Item 1. Financial Statements.
Our unaudited interim financial statements for the three and
nine month period ended February 28, 2018 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.
February 28, 2018
(Expressed in U.S. dollars)
(Unaudited)
WOLVERINE TECHNOLOGIES CORP.
Balance Sheets
(Expressed in U.S. dollars)
(Unaudited)
|
|
February 28,
|
|
|
May 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
$
|
|
|
$
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
29,303
|
|
|
47
|
|
Other receivable
|
|
7,308
|
|
|
1,733
|
|
|
|
|
|
|
|
|
Total Assets
|
|
36,611
|
|
|
1,780
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
182,539
|
|
|
205,436
|
|
Advances from
shareholder (Note 3)
|
|
|
|
|
15,950
|
|
Short term debt related parties (Note 3)
|
|
30,540
|
|
|
59,023
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
213,079
|
|
|
280,409
|
|
|
|
|
|
|
|
|
Stockholders Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, 500,000,000 shares authorized,
$0.001 par value
420,420,993 and
346,520,993 shares issued and outstanding at February
28, 2018 and May 31, 2017,
respectively
|
|
420,421
|
|
|
346,521
|
|
Subscriptions
received
|
|
45,708
|
|
|
26,798
|
|
Additional paid-in capital
|
|
5,107,414
|
|
|
4,882,331
|
|
Accumulated deficit
|
|
(5,750,011
|
)
|
|
(5,534,279
|
)
|
|
|
|
|
|
|
|
Total Stockholders Deficit
|
|
(176,468
|
)
|
|
(278,629
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Deficit
|
|
36,611
|
|
|
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
|
|
|
Nine months
|
|
|
Nine months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
February 28,
|
|
|
February 28,
|
|
|
February 28,
|
|
|
February 28,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
102,156
|
|
|
57,826
|
|
|
202,686
|
|
|
228,207
|
|
Write-off of interest and loans
receivables
|
|
|
|
|
15,993
|
|
|
|
|
|
15,993
|
|
Mineral exploration costs
|
|
|
|
|
|
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
102,156
|
|
|
73,819
|
|
|
202,908
|
|
|
244,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before Other
Expenses
|
|
(102,156
|
)
|
|
(73,819
|
)
|
|
(202,908
|
)
|
|
(244,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
191
|
|
|
|
|
|
570
|
|
Foreign exchange gain (loss)
|
|
(5,521
|
)
|
|
(613
|
)
|
|
(12,786
|
)
|
|
(409
|
)
|
Gain (loss) on settlement of debt
|
|
(38
|
)
|
|
|
|
|
(38
|
)
|
|
3,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(107,715
|
)
|
|
(74,241
|
)
|
|
(215,732
|
)
|
|
(240,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share, Basic and Diluted
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding,
Basic and
Diluted
|
|
358,016,549
|
|
|
346,520,993
|
|
|
369,829,052
|
|
|
334,118,795
|
|
(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)
|
|
Nine Months
|
|
|
Nine Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
February 28,
|
|
|
February 28,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
(215,732
|
)
|
|
(240,422
|
)
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Amortization of prepaid
from shares issued for services
|
|
|
|
|
17,000
|
|
(Gain)
loss on settlement of debt
|
|
38
|
|
|
(3,617
|
)
|
Write-off of interest and
loan receivable
|
|
|
|
|
15,993
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
Other receivable
|
|
(5,575
|
)
|
|
|
|
Accounts payable
|
|
122,498
|
|
|
114,134
|
|
Due to related parties
|
|
(11,832
|
)
|
|
13,230
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
(110,603
|
)
|
|
(83,682
|
)
|
Financing Activities
|
|
|
|
|
|
|
Proceeds from issuance of
common stock
|
|
129,035
|
|
|
63,369
|
|
Proceeds
from common stock subscriptions
|
|
45,708
|
|
|
17,628
|
|
Advances from shareholder
|
|
10,805
|
|
|
|
|
Repayment on advances to shareholder
|
|
(32,903
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
152,645
|
|
|
80,997
|
|
Effect of foreign currency on cash
|
|
(12,786
|
)
|
|
96
|
|
Increase (decrease) in Cash
|
|
29,256
|
|
|
(2,589
|
)
|
Cash, Beginning of Period
|
|
47
|
|
|
2,594
|
|
|
|
|
|
|
|
|
Cash, End of Period
|
|
29,303
|
|
|
5
|
|
|
|
|
|
|
|
|
Non-cash Investing and Financing Activities:
|
|
|
|
|
|
|
Payments made by
shareholders on behalf of Company
|
|
7,021
|
|
|
15,697
|
|
Shares issued to settle accounts
payable
|
|
126,750
|
|
|
35,625
|
|
Shares issued to
settle related party accounts payable
|
|
16,400
|
|
|
14,000
|
|
Stock issued for prior year
subscriptions
|
|
26,798
|
|
|
|
|
Shares issued for prepaid services
|
|
|
|
|
7,000
|
|
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
February 28, 2018
(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 would acquire 25% interest in the
process technology and cyber security company ENIGMAMobil Inc. (Enigma).
