(The accompanying notes are an integral part of these condensed financial statements)
(The accompanying notes are an integral part of these condensed financial statements)
(The accompanying notes are an integral part of these condensed financial statements)
(The accompanying notes are an integral part of these condensed financial statements)
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
1.
Nature of Operations and Continuance of Business
Mitu Resources Inc. (the “Company”) was incorporated in the State of Nevada on April 17, 2013 and is a mineral exploration and production company engaged in the exploration, acquisition, and development of mineral properties. The Company holds nine claims in the Mitu Gold Mine in Departamento del Vaupes, Colombia and is in the process of exploring these claims, as well as raising additional capital for future acquisitions. The Company is an exploration stage company with limited transactions.
Going Concern
These 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. As at December 31, 2018, the Company has generated no revenues, and has an accumulated deficit of $213,911. 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 financing to conduct exploration and drilling on its mineral property claims held in Departamento del Vaupes, Colombia as well as exploring for new mineral property claims.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”), and are expressed in US dollars. The Company’s fiscal year-end is March 31.
b)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make 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 period. The Company regularly evaluates estimates and assumptions related to the recoverability of mineral properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c)
Interim Condensed Financial Statements
These interim condensed financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
d)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at December 31 and March 31, 2018, the Company had no cash equivalents.
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Mitu Resources Inc.
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
2.
Summary of Significant Accounting Policies
(continued)
e)
Mineral Property Costs
The Company has been in the exploration stage since its formation on April 17, 2013 and has not yet realized any revenues from its planned operations. Mineral property acquisition costs are capitalized as incurred. Exploration and evaluation costs are expensed as incurred until proven and probable reserves are established. The Company assesses the carrying costs for impairment under ASC 360, “Property, Plant, and Equipment” at each fiscal quarter end. 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 probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
f)
Asset Retirement Obligations
As at December 31 and March 31, 2018, the Company has no asset retirement obligations.
g)
Basic and Diluted Net Loss per Share
The Company computes net income (loss) per share in accordance with ASC 260,
Earnings per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
h)
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740,
Accounting for Income Taxes,
as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
i)
Comprehensive Loss
ASC 220,
Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31 and March 31, 2018, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
j)
Financial Instruments
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
and ASC 825,
Financial Instruments
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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Mitu Resources Inc.
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
2.
Summary of Significant Accounting Policies
(continued)
j)
Financial Instruments (continued)
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, and accounts payable and accrued liabilities. Pursuant to ASC, the fair value of cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
k)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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 Property
On April 17, 2013, the Company acquired nine claims in the Mitu Gold Mines, located in Colombia, for $5,000. A mining license is necessary to mine the MITU Gold Claim. MITU obtained such a license, but it has expired. MITU plans to renew the license if and when it is ready to commence mining operations. During the year ended March 31, 2016, the Company recorded an impairment of capitalized mineral property costs of $5,000.
4.
Notes Payable
a)
On February 14, 2018, the Company received a loan of $15,000 from a non-related company, which is unsecured, bears interest at 10% per annum, and is due on demand.
As at December 31, 2018, the Company recorded $1,315 (2017 - $nil) of accrued interest which is recorded in accounts payable and accrued liabilities. During the period ended December 31, 2018, the Company recorded $1,315 (2017 - $nil) of interest expense.
b)
On March 13, 2018, the Company received a loan of $2,000 from a non-related company, which is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2018, the Company recorded $161 (2017 - $nil) of accrued interest which is recorded in accounts payable and accrued liabilities. During the period ended December 31, 2018, the Company recorded $161 (2017 - $nil) of interest expense.
c)
On March 28, 2018, the Company received a loan of $7,500 from a non-related company, which is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2018, the Company recorded $571 (2017 - $nil) of accrued interest which is recorded in accounts payable and accrued liabilities. During the period ended December 31, 2018, the Company recorded $571 (2017 - $nil) of interest expense.
9
Mitu Resources Inc.
Notes to the Condensed Financial Statements
(Expressed in U.S. dollars)
(unaudited)
4.
Notes Payable
(continued)
d)
On June 8, 2018, the Company received a loan of $5,000 from a non-related company, which is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2018, the Company recorded $282 (2017 - $nil) of accrued interest which is recorded in accounts payable and accrued liabilities. During the period ended December 31, 2018, the Company recorded $282 (2017 - $nil) of interest expense.
e)
On September 24, 2018, the Company received a loan of $5,750 from the director of the company, which is unsecured, bears interest at 10% per annum, and is due on demand. As at December 31, 2018, the Company recorded $145 (2017 - $nil) of accrued interest which is recorded in accounts payable and accrued liabilities. During the period ended December 31, 2018, the Company recorded $145 (2017 - $nil) of interest expense.
5.
Due to Related Party
a)
As at December 31, 2018, the Company owes $131,229 (March 31, 2018 - $131,229) to the former President and Director of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
b)
As at December 31, 2018, the Company owes $4,976 (March 31, 2018 - $nil) to the President and Director of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
6.
Common Shares
a)
On April 17, 2013, the Company issued 300,000 common shares to founders of the Company at $0.10 per share for proceeds of $30,000.
b)
On September 13, 2018, the Company cancelled 8,000 common shares.
c)
On September 18, 2018, the Company enacted a reverse split of its common shares on a 100:1 basis. All reference to share and per share amounts have been retroactively restated to affect the reverse stock split as if the transaction had taken place as of the beginning of the earliest period presented.
7.
Subsequent Event
(a)
On December 8, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $20,000 which is unsecured, bears interest at 10% per annum, and is due on demand. The Company received the proceeds on February 13, 2019.
(b)
On March 11, 2019, the Company entered into an agreement and plan of merger (the “Agreement”) with Alphacom Holdings, Inc., a newly formed and wholly-owned subsidiary of the Company, for the sole purchase of enacting a name change to “Alphacom Holdings, Inc.”.
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