Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - CN Resources Inc. | Financial_Report.xls |
| EX-31.1 - CN Resources Inc. | ex31-1.htm |
| EX-32.1 - CN Resources Inc. | ex32-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2011
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 000-54482
CN RESOURCES INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
255 Duncan Mill Road, Suite 203
Toronto, Ontario
Canada M3B 3H9
(Address of principal executive offices, including zip code.)
(416) 510-2991
(Registrant’s telephone number, including area code)
Check whether the issuer (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 required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES x NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES o NO x
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 the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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Smaller Reporting Company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES x NO o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 26,100,000 as of January 4, 2012.
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Page
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PART I.
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Item 1.
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F-1
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Financial Statements:
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F-1
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F-2
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F-3
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F-4
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Item 2.
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3
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Item 3.
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5
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Item 4.
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5
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PART II.
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| Item 1. | Legal Proceedings. | |
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Item 1A.
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6
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Item 2.
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6
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Item 6.
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6 | |
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7
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CN RESOURCES INC.
(A development Stage Company)
Balance Sheets
(Unaudited)
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November 30, 2011
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May 31, 2011
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Assets
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Current assets
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Cash and cash equivalents
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$ | 162,417 | $ | 915 | ||||
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Other receivable
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2,558 | |||||||
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Note receivable
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294,210 | - | ||||||
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Total current assets
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$ | 459,185 | 915 | |||||
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Total assets
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$ | 459,185 | $ | 915 | ||||
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Liabilities and Stockholders' Equity
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Liabilities
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Current Liabilities
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Accounts payable
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9,641 | 3,718 | ||||||
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Due to director
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55,577 | 38,800 | ||||||
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Total current liabilities
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$ | 65,218 | $ | 42,518 | ||||
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Stockholders' equity
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Common stock,100,000,000 of shares authorized
with $0.00001 par value,26,100,000 and 21,100,000 issued and
outstanding respectively
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261 | $ | 211 | |||||
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Preferred stock,100,000,000 shares authorized
with $0.00001par value, none issued
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- | |||||||
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Additional paid-in capital
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514,939 | 14,989 | ||||||
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Accumulated deficit during the development stage
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(107,090 | ) | (56,803 | ) | ||||
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Other comprehensive Income (loss)
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(14,143 | ) | ||||||
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Total stockholders' equity
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$ | 393,967 | $ | (41,603 | ) | |||
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Total liabilities and stockholders' equity
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$ | 459,185 | $ | 915 | ||||
The accompanying notes are an integral part of these unaudited interim financial statements.
CN RESOURCES INC.
A Development Stage Company)
Statements of Expenses
(Unaudited)
| Inception | ||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | (May 18, 2010) | ||||||||||||||||||
| November 30, | November 30, | November 30, | November 30, | to | ||||||||||||||||
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2011
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2010
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2011
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2010
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November 30, 2011
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Interest income
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$ | 5,906 | $ | - | $ | 8,994 | - | $ | 8,994 | |||||||||||
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Operating expenses
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Bank service charge
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$ | 29 | $ | - | $ | 94 | 30 | $ | 242 | |||||||||||
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Management fee
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6,000 | - | 12,000 | - | 12,000 | |||||||||||||||
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Professional fees
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11,813 | - | 22,658 | 4,010 | 57,283 | |||||||||||||||
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General and administrative expenses
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14,842 | - | 24,529 | - | 46,559 | |||||||||||||||
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Total operating expenses
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32,684 | $ | - | 59,281 | 4,040 | 116,084 | ||||||||||||||
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Net loss for the period
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$ | (26,778 | ) | $ | - | $ | (50,287 | ) | $ | (4,040 | ) | $ | (107,090 | ) | ||||||
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Loss per common share - basic and diluted
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$ | (0.00 | ) | $ | - | $ | (0.00 | ) | $ | (0.00 | ) | |||||||||
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Weighted average common shares
outstanding - basic and diluted |
26,100,000 | 21,100,000 | 24,944,183 | 21,100,000 | ||||||||||||||||
The accompanying notes are an integral part of these unaudited interim financial statements.
| Date of Inception | ||||||||||||
| For the six months | For the Six Months | May 18, 2010 | ||||||||||
| ended | ended | to | ||||||||||
| November 30, 2011 | November 30, 2010 | November 30, 2011 | ||||||||||
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Cash Flows From Operating Activities
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Net Loss for the period
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$ | (50,287 | ) | $ | (4,040 | ) | $ | (107,090 | ) | |||
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Adjustments to reconcile net loss to net cash in operating activities
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Unrealized gain (loss) on foreign currency
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(14,143 | ) | - | (14,143 | ) | |||||||
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Changes in operating assets and liabilities
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Accounts payable
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5923 | 2,010 | 9641 | |||||||||
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Interest receivable
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(2,558 | ) | - | (2,558 | ) | |||||||
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Net cash used in operating activities
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(61,065 | ) | (2,030 | ) | (114,150 | ) | ||||||
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Cash Flow From Investing Activities
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Loan receivable
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(294,210 | ) | - | (294,210 | ) | |||||||
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Net cash used in investment activities
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(294,210 | ) | - | (294,210 | ) | |||||||
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Cash Flows from Financing Activities
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Payable to related party
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16,777 | - | 55,577 | |||||||||
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Accounts payable
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- | - | ||||||||||
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Proceeds from common stock issued
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500,000 | - | 515,200 | |||||||||
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Net cash provided by financing activities
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516,777 | - | 570,777 | |||||||||
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Net increase (decrease) in cash and cash equivalents
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161,502
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(2,030
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162,417
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| Cash and cash equivalents, beginning of the period |
915
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15,200
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Cash and cash equivalents, end of the period
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162,417
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13,170
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162,417
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The accompanying notes are an integral part of these unaudited interim financial statements.
