Item 1. Financial Statements.
Our unaudited interim financial statements for the three month
period ended August 31, 2017 form part of this quarterly report. They are stated
in United States Dollars (US$) and are prepared in accordance with United States
generally accepted accounting principles.
3
WOLVERINE TECHNOLOGIES CORP.
August 31, 2017
(Expressed in U.S. dollars)
(Unaudited)
WOLVERINE TECHNOLOGIES CORP.
Balance Sheets
(Expressed in U.S. dollars)
(Unaudited)
|
|
August 31,
|
|
|
May 31,
|
|
|
|
2017
|
|
|
2017
|
|
|
|
$
|
|
|
$
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
76
|
|
|
47
|
|
Other receivable
|
|
1,792
|
|
|
1,733
|
|
Total Assets
|
|
1,868
|
|
|
1,780
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
245,018
|
|
|
205,436
|
|
Advances from shareholder (Note
3)
|
|
15,433
|
|
|
15,950
|
|
Short term debt related parties (Note 3)
|
|
80,124
|
|
|
59,023
|
|
Total Liabilities
|
|
340,575
|
|
|
280,409
|
|
|
|
|
|
|
|
|
Stockholders Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, 500,000,000
shares authorized, $0.001 par
value
346,520,993
shares issued and outstanding at August 31, and May
31,
2017, respectively
|
|
346,521
|
|
|
346,521
|
|
Subscriptions
received
|
|
30,501
|
|
|
26,798
|
|
Additional paid-in capital
|
|
4,882,331
|
|
|
4,882,331
|
|
Accumulated deficit
|
|
(5,598,060
|
)
|
|
(5,534,279
|
)
|
Total Stockholders Deficit
|
|
(338,707
|
)
|
|
(278,629
|
)
|
Total Liabilities and Stockholders Deficit
|
|
1,868
|
|
|
1,780
|
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-2
WOLVERINE TECHNOLOGIES CORP.
Statements of
Operations
(Expressed in U.S. dollars)
(Unaudited)
|
|
Three Months
|
|
|
Three Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
50,957
|
|
|
97,214
|
|
Mineral exploration costs
|
|
222
|
|
|
|
|
Total Operating Expenses
|
|
51,179
|
|
|
97,214
|
|
Net Loss Before Other Expenses
|
|
(51,179
|
)
|
|
(97,214
|
)
|
|
|
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (Note 3e)
|
|
|
|
|
192
|
|
Foreign exchange loss
|
|
(12,602
|
)
|
|
(704
|
)
|
Total Other Income (Expenses)
|
|
(12,602
|
)
|
|
(512
|
)
|
Net Loss
|
|
(63,781
|
)
|
|
(97,726
|
)
|
|
|
|
|
|
|
|
Net Loss Per Share, Basic and Diluted
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding, Basic and Diluted
|
|
346,520,993
|
|
|
315,170,993
|
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-3
WOLVERINE TECHNOLOGIES CORP.
Statements of Cash
Flows
(Expressed in U.S. dollars)
(Unaudited)
|
|
Three Months
|
|
|
Three Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(63,781
|
)
|
|
(97,726
|
)
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax receivable
|
|
|
|
|
(1,593
|
)
|
Prepaid expenses
|
|
|
|
|
10,000
|
|
Accounts payable
|
|
32,223
|
|
|
31,577
|
|
Accrued
liabilities
|
|
|
|
|
(1,046
|
)
|
Due to related parties
|
|
16,558
|
|
|
2,414
|
|
Net
Cash Used in Operating Activities
|
|
(15,000
|
)
|
|
(56,374
|
)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from common
stock subscriptions
|
|
3,703
|
|
|
51,943
|
|
Proceeds
from loans payable
|
|
|
|
|
3,812
|
|
Advances from shareholder
|
|
718
|
|
|
|
|
Repayment on advances to shareholder
|
|
(1,994
|
)
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
2,427
|
|
|
55,755
|
|
|
|
|
|
|
|
|
Effect of foreign currency on cash
|
|
12,602
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash
|
|
29
|
|
|
(619
|
)
|
|
|
|
|
|
|
|
Cash, Beginning of Period
|
|
47
|
|
|
2,594
|
|
|
|
|
|
|
|
|
Cash, End of Period
|
|
76
|
|
|
1,975
|
|
|
|
|
|
|
|
|
Non-cash Investing and Financing Activities:
|
|
|
|
|
|
|
Payments made by shareholders on behalf of
Company
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures:
|
|
|
|
|
|
|
Interest paid
|
|
|
|
|
|
|
Income taxes paid
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-4
WOLVERINE TECHNOLOGIES CORP.
