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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2015

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 333-180424

 

VALMIE RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   45-3124748
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     

1001 S Dairy Ashford Road, Suite 100

 
Houston, TX   77077
(Address of principal executive offices)   (Zip Code)

 

(713) 595-6675

(Registrant’s telephone number, including area code)

 

999 18th Street, Suite 3000

Denver, CO 80202

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

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 (§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 [X] 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 the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]   Accelerated filer [  ]   Non-accelerated filer [  ]   Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of April 20, 2015 the registrant had 63,879,270 shares of common stock outstanding.

 

 

 

 
 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION    
       
Item 1. Financial Statements (Unaudited)   3
  Balance Sheets   F-1
  Statements of Operations   F-2
  Statements of Changes in Stockholders’ Equity (Deficiency)   F-3
  Statements of Cash Flows   F-4
  Notes to Financial Statements   F-5
Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations   4
Item 3. Quantitative and Qualitative Disclosures About Market Risk   8
Item 4. Controls and Procedures   8
       
PART II – OTHER INFORMATION    
       
Item 1. Legal Proceedings   9
Item 1A. Risk Factors   9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   9
Item 3. Defaults Upon Senior Securities   9
Item 4. Mine Safety Disclosures   9
Item 5. Other Information   9
Item 6. Exhibits   9

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

VALMIE RESOURCES, INC.

INDEX TO FINANCIAL STATEMENTS

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

 

    Page
     
Balance Sheets   F-1
     
Statements of Operations   F-2
     
Statements of Changes in Stockholders’ Deficiency   F-3
     
Statements of Cash Flows   F-4
     
Notes to the Unaudited Interim Financial Statements   F-5 – F10

 

3
 

 

Valmie Resources, Inc.

Balance Sheets

(Stated in US Dollars)

(Unaudited)

 

   February 28, 2015   November 30, 2014 
ASSETS          
           
Current Assets          
Cash and cash equivalents (Note 3)  $5,277   $12,565 
Prepaid expenses   350    - 
Advances to Vertitek Inc. (Note 10)   25,500    - 
Total Current Assets   31,127    12,565 
Total Assets  $31,127   $12,565 
           
LIABILITIES          
           
Current Liabilities          
Accounts payable and accrued liabilities  $30,321   $83,250 
Due to related parties (Note 6)   44,809    44,809 
Total Current Liabilities   75,130    128,059 
Promissory Notes (Note 7)   274,616    67,805 
Total Liabilities   349,746    195,864 
           
STOCKHOLDERS’ DEFICIENCY          
           
Capital stock (Note 4)           
Authorized:          
10,000,000 preferred shares, $0.001 par value (Nil – November 30, 2014)          
750,000,000 common shares, $0.001 par value (750,000,000 – November 30, 2014)          
Issued and outstanding:        
2,000,000 preferred shares (Nil – November 30, 2014)   2,000    - 
59,040,000 common shares (296,400,000 – November 30, 2014)   59,040    296,400 
Additional paid-in capital   79,703    (155,657)

Retained deficit

   (459,362)   (324,042)
Total Stockholders’ Deficiency   (318,619)   (183,299)
           
Total Liabilities and Stockholders’ Deficiency  $31,127   $12,565 

 

The accompanying notes are an integral part of these financial statements

 

F-1
 

 

Valmie Resources, Inc.

Statements of Operations

(Stated in US Dollars)

(Unaudited)

 

   Three Months Ended
February 28, 2015
   Three Months Ended
February 28, 2014
 
         
Revenue  $-   $- 
           
Operating Expenses          
General and administrative   7,003    - 
Management fees   11,000    - 
Professional fees   110,060    17,595 
Transfer agent fees   446    200 
           
Loss from Operations   (128,509)   (17,795)
           
Other Expenses          
Interest   (6,811)   - 
           
Net Loss   (135,320)   (17,795)
           
Basic and Diluted Loss per Common Share  $(0.00)  $(0.00)
           
Weighted Average Number of Common Shares Outstanding   182,992,667    296,400,000 

 

The accompanying notes are an integral part of these financial statements

 

F-2
 

 

Valmie Resources, Inc.