CN RESOURCES INC.
(A Development Stage Company)
(Unaudited)
November 30, 2011
1. ORGANIZATION AND BUSINESS OPERATIONS
CN RESOURCES INC. (“the Company”) was incorporated in the state of Nevada of the United States of America on May 18, 2010. The Company is in the development stage as defined under the Financial Accounting Standards Board codification 915 “Development Stage Entities” and it intends to identify, acquire, explore and develop natural resources properties in the world. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise.
2. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign Currency Transactions
The Company's functional currency is Canadian dollars and its reporting currency is the United States dollar.
The Company’s financial statements are translated from its functional currency, Canadian dollars, to the reporting currency, United States dollars, using the current rate method. Assets and liabilities are translated using the current rate in effect at the balance sheet date and revenues and expenses are translated at the average rate for the period. Adjustments resulting from the translation, if any, are included in cumulative other comprehensive income (loss) in stockholders’ equity.
Comprehensive Income (Loss)
The Company has adopted ASC Topic 830, “Reporting Comprehensive Income (Loss)” (“ASC 830”), which establishes standards for reporting and presentation of comprehensive income (loss), its components and accumulated balances. Comprehensive income (loss) is defined to include all changes in equity (shareholders’ deficiency) except those resulting from investments by or distributions to owners. Among other disclosures, ASC 830 requires that all items that are required to be recognized under the current accounting standards as a component of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. ASC 830 requires that items be included in other comprehensive income (loss) according to their nature, such as: foreign currency items, change in the fair value of derivative financial instruments and unrealized gains and losses on certain debt and equity securities. Comprehensive income (loss) is displayed in the statements of stockholders’ equity and in the balance sheets as a component of stockholders’ equity. The adoption of ASC 830 did not have a material effect on the Company’s financial position and operating results.
CN RESOURCES INC.
(A Development Stage Company)
Notes to the Financial Statements
(Unaudited)
November 30, 2011
4. GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses for the three-month period ended November 30, 2011 of $26,778 and since inception of May 18, 2010 to November 30, 20111 resulting in an accumulated deficit of $107,090; further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from director and or private placements of common stock.
5. NOTE RECEIVABLE
On July 15, 2011, the Company loaned CAD 300,000 to DX Financial (Canada) Ltd. with an annual interest of 8%. The loan is due on demand with a 30-day written notice.
6. COMMON STOCK
During June and July 2011, the Company sold a total of 5,000,000 common shares to various investors at $0.10 per share, for gross proceeds of $500,000. There is no change in Common Stock in the three month period ended November 30, 2011.
7. RELATED PARTY TRANSACTIONS
The Company shares office space with its President and does not separately pay for rent, telephone, internet or reception or services a corporation would normally incur in order to carry on its business. As a result, for the three-month ended November 30, 2011, the Company has accrued management fee of $6,000. For the three-month ended November 30, 2011, the Company also accrued $9,000 for general and administrative expenses payable to the President.
A director loans the company money from time to time on an interest-free due-on-demand basis. As of November 30, 2011, the total amount advanced and still unpaid was $55,577.
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ITEM 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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This section of this quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
We are a start-up, exploration stage corporation that does not own any interests in any properties or ore bodies, and has not yet generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion. 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 until we obtain an interest in a property, find mineralized material, delineate an ore body, and begin removing and selling minerals.
Plan of Operation
We have allocated between $45,000 and $150,000 for the securing of one property. The property will most likely be located in China. We have not selected a property at this time. We intend to secure a property within the next twelve months. We cannot determine the amount of acreage or the specific location thereof of the property.
Exploration expenditures consist of fees to be paid for consulting services connected with exploration, the cost of rock sampling (the collection of a series of small chips over a measured distance, which is then submitted for a chemical analysis, usually to determine the metallic content over the sampled interval, a pre-determined location(s) on the property), and cost of analyzing these samples. Since we do not own an interest in any properties, we have not begun exploration. Consulting fees will not be paid except on an as needed basis and should not exceed $50,000 for the next 12 months.
