SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
–
A
Amendment No. 1
☑
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
quarterly period ended
May 31,
2018
☐
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE
ACT
For the
transition period from _________ to _________
Commission
File Number:
333-182071
AIM EXPLORATION INC.
(Name
of Small Business Issuer in its charter)
|
|
|
|
Nevada
|
67-0682135
|
|
(state
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer I.D. No.)
|
|
|
|
|
170 S Green Valley Pkwy, Suite 300
Henderson, Nevada
|
89012
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(844) 246-7378
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was
require to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
☑ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of
“
large accelerated
filer
”
,
“
accelerated filer
”
and
“
smaller reporting
company
”
in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company
☑
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☑
As
of August 10, 2018
, the
registrant had
1,457,555,556
shares of common stock issued and outstanding and
100,000
shares of preferred stock issued
and outstanding.
AIM EXPLORATION INC.
TABLE OF CONTENTS
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PART
I - FINANCIAL INFORMATION
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Item 1.
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Financial
Statements (unaudited)
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3
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Condensed
Consolidated Balance Sheets
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F-1
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Condensed
Consolidated Statements of Operations
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F-2
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Condensed
Consolidated Statements of Cash Flows
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F-3
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Notes
to Condensed Consolidated Financial Statements
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F-4
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Item 2.
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Management
Discussion & Analysis of Financial Condition and Results of
Operations
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4
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|
Item 3.
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Quantitative and
Qualitative Disclosures About Market Risk
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5
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Item 4.
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Controls and
Procedures
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6
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PART
II - OTHER INFORMATION
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Item 1.
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Legal
Proceedings
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7
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Item 2.
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Unregistered Sales
of Equity Securities and Use of Proceeds
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7
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Item 3.
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Defaults Upon
Senior Securities
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7
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Item 4.
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Mine
Safety Disclosures
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7
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Item 5.
|
|
Other
information
|
|
7
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Item 6.
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Exhibits
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|
8
|
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2018
(Unaudited)
Condensed
Consolidated Balance Sheets of May 31, 2018 (Unaudited) and August
31, 2017
Condensed
Consolidated Statements of Operations for the 3 and 9 months ended
May 31, 2018 & 2017 (Unaudited)
Condensed
Consolidated Statements of Cash Flows for the 9 months ended May
31, 2018 & 2017 (Unaudited)
Notes
to the Condensed Consolidated Financial Statements (Amended)
(Unaudited)
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Unaudited)
The
accompanying notes are an integral part of these condensed
consolidated financial statements
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
9 months
ended
May
31,
2018
|
9 months
ended
May
31,
2017
|
3 months
ended
May
31,
2018
|
3 months
ended
May
31,
2017
|
|
REVENUE
|
|
|
|
|
|
Total
Revenue
|
$
-
|
$
-
|
$
-
|
$
-
|
|
|
|
|
|
|
|
Gross
Profit
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
MINERAL
PROPERTY OPERATIONS
|
|
|
|
|
|
Acquisition