Notes to the Financial
Statements
August 31, 2017
(Expressed in U.S. dollars)
(unaudited)
Wolverine Technologies Corp. (the
Company) was incorporated in the State of Nevada on February 23, 2006. The
Companys prior principal business was the acquisition and exploration of
mineral resources. The Company had not determined that its properties contain
mineral reserves that were economically recoverable, financing had not yet
become available, and commodity prices had not fully recovered. Therefore,
management decided to change the focus of the Company to include cyber security.
On April 14, 2015, the Company entered into a Share Exchange and Royalty
Agreement pursuant to which the Company will acquire 25% interest in the process
technology and cyber security company ENIGMAMobil Inc. (Enigma). Refer to Note
7. Enigma is in the business of developing security applications for cyber
systems focusing on the mobile smartphone markets. This agreement has not yet
closed. Effective August 12, 2015, the Company changed its name from Wolverine
Exploration Inc. to Wolverine Technologies Corp.
The accompanying financial statements
of Wolverine Technologies Corp. (the Company) should be read in conjunction
with the financial statements and accompanying notes filed with the U.S.
Securities and Exchange Commission in the Companys Annual Report on Form 10-K
for the fiscal year ended May 31, 2017. In the opinion of management, the
accompanying financial statements reflect all adjustments of a recurring nature
considered necessary to present fairly the Companys financial position and the
result of its operations and its cash flows for the periods shown.
The preparation of 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.
Going Concern
These 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 never generated revenues 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. The Company
and/or Enigma plans to raise financing of debt or equity for an aggregate of
$2,500,000 prior to the closing of the Enigma Share Exchange and Royalty
Agreement described in Note 7. There can be no assurance that additional
financing will be available when needed or, if available, that it can be
obtained on commercially reasonable terms. As August 31, 2017, the Company has a
working capital deficiency of $338,707 and has accumulated losses of $5,598,060
since inception. These factors raise substantial doubt regarding the Companys
ability to continue as a going concern. These 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.
|
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.
3.
|
Related Party Transactions
|
|
(a)
|
During the three months ended August 31, 2017, the
Company incurred consulting fees of $7,977 (2016 - $7,636) to a company
controlled by the President of the Company.
|
|
|
|
|
(b)
|
During the three months ended August 31, 2017, the
Company incurred consulting fees of $11,966 (2016 - $nil) to a Director of
the Company.
|
|
|
|
|
(c)
|
As at August 31, 2017, the Company owes $28,034 (May 31,
2017 - $21,765) to a company controlled by the President of the Company,
which is non-interest bearing, unsecured and due on demand.
|
|
|
|
|
(d)
|
As at August 31, 2017, the Company owes $52,090 (May 31,
2017 - $37,257) to a Director of the Company, which is non-interest
bearing, unsecured and due on demand.
|
|
|
|
|
(e)
|
As at August 31, 2017, the Company owes $15,433 (May 31,
2017 - $15,950) to a shareholder of the Company, which is non-interest
bearing, unsecured and due on demand. This amount consists of advances to
the Company of $718 and expenses incurred on behalf of the Company of
$139, repayment of $1,994 with remaining change due to foreign exchange
during the three months ended August 31, 2017. We note the shareholder is
not considered a related party as he owns less than 1% of the shares
outstanding as of balance sheet date.
|
F-4
WOLVERINE TECHNOLOGIES CORP.