Statements of Changes in Stockholders’ Deficiency

(Stated in US Dollars)

(Unaudited)

 

   Preferred Stock   Common Stock   Additional         
   Number
of Shares
   Amount   Number of
Shares
   Amount   Paid-in
Capital
   Retained
Deficit
   Stockholders’
Deficiency
 
Balance November 30, 2013   -   $-    296,400,000   $296,400   $(155,657)  $(159,887)  $(19,144)
Loss for the period   -    -    -    -    -    (17,795)   (17,795)
Balance – February 28, 2014   -    -    296,400,000    296,400    (155,657)   (177,682)   (36,939)
Loss for the period   -    -    -    -    -    (146,360)   (146,360)
Balance – November 30, 2014   -    -    296,400,000    296,400    (155,657)   (324,042)   (183,299)
Exchange of Common Stock for Preferred Stock   2,000,000    2,000    (237,360,000)   (237,360)   235,360    -    - 
Loss for the period             -    -    -    (135,320)   (135,320)
Balance – February 28, 2015   2,000,000   $2,000    59,040,000   $59,040   $79,703   $(459,362)  $(318,619)

 

The accompanying notes are an integral part of these financial statements

 

F-3
 

 

Valmie Resources, Inc.

Statements of Cash Flows

(Stated in US Dollars)

(Unaudited)

 

   Three Months Ended
February 28, 2015
   Three Months Ended
February 28, 2014
 
         
Cash Flows from Operating Activities          
Net loss for the period  $(135,320)  $(17,795)
Changes in operating assets and liabilities:          
Accounts payable and accrued liabilities   (52,929)   7,595 
Prepaid expenses   (350)   5,000 
Interest accrual   6,811    - 
Net cash used in operations   (181,788)   (5,200)
           
Cash Flows from Investing Activities          
Advances to Vertitek Inc.   (25,500)   - 
Net cash used in investing activities   (25,500)   - 
           
Cash Flows from Financing Activities          
Proceeds from related party payable   -    5,200 
Proceeds from promissory notes   200,000    - 
Net cash provided by financing activities   200,000    5,200 
           
Change in cash and cash equivalents   (7,288)   - 
           
Cash and cash equivalents - beginning of period   12,565    - 
           
Cash and cash equivalents - end of period  $5,277   $- 
           
Supplementary Cash Flow Information          
Cash paid for:          
Interest  $-   $- 
Income taxes  $-   $- 

 

The accompanying notes are an integral part of these financial statements

 

F-4
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

1. Organization

 

Valmie Resources, Inc. (the “Company”) was incorporated on August 26, 2011, in the State of Nevada, USA. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”), and the Company’s fiscal year end is November 30.

 

In early December 2014, the Company changed its business focus from mining to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding technology industry. The Company is seeking to develop or acquire concepts with valid business models positioned to make a significant impact within the four key technology “megasectors”: software, hardware, networking and semiconductors.  

 

2. Basis of Presentation

 

Unaudited Interim Financial Statements

 

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended November 30, 2014, included in the Company’s Form 10-K filed with the SEC. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-Q. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended February 28, 2015, are not necessarily indicative of the results that may be expected for the year ending November 30, 2015.

 

3. Cash and Cash Equivalents

 

   February 28, 2015   November 30, 2014 
         
Cash on deposit  $1,800   $3,027 
Funds held in trust   3,477    9,538 
   $5,277   $12,565 

 

4. Capital Stock

 

Authorized Stock

 

At inception, the Company authorized 100,000,000 shares of common stock with a par value of $0.001 per share. Each share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

On December 3, 2013, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in its authorized capital from 100,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”). The Company formally effected the Authorized Capital Increase on December 4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.

 

F-5
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

4. Capital Stock (continued)

 

On December 3, 2013, the Company’s sole director approved a stock dividend of 59 authorized but unissued shares of its common stock on each one (1) issued and outstanding share of its common stock held by shareholders of record as of December 16, 2013. The payment date for the stock dividend was December 17, 2013, as determined by the Financial Industry Regulatory Authority (FINRA). Upon the payment of the stock dividend, the Company had 296,400,000 issued and outstanding shares of common stock, which represents an increase of 291,460,000 shares over its prior total of 4,940,000 issued and outstanding shares of common stock. The split is reflected retrospectively in the accompanying financial statements.

 

On December 10, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved a set of amended and restated articles of incorporation that, among other things, increased the Company’s authorized capital to 760,000,000 shares, consisting of 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of “blank check” preferred stock, par value $0.001.