|
-
|
-
|
-
|
-
|
|
Exploration
|
3,636
|
-
|
-
|
-
|
|
Total
Mineral Property Operations
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
Accretion
|
325,828
|
47,865
|
89,301
|
2,864
|
|
Consulting
fees
|
33,171
|
52,432
|
4,000
|
18,904
|
|
Filling
fees
|
1,436
|
11,941
|
-
|
4,401
|
|
Finder’s
fees
|
-
|
-
|
-
|
-
|
|
Office &
general
|
36,766
|
30,635
|
11,434
|
10,067
|
|
Professional
fees
|
54,201
|
62,366
|
11,812
|
28,722
|
|
Public
relations
|
-
|
67,315
|
-
|
22,685
|
|
Related party
– director’s fees
|
-
|
388,833
|
-
|
-
|
|
Related party
– management fees
|
157,500
|
135,000
|
52,500
|
45,000
|
|
|
|
|
|
|
|
Total
Expenses
|
608,902
|
796,387
|
169,047
|
132,643
|
|
|
|
|
|
|
|
Loss
from operations
|
(612,538
)
|
(796,387
)
|
(169,047
)
|
(132,643
)
|
|
|
|
|
|
|
|
Interest
expense
|
(50,000
)
|
(54,640
)
|
(18,855
)
|
(15,682
)
|
|
Finance
costs
|
(125,475
)
|
(34,593
)
|
(19,561
)
|
(34,593
)
|
|
Related party
– loss on settlement of debt
|
-
|
(660,000
)
|
-
|
-
|
|
Unrealized
foreign exchange loss
|
(2,443
)
|
(61,580
)
|
1,210
|
56
|
|
Gain
(loss) on derivative liability
|
56,970
|
76,270
|
4,060
|
66,487
|
|
|
|
|
|
|
|
Total
Other Income (Expense)
|
(120,948
)
|
(734,543
)
|
(33,146
)
|
16,268
|
|
|
|
|
|
|
|
Net
Loss
|
$
(733,486
)
|
$
(1,530,930
)
|
$
(202,193
)
|
$
(116,375
)
|
|
|
|
|
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BASIC
AND DILUTED LOSS PER COMMON SHARE
|
$
(0.00
)
|
$
(0.00
)
|
$
0.00
|
$
0.00
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
970,139,597
|
607,257,931
|
1,207,714,647
|
686,728,348
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|
WEIGHTED
AVERAGE NUMBER OF PREFERRED SHARES OUTSTANDING
|
100,000
|
100,000
|
100,000
|
100,000
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
9 months
ended
May
31,
2018
|
9 months
ended
May
31,
2017
|
|
|
|
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OPERATING
ACTIVITIES
|
|
|
|
Net
Loss
|
$
(733,486
)
|
$
(1,530,930
)
|
|
Accretion
related to convertible note
|
325,828
|
47,865
|
|
Finance
costs and derivative expense
|
172,476
|
89,233
|
|
Change
in fair value of derivative liability
|
(56,970
)
|
(76,270
)
|
|
Related
party – loss on repayment of debt
|
-
|
660,000
|
|
Shares
issued for services
|
-
|
535,832
|
|
Adjustments to
reconcile Net Loss to net cash used in
operating
activities:
|
|
|
|
Prepaid deposits
and services
|
(16,160
)
|
20,964
|
|
Accounts
Payable
|
(181
)
|
58,671
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(308,493
)
|
(194,635
)
|
|
|
|
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FINANCING
ACTIVITIES
|
|
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Convertible
debt
|
253,000
|
63,000
|
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Loans
payable
|
(18,620
)
|
29,000
|
|
Loans from related
party
|
73,340
|
119,008
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
307,720
|
211,008
|
|
|
|
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|
NET
(DECREASE) INCREASE IN CASH
|
(773
)
|
16,373
|
|
|
|
|
|
CASH,
BEGINNING OF PERIOD
|
802
|
417
|
|
|
|
|
|
CASH,
END OF PERIOD
|
$
29
|
$
16,790
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements
F-3
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF
PRESENTATION
Aim Exploration, Inc. (“Company”) was organized to
engage in mineral exploration. The Company was incorporated on
February 18, 2010 in the State of Nevada and established a fiscal
year end at August 31.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The
condensed
consolidated
financial statements present the
condensed
consolidated balance sheets,
condensed
consolidated
statements of operations and
condensed
consolidated cash flows of the
Company. These financial statements are presented in United States
dollars and have been prepared in accordance with accounting
principles generally accepted in the United States.
Principles of Consolidation
The
condensed
consolidated
statements incorporate the financial statements of the Company and
its wholly-owned subsidiary, Aim Exploration SA, of Peru. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents
For purposes of the condensed consolidated statement of cash flows,
the Company considers highly liquid financial instruments purchased
with a maturity of three months or less to be cash
equivalents.
Functional Currency
The condensed consolidated financial statements are presented in
United States dollars, which is also the functional and reporting
currency of the Company. The functional currency of its subsidiary
is the Peruvian Nuevos Sol. Monetary assets and liabilities
denominated in foreign currencies are translated at the period end
exchange rate while non-monetary assets and liabilities are
translated at historical rates. Revenues and expenses are
translated at the average exchange rate for the period. Foreign
currency gains and losses are included in the determination of net
income or loss.
