Item
1. Financial Statements
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form
10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation
of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring nature. Operating results for the three-month period
ended June 30, 2016 are not necessarily indicative of the results that can be expected for the year ending March 31, 2017.
IMAGE
INTERNATIONAL GROUP, INC.
Condensed
Consolidated Financial Statements
June
30, 2016
(Expressed
in U.S. dollars)
(unaudited)
IMAGE
INTERNATIONAL GROUP, inc.
Condensed
Consolidated Balance Sheets
(Expressed
in U.S. dollars)
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June
30, 2016
$
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March
31, 2016
$
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(unaudited)
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ASSETS
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Current Assets
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Cash
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1,832
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12,994
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Amounts receivable
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–
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4,868
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Due
from related party (Note 4)
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1,093
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–
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Total Assets
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2,925
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17,862
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LIABILITIES AND STOCKHOLDERS’
DEFICIT
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Current Liabilities
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Accounts payable
and accrued liabilities
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5,615
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1,772
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Loans payable (Note
3)
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92,677
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92,677
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Due
to related parties (Note 4)
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267,000
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267,000
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Total Liabilities
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365,292
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361,449
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Nature of operations and continuance
of business (Note 1)
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Stockholder’s Deficit
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Common stock, 1,000,000,000 shares authorized,
$0.001 par value 14,059,000 shares issued and outstanding
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14,059
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14,059
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Additional paid-in capital
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784,941
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784,941
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Deficit
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(1,161,367
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)
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(1,142,587
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)
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Total Stockholder’s
Deficit
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(362,367
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)
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(343,587
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)
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Total Liabilities
and Stockholder’s Deficit
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2,925
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17,862
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(The
accompanying notes are an integral part of these condensed consolidated financial statements)
IMAGE
INTERNATIONAL GROUP, INC.
Condensed
Consolidated Statements of Operations and Comprehensive Loss
(Expressed
in U.S. dollars)
(unaudited)
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Three
Months Ended
June 30, 2016
$
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Three
Months Ended
June 30, 2015
$
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Expenses
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Consulting
fees
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–
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18,500
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Foreign exchange
loss (gain)
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(11
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)
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1,072
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General and administrative
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1,802
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1,278
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Management fees
(Note 4)
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–
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22,500
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Professional fees
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3,846
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3,930
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Transfer
agent and filing fees
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13,143
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28,179
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Total Expenses
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18,780
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75,459
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Net Loss and
Comprehensive Loss
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(18,780
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)
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(75,459
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Net Loss Per
Share, Basic and Diluted
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–
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(0.01
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Weighted Average Shares Outstanding
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14,059,000
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14,059,000
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(The
accompanying notes are an integral part of these condensed consolidated financial statements)
IMAGE
INTERNATIONAL GROUP, INC.
Condensed
Consolidated Statements of Cash Flows
(Expressed
in U.S. dollars)
(unaudited)
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Three
Months Ended
June 30, 2016
$
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Three
Months Ended
June 30, 2015
$
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Operating Activities
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Net
loss
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(18,780
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)
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(75,459
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Changes in operating
assets and liabilities:
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Amounts receivable
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4,868
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–
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Prepaid expenses
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–
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1,000
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Accounts payable
and accrued liabilities
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3,843
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(2,442
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)
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Due
to/from related parties
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(1,093
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)
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22,500
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Net Cash Used
In Operating Activities
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(11,162
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)
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(54,401
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)
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Financing Activities
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Proceeds from
loans payable
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–
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59,700
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Net Cash Provided
by Financing Activities
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–
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59,700
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Increase (Decrease) in Cash
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(11,162
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)
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5,299
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Cash, Beginning of Period
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12,994
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1,921
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Cash, End of Period
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1,832
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7,220
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Supplemental Disclosures:
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Interest paid
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–
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–
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Income taxes
paid
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–
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–
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(The
accompanying notes are an integral part of these condensed consolidated financial statements)
IMAGE
INTERNATIONAL GROUP, INC.
Notes
to the Condensed Consolidated Financial Statements
June
30, 2015
(Expressed
in U.S. dollars)
(unaudited)
The
accompanying interim condensed consolidated financial statements of Image International Group, Inc. (the “Company”)
should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities
and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016. In the opinion
of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present
fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.
The
preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially
from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results
to be expected for the full year.
These
consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize
its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception
and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern
is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity
financing to continue operations, and the attainment of profitable operations. As at June 30, 2016, the Company has a working
capital deficiency of $362,367 and has accumulated losses of $1,161,367 since inception. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
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2.
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Significant
Accounting Policies
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(a)
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Principles
of Consolidation
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These
consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted
in the United States and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Owlhead Minerals (BC) Corp. All inter-company accounts and transactions have been eliminated
on consolidation.
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(b)
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Recent
Accounting Pronouncements
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The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact
on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other
new accounting pronouncements that have been issued that might have a material impact on its financial position or results of
operations.
As
at June 30, 2016, the Company owed $92,667 (March 31, 2016 - $92,667) to non-related parties, which is non-interest bearing, unsecured,
and due on demand.
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4.
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Related
Party Transactions
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(a)
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As
at June 30, 2016, the Company owes $144,000 (March 31, 2016 - $144,000) to a company controlled by the President of the Company
which is non-interest bearing, unsecured, and due on demand.
