AMENDED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED JULY 31, (Expressed in Canadian Dollars)

Transcription

1 AMENDED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED JULY 31,

2 NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Under National Instrument , if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the condensed interim consolidated financial statements have not been reviewed by an auditor. The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of the Company s management. The Company s independent auditor has not performed a review of these condensed interim financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for review of condensed interim financial statements by an entity s auditor. 2

3 CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at Notes July 31, 2015 October 31, 2014 ASSETS Current Cash $ - $ 2,933 Prepaid 1, Receivables 6,531 4,784 $ 7,531 $ 7,982 LIABILITIES AND SHAREHOLDERS EQUITY Current Overdraft $ 21 $ - Accounts payable and accrued liabilities 56,077 26,137 Due to related parties 5 121,939 50, ,037 76,262 Shareholders equity Share capital 4 228, ,052 Deficit (398,558) (296,332) Nature of operations and going concern (Note 1) (170,506) (68,280) $ 7,531 $ 7,982 Approved and authorized by the Board on October 19, 2015: Dennis Mee Director The accompanying notes are an integral part of these condensed interim consolidated financial statements. 3

4 CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS Notes For the three months ended July 31, For the nine months ended July 31, EXPENSES Filing and regulatory $ 3,242 $ 4,085 $ 14,339 $ 43,858 Management and consulting 5 1,500 27,500 65,500 53,000 Office and administration ,139 Professional fees 5 2,000 10,519 21,976 66,362 Loss and comprehensive loss for the period $ (6,853) $ (42,592) $ (102,226) $ (173,359) Basic and diluted loss per common share $ (0.00) $ (0.00) $ (0.00) $ (0.01) Weighted average number of common shares outstanding 32,249,257 32,229,017 32,249,257 29,677,870 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 4

5 CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS For the nine months ended July 31, Notes CASH FLOWS FROM OPERATING ACTIVITIES Loss for the period $ (102,226) $ (173,359) Changes in non-cash working capital items: Prepaid (735) - Receivables (1,747) (5,367) Accounts payable and accrued liabilities 29,940 33,816 Due to related parties 71,814 - (2,954) (144,910) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of exploration and evaluation assets 3 - (67,500) - (67,500) CASH FLOWS FROM FINANCING ACTIVITIES Shares issued for cash 4-101,000 Share issuance costs - (3,281) - 97,719 Change in cash during the period (2,954) (114,691) Cash, beginning of period 2, ,113 Cash, end of period $ (21) 14,422 Cash paid during the period for interest $ - $ - Cash paid during the period for income taxes $ - $ - Supplemental disclosure with respect to cash flows (Note 7) The accompanying notes are an integral part of these condensed interim consolidated financial statements. 5

6 CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Number Amount Obligation to issue shares Deficit Total Balance, October 31, ,000,000 $ 10,000 $ 120,332 $ (2,219) $ 128,113 Shares issued for cash (Note 4) 24,066, ,332 (120,332) - - Shares issued for cash (Note 4) 40,000 1, ,000 Shares issued for cash (Note 4) 142, , ,000 Share issuance costs - (3,281) - - (3,280) Loss for the year (173,359) (173,359) Balance, July 31, ,249,257 $ 288,052 $ - $ (175,578) $ 52,474 Balance, October 31, ,249,257 $ 228,052 $ - $ (296,332) $ (68,280) Loss for the period (102,226) (102,226) Balance, July 31, ,249,257 $ 228,052 $ - $ (398,558) $ (170,506) The accompanying notes are an integral part of these condensed interim consolidated financial statements. 6

7 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, NATURE OF OPERATIONS AND GOING CONCERN Enfield Exploration Corp. (the Company ) was incorporated under the Business Corporations Act (British Columbia) on November 1, The Company commenced trading on the Canadian Securities Exchange ( CSE ) under the symbol EXP in January, The Company is an exploration stage company and is in the process of acquiring mineral properties in Canada and has not yet determined whether those properties contain ore reserves that are economically recoverable. The recoverability of amounts spent for mineral properties is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its property, and upon future profitable production or proceeds from disposition of the properties. The operations of the Company will require various licences and permits from various governmental authorities which are or may be granted subject to various conditions and may be subject to renewal from time to time. There can be no assurance that the Company will be able to comply with such conditions and obtain or retain all necessary licences and permits that may be required to carry out exploration, development, and mining operations at its projects. Failure to comply with these conditions may render the licences liable to forfeiture. The Company s registered office is at Suite Burrard Street, Vancouver, BC V7X 1S8 and the records are held at Suite West Cordova Street, Vancouver, BC, V7T 1B8. These condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. The Company s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that may give rise to significant doubt about the entity s ability to continue as a going concern. 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION Statement of Compliance These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the IASB ( International Accounting Standards Board ) applicable to the preparation of condensed interim consolidated financial statements, including International Accounting Standard ( IAS ) 34 - Interim Financial Reporting. The accounting policies followed in these condensed interim consolidated financial statements are the same as those applied in the Company s audited annual financial statements for the year ended October 31, 2014 other than the principles of consolidation. Basis of Consolidation and Presentation The condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain financial assets that are measured at fair value. All dollar amounts presented are in Canadian dollars unless otherwise specified which is the functional currency of the Company and its wholly owned subsidiary. The condensed interim consolidated financial statements do not contain all disclosures required under IFRS and should be read in conjunction with Company s annual financial statements and the notes thereto for the year ended October 31, These condensed interim consolidated financial statements incorporate the financial statements of the Company and its wholly controlled subsidiary Enfield Resources Corp. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The condensed interim consolidated financial statements include the accounts of the Company and its direct wholly-owned subsidiary. All significant intercompany transactions and balances have been eliminated. Use of Estimates and Judgments The preparation of these condensed interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates. 7

