cutting edge multi-rotor UAV designed specifically to meet
the requirements of a growing commercial user base. The assets of Vertitek include, but are not limited to, all intellectual property,
trade name, trade secrets, trademarks, personnel contracts, website domain and content, strategic partnerships, manuals, licenses
and all other confidential information related to the V-1 Drone
SM
and other technologies under development by Vertitek.
Our
Solutions
Our
UAV solutions will consist of aerial data collection hardware, software and data storage solutions for commercial applications.
We believe that our systems will collect and analyze the highest quality aerial data in the most efficient manner possible. We
are currently developing our software and data storage solutions while we continue to test and refine our prototype hardware units.
AIMD
Platform: Autonomous Intelligence for Mobilized Devices
We
are creating a powerful and feature-rich system for connecting mobilized machines, drones and robots to enable communication,
automation and visibility. We expect to be able to offer choices from dozens of industry applications that are experiencing a
growing need for visibility to help maximize operational efficiencies, and have taken into consideration the need for a seamless
point of integration, empowering the best-of-both-worlds – including hardware components and process information –
to work better together. We developed the AIMD platform as the intersection point for real-time operational intelligence and effective
work-flow that is accessible anywhere, anytime.
Our
open application program interface (API) and support for industry standards are designed to make it easy to add capabilities,
integrate existing systems and innovate with our partners in exciting new ways to harness all the power of their machines, devices
and controllers. Designing enterprise-grade scalability and security into the AIMD platform was at the forefront of our functional
requirements. In addition, simplicity, reducing the “speed to the field”, and filtering the crucial data are all at
the top of our list. Our cloud-based interface provides access to our customers’ own rule-based actions and recognizes and
reacts to empower all assets to perform better, even in extreme environments. We believe that our system will differ from existing
product offerings because it will be the first of its kind to offer end users clearly defined next step options from a simplified
user-friendly interface. In addition, while the majority of our competition is focused on building proprietary hardware and software
systems, we are focused on making our solutions compatible with emerging industry standards, allowing solutions to be easily integrated
with offerings from other industry participants.
AIMDx
– Learning Service Module
AIMDx
is part of the predictive intelligence required for next level businesses. Designed as an out-of-the-box external learning application,
AIMDx lets clients connect, communicate and collaborate within a secure, cloud-based network regardless of device type. AIMD transforms
the data feedback loop into usable information that allows for real-time streamlining of analysis and corrective action. From
image analysis to route discrepancies, the AIMDx module drives production and automating information flow for a new level of efficiency,
allowing for cross-referencing of first and third-party data sources. Unlike automation software, AIMDx looks for deep contact
points of engagement, authentic end-use intelligence and lasting data assessment for use in the field. It’s quick and cost-effective
via the cloud, and is focused on helping our customers achieve results.
Our
Hardware Systems
In
collaboration with Vertitek, we are developing the extremely versatile V-1 Drone
SM
. The multi-rotor platform features
a large carbon fiber composite frame with high efficiency brushless motors. To further increase efficiency, the motors include
large diameter carbon fiber blades. This provides powerful lift while increasing flight times. State-of-the-art lithium polymer
batteries provide power to the rotor with amazing power-to-weight ratios. These batteries not only save weight, but also provide
longer flight times than previous generations of batteries. Along with powerful batteries, the V-1 Drone
SM
will feature
a fully autonomous autopilot. The autopilot system is based on the powerful 32-bit Pixhawk controller with many sensors and features.
This controller provides more functionality with custom sensor packages. These packages range from Sonar, to GPS mapping, to a
live first person view (FPV) of the surroundings. Each multi-rotor system can be customized to fit specific needs by upgrading,
optimizing, and personalizing individual components.
Images
of the V-1 Drone
SM
The
following are the hardware specifications for the V-1 Drone
SM
:
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fully
autonomous 32 bit Pixhawk flight controller
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lightweight
customized carbon fiber frame
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high
capacity lithium polymer batteries
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high
voltage 20 amp brushless speed controllers
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large
17” carbon fiber propellers
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available
customized sensor packages
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To
date we have built and tested approximately 10 prototypes of the V-1 Drone
SM
. Mr. Hammack is allowing us the use of
his ranchland to store and test the drones. When necessary we intend to expand our testing area to include farmland and other
agricultural areas for real world usability testing.
Suppliers
Both
our hardware and software solutions rely on certain outside suppliers for either operational components or software packages upon
which our systems are constructed. While we rely heavily on 3D Robotics as our principle supplier for drone components, at this
time there are multiple suppliers for almost all of the components that are required in our business and we do not foresee a situation
under which we would be unable to receive the items required from these suppliers. Our V-1 Drone
SM
prototype is constructed
mostly from readily available components. When we begin to manufacture the V-1 Drone
SM
for commercial sale, we will
require certain proprietary components such as flight controllers and network interfacers to be manufactured to our specifications.
This will limit our supply network and could leave us vulnerable in the event of an issue with such supplier. Where appropriate
we will try to diversify our supply network as much as possible to mitigate future supply risks.
Business
Plan Implementation Schedule
We
will be unable to implement the remainder of our business plan until we are able to secure total financing of approximately $1,500,000.
However, there can be no assurance that sufficient financing will be available or available on suitable terms. We have not established
a schedule for the completion of specific tasks or milestones contained in our business plan, of which we have implemented approximately
15% as of the date of this prospectus, focused mainly on the development of our V-1 Drone
SM
. Virtually all aspects
of our business plan are scalable in terms of size, quality, and effectiveness, and the timing of their execution must be concurrent
or near concurrent and progressive over an eighteen-month period. We anticipate that we will require a total of $1,500,000 in
order to deliver upon our business goals within a 24-month period.
Sales
and Marketing Strategy
We
plan to begin producing revenues from sales related to drone services, either through one-time contracts or through longer-term
monitoring and data processing agreements. We plan to begin discussions within the agriculture industry to determine the areas
in which our services could have an immediate impact, thus generating the most interest from early adopters. While we plan to
attend industry conferences and association meetings in order to introduce our services, we believe that personal relationships
and introductions will be our best avenue to capture revenues in the near-term.
We
anticipate that within 24 months, we will be actively marketing our V-1 Drone
SM
for sale to commercial customers. In
order to effectively sell the V-1 Drone
SM
, we will need to engage a professional sales and marketing team with experience
in business-to-business sales. We expect that as the UAV market matures over the coming years there will be opportunities for
collaborations with other interested parties which could provide additional markets for our product and services.
Characteristics
and Make-Up of Target Market
The
UAV market is constantly changing, due in large part to the current regulatory challenges faced by the industry. It is impossible
to predict exactly how new regulations will impact the market at this time.
Although
our initial focus will be the agriculture and farming markets, our solutions, especially the V-1 Drone
SM
, will be applicable
to a variety of markets. We will be constantly reviewing our target markets to ensure the success of our business model.
As
the UAV industry matures in the coming years, the demand for our solutions will only increase. Our early entry into the commercial
UAV marketplace will provide an opportunity to become one of the major solution providers in our target markets.
Competition
The
commercial UAV market is characterized by many participants that offer very similar products. Therefore, our strategy is to begin
offering advanced solutions that combine our software and hardware offerings in such a way to bring clear value to our customers.
Although
this industry operates in a highly specialized niche, competition for business will be intense. We will face significant competition
in the provision of both software solutions and hardware systems from the following companies, among others:
Hardware
Vendors
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|
Parrot
Industries
|
|
|
|
|
●
|
PrecisionHawk
|
|
|
|
|
●
|
DJI
Innovations
|
|
|
|
|
●
|
Helico
Aerospace Industries
|
Software
Solutions Providers
|
●
|
PrecisionHawk
|
|
|
|
|
●
|
AirWare
|
|
|
|
|
●
|
DroneCode
|
|
|
|
|
●
|
NV
Drones
|
Intellectual
Property
Our
policy is to capitalize intellectual property related to the filing and acquisition of internally developed patents where appropriate.
Patent
related expenses that are eligible for capitalization include:
|
●
|
legal
fees related to the preparation and filing of a patent application;
|
|
|
|
|
●
|
legal
fees related to the defense of a patent or patent application; and
|
|
|
|
|
●
|
filing
fees related to the filing of a patent application.
|
Intellectual
property for internally developed patents will be capitalized only in the above circumstances and will be amortized over the life
of the patent, beginning on the grant date.
We
have not filed any patents related to our UAV technologies as of the date hereof; however, we anticipate that we will begin to
complete such filings in the near future.
Research
and Development
Our
current research and development activities are solely focused on the continued development of the AIMD platform as well as our
collaboration on the V-1 Drone
SM
. We anticipate these efforts will lead to additional products being developed from
the foundation of these two systems. If and when we are able to do this, engineering design development will be employed to aid
in the development of these systems. At this time, however, we have no plans to pursue pure research and development activities
at any point in the future.
Government
Regulations
As
a provider of technologies and services in the UAV industry we are likely to be subject to extensive regulation at both the federal
and municipal levels. This will be especially true if we begin to offer operational services to our customers. We believe that
increasing regulation in the drone space will be beneficial not only to our business, but to all commercial drone operators and
solution providers. The barriers to entry created by such regulation will only help to differentiate the product and solutions
being offered by professional companies versus those that are intended for the consumer marketplace.
The
regulatory environment for commercial UAV use has not yet been codified in the United States. In addition to a few recent FAA
exemptions, the key case,
Huerta v. Pirker,
has not brought definitive clarity, just more clearly defined positions on
both sides of the dispute over the regulated or unregulated use of UAVs for commercial purposes.
UAV
regulations for the United States airspace are still a patchwork of confusing, often contradictory rulings, generally based on
regulations, which, in some cases, were codified decades ago. Based on the existing exemptions, those entities and organizations
that are anticipating to utilize UAVs commercially will be required to receive pilot certifications, including medical certifications,
which the FAA has attached to the few exemptions. Operators and pilots are likely to be distinguished. The FAA has recently determined
that a drone registry will be implemented in order to more effectively track drones that stray into restricted airspace or are
flown in violation of the law. We feel this registry is long overdue and will help to reduce the negative attention paid to the
industry when hobbyist operators do not follow common sense guidelines for drone operations.
On
the non-FAA side, there will be expanding barriers to entry into the UAV industry, especially if the FAA regulations should surprise
us with low thresholds for an entry into the commercial field. From homeland security to privacy, there are real, and imaginary,
dangers associated with the expanding use of UAVs in the United States. As U.S. domestic regulation continues to fall behind that
of more forward thinking countries, it may become necessary for UAV companies to focus their efforts and resources outside the
United States until such time as UAV regulations become more conducive to the game changing solutions that can only be delivered
by tomorrow’s advanced UAV systems and technologies.
On
February 10, 2016, we were granted an exemption (No. 14749, Regulatory Docket No. FAA–2015–4694) from Section 333
of Public Law 112-95 by the Federal Aviation Administration to operate two models of the V-series drones to perform aerial data
collection, and in particular, to conduct aerial based agricultural applications, search and rescue operations, power-line inspections,
pipe-line inspections, infrastructure surveying and aerial imaging. The exemption is subject to industry standard weight, speed
and altitude limitations, as well as certain visual line of sight, visual observer, operating document, safety and pre-flight
inspection measures, among others.
The
exemption will terminate on February 28, 2018, and we do not anticipate being unable to comply with any conditions of the exemption
during the term.
Employees
As
of the date hereof, we do not have any full-time or part-time employees. We currently rely on the efforts of Gerald B. Hammack,
our sole executive officer and director, and Sean Foster, the sole officer and director of Vertitek, to manage our operations.
Mr. Hammack dedicates approximately 40 hours per week to the management of our operations along with the oversight of our autonomous
vehicle software and hardware development projects, and Mr. Foster dedicates approximately 20 hours per week to the continued
development of Vertitek’s autonomous vehicle prototypes. From time to time, we also engage consultants to provide specialized
technical and support services, both in the implementation of our corporate structure as well as the advancement of our products
and services.
DESCRIPTION
OF PROPERTY
Our
principal executive office is located at 1001 S Dairy Ashford Road, Suite 100, Houston, TX 77077. We lease this space from Regus
Management Group, LLC, at a cost of $179 per month pursuant to a virtual office agreement dated April 1, 2014, as amended on March
19, 2015. We believe that this space is generally suitable to meet our needs for the foreseeable future; however, we will continue
to seek additional space as needed to satisfy our growth.
Our
telephone number is (713) 595-6675 and our website address is www.valmie.com.
LEGAL
PROCEEDINGS
We
do not know of any material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material
proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered
beneficial shareholders are an adverse party or have a material interest adverse to us.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Our financial statements are stated in United
States dollars and are prepared in accordance with United States generally accepted accounting principles.
The
following discussion and analysis of our results of operations and financial condition has been derived from and should be read
in conjunction with our financial statements, including the notes thereto, that appear in the registration statement of which
this prospectus forms a part.
Overview
We
were incorporated pursuant to the laws of the State of Nevada on August 26, 2011. We have not yet generated any revenue from operations.
Results
of Operations
For
the periods ended February 29, 2016 and February 28, 2015
Revenues
We
have not generated any revenue since our inception. We anticipate that we will incur substantial losses for the foreseeable future
and our ability to generate any revenue during the next 12 months continues to be uncertain.
