Notes to the Condensed Consolidated Financial Statements
6
2
BINGO NATION INC.
(Formerly Nexgen Applied Solutions Inc.)
Condensed Consolidated Balance Sheets
(Expressed in U.S. dollars)
|
|
|
|
December 31
2016
$
|
March 31,
2016
$
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
Cash
|
|
22
|
Prepaid expenses (Note 4)
|
16,595
|
287
|
Assets of discontinued operations (Note 3)
|
|
360
|
|
|
|
Total current assets
|
16,595
|
669
|
|
|
|
Non-current assets
|
|
|
Assets of discontinued operations (Note 3)
|
|
280,291
|
|
|
|
Total assets
|
16,595
|
280,960
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
|
|
Current liabilities
|
|
|
Bank indebtedness
|
7
|
|
Line of credit (Note 9)
|
36,500
|
|
Accounts payable and accrued liabilities (Note 6)
|
91,389
|
66,237
|
Convertible notes payable (Note 8)
|
469,370
|
436,512
|
Due to related party (Note 10)
|
300
|
180
|
Liabilities of discontinued operations (Note 3)
|
|
42,862
|
|
|
|
Total current liabilities
|
597,566
|
545,791
|
|
|
|
Non-current liabilities
|
|
|
Deferred vendor incentive
|
|
3,049
|
Liabilities of discontinued operations (Note 3)
|
|
85,752
|
|
|
|
Total non-current liabilities
|
|
88,801
|
|
|
|
Total liabilities
|
597,566
|
634,592
|
|
|
|
Nature of operations and continuance of business (Note 1)
|
|
|
|
|
|
Stockholders deficit
|
|
|
|
|
|
Preferred stock
Authorized: 100,000,000 preferred shares, $0.001 par value 5,000,000 shares issued and outstanding
|
5,000
|
|
Common stock
Authorized: 400,000,000 common shares, $0.001 par value 27,633,027 and 2,633,027 shares issued and outstanding, respectively
|
27,633
|
2,633
|
Additional paid-in capital
|
154,984,905
|
114,539,145
|
Deficit
|
(155,598,509)
|
(114,895,410)
|
|
|
|
Total stockholders deficit
|
(580,971)
|
(353,632)
|
|
|
|
Total liabilities and stockholders deficit
|
16,595
|
280,960
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
3
BINGO NATION INC.
(Formerly Nexgen Applied Solutions Inc.)
Condensed Consolidated Statements of Operations
(Expressed in U.S. dollars)
(Unaudited)
|
|
|
|
|
|
Three Months
|
Three Months
|
Nine Months
|
Nine Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|
2016
|
2015
|
2016
|
2015
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
General and administrative
|
4,024
|
5,454
|
22,020
|
11,102
|
Professional fees
|
13,895
|
15,405
|
33,530
|
33,893
|
|
|
|
|
|
Total operating expenses
|
17,919
|
20,859
|
55,550
|
44,995
|
|
|
|
|
|
Net loss from operations
|
(17,919)
|
(20,859)
|
(55,550)
|
(44,995)
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
|
(27,500,000)
|
|
Interest expense
|
(6,254)
|
(14,540)
|
(51,294)
|
(86,022)
|
Loss on increased valuation -Series A preferred stock
|
(12,942,902)
|
|
(12,942,902)
|
|
Loss on disposal of subsidiary (Note 3)
|
(144,423)
|
|
(144,423)
|
|
|
|
|
|
|
Total other expenses
|
(13,093,579)
|
(14,540)
|
(40,638,619)
|
(86,022)
|
|
|
|
|
|
Loss from continuing operations
|
(13,111,498)
|
(35,399)
|
(40,694,169)
|
(131,017)
|
|
|
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations (Note 3)
|
|
(61,613)
|
(8,930)
|
168,822
|
|
|
|
|
|
Net income (loss)
|
(13,111,498)
|
(97,012)
|
(40,703,099)
|
37,805
|
|
|
|
|
|
Earnings (loss) per share
|
(0.43)
|
(0.07)
|
(0.97)
|
0.03
|
|
|
|
|
|
Continuing operations
|
(0.43)
|
(0.03)
|
(0.97)
|
(0.09)
|
Discontinued operations
|
0.00
|
(0.04)
|
0.00
|
0.12
|
|
|
|
|
|
Weighted average shares outstanding
|
30,622,157
|
1,408,820
|
41,996,663
|
1,408,820
|
|
|
|
|
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
4
BINGO NATION INC.