8 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, 2015 Critical Accounting Estimates The determination of income tax is inherently complex and requires making certain estimates and assumptions about future events. While income tax filings are subject to audits and reassessments, the Company has adequately provided for all income tax obligations. However, changes in facts and circumstances as a result of income tax audits, reassessments, jurisprudence and any new legislation may result in an increase or decrease in our provision for income taxes. Critical Accounting Judgments The carrying value and recoverability of exploration and evaluation assets requires management to make certain estimates, judgments and assumptions about each project. Management considers the economics of the project, including the latest resources prices and the long-term forecasts, and the overall economic viability of the project. The determination of income tax is inherently complex and requires making certain estimates and assumptions about future events. While income tax filings are subject to audits and reassessments, the Company has adequately provided for all income tax obligations. However, changes in facts and circumstances as a result of income tax audits, reassessments, jurisprudence and any new legislation may result in an increase or decrease in our provision for income taxes. New standards not yet adopted The following new standards, amendments to standards and interpretations have been issued and will be effective for the Company s year ended October 31, 2015: IAS 32 (Amendment) New standard that clarifies requirements for offsetting financial assets and liabilities (ii) IAS 36 (Amendment) This amendment addresses the disclosure of information regarding the recoverable amount of impairment assets as the amount is based on fair value less costs of disposal. (ii) IFRIC 21 This is an interpretation of IAS 37, Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event, known as an obligating event. The interpretation clarifies that the obligation event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. (ii) The Company anticipates that the application of these standards, amendments and interpretations will not have a material impact on the results and financial position of the Company. 3. EXPLORATION AND EVALUATION ASSETS Wels Nickel The Company had the right to acquire an option to earn a 100% interest in the Property. In order to acquire the right, the Company agreed to make the following cash payments to Gorilla: a) $10,000 on or before closing (paid); b) Within five days of listing on the CSE pay $15,000 (paid); c) Pay $2,500 on or before May 1, 2014 (paid); d) Pay $80,000 on or before September 30, 2014; and e) Pay $80,000 on or before September 30, The Property is subject to a 5% NSR of which each 1% may be purchased by the Company at any time for $1,500,000 up to a total of $7,500,000. As of October 31, 2014, the Company decided not to proceed with this arrangement, as a result $27,500 of exploration expenses were written off. 8

9 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, 2015 Richfield Oils During the year ended October 31, 2014, the Company has entered into a letter of intent with Richfield Oils Inc. for an option to acquire a 100% interest in six petroleum and natural gas leases in Alberta, subject to a gross overriding royalty of 2% to 5%. Total consideration is expected to be $600,000, of which the Company has paid $40,000 during the year ended October 31, The terms of the letter of intent were not met and as a result $40,000 was written off. Block Creek Property On March 23, 2015, the Company through its wholly-owned subsidiary, Enfield Resources Corp., entered into an option assignment agreement (the Agreement ) with B.C. Ltd., to acquire a 100% undivided interest in two unpatented mining claims located in Whitefin Lake Area of the Thunder Bay Mining Division in northwestern Ontario, known as the Block Creek Property. Pursuant to the Agreement, the Company agreed to earn a 100% interest in the property by making cash payments, as follows: (a) $5,000 on October 8, 2015; (b) $10,000 on October 8, 2016; and (c) $20,000 on October 8, 2017 The Company shall pay a 2% net smelter returns royalty (the NSR ) in the event that it acquires the property and begins commercial production on any part of it. The Company can buy back 1% of the NSR for a one-time payment of $1,000,000. Subsequently, the Company decided not to proceed with this arrangement. 4. SHARE CAPITAL AND RESERVES During the year ended October 31, 2014, the board of directors authorized a 4-for-1 forward stock split. The number of issued and outstanding shares has been retroactively restated for all periods presented unless otherwise stated. a) Authorized share capital Unlimited number of common shares without par value. b) Issued share capital During the year ended October 31, 2014: a) The Company completed a non-brokered private placement by issuing 24,066,400 common shares for $0.005 per common share for total proceeds of $120,332. The proceeds were received during the period ended October 31, 2013 and recorded as shares subscribed. b) The Company completed a non-brokered private placement by issuing 40,000 common shares for $0.025 per common share for total proceeds of $1,000. c) The Company completed a non-brokered private placement for gross proceeds of $100,000 by issuing 142,857 units at a price of $0.70 per unit. Each unit consists of one common share and one warrant exercisable to purchase one common share at a price of $1.00 per share for the period of 2 years. c) Stock options and warrants There were no stock options issued as of July 31, At July 31, 2015, the Company had 142,857 warrants outstanding, exercisable at a price of $1.00 per share and expiring May 13,