Expenses
During
the three months ended February 29, 2016, we incurred $77,609 in operating expenses, including $50,349 in professional fees, $11,160
in general and administrative expenses, $15,000 in management fees and $1,100 in transfer agent fees. During the same period in
fiscal 2015, we incurred $128,509 in operating expenses, including $110,060 in professional fees, $7,003 in general and administrative
expenses, $11,000 in management fees and $446 in transfer agent fees. The $50,900 decrease in our operating expenses between the
two periods was therefore primarily attributable to the significant decrease in our professional fees, which was in turn related
to our obligations under a consulting agreement we entered into on September 1, 2014 that was amended effective February 28, 2015
to cancel the fixed monthly fee. During the three months ended February 29, 2016, our general and administrative expenses and
transfer agent fees also increased due to the general increase in our operations subsequent to the acquisition of Vertitek.
During
the three months ended February 29, 2016, we also incurred $5,411 in interest expenses, whereas we incurred $6,811 in interest
expenses during the same period in fiscal 2015.
Net
Loss
During
the three months ended February 29, 2016, we incurred a loss from operations of $77,609, a net loss of $83,020, and a net loss
per share of $0.00. During the same period in fiscal 2015, we incurred a loss from operations of $128,509, a net loss of $135,320
and a net loss per share of $0.00.
For
the years ended November 30, 2015 and 2014
Expenses
During
the year ended November 30, 2015, we incurred $3,210,470 in operating expenses, including $237,605 in professional fees, $52,000
in management fees, $38,143 in general and administrative expenses, $5,578 in transfer agent fees and $2,877,144 in impairment
losses. During the year ended November 30, 2014, we incurred $164,155 in operating expenses, including $136,415 in professional
fees, $20,000 in management fees, $5,815 in general and administrative expenses and $1,925 in transfer agent fees. The $3,046,315
increase in our operating expenses between the two years was primarily attributable to the significant increases in our impairment
losses related to intangible assets acquired during the year and professional fees, which was in turn related to our obligations
under a consulting agreement we entered into on September 1, 2014. During the year ended November 30, 2015, our management fees,
general and administrative expenses and transfer agent fees also increased due to the general increase in our operations subsequent
to the acquisition of Vertitek.
During
the year ended November 30, 2015, we also incurred $10,403,232 in other expenses, including a $10,404,422 loss on the settlement
of debt, as offset by $1,190 in interest income.
Net
Loss
During
the year ended November 30, 2015, we incurred a loss from operations of $3,210,470, a net loss of $13,613,702, and a loss per
share of $0.15. During the prior year, we incurred a loss from operations and a net loss of $164,155, and a loss per share of
$0.00. The increase in our net loss between the two years was attributable to both the increase in our net loss from operations
as described above as well as our other expenses, and in particular our significant loss on the settlement of debt and impairment
loss.
Liquidity
and Capital Resources
As
of February 29, 2016, we had $24,858 in cash and cash equivalents, $25,208 in current assets, $58,014 in total assets, $91,963
in current liabilities, $268,905 in total liabilities, a working capital deficit of $66,755 and a retained deficit of $14,020,764.
During
the three months ended February 29, 2016, we used $65,444 in net cash on operating activities due to net losses and our accounts
payable increasing by $12,310. During the same period in fiscal 2015 we used $181,788 in net cash on operating activities due
to net losses and our accounts payable decreasing by $52,929. The majority of our spending on operating activities for the three
months ended February 29, 2016 and 2015 was attributable to our net loss as described above, as adjusted for changes in our accounts
payable and accrued liabilities, and was associated with carrying out our reporting obligations under applicable securities laws
and transitioning our business focus from mining to pursuing opportunities for the commercialization of products and services
in the technology industry.
During
the three months ended February 29, 2016, we used $74 in net cash on investing activities. During the same period in fiscal 2015,
we used $25,500 in net cash on investing activities, all of which was in the form of advances to Vertitek.
During
the three months ended February 29, 2016, we received $67,500 from financing activities, all of which was in the form of proceeds
from promissory notes. During the same period in fiscal 2015, we received $200,000 from financing activities, all of which was
also in the form of proceeds from promissory notes.
During
the three months ended February 29, 2016, our cash position increased by $1,982 due to a combination of our operating, investing
and financing activities.
Our
plans for the next 12 months are uncertain due to our current financial condition; however, we intend to raise additional funds
through public or private placement offerings. If we are unsuccessful in raising enough money through such efforts, we may review
other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us
with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable
to us. In the absence of such financing, we may be forced to cease or significantly curtail our operations.
Plan
of Operations
We
will need to raise additional capital to fully develop our business plan. We have a 24-month plan during which we intend to implement
our business development and marketing plan. We believe we must raise approximately $1,500,000 to pay for expenses associated
with the continued development of our AIMD platform as well as the development and commercialization of the V-1 Drone
SM
.
Of this, we plan to use $500,000 to finance anticipated activities during Phase I of our development plan as described below,
and $1,000,000 to finance anticipated activities during Phase II.
Phase
I
Description
|
|
Estimated Amount
($)
|
|
Complete the development of the AIMD platform
|
|
|
200,000
|
|
Finalize the design of the V-1 Drone
SM
|
|
|
150,000
|
|
Hire sales staff to work with potential clients
|
|
|
50,000
|
|
Additional working capital to cover general and administrative expenses
|
|
|
100,000
|
|
Total
|
|
|
500,000
|
|
Phase
II
Description
|
|
Estimated Amount
($)
|
|
Complete small-scale manufacturing of the V-1 Drone
SM
|
|
|
500,000
|
|
Sales literature, displays and advertising expenses
|
|
|
200,000
|
|
Management and consulting fees, employee salaries
|
|
|
200,000
|
|
Additional working capital to cover general and administrative expenses
|
|
|
100,000
|
|
Total
|
|
|
1,000,000
|
|
Many
of the developments enumerated in Phase II are dependent on the completion of our Phase I objectives, and both phases are dependent
on us obtaining additional financing. There can be no assurance that we will be able to secure such financing, and if we are able
to raise some but not all of the funds required to undertake the developments in Phase I and Phase II, our management will likely
need to re-examine our proposed business activities to use our resources most efficiently. In this event, our focus will likely
be on spending available funds to maintain our reporting status with the SEC and developing our product designs to attract investors.
If
we are unable to raise additional funds, we will not be able to complete any of the milestones in either Phase I or Phase II.
Due to the fact that many of the milestones are dependent on each other, if we are unsuccessful in obtaining additional financing,
we may not be able to implement any facets of our business plan.
We
intend to pursue capital through public or private financing as well as borrowings and other sources, such as loans from our existing
shareholders in order to finance our businesses activities. We cannot guarantee that additional funding will be available on favorable
terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.
Going
Concern
Our
financial statements have been prepared on a going concern basis, which contemplates, among other things, that we will continue
to realize our assets and satisfy our liabilities in the normal course of business. As of February 29, 2016, we had a working
capital deficit of $66,755 and a retained deficit of $14,020,764. We intend to fund our operations through equity financing arrangements,
which may be insufficient to fund our capital expenditures, working capital and other cash requirements for the next 12 months.
Our
ability to continue in existence is dependent upon, among other things, obtaining additional financing to continue our operations
and the operations of Vertitek. These factors, among others, raise substantial doubt about our ability to continue as a going
concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Our periodic filings with the Securities and Exchange
Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect our financial
statements and future operations.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks, money market funds, and certificates of term deposits with original maturities of
less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject
to an insignificant risk of loss in value. We had $24,858 in cash and cash equivalents at February 29, 2016 (November 30, 2015
- $22,876).
Capitalized
Prototype Development Costs
Prototype
development costs are costs associated with the development of software and hardware related to advance drone fleet technology
and are stated at historical cost. Prototype development costs consist of salaries and costs of raw material in development. Until
the prototype is substantially completed and ready for its intended use, no depreciation expenses will be incurred. We currently
have no depreciation policy with respect to prototype development costs.
Off-Balance
Sheet Arrangements
We
do not have any 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.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On
September 22, 2015, we notified our independent registered public accounting firm, Anderson Bradshaw PLLC (“Anderson Bradshaw”),
that we had decided to change auditors and were therefore dismissing Anderson Bradshaw, effective immediately. Our decision was
approved by our sole director, also acting as the audit committee, on that same day, and concurrent with Anderson Bradshaw’s
dismissal, our sole director appointed Heaton & Company, PLLC (“Heaton”) as our new independent registered public
accounting firm.
During
the fiscal years ended November 30, 2014 and 2013, and through September 22, 2015, neither us nor anyone acting on our behalf
consulted Heaton regarding (i) either the application of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and neither a written
report nor oral advice was provided to us that Heaton concluded was an important factor considered by us in reaching a decision
as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement
(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable
event (as defined in Item 304(a)(1)(v) of Regulation S-K).
The
reports of Anderson Bradshaw regarding our financial statements for the fiscal years ended November 30, 2014 and 2013 did not
contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting
principles, except to indicate that there was substantial doubt about our ability to continue as a going concern.
During
the fiscal years ended November 30, 2014 and 2013, and through September 22, 2015, we did not (i) have any disagreements (as defined
in Item 304(a)(1(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Anderson Bradshaw on any
matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements,
if not resolved to the satisfaction of Anderson Bradshaw, would have caused it to make reference thereto in connection with its
reports; or (ii) experience any reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
USE
OF PROCEEDS
We received net proceeds of $200,000 from
the sale of promissory notes to Crystal in the private placement transaction, the conversion of which into our common stock
resulted in the issuance of 2,000,000 shares. We will not receive any proceeds from the sale of the shares being registered hereunder.
SELLING
SHAREHOLDERS
The
2,212,765 shares of our common stock included in this prospectus were issued to the selling shareholders in private sales in reliance
upon the provisions of Section 4(a)(2) of the Securities Act. Neither of the selling shareholders is a broker-dealer or an affiliate
of a broker-dealer.
The following table sets forth, as to each
of the selling shareholders: the number of shares of our common stock beneficially owned, based on each selling shareholder’s
ownership of the common stock purchased pursuant to the Private Placement Transaction or the Hammack Technology Acquisition; the
number of shares of our common stock being offered by such selling shareholder pursuant to this prospectus; and the number of
shares of our common stock beneficially owned upon completion of the offering and the percentage of beneficial ownership upon
completion of the offering based upon 66,769,755 shares of our common stock outstanding as of June 24, 2016.
Information
in the table below and the notes thereto has been provided to us by the selling shareholders. Beneficial ownership and percentage
have been determined in accordance with Rule 13d-3 under the Exchange Act and generally includes voting or investment power with
respect to the securities. The information listed below is not necessarily indicative of beneficial ownership for any other purpose.
Name
|
|
Shares of Common Stock Held
|
|
|
Shares of Common Stock Being Registered
|
|
|
Beneficial Ownership After Offering(1)
|
|
|
Percentage of Beneficial Ownership After Offering
|
|
Crystal Resource Corp. (2)
|
|
|
2,000,000
|
|
|
|
2,000,000
|
|
|
|
0
|
|
|
|
0
|
|
Gerald B. Hammack (3)
|
|
|
212,765
|
|
|
|
212,765
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,212,765
|
|
|
|
2,212,765
|
|
|
|
0
|
|
|
|
0
|
|
|
(1)
|
The
numbers in this column assume each selling shareholder sells all of its shares being registered pursuant to this prospectus.
|
|
|
|
|
(2)
|
Gregory
Lyons exercises sole voting and investment power over the securities held by Crystal Resource Corp.
|
|
|
|
|
(3)
|
Mr.
Hammack is our sole officer and director.
|
PLAN
OF DISTRIBUTION
Each
selling shareholder may, from time to time, sell any or all of the shares covered hereby on the OTC Bulletin Board, the OTC Pink
marketplace or any other stock exchange, market or trading facility on which our common stock is traded or in private transactions.
These sales may be at fixed or negotiated prices. A selling shareholder may use any one or more of the following methods when
selling shares:
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
|
●
|
an
exchange distribution in accordance with the rules of the applicable exchange;
|
|
|
|
|
●
|
privately
negotiated transactions;
|
|
|
|
|
●
|
settlement
of short sales entered into after the effective date of the registration statement of which this prospectus forms a part;
|
|
|
|
|
●
|
in
transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share;
|
|
|
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
Broker-dealers
engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from
the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the shares or interests therein, the selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging
the positions they assume. The selling shareholders may also sell shares short and deliver these shares to close out their short
positions, or loan or pledge the shares to broker-dealers that in turn may sell these shares. The selling shareholders may also
enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares
such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
Broker-dealers
or agents may receive compensation from the selling shareholders in the form of commissions, discounts or concessions. Broker-dealers
or agents may also receive compensation from the purchasers of the registered securities for which they act as agents or to whom
they sell as principals, or both. A broker-dealer’s compensation will be negotiated in connection with the sale and may
exceed the broker-dealer’s customary commissions. Broker-dealers, agents or the selling shareholders may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with sales of the registered securities. Any
commission, discount or concession received by these broker-dealers or agents and any profit on the sale of the registered securities
purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act.
Because
selling shareholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject
to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus that qualify
for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling
shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriter
or broker-dealer regarding the sale of the registered securities. There is currently no coordinating broker acting in connection
with the proposed sale of the registered securities by the selling shareholders.
We
have agreed to keep the registration statement of which this prospectus forms a part effective until the date on which all of
the registered securities have been sold pursuant to this prospectus. The registered securities will be sold only through registered
or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the registered
securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the registered securities may
not simultaneously engage in market making activities with respect to the registered securities for a period of two business days
prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases
and sales of the registered securities by the selling shareholders or any other person. We will make copies of this prospectus
available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser
at or prior to the time of the sale.