(Formerly Nexgen Applied Solutions Inc.)
Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
|
|
|
|
Nine Months
|
Nine Months
|
|
Ended
|
Ended
|
|
December 31,
|
December 31,
|
|
2016
|
2015
|
|
$
|
$
|
Operating activities
|
|
|
|
|
|
Net loss for the period
|
(40,694,169)
|
(131,017)
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
Impairment of intangible assets
|
27,500,000
|
|
Loss on increased valuation of Series A preferred stock
|
12,942,902
|
|
Non-cash interest expense
|
50,602
|
67,595
|
Changes in operating assets and liabilities:
|
|
|
Prepaid expenses
|
(16,595)
|
|
Line of credit
|
36,500
|
|
Accounts payable and accrued liabilities
|
4,647
|
43,552
|
Deferred vendor incentive
|
|
(858)
|
|
|
|
Net cash used in operating activities
|
(176,113)
|
(20,728)
|
|
|
|
Investing activities
|
|
|
|
|
|
Bank indebtedness
|
7
|
|
Cash balance removed on deconsolidation
|
(1,710)
|
|
|
|
|
Net cash used in investing activities
|
(1,703)
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Repayments to related parties
|
120
|
(95)
|
Advances for convertible notes payable
|
32,858
|
67,595
|
|
|
|
Net cash provided by financing activities
|
32,978
|
67,500
|
|
|
|
Cash flow from discontinued operations
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
144,709
|
(50,292)
|
Net cash used in investing activities
|
|
(796)
|
|
|
|
Net cash provided by (used in) discontinued operations
|
144,709
|
(51,088)
|
|
|
|
Decrease in cash
|
(129)
|
(4,316)
|
|
|
|
Cash, beginning of period
|
129
|
4,469
|
|
|
|
Cash, end of period
|
|
153
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
Shares issued for acquisition of intangible assets
|
27,500,000
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
Interest paid
|
1,502
|
5,595
|
Income taxes paid
|
|
|
(The accompanying notes are an integral part of these condensed consolidated financial statements)
5
1.
Nature of Operations and Continuance of Business
Viking Minerals Inc., (the Company), was incorporated in the State of Nevada on March 24, 2006 with 75,000,000 authorized common shares with a par value of $0.001 per share. In January 2011, the Company filed an amendment with the State of Nevada to increase the authorized shares to 400,000,000 common shares with a par value of $0.001 per share. On April 14, 2014, the Company changed its name to Indie Growers Association and completed a 1:200 reverse stock consolidation.
The Company was originally organized for the purpose of acquiring and developing mineral claims. On June 30, 2014, the Company acquired River Ridge Sunshine Farms LLC (River Ridge), a Washington State corporation, and in so doing, changed its business to that of real estate development for the purpose of leasing and agricultural buildings to licensed cannabis producers.
On April 4, 2016, the Company changed its name to Nexgen Applied Solutions Inc. and completed a 1:100 reverse stock consolidation. All share amounts in these interim condensed consolidated financial statements have been restated to reflect all stock consolidations.
On July 1, 2016, the Company changed its name to Bingo Nation Inc.
These interim 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. As at December 31, 2016, the Company has a working capital deficiency of $580,971 and accumulated losses of $155,598,509 since inception. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate sufficient revenues. These interim 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)
Basis of Presentation and Consolidation
The accompanying interim condensed consolidated financial statements of the Company should be read in conjunction with the financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2016. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Companys financial position and the results of its operations and its cash flows for the periods shown.