Advertising
Advertising
costs are expensed as incurred. As of May 31, 2018, no advertising
costs have been incurred.
Property
The
Company does not own or rent any property. The Company’s
office space is being provided by the president at no charge to the
Company.
Use of Estimates and Assumptions
Preparation
of the financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Income Taxes
The
Company follows the liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax balances. Deferred tax assets
and liabilities are measured using enacted or substantially enacted
tax rates expected to apply to the taxable income in the years in
which those differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the date
of enactment or substantive enactment.
F-4
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair Value of Financial Instruments
The Company has adopted Accounting Standards Codification subtopic
820-10, Fair Value Measurements and Disclosures ("ASC 820-10"). ASC
820-10 defines fair value, establishes a framework for measuring
fair value and enhances fair value measurement disclosure. The
adoption of ASC 820-10 requires that the Company disclose assets
and liabilities that are recognized and measured at fair value on a
non-recurring basis, presented in a three-tier fair value
hierarchy, as follows:
- Level
1. Observable inputs such as quoted prices in active
markets;
- Level
2. Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly; and
- Level
3. Unobservable inputs in which there is little or no market data,
which require the reporting entity to develop its own
assumptions.
The following presents the gross value of assets that were measured
and recognized at fair value:
|
|
Assets
|
Liabilities
|
|
Level
1
|
$
29
|
$
1,684,894
|
|
Level
2
|
$
832,156
|
$
652,059
|
|
Level
3
|
$
Nil
|
$
Nil
|
The Company adopted ASC 825-10, Financial Instruments, which
permits entities to choose to measure many financial instruments
and certain other items at fair value. The adoption of this
standard did not have an impact on the Company's financial
position, results of operations or cash flows. The carrying value
of cash and cash equivalents, accounts payable and accrued
expenses, as reflected in the balance sheets, approximate fair
value because of the short-term maturity of these
instruments.
Derivative Liability
The conversion features embedded in the outstanding convertible
notes payable are separately accounted for as a derivative
liability in accordance with ASC 815-15, Embedded Derivative. This
is because the number of shares that may be acquired upon
conversion is indeterminable as the conversion rates are expressed
as a percentage discount to the current fair market value of common
stock at the time of conversion. Derivative liabilities are valued
when the host instruments (convertible notes) are initially issued
and are also revalued at each reporting date, with the change in
the respective fair values being recorded as a gain or loss to the
derivative liability.
Net Loss per Share
Basic
loss per share includes no dilution and is computed by dividing
loss available to common stockholders by the weighted average
number of common shares outstanding for the period. Dilutive loss
per share reflects the potential dilution of securities that could
share in the losses of the Company. Because the Company does not
have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for recoverability in
accordance with ASC 360, Property Plant and Equipment. Under that
standard, the Company reviews the recoverability of its long-lived
assets or asset groups 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.
F-5
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Impairment of Long-Lived Assets (Continued)
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.
The Company conducts a review for each reported period and
determines whether any triggering events are
indicated.
Mineral Property Costs
Once the legal right to explore a property has been acquired, the
Company capitalized all costs related to mineral property interests
on a property-by-property basis. Such costs include mineral
property acquisition costs, net of any recoveries.
Property
acquisition costs include cash costs and the fair market value of
issued shares and other share-based payments, paid under option or
joint interest agreements. Payment terms are at the sole discretion
of the Company and are recorded as acquisition costs upon payment.
The Company has capitalized $804,656
of mineral property acquisition costs reflecting its investment in
its properties.
Stock-based Compensation
The Company adopted FASB guidance on stock based compensation upon
inception at February 18, 2010. ASC 718-10-30-2 requires all
share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based
on their fair values. The Company has not had any stock and stock
options issued for services and compensation for the period from
inception (February 18, 2010) through May 31, 2018.
Recent Accounting Pronouncements
Other recent accounting pronouncements issued by the FASB
(including its Emerging Issues Task Force), the American Institute
of Certified Public Accountants, and the United States Securities
and Exchange Commission did not or are not believed by management
to have a material impact on the Company’s present or future
consolidated financial statements.
