Item 2. Management’s 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.
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 are not currently conducting any exploration on the Cache River Property. We intend to conduct further exploration activities on the Cache River when financing is available. We
expect to review other potential exploration projects from time to time as they
are presented to us.
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 $241,227 as of August 31, 2019, 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, 2019. 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, 2019 we had cash in
the amount of $206 and a working capital deficiency in the amount of $241,227.
As of August 31, 2019, 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 1 exploration 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 metres all inclusive
|
$42,000
|
|
Subtotal
|
$88,500
|
|
Contingency 15%
|
$11,500
|
|
Phase 1 Total
|
$100,000
|
|
As at August 31, 2019, we had a cash balance of $206. 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, 2020.
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, which the Company leases 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. For information regarding our Critical Accounting Policies, see the “Application of Critical Accounting
Policies” section in our Form 10-K.
Results of Operations
Three Months Ended August 31, 2019 and August 31, 2018
The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended August 31, 2019 which are included herein.
Three month summary ending August 31, 2019 and August 31,
2018
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating Expenses
|
$
|
(68,321
|
)
|
$
|
(52,580
|
)
|
Other income (expense)
|
$
|
3,311
|
|
$
|
538
|
|
Net Loss
|
$
|
(65,010
|
)
|
$
|
(52,042
|
)
|
Expenses
Our operating expenses for the three month periods ended August
31, 2019 and August 31, 2018 are outlined in the table below:
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
General and administrative
|
$
|
(68,321
|
)
|
$
|
(52,580
|
)
|
Gain on forgiveness of debt
|
$
|
2,585
|
|
$
|
-
|
|
Foreign exchange gain (loss)
|
$
|
(1,161
|
)
|
$
|
538
|
|
Gain on settlement of debt
|
$
|
1,887
|
|
$
|
-
|
|
General and administrative expenses increased by $15,741 from
$52,580 during the three months ended August 31, 2018 to $68,321 during the
three months ended August 31, 2019. This increase was primarily a result of a
$8,615 increase in consulting fees and a $7,482 increase in professional
fees.
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,
|
|
|
|
2019
|
|
|
2019
|
|
Current assets
|
$
|
3,945
|
|
$
|
3,592
|
|
Current liabilities
|
|
(245,172
|
)
|
|
(238,658
|
)
|
Working capital (deficit)
|
$
|
(241,227
|
)
|
$
|
(235,066
|
)
|
Cash Flows
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net Cash Used in Operating
Activities
|
$
|
(55,643
|
)
|
$
|
(21,270
|
)
|
Net Cash Provided by Financing Activities
|
|
55,849
|
|
|
2,288
|
|
Net change in cash during
period
|
$
|
206
|
|
$
|
(18,982
|
)
|
Operating Activities
Net cash used in operating activities during the three months
ended August 31, 2019, was $55,643 compared to $21,270 during the three months
ended August 31, 2018. The increase was primarily a result of a $12,968 increase
in operating expenses for the three months ended August 31, 2019 compared to the
three months ended August 31, 2018 and a $8,892 decrease in accounts payable
during the three months ended August 31, 2019 compared to a $23,016 increase in
accounts payable during the three months ended August 31, 2018.
Financing Activities
During the three months ended August 31, 2019, we received
$12,349 through the issuance of shares and $43,500 from shares subscribed in
private placements, which have not been issued as of the date of this filing. In
the comparable period, the Company received $2,282 in 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.