Notes to the Financial
Statements
August 31, 2017
(Expressed in U.S. dollars)
(unaudited)
Stock transactions during the three
months ended August 31, 2017:
|
(a)
|
During the three months ended August 31, 2017, the
Company received cash proceeds of $3,724 (Cdn$5,000) relating to a
subsequent share issuance. As at October 23, 2017 these shares have not
yet been issued.
|
Stock transactions during the three
months ended August 31, 2016:
|
(b)
|
During the three months ended August 31, 2016, the
Company received cash proceeds of $51,943 relating to a portion of a share
issuance on September 16, 2016 at $0.005 per
share.
|
5.
|
Stock-based Compensation
|
On May 28, 2010, the Board of Directors
of the Company adopted the 2010 Stock Plan (the Plan). The maximum number of
shares of the Companys common stock available for issuance under the Plan is
10,294,500 shares. An aggregate of 5,147,250 shares may be issued under stock
options and an aggregate of 5,147,250 shares may be issued in the form of
restricted shares. As at August 31, 2017 and May 31, 2017, the Company did not
have outstanding stock options.
On January 31, 2007, the Company
entered into a consulting agreement with a company whereby it has agreed to pay
$7,407 (Cdn$10,000) per month. The Company is obligated to issue a bonus of 5%
of the Companys issued and outstanding common shares as of the date of the
payment of the bonus upon and only in the event of the discovery of a major
commercially viable mineral resource deposit. As at August 31, 2017, the Company
has not issued a bonus. During the three months ended August 31, 2017, the
Company recorded consulting fees of $23,931 (Cdn$30,000).
The Company entered into various debt
settlement agreements with several creditors to settle $23,086 (Cdn$31,000) of
debt with the issuance of 6,200,000 shares of common stock. As at August 31,
2017, the shares have not been issued.
|
(a)
|
On April 14, 2015, the Company entered into a Share
Exchange and Royalty Agreement pursuant to which the Company will acquire
25% interest in the process technology and cyber security company
ENIGMAMobil Inc. (Enigma) for the purchase price of $3,000,000, to be
paid in shares of common stock of the Company. The Company will also
receive 25% royalty of all gross revenue received by Enigma from the sale
of licenses of ENIGMAMobil mobile security app. The Company agreed to
issue a finders fee to Texada Consulting Inc. consisting of 30,000,000
shares of common stock of the Company (the Finders Shares). The
Agreement is subject to Wolverine and/or Enigma completing a financing of
$2,500,000 and the Company increasing its authorized capital of common
stock to allow for the issuance of the Shares and Finders Shares. As at
October 23, 2017, the agreement has not yet closed.
|
|
|
|
|
(b)
|
On April 19, 2016, the Company signed a Share Purchase
Agreement with a Director of the Company, whereby the Company will issue,
in a private placement, 400,000,000 shares of common stock of the Company
in consideration for one-third of the net proceeds that the Director will
receive from the sale of the Directors 15% interest in Decision-Zone Inc.
The Agreement is subject to the Company increasing its authorized capital
of common stock to allow for the issuance of the shares to the Director.
As at October 23, 2017, the agreement has not yet closed.
|
|
|
|
|
(c)
|
In September 2017, the Company received cash proceeds of
Cdn$15,000 relating to a subsequent issuance of 3,000,000 shares of common
stock. As at October 23, 2017, these shares have not yet been
issued.
|
|
|
|
|
(d)
|
In October 2017, a creditor of the Company assigned $110,000 of debt to various parties. In October 2017, the Company then entered into various accounts payable settlement agreements with these parties to settle Cdn$110,000 of debt with the issuance of 22,000,000 shares of common stock. As of the date of this filing these shares have not yet been issued and the amounts due are reflected in accounts payable.
|
|
|
|
|
(e)
|
In October 2017, the Company entered into accounts payable settlement agreements with two creditors to settle Cdn$62,500 and USD$10,000 of debt with the issuance of 14,500,000 shares of common stock. As of the date of this filing, the shares have not been issued and the amounts due are reflected in accounts payables.
|
|
|
|
|
(f)
|
The Company entered into an accounts payable settlement agreement with company controlled by the President of the Company to settle Cdn$20,000 of debt with the issuance of 4,000,000 shares of common stock. As of the date of this filing, the shares have not been issued and the amount is reflected in accounts payable.
|
|
|
|
|
(g)
|
In January 2018, the Company received cash proceeds of Cdn$100,000 relating to a subsequent issuance of 20,000,000 shares of common stock. As of the date of this filing these shares have not yet been issued.
|
F-5
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States generally
accepted accounting principles. The following discussion should be read in
conjunction with our financial statements and the related notes that appear
elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
quarterly report, particularly in the section entitled "Risk Factors".