NOTE 3 – GOING CONCERN
The
Company’s financial statements are prepared in accordance
with generally accepted accounting principles applicable to a going
concern. This contemplates the realization of assets and the
liquidation of liabilities in the normal course of business.
Currently, the Company has a working capital deficit of $2,309,424,
an accumulated deficit of $5,496,312
and net loss from operations since
inception of $5,496,312. The Company does not have a source of
revenue sufficient to cover its operation costs giving substantial
doubt for it to continue as a going concern. The Company will be
dependent upon the raising of additional capital through placement
of our common stock in order to implement its business plan or
merging with an operating company. There can be no assurance that
the Company will be successful in either situation in order to
continue as a going concern. The Company is funding its initial
operations by way of issuing common shares.
The
officers and directors have committed to advancing certain costs of
the Company, including Legal, Audit, Transfer Agency and Edgarizing
costs.
NOTE 4 – PREPAID DEPOSITS AND SERVICES
|
|
May 31,
2018
|
August 31,
2017
|
|
Prepaid
services
|
$
-
|
$
6,164
|
|
Prepaid
deposits
|
27,500
|
5,176
|
|
|
$
27,500
|
$
11,340
|
F-6
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 5 – MINERAL PROPERTY
On June
23, 2014, Aim Exploration, Inc. entered into a Mining Concession
Asset Acquisition Agreement (the “Agreement”) with
Percana Mining Corp. (“Percana”). Pursuant to the
Agreement, the Company acquired three separate mining concessions.
The concession titles are unencumbered and comprise of three
separate adjoing mining concession two concessions representing 40%
are known as El Tunel Del Tiempo 1 code 11060780 and El Tunel Del
Tiempo 2 code 11060781, and the third concession property is known
as Agujeros Negros MAAG comprising the remaining 60%, all of which
are registered to the Company.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
|
|
May
31,
2018
|
August
31,
2017
|
|
Accounts
payable
|
$
308,637
|
$
311,598
|
|
Accrued
liabilities
|
11,060
|
8,280
|
|
|
$
319,697
|
$
319,878
|
NOTE 7 – LOANS PAYABLE
During the nine months ended May 31, 2018, the Company issued
unsecured, non-interest bearing loans of $7,000 (May 31, 2017:
$127,350) and repaid loans of $25,620 (May 31, 2017:
$Nil).
NOTE 8 – LOAN PAYABLE – RELATED PARTY
During the period ended
May 31, 2018, a director of the
Company advanced $7,655 (May 31, 2017: $123,740).
The amounts are unsecured, non-interest bearing
and are due on demand. During the same period, the Company made
repayments of $
91,814
to a
director (
May 31, 2017
:
$
86,500
).
Nil
common shares (
May 31,
2017
: 34,285,739 common shares) were
issued to repay $
Nil
of this
amount (
May 31, 2017
:
$72,000
). (Note
11)
During the period ended May 31, 2018, the Company made repayments
to related parties, issuing
Nil
common shares (May 31, 2017:
189,600,000
common shares) of the Company with a
fair value of $
Nil
(
May
31, 2017
: $
221,440)
. During the period ended
May 31, 2018,
management fees totaling
$
157,500
where accrued as
payable to directors and officers of the Company (May 31, 2017:
$
135,000
). During the period
ended May 31, 2018, the Company issued Nil common shares (May 31,
2017: 219,444,444 common shares to directors in compensation for
their services totaling $Nil (May 31, 2017:
$460,833).
As at
May 31, 2018
, the Company
owed related party loans of $
630,917
(August 31, 2017: $
557,576)
.
NOTE 9 – CONVERTIBLE NOTE
During
the nine months ended May 31, 2018, the Company issued convertible
notes with a principal balance of $253,000, with maturity dates
between March 11, 2018 and November 30, 2018, and interest rates
per annum of 8% - 22%. The principal is convertible into shares of
the Company at a conversion rate equal to 60% - 61% of the lowest
trading price of the Company’s common stock for the fifteen
prior trading days, as defined in the agreements.