 

On December 11, 2014, the sole director of the Company approved the designation of 2,000,000 shares of the Company’s authorized but unissued “blank check” preferred stock, par value $0.001, as Series “A” preferred stock. The shares of Series “A” preferred stock carry certain rights and preferences, may be converted into shares of the Company’s common stock on a 10 for one (1) basis at any time after 18 months from the date of issuance, and each share of Series “A” preferred stock has voting rights and carries a voting weight equal to 50 shares of common stock. The Company formally effected the designation by filing a Certificate of Designation with the Nevada Secretary of State on January 15, 2015.

 

Share Issuances

 

On January 16, 2015, the owner of an aggregate of 237,360,000 shares of the Company agreed to cancel those shares in exchange for the issuance of 2,000,000 shares of Series “A” preferred stock. As a result, the number of issued and outstanding shares of the Company’s common stock decreased from 296,400,000 to 59,040,000.

 

As of February 28, 2015 the Company had 59,040,000 issued and outstanding shares of common stock and 2,000,000 issued and outstanding shares of Series “A” preferred stock.

 

At February 28, 2015, the Company had no issued or outstanding stock options or warrants.

 

5. Mineral Property Costs

 

Lander County, Nevada Claims

 

On September 30, 2011, the Company entered into an option agreement that would provide for the purchase of a 100% interest in the Carico Lake Valley Property (the “Property”). The Property is located in the State of Nevada.

 

To complete the option, the agreement requires the Company to make the following payments and incur the following amounts on exploration and development:

 

a) $15,000 cash on September 30, 2011 (paid);
   
b) an additional $30,000 cash on September 30, 2013 (not paid);

 

F-6
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

5. Mineral Property Costs (continued)

 

c) an additional $60,000 cash on September 30, 2013 (not paid);
   
d) an additional $120,000 cash on September 30, 2014 (not paid) and
   
e) incur a minimum of $125,000 ($12,654 has been incurred as of February 28, 2015) on exploration and development work by December 31, 2013 and every subsequent year thereafter, through 2014.

 

The entity that owns the Property has made the 2014 payments due to the Bureau of Land Management, Nevada (“BLM”) and Lander County. The payments ($6,406) are reflected in accounts payable and accrued liabilities.

 

The Company is responsible for any and all property payments due to any government authority on the property during the term of this option agreement (BLM: $3,920 yr., Lander County: $294 yr.).

 

The entity that owns the Property terminated the option agreement with the Company on July 28, 2014 and the above mentioned reimbursement of $6,406 remains outstanding. The Company has no further rights to the Property.

 

6. Related Party Transactions

 

During the period ended February 28, 2015, the Company paid management fees of $5,000 (2014 - $Nil) to a former director and $6,000 (2014 - $Nil) to its current President.

 

As of February 28, 2015, the Company was obligated to a former director for non-interest bearing, unsecured and with no fixed terms of repayment loans with a balance of $27,396 (November 30, 2014 – $19,146). The Company also owed $17,313 to its majority shareholder at February 28, 2015 (November 30, 2014 – $25,663) and $100 to its former President and director.

 

7. Promissory Notes

 

On August 18, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on August 18, 2016. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of February 28, 2015, $50,000 was received and interest accrued of $4,007.

 

On October 22, 2014, the Company entered into a promissory note agreement with Investor B for an aggregate amount of $15,000 plus simple interest at an annual interest rate of 15%, repayable on October 22, 2016. As of February 28, 2015, $15,000 was received and interest accrued of $801.

 

On November 23, 2014, the Company entered into a promissory note agreement with Investor C for an aggregate amount of $75,000 plus simple interest at an annual interest rate of 15%, repayable on November 23, 2016. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of February 28, 2015, $75,000 was received and interest accrued of $2,558.

 

F-7
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

7. Promissory Notes (continued)

 

On December 29, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $75,000 plus simple interest at an annual interest rate of 15%, repayable on December 29, 2016. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of February 28, 2015, $75,000 was received and interest accrued of $1,634.

 

On January 26, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on January 26, 2017. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of February 28, 2015, $50,000 was received and interest accrued of $616.

 

On February 27, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000 plus simple interest at an annual interest rate of 15%, repayable on February 27, 2017. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of February 28, 2015, $Nil was received and interest accrued of $Nil.

 

8. Provision for Income Taxes

 

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.

 

Exploration stage deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from August 26, 2011 (date of inception) through February 28, 2015 of $459,362 will begin to expire in 2031. Accordingly, deferred tax assets of approximately $160,777 were offset by the valuation allowance.

 

The Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.

 

The Company has no tax position at February 28, 2015 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at February 28, 2015. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended exploration stage activities. The tax years for November 30, 2014, 2013, 2012 and 2011 are still open for examination by the Internal Revenue Service (IRS).