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(b)
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As
at June 30, 2016, the Company owes $123,000 (March 31, 2016 - $123,000) to a company controlled by the Chief Financial Officer
of the Company which is non-interest bearing, unsecured, and due on demand.
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(c)
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As
at June 30, 2016, the Company is owed $1,093 (March 31, 2016 - $nil) from the Chief Financial Officer of the Company which
is non-interest bearing, unsecured, and due on demand.
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(d)
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During
the three months ended June 30, 2016, the Company incurred management fees of $nil (2015 - $12,000) to a company controlled
by the President of the Company.
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(e)
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During
the three months ended June 30, 2016, the Company incurred management fees of $nil (2015 - $10,500) to a company controlled
by the Chief Financial Officer of the Company.
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results
of Operations for the Quarter Ended June 30, 2016
During
the three-month period ended June 30, 2016, the Company incurred a net loss of $18,780 (2015 - $75,459).
Consulting
fees for the three-month period ended June 30, 2016 were $nil (2015 - $18,500).
Transfer
agent and filing fees in the three-month period ended June 30, 2016 were $13,143 (2015 - $28,179).
Expenses
during the quarter were for:
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-
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Renewal
of listing on the OTCQB stock exchange; and
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-
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Financial
statement audit.
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Management
fees in the three month period ended June 30, 2016 were $nil (2014 - $22,500) as management has agreed to forgo charging any fees
until a substantial financing has been completed.
Professional
fees for the three month period ended June 30, 2016 were $3,846 (2015 - $3,930) relating to audit fees.
Following extensive research and discussion
with an experienced gemstone and jewelry consultant, the Company decided to expand its business focus to include the acquisition
of gemstone and other precious mineral resources and retail jewelry and gemstone outlets. In order to appropriately reflect the
Company’s expanded and more comprehensive and inclusive business plan, the Company changed its name to Image International
Group, Inc. on December 23, 2014.
We
have not attained profitable operations and are dependent upon obtaining financing to pursue exploration activities. For these
reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern.
Capital
Resources and Liquidity
The
Company has limited financial resources as at June 30, 2016 with funds on hand of $1,832 (March 31, 2016 - $12,994). As at June
30, 2016 the Company has a working capital deficit of $362,367 compared to $343,587 as at March 31, 2016.
Amounts
due to related parties were $267,000 as at June 30, 2016 (March 31, 2016 - $267,000).
Loans payable as at June 30, 2016 was $92,677
(March 31, 2016 - $92,677). The loans are non-interest bearing, unsecured, and due on demand.
The
Company has no employees other than officers and uses consultants as and when necessary.
The
Company’s ability to continue as a going concern is dependent on its available cash and its ability to raise additional
funds in the near future to support corporate operations and the exploration of our mineral property.
Limited
Operating History; Need for Additional Capital
There
is limited historical financial information about us upon which to base an evaluation of our performance. We have no revenue generating
assets. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost
increases in services.
The
Company is aware that additional financing will be required in order to continue its pursuit of a mineral property opportunity
or comparable opportunity in a related field. There is no assurance that additional funding will be successfully completed.
We
will require additional financing to cover our costs that we expect to incur over the next twelve months. We believe that debt
financing will not be an alternative for funding our operations, as we do not have tangible assets to secure any debt financing.
We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot
provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations.
In the absence of such financing, we will not be able to continue and our business plan will fail.
Cash
used in Operating Activities
During
the three month period ended June 30, 2016, the Company used $11,162 (2015 - $54,401) to fund operations. Management fees have
not been paid in order to maintain funds.
Cash
from Financing Activities
We
have funded our business to date primarily from sales of our common stock but did not sell any common stock during the three month
period ended June 30, 2016. During the three month period ended June 30, 2016, the Company received loan proceeds of $nil (2015
- $59,700).
There
are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing.
If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our
operations and our business will fail.
Future
Financing
We
anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances
of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional
sales of our equity securities or arrange for debt or other financing to fund our planned operations.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
Item
4. Controls and Procedures.
We
carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of June 30, 2016 (the “Evaluation Date”). This evaluation was carried out under the supervision
and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation
Date as a result of the material weaknesses in internal control over financial reporting discussed below.
Disclosure
controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required
disclosure.
Notwithstanding
the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as
identified in this report, we believe that our consolidated financial statements contained in our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2016 fairly present our financial condition, results of operations and cash flows in all material
respects.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.
Internal
control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management
and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our assets that could have a material effect on the financial statements.
Management
recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective
internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or
detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods
because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A
material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more
than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under
the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework
set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting
was not effective as of the Evaluation Date.
Management
assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified
the following material weaknesses:
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1.
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Inadequate
Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
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2.
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Insufficient
Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.
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3.
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Inadequate
Financial Statement Closing Process: We have an inadequate financial statement closing process.
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4.
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Lack
of Audit Committee: The lack of a functioning audit committee and lack of a majority of outside directors on the Company’s
Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and
procedures.
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Management
is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in
staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations
of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) prepare
and implement sufficient written policies and checklists for financial reporting and closing processes and (4) may consider appointing
outside directors and audit committee members in the future.
Management,
including our Chief Executive Officer and the Chief Financial Officer, has discussed the material weakness noted above with our
independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood
that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented
or detected.
Our
management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the our controls and procedures
will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Changes
in internal control over financial reporting
There
were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2016 that have
materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.