10 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, RELATED PARTY TRANSACTIONS The financial statements include the financial statements of Enfield Exploration Corp. and its 100% owned subsidiary Enfield Resources Corp, a company incorporated in British Columbia. Key management personnel comprise of the Chief Executive Officer, Chief Financial Officer, and Directors of the Company. During the period ended July 31, 2015, remuneration of the key management personnel was as follows: Paid or accrued management of $5,500 ( $9,000) to two directors of the Company; Paid or accrued management fees of $30,000 ( $20,000) to the CEO of the Company; Paid or accrued management fees of $30,000 to the CFO of the Company ; In nine months period of 2014, paid or accrued management and consulting fees of $12,000 to the former CEO of the Company and $3,000 to the former CFO of the Company, and $9,000 to a company of which the former CFO is a director. As of July 31, 2015, $114,275 ( October 31, $Nil) of management and consulting fees were owed to directors and officers of the Company. As of July 31, 2015, $1,957 was owed to a director for expenses paid on the behalf of the Company. Short-term Employee benefits Share-based payments Total Period ended July 31, 2015 Directors and officers $ 65,500 $ - $ 65,500 Period ended July 31, 2014 Directors and officers $ 53,000 $ - $ 53, SEGMENTED INFORMATION The Company operates in one industry and geographical segment, the exploration industry in Canada. 7. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS There were no non-cash transaction during the period ended July 31, During the period ended July 31, 2014, the Company issued common shares for an obligation to issue shares as at October 31, 2013 in the amount of $120, FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Financial Instruments Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and Level 3 Inputs that are not based on observable market data. 10

11 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, 2015 Cash and is carried at fair value using a level 1 fair value measurement. The carrying value of receivables and accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. Financial risk factors The Company s risk exposures and the impact on the Company s financial instruments are summarized below: Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its obligations associated with its financial liabilities. The Company s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at July 31, 2015, the Company had a cash overdraft of $21 to settle current liabilities of $178,016. The Company is currently investigating financing opportunities so that it has sufficient liquidity to meet liabilities when due. There can be no assurance the Company will be able to obtain required financing in the future on acceptable terms. The Company anticipates it will need additional capital in the future to finance on-going exploration of its properties, such capital to be derived from the completion of other equity financings. The Company has limited financial resources, has no source of operating income and has no assurance that additional funding will be available to it for future exploration and development of its project. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions and exploration success. In recent years, the securities markets have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. Any quoted market for the common shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows or earnings. Credit risk Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company s credit risk is primarily attributable to its liquid financial assets including cash. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality financial institutions. Receivables consist mainly of GST receivable from the Government of Canada. The Company believes credit risk with respect to receivables to be insignificant. Market risk Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives. a) Interest rate risk The Company s financial assets exposed to interest rate risk consist of cash. The Company s policy will be to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company is satisfied with the credit ratings of its banks. As at July 31, 2015, the Company did not have any investments in investment-grade short-term deposit certificates. b) Foreign currency risk The Company s foreign exchange risk arises from transactions denominated in other currencies. The Company has no exploration and evaluation assets outside of Canada and therefore considers this low risk. c) Price risk The resource industry is heavily dependent upon the market price of the resources being extracted. There is no assurance that, even if commercial quantities of resources are discovered, a profitable market will exist for their sale. There can be no assurance that mineral prices will be such that the Company s properties can be 11

12 NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS July 31, 2015 extracted at a profit. Factors beyond control of the Company may affect the marketability of any resources discovered. The price of oil has experienced volatile and significant price movements over short periods of time, and is affected by numerous factors beyond the Company s control. The Company closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. 9. CAPITAL MANAGEMENT The Company considers capital to be the elements of shareholders equity. The Company s primary objectives in capital management are to safeguard the Company s ability to continue as a going concern in order to provide returns for shareholders and to maintain sufficient funds to finance the exploration and development of its mineral property interest. The Company is in the early stages of operations and is currently developing a capital structure which will support expanded activity. The Company monitors economic conditions and the risks related to the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital and is not subject to externally imposed capital requirements. 12