During
the nine months ended May 31, 2018, 542,782,333 common shares were
issued in relation to conversion options exercised during the
period, which reduced the convertible debt by
$248,363.
The
following convertible notes were outstanding as at May 31, 2018 and
August 31, 2017:
|
|
May
31,
2018
|
August
31,
2017
|
|
Note
balance
|
$
615,878
|
$
586,512
|
|
Debt
discounts
|
(52,415
)
|
(64,917
)
|
|
Accrued
interest
|
145,167
|
112,959
|
|
|
$
708,630
|
$
634,554
|
F-7
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 10 – DERIVATIVE LIABILITY
An
embedded derivative has been bifurcated and accounted for
separately from the debt host. Accordingly, the Company recorded
the estimated derivative as a liability upon issuance of the
convertible notes. The derivative liability was recorded by
reducing the carrying value of the convertible notes. The fair
value of the embedded derivative fluctuates with the fair value of
the Company’s common stock, which is calculated each quarter
using the Black-Scholes valuation model.
During
the period ended May 31, 2018, the Company recognized change in
fair value of the derivative liability of $56,970 related to the
change in fair value of the conversion feature. The change in fair
value of the conversion feature was recorded through operating
results.
NOTE 11 – CAPITAL STOCK
On
April 25, 2016, the Company consolidated its share capital on a
250:1 basis. All common shares and per share amounts have been
restated to reflect this share consolidation.
The
Company has authorized 250,000,000 shares of common stock with a
par value of $0.001 per share and 1,000,000 shares of preferred
stock with a par value of $0.001 per share.
At May
31, 2018, 1,267,153,053 shares of common stock were issued and
outstanding, and 100,000 shares of preferred stock were issued and
outstanding.
Nine months ended May 31, 2018
During
the nine months ended May 31, 2018, the Company issued 542,782,333
common shares pursuant to the exercise of the option attached to
outstanding convertible notes.
Year ended August 31, 2017
On
September 14, 2016, the Company issued an additional 220,000,000 to
Percana to bring their post-consolidation shareholdings to
235,750,000 common shares. The value of these additional shares is
$462,000 which is based on fair market value. These shares were
issued in connection with the acquisition of certain mining
property. (Note 4)
During
the year ended August 31, 2017, the Company issued 27,305,206
common shares pursuant to the exercise of the option attached to
outstanding convertible notes and 400,000 common shares pursuant to
the exercise of the option attached to outstanding related party
convertible notes.
During
the year ended August 31, 2017, the Company issued 25,000,000
common shares in connection with services rendered. Such services
had a fair value of $75,000.
During
the year ended August 31, 2017, the Company issued 219,444,444
common shares in connection with director’s compensation.
Such services had a fair value of $395,000. Of this amount $323,000
was expensed during the current period and $72,000 reduced an
amount due to a related party.
During
the year ended August 31, 2017, the Company issued 206,505,000
common shares in connection with paying down $206,505 of debt to a
related party.
During
the year ended August 31, 2017, the Company issued 3,343,341 common
shares in connection with a private placement offering. The common
shares were issued at a fair value of $0.03 per share for gross
proceeds of $99,700.
F-8
AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
May 31, 2018 (unaudited)
NOTE 11 – CAPITAL STOCK (CONTINUED)
Share purchase warrants
As at
May 31, 2018, the following share purchase warrants issued in
connection with convertible notes were outstanding:
|
NUMBER
OF
WARRANTS
|
EXERCISE
PRICE
|
EXPIRY
DATES
|
|
9,258,535
|
$
0.0052
|
September 11,
2022
|
|
6,091,617
|
$
0.0047
|
September 22,
2022
|
|
5,611,672
|
$
0.0047
|
October 27,
2022
|
|
20,576,130
|
$
0.0018
|
December 12,
2022
|
|
13,227,512
|
$
0.0013
|
January 30,
2023
|
|
14,244,872
|
$
0.0016
|
February 27,
2023
|
|
23,148,138
|
$
0.0007
|
April 20,
2023
|
|
92,158,476
|
|
|
A
summary of the changes in warrants for the period ended May 31,
2018 and year ended August 31, 2017 is presented
below:
|
|
Number
of
Warrants
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining Life
|
|
Balance, August 31,
2016 and 2017
|
-
|
-
|
-
|
|
Issued
|
92,158,476
|
$
0.0021
|
4.63
years
|
|
Balance,
May 31, 2018
|
92,158,476
|
|
4.63
years
|
NOTE 12 – LOSS PER SHARE
The
Company calculates the basic and diluted loss per common share
using the weighted average number of common shares outstanding
during each period. To compute diluted earnings per share, the
average number of shares outstanding is adjusted for the number of
potentially dilutive shares.