Enigma is in the business of developing security applications for cyber systems
focusing on the mobile smartphone markets. On December 31, 2017, the parties
agreed to let the Share Exchange and Royalty Agreement expire to enable the
Company to focus on its indirect interest in Decision-Zone Inc. which the
Company acquired through a Share Purchase Agreement, which was announced April
19, 2016. The Company will no longer be pursuing an interest in Enigma. Refer to
Note 7. 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 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
plans to raise financing of debt or equity. 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. At February 28, 2018, the Company
has a working capital deficiency of $176,468 and has accumulated losses of
$5,750,011 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 nine months ended February 28, 2018, the
Company incurred consulting fees of $26,766 (2017 - $22,613) to a company
controlled by the President of the Company.
|
|
|
|
|
(b)
|
During the nine months ended February 28, 2018, the
Company incurred consulting fees of $23,418 (2017 - $22,466) to a Director
of the Company.
|
|
|
|
|
(c)
|
As at February 28, 2018, the Company owes $17,582 (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 February 28, 2018, the Company owes $12,958 (May
31, 2017 - $37,257) to a Director of the Company, which is non-interest
bearing, unsecured and due on demand.
|
|
|
|
|
(e)
|
As at February 28, 2017, the Company owes $0 (May 31,
2017 - $15,950) to a shareholder of the Company, which is non-interest
bearing, unsecured and due on demand. During the nine months ended
November 30, 2017 the change consisted of advances to the Company of
$10,805 and expenses incurred on behalf of the Company of $7,021, and
repayment of $32,903. On February 14, 2018, the Company issued 10,000,000
shares of common stock with a fair value of $41,000 to settle Cdn$50,000
($39,844) of amounts owing to a shareholder, resulting in a loss on settlement of debt of
$1,156. We note the shareholder is not considered a related party as he owns less
than 5% of the shares outstanding as of balance sheet date and does not have
significant influence in the Company.
|
F-4
WOLVERINE TECHNOLOGIES CORP.
Notes to the
Financial Statements
February 28, 2018
(Expressed in U.S. dollars)
(unaudited)
|
(f)
|
On February 14, 2018, the Company issued 4,000,000 shares
of common stock with a fair value of $16,400 to settle Cdn$20,000
($15,938) of amounts owing to a company controlled by the President of the
Company, resulting in a loss on settlement of debt of
$462
|
Stock transactions during the nine
months ended February 28, 2018:
|
(a)
|
On February 14, 2018, the Company issued 31,700,000
shares of common stock with a fair value of $85,750 to settle accounts
payable of $126,750, resulting in a gain on settlement of $424.
|
|
|
|
|
(b)
|
On February 14, 2018, the Company issued 4,000,000 shares
of common stock with a fair value of $16,400 to settle related party
accounts payable of $15,938 (Cdn$20,000), resulting in a loss on
settlement of $462.