We
will pay all costs, expenses and fees associated with the registration of the registered securities, including without limitation,
SEC filing fees and expenses of compliance with state securities or “blue sky” laws. The selling shareholders will
pay all underwriting commissions and discounts, selling or placement agent fees or broker fees and commissions, and transfer taxes,
if any, associated with the sale of the registered securities. The selling shareholders may agree to indemnify any broker-dealer
or agent that participates in sales of the registered securities against specified liabilities, including liabilities arising
under the Securities Act. The selling shareholders have agreed to indemnify certain persons against specified liabilities in connection
with the offering of the registered securities, including liabilities arising under the Securities Act.
DESCRIPTION
OF SECURITIES
Introduction
In
the discussion that follows, we have summarized selected provisions of our amended and restated articles of incorporation, our
amended and restated bylaws and the Nevada Revised Statues (the “NRS”). This summary is not complete. This discussion
is subject to the relevant provisions of Nevada law and is qualified in its entirety by reference to our amended and restated
articles of incorporation and bylaws.
Common
Stock
Our authorized capital consists of 750,000,000
shares of common stock, par value $0.001 per share. As of June 24, 2016, an aggregate of 66,769,755 shares of common stock
were issued and outstanding.
The
holders of our common stock:
|
●
|
have
equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors;
|
|
|
|
|
●
|
are
entitled to share ratably in all of our assets available for distribution to holders of common stock upon the liquidation,
dissolution or winding up of our affairs;
|
|
|
|
|
●
|
do
not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
|
|
|
|
|
●
|
are
entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
|
Preferred
Stock
Our
authorized capital also consists of 10,000,000 shares of shares of “blank check” preferred stock, par value $0.001,
2,000,000 of which have been designated as Series “A” preferred stock. As of the date hereof, all 2,000,000 shares
of the Series “A” preferred stock are issued and outstanding and the remaining 8,000,000 shares of “blank check”
preferred stock have yet to be designated or issued.
The
“blank check” preferred stock may be issued from time to time in one or more series, and our Board of Directors is
authorized to issue such stock in one or more series and to fix from time to time the number of shares to be included in any series
and the designations, powers, preferences and relative, participating, option or other special rights, and qualifications, limitations
or restrictions thereof, of all shares of such series.
Subject
to the rights of the holders of any series of preferred stock pursuant to the terms of any preferred stock designation, the number
of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding)
by the affirmative vote of the holders of a majority of our capital stock entitled to vote generally in the election of directors.
The
shares of Series “A” preferred stock carry certain rights and preferences, including that the Series “A”
Preferred Stock may be converted into shares of our common stock on a 10 for one (1) basis at any time after 18 months from the
date of issuance; that each share of Series “A” preferred stock has voting rights and carries a voting weight equal
to 50 shares of common stock; and that in the event of our voluntary or involuntary liquidation, dissolution or winding-up, the
Series “A” preferred stock has a priority on liquidation senior to that of our other preferred stock.
Non-Cumulative
Voting
Holders
of our common stock do not have cumulative voting rights. This means that the holders of more than 50% of the outstanding shares,
when voting for the election of directors, can elect all of the directors to be elected, if they so choose. In that event, the
holders of the remaining shares will not be able to elect any of our directors.
Dividends
On
December 3, 2013, our former sole director approved a stock dividend of 59 authorized but unissued shares of our common stock
on each one (1) issued and outstanding share of our common stock. On December 13, 2013, we received approval from the Financial
Industry Regulatory Authority (FINRA) to effectuate the stock dividend by way of a forward split, and on December 17, 2013, our
shareholders of record on December 16, 2013 received the dividend. As a result of the stock dividend, our issued and outstanding
common stock increased from 4,940,000 shares to 296,400,000 shares.
Other
than as described above, we have not paid any dividends to our shareholders. The declaration of any future dividends is at the
discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our
general economic conditions, and other pertinent conditions. It is our present intention not to pay any dividends in the foreseeable
future, but rather to reinvest earnings, if any, in our business operations.
INTEREST
OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering
of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with
the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director,
officer, or employee.
Anderson
Bradshaw PLLC of Salt Lake City, Utah, our former independent registered public accountant, audited our financial statements included
in this prospectus and registration statement to the extent and for the periods set forth in its audit report. Anderson Bradshaw
PLLC has presented its report with respect to our audited financial statements. On September 22, 2015, we dismissed Anderson Bradshaw
PLLC as our independent registered public accountant. See “Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.”
Heaton
& Company, PLLC of Farmington, Utah, our independent registered public accountant, audited our financial statements included
in this prospectus and registration statement to the extent and for the periods set forth in its audit report. Heaton & Company,
PLLC has presented its report with respect to our audited financial statements.
Bacchus
Law Corporation of 925 West Georgia Street, Suite 1820, Vancouver, British Columbia, Canada V6C 3L2, has passed upon certain legal
matters in connection with the validity of the issuance of the shares of common stock.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
General
As of the date hereof, we have 66,769,755
shares of common stock issued and outstanding.
Market
Information
There
is a limited public market for our common stock. Our common stock is quoted on the OTC Bulletin Board and OTC Pink marketplace
under the symbol “VRMI”. Trading in stocks quoted on such markets is often thin and is characterized by wide fluctuations
in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. We cannot assure
you that there will be a market in the future for our common stock.
OTC
market securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC market
securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC market issuers
are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock
exchange.
Our
common stock became eligible for quotation on the OTC Bulletin Board and OTC Pink marketplace on December 6, 2012. The following
quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down
or commission, and may not represent actual transactions. The high and low bid quotations of our common stock for the periods
indicated below are as follows:
OTCBB / OTC Pink Marketplace
|
Quarter Ended
|
|
High ($)
|
|
|
Low ($)
|
|
February 29, 2016
|
|
|
0.24
|
|
|
|
0.10
|
|
November 30, 2015
|
|
|
0.33
|
|
|
|
0.122
|
|
August 31, 2015
|
|
|
0.69
|
|
|
|
0.22
|
|
May 31, 2015
|
|
|
6.00
|
|
|
|
0.41
|
|
February 28, 2015
|
|
|
2.55
|
|
|
|
0.31
|
|
November 30, 2014
|
|
|
0.31
|
|
|
|
0.31
|
|
August 31, 2014
|
|
|
0.31
|
|
|
|
0.31
|
|
May 31, 2014
|
|
|
0.65
|
|
|
|
0.30
|
|
Holders
As
of the date hereof, there are four holders of record of our common stock, one of which is Cede & Co.
Dividends
On
December 3, 2013, our former sole director approved a stock dividend of 59 authorized but unissued shares of our common stock
on each one (1) issued and outstanding share of our common stock. On December 13, 2013, we received approval from the Financial
Industry Regulatory Authority (FINRA) to effectuate the stock dividend by way of a forward split, and on December 17, 2013, our
shareholders of record on December 16, 2013 received the dividend. As a result of the stock dividend, our issued and outstanding
common stock increased from 4,940,000 shares to 296,400,000 shares.
Other
than as described above, we have never paid dividends on our common stock.
Securities
Authorized for Issuance under Equity Compensation Plans
As
of the date hereof, we do not have any compensation plans under which our equity securities are authorized for issuance. We intend
to adopt an equity compensation plan in which our directors, officers, employees and consultants will be eligible to participate.
However, no formal steps have been taken as of the date of this prospectus to adopt such a plan.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
bylaws allow the number of directors to be fixed by our Board of Directors. Our Board of Directors has fixed the number of directors
at one.
As
of the date hereof, the name, age and positions of our sole executive officer and director were as follows:
Name
|
|
Age
|
|
Position
|
Gerald B. Hammack
|
|
53
|
|
Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director
|
Mr.
Hammack will serve as our director until our next shareholder meeting or until his successor is elected who accepts the position.
Officers hold their positions at the will of the Board of Directors. There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or
influence the management of our affairs.
Gerald
B. Hammack – Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary,
Treasurer, Director
Mr.
Hammack has been our Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary,
Treasurer and sole director since December 8, 2014. He has more than 30 years of experience in a variety of technology-related
fields, including programming, digital telephony, database management as well as substantial expertise in the setup and management
of complex data processing systems. From 2008 to the present, he has acted as the Managing Director of Wizard Technical Services,
a boutique firm located in Cushing, Texas, focused on the development of customized technology solutions for a diverse client
base, including the development and management of a cloud-based Internet telephony solution for a niche telephony service provider
as well as offsite management and oversight of legacy hardware and software systems.
Prior
to 2008, Mr. Hammack served as the Director of Technical Services for the Orleans Parish Criminal Sheriff’s Office (OPCSO)
in New Orleans, Louisiana. While holding the rank of Captain, Mr. Hammack’s experience and dedication were instrumental
in restarting OPCSO’s operations after the devastation of Hurricane Katrina.
Mr.
Hammack has not been a director of any company with a class of securities registered pursuant to section 12 of the Exchange Act
or subject to the requirements of section 15(d) of the Exchange Act, or any company registered as an investment company under
the Investment Company Act of 1940, during the past five years.
Significant
Employees
Other than Mr. Hammack, Mr. Foster, the sole
officer and director of Vertitek, and James Stafford, our joint venture partner in AeroLift, we do not expect any other
individuals to make a significant contribution to our business at this time.
Family
Relationships
There
are no family relationships among our sole director, sole executive officer or persons nominated or chosen by us to become directors
or executive officers.
Legal
Proceedings
None
of our directors, executive officers, promoters or control persons has been involved in any of the following events during the
past 10 years:
|
●
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
●
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
|
|
|
●
|
being
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities;
|
|
|
|
|
●
|
being
found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have
violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;
|
|
|
|
|
●
|
being
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business activity;
|
|
|
|
|
●
|
being
the subject of, or a party to, any judicial or administrative order, judgment, decree or finding, not subsequently reversed,
suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation
or any law or regulation respecting financial institutions or insurance companies; or
|
|
|
|
|
●
|
being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any stock, commodities
or derivatives exchange or other self-regulatory organization.
|
Except
as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or
executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the SEC.
Code
of Ethics
We
have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions, because we have not yet finalized the content of such
a code. Companies whose equity securities are listed for trading on the OTC Bulletin Board and OTC Pink marketplace are not currently
required to implement a code of ethics.
Audit
Committee
On
September 30, 2013, we established an audit committee and appointed our former sole executive officer and director as the sole
member of the committee. He has since been replaced by our current sole executive officer and director, Gerald B. Hammack. Mr.
Hammack is not an independent member of the committee pursuant to NASDAQ Listing Rule 5605(a)(2) since he is our sole executive
officer. The Board of Directors adopted a charter for the audit committee on September 30, 2013, a copy of which was included
as Exhibit 99.1 to our annual report for the fiscal year ended November 30, 2013, filed with the SEC on March 14, 2014.
The
audit committee is responsible for reviewing both our interim and annual financial statements. For the purposes of performing
their duties, the members of the audit committee have the right, at all times, to inspect all our books and financial records
and discuss with management and our auditors any accounts, records and matters relating to our financial statements. The audit
committee is required to meet periodically with management and annually with our auditors.
Our
Board of Directors has determined that we do not presently need an audit committee financial expert on our Board of Directors
carrying out the duties of the audit committee. Our Board of Directors has determined that the cost of hiring a financial expert
to act as one of our directors and to be a member of the audit committee or otherwise perform audit committee functions outweighs
the benefits of having a financial expert on the Board.
We
do not have any independent directors and have not voluntarily implemented various corporate governance measures, in the absence
of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar
matters.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following sets forth information with respect to the compensation awarded or paid to our current and former sole officers and
directors for all services rendered in all capacities to us. We do not have any other executive officers and no other individual
received total compensation from us in excess of $100,000 during those years. Pursuant to Item 402(a)(5) of Regulation S-K, we
have omitted certain columns from the table since there was no compensation awarded to, earned by or paid to these individuals
required to be reported in such columns in either year.
Name and Principal Position
|
|
Year Ended November 30,
|
|
Salary
($)
|
|
Total
($)
|
Gerald B. Hammack,
|
|
|
2015
|
|
|
|
47,000
|
|
|
|
47,000
|
|
Chief Executive Officer (1)
|
|
|
2014
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Timothy Franklin,
|
|
|
2015
|
|
|
|
5,000
|
|
|
|
5,000
|
|
former Chief Executive Officer (2)
|
|
|
2014
|
|
|
|
20,000
|
|
|
|
20,000
|
|
Khurram Shroff,
|
|
|
2015
|
|
|
|
N/A
|
|
|
|
N/A
|
|
former Chief Executive Officer (3)
|
|
|
2014
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Gerald
B. Hammack has been our Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer,
Secretary, Treasurer and sole director since December 8, 2014.
|
|
|
(2)
|
Timothy
Franklin was our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer
and sole director from April 16, 2014 until December 8, 2014.
|
|
|
(3)
|
Khurram
Shroff was our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer
and sole director from September 30, 2013 until April 16, 2014.
|
Outstanding
Equity Awards at Fiscal Year-End
As
of November 30, 2015, we did not have any outstanding equity awards.
Benefit
Plans
We
do not have any pension plan, profit sharing plan or similar plan for the benefit of our officers, directors or employees. However,
we may establish such plans in the future.
