ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
No Public Market for Common Stock
Our shares have recently been quoted on the OTC Bulletin Board (OTCBB) under the symbol of ORRP.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, if our common stock becomes subject to the penny stock rules, stockholders may have difficulty selling those securities.
Rule 144 Shares
In general, under Rule 144, a person who is not an affiliate of a company and who is not deemed to have been an affiliate of a company at any time during the three months preceding a sale and who has beneficially owned shares of a companys common stock for at least six months would be entitled to sell them without restriction, subject to the continued availability of current public information about the company (which current public information requirement is eliminated after a one-year holding period). In addition, a person, who is an affiliate and beneficially owned shares of a companys common stock for at least six months, will be entitled to sell within any three month period a number of shares that does not exceed the greater of:
|
|
1.
|
One percent of the number of shares of the company's common stock then outstanding; or
|
|
|
2.
|
The average weekly trading volume of the company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale.
|
However, Rule 144 is not available for securities initially issued by a company that has either no or nominal operations and no or nominal assets (a shell company), whether reporting or non-reporting, or a company that was at any time previously a shell company, unless the company:
·
has ceased to be a shell company;
·
is subject to the Exchange Act reporting obligations;
·
has filed all required Exchange Act reports during the preceding twelve months; and
11
·
at least one year has elapsed from the time the company filed with the SEC current Form 10 type information reflecting its status as an entity that is not a shell company.
HOLDERS OF OUR COMMON STOCK
As of December 7, 2016, there were 24 registered holders of record totaling 59,136,943 issued and outstanding shares of common stock.
DIVIDENDS
Oroplatas Articles of Incorporation or Bylaws do not restrict it from declaring dividends. Nevertheless, the Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1.
We would not be able to pay our debts as they become due in the usual course of business; or
2.
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.
Oroplata has not declared any dividends since its inception and does not conceive that it will be declaring any dividends in the near future. Management plans to retain any excess funds in the Company for working capital and for further exploration on a future mineral claim.
Stock Options, Warrants and Rights
As at September 30, 2016, Oroplata has 1,594,000 potentially issuable shares of common stock including:
·
242,000 potentially issuable shares of common stock from cashless warrants issued as bonus compensation for debt securities issued during the year; and
·
1,352,000 potentially issuable shares of common stock from $232,000 of convertible debt instruments that were issued during the year.
RECENT SALES OF UNREGISTERED SECURITIES
None.
12
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
OROPLATA RESOURCES, INC.
Financial Statements
For the Years Ended September 30, 2016 and 2015
Report of Independent Registered Public Accounting Firm
F-1
Consolidated Balance Sheets
F-2
Consolidated Statements of Operations
F-3
Consolidated Statement of Stockholders Deficit
F-4
Consolidated Statements of Cash Flows
F-5
Notes to the Consolidated Financial Statements
F-6
16
Heaton & Company, PLLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders of
Oroplata Resources, Inc.
We have audited the accompanying consolidated balance sheets of Oroplata Resources, Inc. (the Company) as of September 30, 2016 and 2015, and the related statements of operations, stockholders equity (deficit) and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oroplata Resources, Inc. as of September 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated 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 Companys ability to continue as a going concern. Managements plans in regard to this matter are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Heaton & Company, PLLC
Farmington, Utah
December 13, 2016
F-1
OROPLATA RESOURCES, INC.
Consolidated Balance Sheets
|
|
|
|
September 30,
2016
$
|
September 30,
2015
$
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash
|
90,040
|
9,946
|
Prepaid expenses
|
|
1,000
|
|
|
|
Total assets
|
90,040
|
10,946
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
95,208
|
20,016
|
Due to related parties
|
178,146
|
81,650
|
Convertible notes payable, net of unamortized discount of $198,321 and $nil, respectively
|
32,679
|
|
|
|
|
Total current liabilities
|
306,033
|
101,666
|
|
|
|
Note payable
|
303,000
|
|
|
|
|
Total liabilities
|
609,033
|
101,666
|
|
|
|
STOCKHOLDERS EQUITY (DEFICIT)
|
|
|
|
|
|
Common Stock
Authorized: 500,000,000 common shares with a par value of $0.001 per share
Issued and outstanding: 57,136,943 and 40,000,000 common shares, respectively
|
57,137
|
40,000
|
|
|
|
Additional paid-in capital
|
27,925,770
|
40,000
|
|
|
|
Deficit
|
(28,501,900)
|
(170,720)
|
|
|
|
Total stockholders equity (deficit)
|
(518,993)
|
(90,720)
|
|
|
|
Total liabilities and stockholders equity (deficit)
|
90,040
|
10,946
|
(The accompanying notes are an integral part of these consolidated financial statements)
F-2
OROPLATA RESOURCES, INC.