|
|
|
|
|
(c)
|
On February 14, 2018, the Company issued 5,000,000 shares
of common stock pursuant to a private placement at $0.005 per share for
proceeds of $25,000.
|
|
|
|
|
(d)
|
On February 14, 2018, the Company issued 33,200,000
shares of common stock pursuant to a private placement at Cdn$0.005 per
share for proceeds of $130,833 (Cdn$166,000). Proceeds of $26,798
(Cdn$36,000) which were received during the year ended May 31,
2017.
|
|
|
|
|
(e)
|
In February 2018, the Company received cash proceeds of
$45,708 (Cdn$58,000) relating to share subscriptions. The shares were
unissued at February 28, 2018 and the amounts received have been reflected
in stock subscriptions received in the balance sheet. These shares have
been issued subsequent to February 28, 2018.
|
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 February 28, 2018, 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 February 28, 2018, the
Company has not issued a bonus. During the nine months ended February 28, 2018,
the Company recorded consulting fees of $94,042 (Cdn$120,000), which included
$70,531 (Cdn$90,000) of consulting fees under the above agreement, and
additional consulting fees of $23,511 due to an increase in financing activities
(Cdn$30,000) for the three months ended February 28, 2018.
|
(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. Both
parties mutually agreed to let the agreement expire in the current fiscal
year.
|
|
|
|
|
(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 of the date of this filing, the agreement has not yet
closed.
|
F-5
WOLVERINE TECHNOLOGIES CORP.
Notes to the
Financial Statements
February 28, 2018
(Expressed in U.S. dollars)
(unaudited)
|
(c)
|
In February 2018, the Company received cash proceeds of
$45,276 (Cdn$58,000) relating to share subscriptions. The shares were
unissued at February 28, 2018 and the amounts received have been reflected
in stock subscriptions received in the balance sheet. These shares have
been issued subsequent to February 28, 2018.
|
F-6
Item 2.
|
Managements Discussion and Analysis of
Financial Condition and Results of Operations
|
Forward-Looking Statements
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States
Dollars (US$) 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
On April 14, 2015 Wolverine entered into a Share Exchange and
Royalty Agreement with ENIGMAMobil Inc. (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.
4
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 Company’s current issued and outstanding shares, Enigma would acquire 46% of the Company’s voting securities.
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. On December 31, 2017 the parties agreed to let the Share Exchange & Royalty
Agreement expire to enable Wolverine to focus on its indirect interest in Decision-Zone Inc. which Wolverine acquired through a Share Purchase Agreement with Dr. David Chalk, which was announced April 19, 2016. Wolverine will no longer be pursuing
an interest in Enigma.
Background on Enigma
Enigma is a private corporation incorporated in the Province of Alberta on September 6, 2013. Enigma’s 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 Enigma’s planned
Enigma™ SECURE mobile security application for the protection against unauthorized computer intrusion and fraud on wireless devices and mobile smartphones.
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.
Enigma LOI’s
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 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.
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. Chalk’s 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.
5
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 $176,468
as of February 28, 2018, 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 February 28, 2018 we had cash in
the amount of $29,303 and a working capital deficiency in the amount of $176,468
As of February 28, 2018, 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 meters all inclusive
|
$
|
42,000
|
|
|
Subtotal:
|
|
|
$
|
88,500
|
|
Contingency ~ 13%
|
|
|
$
|
11,500
|
|
Phase
1 Total
|
|
|
$
|
100,000
|
|
As at February 28, 2018, we had a cash balance of $29,303. 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.
6
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 February 28, 2019.
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.
7
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 February 28, 2018 and February 28,
2017
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended February
28, 2018 which are included herein.
Three month summary ending February 28, 2018 and February
28, 2017
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
February 28, 2018
|
|
|
February 28, 2017
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating Expenses
|
$
|
(102,156
|
)
|
$
|
(73,819
|
)
|
Other expense
|
$
|
(5,559
|
)
|
$
|
(422
|
)
|
Net Loss
|
$
|
(107,715
|
)
|
$
|
(74,241
|
)
|
Nine Months Ended February 28, 2018 and February 28, 2017
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended February
28, 2018 which are included herein.