 

   2015 
   Amount   Tax Effect (35%) 
         
Net operating losses  $135,320   $47,362 
           
Valuation allowance   (135,320)   (47,362)
           
Net deferred tax asset (liability)  $-   $- 

 

   2014 
   Amount   Tax Effect (35%) 
         
Net operating losses  $17,795   $6,228 
           
Valuation allowance   (17,795)   (6,228)
           
Net deferred tax asset (liability)  $-   $- 

  

F-8
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

9. Going Concern and Liquidity Considerations

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at February 28, 2015, the Company had a working capital deficiency of $44,003 (November 30, 2014 – $115,494) and a retained deficit of $459,362 (November 30, 2014 – $324,042). The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next 12 months.

 

The ability of the Company to continue in existence is dependent upon, among other things obtaining additional financing to continue operations and the operations of Vertitek. See Note 10.

 

In response to these problems, management intends to raise additional funds through public or private placement offerings.

 

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

F-9
 

 

Valmie Resources, Inc.

Notes to Financial Statements

February 28, 2015

(Stated in US Dollars)

(Unaudited)

 

10. Commitments

 

On January 20, 2015, the Company entered into a letter of intent (the “LOI”) to acquire 100% of the capital stock of Vertitek Inc. (“Vertitek”), a Wyoming company engaged in the development of hardware systems and platforms for use in the semiautonomous unmanned vehicles industry. Pursuant to the LOI, the Company has 60 days to complete its due diligence on Vertitek and negotiate the term of a definitive acquisition agreement. During the 60-day due diligence period, the Company is obliged to provide Vertitek with a $150,000 line of credit and has the exclusive right to market Vertitek’s technologies and industry solutions. As of February 28, 2015, the Company has advanced a total of $25,500 to Vertitek. On January 27, 2015 the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Vertitek and the sole shareholder of Vertitek, Masamos Services Ltd., a Cypriot corporation (“Masamos”), on substantially the same terms as the LOI whereby Vertitek will become the Company’s wholly owned subsidiary upon the closing of the transaction.

 

Pursuant to a consulting agreement dated September 1, 2014, the Company is obligated to pay one consultant $25,000 per month for a term of one year and reimburse the consultant’s reasonable expenses incurred in the course of providing services under the agreement. As of February 28, 2015, the Company had paid or accrued $177,500 in fees and expenses under the agreement.

 

11. Subsequent Events

 

On March 2, 2015, the Company received $25,000 from Investor A pursuant to the promissory note agreement dated February 27, 2015. See Note 7.

 

On March 20, 2015, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on March 20, 2017. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. On April 10, 2015, the Company received the $50,000.

 

On March 31, 2015, the closing of the Share Exchange Agreement occurred and the Company issued 1,000,000 shares of common stock to Masamos in exchange for 100% of the issued and outstanding shares of Vertitek. As a result, Vertitek became a wholly owned subsidiary of the Company.

 

On April 6, 2015, the Company entered into debt conversion agreements with Investor A and Investor C pursuant to which those investors converted an aggregate of $350,000 in debt into 3,500,000 shares of common stock. As part of those debt conversion agreements, each of Investor A and Investor C agreed to forgive any and all accrued interest and release their respective security interests in the assets, rights or other property of the Company.

 

On April 6, 2015, the Company entered into a debt conversion agreement with one creditor pursuant to which the creditor converted an aggregate of $33,927 in debt into 339,270 shares of common stock.

 

The Company has evaluated subsequent events from February 28, 2015, through the date these financial statements were issued and determined that, other than as described above, there are no additional items to disclose.

 

F-10
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

As used in this quarterly report, the terms “we”, “us” and “our” mean Valmie Resources, Inc. and all dollar amounts refer to U.S. dollars, unless otherwise indicated.

 

Forward-Looking Statements

 

This quarterly report contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements”, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; 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 any 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 discussion of our financial condition and results of operations is 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, including the notes thereto, that appear elsewhere in this quarterly report. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

Overview

 

We were incorporated pursuant to the laws of the State of Nevada on August 26, 2011. We have one wholly owned subsidiary, Vertitek Inc. (“Vertitek”), a Wyoming corporation. From our inception until the quarter ended August 31, 2014, we were a mineral exploration company exploring for precious metals, or gold and silver targets. Our property, known as the Carico Lake Valley Property (the “Property”), was located in Lander County, Nevada.