Consolidated Statements of Operations
|
|
|
|
For the year ended September 30,
2016
$
|
For the year ended September 30,
2015
$
|
|
|
|
Revenues
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Exploration costs
|
152,500
|
10,700
|
General and administrative
|
1,089,583
|
27,288
|
Impairment of mineral property
|
27,051,848
|
|
|
|
|
Net loss before other expenses
|
(28,293,931)
|
(37,988)
|
|
|
|
Other expenses
|
|
|
|
|
|
Interest expense
|
37,249
|
|
|
|
|
Net loss
|
(28,331,180)
|
(37,988)
|
Net loss per share, basic and diluted
|
(0.66)
|
(0.00)
|
Weighted average shares outstanding
|
43,239,306
|
40,000,000
|
|
|
|
(The accompanying notes are an integral part of these consolidated financial statements)
F-3
OROPLATA RESOURCES, INC.
Consolidated Statement of Stockholders Deficit
|
|
|
|
|
|
|
Common Shares
|
Additional Paid-In Capital
$
|
Deficit
$
|
Total
$
|
|
Number
|
Amount
$
|
|
|
|
|
|
|
Balance, September 30, 2014
|
40,000,000
|
40,000
|
40,000
|
(132,732)
|
(52,732)
|
|
|
|
|
|
|
Net loss for the year
|
|
|
|
(37,988)
|
(37,988)
|
|
|
|
|
|
|
Balance, September 30, 2015
|
40,000,000
|
40,000
|
40,000
|
(170,720)
|
(90,720)
|
|
|
|
|
|
|
Shares issued to acquire mineral property
|
16,636,943
|
16,637
|
26,935,211
|
|
26,951,848
|
|
|
|
|
|
|
Shares issued for services
|
500,000
|
500
|
424,500
|
|
425,000
|
|
|
|
|
|
|
Fair value of cashless warrants
|
|
|
295,059
|
|
295,059
|
|
|
|
|
|
|
Fair value of beneficial conversion feature
|
|
|
231,000
|
|
231,000
|
|
|
|
|
|
|
Net loss for the year
|
|
|
|
(28,331,180)
|
(28,331,180)
|
|
|
|
|
|
|
Balance, September 30, 2016
|
57,136,943
|
57,137
|
27,925,770
|
(28,501,900)
|
(518,993)
|
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
OROPLATA RESOURCES, INC.
Consolidated Statements of Cash Flows
|
|
|
|
For the
year ended September 30, 2016
$
|
For the
year ended September 30, 2015
$
|
|
|
|
Operating Activities
|
|
|
|
|
|
Net loss
|
(28,331,180)
|
(37,988)
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
Accretion expense
|
32,679
|
|
Fair value of cashless warrants
|
295,059
|
|
Impairment loss on mineral property
|
27,051,848
|
|
Shares issued for services
|
425,000
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
Prepaid expenses
|
1,000
|
(1,000)
|
Accounts payable and accrued liabilities
|
75,192
|
6,047
|
Due to related parties
|
48,000
|
|
|
|
|
Net Cash Used In Operating Activities
|
(402,402)
|
(32,941)
|
|
|
|
Investing Activities
|
|
|
|
|
|
Mineral property acquisition costs
|
(100,000)
|
|
|
|
|
Net Cash Used In Investing Activities
|
(100,000)
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
Advances from related parties
|
48,496
|
20,639
|
Proceeds from issuance of notes payable
|
534,000
|
|
|
|
|
Net Cash Provided By Financing Activities
|
582,496
|
20,639
|
|
|
|
Increase (decrease) in Cash
|
80,094
|
(12,302)
|
|
|
|
Cash Beginning of Period
|
9,946
|
22,248
|
|
|
|
Cash End of Period
|
90,040
|
9,946
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
Shares issued for acquisition of mineral properties
|
26,951,848
|
|
Discount on convertible debenture
|
198,321
|
|
|
|
|
Supplemental Disclosures
|
|
|
Interest paid
|
|
|
Income tax paid
|
|
|
|
|
|
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
1.