Nine month summary ending February 28, 2017 and February 28,
2017
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2018
|
|
|
February 28, 2017
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating Expenses
|
$
|
(202,908
|
)
|
$
|
(244,200
|
)
|
Other income (expenses)
|
$
|
(12,824
|
)
|
$
|
3,778
|
|
Net Loss
|
$
|
(215,732
|
)
|
$
|
(240,422
|
)
|
Expenses
Our operating expenses for the three month periods ended
February 28, 2018 and February 28, 2017 are outlined in the table below:
8
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
February 28, 2018
|
|
|
February 28, 2017
|
|
General and administrative
|
$
|
102,156
|
|
$
|
57,826
|
|
Write-off of interest and loan receivables
|
$
|
-
|
|
$
|
15,993
|
|
General and administrative expenses increased by $44,330 from
$57,826 during the three months ended February 28, 2017 to $102,156 during the
three months ended February 28, 2018 primarily as a result of an increase in
consulting fees of $23,277, an increase in transfer agent and filing fees of
$11,220, and an increase in accounting fees of $8,606.
Our operating expenses for the nine month periods ended
February 28, 2018 and February 28, 2017 are outlined in the table below:
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
February 28, 2018
|
|
|
February 28, 2017
|
|
General and administrative
|
$
|
202,686
|
|
$
|
228,207
|
|
Write-off of interest and loan receivables
|
$
|
-
|
|
$
|
15,993
|
|
Mineral exploration costs
|
$
|
222
|
|
$
|
-
|
|
General and administrative expenses decreased by $25,521 from
$228,207 during the nine months ended February 28, 2017 to $202,686 during the
nine months ended February 28, 2018 primarily as a result of a decrease in
investor relations of $17,000, a decrease in legal fees of $16,359, and a
decrease in consulting fees of $5,209 offset by an increase in transfer agent
and filing fees of $6,943 an increase in accounting fees of $5,096.
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
|
|
|
|
February 28,
|
|
|
May 31,
|
|
|
|
2018
|
|
|
2017
|
|
Current assets
|
$
|
36,611
|
|
$
|
1,780
|
|
Current liabilities
|
|
213,079
|
|
|
280,409
|
|
Working capital (deficit)
|
$
|
(176,468
|
)
|
$
|
(278,629
|
)
|
Cash Flows
|
|
Nine
Months Ended
|
|
|
|
|
|
|
|
|
|
|
February 28,
|
|
|
February 28,
|
|
|
|
2018
|
|
|
2017
|
|
Net Cash Used in Operating Activities
|
$
|
(110,603
|
)
|
$
|
(83,682
|
)
|
Net Cash Provided by Investing Activities
|
|
-
|
|
|
-
|
|
Net Cash Provided by Financing Activities
|
|
152,645
|
|
|
80,997
|
|
Effect of Foreign Exchange on Cash
|
|
(12,786
|
)
|
|
96
|
|
Net increase (decrease) in cash during
period
|
$
|
29,256
|
|
$
|
(2,589
|
)
|
9
Operating Activities
Net cash used in operating activities during the nine months
ended February 28, 2018, was $110,603 compared to $83,682 during the nine months
ended February 28, 2017. The increase was primarily a result of greater
increases in accounts payable and accounts payable to related parties during the
nine months ended February 28, 2017 than the nine months ended February 28,
2018. This was partially offset by a reduction in net loss from $240,422 during
the nine months ended February 28, 2017 to $215,732 during the nine months ended
February 28, 2018.
Financing Activities
During the nine months ended February 28, 2018, we received
$152,645 through the issuance of shares/shares subscribed in private placements
and net shareholder advances. During the period the Company repaid shareholder
advances in the amount of $32,903. In the comparable period, the Company
received $80,997 through the issuance of shares/shares subscribed in private
placements and shareholder advances.
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.