These financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form 10-Q. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the interim period ended
May 31, 2014, are not necessarily indicative of the results that can be expected
for the full year.
Laredo Resources Corp.
|
Balance Sheets
|
(Unaudited)
|
|
|
May 31,
|
|
|
August 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash
|
$
|
50,314
|
|
$
|
692
|
|
Prepaid Expense
|
|
-
|
|
|
1,000
|
|
Total Current Assets
|
|
50,314
|
|
|
1,692
|
|
Property option
|
|
47,600
|
|
|
-
|
|
Intangible asset, net of accumulated
amortization of $7,322 and $3,209, respectively
|
|
9,178
|
|
|
13,291
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
107,092
|
|
$
|
14,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
167,251
|
|
$
|
123,400
|
|
Advances from related party
|
|
185,022
|
|
|
105,901
|
|
Note payable
|
|
122,201
|
|
|
-
|
|
Note payable, related party
|
|
7,500
|
|
|
20,000
|
|
Accrued interest, related party
|
|
-
|
|
|
1,156
|
|
Total Current Liabilities
|
|
481,974
|
|
|
250,457
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
Series A convertible preferred stock: $.001 par value, 100
shares
authorized, none issued or outstanding
|
|
-
|
|
|
-
|
|
Series B preferred stock: $.00001 par
value, 10,000,000 shares
authorized, 118,283 issued and outstanding
|
|
1
|
|
|
-
|
|
Series C convertible preferred stock: $.00001 par value,
10,000,000 shares
authorized, 45,138 issued and outstanding
|
|
1
|
|
|
-
|
|
Series D preferred stock: $.001 par value,
10,000,000 shares
authorized, none issued or outstanding
|
|
-
|
|
|
-
|
|
Common stock: $.00001 par value, 3,000,000,000 shares
authorized ,
2,128,500,000 and 178,500,000 shares issued and
outstanding
|
|
21,285
|
|
|
1,785
|
|
Additional paid in capital
|
|
418,700
|
|
|
269,601
|
|
Deficit accumulated
|
|
(814,869
|
)
|
|
(506,860
|
)
|
Total Stockholders' Deficit
|
|
(374,882
|
)
|
|
(235,474
|
)
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
$
|
107,092
|
|
$
|
14,983
|
|
The accompanying notes that are an integral part of these
financial statements.
F-2
Laredo Resources Corp.
|
Statements of Operations
|
(Unaudited)
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense
|
$
|
1,386
|
|
$
|
1,823
|
|
$
|
4,113
|
|
$
|
1,823
|
|
Accounting and audit
|
|
3,500
|
|
|
6,084
|
|
|
14,734
|
|
|
21,242
|
|
Foreign exchange (gain) loss
|
|
-
|
|
|
3
|
|
|
-
|
|
|
(2,324
|
)
|
Legal and professional fees
|
|
3,215
|
|
|
4,569
|
|
|
9,921
|
|
|
35,388
|
|
General and administrative expenses
|
|
1,507
|
|
|
53,939
|
|
|
3,111
|
|
|
30,342
|
|
Mineral property and exploration
costs
|
|
-
|
|
|
30,000
|
|
|
-
|
|
|
95,842
|
|
Transfer and filing fees
|
|
9,887
|
|
|
3,458
|
|
|
14,773
|
|
|
26,194
|
|
Management fees
|
|
58,900
|
|
|
-
|
|
|
156,700
|
|
|
|
|
Stock compensation
|
|
27,980
|
|
|
-
|
|
|
32,983
|
|
|
-
|
|
Operating loss before
interest
expense
|
|
(106,375
|
)
|
|
(99,876
|
)
|
|
(236,335
|
)
|
|
(208,507
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of debt
|
|
-
|
|
|
-
|
|
|
17,344
|
|
|
-
|
|
Interest expense
|
|
(28,657
|
)
|
|
(300
|
)
|
|
(77,156
|
)
|
|
(997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(135,032
|
)
|
$
|
(100,176
|
)
|
$
|
(296,147
|
)
|
$
|
(209,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividend
|
|
(11,862
|
)
|
|
-
|
|
|
(11,862
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common
shareholders
|
$
|
(146,894
|
)
|
$
|
(100,176
|
)
|
$
|
(308,009
|
)
|
$
|
(209,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding - basic
|
|
700,322,222
|
|
|
178,500,000
|
|
|
700,322,222
|
|
|
178,500,000
|
|
The accompanying notes that are an integral part of these
financial statements.
