Attached files
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| EX-32.1 - CERTIFICATION - Aim Exploration Inc. | aexe_ex321.htm |
| EX-31.2 - CERTIFICATION - Aim Exploration Inc. | aexe_ex312.htm |
| EX-31.1 - CERTIFICATION - Aim Exploration Inc. | aexe_ex311.htm |
| EX-32.2 - CERTIFICATION - Aim Exploration Inc. | aexe_ex322.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2015
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _________ to _________
Commission File Number: 333-182071
AIM EXPLORATION INC.
(Name of Small Business Issuer in its charter)
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Nevada
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67-0682135
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(state or other jurisdiction of incorporation or organization)
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(I.R.S. Employer I.D. No.)
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701 North Green Valley Parkway, Suite 200
Henderson, Nevada
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89012
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(Address of principal executive offices)
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(Zip Code)
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(844) 246-7378
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
APPLICABLE ONLY TO CORPORATE ISSUERS
As of December 15, 2015, the registrant had 89,100,000 shares of common stock outstanding and 100,000 of preferred stock outstanding.
Explanatory Note
Subsequent to the issuance of the Company's Form 10-Q for the quarterly period ended May 30, 2015, the Company’s new auditor identified errors in the financial statements for the nine months ended May 30, 2015. As a result, the accompanying condensed consolidated financial statements included in this amendment No. 1 to this Form 10-Q, the Company has restated its condensed consolidated financial statements and amended the notes submitted herewith to correct these errors.
The Company has not modified or updated disclosures presented in this Form 10-Q, except to reflect the effects of the restatement. Accordingly, this Amendment No. 1 to the Form 10-Q for the quarterly period ended May 30, 2015 does not reflect events occurring after the original filing date of the Form 10-Q on July 20, 2015 and does not modify or update those disclosures affected by subsequent events, except as specifically referenced herein. Information not affected by the restatement is unchanged and reflects the disclosures made at the time of the original filing of the Form 10-Q. References to the "Form 10-Q/A" herein shall refer to the Form 10-Q as amended by this Amendment No. 1 to the Form 10-Q.
AIM EXPLORATION INC.
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
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Item 1.
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Financial Statements (unaudited)
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Condensed Consolidated Balance Sheets
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4
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Condensed Consolidated Statements of Operations
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5
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Condensed Consolidated Statements of Cash Flows
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6
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Notes to Condensed Consolidated Financial Statements
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7
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Item 2.
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Management Discussion & Analysis of Financial Condition and Results of Operations
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12
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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14
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Item 4.
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Controls and Procedures
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14
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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15
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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22
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Item 3.
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Defaults Upon Senior Securities
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22
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Item 4.
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Mine Safety Disclosures
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22
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Item 5.
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Other information
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22
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Item 6.
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Exhibits
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22
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PART I – FINANCIAL INFORMATION
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015
(Unaudited)
Condensed Consolidated Balance Sheets of May 31, 2015 (Unaudited) and August 31, 2014
Condensed Consolidated Statements of Operations for the 3 and 9 months ended May 31, 2015 & 2014 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the 9 months ended May 31, 2015 & 2014 (Unaudited)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
AIM EXPLORATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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ASSETS
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May 31,
2015
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August 31,
2014
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CURRENT ASSETS
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Cash
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$ | 6,664 | $ | 1,862 | ||||
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Loans receivable
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45,800 | - | ||||||
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Deposits
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16,334 | 25,505 | ||||||
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Total Current Assets
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68,798 | 27,367 | ||||||
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Mineral property investment
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326,969 | 326,969 | ||||||
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TOTAL ASSETS
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$ | 395,767 | $ | 354,336 | ||||
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LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
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CURRENT LIABILITIES
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Accounts payable and accrued liabilities
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$ | 55,625 | $ | 26,232 | ||||
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Loans payable – related party
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323,813 | 183,481 | ||||||
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Convertible note – related party
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49,529 | - | ||||||
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Convertible note, net of unamortized discount
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28,891 | - | ||||||
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Derivative liability
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69,969 | - | ||||||
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Total Current Liabilities
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527,827 | 209,713 | ||||||
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Provisions
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- | 55,000 | ||||||
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TOTAL LIABILITIES
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527,827 | 264,713 | ||||||
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STOCKHOLDERS' EQUITY (DEFICIT)
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| Capital Stock | ||||||||
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| 250,000,000 shares of common stock, $0.001 par value Issued and outstanding 89,100,000 shares (83,750,000 shares outstanding as at August 31, 2014) | 89,100 | 83,750 | ||||||
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1,000,000 shares of preferred stock, $0.001 par value Issued and outstanding 100,000 shares (Nil as at August 31, 2014)
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100 | - | ||||||
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Additional paid in capital
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582,024 | 313,254 | ||||||
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Accumulated deficit
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(803,284 | ) | (307,381 | ) | ||||
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
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(132,060 | ) | 89,623 | |||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$ | 395,767 | $ | 354,336 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
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AIM EXPLORATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The accompanying notes are an integral part of these condensed consolidated financial statements
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AIM EXPLORATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
The accompanying notes are an integral part of these condensed consolidated financial statements
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Aim Exploration, Inc. (“Company”) is an exploration stage company as defined by FASB ASC 915. The Company was organized to engage in mineral exploration and has incurred losses totaling $803,284 since inception. The Company was incorporated on February 18, 2010 in the State of Nevada and established a fiscal year end at August 31.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements present the condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
Principles of Consolidation
The condensed consolidated statements incorporate the financial statements of the Company and its wholly-owned subsidiary, Aim Exploration SA, of Peru. All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at May 31, 2015 or 2014.
