UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28,
2015
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to
_____________________
Commission File Number 000-53767
WOLVERINE EXPLORATION INC.
(Exact name of registrant as specified in its charter)
Nevada |
98-0569013 |
(State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.) |
|
|
4055 McLean Road, Quesnel, British Columbia, Canada
|
V2J 6V5 |
(Address of principal executive offices) |
(Zip Code) |
250.992.6972
(Registrants telephone number,
including area code)
N/A
(Former name, former address and
former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X]
YES [ ] NO
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act
Large accelerated filer [ ] |
Accelerated
filer [
] |
Non-accelerated filer [ ]
(Do not check if a smaller
reporting company) |
Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act
[ ]
YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court.
[ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date.
200,563,333 common shares issued and
outstanding as May 13, 2015
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements.
Our unaudited interim financial statements for the nine month
period ended February 28, 2015 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.
2
WOLVERINE EXPLORATION INC.
February 28, 2015
(Expressed in U.S. dollars)
(unaudited)
WOLVERINE EXPLORATION INC.
Balance Sheets
(Expressed in U.S. dollars)
|
|
February 28, |
|
|
May 31, |
|
|
|
2015 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
8,019 |
|
|
135 |
|
Amounts receivable |
|
2,149 |
|
|
2,053 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
10,168 |
|
|
2,188 |
|
|
|
|
|
|
|
|
Mineral property costs (Note 3) |
|
|
|
|
201,250 |
|
|
|
|
|
|
|
|
Total Assets |
|
10,168 |
|
|
203,438 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
305,715 |
|
|
215,966 |
|
Due to related party (Note 4) |
|
66,988 |
|
|
53,914 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
372,703 |
|
|
269,880 |
|
|
|
|
|
|
|
|
Stockholders Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock,
500,000,000 shares authorized, $0.001 par value 200,563,333 and
194,063,333 shares issued and outstanding,
respectively |
|
201,563 |
|
|
194,063 |
|
Additional paid-in capital |
|
4,054,619 |
|
|
3,990,672 |
|
Accumulated deficit |
|
(4,618,717 |
) |
|
(4,251,177 |
) |
|
|
|
|
|
|
|
Total Stockholders Deficit |
|
(362,535 |
) |
|
(66,442 |
) |
|
|
|
|
|
|
|
Total Liabilities and Stockholders Deficit |
|
10,168 |
|
|
203,438 |
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-1
WOLVERINE EXPLORATION INC.
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, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
41 |
|
|
|
|
|
330 |
|
Foreign exchange gain |
|
(21,904 |
) |
|
(7,825 |
) |
|
(1,854 |
) |
|
(10,880 |
) |
General and administrative |
|
61,328 |
|
|
51,308 |
|
|
168,144 |
|
|
214,716 |
|
Mineral exploration costs |
|
|
|
|
4,718 |
|
|
|
|
|
4,718 |
|
Impairment of mineral rights (Note 3) |
|
|
|
|
|
|
|
201,250 |
|
|
|
|
Total Expenses |
|
39,424 |
|
|
48,242 |
|
|
367,540 |
|
|
208,884 |
|
Net Loss |
|
(39,424 |
) |
|
(48,242 |
) |
|
(367,540 |
) |
|
(208,884 |
) |
Other Income |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on settlement of debt |
|
|
|
|
36,000 |
|
|
|
|
|
36,000 |
|
Total Other Income |
|
|
|
|
36,000 |
|
|
|
|
|
36,000 |
|
Net Loss |
|
(39,424 |
) |
|
(12,242 |
) |
|
(367,540 |
) |
|
(172,884 |
) |
Net Loss Per Share, Basic and Diluted |
|
(0.00 |
) |
|
(0.00 |
) |
|
(0.00 |
) |
|
(0.00 |
) |
Weighted Average Shares Outstanding |
|
200,563,000 |
|
|
202,007,777 |
|
|
198,067,000 |
|
|
194,969,926 |
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-2
WOLVERINE EXPLORATION INC.
Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
|
|
Nine Months |
|
|
Nine Months |
|
|
|
Ended |
|
|
Ended |
|
|
|
February 28, |
|
|
February 28, |
|
|
|
2015 |
|
|
2014 |
|
|
|
$ |
|
|
$ |
|
Operating Activities |
|
|
|
|
|
|
Net loss |
|
(367,540 |
) |
|
(172,884 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
|
|
330 |
|
Gain on
settlement of debt |
|
|
|
|
(36,000 |
) |
Impairment of mineral rights |
|
201,250 |
|
|
|
|
Changes in operating assets
and liabilities |
|
|
|
|
|
|
Amounts receivable |
|
(96 |
) |
|
(1,861 |
) |
Accounts payable
|
|
138,613 |
|
|
69,884 |
|
Accrued liabilities |
|
1,136 |
|
|
|
|
Due to related party |
|
13,074 |
|
|
(9,560 |
) |
Net Cash Used In
Operating Activities |
|
(13,563 |
) |
|
(150,091 |
) |
Financing Activities |
|
|
|
|
|
|
Bank indebtedness |
|
|
|
|
28 |
|
Proceeds from issuance of common stock
|
|
21,447 |
|
|
150,000 |
|
Net Cash Provided
By Financing Activities |
|
21,447 |
|
|
150,028 |
|
Increase (Decrease) in Cash |
|
7,884 |
|
|
(63 |
) |
Cash, Beginning of
Period |
|
135
|
|
|
63
|
|
Cash, End of Period |
|
8,019 |
|
|
|
|
Non-cash Investing and Financing Activities: |
|
|
|
|
|
|
Shares issued pursuant to the
acquisition of mineral properties |
|
|
|
|
402,500 |
|
Shares issued to settle accounts payable |
|
50,000 |
|
|
64,000 |
|
Supplemental Disclosures: |
|
|
|
|
|
|
Interest paid |
|
|
|
|
|
|
Income taxes paid |
|
|
|
|
|
|
(The accompanying notes are an integral part of these unaudited
financial statements)
F-3
WOLVERINE EXPLORATION INC.
(An
Exploration Stage Company)
Notes to the Financial Statements
February
28, 2015
(Expressed in U.S. dollars)
(unaudited)
1. |
Basis of Presentation |
|
|
|
|
Wolverine Exploration Inc. (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 from mineral
exploration to cyber security. 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). Refer to Note 8. Enigma is in the business of
developing security applications for cyber systems focusing on the mobile
smartphone markets. |
|
|
|
|
The accompanying financial statements of Wolverine
Exploration Inc. (the Company) should be 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, 2014. 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 results 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 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 for an
aggregate of $2,500,000 prior to the closing of the Enigma Share Exchange
and Royalty Agreement described in Note 8. 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. As February 28, 2015,
the Company has a working capital deficiency of $362,535 and has
accumulated losses of $4,618,717 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. |
Mineral Properties |
|
|
|
|
On June 11, 2013, the Company issued 17,500,000 shares of
common stock with a fair value of $201,250 to acquire 20 mineral claims
located in the Cariboo Mining District of British Columbia. During the
nine months ended February 28, 2015, the Company determined that the
carrying amount of the mineral claims is not recoverable and exceeds its
fair value and, therefore, recognized an impairment of $201,250. During
the period ended February 28, 2015, the Company decided to change its
focus from mineral exploration to cyber security. |
|
|
|
4. |
Related Party Transactions |
|
|
|
|
(a) |
During the nine months ended February 28, 2015, the
Company incurred consulting fees of $23,977 (2014 - $25,632) to the
President of the Company. |
|
|
|
|
(b) |
During the nine months ended February 28, 2015, the
Company incurred consulting fees of $82,653 (2014 - $85,442) and rent of
$8,265 (2013 - $8,544) to a company controlled by the brother of the
President of the Company which is included in general and administrative
expenses. |
|
|
|
|
(c) |
As at February 28, 2015, the Company owed $50,992 (May
31, 2014 - $35,468) to the President of the Company which is non-interest
bearing, unsecured, and due on demand. |
F-4
WOLVERINE EXPLORATION INC.