F-3
Laredo Resources Corp.
|
Statements of Cash Flows
|
(Unaudited)
|
|
|
Nine Months Ended
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
$
|
(296,147
|
)
|
$
|
(209,504
|
)
|
Adjustments to reconcile net loss to net
cash used by operating activities
|
|
|
|
|
|
|
Non cash interest expense -
capital contribution
|
|
-
|
|
|
25
|
|
Amortization expense
|
|
4,113
|
|
|
1,823
|
|
Stock-based compensation
|
|
32,983
|
|
|
-
|
|
Gain on
settlement of debt
|
|
(17,344
|
)
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Prepaid expenses
|
|
1,000
|
|
|
-
|
|
Accrued interest, related party
|
|
-
|
|
|
972
|
|
Accounts
payables and accrued liabilities
|
|
71,295
|
|
|
137,143
|
|
Accounts payable, related party
|
|
-
|
|
|
66,436
|
|
Net cash used in operating activities
|
|
(204,100
|
)
|
|
(3,105
|
)
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
Acquisition of property option
|
|
(47,600
|
)
|
|
-
|
|
Website
development
|
|
-
|
|
|
(16,500
|
)
|
Net cash used in investing activities
|
|
(47,600
|
)
|
|
(16,500
|
)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from the sale of preferred stock
|
|
100,000
|
|
|
-
|
|
Proceeds
from note payable
|
|
122,201
|
|
|
-
|
|
Proceeds from advances, related party
|
|
79,121
|
|
|
20,000
|
|
Net Cash
Provided by Financing Activates
|
|
301,322
|
|
|
20,000
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
49,622
|
|
|
395
|
|
Cash and cash equivalents, beginning of
period
|
|
692
|
|
|
368
|
|
Cash and cash equivalents, end of period
|
$
|
50,314
|
|
|
763
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
Issuance of common shares for debt
|
$
|
12,500
|
|
$
|
-
|
|
Issuance of
preferred shares for debt
|
$
|
25,689
|
|
|
-
|
|
Gain from foreign exchange
|
$
|
-
|
|
$
|
2,381
|
|
Property
option payment in accounts payable
|
$
|
20,000
|
|
|
-
|
|
Preferred stock dividend
|
$
|
11,862
|
|
|
-
|
|
Capital
Contribution
|
$
|
2,911
|
|
|
-
|
|
The accompanying notes that are an integral part of these
financial statements.
F-4
LAREDO RESOURCES CORP.
|
Notes to Unaudited Financial Statements
|
May 31, 2014
|
Note 1 - Basis of Presentation
While the information presented in the accompanying May 31,
2014 financial statements is unaudited, it includes all adjustments which are,
in the opinion of management, necessary to present fairly the financial
position, results of operations and cash flows for the period presented in
accordance with the accounting principles generally accepted in the United
States of America. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature. These financial statements should be read in conjunction with the
Companys August 31, 2013 audited financial statements (notes thereto) included
in the Companys Annual Report Form 10-K. Operating results for the nine months
ended May 31, 2014 are not necessarily indicative of the results that can be
expected for the year ending August 31, 2014.
In the quarter ending May 31, 2014, the Company has elected to
early adopt Accounting Standards Update No. 2014-10, Development Stage Entities
(Topic 915): Elimination of Certain Financial Reporting Requirements. The
adoption of this ASU allows the Company to remove the inception to date
information and all references to development stage.
Note 2 - Nature of Operations and Ability to Continue as a
Going Concern
These financial statements have been prepared in accordance
with generally accepted accounting principles applicable to a going concern,
which assumes that the Company will be able to meet its obligations and continue
its operations for its next fiscal year. Realization values may be substantially
different from carrying values as shown and these financial statements do not
give effect to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be unable to
continue as a going concern. The Company has yet to achieve profitable
operations, has accumulated losses of $814,869 since its inception and expects
to incur further losses in the development of its business, all of which casts
substantial doubt about the Companys ability to continue as a going concern.
The Companys ability to continue as a going concern is
dependent upon its ability to generate future profitable operations and/or to
obtain the necessary financing from shareholders or other sources to meet its
obligations and repay its liabilities arising from normal business operations
when they become due. Management has no formal plan in place to address this
concern but considers that the Company will be able to obtain additional funds
by equity financing and/or related party advances, however there is no assurance
of additional funding being available or on acceptable terms, if at all. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the company
cannot continue in existence.
Note 3 Summary of Significant Accounting Policies
Mineral Property Option
The Company is primarily engaged in the acquisition,
exploration and development of mineral properties.
Mineral property acquisition costs are capitalized in
accordance with FASB ASC 930, Extractive Activities-Mining, when management
has determined that probable future benefits consisting of a contribution to
future cash inflows have been identified and adequate financial resources are
available or are expected to be available as required to meet the terms of
property acquisition and budgeted exploration and development expenditures.
Mineral property acquisition costs are expensed as incurred if the criteria for
capitalization are not met.
In the event that mineral property acquisition costs are paid
with Company shares, those shares are recorded at the estimated fair value at
the time the shares are due in accordance with the terms of the property
agreements.
Mineral property exploration costs are expensed as incurred.
When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves
and pre-feasibility, the costs incurred to develop such property are
capitalized.
Estimated future removal and site restoration costs, when
determinable are provided over the life of proven reserves on a
units-of-production basis. Costs, which include production equipment removal and
environmental remediation, are estimated each period by management based on
current regulations, actual expenses incurred, and technology and industry
standards. Any charge is included in exploration expense or the provision for
depletion and depreciation during the period and the actual restoration
expenditures are charged to the accumulated provision amounts as incurred.
When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves
and pre-feasibility, the costs incurred to develop such property are
capitalized.