Advertising
Advertising costs are expensed as incurred. As of May 31, 2015, no advertising costs have been incurred.
Property
The Company does not own or rent any property. The Company’s office space is being provided by the president at no charge to the Company.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Income Taxes
The Company follows the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
Fair Value of Financial Instruments
The Company has adopted Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10"). ASC 820-10 defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure The adoption of ASC 820-10 requires that the Company disclose assets and liabilities that are recognized and measured at fair value on a non-recurring basis, presented in a three-tier fair value hierarchy, as follows:
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- Level 1. Observable inputs such as quoted prices in active markets;
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- Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
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- Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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The following presents the gross value of assets that were measured and recognized at fair value:
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- Level 1: none
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- Level 2: none
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- Level 3: none
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The Company adopted ASC 825-10, Financial Instruments, which permits entities to choose to measure many financial instruments and certain other items at fair value. The adoption of this standard did not have an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash and cash equivalents, accounts payable and accrued expenses, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.
Derivative Liability
The conversion features embedded in the outstanding convertible notes payable are separately accounted for as a derivative liability in accordance with ASC 815-15, Embedded Derivative. This is because the number of shares that may be acquired upon conversion is indeterminable as the conversion rates are expressed as a percentage discount to the current fair market value of common stock at the time of conversion. Derivative liabilities are valued when the host instruments (convertible notes) are initially issued and are also revalued at each reporting date, with the change in the respective fair values being recorded as a gain or loss to the derivative liability.
Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of Long-Lived Assets
In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Mineral Property Costs
Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. The Company has capitalized $326,969 of mineral property acquisition costs reflecting its investment in its properties.
Stock-based Compensation
The Company adopted FASB guidance on stock based compensation upon inception at February 18, 2010. ASC 718-10-30-2 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company has not had any stock and stock options issued for services and compensation for the period from inception (February 18, 2010) through May 31, 2015.
Recent Accounting Pronouncements
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This new standard will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount it expects to receive for those goods and services. The ASU requires additional disclosure about the
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The ASU will be effective for the Company beginning January 1, 2017, and allows for both retrospective and modified- retrospective methods of adoption. The Company is in the process of determining the method of adoption it will elect and is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.
In November 2014, the FASB issued ASU No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity . The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2014-16 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.
In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s financial statements. Early adoption is permitted.
In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period.
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – GOING CONCERN
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has a working capital deficit of $459,029, an accumulated deficit of $803,284 and net loss from operations since inception of $803,284. The Company does not have a source of revenue sufficient to cover its operation costs giving substantial doubt for it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merging with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern.
The Company is funding its initial operations by way of issuing common shares.
The officers and directors have committed to advancing certain operating costs of the Company, including Legal, Audit, Transfer Agency and Edgarizing costs.
NOTE 4 – MINERAL PROPERTY
Peruvian Mining Claims:
On June 23, 2014, Aim Exploration, Inc. entered into a Mining Concession Asset Acquisition Agreement (the “Agreement”) with Percana Mining Corp. (“Percana”). Pursuant to the Agreement, the Company acquired three separate mining concessions. Two of the concession titles are unencumbered and comprise 40% of the mining concessions. These two concessions are known as El Tunel Del Tiempo 1 code 11060780 and El Tunel Del Tiempo 2 code 11060781, and the registered ownership of these two concessions have been transferred to the Company. The third concession property known as Agujeros Negros MA-AG comprising the remaining 60% has not yet been transferred to the Company, however the
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 4 – MINERAL PROPERTY (Continued)
Peruvian Mining Claims (Continued):
Company has entered into a Contract of Mining Assignment and Option to Purchase the concession for a five year term. This contract provides AIM with full rights and authorities over the concession. .