These interim condense consolidated financial statements are expressed in U.S. dollars and include the accounts of the Company and those of its wholly-owned subsidiary, River Ridge. All intercompany balances and transactions are eliminated on consolidation.
(b)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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.
(c)
Reclassifications
Certain of the prior period figures have been reclassified to conform to the current periods presentation.
6
3.
Discontinued Operations
On October 31, 2016, the Company entered into a settlement agreement whereby the Company cancelled its lease agreement and transferred River Ridge to the owners of the property to settle the early termination of the lease without penalties. The agreement is effective September 30, 2016.
Accordingly, the operations of River Ridge have been treated as discontinued operations for the period ended December 31, 2016 and the comparative balances for 2015 have been reclassified.
The fair value of all consideration given up and charged to loss on disposal of subsidiary is comprised of the following:
|
|
|
$
|
Fair value of identifiable assets and liabilities transferred to the owners of the property
|
|
|
|
Cash
|
1,710
|
Property, plant, and equipment
|
275,363
|
Accounts payable and accrued liabilities
|
(132,650)
|
|
|
Loss on disposal of subsidiary
|
144,423
|
Assets of discontinued operations
|
|
|
|
December 31,
2016
$
|
March 31,
2016
$
|
Current assets of discontinued operations
|
|
|
|
|
|
Cash
|
|
107
|
Prepaid assets
|
|
253
|
|
|
|
Total current assets of discontinued operations
|
|
360
|
|
|
|
Non-current assets of discontinued operations
|
|
|
|
|
|
Property, plant, and equipment, net of accumulated depreciation $14,601
|
|
280,291
|
|
|
|
Total non-current assets of discontinued operations
|
|
280,291
|
|
|
|
Total assets of discontinued operations
|
|
280,651
|
Liabilities of discontinued operations
|
|
|
|
December 31,
2016
$
|
March 31,
2016
$
|
Current liabilities of discontinued operations
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
42,862
|
|
|
|
Total current liabilities of discontinued operations
|
|
42,862
|
|
|
|
Non-current liabilities of discontinued operations
|
|
|
|
|
|
Due to related parties
|
|
85,752
|
|
|
|
Total liabilities of discontinued operations
|
|
128,614
|
7
3.
Discontinued Operations
(continued)
Net income (loss) from discontinued operations
|
|
|
|
|
|
Three months ended
December 31,
2016
$
|
Three months ended
December 31,
2015
$
|
Nine months ended
December 31,
2016
$
|
Nine months ended
December 31,
2015
$
|
|
|
|
|
|
Revenue
|
|
|
|
|
Rental income
|
|
156,000
|
118,650
|
416,000
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
Bad debt expense
|
|
205,000
|
103,650
|
205,000
|
Depreciation
|
|
2,454
|
4,928
|
7,362
|
General and administrative
|
|
6,659
|
6,098
|
16,238
|
Land lease
|
|
3,000
|
6,000
|
9,000
|
Management fees
|
|
|
6,000
|
6,540
|
Professional fees
|
|
|
|
800
|
Repairs and maintenance
|
|
106
|
93
|
1,447
|
Interest expense
|
|
394
|
811
|
791
|
|
|
|
|
|
Total operating expenses
|
|
217,613
|
127,580
|
247,178
|
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
(61,613)
|
(8,930)
|
168,822
|
4.
Prepaid expenses
As at December 31, 2016, the Company had prepaid professional fees of $16,595 (March 31, 2016 - $nil) to be deducted against future services.
5.