Estimated future removal and site restoration costs, when
determinable are provided over the life of proven reserves on a
units-of-production basis. Costs, which include production equipment removal and
environmental remediation, are estimated each period by management based on
current regulations, actual expenses incurred, and technology and industry
standards. Any charge is included in exploration expense or the provision for
depletion and depreciation during the period and the actual restoration
expenditures are charged to the accumulated provision amounts as incurred.
Asset Retirement Obligations
Asset retirement obligations (ARO) associated with the
retirement of a tangible long-lived asset, are recognized as liabilities in the
period in which it is incurred and becomes determinable, with an offsetting
increase in the carrying amount of the associated assets. The cost of tangible
long-lived assets, including the initially recognized ARO, is amortized, such
that the cost of the ARO is recognized over the useful life of the assets. The
ARO is recorded at fair value, and accretion expense is recognized over time as
the discounted fair value is accreted to the expected settlement value.
The fair value of the ARO is measured using expected future
cash flow, discounted at the Companys credit-adjusted risk-free interest rate.
As of May 31, 2014 the Company has determined no provision for AROs is
required.
Note 4 - Related Party Transactions
During the quarter ended May 31, 2014, the Company retired
$12,500 portion of a $20,000 note owed to the Company's CEO in exchange for 1.25
billion common shares which had a fair value of $12,500. Additionally, accrued
interest of $2,911 relating to this note was forgiven. The remaining $7,500
balance bears no interest and is due within one year.
On December 16, 2013, Laredo Resources Corp. entered into a one
year consulting agreement with Olie Inc. in exchange for 100,000 shares of
Laredos Series B preferred shares with a fair value of $21,613. Robert Gardner,
CEO of Laredo is the sole officer and majority shareholder of Olie Inc.
During the nine months ended May 31, 2014, the company was
advanced $79,121 from the Companys CEO. Additionally, the CEO performed
management services for the company in the amount of $56,700.
Note 5 - Notes Payable
As of May 31, 2014, the Company owes $122,201 to third parties.
$48,030 of this amount is non-interest bearing and due on demand. The remaining
$74,271 portion is non-interest bearing and is due on May 31, 2015.
Note 6 - Advance for Mineral Property Option
On September 6, 2013, Laredo bought the mineral rights to the
Pony Mountain Gold Property from a third party, Magna Management Ltd. During the
quarter ending May 31, 2014, the Company paid $47,600 to Magna Management Ltd.
The total purchase price for these rights is $3,000,000. However, the Company
does not have title to the property and, therefore, has only recorded payments
made through May 31, 2014 toward the total purchase price in the financial
statements.
Note 7 - Capital Stock
Each share of Series A preferred stock is convertible into the
number of shares of common stock equal to four times the sum of all shares of
common stock issued and outstanding plus all shares of Series B, C and D
preferred stock issued and outstanding divided by the number of shares of Series
A preferred stock issued and outstanding at the time of conversion. There are no
Series A or D shares issued or outstanding.
Each share of Series B and C preferred stock is convertible
into 100,000 common shares. Shares of Series B and C preferred stock may not be
converted into shares of common stock for a period of twelve months from each
issuance. The holders of Series C preferred stock are entitled to receive
dividends when, and if declared by the Board of Directors, in its sole
discretion. The company estimated the fair value of preferred stock and common
stock using an enterprise valuation model based on current selling prices of
comparable non-operating public shell companies.
During the past 9 months:
Laredo changed the number of authorized shares of common stock
to 3,000,000,000 and changed the par value from $0.001 to $0.00001. All
disclosures have been restated to reflect the change in par value.
Laredo issued 700,000,000 common shares to various consultants
for services rendered. These shares were valued at the fair market trading
value, in the amount of $11,369 at each date of grant.
Laredo issued 100,000 Series B Preferred shares to Olie Inc.
with a fair market price of $21,613 in exchange for a one year consulting
contract.
Laredo issued 5,138 Series C Preferred were issued in exchanged
for outstanding debt and accrued interest of $25,689. The common shares had a
fair value of $8,345 and the difference was recorded as a gain on settlement of
debt.
Laredo issued 1.25 billion common shares to its CEO in payment
for $12,500 debt. The shares had a fair market value of $12,500.
Laredo issued 40,000 Series C Preferred shares in exchange for
$100,000 of third party cash. Each preferred share was priced at $2.50.
On April 19, 2014 Laredo Resources declared a stock dividend of
1 restricted Series B Preferred Share per every 100,000 common shares held as of
record date April 19, 2014 and payable on May 6, 2014. No partial shares were
granted. The preferred shares had a fair value of $11,862 at the date of grant.
Note 8 - Subsequent Events
In accordance with ASC 855-10, management has evaluated
subsequent events through the date the financial statements were issued.
On July 2, 2014 De Joya Griffith, LLC ("De Joya") officially
resigned as the Company's independent registered public accounting firm
effective immediately. Laredo Resources Corp. engaged MaloneBaily, LLP as the
Company's independent registered public accounting firm for the year ended
August 31, 2014, to be effective immediately as of July 2, 2014.
F-10