(An
Exploration Stage Company)
Notes to the Financial Statements
February
28, 2015
(Expressed in U.S. dollars)
(unaudited)
|
(d) |
As at February 28, 2015, the Company owes $15,996 (May
31, 2014 - $18,446) for cash advances received from a company controlled
by the brother of the President of the Company, which is non-interest
bearing, unsecured, and due on demand. As at February 28, 2015, included
in accounts payable are the amounts of $117,529 (May 31, 2014 - $59,819)
owing to this company. |
|
|
|
|
(e) |
As at February 28, 2015, included in accounts payable is
the amount of $4,621 (May 31, 2014 - $24) owed to the brother of the
President of the Company, which is non-interest bearing, unsecured and due
on demand. |
|
|
|
|
(f) |
On September 8, 2014, the Company issued 5,000,000 shares
of common stock to settle related party accounts payable of
$50,000. |
5. |
Common Stock |
|
|
|
|
(a) |
On September 8, 2014, the Company issued 5,000,000 shares
of common stock to settle related party accounts payable of
$50,000. |
|
|
|
|
(b) |
On September 29, 2014, the Company issued 1,500,000
shares of common stock pursuant to a private placement at Cdn$0.01 per
share for proceeds of $13,449 (Cdn$15,000). |
|
|
|
|
(c) |
During the period ended February 28, 2015, the Company
received stock subscriptions for 1,000,000 shares of common stock pursuant
to a private placement at Cdn$0.01 per share for proceeds of $7,998
(Cdn$10,000). At February 28, 2015, the shares had not been
issued. |
6. |
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. |
|
|
|
A summary of the Companys stock option activity is as
follows: |
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|
|
|
Number of |
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
|
|
|
Options |
|
|
Price |
|
|
Life
(years) |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable, February 28, 2015 and May 31,
2014 |
|
5,100,000 |
|
$ |
0.05 |
|
|
0.29 |
|
$ |
|
|
7. |
Commitments |
|
|
|
On January 31, 2007, the Company entered into a
consulting agreement with a company whereby it has agreed to pay $7,998
(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,
2015, the Company has not issued a bonus. During the nine months ended
February 28, 2015, the Company recorded consulting fees of
$82,653. |
|
|
8. |
Subsequent Event |
|
|
|
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 consisting of 30,000,000 shares of common stock of
the Company (the Finders Shares).The Agreement is subject to Enigma
completing a financing of $2,500,000 and the Company increasing its
authorized capital of common stock to allow for the issuance of the Shares
and Finders Shares. |
F-5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects",
"plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) 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 Exploration Inc., 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.
On June 11, 2013, Wolverine entered into an Agreement (the “Agreement”) with 0969015 B.C. Ltd (“0969015”) to acquire the Eureka Project Claims located in the Cariboo Mining District of British Columbia. Under the terms of the
Agreement Wolverine issued 35,000,000 shares of common stock to 0969015 at a fair value of $0.01 per share as full consideration for the acquisition of the Eureka Project Claims.
On August 9, 2014 a total of 17,500,000 common shares issued pursuant to the acquisition of the Eureka Project Claims were cancelled.
Our Current Business
On April 14, 2014 Wolverine entered into a Share Exchange and Royalty Agreement (the “Agreement”) with Dr. David Chalk, hd.Tech (“Chalk”). Under the terms of the Agreement, Wolverine will acquire a 25% interest in ENIGMAMobil
Inc.(“Enigma”) from Chalk for the purchase price of USD $3,000,000, to be paid in shares of common stock of Wolverine at a deemed price of USD$0.01 per share (the “Shares”). Wolverine will also receive a 25% royalty
of all gross revenue received by Enigma from the sale of licenses of the ENIGMAMobil™ mobile security app. The Agreement is subject to Enigma completing a financing of USD$2,500,000 and Wolverine increasing its authorized capital of
common stock to allow for the issuance of the Shares.
The purchase price is a negotiated value determined by
Wolverine and Enigma. Dr. David Chalk is a director of Wolverine and Enigma.
Wolverine and Enigma are currently working on arranging
financing in the amount of USD $2,500,000 that is required for the building of
the Enigma fully secure mobile wireless software application.
Information regarding Enigma
Enigma is a private corporation incorporated in the Province of
Alberta on September 6, 2013. Enigmas operations are based in Vancouver,
British Columbia.
Enigma will be designing and completing computer systems
security focused on mobile and transaction security markets. All third party
testing on the technology has been completed using the proprietary fully
patented fifth generation programming language (5GL) providing the only
real-time data in motion with cybersecurity capability and further adding
tremendous efficiency in Digital Process Management (DPM).