In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "CDN$"
refer to Canadian dollars and all references to "common shares" refer to the
common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our",
the Company and "Wolverine" mean Wolverine Technologies Corp., unless
otherwise indicated.
Corporate History
Our company was incorporated in the State of Nevada on February
23, 2006 and is quoted on the OTC Pink under the symbol WOLV.
Since we began operations in 2006, the Company has been focused
primarily on the exploration for and development of base and precious metal
properties located in North America. In February, 2007, we acquired a right to
earn a 90% interest in approximately 520 claims through a combination of an
upfront cash payment of $34,000, an upfront share payment of 34,000,000 common
shares of Wolverine, and by making exploration expenditure commitments totaling
$600,000 over three years. From 2007 to the present, we spent approximately
US$710,757 to earn our 90% interest in the Cache River Property; Shenin
Resources Inc. maintains a 10% carried interest in the project.
We have not yet determined whether the Cache River Property
contain mineral reserves that are economically recoverable.
Enigma Mobil Transaction
In the fall of 2013, due to ongoing stagnation in the
commodities sector, our management began identifying opportunities to increase
shareholder value through merger and acquisition. On September 5, 2013 Wolverine
entered into a Letter of Intent with the cyber security corporation ENIGMAMobil
Inc. (Enigma) to acquire a 25% interest in Enigma for a cash payment of
$10,000,000, however the transaction was not completed. On January 22, 2014, we
entered into an Amended Letter of Intent with Enigma to acquire a 25% interest
in Enigma for the purchase price of $5,000,000 to be paid with $3,000,000 shares
of our common stock at a deemed price of $0.01 per share and $2,000,000 in cash.
The LOI expired on June 30, 2014.
On April 14, 2015 Wolverine entered into a Share Exchange and
Royalty Agreement with Enigma and Dr. David Chalk pursuant to which Wolverine is
seeking to acquire from Dr. Chalk 25% of the issued and outstanding securities
of Enigma. for the purchase price of USD $3,000,000, to be paid by the issuance
of 300,000,000 common shares of Wolverine at a deemed price of USD$0.01 per
share. Dr. Chalk is a Director of Enigma.
Enigma is a private corporation incorporated in the Province of
Alberta on September 6, 2013. Enigmas operations are based in Vancouver,
British Columbia. Enigma is engaged in the business of developing security
applications for cyber systems focusing on the mobile smartphone markets. Under
the terms of the Share Exchange and Royalty Agreement, Wolverine will also
receive a royalty equal to 25% of gross revenue received by Enigma from the
exploitation of Enigmas planned Enigma SECURE mobile security application for
the protection against unauthorized computer intrusion and fraud on wireless
devices and mobile smartphones.
The closing of the Share Exchange and Royalty Agreement is
subject to Enigma completing a financing of USD$2,500,000, and to Wolverine
increasing its authorized capital of common stock to allow for the issuance of
the 300,000,000 consideration shares. As at the date of this 10-Q, neither the
contemplated financing nor the authorized capital increase has been completed,
and the Share Exchange and Royalty Agreement has not closed. However, if the
agreement were to close, based on the number of the Companys current issued and
outstanding shares, Enigma would acquire 46% of the Companys voting
securities.
The Enigma SECURE application is not yet commercially
available and remains in development. The application is built using
proprietary, patent protected fifth generation programming language (5GL) and is
compatible with Apple iOS, Android and Blackberry operating systems. As of the
date of this 10-Q, third party testing of the application has been completed and
Wolverine anticipates that the application will be available for commercial
download within 10 months following completion of the USD$2,500,000 private
placement contemplated by the Share Exchange and Royalty Agreement.
The Share Exchange and Royalty Agreement may be terminated if
the transaction does not close by December 31, 2017, unless extended by mutual
agreement of the parties.
Our Current Business
We are an exploration stage mining company engaged in the
identification, acquisition, and exploration of metals and minerals with a focus
on base and precious metals. Our current operational focus is to raise
sufficient funds to continue exploration activities on our property in Labrador,
Canada, known as the Cache River Property. We expect to review other potential
exploration projects from time to time as they are presented to us.