Director
Compensation
We
do not pay our directors any fees for attendance at Board meetings or similar remuneration or reimburse them for any out-of-pocket
expenses incurred by them in connection with our business.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding our common stock beneficially owned as of June 24, 2016 for (i) each
stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each of our officers
and directors and (iii) our officers and directors as a group. A person is considered to beneficially own any shares over which
such person, directly or indirectly, exercises sole or shared voting or investment power, or over which such person has the right
to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless
otherwise indicated, voting and investment power relating to the shares shown in the table for our officers and directors is exercised
solely by the beneficial owner thereof.
For
the purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of
our common stock that such person has the right to acquire within 60 days. For the purposes of computing the percentage of outstanding
shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the
right to acquire within 60 days is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute
an admission of beneficial ownership.
Title of Class
|
|
Name of Beneficial Owner (1)
|
|
Amount and Nature of Beneficial Ownership
|
|
|
Percent
of
Class (2)
|
|
Common Stock
|
|
Gerald B. Hammack (3)
|
|
|
212,765
|
|
|
|
(4
|
)
|
Common Stock
|
|
Timothy Franklin (5)
|
|
|
-
|
|
|
|
-
|
|
Common Stock
|
|
Khurram Shroff (6)
|
|
|
-
|
|
|
|
-
|
|
All Officers and Directors as a Group
|
|
|
212,765
|
|
|
|
(4
|
)
|
Preferred Stock
|
|
Fen Holdings & Investments Ltd. (7)
10 route de l’Aeroport
Geneva, Switzerland CH-1215
|
|
|
2,000,000
|
|
|
|
100
|
|
|
(1)
|
We
are unaware of any shareholder who directly, or indirectly, controls or is the beneficial owner of more than 5% of our common
stock.
|
|
|
|
|
(2)
|
Based
on 66,769,755 shares of our common stock and 2,000,000 shares of our Series “A” preferred stock issued
and outstanding as of June 24, 2016.
|
|
(3)
|
Gerald
B. Hammack has been our Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer,
Secretary, Treasurer and sole director since December 8, 2014.
|
|
|
|
|
(4)
|
Less
than 1%.
|
|
|
|
|
(5)
|
Timothy
Franklin was our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer
and sole director from April 16, 2014 until December 8, 2014. To our knowledge, Mr. Franklin is not a current shareholder
or beneficial owner of any shares of our stock.
|
|
|
|
|
(6)
|
Khurram
Shroff was our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer
and sole director from September 30, 2013 until April 16, 2014. To our knowledge, Mr. Shroff is not a current shareholder
or beneficial owner of any shares of our stock.
|
|
|
|
|
(7)
|
Juergen
Krause exercises sole voting and investment power over the securities held by Fen Holdings & Investments Ltd.
|
Changes
in Control
As
of the date hereof, we are not aware of any arrangements, including any pledge by any person of our securities, the operation
of which may at a subsequent date result in a change in our control.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On
April 16, 2014, Fen, a company incorporated in the British Virgin Islands and our majority stockholder, acquired an aggregate
of 237,360,000 shares, or approximately 80.1% of our then issued and outstanding common stock from Khurram Shroff, our former
sole officer and director, for the aggregate purchase price of $150,011.52. The acquisition of the shares by Fen was governed
by the terms of a stock purchase agreement between Fen and Mr. Shroff dated April 8, 2014. On January 16, 2015, Fen agreed to
cancel those shares in exchange for the issuance of 2,000,000 shares of our Series “A” preferred stock.
On
January 20, 2015, we entered into the LOI with Vertitek to acquire 100% of the capital stock of that company in exchange for the
issuance of shares of our common stock to the principal shareholder of Vertitek, contingent upon certain due diligence requirements.
On January 27, 2015, we entered into a share exchange agreement with Vertitek and the sole shareholder of Vertitek, Masamos, on
substantially the same terms as the LOI. On March 31, 2015, the closing of the share exchange agreement occurred and we issued
1,000,000 shares of our common stock to Masamos in exchange for 100% of the issued and outstanding shares of Vertitek. As a result,
Vertitek became our wholly owned subsidiary.
On
July 15, 2015, we entered into an asset purchase agreement with our sole officer and director, Gerald B. Hammack, pursuant to
which we acquired all of the right, title and interest in and to certain intellectual property related to the AIMD platform in
consideration for the issuance of $100,000 worth of common stock to Mr. Hammack on that date at a deemed price of $0.47 per share.
As a result, Mr. Hammack received an aggregate of 212,765 shares of our common stock. The entire $100,000 of intellectual property
was impaired and written-off as of November 30, 2015.
During
the year ended November 30, 2015, we paid management fees of $5,000 (2014 – $Nil) to Timothy Franklin our former sole officer
and director, and $47,000 (2014 – $Nil) to Mr. Hammack, and converted $33,927 (2014 – $Nil) in debt previously owed
to Mr. Shroff, resulting in a loss on the settlement of debt in the amount of $919,422. Mr. Shroff assigned the debt to Dome Capital
LLC prior to its conversion.
During
the year ended November 30, 2015, we had $10,781 (2014 – $Nil) in debt forgiven by Fen, our majority stockholder.
As
of November 30, 2015, we were obligated to Mr. Shroff for non-interest bearing, unsecured and with no fixed terms of repayment
loans with a balance of $Nil (November 30, 2014 – $19,146). We also owed $Nil to Fen at November 30, 2015 (November 30,
2014 – $25,663).
Other
than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions,
beneficial owners of 5% or more of our common stock, or family members of those persons wherein the amount involved in the transaction
or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two
fiscal years.
Promoters
We
believe that the following persons may be deemed to be our promoters as such term is defined in Rule 405 under the Securities
Act:
|
●
|
Khurram
Shroff, our former sole officer and director and former majority shareholder, for the period from September 30, 2013, the
date he acquired his majority control, until April 16, 2014, the date he sold his majority control to Fen; and
|
|
|
|
|
●
|
Mauro
Baessato, our founder, former sole officer and director and former majority shareholder, from our inception, the date he acquired
his majority control, until September 30, 2013, the date he sold his majority control to Mr. Shroff.
|
Director
Independence
Because
our common stock is not currently listed on a national securities exchange, we currently use the definition in NASDAQ Listing
Rule 5605(a)(2) for determining director independence, which provides that an “independent director” is a person other
than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the
company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
|
●
|
the
director is, or at any time during the past three years was, an employee of the company;
|
|
|
|
|
●
|
the
director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period
of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including,
among other things, compensation for board or board committee service);
|
|
|
|
|
●
|
a
family member of the director is, or at any time during the past three years was, an executive officer of the company;
|
|
|
|
|
●
|
the
director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity
to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject
to certain exclusions);
|
|
|
|
|
●
|
the
director or a family member of the director is employed as an executive officer of an entity where, at any time during the
past three years, any of the executive officers of the company served on the compensation committee of such other entity;
or
|
|
|
|
|
●
|
the
director or a family member of the director is a current partner of the company’s outside auditor, or at any time during
the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s
audit.
|
We
have determined that our sole director does not meet this definition of independence due to the fact that he is also our sole
executive officer.
We
do not currently have a separately designated nominating or compensation committee.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
Our
bylaws provide that we will indemnify our directors and officers to the fullest extent provided by Nevada law.
The
general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible
for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their
conduct in such capacity, provided they did not engage in fraud or criminal activity.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons
pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
REPORTS
TO SECURITY HOLDERS
We
plan to file annual, quarterly, and current reports, and other information with the SEC, where applicable. You may read and copy
any reports, statements, or other information we file at the SEC’s public reference room at 100 F. Street, N.E., Washington
D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee by writing to the SEC. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings are also available
to the public on the SEC’s Internet site at http://www.sec.gov.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Securities and Exchange Commission, 100 F Street NE, Washington, D.C. 20549, under the Securities Act a registration
statement on Form S-1 of which this prospectus is a part, with respect to the shares of common stock offered hereby. We have not
included in this prospectus all the information contained in the registration statement, and you should refer to the registration
statement and our exhibits for further information.
In
the registration statement, certain items are contained in exhibits and schedules as permitted by the rules and regulations of
the SEC. You should read this prospectus and any prospectus supplement together with the registration statement and the exhibits
filed with or incorporated by reference into the registration statement. The information contained in this prospectus speaks only
as of its date unless the information specifically indicates that another date applies.
You
should rely only on the information contained in this prospectus. No finder, dealer, sales person or other person has been authorized
to give any information or to make any representation in connection with this offering other than those contained in this prospectus
and, if given or made, such information or representation must not be relied upon as having been authorized by the Company. This
prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby by anyone
in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
STOCK
TRANSFER AGENT
Island
Stock Transfer is our transfer agent. It can be contacted by mail at 15500 Roosevelt Boulevard, Suite 301 Clearwater, Florida
33760 or by phone at (727) 289-0010.
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
a date which is 90 days after the date of this prospectus, all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation
to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
VALMIE RESOURCES, INC.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
February
29, 2016
(Stated
in US Dollars)
Valmie
Resources, Inc.
Consolidated
Balance Sheets
(Stated
in US Dollars)
(Unaudited)
|
|
February 29, 2016
|
|
|
November 30, 2015
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
(Note 4)
|
|
$
|
24,858
|
|
|
$
|
22,876
|
|
Prepaid expenses
|
|
|
350
|
|
|
|
350
|
|
Total Current Assets
|
|
|
25,208
|
|
|
|
23,226
|
|
Prototype development (at cost)
|
|
|
32,806
|
|
|
|
32,732
|
|
Total Assets
|
|
$
|
58,014
|
|
|
$
|
55,958
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
73,505
|
|
|
$
|
61,195
|
|
Promissory
note
(Note 8)
|
|
|
18,458
|
|
|
|
17,897
|
|
Total Current Liabilities
|
|
|
91,963
|
|
|
|
79,092
|
|
Promissory
Notes
(Note 8)
|
|
|
176,942
|
|
|
|
104,737
|
|
Total Liabilities
|
|
|
268,905
|
|
|
|
183,829
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
stock
(Note 5)
|
|
|
|
|
|
|
|
|
Authorized:
|
|
|
|
|
|
|
|
|
10,000,000 preferred shares, $0.001 per share
|
|
|
|
|
|
|
|
|
750,000,000 common shares, $0.001 par value
|
|
|
|
|
|
|
|
|
Issued and outstanding:
|
|
|
|
|
|
|
|
|
2,000,000 preferred shares
|
|
|
2,000
|
|
|
|
2,000
|
|
64,092,035 common shares
|
|
|
64,092
|
|
|
|
64,092
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
13,743,781
|
|
|
|
13,743,781
|
|
Retained deficit
|
|
|
(14,020,764
|
)
|
|
|
(13,937,744
|
)
|
|
|
|
|
|
|
|
|
|
Total
Stockholders’ Deficiency
|
|
|
(210,891
|
)
|
|
|
(127,871
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
58,014
|
|
|
$
|
55,958
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Consolidated
Statements of Operations
(Stated
in US Dollars)
(Unaudited)
|
|
Three Months
Ended
February 29, 2016
|
|
|
Three Months
Ended
February 28, 2015
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
11,160
|
|
|
|
7,003
|
|
Management
fee
(Note 7)
|
|
|
15,000
|
|
|
|
11,000
|
|
Professional fees
|
|
|
50,349
|
|
|
|
110,060
|
|
Transfer agent fees
|
|
|
1,100
|
|
|
|
446
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
77,609
|
|
|
|
128,509
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
Interest
|
|
|
5,411
|
|
|
|
6,811
|
|
|
|
|
5,411
|
|
|
|
6,811
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
83,020
|
|
|
$
|
135,320
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
64,092,035
|
|
|
|
182,992,667
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Consolidated
Statements of Cash Flows
(Stated
in US Dollars)
(Unaudited)
|
|
Three Months Ended
February 29, 2016
|
|
|
Three Months Ended
February 28, 2015
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(83,020
|
)
|
|
$
|
(135,320
|
)
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
12,310
|
|
|
|
(52,929
|
)
|
Prepaid expenses
|
|
|
-
|
|
|
|
(350
|
)
|
Interest accrual
|
|
|
5,266
|
|
|
|
6,811
|
|
Net cash used in operations
|
|
|
(65,444
|
)
|
|
|
(181,788
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Advances
to Vertitek Inc.
(Note 3)
|
|
|
-
|
|
|
|
(25,500
|
)
|
Increase in prototype development
|
|
|
(74
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(74
|
)
|
|
|
(25,500
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from promissory notes
|
|
|
67,500
|
|
|
|
200,000
|
|
Net cash provided by financing activities
|
|
|
67,500
|
|
|
|
102,323
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
1,982
|
|
|
|
(7,288
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period
|
|
|
22,876
|
|
|
|
12,565
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
|
$
|
24,858
|
|
|
|
5,277
|
|
|
|
|
|
|
|
|
|
|
Supplementary Disclosure of Non-Cash Investing & Financing Activity
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
1.
Organization
Valmie
Resources Inc. (the “Company”) was incorporated on August 26, 2011, in the State of Nevada, U.S.A. The accounting
and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US
GAAP”), and the Company’s fiscal year end is November 30.
In
early December 2014, the Company changed its business focus from mining to pursuing opportunities for the commercialization of
leading edge products and services in the rapidly expanding technology industry.
On
March, 31, 2015, the Company acquired 100% interest in Vertitek Inc., a Wyoming corporation (“Vertitek”).