The Key for Enigma is the deployment of its fully secure mobile
smartphone software application for Apple iOS, Android and Blackberry operating
systems developed with the patented 5GL language capable of protecting against
unauthorized computer intrusion and fraud on wireless devices and mobile
smartphones. When complete, Enigma will be able to protect, the wireless
marketplace currently in excess of 7 billion devices. Overall mobile data
traffic is expected to grow to 24.3 exabytes per month by 2019, nearly a tenfold
increase over 2014. Mobil data traffic will grow at a CAGR of 57% from 2014 to
2019. (Figure 1 of the link below). The Enigma mobile security application will
be available to the marketplace for download within 10 months of receipt of
funding.
http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white_paper_c11-520862.html.
Risks and Uncertainties
Enigma has a limited operating history and has had no revenues
derived from its operations. Significant expenditures are required to complete
the development of its mobile wireless software application. There is no
assurance that Enigma will be able to raise the capital required for these
expenditures.
Enigma operates in a competitive environment where software is
subject to rapid technological changes and evolving industry standards. There is
no assurance that Enigma will be able to become and remain competitive in this
competitive environment.
The success of Enigma will be largely dependent upon the
performance of its management and key employees. Failure by Enigma to attract
and retain key employees with the necessary skills could have a materially
adverse effect on Enigmas growth and profitability. Currently Dr. David Chalk
is the only key employee.
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 $362,535 as of February 28, 2015, we require
additional funds of approximately $2,500,000 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, 2014. 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, 2015 we had cash in
the amount of $8,019 and a working capital deficiency in the amount of $362,535.
As of February 28, 2015, 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
$2,500,000 for the building of Enigmas fully secure mobile wireless software
application for Apple iOS, Android and Blackberry developed through a full
patented language technology with the capability to protect against unauthorized
computer intrusion and fraud.
As at February 28, 2015, we had a cash balance of $8,019. 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 February 28, 2016.
Corporate Offices
We do not own any real property. Our principal business office
is located at 4055 McLean Road, Quesnel, British Columbia, Canada, V2J 6V5. The
Company also maintains an office in Richmond, British Columbia 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.
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, 2015 and February 28,
2014
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended February
28, 2015 which are included herein.
Three month summary ending February 28, 2015 and February
28, 2014
|
|
Three Months Ended |
|
|
|
February 28, 2015 |
|
|
February 28, 2014 |
|
Revenue |
$ |
Nil |
|
$ |
Nil |
|
Operating Expenses |
$ |
39,424 |
|
$ |
48,242 |
|
Net Loss |
$ |
(39,424 |
) |
$ |
(12,242 |
) |
Nine Months Ended February 28, 2015 and February 28, 2014
The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended February
28, 2015 which are included herein.
Nine month summary ending February 28, 2015 and February 28,
2014
|
|
Nine Months Ended |
|
|
|
February 28, 2015 |
|
|
February 28, 2014 |
|
Revenue |
$ |
Nil |
|
$ |
Nil |
|
Operating Expenses |
$ |
367,540 |
|
$ |
208,884 |
|
Net Loss |
$ |
(367,540 |
) |
$ |
(172,884 |
) |
Expenses
Our operating expenses for the three month periods ended
February 28, 2015 and February 28, 2014 are outlined in the table below:
|
|
Three Months Ended |
|
|
|
February 28, 2015 |
|
|
February 28, 2014 |
|
Depreciation |
$ |
Nil |
|
$ |
41 |
|
Foreign exchange loss (gain) |
$ |
(21,904 |
) |
$ |
(7,825 |
) |
General and administrative |
$ |
61,328 |
|
$ |
51,308 |
|
Impairment of Mineral Rights |
$ |
- |
|
$ |
4,718 |
|
Our operating expenses for the nine month periods ended
February 28, 2015 and February 28, 2014 are outlined in the table below:
|
|
Nine Months Ended |
|
|
|
February 28, 2015 |
|
|
February 28, 2014 |
|
Depreciation |
$ |
Nil |
|
$ |
330 |
|
Foreign exchange loss (gain) |
$ |
(1,854 |
) |
$ |
(10,880 |
) |
General and administrative |
$ |
168,144 |
|
$ |
214,716 |
|
Impairment of Mineral Rights |
$ |
201,250 |
|
$ |
4,718 |
|
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, |
|
|
|
2015 |
|
|
2014 |
|
Current assets |
$ |
10,168 |
|
$ |
2,188 |
|
Current liabilities |
|
372,703 |
|
|
269,880 |
|
Working capital (deficit) |
$ |
(362,535 |
) |
$ |
(267,692 |
) |
Cash Flows
|
|
Nine Months Ended |
|
|
|
February 28, 2015 |
|
|
February 28, 2014 |
|
Net Cash Used in Operating
Activities |
$ |
(13,563 |
) |
$ |
(150,091 |
) |
Net Cash Used in Investing Activities |
|
- |
|
|
- |
|
Net Cash Provided by
Financing Activities |
|
21,447 |
|
|
150,028 |
|
Net increase (decrease) in cash during period |
$ |
7,884 |
|
$ |
(63 |
) |
Operating Activities
Net cash used in operating activities during the nine months
ended February 28, 2015, was $13,563 compared to $150,091 during the nine months
ended February 28, 2014.