Intangible Assets
|
|
|
|
|
|
|
Cost
$
|
Accumulated amortization
$
|
Impairment
$
|
Net book
value as at
December 31,
2016
$
|
Net book
value as at
March 31,
2016
$
|
|
|
|
|
|
|
Intangible assets
|
27,500,000
|
|
(27,500,000)
|
|
|
On April 18, 2016, the Company acquired a business development contract, an exclusive software technology license to a bingo-themed Class II game recognized by the Indian Gaming Regulatory Act, and related television broadcast rights. Under the term of the agreement, the Company issued 50,000,000 restricted common shares of the Company. Refer to Note 11(a).
As at June 30, 2016, the Company had not put these assets into use and has not yet recorded any amortization. As at June 30, 2016, the Company reviewed the assets for indication of impairment. Due to the inability to estimate future cash flows, the intangible assets have been written-off.
6.
Accounts payable
|
|
|
|
|
|
|
|
December 31,
2016
$
|
March 31,
2016
$
|
|
|
|
|
|
Trade accounts payable
|
|
|
91,389
|
66,237
|
8
7.
Deferred Vendor Incentive
In December 2013, the Companys transfer agent paid off the outstanding balance of $5,717 owed to the former transfer agent which had been recorded as deferred vendor incentive. It is being amortized on a straight-line base
over the contract term of five years
and offset against transfer agent fees in the statement of operations.
On May 16, 2016, the Company changed transfer agents. As a result of the early termination, the Company was required to pay back the original amount of the vendor incentive, which has been added to the termination fees charged by the outgoing transfer agent.
8.
Convertible Notes Payable
As of December 31, 2016, the Company had $469,370 (March 31, 2016 - $436,512) in convertible notes payable. The amounts are unsecured, bear interest at 5% per annum, are due on demand, and convertible at a price of $0.001 per share. The shares are not subject to forward or reverse stock splits unless the shares have been converted and issued prior to any such forward or reverse stock split. Therefore, if the balance outstanding was converted into common shares, the amount of stock to be issued would be 469,370,000 (March 31, 2016 436,512,000) common shares.
During the nine months ended December 31, 2016, the Company received $32,858 (March 31, 2016 - $107,258). The Company assessed the conversion option and determined that during the period the debenture had a beneficial conversion feature with intrinsic value in excess of the debt. Therefore, the Company fully amortized a conversion benefit of $32,858 (March 31, 2016 - $107,258) for the current period, which was recorded as interest expense.
During the nine months ended December 31, 2016, the Company issued nil (March 31, 2016 1,150,000) common shares for the settlement of $nil (March 31, 2015 - $115,000) of convertible notes payable. As at December 31, 2016, the Company has accrued $17,406 (March 31, 2016 - $41,784) in interest expense which has been recorded in accounts payable and accrued liabilities.
9.
Line of Credit
On October 1, 2016, the Company, entered into a credit line agreement with an unrelated party. The agreement covers a line of credit for the principal amount of up to $100,000 and matures on September 30, 2017. Interest rate shall accrue on the outstanding principal balance at an annual rate of 8%.
10.
Related Party Transactions
As at December 31, 2016, the Company owed $300 (March 31, 2016 - $180) to the Chief Executive Officer of the Company, which is unsecured, non-interest bearing, and due on demand.
11.
Share Capital
Authorized:
400,000,000 common shares with $0.001 par value
100,000,000 preferred shares with $0.001 par value
(a)
On April 18, 2016, the Company issued 50,000,000 common shares with a fair value of $27,500,000 based on the market price of the shares issued for the acquisition of various intangible assets. Refer to Note 5.
(b)
On October 11, 2016, the Company designated 25,000,000 preferred shares as Series A preferred shares. The holders of Series A preferred shares shall not be entitled to receive any dividends and the Series A preferred shares shall not be convertible into common shares and have no other conversion rights. Each holder of Series A preferred shares is entitled to cast 100 votes for every one Series A preferred shares held.