|
|
NINE MONTHS
ENDED
MAY
31,
|
|
|
|
2018
|
2017
|
|
|
|
|
|
Issued shares
beginning of year
|
724,370,720
|
22,392,729
|
|
Weighted average
issuances
|
245,768,877
|
584,865,202
|
|
Basic weighted
average common shares, end of year
|
970,139,597
|
607,257,931
|
NOTE 13 – SUBSEQUENT EVENTS
1.
Subsequent to May
31, 2018, the Company issued 232,846,947 common shares pursuant to
the exercise of options attached to outstanding convertible
notes.
2.
Subsequent to May
31, 2018, the Company issued convertible notes with a principal
balance of $26,500.
3.
Subsequent to May
31, 2018, a director of the Company retired 100,000,000 shares in
an effort to ensure the Company did not exceed the number of common
shares authorized.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement
This
report on Form 10-Q contains certain forward-looking statements.
All statements other than statements of historical fact are
“forward-looking statements” for purposes of these
provisions, including any projections of earnings, revenues, or
other financial items; any statements of the plans, strategies, and
objectives of management for future operation; any statements
concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance;
statements of belief; and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are subject
to inherent risks and uncertainties, and actual results could
differ materially from those anticipated by the forward-looking
statements.
These
forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following:
competition, promotional costs, and risk of declining revenues. Our
actual results could differ materially from those anticipated in
such forward-looking statements as a result of a number of factors.
These forward-looking statements are made as of the date of this
filing, and we assume no obligation to update such forward-looking
statements. The following discusses our financial condition and
results of operations based upon our financial statements which
have been prepared in conformity with accounting principles
generally accepted in the United States. It should be read in
conjunction with our financial statements and the notes thereto
included elsewhere herein.
The
following discussion should be read in conjunction with our
financial statements, including the notes thereto, appearing
elsewhere in this Form 10-Q. The discussions of results, causes and
trends should not be construed to imply any conclusion that these
results or trends will necessarily continue into the
future.
Results of Operation
Our
financial statements have been prepared assuming that we will
continue as a going concern and, accordingly, do not include
adjustments relating to the recoverability and realization of
assets and classification of liabilities that might be necessary
should we be unable to continue in operation.
We
expect we will require additional capital to meet our long term
operating requirements. We expect to raise additional capital
through, among other things, the sale of equity or debt
securities.
Results of Operations for the Nine Months Ended May 31, 2018
Compared to the Same Period in 2017
No Revenues
Since
our inception on February 18, 2010 to May 31, 2018, we have not yet
earned any revenues. As of May 31, 2018, we have an accumulated
deficit of $5,496,312. At this time, our ability to generate any
significant revenues continues to be uncertain.
Net Loss
We
incurred a net loss of $733,486 for the nine months ended May 31,
2018 compared to our net loss of $1,530,930 for the nine months
ended May 31, 2017. The decrease in net loss was mainly due to
decrease director’s fees and public relations costs. Since
February 18, 2010 (date of inception) to May 31, 2018, we have
incurred a net loss of $5,496,312.
Expenses
Our
total operating expenses for the nine months ended May 31, 2018
were $612,538 compared to $796,387, for the same period in 2017.
Our consulting fees decreased by $19,261 from $52,432 to $33,171
for the nine months ended May 31, 2018. Director’s fees paid
to related parties decreased by $388,833 from $388,833 to $Nil for
the nine months ended May 31, 2018. Filing fees decreased by
$10,505 from $11,941 to $1,436 for the nine months ended May 31,
2018. Management fees paid to related parties increased by $22,500
from $135,000 to $157,500 for the nine months ended May 31, 2018.