 

In July 2014, we were notified by the landowner that our option to acquire an interest in the Property had been terminated and that the Property had been sold to a third party. Our efforts from that date until the end of our fiscal year were primarily directed to identifying new development properties.

 

In early December 2014, our majority shareholder determined it was in the best interests of our shareholders to change our business focus from mining to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding technology industry. We therefore have been seeking to develop or acquire concepts with valid business models positioned to make a significant impact within the four key technology “megasectors”: software, hardware, networking and semiconductors.

 

Business Strategy

 

The first major step in our shift to the technology sector was the appointment of Gerald B. Hammack as our sole officer and director on December 8, 2014. Mr. Hammack has more than 30 years of experience in a variety of technology-related fields, including programming, digital telephony and database management, as well as substantial expertise in the setup and management of complex data processing systems.

 

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Over the past several years, Mr. Hammack has been developing a series of software platforms and technologies designed to provide the near real-time data processing required by the ever-expanding use of commercial Unmanned Aerial Vehicles or UAV’s (more commonly referred to as drones). Towards the end of 2014 we rebranded Mr. Hammack’s development efforts to date as the AIMD (Automated Intelligence for Mobile Devices) data processing platform and adopted them as our own. As of the date of this quarterly report we have not yet entered into a formal agreement with Mr. Hammack regarding the assignment of this property to us; however, we expect to enter into such an agreement in the near future to formalize this arrangement.

 

While in the process of launching the AIMD platform we determined that it would be necessary to find a partner that had the technology and experience in the design and manufacture of UAV’s in order to design and build a prototype unit to test and refine our product and service offerings. After extensive investigation we located an up and coming UAV manufacturer, Vertitek. Vertitek’s hardware and software technology enables a sophisticated level of autonomy for UAV’s and other autonomous mobilized devices, including precision guidance controls and advanced safety features. Vertitek’s under development commercial V-1 DroneSM is a multi-rotor platform that incorporates an integrated, fully autonomous autopilot, which could be connected to, and controlled from, the AIMD platform.

 

After significant discussion with Vertitek and its principal shareholder, on January 20, 2015 we entered into a letter of intent (the “LOI”) with Vertitek to acquire 100% of the capital stock of that company in exchange for the issuance of shares of our common stock to the principal shareholder of Vertitek, contingent upon certain due diligence requirements. Following the execution of the LOI, we combined our development efforts with those of Vertitek to deliver our customers with the most advanced product and service offerings in the commercial UAV industry. On January 27, 2015 we entered into a share exchange agreement with Vertitek and the sole shareholder of Vertitek, Masamos Services Ltd., a Cypriot corporation, on substantially the same terms as the LOI.

 

As of February 28, 2015, we had advanced a total of $25,500 to Vertitek under a line of credit in the amount of $150,000 to continue the development of the V-1 DroneSM. On March 31, 2015, the share exchange agreement closed and Vertitek became our wholly owned subsidiary.

 

Results of Operations

 

Revenues

 

We have not generated any revenue since our inception. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenue during the next 12 months continues to be uncertain.

 

Expenses

 

During the three months ended February 28, 2015, we incurred $128,509 in operating expenses, including $110,060 in professional fees, $7,003 in general and administrative expenses, $11,000 in management fees and $446 in transfer agent fees. During the same period in fiscal 2014, we incurred $17,795 in operating expenses, including $17,595 in professional fees and $200 in transfer agent fees. The $110,714 increase in our operating expenses between the two periods was therefore primarily attributable to the significant increase in our professional fees, which was in turn related to our obligations under a consulting agreement we entered into on September 1, 2014.

 

During the three months ended February 28, 2015, we also incurred $6,811 in interest expenses, whereas we did not incur any interest expenses during the same period in fiscal 2014.

 

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Net Loss

 

During the three months ended February 28, 2015, we incurred a net loss of $135,320, whereas we incurred a net loss of $17,795 during the same period in fiscal 2014. Our basic and diluted net loss per share during each of those periods was $0.00.

 

Liquidity and Capital Resources

 

As of February 28, 2015, we had $5,277 in cash and cash equivalents, $31,127 in current and total assets, $75,130 in current liabilities, $349,746 in total liabilities, a working capital deficit of $44,003 and a retained deficit of $459,362.

