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 and
nine-month periods ended December 31, 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 Condensed Financial Statements
December
31, 2016
(Expressed
in U.S. dollars)
(unaudited)
IMAGE
INTERNATIONAL GROUP, INC.
Condensed
Consolidated Balance Sheets
(Expressed
in U.S. dollars)
|
|
December
31, 2016
$
|
|
|
March
31, 2016
$
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
1,022
|
|
|
|
12,994
|
|
Amounts
receivable
|
|
|
–
|
|
|
|
4,868
|
|
Total
Assets
|
|
|
1,022
|
|
|
|
17,862
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
1,552
|
|
|
|
1,772
|
|
Loans
payable (Note 3)
|
|
|
102,177
|
|
|
|
92,677
|
|
Due
to related parties (Note 4)
|
|
|
–
|
|
|
|
267,000
|
|
Total
Liabilities
|
|
|
103,729
|
|
|
|
361,449
|
|
|
|
|
|
|
|
|
|
|
Going
Concern (Note 1)
|
|
|
|
|
|
|
|
|
Subsequent Event
(Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder’s
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, 1,000,000,000 shares authorized, $0.001 par value
14,059,000
shares issued and outstanding
|
|
|
14,059
|
|
|
|
14,059
|
|
Additional
paid-in capital
|
|
|
784,941
|
|
|
|
784,941
|
|
Deficit
|
|
|
(901,707
|
)
|
|
|
(1,142,587
|
)
|
Total
Stockholder’s Deficit
|
|
|
(102,707
|
)
|
|
|
(343,587
|
)
|
Total
Liabilities and Stockholder’s Deficit
|
|
|
1,022
|
|
|
|
17,862
|
|
(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)
|
|
Three
Months
Ended
December 31, 2016
$
|
|
|
Three
Months
Ended
December 31, 2015
$
|
|
|
Nine
Months
Ended
December 31, 2016
$
|
|
|
Nine
Months
Ended
December 31, 2015
$
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
18,500
|
|
Foreign exchange
loss (gain)
|
|
|
(1,675
|
)
|
|
|
–
|
|
|
|
(1,726
|
)
|
|
|
1,272
|
|
General and administrative
|
|
|
2,482
|
|
|
|
112
|
|
|
|
5,644
|
|
|
|
4,858
|
|
Management fees
(Note 4)
|
|
|
–
|
|
|
|
22,500
|
|
|
|
–
|
|
|
|
67,500
|
|
Professional fees
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
6,746
|
|
|
|
7,750
|
|
Transfer
agent and filing fees
|
|
|
827
|
|
|
|
2,024
|
|
|
|
15,456
|
|
|
|
33,499
|
|
Total Expenses
|
|
|
2,634
|
|
|
|
25,636
|
|
|
|
26,120
|
|
|
|
133,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other income
|
|
|
(2,634
|
)
|
|
|
(25,636
|
)
|
|
|
(26,120
|
)
|
|
|
(133,379
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of related party debt (Note 4)
|
|
|
267,000
|
|
|
|
–
|
|
|
|
267,000
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
and Comprehensive Income (Loss)
|
|
|
264,366
|
|
|
|
(25,636
|
)
|
|
|
240,880
|
|
|
|
(133,379
|
)
|
Net
Earnings (Loss) Per Share, Basic and Diluted
|
|
|
0.02
|
|
|
|
–
|
|
|
|
0.02
|
|
|
|
(0.01
|
)
|
Weighted Average Shares Outstanding
|
|
|
14,059,000
|
|
|
|
14,059,000
|
|
|
|
14,059,000
|
|
|
|
14,059,000
|
|
(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)
|
|
Nine
Months
Ended
December 31, 2016
$
|
|
|
Nine
Months
Ended
December 31, 2015
$
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) for the period
|
|
|
240,880
|
|
|
|
(133,379
|
)
|
|
|
|
|
|
|
|
|
|
Items not involving
cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of related
party debt
|
|
|
(267,000
|
)
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Amounts receivable
|
|
|
4,868
|
|
|
|
–
|
|
Prepaid expenses
|
|
|
–
|
|
|
|
1,000
|
|
Accounts payable
and accrued liabilities
|
|
|
(220
|
)
|
|
|
(8,723
|
)
|
Due
to related parties
|
|
|
–
|
|
|
|
67,500
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used
In Operating Activities
|
|
|
(21,472
|
)
|
|
|
(73,602
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from loans payable
|
|
|
9,500
|
|
|
|
87,677
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided
by Financing Activities
|
|
|
9,500
|
|
|
|
87,677
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash
|
|
|
(11,972
|
)
|
|
|
14,075
|
|
|
|
|
|
|
|
|
|
|
Cash, Beginning of Period
|
|
|
12,994
|
|
|
|
1,921
|
|
|
|
|
|
|
|
|
|
|
Cash, End of Period
|
|
|
1,022
|
|
|
|
15,996
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
–
|
|
|
|
–
|
|
Income
taxes paid
|
|
|
–
|
|
|
|
–
|
|
(The
accompanying notes are an integral part of these condensed consolidated financial statements)
IMAGE
INTERNATIONAL GROUP, INC.