Vertitek
was established to provide unmanned vehicle software, hardware and cloud services for a wide range of commercial applications
around the globe. Vertitek is in the process of developing the V-1 Drone
SM
, a cutting edge multi-rotor UAV designed
specifically to meet the requirements of a growing commercial user base.
2.
Basis of Presentation
Unaudited
Interim 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 (the “SEC”).
They do not include all information and footnotes required by US GAAP 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 November 30, 2015, included in the Company’s Form 10-K filed with the SEC. The unaudited interim consolidated financial
statements should be read in conjunction with those financial statements included in the Form 10-Q. 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 February 29, 2016, are not necessarily indicative of the results that may be expected
for the year ending November 30, 2016.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
3.
Acquisition of Vertitek Inc.
On
March 31, 2015, the Company issued 1,000,000 shares of common stock in exchange for 100% of the issued and outstanding shares
of Vertitek. Vertitek was previously named Landstar Leasing, Inc. (“Landstar”) and was incorporated pursuant to the
Wyoming Business Corporation Act on February 19, 2014. On November 19, 2014, Landstar changed its name to Vertitek Inc. As a result
of the acquisition, Vertitek became a wholly owned subsidiary of the Company.
In
December 2014, the Company changed its business focus from mining to opportunities in the technology industry. The acquisition
of Vertitek enables the Company to pursue its new business focus as Vertitek has focused on the development of unmanned vehicle
software, hardware and cloud services for a wide range of commercial applications around the globe. Vertitek is in the process
of developing the V-1 Drone
SM
, a cutting edge multi-rotor unmanned aerial vehicle (“UAV”) designed specifically
to meet the requirements of a growing commercial user base.
The
acquisition was accounted for as an asset acquisition in accordance with US GAAP as Vertitek did not meet the definition of a
business. Vertitek did not consist of sufficient processes (systems, standards, protocols, conventions or rules) that would be
able to be applied to those inputs and have the ability to create outputs as required by Accounting Standards Codification 805.
In
exchange for common stock of $2,770,000, the Company acquired $18,355 of financial assets, $2,777,145 of intangible assets related
to intellectual property and $25,500 of financial liabilities. The total value of the intangible assets related to intellectual
property ($2,777,145) was impaired and written-off as of November 30, 2015.
4.
Cash and Cash Eequivalents
|
|
February 29, 2016
|
|
|
November 30, 2015
|
|
|
|
|
|
|
|
|
Cash on deposit
|
|
$
|
24,858
|
|
|
$
|
22,876
|
|
|
|
$
|
24,858
|
|
|
$
|
22,876
|
|
5.
Capital Stock
Authorized
Stock
At
inception, the Company authorized 100,000,000 shares of common stock with a par value of $0.001 per share. Each share entitles
the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On
December 3, 2013, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in
its authorized capital from 100,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value
$0.001 (the “Authorized Capital Increase”). The Company formally effected the Authorized Capital Increase on December
4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.
On
December 3, 2013, the Company’s sole director approved a stock dividend of 59 authorized but unissued shares of its common
stock on each one (1) issued and outstanding share of its common stock held by shareholders of record as of December 16, 2013.
The payment date for the stock dividend was December 17, 2013, as determined by the Financial Industry Regulatory Authority (FINRA).
Upon the payment of the stock dividend, the Company had 296,400,000 issued and outstanding shares of common stock, which represents
an increase of 291,460,000 shares over its prior total of 4,940,000 issued and outstanding shares of common stock. The split is
reflected retrospectively in the consolidated financial statements.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
5.
Capital Stock (continued)
On
December 10, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved a set of amended
and restated articles of incorporation that, among other things, increased the Company’s authorized capital to 760,000,000
shares, consisting of 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of “blank check”
preferred stock, par value $0.001.
On
December 11, 2014, the Company’s sole director approved the designation of 2,000,000 shares of the Company’s authorized
but unissued “blank check” preferred stock, par value $0.001, as Series “A” preferred stock. The shares
of Series “A” preferred stock carry certain rights and preferences and may be converted into shares of the Company’s
common stock on a 10 for one (1) basis at any time after 18 months from the date of issuance, and that each share of Series “A”
preferred stock has voting rights and carries a voting weight equal to 50 shares of common stock.
The
preferred stock ranks senior to (a) any other series of preferred stock of the Company currently existing or hereafter created
(b) the common stock of the Company, now existing or hereafter issued and (c) any other class of securities of the Company, in
each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of
the Company whether voluntary or involuntary.
The
Company formally effected the designation by filing a Certificate of Designation with the Nevada Secretary of State on January
15, 2015.
Share
Issuances
On
January 16, 2015, the owner of an aggregate of 237,360,000 shares of the Company’s common stock agreed to cancel those shares
in exchange for the issuance of the 2,000,000 shares of Series “A” preferred stock. As a result, the number of issued
and outstanding shares of the Company’s common stock decreased from 296,400,000 to 59,040,000.
On
April 6, 2015, the Company issued 3,500,000 shares of common stock at a deemed price of $0.10 per share in settlement of promissory
notes totaling $350,000, including $300,000 in proceeds received during the fiscal year. The stock was valued at the $2.81 trading
price per share, resulting in a loss on the settlement of debt in the amount of $9,485,000.
On
April 6, 2015, the Company issued 339,270 shares of common stock at a deemed price of $0.10 per share in settlement of related
party loans totaling $33,927. The stock was valued at the $2.81 trading price per share, resulting in a loss on the settlement
of debt in the amount of $919,422.
On
April 6, 2015, the Company issued 1,000,000 shares of common stock at a price of $2.77 per share for the acquisition of Vertitek.
The stock was valued at $2.77 per share on the effective date of the acquisition of Vertitek, March 31, 2015.
On
July 21, 2015, the Company issued 212,765 shares of common stock at a deemed price of $0.47 per share for the purchase of all
of the rights, title and interest in and to certain intellectual property from the Company’s President.
As
of February 29, 2016, the Company had 64,092,035 issued and outstanding shares of common stock and 2,000,000 issued and outstanding
shares of Series “A” preferred stock.
At
February 29, 2016, the Company had no issued or outstanding stock options or warrants.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
6.
Mineral Property Costs
Lander
County, Nevada Claims
On
September 30, 2011, the Company entered into an option agreement that would provide for the purchase of a 100% interest in the
Carico Lake Valley Property (the “Property”). The Property is located in the State of Nevada.
To
complete the option, the agreement requires the Company to make the following payments and incur the following amounts on exploration
and development:
a)
|
$15,000
cash on September 30, 2011 (paid);
|
|
|
b)
|
an
additional $30,000 cash on September 30, 2013 (not paid);
|
|
|
c)
|
an
additional $60,000 cash on September 30, 2013 (not paid);
|
|
|
d)
|
an
additional $120,000 cash on September 30, 2014 (not paid) and
|
|
|
e)
|
incur
a minimum of $125,000 ($12,654 was incurred as of February 29, 2016) on exploration and development work by December 31, 2013
and every subsequent year thereafter, through 2014.
|
The
entity that owns the Property has made the 2014 payments due to the Bureau of Land Management, Nevada (“BLM”) and
Lander County. The payments ($6,406) are reflected in accounts payable and accrued liabilities and the annual exploration and
development work.
The
Company is responsible for any and all property payments due to any government authority on the property during the term of this
option agreement (BLM: $3,920 yr., Lander County: $294 yr.).
The
entity that owns the Property terminated the option agreement with the Company on July 28, 2014 and the above mentioned reimbursement
of $6,406 remains outstanding. The Company has no further rights to the Property.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
7.
Related Party Transactions
On
July 15, 2015, the Company entered into an asset purchase agreement with its current President pursuant to which the Company acquired
all of the right, title and interest in and to certain intellectual property from the President in consideration for the issuance
of $100,000 worth of common stock on that date at a deemed price of $0.47 per share. As a result, the Company issued 212,765 shares
of common stock to the President. The entire $100,000 of intellectual property was impaired and written-off as of November 30,
2015.
During the period ended February 29, 2016,
the Company paid management fees of $15,000 (2015 – $6,000) to its current President and $Nil (2015 – $5,000) to a
former director, and converted $Nil (2015 – $33,927) in debt owed to a former director into common stock resulting in a
loss on the settlement of debt in the amount of $Nil (2015 – $919,422). The Company had $Nil (2015 – $10,782) in debt
forgiven by its majority shareholder.
8.
Promissory Notes
On
August 18, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus
simple interest at an annual interest rate of 15%, repayable on August 18, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt
settlement.
On
October 7, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $25,000 plus
simple interest at an annual interest rate of 15%, repayable on October 7, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with the debt
settlement.
On
October 22, 2014, the Company entered into a promissory note agreement with Investor B for an aggregate amount of $15,000 plus
simple interest at an annual interest rate of 15%, repayable on October 22, 2016. As of February 29, 2016, $15,000 was received
and interest accrued of $3,458 ($2,897 as at November 30, 2015).
On
November 23, 2014, the Company entered into a promissory note agreement with Investor C for an aggregate amount of $75,000 plus
simple interest at an annual interest rate of 15%, repayable on November 23, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 in connection with the debt
settlement.
On
December 29, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $75,000
plus simple interest at an annual interest rate of 15%, repayable on December 29, 2016. On April 6, 2015, the promissory note
was settled through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 for the debt settlement.
On
January 26, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on January 26, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
8.
Promissory Notes (continued)
On
February 27, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000
plus simple interest at an annual interest rate of 15%, repayable on February 27, 2017. On April 6, 2015, the promissory note
was settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with
the debt settlement.
On
March 20, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on March 20, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
During
the period ended February 29, 2016, the Company entered into multiple promissory note agreements with Investor D for an aggregate
amount of $67,500 ($102,500 in aggregate during the year ended November 30, 2015). The promissory notes mature two years from
the date of the inception of the notes and bear simple interest at an annual interest rate of 15%. The notes are secured by all
of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments,
chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent
applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on
the date of the note or hereafter acquired, and all proceeds thereof.
The
following are the notes outstanding as at February 29, 2016:
|
|
Principal
|
|
|
Accrued Interest
|
|
Note 1 on October 22, 2014
Due October 22, 2016
|
|
$
|
15,000
|
|
|
$
|
3,458
|
|
Note 2 on July 30, 2015
Due July 30, 2017
|
|
$
|
20,000
|
|
|
$
|
1,759
|
|
Note 3 on September 2, 2015
Due September 2, 2017
|
|
$
|
7,500
|
|
|
$
|
555
|
|
Note 4 on October 2, 2015
Due October 2, 2017
|
|
$
|
10,000
|
|
|
$
|
616
|
|
Note 5 on October 21, 2015
Due October 21, 2017
|
|
$
|
15,000
|
|
|
$
|
808
|
|
Note 6 on October 29, 2015
Due October 29, 2017
|
|
$
|
25,000
|
|
|
$
|
1,264
|
|
Note 7 on November 17, 2015
Due November 17, 2017
|
|
$
|
25,000
|
|
|
$
|
1,068
|
|
Note 8 on January 4, 2016
Due January 4, 2018
|
|
$
|
25,000
|
|
|
$
|
575
|
|
Note 9 on January 18, 2016
Due January 18, 2018
|
|
$
|
10,000
|
|
|
$
|
173
|
|
Note 10 on February 2, 2016
Due February 2, 2018
|
|
$
|
7,500
|
|
|
$
|
83
|
|
Note 11 on February 25, 2016
Due February 25, 2018
|
|
$
|
25,000
|
|
|
$
|
41
|
|
|
|
$
|
185,000
|
|
|
$
|
10,400
|
|
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
9.
Provision for Income Taxes
The
Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net
income, regardless of when reported for tax purposes. Deferred taxes are provided in the consolidated financial statements under
FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets,
depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.
Deferred
tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to
the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from August 26,
2011 (date of inception) through February 29, 2016 of $739,198 will begin to expire in 2031. Accordingly, deferred tax assets
of approximately $258,719 were offset by the valuation allowance.
The
Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately
no increase in the liability for unrecognized tax benefits.
The
Company has no tax position at February 29, 2016 for which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits
in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented.
The Company had no accruals for interest and penalties at February 29, 2016. The Company’s utilization of any net operating
loss carry forward may be unlikely as a result of its intended exploration stage activities. The tax years for November 30, 2015,
2014, 2013, 2012 are still open for examination by the Internal Revenue Service (IRS).
10.
Going Concern and Liquidity Considerations
The
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 normal course of business. As at February
29, 2016, the Company had a working capital deficiency of $66,755 (November 30, 2015 – $55,866) and an accumulated deficit
of $14,020,764 (November 30, 2015 – $13,937,744). The Company intends to fund operations through equity financing arrangements,
which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next 12 months.
The
ability of the Company to continue in existence is dependent upon, among other things, obtaining additional financing to continue
operations and the operations of Vertitek.
In
response to these problems, management intends to raise additional funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
11.
Commitments
Pursuant
to a Letter of Intent dated July 7, 2015, the Company is obligated to pay one vendor $5,000 for costs incurred to construct a
prototype and testing of such prototype. As at February 29, 2016, $3,000 has been paid in relation to this agreement.
12.
Subsequent Events
The Company has evaluated subsequent events
from February 29, 2016, through the date these financial statements were issued and determined that there are no additional items
to disclose.