Office and general costs consisting of bank charges, travel, meals
and entertainment, office maintenance, communications (cellular,
internet, fax and telephone), courier, postage costs and office
supplies, increased by $6,131 from $30,635 to $36,766 for the nine
months ended May 31, 2018. Professional fees decreased by $8,165
from $62,366 to $54,201 for the nine months ended May 31, 2018.
Public relation costs decreased by $67,315 from $67,315 to $Nil for
the nine months ended May 31, 2018.
In
addition, we incurred costs related to the convertible notes issued
and outstanding during the comparable periods. Interest expense
relating to such notes decreased by $4,640 from $54,640 for the
nine months ended May 31, 2017 to $50,000 for the nine months ended
May 31, 2018. Accretion increased by $277,963 from $47,865 to
$325,828 for the nine months ended May 31, 2018. Finance costs
increased by $90,882 from $34,593 to $125,475 for the nine months
ended May 31, 2018. A change in the fair value of the derivative
liability in the amount of $56,970 was recognized during the nine
months ended May 31, 2018 compared to a change of $76,270 during
the nine months ended May 31, 2018.
Liquidity and Capital Resources
Nine Month Period Ended May 31, 2018
As at
May 31, 2018, our total assets were $832,185 compared to $816,798
in total assets at August 31, 2017. As at May 31, 2018, our current
liabilities were $2,336,953 compared to $2,285,459 in current
liabilities at August 31, 2017; these liabilities were comprised of
accounts payable and accrued liabilities of $319,697 (August 31,
2017: $319,878), loans payable of $25,650 (August 31, 2017:
$44,270), loans from related party of $630,917 (August 31, 2017:
$557,576), convertible notes, net of unamortized discount of
$708,630 (August 31, 2017: $634,555) and a derivative liability of
$652,059 (August 31, 2017: $729,180). Stockholders’ deficit
was $1,504,768 as of May 31, 2018, compared to stockholders'
deficit of $1,468,661 as of August 31, 2017.
Cash Flows from Operating Activities
We have
not generated positive cash flows from operating activities. For
the nine months ended May 31, 2018, net cash flows used by
operating activities was $308,493, compared to $194,635 provided by
the same period in 2017.
Cash Flows from Financing Activities
We have
financed our operations primarily from either advancements,
convertible notes or the issuance of equity. For the nine months
ended May 31, 2018, net cash provided by financing activities was
$307,720, compared to $211,008 in the same period in
2017.
Plan of Operation
Our
plan of operation for the next twelve months is to grow our
business through the exploration of our current properties and
additional properties that we acquire.
Going Concern
Our
independent auditors' review report accompanying our August 31,
2017 financial statements contained an explanatory paragraph
expressing substantial doubt about our ability to continue as a
going concern. The financial statements have been prepared
"assuming that we will continue as a going concern," which
contemplates that we will realize our assets and satisfy our
liabilities and commitments in the ordinary course of
business.
Inflation
The
amounts presented in the financial statements do not provide for
the effect of inflation on our operations or financial position.
The net operating losses shown would be greater than reported if
the effects of inflation were reflected either by charging
operations with amounts that represent replacement costs or by
using other inflation adjustments.
Off-Balance Sheet Arrangements
As of
May 31, 2018, we had no off-balance sheet transactions 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
applicable.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial
Reporting.
Our
internal control over financial reporting is a process that, under
the supervision of and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer,
was designed to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail,
accurately and fairly reflect our transactions and dispositions of
our assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements
in accordance with generally accepted according principles, and
that our receipts and expenditures are being made only in
accordance with authorizations of our management and our trustees;
and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition of our assets that
could have a material effect on our financial
statements.
Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that our controls may become inadequate
because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
As
management, it is our responsibility to establish and maintain
adequate internal control over financial reporting. As of May 31,
2018, under the supervision and with participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of our internal
control over financial reporting using criteria established in
Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(“COSO”). Based on our evaluation, we concluded that
the Company maintained ineffective internal control over financial
reporting as of May 31, 2018, based on criteria established in the
Internal Control Integrated Framework issued by the
COSO.