Notes
to the Condensed Consolidated Financial Statements
December
31, 2016
(Expressed
in U.S. dollars)
(unaudited)
1.
|
Basis
of Presentation
|
|
|
|
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
condensed 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 December 31,
2016, the Company has a working capital deficiency of $102,707 and has accumulated losses of $901,707 since inception. These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed 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.
|
Significant
Accounting Policies
|
|
(a)
|
Principles
of Consolidation
|
|
|
|
|
|
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.
|
|
(b)
|
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 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.
|
3.
|
Loans
Payable
|
|
|
|
As
at December 31, 2016, the Company owed $102,177 (March 31, 2016 - $92,677) to non-related parties, which is non-interest bearing,
unsecured, and due on demand.
|
4.
|
Related
Party Transactions
|
|
(a)
|
As
at December 31, 2016, the Company owes $nil (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. During the nine months ended December 31, 2016, the company controlled
by the President of the Company forgave $144,000 in amounts outstanding, which was recognized by the Company as a gain on
forgiveness of debt.
|
|
|
|
|
(b)
|
As
at December 31, 2016, the Company owes $nil (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. During the nine months ended December 31, 2016,
the company controlled by the President of the Company forgave $123,000 in amounts outstanding, which was recognized by the
Company as a gain on forgiveness of debt.
|
|
|
|
|
(c)
|
During
the nine months ended December 31, 2016, the Company incurred management fees of $nil (2015 - $24,000) to a company controlled
by the President of the Company.
|
|
|
|
|
(d)
|
During
the nine months ended December 31, 2016, the Company incurred management fees of $nil (2015 - $21,000) to a company controlled
by the Chief Financial Officer of the Company.
|
5.
|
Subsequent
Event
|
|
|
|
On
January 23, 2016, the Company received $2,000 in loan proceeds from a non-related party. The amount due is non-interest bearing,
unsecured, and due on demand.
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results
of Operations for the nine-month period ended December 31, 2016
During
the nine-month period ended December 31, 2016, the Company had net income of $240,880 (2015 – net loss $133,379).
Consulting
fees for the nine-month period ended September 30, 2016 were $nil (2015 - $18,500).
Transfer
agent and filing fees in the nine-month period ended December 31, 2016 were $15,456 (2015 - $33,499).
Expenses
during the nine-month period included:
|
●
|
Renewal
of listing on the OTCQB stock exchange; and
|
|
|
|
|
●
|
Financial
statement audit and review fees
|
Management
fees in the nine-month period ended December 31, 2016 were $nil (2015 - $67,500). During the quarter ended December 31,
2016, management had forgiven amounts owed of $267,000 (2015 - $nil).
Professional
fees for the nine-month period ended December 31, 2016 were $6,746 (2015 - $7,750) relating to audit and review 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 December 31, 2016 with funds on hand of $1,022 (March 31, 2016 - $12,994). As at
December 31, 2016 the Company had a working capital deficit of $102,257 compared to $343,587 as at March 31, 2016.
Amounts
due to related parties were $nil as at December 31, 2016 (March 31, 2016 - $267,000). Management forgave $267,000 in management
fees owed during the quarter ended December 31, 2016.
Loans
payable as at December 31, 2016 was $102,177 (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 nine-month period ended December 31, 2016, the Company used $21,472 (2015 - $73,602) to fund operations.
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 nine-month
period ended December 31, 2016. During the nine-month period ended December 31, 2016, the Company received loan proceeds of $9,500
(2015 - $87,677).
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 December 31, 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 December 31, 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:
|
1.
|
Inadequate
Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
|
|
|
|
|
2.
|
Insufficient
Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.
|
|
|
|
|
3.
|
Inadequate
Financial Statement Closing Process: We have an inadequate financial statement closing process.
|
|
|
|
|
4.
|
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.
|
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 December 31, 2016 that
have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.