VALMIE
RESOURCES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
November
30, 2015
(Stated
in US Dollars)
He
a
t
o
n
&
C
o
mp
a
n
y,
P
L
LC
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Kristofer
Heaton, CPA
|
|
|
William
R. Denney, CPA
|
|
|
|
|
To
The Board of Directors and Stockholders of
|
|
|
Valmie
Resources, Inc.
|
|
|
|
|
|
We
have audited the accompanying balance sheet of Valmie Resources, Inc. (the Company) as of November 30, 2015, and the related
statements of operations, changes in stockholders’ equity (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audit.
|
|
|
|
|
|
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
|
|
|
|
|
|
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
Valmie Resources, Inc. as of November 30, 2015, and the results of its operations and its cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United States of America.
|
|
|
|
|
|
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. As
discussed in Note 10 to the financial statements, the Company has negative working capital and has not generated revenues
to cover operating expenses. These factors, among others, raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans in regard to this matter are also described in Note 10. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
|
|
/s/
Heaton & Company, PLLC
|
|
|
|
Farmington,
Utah
|
|
|
|
March
4, 2016
|
|
240
N. East Promontory
|
|
|
|
Suite
200
|
|
|
|
Farmington,
Utah 84025
|
|
|
|
(T)
801.218.3523
|
|
|
|
|
|
|
|
heatoncpas.com
|
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Russell E. Anderson, CPA
|
|
|
Russ
Bradshaw, CPA
|
|
To
the Board of Directors and Management
|
William
R. Denney, CPA
|
|
Valmie
Resources, Inc.
|
|
|
1001
S Dairy Ashford, Suite 100
|
|
|
Houston,
TX 77077
|
|
|
|
|
|
We
have audited the accompanying balance sheet of Valmie Resources, Inc. as of November 30, 2014, and the related statements
of operations, changes in stockholders’ (deficit), and cash flows for the year then ended. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audit.
|
|
|
|
|
|
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting, as a basis
for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
|
|
|
|
|
|
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
Valmie Resources, Inc. as of November 30, 2014, and the results of its operations, and its cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United States of America.
|
|
|
|
5296
S. Commerce Dr
Suite
300
Salt
Lake City, Utah
84107
USA
(T)
801.281.4700
(F)
801.281.4701
|
|
The accompanying financial statements have been
prepared assuming the Company will continue as a going concern. As discussed in Note 10 to the financial statements,
the Company has recurring losses and has not generated revenues from its planned principal operations. These factors
raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
|
|
|
/s/
Anderson Bradshaw PLLC
|
|
|
|
Anderson
Bradshaw PLLC
|
|
|
|
Salt
Lake City, Utah
|
|
|
|
March
13, 2015
|
|
abcpas.net
|
|
|
|
Valmie
Resources, Inc.
Consolidated
Balance Sheets
(Stated
in US Dollars)
|
|
November
30, 2015
|
|
|
November
30, 2014
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
(Note 4)
|
|
$
|
22,876
|
|
|
$
|
12,565
|
|
Prepaid
expenses
|
|
|
350
|
|
|
|
-
|
|
Total Current
Assets
|
|
|
23,226
|
|
|
|
12,565
|
|
Prototype
development (at cost)
(Note 2)
|
|
|
32,732
|
|
|
|
-
|
|
Intangible
assets
(Notes 2 and 3)
|
|
|
-
|
|
|
|
-
|
|
Total Assets
|
|
$
|
55,958
|
|
|
$
|
12,565
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
61,195
|
|
|
$
|
83,250
|
|
Due
to related party
(Note 7)
|
|
|
-
|
|
|
|
44,809
|
|
Promissory
note
(Note 8)
|
|
|
17,897
|
|
|
|
-
|
|
Total Current
Liabilities
|
|
|
79,092
|
|
|
|
128,059
|
|
Promissory
Notes
(Note 8)
|
|
|
104,737
|
|
|
|
67,805
|
|
Total Liabilities
|
|
|
183,829
|
|
|
|
195,864
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
stock
(Note 5)
|
|
|
|
|
|
|
|
|
Authorized:
|
|
|
|
|
|
|
|
|
10,000,000 preferred shares, $0.001 per share
(Nil
– November 30, 2014)
|
|
|
|
|
|
|
|
|
750,000,000 common shares, $0.001 par value
(750,000,000
– November 30, 2014)
|
|
|
|
|
|
|
|
|
Issued and outstanding:
|
|
|
|
|
|
|
|
|
2,000,000 preferred shares
(Nil – November
30, 2014)
|
|
|
2,000
|
|
|
|
-
|
|
64,092,035 common shares
(296,400,000 –
November 30, 2014)
|
|
|
64,092
|
|
|
|
296,400
|
|
Additional
paid-in capital
|
|
|
13,743,781
|
|
|
|
(155,657
|
)
|
Retained deficit
|
|
|
(13,937,744
|
)
|
|
|
(324,042
|
)
|
Total
Stockholders’ Deficiency
|
|
|
(127,871
|
)
|
|
|
(183,299
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’
Equity (deficiency)
|
|
$
|
55,958
|
|
|
$
|
12,565
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Consolidated
Statements of Operations
(Stated
in US Dollars)
|
|
Year
Ended
November 30, 2015
|
|
|
Year
Ended
November 30, 2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
38,143
|
|
|
|
5,815
|
|
Management
fee
(Note 7)
|
|
|
52,000
|
|
|
|
20,000
|
|
Professional fees
|
|
|
237,605
|
|
|
|
136,415
|
|
Transfer agent fees
|
|
|
5,578
|
|
|
|
1,925
|
|
Impairment
loss
|
|
|
(2,877,144
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(3,210,470
|
)
|
|
|
(164,155
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
Interest
|
|
|
1,190
|
|
|
|
-
|
|
Loss on settlement of debt
|
|
|
(10,404,422
|
)
|
|
|
-
|
|
|
|
|
(10,403,232
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(13,613,702
|
)
|
|
$
|
(164,155
|
)
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per
Common Share
|
|
$
|
(0.15
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding
|
|
|
90,336,662
|
|
|
|
296,400,000
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Consolidated
Statements of Changes in Stockholders’ Deficiency
(Stated
in US Dollars)
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number
of
Shares
|
|
|
Amount
|
|
|
Number
of Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders’
Deficiency
|
|
Balance – November 30, 2013
|
|
|
296,400,000
|
|
|
|
296,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(155,657
|
)
|
|
|
(159,887
|
)
|
|
|
(19,144
|
)
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(164,155
|
)
|
|
|
(164,155
|
)
|
Balance – November 30, 2014
|
|
|
296,400,000
|
|
|
$
|
296,400
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
(155,657
|
)
|
|
$
|
(324,042
|
)
|
|
$
|
(183,299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange of common stock for preferred stock
|
|
|
(237,360,000
|
)
|
|
|
(237,360
|
)
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
235,360
|
|
|
|
-
|
|
|
|
-
|
|
Debt settlement
|
|
|
3,839,270
|
|
|
|
3,839
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,784,510
|
|
|
|
-
|
|
|
|
10,788,349
|
|
Acquisition of subsidiary
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,769,000
|
|
|
|
-
|
|
|
|
2,770,000
|
|
Forgiveness of debt – related party
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,781
|
|
|
|
-
|
|
|
|
10,781
|
|
Acquisition of intangible assets
|
|
|
212,765
|
|
|
|
213
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99,787
|
|
|
|
-
|
|
|
|
100,000
|
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,613,702
|
)
|
|
|
(13,613,702
|
)
|
Balance – November 30, 2015
|
|
|
64,092,035
|
|
|
$
|
64,092
|
|
|
|
2,000,000
|
|
|
$
|
2,000
|
|
|
$
|
13,743,781
|
|
|
$
|
(13,937,744
|
)
|
|
$
|
(127,871
|
)
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Consolidated
Statements of Cash Flows
(Stated
in US Dollars)
|
|
Year
Ended
November 30, 2015
|
|
|
Year
Ended
November 30, 2014
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
$
|
(13,613,702
|
)
|
|
|
(164,155
|
)
|
Adjustments to reconcile net loss
to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Loss
on settlement of debt by issuing common stock
(Note 8)
|
|
|
10,404,422
|
|
|
|
-
|
|
Impairment loss
|
|
|
2,877,144
|
|
|
|
-
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
(22,055
|
)
|
|
|
66,592
|
|
Prepaid expenses
|
|
|
(350
|
)
|
|
|
5,000
|
|
Interest
accrual
|
|
|
(549
|
)
|
|
|
2,805
|
|
Net cash used in operations
|
|
|
(355,090
|
)
|
|
|
(89,758
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Advances
to Vertitek Inc.
(Note 3)
|
|
|
(25,500
|
)
|
|
|
|
|
Cash acquired on the acquisition
of Vertitek Inc.
|
|
|
6,133
|
|
|
|
-
|
|
Increase
in prototype development
|
|
|
(32,732
|
)
|
|
|
-
|
|
Net cash used in investing
activities
|
|
|
(52,099
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from related party payable
|
|
|
-
|
|
|
|
37,323
|
|
Proceeds
from promissory notes
|
|
|
417,500
|
|
|
|
65,000
|
|
Net cash provided by financing
activities
|
|
|
417,500
|
|
|
|
102,323
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
10,311
|
|
|
|
12,565
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
- beginning of year
|
|
|
12,565
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
- end of year
|
|
$
|
22,876
|
|
|
|
12,565
|
|
|
|
|
|
|
|
|
|
|
Supplementary Disclosure of Non-Cash Investing &
Financing Activity
|
|
|
|
|
|
|
|
|
Issuance of common stock for intangible
assets
|
|
$
|
2,870,000
|
|
|
$
|
-
|
|
Issuance of common stock to settle
debt
|
|
$
|
383,927
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
1.
Organization
Valmie
Resources Inc. (the “Company”) was incorporated on August 26, 2011, in the State of Nevada, U.S.A. The accounting
and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US
GAAP”), and the Company’s fiscal year end is November 30.
In
early December 2014, the Company changed its business focus from mining to pursuing opportunities for the commercialization of
leading edge products and services in the rapidly expanding technology industry.
On
March, 31, 2015, the Company acquired a 100% interest in Vertitek Inc., a Wyoming corporation (“Vertitek”).
Vertitek
was established to provide unmanned vehicle software, hardware and cloud services for a wide range of commercial applications
around the globe. Vertitek is in the process of developing the V-1 Drone
SM
, a cutting edge multi-rotor UAV designed
specifically to meet the requirements of a growing commercial user base.
2.
Significant Accounting Policies
Use
of Estimates
The
preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where
applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the consolidated financial statements
and future operations of the Company.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks, money market funds, and certificates of term deposits with original maturities of
less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject
to an insignificant risk of loss in value. The Company had $22,876 in cash and cash equivalents at November 30, 2015 (November
30, 2014 – $12,565).
Mineral
Acquisition and Exploration Costs
The
Company has been in the exploration stage since its formation on August 26, 2011 and has not yet realized any revenue from its
operations. During the year ended November 30, 2015, the Company changed its business focus from mining to opportunities in the
technology industry. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined
that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred
to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated
life of the probable reserves.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
2.
Significant Accounting Policies –
Continued
Concentrations
of Credit Risk
The
Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash
equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents
with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution
may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and
credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures
are limited.
Net
Income or (Loss) per Share of Common Stock
The
Company has adopted FASC Topic No. 260, “Earnings Per Share” (“EPS”), which requires presentation of basic
and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
In the consolidated financial statements, basic earnings (loss) per share is computed by dividing net income/loss by the weighted
average number of shares of common stock outstanding during the period.
Foreign
Currency Translations
The
Company’s functional and reporting currency is the US dollar. All transactions initiated in other currencies are translated
into US dollars using the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in
foreign currencies are translated into the US dollar at the rate of exchange in effect at the balance sheet date. Unrealized exchange
gains and losses arising from such transactions are deferred until realization and are included as a separate component of stockholders’
equity (deficit) as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income
in the period when it is realized.
No
significant realized exchange gain or losses were recorded as at November 30, 2015 and 2014.
Comprehensive
Income (Loss)
FASC
Topic No. 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. As at November 30, 2015 and 2014, the Company had no items
of other comprehensive income. Therefore, net loss equals comprehensive loss as at November 30, 2015 and 2014.
Risks
and Uncertainties
The
Company’s operations in the technology industry are subject to significant risks and uncertainties including financial,
operational, technological, and other risks associated with operating a technology development business.
Capitalized
Prototype Development Costs
Prototype
development costs are costs associated with the development of software and hardware related to advance drone fleet technology
and are stated at historical cost. Prototype development costs consist of salaries and costs of raw material in development. Until
the prototype is substantially completed and ready for its intended use, no depreciation expenses will be incurred. The Company
currently has no depreciation policy with respect to prototype development costs.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
2.
Significant Accounting Policies –
Continued
Intangible
Assets
Intangible
assets with indefinite lives are not amortized, but are reviewed for impairment at least annually or whenever events or circumstances
indicate the carrying value of the asset may not be recoverable.
Through
the acquisition of Vertitek (see Note 3), the Company acquired the V-1 Drone
SM
and other technologies that constitute
the definition of indefinite-lived intangible assets. The Company performs annual impairment tests of the intangible assets during
the fourth quarter of each fiscal year and assesses qualitative factors to determine the likelihood of impairment. The Company’s
qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment,
industry and market conditions, financial performance versus budget and any other events or circumstances specific to the technologies.
If it is more likely than not that the fair value of the technologies is greater than the carrying value, no further testing is
required. Otherwise, the Company will apply the quantitative impairment test method.