Concurrent with our exploration activities we will continue to
evaluate opportunities to diversify our business through merger or acquisition,
and to assist Enigma to raise the $2,500,000 in financing required to complete
our reverse acquisition pursuant to the Share Exchange and Royalty
Agreement.
On April 19, 2016, Wolverine entered into a Share Purchase
Agreement with our Director, David Chalk, pursuant to which we have agreed to
issue in a private placement 400,000,000 shares of our common stock in
consideration for one-third of the net proceeds that Mr. Chalk may realize from
the sale of Mr. Chalks 15% equity interest in Decision-Zone Inc., a privately
held cyber-security software company based in Ontario, Canada. The Agreement is
subject to our Company increasing its authorized capital to allow for the
issuance of the consideration shares. As of the date of this filing, the
agreement has not yet closed.
Cash Requirements
There is limited historical financial information about us upon
which to base an evaluation of our performance. We are in the development stage
and have not generated any revenues from activities. We cannot guarantee we will
be successful in our business activities. 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.
Over the next twelve months we intend to use any funds that we
may have available to fund our Plan of Operation Not accounting for our working
capital deficit of $338,707
as of August 31, 2017, we require additional
funds of approximately $100,000 at a minimum to proceed with our plan of
operation over the next twelve months. As we do not have the funds necessary to
cover our projected operating expenses for the next twelve month period, we will
be required to raise additional funds through the issuance of equity securities,
through loans or through debt financing. There can be no assurance that we will
be successful in raising the required capital or that actual cash requirements
will not exceed our estimates. We intend to fulfill any additional cash
requirement through the sale of our equity securities.
Our auditors have issued a going concern opinion for our year
ended May 31, 2017. This means that there is substantial doubt that we can
continue as an on-going business for the next twelve months unless we obtain
additional capital to pay our bills. This is because we have not generated any
revenues and no revenues are anticipated. As at August 31, 2017 we had cash in
the amount of $76 and a working capital deficiency in the amount of $338,707. As
of August 31, 2017, we do not have sufficient working capital to enable us to
carry out our stated plan of operation for the next twelve months.
Plan of Operation
The Plan of Operation for the next 12 months is to raise
$100,000 for the Phase 1exploration program on the Cache River Property.
The work completed to date on the Cache River Property has
identified an area that could host significant copper and gold mineralization in
a previously unexplored area. A program of prospecting, followed by trenching
(if warranted) is recommended to field check all remaining IP anomalies prior to
undertaking additional diamond drill holes. A budget estimate of $100,000 should
suffice to complete the recommended prospecting and assaying of samples as well
as a limited trenching program if required. This budget would also cover costs
associated with the required site visit. Further diamond drilling will be
dependent on results of the recommended work program.
Phase 1 Program Proposed Expenditures
|
|
|
$CDN
|
|
Project
Management/Staff Costs
|
|
$
|
7,500
|
|
Geologists/technicians (mapping,
prospecting compilation, reporting)
|
|
$
|
18,000
|
|
Geochemistry -
Assaying rock/core (approx. 200 samples)
|
|
$
|
6,000
|
|
Field Costs (transportation,
accommodation, fuel, etc.)
|
|
$
|
7,500
|
|
Trenching
|
|
$
|
7,500
|
|
Diamond Drilling 300 meters all
inclusive
|
|
$
|
42,000
|
|
|
Subtotal:
|
|
$
|
88,500
|
|
|
Contingency ~ 13%
|
|
$
|
11,500
|
|
|
Phase 1 Total
|
|
$
|
100,000
|
|
As at August 31, 2017, we had a cash balance of $76. We will
need to raise additional financing to fund our plan of operation over the next
12 months.
The continuation of our business is dependent upon obtaining
further financing, and achieving a profitable level of operations. The issuance
of additional equity securities by us could result in a significant dilution in
the equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the
twelve months ending August 31, 2018.
Corporate Offices
We do not own any real property. Our principal business office
is located at #55-11020 Williams Road, Richmond, British Columbia, Canada, V7A
1X8 at a cost of CDN$1,000 per month. We believe that our current lease
arrangements provide adequate space for our foreseeable future needs.