Financing Activities
During the nine months ended February 28, 2015, we received
$21,447 through the issuance of shares/shares subscribed in private placements.
In the comparable period, the Company received $150,028 through the issuance of
shares/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.
Item 4. Controls and Procedures
Managements Report on Disclosure Controls and
Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president (also
our principal executive officer, principal financial officer and principal
accounting officer) to allow for timely decisions regarding required
disclosure.
As of February 28, 2015, the end of the quarter covered by this
report, we carried out an evaluation, under the supervision and with the
participation of our president (also our principal executive officer, principal
financial and accounting officer), of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on the foregoing, and
in light of weakness identified in our internal controls over financial
reporting which were disclosed in our Annual Report on Form 10-K for the year
ended May 31, 2014, our president (also our principal executive officer,
principal financial and accounting officer) concluded that our disclosure
controls and procedures were not effective .
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended February 28, 2015
that have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceedings and, to the
best of our knowledge, none of our property or assets are the subject of any
pending legal proceedings
Item 1A. Risk Factors
Much of the information included in this annual report includes
or is based upon estimates, projections or other forward looking statements.
Such forward looking statements include any projections and estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other forward looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward looking statements.
If we do not obtain additional financing, the business plan
will fail.
Our current operating funds are insufficient to complete our
proposed in Enigma We will need to obtain additional financing in order to
complete our business. Our business plan calls for significant expenses in
connection with the investment in Enigma. We have not made arrangements to
secure any additional financing.
There is no assurance we will complete our investment in
Enigma
There is no assurance that Enigma and Wolverine will be able
to raise the financing necessary to complete its mobile security app which will
be a condition of the investment in Enigma by Wolverine.
We expect to incur operating losses for the foreseeable
future.
Our company has never earned any revenue and our company has
never been profitable. We may incur increased operating expenses without
realizing any revenues, this could cause our company to fail.
Because our company holds a significant portion of our cash
reserves in United States dollars, we may experience weakened purchasing power
in Canadian dollar terms.
Our company holds a significant portion of our cash reserves in
United States dollars. Due to foreign exchange rate fluctuations, the value of
these United States dollar reserves can result in translation gains or losses in
Canadian dollar terms. If there was to be a significant decline in the United
States dollar versus the Canadian Dollar, our US dollar purchasing power in
Canadian dollars would also significantly decline. Our company has not entered
into derivative instruments to offset the impact of foreign exchange
fluctuations.
Our auditors have expressed substantial doubt about our company’s ability to continue as a going concern.
The accompanying financial statements have been prepared assuming that our company will continue as a going concern. As discussed in Note 1 to the May 31, 2014 financial statements, our company was incorporated on February 23, 2006, and does not
have a history of earnings, and as a result, our company’s auditor has expressed substantial doubt about the ability of our company to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt
financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.
Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers
and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior
to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement
to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On September 8, 2014, we issued 5,000,000 shares of our common stock pursuant to debt settlement agreements with two individuals. The deemed price of the shares issued was $0.01. We have issued all of the shares to two non-US persons (as that
term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.