The
key assumptions used in estimating the recoverable amounts of the technologies include:
i)
the market penetration leading to revenue growth;
ii)
the profit margin;
iii)
the duration and profile of the build-up period;
iv)
the estimated start-up costs and losses incurred during the build-up period; and
v)
the discount rate.
Fair
value less costs of disposal is the price that would be received to sell an asset in an orderly transaction between market participants
at the measurement date. In order to determine the fair value less costs of disposal, the Company uses either a market or income
approach. Under a market approach, the Company measures what an independent third party would pay to purchase the technologies
by looking to actual market transactions for similar assets. Under an income approach, the fair value is determined to be the
sum of the projected discounted cash flows over a discrete period of time in addition to the terminal value.
The
value in use amount is the present value of the future cash flows expected to be derived from the asset. The determination of
this amount includes projections of cash inflows from the continuing use of the asset and cash outflows that are required to generate
the associated cash inflows. These cash inflows are discounted at an appropriate discount rate.
The
Company determined that the value associated with the technologies under the market approach was indeterminable. Given that the
Company has no tentative plans to use the acquired technologies and does not expect any sales or cash inflows associated with
the technologies, the entire value of the technologies has been fully impaired as at November 30, 2015.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
2.
Significant Accounting Policies –
Continued
Recent
Accounting Pronouncements
Recent
accounting pronouncements that are listed below did not, and are not currently expected to, have a material effect on the Company’s
consolidated financial statements, but will be implemented in the Company’s future financial reporting when applicable.
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016-02—Leases. The FASB amended lease accounting requirements to begin recording assets and liabilities arising from leases
on the balance sheet. The new guidance will also require significant additional disclosures about the amount, timing and uncertainty
of cash flows from leases. This new guidance will be effective for the Company beginning on December 1, 2020 using a modified
retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may
elect to apply. Currently, the Company’s operations do not include significant leases. The Company is evaluating the potential
future impact ASU 2016-02 will have on its consolidated financial statements.
In
January 2016, the FASB issued ASU 2016-01—Financial Instruments-Overall: Recognition and Measurement of Financial Assets
and Financial Liabilities. ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value
of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation
and are not accounted under the equity method at fair value and recognize any changes in fair value in net income unless the investments
qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a
readily determinable fair value and do not qualify for the practical expedient to estimate fair value, and as such these investments
may be measured at cost. Given that the Company currently does not hold any equity investments, it does not expect the impact
of ASU 2016-01 on its consolidated financial statements to be significant.
In
November 2015, the FASB issued ASU 2015-17—Balance Sheet Classification of Deferred Taxes, which simplifies the presentation
of deferred income taxes. ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent assets or
noncurrent liabilities. At this time, the Company has not incurred or generated a significant amount of deferred tax assets or
liabilities to be recognized on the financial statements (see Note 9). The Company does not expect the impact of ASU 2015-17 on
its consolidated financial statements to be significant.
In
September 2015, the FASB issued ASU 2015-16—Simplifying the Accounting for Measurement-Period Adjustments, which eliminates
the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead,
acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect
on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition
date. ASU 2015-16 will be effective beginning on January 1, 2016. The Company does not expect the impact of ASU 2015-16 on its
consolidated financial statements to be significant.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
3.
Acquisition of Vertitek Inc.
On
March 31, 2015, the Company issued 1,000,000 shares of common stock in exchange for 100% of the issued and outstanding shares
of Vertitek. Vertitek was previously named Landstar Leasing, Inc. (“Landstar”) and was incorporated pursuant to the
Wyoming Business Corporation Act on February 19, 2014. On November 19, 2014, Landstar changed its name to Vertitek Inc. As a result
of the acquisition, Vertitek became a wholly owned subsidiary of the Company.
In
December 2014, the Company changed its business focus from mining to opportunities in the technology industry. The acquisition
of Vertitek enables the Company to pursue its new business focus as Vertitek has focused on the development of unmanned vehicle
software, hardware and cloud services for a wide range of commercial applications around the globe. Vertitek is in the process
of developing the V-1 Drone
SM
, a cutting edge multi-rotor unmanned aerial vehicle (“UAV”) designed specifically
to meet the requirements of a growing commercial user base.
The
acquisition was accounted for as an asset acquisition in accordance with US GAAP as Vertitek did not meet the definition of a
business .Vertitek did not consist of sufficient processes (systems, standards, protocols, conventions or rules) that would be
able to be applied to those inputs and have the ability to create outputs as required by Accounting Standards Codification 805.
In
exchange for common stock of $2,770,000, the Company acquired $18,355 of financial assets, $2,777,145 of intangible assets related
to intellectual property and $25,500 of financial liabilities. The total value of the intangible assets related to intellectual
property ($2,777,145) was impaired and written-off as of November 30, 2015.
4.
Cash and Cash Equivalents
|
|
November
30, 2015
|
|
|
November
30, 2014
|
|
|
|
|
|
|
|
|
Cash on deposit
|
|
$
|
22,876
|
|
|
$
|
3,027
|
|
Funds held in trust
|
|
|
-
|
|
|
|
9,538
|
|
|
|
$
|
22,876
|
|
|
$
|
12,565
|
|
5.
Capital Stock
Authorized
Stock
At
inception, the Company authorized 100,000,000 shares of common stock with a par value of $0.001 per share. Each share entitles
the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On
December 3, 2013, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in
its authorized capital from 100,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value
$0.001 (the “Authorized Capital Increase”). The Company formally effected the Authorized Capital Increase on December
4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.
On
December 3, 2013, the Company’s sole director approved a stock dividend of 59 authorized but unissued shares of its common
stock on each one (1) issued and outstanding share of its common stock held by shareholders of record as of December 16, 2013.
The payment date for the stock dividend was December 17, 2013, as determined by the Financial Industry Regulatory Authority (FINRA).
Upon the payment of the stock dividend, the Company had 296,400,000 issued and outstanding shares of common stock, which represents
an increase of 291,460,000 shares over its prior total of 4,940,000 issued and outstanding shares of common stock. The split is
reflected retrospectively in the consolidated financial statements.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
5.
Capital Stock –
Continued
On
December 10, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved a set of amended
and restated articles of incorporation that, among other things, increased the Company’s authorized capital to 760,000,000
shares, consisting of 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of “blank check”
preferred stock, par value $0.001.
On
December 11, 2014, the Company’s sole director approved the designation of 2,000,000 shares of the Company’s authorized
but unissued “blank check” preferred stock, par value $0.001, as Series “A” preferred stock. The shares
of Series “A” preferred stock carry certain rights and preferences and may be converted into shares of the Company’s
common stock on a 10 for one (1) basis at any time after 18 months from the date of issuance, and that each share of Series “A”
preferred stock has voting rights and carries a voting weight equal to 50 shares of common stock.
The
preferred stock ranks senior to (a) any other series of preferred stock of the Company currently existing or hereafter created
(b) the common stock of the Company, now existing or hereafter issued and (c) any other class of securities of the Company, in
each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of
the Company whether voluntary or involuntary.
The
Company formally effected the designation by filing a Certificate of Designation with the Nevada Secretary of State on January
15, 2015.
Share
Issuances
On
January 16, 2015, the owner of an aggregate of 237,360,000 shares of the Company’s common stock agreed to cancel those shares
in exchange for the issuance of the 2,000,000 shares of Series “A” preferred stock. As a result, the number of issued
and outstanding shares of the Company’s common stock decreased from 296,400,000 to 59,040,000.
On
April 6, 2015, the Company issued 3,500,000 shares of common stock at a deemed price of $0.10 per share in settlement of promissory
notes totaling $350,000, including $300,000 in proceeds received during the fiscal year. The stock was valued at the $2.81 trading
price per share, resulting in a loss on the settlement of debt in the amount of $9,485,000.
On
April 6, 2015, the Company issued 339,270 shares of common stock at a deemed price of $0.10 per share in settlement of related
party loans totaling $33,927. The stock was valued at the $2.81 trading price per share, resulting in a loss on the settlement
of debt in the amount of $919,422.
On
April 6, 2015, the Company issued 1,000,000 shares of common stock at a price of $2.77 per share for the acquisition of Vertitek.
The stock was valued at $2.77 per share on the effective date of the acquisition of Vertitek, March 31, 2015.
On
July 21, 2015, the Company issued 212,765 shares of common stock at a deemed price of $0.47 per share for the purchase of all
of the rights, title and interest in and to certain intellectual property from the Company’s President.
As
of November 30, 2015, the Company had 64,092,035 issued and outstanding shares of common stock and 2,000,000 issued and outstanding
shares of Series “A” preferred stock.
At
November 30, 2015, the Company had no issued or outstanding stock options or warrants.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
6.
Mineral Property Costs
Lander
County, Nevada Claims
On
September 30, 2011, the Company entered into an option agreement that would provide for the purchase of a 100% interest in the
Carico Lake Valley Property (the “Property”). The Property is located in the State of Nevada.
To
complete the option, the agreement requires the Company to make the following payments and incur the following amounts on exploration
and development:
a)
|
$15,000
cash on September 30, 2011 (paid);
|
|
|
b)
|
an
additional $30,000 cash on September 30, 2013 (not paid);
|
|
|
c)
|
an
additional $60,000 cash on September 30, 2013 (not paid);
|
|
|
d)
|
an
additional $120,000 cash on September 30, 2014 (not paid) and
|
|
|
e)
|
incur
a minimum of $125,000 ($12,654 has been incurred as of November 30, 2015) on exploration and development work by December
31, 2013 and every subsequent year thereafter, through 2014.
|
The
entity that owns the Property has made the 2014 payments due to the Bureau of Land Management, Nevada (“BLM”) and
Lander County. The payments ($6,406) are reflected in accounts payable and accrued liabilities and the annual exploration and
development work.
The
Company is responsible for any and all property payments due to any government authority on the property during the term of this
option agreement (BLM: $3,920 yr., Lander County: $294 yr.).
The
entity that owns the Property terminated the option agreement with the Company on July 28, 2014 and the above mentioned reimbursement
of $6,406 remains outstanding. The Company has no further rights to the Property.
7.
Related Party Transactions
On
July 15, 2015, the Company entered into an asset purchase agreement with its current President pursuant to which the Company acquired
all of the right, title and interest in and to certain intellectual property from the President in consideration for the issuance
of $100,000 worth of common stock on that date at a deemed price of $0.47 per share. As a result, the Company issued 212,765 shares
of common stock to the President. The entire $100,000 of intellectual property was impaired and written-off as of November 30,
2015.
During
the year ended November 30, 2015, the Company paid management fees of $5,000 (2014 – $10,000) to a former director and $47,000
(2014 – $Nil) to its current President, and converted $33,927 (2014 – $Nil) in debt owed to a former director into
common stock resulting in a loss on the settlement of debt in the amount of $919,422. The Company had $10,781 (2014 – $Nil)
in debt forgiven by its majority shareholder.
As
of November 30, 2015, the Company was obligated to a former director for non-interest bearing, unsecured and with no fixed terms
of repayment loans with a balance of $Nil (November 30, 2014 – $19,146). The Company also owed $Nil to its majority shareholder
at November 30, 2015 (November 30, 2014 – $25,663).
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
8.
Promissory Notes
On
August 18, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus
simple interest at an annual interest rate of 15%, repayable on August 18, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt
settlement.
On
October 7, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $25,000 plus
simple interest at an annual interest rate of 15%, repayable on October 7, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with the debt
settlement.
On
October 22, 2014, the Company entered into a promissory note agreement with Investor B for an aggregate amount of $15,000 plus
simple interest at an annual interest rate of 15%, repayable on October 22, 2016. As of November 30, 2015, $15,000 was received
and interest accrued of $2,897 ($647 as at November 30, 2014).
On
November 23, 2014, the Company entered into a promissory note agreement with Investor C for an aggregate amount of $75,000 plus
simple interest at an annual interest rate of 15%, repayable on November 23, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 in connection with the debt
settlement.
On
December 29, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $75,000
plus simple interest at an annual interest rate of 15%, repayable on December 29, 2016. On April 6, 2015, the promissory note
was settled through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 for the debt settlement.
On
January 26, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on January 26, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
On
February 27, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000
plus simple interest at an annual interest rate of 15%, repayable on February 27, 2017. On April 6, 2015, the promissory note
was settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with
the debt settlement.
On
March 20, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on March 20, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
8.
Promissory Notes –
Continued
During
the year ended November 30, 2015, the Company entered into multiple promissory note agreements with an Investor D for an aggregate
amount of $102,500. The promissory notes mature two years from the date of the inception of the notes and bear simple interest
at an annual interest rate of 15%. The notes are secured by all of the assets, properties, goods, inventory, equipment, furniture,
fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including
but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets)
and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof.
The following are the notes outstanding as at November 30, 2015:
|
|
|
Principal
|
|
|
Accrued
Interest
|
|
Note
1 on October 22, 2014
Due October 22, 2016
|
|
|
$
|
15,000
|
|
|
$
|
2,897
|
|
Note
2 on July 30, 2015
Due
July 30, 2017
|
|
|
$
|
20,000
|
|
|
$
|
1,011
|
|
Note
3 on September 2, 2015
Due
September 2, 2017
|
|
|
$
|
7,500
|
|
|
$
|
274
|
|
Note
4 on October 2, 2015
Due
October 2, 2017
|
|
|
$
|
10,000
|
|
|
$
|
242
|
|
Note
5 on October 21, 2015
Due
October 21, 2017
|
|
|
$
|
15,000
|
|
|
$
|
247
|
|
Note
6 on October 29, 2015
Due
October 29, 2017
|
|
|
$
|
25,000
|
|
|
$
|
329
|
|
Note
7 on November 17, 2015
Due
November 17, 2017
|
|
|
$
|
25,000
|
|
|
$
|
134
|
|
|
|
|
$
|
117,500
|
|
|
$
|
5,134
|
|
9.