 

During the three months ended February 28, 2015, we used $181,788 in net cash on operating activities and our accounts payable decreased by $52,929. During the same period in fiscal 2014 we used $5,200 in net cash on operating activities and our accounts payable increased by $7,595. The majority of our spending on operating activities for the three months ended February 28, 2015 was attributable to our net loss as described above, as adjusted for changes in our accounts payable and accrued liabilities, and was associated with carrying out our reporting obligations under applicable securities laws and transitioning our business focus from mining to pursuing opportunities for the commercialization of products and services in the technology industry.

 

During the three months ended February 28, 2015, we used $25,500 in net cash on investing activities, all of which was in the form of advances to Vertitek. During the same period in fiscal 2014, we did not use any net cash on investing activities.

 

During the three months ended February 28, 2015, we received $200,000 from financing activities, all of which was in the form of proceeds from promissory notes. During the same period in fiscal 2014, we received $5,200 from financing activities, all of which was in the form of proceeds from a related party.

 

During the three months ended February 28, 2015, our cash position decreased by $7,288 due to a combination of our operating, investing and financing activities.

 

Our plans for the next 12 months are uncertain due to our current financial condition; however, we intend to raise additional funds through public or private placement offerings. If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us. In the absence of such financing, we may be forced to cease or significantly curtail our operations.

 

Plan of Operations

 

We will need to raise additional capital to fully develop our business plan. We have a 24-month plan during which we intend to implement our business development and marketing plan. We believe we must raise approximately $1,500,000 to pay for expenses associated with the continued development of our AIMD platform as well as the development and commercialization of the Vertitek V-1 DroneSM. Of this, we plan to use $500,000 to finance anticipated activities during Phase I of our development plan as described below, and $1,000,000 to finance anticipated activities during Phase II.

 

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Phase I

 

Description  Estimated Amount
($)
 
Complete the development of the AIMD platform   200,000 
Finalize the design of the Vertitek V-1 DroneSM   150,000 
Hire sales staff to work with potential clients   50,000 
Additional working capital to cover general and administrative expenses   100,000 
Total   500,000 

 

Phase II

 

Description  Estimated Amount
($)
 
Complete small-scale manufacturing of the Vertitek V-1 DroneSM   500,000 
Sales literature, displays and advertising expenses   200,000 
Management and consulting fees, employee salaries   200,000 
Additional working capital to cover general and administrative expenses   100,000 
Total   1,000,000 

 

Many of the developments enumerated in Phase II are dependent on the completion of our Phase I objectives, and both phases are dependent on us obtaining additional financing. There can be no assurance that we will be able to secure such financing, and if we are able to raise some but not all of the funds required to undertake the developments in Phase I and Phase II our management will likely need to re-examine our proposed business activities to use our resources most efficiently. In this event, our focus will likely be on spending available funds to maintain our reporting status with the SEC and developing our product designs to attract investors.

 

If we are unable to raise additional funds, we will not be able to complete any of the milestones in either Phase I or Phase II. Due to the fact that many of the milestones are dependent on each other, if we are unsuccessful in obtaining additional financing we may not be able to implement any facets of our business plan.

 

We intend to pursue capital through public or private financing as well as borrowings and other sources, such as loans from our existing shareholders in order to finance our businesses activities. We cannot guarantee that additional funding will be available on favourable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis, which contemplates, among other things, that we will continue to realize our assets and satisfy our liabilities in the normal course of business. As at February 28, 2015, we had a working capital deficit of $44,003 and a retained deficit of $459,362. We intend to fund our operations through equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements for the next 12 months.

 

Our ability to continue in existence is dependent upon, among other things, obtaining additional financing to continue our operations and the operations of Vertitek. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, management, with the participation of our Chief Executive and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, management concluded that our disclosure controls and procedures were effective as of the date of filing this report applicable for the period covered by this report.

 

Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our properties is the subject. Our management is not aware of any such legal proceedings contemplated by any governmental authority against us.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit
Number
  Exhibit Description
31.1*   Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1*   Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
101.INS**   XBRL Instance Document
     
101.SCH**   XBRL Taxonomy Extension Schema
     
101.CAL**   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF**   XBRL Taxonomy Extension Definition Linkbase
     
101.LAB**   XBRL Taxonomy Extension Label Linkbase
     
101.PRE**   XBRL Taxonomy Presentation Linkbase

 

* Filed herewith.

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this quarterly report on Form 10-Q shall be deemed “furnished” and not “filed”.

  

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SIGNATURES

 

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.

 

  VALMIE RESOURCES, INC.
  (Registrant)
   
Date: April 20, 2015 /s/ Gerald B. Hammack
  Gerald B. Hammack
  Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director

 

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