On September 29, 2014 we issued 1,500,000 shares of our common stock in a private placement at a purchase price of CDN $0.01 raising gross proceeds of CDN $15,000. We have issued all of the shares to one non-US person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety disclosures
N/A.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit |
|
Number |
Description |
|
|
(3) |
(i) Articles
of Incorporation; and (ii) Bylaws |
|
|
3.1 |
Articles of Incorporation of Wolverine Exploration Inc.
filed as an Exhibit to our Form S-1 (Registration Statement) on July 15,
2008, and incorporated herein by reference. |
|
|
3.2 |
Bylaws of Wolverine Exploration Inc., filed as an Exhibit
to our Form S-1 (Registration Statement) on July 15, 2008, and
incorporated herein by reference. |
|
|
3.3 |
Certificate of Amendment of Wolverine Exploration Inc.,
filed as an Exhibit to our Form S-1 (Registration Statement) filed on July
15, 2008 and incorporated herein by reference. |
|
|
3.4 |
Certificate of Registration of Extra-Provincial
Corporation, filed as an Exhibit to our Form S-1 (Registration Statement)
filed on July 15, 2008 and incorporated herein by reference. |
|
|
(10) |
Material Contracts |
|
|
10.1 |
Vend-In Agreement dated February 28, 2007 between
Wolverine and Shenin Resources Inc., filed as an Exhibit to our Form S-1
(Registration Statement) filed on July 15, 2008 and incorporated herein by
reference. |
|
|
10.2 |
Consulting Agreement dated January 31, 2007 between
Wolverine and Texada Consulting Inc., filed as an Exhibit to our Form S-1
(Registration Statement) filed on July 15, 2008 and incorporated herein by
reference. |
|
|
10.3 |
Purchase Agreement dated June 11, 2013 between Wolverine
and 0969015 B.C. Ltd. filed as an Exhibit to our 8-K filed on June 13,
2013 and incorporated herein by reference. |
|
|
10.4 |
Share Exchange and Royalty Agreement dated April 14, 2015
filed as an Exhibit to our 8-K filed on May 7, 2015 and incorporated by
reference. |
|
|
(14) |
Code of Ethics |
|
|
14.1 |
Code of Ethics, filed as an Exhibit to our Form S-1
(Registration Statement) filed on July 15, 2008 and incorporated herein by
reference. |
|
|
(31) |
Rule 13a-14(a)/15d-14(a) Certifications |
|
|
31.1* |
Section 302 Certifications under Sarbanes-Oxley Act of
2002 |
|
|
(32) |
Section 1350 Certifications |
|
|
32.1* |
Section 906 Certifications under Sarbanes-Oxley Act of
2002 |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
|
WOLVERINE EXPLORATION INC. |
|
(Registrant) |
|
|
|
|
Dated: May 13, 2015 |
/s/
Richard Haderer |
|
Richard Haderer |
|
Chief Executive Officer, Chief Financial
Officer and Director |
|
(Principal Executive Officer, Principal
Financial |
|
Officer and Principal Accounting Officer)
|
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS
ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Haderer, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Wolverine Exploration
Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
|
|
(b) |
Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
|
|
(c) |
Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
|
(d) |
Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and |
5.
The registrant's other certifying officer(s) and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and |
|
|
|
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal control over financial
reporting. |
Date: May 13, 2015 |
|
|
|
/s/ Richard
Haderer |
|
Richard Haderer |
|
Chief Executive Officer, Chief Financial Officer and
Director |
|
(Principal Financial Officer and Principal Accounting
Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Lee Costerd, hereby certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) |
the Quarterly Report on Form 10-Q of Wolverine
Exploration Inc. for the period ended February 28, 2015 (the "Report")
fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
|
|
(2) |
the information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of Wolverine Exploration Inc. |
Dated: May 13, 2015
|
/s/
Richard Haderer |
|
Richard Haderer |
|
Chief Executive Officer, Chief Financial
Officer and Director |
|
(Principal Financial Officer and Principal
Accounting Officer) |
|
Wolverine Exploration Inc. |
A signed original of this written statement required by Section
906, or other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Wolverine
Exploration Inc. and will be retained by Wolverine Exploration Inc. and
furnished to the Securities and Exchange Commission or its staff upon
request.
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