This
quarterly report does not include an attestation report of the
Company’s registered public accounting firm regarding
internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s
registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the Company to
provide only management’s report in this quarterly
report.
Evaluation of disclosure controls and procedures.
As of
May 31, 2018, the Company’s chief executive officer and chief
financial officer conducted an evaluation regarding the
effectiveness of the Company’s disclosure controls and
procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the
Exchange Act). Based upon the evaluation of these controls and
procedures, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were
effective as of the date of filing this quarterly report applicable
for the period covered by this report.
Changes in internal controls.
During
the period covered by this report, no changes occurred in our
internal control over financial reporting that materially affected,
or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A
company called Tarpon Bay commenced legal action with the company
as at August 30, 2016 claiming the company owed them $78,678. The
company is disputing the claim and it is currently in the hands of
the courts. This relates to the S-1 registration statement that
became effective June 1, 2015. The S-1 that was registered in the
name of Southridge Capital and the amount of the claim represents
the “standby fee”. In view of the fact that the equity
line of credit with Southridge Capital was completed wrong and
could not be utilized technically Southridge or Tarpon Bay was not
on “standby”. The S-1 registration statement was
approved by Southridge (Tarpon Bay) in- house legal department
prior to submitting to the SEC for registration." There are no
proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial stockholder, is an adverse party or
has a material interest adverse to our interest. On April 11, 2017,
Tarpon Bay dismissed the action without prejudice.
A
company called LG Capital Finance commenced legal action with the
Company as at December 22, 2016.
On
December 22, 2016, LG Capital Finance filed a complaint with the
United States District Court, Southern District of New York (Case
No: 1”17-cv-3118) against the company. In the complaint, LG
Capital Finance indicated that on June 5, 2015, the company entered
into a Securities Purchase Agreement (the “June 15,2015
SPA”) and the company issued LG a 8% Convertible Note in the
principal amount of $57,875 (“the June 5 Note”). In the
complaint LG seeks damages for breach of contract, unjust
enrichment and legal fees. On August 14, 2017, the company made a
motion to dismiss the case and to declare the note void under New
York’s criminal usury statute for charging a rate of interest
exceeding 25%. The penalty in New York for charging a criminally
usurious rate of interest is forfeiture of the loans principal and
interest pursuant to NY’s Gen. Oblig. Law 5-511. The motion
to dismiss has been fully briefed and is awaiting the court’s
decision.
On
April 16, 2017, Adar Bays, LLC filed an amended complaint with the
United States District Court, Southern District of New York (Case
No: 1:17-cv-1290) against the Company, in the complaint, Adar Bays
indicated that (i) on November 6, 2014, the Company and Adar Bays
entered into a Securities Purchase Agreement (“the November
6, SPA”) and the Company issued Adar Bays an 8% Convertible
Note in the principal amount of $45,000.00 (the November 6, 2014
Note”). In the complaint Adar Bays seeks damages for breach
of contract, unjust enrichment and legal fees. On August 25, 2017,
the company made a motion to dismiss the case and to declare the
note void under New York’s criminal usury statute for
charging a rate of interest exceeding 25%. The penalty in New York
for charging a criminally usurious rate of interest is forfeiture
of the loans principal and interest pursuant to NY’s Gen.
Oblig. Law 5-511. The motion to dismiss has been fully briefed and
is awaiting the court’s decision.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
|
Exhibits
|
|
|
|
Exhibit
Number
|
|
Exhibit
Description
|
|
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14 or 15d-14 of
the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
|
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of
the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on our behalf
by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
SIGNATURE
|
CAPACITY IN WHICH SIGNED
|
DATE
|
|
|
|
|
|
/s/ James Robert Todhunter
|
President,
Chief
Executive Officer
|
August
28, 2018
|
|
James
Robert Todhunter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Gregorio Formoso
|
Secretary,
Treasurer, Principal Accounting Officer,
Principal
Financial Officer and Director
|
August
28, 2018
|
|
Gregorio
Formoso
|
|
|
9