Employees
Currently we do not have any employees. The Company utilizes
consultants for the management, regulatory, administration, investor relations
and geological functions of the Company. We do not expect any material changes
in the number of employees over the next 12 month period. We will continue to
retain consultants as required.
Critical Accounting Policies
Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles used in the United
States. Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our financial statements is critical to an understanding of our financial
statements.
Mineral Property Costs
Our company has been in the exploration stage since inception
and has not yet realized any revenues from its operations. We are primarily
engaged in the acquisition and exploration of mineral exploration properties. We
expense mineral property exploration costs as they are incurred. Mineral
property acquisition costs are initially capitalized, when incurred. Our company
assesses the carrying costs for impairment under ASC 360, Property, Plant and
Equipment
at each fiscal quarter end. An impairment is recognized when
the sum of the expected undiscounted future cash flows is less than the carrying
amount of the mineral property. Impairment losses, if any, are measured as the
excess of the carrying amount of the mineral property over its estimated fair
value. 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
proven and probable reserves. If mineral properties are subsequently abandoned
or impaired, any capitalized costs will be charged to operations.
Long-Lived Assets
In accordance with ASC 360, Property, Plant and Equipment,
the Company tests long-lived assets or asset groups for recoverability when
events or changes in circumstances indicate that their carrying amount may not
be recoverable. 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 is assessed based on the carrying amount of the asset and
its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An
impairment loss is recognized when the carrying amount is not recoverable and
exceeds fair value.
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.
Results of Operations
Three Months Ended August 31, 2017 and August 31, 2016
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended August
31, 2017 which are included herein.
Three month summary ending August 31, 2017 and August 31,
2016
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31, 2017
|
|
|
August 31, 2016
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating Expenses
|
$
|
51,179
|
|
$
|
97,214
|
|
Other expenses
|
$
|
12,602
|
|
$
|
512
|
|
Net Loss
|
$
|
(63,871)
|
|
$
|
(97,726)
|
|
Expenses
Our operating expenses for the three month periods ended August
31, 2017 and August 31, 2016 are outlined in the table below:
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31, 2017
|
|
|
August 31, 2016
|
|
General and administrative
|
$
|
50,957
|
|
$
|
97,214
|
|
Mineral exploration costs
|
$
|
222
|
|
$
|
-
|
|
General and administrative expenses decreased by $46,257 from
$97,214 during the three months ended August 31, 2016 to $50,957 during the
three months ended August 31, 2017 primarily as a result of a decrease in
consulting fees of $19,412, a decrease in investor relations of $10,000 and a
decrease in legal fees of $9,330.
Revenue
We have not earned any revenues since our inception and we do
not anticipate earning revenues in the upcoming quarter.
Liquidity and Financial Condition
Working Capital
|
|
As At
|
|
|
As At
|
|
|
|
August 31,
|
|
|
May 31,
|
|
|
|
2017
|
|
|
2017
|
|
Current assets
|
$
|
1,868
|
|
$
|
1,780
|
|
Current liabilities
|
|
340,575
|
|
|
280,409
|
|
Working capital (deficit)
|
$
|
(338,707)
|
|
$
|
(278,629)
|
|
Cash Flows
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
Net Cash Used in Operating
Activities
|
$
|
(15,000)
|
|
$
|
(56,374)
|
|
Net Cash Used in Investing Activities
|
|
-
|
|
|
-
|
|
Net Cash Provided by
Financing Activities
|
|
2,427
|
|
|
55,755
|
|
Effect of Foreign Exchange on Cash
|
|
12,602
|
|
|
-
|
|
Net increase (decrease) in
cash during period
|
$
|
29
|
|
$
|
(619)
|
|
Operating Activities
Net cash used in operating activities during the three months
ended August 31, 2017, was $15,000 compared to $56,374 during the three months
ended August 31, 2016. The decrease was primarily a result of a reduction in net
loss from $97,726 during the three months ended August 31, 2016 to $63,781
during the three months ended August 31, 2017.
Financing Activities
During the three months ended August 31, 2017, we received
$3,703 through the issuance of shares/shares subscribed in private placements.
In the comparable period, the Company received $51,943 through the issuance of
shares/shares subscribed in private placements.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Off-Balance Sheet Arrangements
We have no significant 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 are
material to stockholders.
Recent Accounting Standards
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.