Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of Operations
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FORWARD-LOOKING
STATEMENTS
This
Management’s 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.
Liquidity
and Capital Resources
Since
inception we have raised capital through private placements of common stock aggregating $35,000. Our capital commitments for the
coming 12 months consist of administrative expenses, expenses associated with the completion of our planned exploration program
and costs of distribution of the securities being registered in this report. Including this exploration work and other costs,
we estimate that we will have to incur the following expenses during the next 12 months:
Description
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Estimated
Completion Date (1)
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Estimated
Expenses
($)
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License Renewal Fee SMG-Gold B.V.
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27,500
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Legal and accounting fees and expenses(2)
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12 months
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90,000
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Investor relations and capital raising
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12 months
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500,000
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General and administrative expenses
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12 months
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2,200,000
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Exploration expenses(3)
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12 months
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905,000
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Transfer Agent
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12 months
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4,500
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Total
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3,727,000
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(1)
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Budget Items are listed in order of priority.
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(2)
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Includes $45,000 for accounting and auditing.
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(3)
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For Phase I and Phase II of the recommended
exploration program.
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Since
our initial share issuances, our company has been unable to raise additional cash forcing it to rely in the future upon cash advances
from its loans to meet current and future liabilities over the foreseeable future. Based on our cash on hand of approximately
$15,489 as at June 30, 2020, we will be required to raise additional funds to execute our current plan of operation. We have no
commitment from anyone to contribute funds to the Company. If we are unable to raise sufficient funds to execute our plan of operation,
we intend to scale back our operations commensurately with the funds available to us. In that regard, we will prioritize expenditures
to (in order of priority): (i) maintain our mineral exploration license; and (ii) to conduct our planned exploration activities.
We intend to raise the capital that we require through the private placement of our securities or through loans. However, we have
not received any financing commitments and there is no guarantee that we will be successful in so doing.
We
have no plant or significant equipment to sell, nor are we going to buy any plant or significant equipment during the next 12
months. We do not intend to hire any employees at this time.
Limited
Operating History; Need for Additional Capital
There
is no historical financial information about us upon which to base an evaluation of our performance as an exploration corporation.
Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.
We
have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms,
we may be unable to commence, continue, develop or expand our exploration activities. Even if available, equity financing could
result in additional dilution to existing shareholder.
Results
of Operations
Revenues
From
our inception on July 26, 2013 (date of inception) to June 30, 2020, we did not generate any revenues.
Expenses
Three
months ended June 30, 2020 and 2019
During
the three months ended June 30, 2020, we incurred operating expenses of $60,710 compared to $16,180 during the three months ended
June 30, 2019. The increase in operating expenses is due to issuance of share-based compensation of $1,387 relating to the issuance
of common shares for director’s fees and consulting services, as well as an increase in professional fees of $19,000 relating
to audit, accounting, and legal costs relating to our SEC filing requirements. Furthermore, we incurred management consulting
fees of $22,500 to our Chief Executive Officer and Director.
Net
Loss
During
the three months ended June 30, 2020, we incurred a net loss of $61,746 compared to a net loss of $16,244 for the three months
ended June 30, 2019. In addition to operating expense, the Company incurred $1,036 of interest expense for loans payable of $68,000
which is unsecured, bears interest at 10% per annum, and is due on demand. For the three months ended June 30, 2020 and 2019,
we had a net loss per share of $nil.
Liquidity
and Capital Resources
At June 30, 2020, the Company had cash of
$15,489 and total assets of $31,489 compared with cash and total assets of $77 at March 31, 2020. During the period, we issued
4,000,000 common shares with a fair value of $16,000 which was issued in June 2020, as a deposit for the acquisition of SMG-Gold
B.V. The fair value of the common shares issued was based on an independent valuation of the fair value of the Company’s
common stock on the date of issuance. Refer to Note 6(a).
At June 30, 2020, the Company had liabilities
of $284,246 compared to liabilities of $208,475 at March 31, 2020. The increase in liabilities is due to $23,271 increase in accounts
payable and accrued liabilities relating to unpaid professional fees and day-to-day transactional costs, an increase of $30,000
in loans payable for two additional loans issued during the period which are unsecured, bear interest at 10% per annum, and are
due on demand, and $22,500 increase in amounts due to related parties relating to unpaid management fees incurred during the period.
On June 8, 2020, the Company issued 4,000,000
common shares with a fair value of $16,000 as a deposit for the acquisition of SMG-Gold B.V., which acquisition was entered into
on April 6, 2020, and closed on July 7, 2020. The fair value of the common shares issued was based on an independent valuation
of the fair value of the Company’s common stock on the date of issuance. Refer to Note 6(a). Furthermore, we issued 346,758
common shares with a fair value of $1,387 for services including 30,968 common shares with a fair value of $124 for director’s
fees.
Cash
Flows
Cash
from Operating Activities
During
the three months ended June 30, 2020, we used cash of $14,588 for operating activities compared to $4,890 during the three months
ended June 30, 2019. Overall, we had limited cash flows during the period and the use of cash is consistent on a year-to-year
basis.
Cash
from Investing Activities
During
the three months ended June 30, 2020 and 2019, we did not have any investing activities.
Cash
from Financing Activities
During
the three months ended June 30, 2020, we received $30,000 of funding from a loan payable which is unsecured, bears interest at
10% per annum, and is due on demand compared to $5,000 of proceeds from a loan payable received during the three months ended
June 30, 2019.
Trends
We
are in the pre-exploration stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable
future. We are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material
impact on our business or income, either in the long term of short term, other than as described in this section or in “Risk
Factors”.
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 our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that are material to our stockholders.
Inflation
The
effect of inflation on our revenues and operating results has not been significant.
Critical
Accounting Policies
Set
forth below are certain of our important accounting policies. For a full explanation of these and other of our important accounting
policies, see Note 2 to Notes to the Financial Statements below.
Our
financial statements are presented in United States dollars and are prepared using the accrual method of accounting which conforms
to US GAAP.
Going
Concern
On
March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related
adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an
economic downturn. The impact on the Company is not currently determinable, but management continues to monitor the situation.
The
Company’s financial statements have been prepared on a going concern basis, which implies that the Company will continue
to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to
date, and an accumulated deficit of $313,813. The continuation of the Company as a going concern is dependent upon the continued
financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations
from the Company’s future business. These factors raise substantial doubt regarding the Company’s 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.
The
Company’s plan of action over the next twelve months is to raise capital.
Use
of Estimates and Assumptions
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods presented. We are required to make judgments and estimates about the effect of matters that are inherently
uncertain. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different
assumptions or conditions were to prevail, the results could be materially different from our reported results.
Long-Lived
Assets
Long-Lived
assets, such as property and equipment and purchased intangibles with finite lives (subject to amortization), are evaluated for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in
accordance with A 360 “Property, Plant, and Equipment”. Circumstances which could trigger a review include, but are
not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or
legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction
of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses
associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life.
Recoverability
of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected
to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value
is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the
impairment occurs.
Recent
Accounting Pronouncements
We
review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our
previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We
believe that none of the new standards will have a significant impact on our financial position, future operations or cash flows