(c)
On October 11, 2016, the majority shareholder of the Company converted 25,000,000 common shares to 5,000,000 shares of Series A preferred shares. The addition of new shares triggered extinguishment accounting which requires the Company to fair value the new instrument and consider the incremental value of the fair value of the Series A preferred shares over the carrying value of the previously held common shares at the date of the conversion as a reduction of income available to common stockholders. The 5,000,000 Series A preferred shares were deemed to have a fair value of $12,967,902 based upon the converted valuation approach as the primary driver of value in the instrument, its common stock equivalency. Accordingly, the Company recorded a loss on increased valuation of Series A preferred shares of $12,942,902.
9
2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
This Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
|
|
|
|
|
|
|
December 31, 2016
$
|
March 31, 2016
$
|
Current Assets
|
16,595
|
309
|
Current Assets discontinued operations
|
Nil
|
360
|
Current Liabilities
|
597,266
|
502,749
|
Current Liabilities discontinued operations
|
Nil
|
42,862
|
Working Capital (Deficit) continuing operations
|
(580,671)
|
(502,440)
|
Working Capital (Deficit) discontinued operations
|
Nil
|
(42,502)
|
Cash Flows
|
|
|
|
|
|
|
December 31, 2016
$
|
December 31, 2015
$
|
Cash Flows used in Operating Activities
|
(176,113)
|
(20,728)
|
Cash Flows used in Investing Activities
|
(1,703)
|
Nil
|
Cash Flows provided by Financing Activities
|
32,978
|
67,500
|
Cash Flows provided by (used in) Discontinued Operations
|
144,709
|
(51,088)
|
Net Increase (Decrease) in Cash During Period
|
(129)
|
(4,316)
|
Operating Revenues
Continuing Operations
During the three months ended December 31, 2016 and 2015, the Company earned no revenues from continuing operations.
Discontinued Operations
During the three months ended December 31, 2016, the Company had a nil gain (loss) compared with a loss of $61,613 during the three months ended December 31, 2015 from discontinued operations. This is due to all discontinued operations having ceased during the three months ended December 31, 2016.
Operating Expenses and Net Loss
Operating Expenses
Continuing Operations
During the three months ended December 31, 2016, the Company incurred operating expenses of $17,919 compared with $20,859 during the three months ended December 31, 2015. The decrease is mainly due to lower general and administrative expenses as the Company had minimal cash flows for operating activities.
10
During the nine months ended December 31, 2016, the Company incurred operating expenses of $55,550 compared to $44,995during the nine months ended December 31, 2015. The increase in operating expenses was attributed to a $10,918 increase in general and administrative expenses while professional fees decreased by $363.
Discontinued Operations
During the three months ended December 31, 2016, the Company recorded a nil gain (loss) from discontinued operations compared to a $61,613 loss during the three months ended December 31, 2015. The decrease was due to the fact that the Company had completely ceased discontinued operations for the three months ending December 31, 2016.
During the nine months ended December 31, 2016, the Company recorded a loss of $8,930 compared to a gain of $168,822 during the nine months ended December 31, 2015. The decrease is due to the Company entering into an agreement whereby the Company cancelled its lease agreement and transferred River Ridge to the owners of the property to settle the early termination of the lease without penalties.
Net Income (Loss)
For the three months ended December 31, 2016, the Company had a net loss of $13,111,498 and basic and diluted net loss per share of $0.43. In addition to operating expenses, the Company also incurred $6,254 in interest expense for interest charges incurred on its convertible notes payable and beneficial conversion feature on new debt.
For the three months ended December 31, 2015, the Company had a net loss of $97,012 and basic and diluted net loss per share of $0.07, comprised of a loss per share of $0.03 for continuing operations and loss per share of $0.4 for discontinued operations.
For the nine months ended December 31, 2016, the Company had a net loss of $40,703,099 and loss per share of $0.97 from continuing operations. In addition to the net loss from operations, the Company also recorded an impairment charge of $27,500,000 for the acquisition of intangible assets through the issuance of common shares, a loss on the conversion of common shares of $12,942,902, a loss on the disposal of subsidiary of $144,423 and $51,294 of interest and accretion expense for its convertible notes payable. For the nine months ended December 31, 2015, the Company incurred a net income of $37,805 or $0.03 per share, comprising of a loss of $0.09 per share for continuing operations and earnings of $0.12 per share for discontinued operations.