Organization and Nature of Operations
Oroplata Resources Inc. (the Company) was incorporated under the laws of the state of Nevada on October 6, 2011 for the purpose of acquiring and developing mineral properties. The Company has a wholly-owned subsidiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated in the Dominican Republic on January 10, 2012. On July 26, 2016, the Company incorporated Lithortech Resources Inc., a Nevada company, as a wholly-owned subsidiary. The Company currently holds mineral rights in the Dominican Republic and in the Western Nevada Basin of Nye County in the state of Nevada.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at September 30, 2016, the Company has not earned revenue, has a working capital deficit of $215,993, and an accumulated deficit of $28,501,900. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Companys future operations. If the Company is able to obtain financing, there is no certainty that terms will be favorable to the Company. These factors raise substantial doubt regarding the Companys 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.
2.
Summary of Significant Accounting Policies
(a)
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) and are expressed in U.S. dollars. The Companys fiscal year end is September 30.
(b)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of September 30, 2016 and 2015, there were no cash equivalents.
(c)
Use of Estimates
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-6
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
2.
Summary of Significant Accounting Policies
(continued)
(d)
Long-Lived Assets
Long-lived assets, such as property and equipment, mineral properties, and purchased intangibles with finite lives (subject to amortization), are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with Accounting Standards Codification topic 360 Property, Plant, and Equipment. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the impairment occurs.
(e)
Asset Retirement Obligations
The Company follows the provisions of ASC 410,
Asset Retirement and Environmental Obligations
, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets.
(f)
Loss per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earnings per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At September 30, 2016, the Company has 1,594,000 (2015 nil) potentially dilutive shares.
(g)
Foreign Currency Translation
The Companys functional and reporting currency is the United States dollar. Foreign currency transactions are primarily undertaken in Canadian dollars. Foreign currency transactions are translated to United States dollars in accordance with ASC 830,
Foreign Currency Translation Matters
, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
(h)
Comprehensive Loss
ASC 220,
Comprehensive Income
, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2016 and 2015, the Company has no items representing comprehensive income or loss.
F-7
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
2.
Summary of Significant Accounting Policies
(continued)
(i)
Revenue Recognition
Revenue from the sale of minerals will be recognized when a contract is in place and minerals are delivered to the customer.
(j)
Financial Instruments
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Companys financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to related parties, convertible debt, and notes payable. Pursuant to ASC 820, the fair value of cash is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(k)
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740,
Accounting for Income Taxes
. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Due to the Companys net loss position from inception on October 6, 2011 to September 30, 2016, there was no provision for income taxes recorded. As a result of the Companys losses to date, there exists doubt as to the ultimate realization of the deferred tax assets. Accordingly, a valuation allowance equal to the total deferred tax assets has been recorded at September 30, 2016. The Company may be subject to a reassessment of income taxes, as U.S. state statutes of limitations for income tax assessment vary from state to state.
F-8
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
2.
Summary of Significant Accounting Policies
(continued)
(k)
Income Taxes (continued)
The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the years ended September 30, 2016 and 2015, there were no charges for interest or penalties.
(l)
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718,
Compensation Stock Compensation
using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. As at September 30, 2016 and 2015, the Company did not grant any stock options.
(m)
Mineral Property Costs
Mineral property acquisition costs are capitalized as incurred. Exploration and evaluation costs are expensed as incurred until proven and probable reserves are established. The Company assesses the carrying costs for impairment under ASC 360, Property, Plant, and Equipment at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then 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 reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
(n)
Advertising and Marketing Costs
The Company expenses advertising and marketing development costs as incurred.
(o)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the 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.
3.
Mineral Property
(a)
The Company has acquired the mineral rights to the Mogollon claim located in the Province of San Juan near the villages of Solorin and El Toro in the Dominican Republic for a price of $10,000 which included the cost of a geological report.
(b)
On June 1, 2016, the Company acquired the mineral rights to 500 lithium claims situated in the Railroad Valley in the Western Nevada Basin of Nye County, Nevada in exchange for $100,000 and the issuance of 16,000,000 common shares of the Company to be issued on June 15, 2016. The agreement is subject to a 2% net smelter return from the production or sale of minerals from the claims and may be reduced to 1% on a one-time payment of $1,000,000 at any time prior to commencement of commercial production. Furthermore, the Company is required to incur exploration expenditures of $77,500 prior to July 31, 2016. In July 2016, the agreement was amended to remove the net smelter return and in exchange, the Company issued an additional 636,943 common shares. Refer to Note 6.
The total consideration given for the mineral rights was $27,051,848 which includes the $100,000 payment and the 16,636,943 shares of common stock valued at $26,951,848. The total amount of $27,051,548 was impaired and recorded as an impairment loss for the year ended September 30, 2016.
F-9
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
4.