Provision for Income Taxes
The
Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net
income, regardless of when reported for tax purposes. Deferred taxes are provided in the consolidated financial statements under
FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets,
depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.
Deferred
tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to
the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from August 26,
2011 (date of inception) through November 30, 2015 of $656,178 will begin to expire in 2031. Accordingly, deferred tax assets
of approximately $229,662 were offset by the valuation allowance.
The
Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately
no increase in the liability for unrecognized tax benefits.
The
Company has no tax position at November 30, 2015 for which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits
in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented.
The Company had no accruals for interest and penalties at November 30, 2015. The Company’s utilization of any net operating
loss carry forward may be unlikely as a result of its intended exploration stage activities. The tax years for November 30, 2015,
2014, 2013, 2012 are still open for examination by the Internal Revenue Service (IRS).
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
9.
Provision for Income Taxes –
Continued
|
|
2015
|
|
|
|
Amount
|
|
|
Tax
Effect (35%)
|
|
|
|
|
|
|
|
|
Net operating losses (including interest
income)
|
|
$
|
332,136
|
|
|
$
|
116,248
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
$
|
(332,136
|
)
|
|
|
(116,248
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset (liability)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
2014
|
|
|
|
Amount
|
|
|
Tax
Effect (35%)
|
|
|
|
|
|
|
|
|
Net operating losses
|
|
$
|
164,155
|
|
|
$
|
57,454
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
$
|
(164,155
|
)
|
|
|
(57,454
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset (liability)
|
|
$
|
-
|
|
|
$
|
-
|
|
10.
Going Concern and Liquidity Considerations
The
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 normal course of business.
As at November 30, 2015, the Company had a working capital deficiency of $55,866 (November 30, 2014 – $115,494) and an accumulated
deficit of $13,937,744 (November 30, 2014 – $324,042). The Company intends to fund operations through equity financing arrangements,
which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next 12 months.
The
ability of the Company to continue in existence is dependent upon, among other things, obtaining additional financing to continue
operations and the operations of Vertitek.
In
response to these problems, management intends to raise additional funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
11.
Commitments
Pursuant
to a Letter of Intent dated July 7, 2015, the Company is obligated to pay one vendor $5,000 for costs incurred to construct a
prototype and testing of such prototype. As at November 30, 2015, $3,000 has been paid in relation to this agreement.
12.
Subsequent Events
Subsequent
to year end, the Company entered into two additional promissory notes with Investor D bearing the same terms. One note was entered
into on January 4, 2016 for $25,000 and is due on January 4, 2018. The other note was entered into on January 26, 2016 for $10,000
and is due on January 26, 2018.
PART
II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We
will pay for all expenses incurred by this offering, except for fees for underwriter’s counsel. Whether or not all of the
offered shares are sold, these expenses are estimated as follows:
SEC registration fee
|
|
$
|
346
|
|
Printing fees
|
|
$
|
1,654
|
*
|
Transfer agent fees
|
|
$
|
500
|
*
|
Accounting fees and expenses
|
|
$
|
2,500
|
*
|
Legal fees and expenses
|
|
$
|
10,000
|
*
|
TOTAL
|
|
$
|
15,000
|
*
|
*
Estimated.
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our
amended and restated articles of incorporation provide that we will indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of us) by reason of the fact that he/she is or was our director, officer,
employee or agent, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him/her in connection with such action, suit or proceeding if he/she acted in
good faith and in a manner he/she reasonably believed to be in or not opposed to our best interests, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his/her conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere
or its equivalent, shall
not, of itself, create a presumption that the person did not act in good faith and in a manner which he/she reasonably believed
to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his/her conduct was unlawful.
Our
amended and restated articles of incorporation also provide that we will indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding, by or in the right of us to procure a judgment
in our favor by reason of the fact that he/she is or was our director, officer, employee or agent, or is or was serving at our
request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees) actually and reasonably incurred by him/her in connection with the defense
or settlement of such action, suit or proceeding if he/she acted in good faith and in a manner he/she reasonably believed to be
in or not opposed to our best interests, except that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his/her duty
to us unless and only to the extent that the court in which such action, suit or proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such other court shall deem proper.
We
may pay any expenses incurred in defending a civil or criminal action, suit or proceeding in advance of the final disposition
of such action, suit or proceeding as authorized by our Board of Directors in the specific case upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that
he/she is entitled to be indemnified by us.
The
indemnification described above is not exclusive of any other rights to which those seeking indemnification may be entitled under
any statute, bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his/her official
capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Our
amended and restated bylaws provide for indemnification of the directors, officers and employees in most cases for any liability
suffered by them or arising out of their activities as our directors, officers, and employees if they were not engaged in willful
misfeasance or malfeasance in the performance of his or her duties; provided that in the event of a settlement the indemnification
will apply only when our Board of Directors approves such settlement and reimbursement as being for our best interests. Our bylaws,
therefore, limit the liability of directors to the maximum extent permitted by Section 78.751 of the NRS.
Our
officers and directors are accountable to us as fiduciaries, which means they are required to exercise good faith and fairness
in all dealings affecting us. In the event that a shareholder believes the officers and/or directors have violated their fiduciary
duties us, the shareholder may, subject to applicable rules of civil procedure, be able to bring a class action or derivative
suit to enforce the shareholder’s rights, including rights under certain federal and state securities laws and regulations
to recover damages from and require an accounting by management. Shareholders who have suffered losses in connection with the
purchase or sale of their interest in us in connection with such sale or purchase, including the misapplication by any such officer
or director of the proceeds from the sale of these securities, may be able to recover such losses from us.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the provisions above or otherwise, we have been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
During
the past three years, we completed the following issuances of unregistered securities:
On
January 20, 2015, we entered into the LOI with Vertitek to acquire 100% of the capital stock of that company in exchange for the
issuance of shares of our common stock to the principal shareholder of Vertitek, contingent upon certain due diligence requirements.
On January 27, 2015, we entered into a share exchange agreement with Vertitek and the sole shareholder of Vertitek, Masamos, on
substantially the same terms as the LOI. On March 31, 2015, the closing of the share exchange agreement occurred and we issued
1,000,000 shares of our common stock to Masamos in exchange for 100% of the issued and outstanding shares of Vertitek. As a result,
Vertitek became our wholly owned subsidiary.
The
shares of our common stock issued to Masamos in connection with the acquisition were offered and sold in reliance upon the exemption
from registration provided by Rule 903 of Regulation S under the Securities Act (“Regulation S”). Our reliance on
Rule 903 of Regulation S was based on the fact that the shares were sold in an “offshore transaction”, as defined
in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts in the United States in connection with the
sale of the shares, and Masamos was not a U.S. person and did not acquire the shares for the account or benefit of any U.S. person.
From
our inception to the period ended June 30, 2014, our former sole officer and director, Khurram Shroff, made certain unsecured
non-interest bearing advances to us in the original principal amount of $33,927. These advances were subsequently assigned to
Dome Capital LLC, a non-affiliated third party (“Dome”). On March 31, 2015, the Company and Dome entered into a debt
conversion agreement pursuant to which the Company issued 339,270 shares of its common stock to Dome in consideration for the
cancellation of the debt.
During
the period from August 18, 2014 to March 20, 2015, we entered into a series of promissory notes with Shield Investments Inc. (“Shield”)
in the aggregate principal amount of $275,000 plus simple interest at an annual interest rate of 15%. These notes were secured
by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents,
instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents,
patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company
on the date of the note or thereafter acquired, and all proceeds thereof. On March 31, 2015, the Company and Shield entered into
a debt conversion agreement pursuant to which the Company issued 2,750,000 shares of its common stock to Shield in consideration
for the cancellation of the debt. Upon the issuance of such shares, Shield agreed to waive any then due and payable interest.
As a result of the conversion, Shield released all security interests it previously held in the Company’s assets.
On
November 24, 2014, we entered into a promissory note with Tuverga in the principal amount of $75,000 plus simple interest at an
annual interest rate of 15%. This note was secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures,
leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but
not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets)
and other general intangibles, whether owned by Company on the date of the note or thereafter acquired, and all proceeds thereof.
On March 31, 2015, the Company and Tuverga entered into a debt conversion agreement pursuant to which the Company issued 750,000
shares of its common stock to Tuverga in consideration for the cancellation of the debt. Upon the issuance of such shares, Tuverga
agreed to waive any then due and payable interest. As a result of the conversion, Tuverga released all security interests it previously
held in the Company’s assets.
On
July 15, 2015, we entered into an asset purchase agreement with Gerald B. Hammack, our sole officer and director, pursuant to
which we acquired all of the right, title and interest in and to certain intellectual property relating to the AIMD platform in
consideration for the issuance of $100,000 worth of our common stock to Mr. Hammack on that date at a deemed price of $0.47 per
share. As a result, Mr. Hammack received 212,765 shares of our common stock.
During
the period from July 30, 2015 to April 26, 2016, we entered into a series of promissory notes with Crystal in the aggregate principal
amount of $200,000 plus simple interest at an annual interest rate of 15%. These notes were secured by all of the assets, properties,
goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts,
intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks,
service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or
thereafter acquired, and all proceeds thereof. On April 26, 2016, the Company and Crystal entered into a debt conversion agreement
pursuant to which the Company issued 2,000,000 shares of its common stock to Crystal in consideration for the cancellation of
the debt. Upon the issuance of such shares, Crystal agreed to waive any then due and payable interest. As a result of the conversion,
Crystal released all security interests it previously held in the Company’s assets.
We
issued the foregoing shares in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.
Our reliance on Section 4(a)(2) was based on the fact that none of the issuances involved a “public offering” and
each of the debtors provided representations to us that they acquired the shares for investment purposes and not with a view to
the distribution thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United
States or any other applicable jurisdiction.
ITEM
16. EXHIBITS
The
following exhibits are filed as part of this registration statement:
Exhibit
No.
|
|
Description
|
|
|
|
3(i).1
|
|
Articles
of Incorporation filed with the Nevada Secretary of State on August 25, 2011 (1)
|
|
|
|
3(i).2
|
|
Certificate
of Amendment filed with the Nevada Secretary of State on December 4, 2013 (2)
|
|
|
|
3(i).3
|
|
Amended
and Restated Articles of Incorporation filed with the Nevada Secretary of State on December 11, 2014 (3)
|
|
|
|
3(i).4
|
|
Certificate
of Designation filed with the Nevada Secretary of State on January 15, 2015 (4)
|
|
|
|
3(ii).1
|
|
Bylaws
(1)
|
|
|
|
3(ii).2
|
|
Amended
and Restated Bylaws dated December 3, 2013 (2)
|
|
|
|
5.1
|
|
Legal
Opinion of Bacchus Law Corporation *
|
|
|
|
10.1
|
|
Asset
Purchase Agreement with Gerald Hammack dated July 15, 2015 (5)
|
|
|
|
21.1
|
|
Vertitek
Inc., a Wyoming corporation
|
|
|
|
23.1
|
|
Consent
of Anderson Bradshaw PLLC *
|
|
|
|
23.2
|
|
Consent
of Bacchus Law Corporation (included in Exhibit 5.1)
|
|
|
|
23.3
|
|
Consent
of Heaton & Company, PLLC *
|
(1)
|
Incorporated
by reference from our registration statement on Form S-1 filed with the SEC on March 29, 2012.
|
|
|
(2)
|
Incorporated
by reference from our current report on Form 8-K filed with the SEC on December 9, 2013.
|
|
|
(3)
|
Incorporated
by reference from our current report on Form 8-K filed with the SEC on December 12, 2014.
|
|
|
(4)
|
Incorporated
by reference from our current report on Form 8-K filed with the SEC on January 16, 2015.
|
|
|
(5)
|
Incorporated
by reference from our quarterly report on Form 10-Q filed with the SEC on July 20, 2015.
|
*
Filed herewith
ITEM
17. UNDERTAKINGS
The
registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
(i)
|
To
include any prospectus required by section 10(a)(3) of the Securities Act;
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective datle of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
and
|
|
(iii)
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
|
2.
|
That
for the purpose of determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
|
3.
|
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering; and
|
4.
|
That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
|
|
(i)
|
Any
preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the
registrant;
|
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering containing material information about the registrant
or its securities provided by or on behalf of the registrant; and
|
|
(iv)
|
Any
other communication that is an offer in the offering made by the registrant to the purchaser.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in
a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to
a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date
of first use.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on June 29, 2016.
|
VALMIE
RESOURCES, INC.
|
|
|
|
By:
|
/s/
Gerald B. Hammack
|
|
|
Gerald
B. Hammack
|
|
|
Title:
Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer,
Director
|
In
accordance with the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 was signed
by the following person in the capacities and on the date so indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Gerald B. Hammack
|
|
Chairman, President, Chief Executive Officer,
|
|
June 29, 2016
|
Gerald B. Hammack
|
|
Chief Financial Officer, Principal Accounting Officer,
Secretary, Treasurer, Director
|
|
|
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