Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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
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:
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Description
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Estimated
Completion Date (1)
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Estimated
Expenses
($)
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|
Legal and accounting fees and expenses(2)
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12 months
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17,089
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Investor relations and capital raising
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12 months
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Nil
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General and administrative expenses
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12 months
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48,000
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Transfer Agent
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12 months
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2,800
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Total
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67,889
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(1)Budget Items are listed in order of priority.
(2)Includes $17,000 for accounting and auditing.
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 directors to meet current and future liabilities over the next few months. Based on our cash on hand of approximately $1,014 as at September 30, 2019, we will be required to raise additional funds to execute a plan of operations going forward. We have no commitment from anyone to contribute funds to the Company. If we are unable to raise sufficient funds to execute a 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): We intend to raise the capital that we require through the private placement of our securities. 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.
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Results of Operations
Revenues
From our inception on July 26, 2013 (date of inception) to September 30, 2019, we did not generate any revenues.
Expenses
Three months ended September 30, 2019 and 2018
During the three months ended September 30, 2019, we incurred operating expenses of 17,975 compared to $5,674 during the three months ended September 30, 2018. The increase was due to $12,000 of consulting fees incurred to the President and Director of the Company. All other transactions were consistent with prior year as the Company has not a significant change in its business objectives or had an increase in operating activity.
Net Loss
During the three months ended September 30, 2019, we incurred a net loss of $18,101 compared to a net loss of $5,674 for the three months ended September 30, 2018. In addition to operating expense, the Company incurred $126 of interest expense for $5,000 of a new loan payable which is unsecured, bears interest at 10% per annum, and is due on demand. For the three months ended September 30, 2019 and 2018, the Company incurred a loss per share of $nil.
Liquidity and Capital Resources
At September 30, 2019, the Company had cash and total assets of $1,014 compared with cash and total assets of $2,111 at March 31, 2019. Overall, there was no material change in cash or total assets during the period as the Company had minimal transactions and, due to the lack of sufficient cash funding in the Company, the majority of operating expenses incurred were unpaid as of September 30, 2019.
At September 30, 2019, the Company had liabilities of $183,607 compared to liabilities of $150,359 at March 31, 2019. The increase in liabilities is due to $190 of accrued interest, a $5,000 increase in loan payable for a new loan that is unsecured, bears interest at 10% per annum, and is due on demand, and $25,975 increase in amounts due to related parties, primarily for unpaid consulting fees to the President and Director of the Company.
During the three months ended September 30, 2019, the Company did not have any equity or capital transactions.
Cash Flows
Cash from Operating Activities
During the six months ended September 30, 2019, we used cash of $6,097 for operating activities compared to $20,307 during the six months ended September 30, 2018. The decrease in cash used for operating activities is primarily due to costs incurred for DTC eligibility of $9,500 during the six months ended September 30, 2018.
Cash from Investing Activities
During the six months ended September 30, 2019 and 2018, we did not have any investing activities.
Cash from Financing Activities
During the six months ended September 30, 2019, we received $5,000 of funding from a loan payable which is unsecured, bears interest at 10% per annum, and is due on demand. During the six months ended September 30 ,2018, the Company received $17,500 from the former President and Director. The amounts owed to the former President and Director of the Company is unsecured, non-interest bearing, and due on demand.
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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
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, has a working capital deficit of $182,593, and has an accumulated deficit of $212,593. 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.
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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