Notes Payable
(a)
On July 18, 2016, the Company entered into a loan agreement with a non-related party for proceeds of $121,000. The amount owing is unsecured, bears interest at 10% per annum, and is due on April 18, 2017, and is convertible into common shares of the Company at $0.50 per share. During the year ended September 30, 2016, the Company recorded a beneficial conversion feature of $121,000 (2015 - $nil), and recorded accretion expense of $32,679 (2015 - $nil). As at September 30, 2016, the carrying value of the note payable is $32,679 (2015 - $nil), the unamortized discount on the note is $88,321 (2015 - $nil), and accrued interest of $3,279 (2015 - $nil) has been recorded in accounts payable and accrued liabilities.
As an incentive for the loan, the Company issued 121,000 cashless warrants to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until July 18, 2021. The fair value of the cashless warrants was $229,069, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 239%, and risk-free rate of 1%.
(b)
On September 28, 2016, the Company entered into a loan agreement with a non-related party for proceeds up to $550,000. On September 30, 2016, the Company received proceeds of $110,000. The amount owing is unsecured, bears interest at 10% per annum, and is due on September 30, 2017, and is convertible into common shares of the Company at $0.10 per share. During the year ended September 30, 2016, the Company recorded a beneficial conversion feature of $110,000 (2015 - $nil). As at September 30, 2016, the carrying value of the note payable is $nil (2015 - $nil), and the unamortized discount on the note is $110,000 (2015 - $nil).
As an incentive for the loan, the Company issued 121,000 cashless warrants to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until September 30, 2021. The fair value of the cashless warrants was $65,990, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 233%, and risk-free rate of 1%.
(c)
On June 15, 2016, the Company entered into a loan agreement with a non-related party for proceeds up to $400,000. During the year ended September 30, 2016, the Company received proceeds of $303,000 (2015 - $nil) on the loan. The loan is unsecured, bears interest at 2.5% per annum, and is due on or before June 15, 2018. As at September 30, 2016, accrued interest of $1,289 (2015 - $nil) has been recorded in accounts payable and accrued liabilities.
5.
Related Party Transactions
(a)
As at September 30, 2016, the Company owes $120,146 (2015 - $81,650) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended September 30, 2016, the Company received advances of $38,496 (2015 - $20,265) from the former Chief Executive Officer and Director of the Company.
(b)
As at September 30, 2016, the Company owes $33,000 (2015 - $nil) to the Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended September 30, 2016, the Company received advances of $10,000, recorded management fees of $30,000, and repaid $7,000 to the Chief Executive Officer and Director of the Company.
(c)
As at September 30, 2016, the Company owes $25,000 to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended September 30, 2016, the Company recorded management fees of $30,000 and repaid $5,000 to the directors of the Company.
F-10
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
6.
Common Shares
The Companys authorized common stock consists of 500,000,000 shares of common stock, with par value of $0.001.
(a)
On October 14, 2011, the Company issued 40,000,000 shares of its common stock to its sole director and officer at $0.002 per share, for net proceeds of $80,000. On March 31, 2015 there were 41 registered holders of record of our common stock due to our sole director and officer selling 15,000,000 common shares under the Companys effective Form S-1 registration statement to these shareholders. The Company did not receive any proceeds from the sale of these shares.
(b)
On May 31, 2016, the former Chief Executive Officer and Director of the Company sold 25,000,000 common shares of the Company to the Chief Executive Officer and Director of the Company for proceeds of $25,000 in a private sale. The transaction has no impact on the issued and outstanding common shares of the Company.
(c)
On June 15, 2016, the Company acquired mineral properties in Nye County, Nevada from Plateau Ventures LLC (Plateau), a non-related party, in exchange for the issuance of 16,636,943 common shares of the Company with a fair value of $26,951,848, which is the end of day trading price of the Companys common shares on the date of the agreement which was the date that the shares became issuable. The common shares were issued on July 22, 2016.
(d)
On August 19, 2016, the Company issued 500,000 common shares with a fair value of $425,000 to a consultant for services. The fair value of the common shares is based on the end of day trading price of the Companys common shares on the date of issuance.
7.
Cashless Warrants
|
|
|
|
Number of
cashless warrants
|
Weighted average exercise price
$
|
|
|
|
Balance, September 30, and 2015
|
|
|
|
|
|
Granted
|
242,000
|
0.50
|
Exercised
|
|
|
Forfeited
|
|
|
|
|
|
Balance, September 30, 2016
|
242,000
|
0.50
|
Additional information regarding cashless warrants as of September 30, 2016, is as follows:
|
|
|
|
Outstanding and exercisable
|
Range of
Exercise Prices
$
|
Number of Cashless Warrants
|
Weighted Average Remaining Contractual Life (years)
|
|
|
|
0.50
|
242,000
|
4.9
|
The fair values for cashless warrants granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:
|
|
|
|
2016
|
2015
|
|
|
|
Risk-free interest rate
|
1.00%
|
|
Expected life (in years)
|
5.0
|
|
Expected volatility
|
236%
|
|
F-11
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
8.