We plan to use the proceeds as follows:
Our offering was completed on a self-underwritten basis. The table below sets forth the use of proceeds.
| $ | 500,000 | |||
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Gross proceeds
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$ | 500,000 | ||
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Net proceeds
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$ | 500,000 |
The net proceeds will be used as follows:
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Claim Acquisition
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$ | 150,000 | ||
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Exploration
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$ | 200,000 | ||
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Geological Consultant
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$ | 50,000 | ||
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Reclamation
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$ | 15,000 | ||
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Working capital
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$ | 85,000 |
We cannot be more specific about the application of proceeds for exploration, because we do not know what we will find.
Working capital is the cost related to operating our office. It comprises expenses for mail, stationary and other office supplies, and legal and accounting fees related to filing reports with the SEC. Telephone, office equipment, and minor office services are provided free of charge as an accommodation by one of our officers and director, Oliver Xing. We have allocated a range of money for exploration. That is because we do not know how much will ultimately be needed for exploration. If our initial exploration proves positive results, we will expand the exploration activities.
If we discover significant quantities of mineralized material, we will begin technical and economic feasibility studies to determine if we have reserves. We estimate that the feasibility studies could cost somewhere between $10,000 and $50,000, depending on the estimated size of the ore body. Since we have no ore body, it is impossible to accurately estimate the cost of the feasibility studies. Only if we have reserves will we consider developing the property.
Once we have secured a property, and if through early stage exploration we find mineralized material and it is feasible to expand the exploration program, we will attempt to raise additional money through a subsequent private placement, public offering or through loans. If we do not raise all of the money we need, we will have to find alternative sources of funding, like a public offering, a private placement of securities, or loans from our officers or others.
We have discussed this matter with our officers and sole director. Our sole director has agreed to loan us money if we should need it, provided the amount needed is not unreasonable in light of all of the facts and circumstances at that time. At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and can’t raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely.
We will be conducting research in the form of exploration of the property we intend to secure. Our exploration program is explained in as much detail as possible in the business section of this registration statement. We are not going to buy or sell any plant or significant equipment during the next twelve months. We will not buy any equipment until we have located a body of minerals and we have determined they are economical to extract from the land.
We do not intend to interest other companies in the properties if we find mineralized materials. We intend to try to develop the reserves ourselves.
If we are unable to complete any phase of exploration because we don’t have enough money, we will cease operations until we raise more money. If we can’t or don’t raise more money, we will cease operations. If we cease operations, we don’t know what we will do and we don’t have any plans to do anything. In the event we fail in our exploration activity, we will cease operations and not sell the company. We do not intend to hire additional employees at this time. Any work that would be conducted on a property that we may secure will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.
No Operating History
We have no operations upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of properties we may secure, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we will have to conduct research and exploration of the properties we intend to acquire before we start exploration.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of Operations
From Inception on May 18, 2010
Since inception, we obtained a loan from Oliver Xing, our sole director and one of our officers to initiate operations. Cash provided by Oliver Xing from inception on May 18, 2010 to November 30, 2011 was $55,577 (November 30, 2010 - $35,370).
We had a net loss of $26,778 for the three-month ended November 30, 2011 (November 30, 2010 - $0) and net loss of $107,090 for the period of inception, May 18, 2010, to November 30, 2011. We utilized office space provided by our president and we concentrated our efforts in raising the funds for our business.
Liquidity and Capital Resources
At November 30, 2011, we had cash of $162,417 (November 30, 2010 - $13,170) and short-term note receivable of $294,210 (August 31, 2010 - $0.00). Note Receivable yields an interest of 8% per annum and is due on demand.
We are in the start-up stage of operations and have not yet generated any revenues. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns.
We will continue to seek additional financing in order to obtain the capital required to continue implementation of our business plan.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available to us on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to our existing shareholders.
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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ITEM 4.
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CONTROLS AND PROCEDURES.
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Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective due to limited segregation of duties, lack of independent directors, and no written internal control procedure manual. The Company plans to address the weakness in control as soon as the Company considers that the financial situation allows the Company to spend the limited resources to mitigate the weakness in control.
There were no material changes in our internal control over financial reporting during the quarter ended November 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not aware of any pending or threatened litigation against us or our officers and director in their capacity as such.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 12, 2011, our Form S-1 registration statement (SEC file no. 333-167804) was declared effective by the SEC. Pursuant to the S-1, we are offering 2,000,000 shares of common stock minimum, 5,000,000 shares maximum at an offering price of $0.10 per share in a direct public offering, without any involvement of underwriters or broker-dealers.
As at November 30, 2011, we have completed the maximum offering of 5,000,000 common stock at $0.10 per share and received $500,000 and closed the public offering.
We plan to use proceeds raised through the sale of the Company’s securities for operating expenses, working capital, and general corporate activities, including the acquisition of mineral properties if an opportunity arises that we believe would justify the expenditure and capital is available to make the acquisition.
ITEM 6. EXHIBITS
| Exhibit | Description | |
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31.1
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32.1
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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SIGNATURE
Pursuant to the requirements 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.
| CN Resources Inc. | |||
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Date: January 4, 2012
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By:
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/s/ Oliver Xing | |
| Oliver Xing | |||
| President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and sole member of the Board of Directors | |||
| Exhibit | Description | |
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31.1
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32.1
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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