Liquidity and Capital Resources
Continuing and Discontinued Operations
At December 31, 2016, the Company had cash and total current assets of $16,595 compared with cash and total current assets of $669 at March 31, 2016.
The increase in cash and total current assets is attributed to an increase in prepaid expenses for professional fees.
The overall working capital deficit increased from $544,942 at March 31, 2016 to $580,671 at December 31, 2016 due to increases in both accounts payable and accrued liabilities and convertible notes payable.
Cash flow from Operating Activities
During the nine months ended December 31, 2016, the Company used $176,113 compared to $20,728 during the nine months ended December 31, 2015. The decrease in cash is due to the fact that the Company did not have any cash inflows from continuing operations and were fully supported by cash received from financing activities which decreased during the current year.
Cash flow from Investing Activities
During the nine months ended December 31, 2016 the Company decreased net cash used in investing activities by $1,703 due to a cash balance being removed on deconsolidation and during the nine months ended December 31, 2015, the Company had no investing activities from continuing operations.
Cash flow from Financing Activities
During the nine months ended December 31, 2016, the Company received $32,978 of cash for financing activities, compared with $67,500 received during the nine months ended December 31, 2015. The decrease in cash received for financing activities relates to a decrease in proceeds received from convertible notes payable.
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Cash flow from Discontinued Operations
During the nine months ended December 31, 2016, the Company received cash of $144,709 from discontinued operations from operating activities compared to the use of $51,088 during the nine months ended December 31, 2015 which was comprised of $50,292 for operating activities and $796 for financing activities. The Companys former subsidiary received funding from cash generated by rental income as well as funding supporting from the Company on an as-needed basis.
Convertible Notes Payable
As of December 31, 2016, the Company had recorded $469,370 (March 31, 2016 - $436,512) in convertible notes payable. The amounts are unsecured; bear interest at 5% per annum, due on demand, and convertible at a price of $0.001 per share. The shares are not subject to forward or reverse stock splits unless the shares have been converted and issued prior to any such forward or reverse stock split. Therefore, if the balance outstanding was converted into common shares, the amount of stock to be issued would be 469,370,000 (March 31, 2016 436,512,000) common shares.
During the nine month period ended December 31, 2016, the Company received $32,858 (March 31, 2016 - $107,258). The Company assessed the conversion option and determined that during the period the debenture had a beneficial conversion feature with intrinsic value in excess of the debt. Therefore, the Company fully amortized a conversion benefit of $32,858 (March 31, 2016 - $107,258) for the current period which was recorded as interest expense.
During the nine month period ended December 31, 2016, the Company issued nil (March 31, 2016 1,150,000) common shares for the settlement of $nil (March 31, 2015 - $115,000) of convertible notes payable. As at December 31, 2016, the Company has accrued $17,406 (March 31, 2016 - $41,784) in interest expense which has been recorded in accounts payable and accrued liabilities.
Critical Accounting Policies and Estimates
We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical accounting policies:
Basis of Presentation and Consolidation
The accompanying interim condensed consolidated financial statements of the Company should be read in conjunction with the financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2016. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Companys financial position and the results of its operations and its cash flows for the periods shown.
These interim condense consolidated financial statements are expressed in U.S. dollars and include the accounts of the Company and those of its wholly-owned subsidiary, River Ridge. All intercompany balances and transactions are eliminated on consolidation
Use of Estimates
The preparation of these interim condensed consolidated financial statements are in accordance with accounting principles generally accepted in the United States and requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from these estimates. The results of operations and cash flows for the period shown are not necessarily indicative of the results to be expected for the full year.
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