Commitments
(a)
On July 1, 2016, the Company entered into management agreements as follows:
·
Chief Executive Officer and Director of the Company for a twelve month term with monthly management fees of $10,000 in addition to reasonable out-of-pocket expenses and any pre-approved travel expenses;
·
Director of the Company for a three month term with monthly management fees of $5,000 in addition to reasonable out-of-pocket expenses and any pre-approved travel expenses; and
·
Director of the Company for a three month term with monthly management fees of $5,000 in addition to reasonable out-of-pocket expenses and any pre-approved travel expenses.
(b)
On July 1, 2016, the Company entered into consulting agreements as follows:
·
Consultant for general business, business development, and corporate advice for a period of six months at a rate of $5,000 per month;
·
Consultant for business development and field technician services for a period of six months at a rate of $3,000 per month;
·
Consultant for business development and field technician services for a period of six months at a rate of $5,000 per month; and
·
Consultant for administrative assistance and translation services for a period of six months at a rate of $2,000 per month.
(c)
On August 10, 2016, the Company entered into a consulting agreement with a consultant for general business, business development, and corporate advice for a period of six months at a rate of $10,000 per month.
9.
Income Taxes
The Company has $1,122,314 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2032. The income tax benefit differs from the amount computed by applying the US federal income tax rate of 30% to net loss before income taxes. As at September 30, 2016 and 2015, the Company had no uncertain tax positions. The Company has three open tax years for federal income tax purposes.
|
|
|
|
|
|
September 30,
2016
$
|
September 30,
2015
$
|
|
|
|
|
Net loss before taxes
|
|
28,331,180
|
37,988
|
Statutory rate
|
|
30%
|
30%
|
|
|
|
|
Computed expected tax recovery
|
|
8,499,354
|
11,397
|
Permanent differences and other
|
|
(8,213,876)
|
|
Change in valuation allowance
|
|
(285,478)
|
(11,397)
|
|
|
|
|
Income tax provision
|
|
|
|
The significant components of deferred income tax assets and liabilities as at September 30, 2016 and 2015 after applying enacted corporate income tax rates are as follows:
|
|
|
|
|
|
2016
$
|
2015
$
|
|
|
|
|
Net operating losses carried forward
|
|
336,694
|
51,216
|
Valuation allowance
|
|
(336,694)
|
(51,216)
|
|
|
|
|
Net deferred tax asset
|
|
|
|
F-12
OROPLATA RESOURCES, INC.
Notes to the Consolidated Financial Statements
For the year ended September 30, 2016
10.
Subsequent Events
We have evaluated subsequent events through to the date of issuance of the consolidated financial statements, and did not have any material recognizable subsequent events after September 30, 2016 with the exception of the following:
In November 2016, the Company issued 2,000,000 common shares to Plateau Ventures LLC as settlement for consulting services and claim staking.
F-13
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On July 8, 2015 the Company engaged Heaton & Company, PLLC of Farmington, Utah, as its new registered independent public accountant. Prior to July 6, 2015, the Company did not consult with Heaton & Company, PLLC regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company's financial statements by Heaton & Company, PLLC, in either case where written or oral advice provided by Heaton & Company, PLLC would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation SK, respectively).
ITEM 9A.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of September 30, 2016 (the Evaluation Date). Based on that evaluation, the sole director and officer has concluded that these 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 directors and officers 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 below, we believe that our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 fairly present our financial condition, results of operations and cash flows in all material respects.
Managements Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process, under the supervision of our directors and officers, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States Generally Accepted Accounting Principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
·
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our sole director and officer; and
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company's CEO conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of September 30, 2016, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, management identified a material weakness in internal control over financial reporting.
17
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness identified is described below.
1.
Certain entity level controls establishing a tone at the top were considered material weaknesses. As of September 30, 2016, the Company did not have a separate audit committee or a policy on fraud. A whistleblower policy is not necessary given the small size of the organization.
2.
There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.
As a result of the material weakness in internal control over financial reporting described above, the Company's sole director and officer has concluded that, as of September 30, 2016, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework (2013) issued by COSO.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the fiscal year ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION.
None.
18