In consideration for the above concessions, the Company has issued 15,750, 000 restricted common shares (Note 6) to Percana in two separate blocks; the first block consists of 6,300,000 common shares which are to be held in escrow until either the Company raises $1,000,000 or when Percana waives this requirement. The second block consists of 9,450,000 shares which are to be held in escrow until such time as the Company is satisfied at its discretion that any arbitration issues have been resolved with the third concession, at which time the shares may be released out of escrow at the option of Percana. These Mining Concessions were acquired based on the assumption the properties are rich in high grade Anthracite Coal, currently there are 20 small tunnels on the property already producing anthracite coal which was being mined by illegal miners. Testing of the coal samples was performed indicating the presence of high-grade anthracite coal. Prior to acquisition AIM reviewed a non-compliant technical report prepared by Engineers/Geologists together with hiring a US based firm Gustavson Associates to visit the property and review the reports. The firm provided AIM with a report, which included recommendation for further exploration.
NOTE 5 – CONVERTIBLE NOTE
During the nine months ended May 31, 2015, the Company issued convertible notes with a principal balance of $92,250, with maturity dates of November 6, 2015, and an interest rate per annum of 8%. The principal is convertible into common shares of the Company at a conversion rate equal to 55% of the lowest trading price of the Company’s common stock for the fifteen prior trading days, as defined in the agreements.
The Company is accounting for the conversion feature as a separate derivative liability under ASC 815. As such, the Company will carry the conversion feature liability at fair value on the balance sheet. The Company determined the fair value of the conversion feature as at the date of issuance and also as at each period end. To determine the put and call values, the Company used the Black-Scholes option valuation model using the following inputs:
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May 31, 2015
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May 31, 2014
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Fair value of common stock
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$ | 0.42 | – | |||||
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Exercise price
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$ | 0.2310 | – | |||||
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Contractual term
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1 year
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– | ||||||
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Volatility
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119.50 | % | – | |||||
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Risk-free interest rate
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0.12 | % | – | |||||
Volatility was determined using a peer group of public companies, and the Company used US treasuries with a similar contractual term to determine the risk-free interest rate.
On May 11, 2015, the Company exercised its option to redeem convertible notes with a principal balance of $47,250 within 180 days of their issuance, by opting to prepay the note at 150% of the principal amount plus accrued interest in the amount of $1,854. The Company recorded a loss on the repurchase of the convertible note in the amount of $20,664, which was credit to the additional paid in capital account.
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 5 – CONVERTIBLE NOTE (CONTINUED)
During the period ended May 31, 2015, the Company recognized change in fair value of derivative liability of $674 related to the change in fair value of the conversion feature. The change in fair value of the conversion feature is being recorded through operating results.
When recording the conversion feature liability at during the year, the Company recognized a 100% debt discount on the convertible notes payable of $92,250 and finance costs expense of $67,135 from amortization of debt discounts and excess of derivative liability over the face value of the note. The debt discount is being accreted to finance costs using the straight-line method over the one-year contractual term of the debt. During the period ended May 31, 2015, the Company also recognized in the normal course accretion of $34,089.
On May 1, 2015, the Company issued $100,000 of convertible note payable with a related party. The note bears interest at 8% per annum and is due on May 1, 2016. The note has conversion rights that allow the holder of the note ta any time to convert all or any part of the remaining principal balance into the Company’s common stock at a fixed price of $0.135. A debt discount of $55,556 was determined to exist and was recorded at the time of issue.
In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF has been recorded as a discount to the convertible notes payable, and to Additional Paid-in Capital.
NOTE 6 – CAPITAL STOCK
The Company’s has authorized 250,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 shares of preferred stock with a par value of $0.001 per share. At May 31, 2015, 89,100,000 shares of common stock were issued and outstanding, and 100,000 shares of preferred stock were issued and outstanding.
During the year ended August 31, 2013 the Company issued 18,000,000 shares to 6 shareholders for cash proceeds of $18,000.
In July 2014, the Company issued 15,750,000 common shares in connection with the acquisition of certain mining property. (Note 4)
During the period ended May 31, 2015, the Company issued 5,000,000 shares to 1 shareholder in connection with an asset acquisition agreement at fair value of $5,000. The Company also issued 350,000 shares to 1 shareholder in connection with a six-month investor relations campaign at fair value of $175,000.
During the period ended May 31, 2015, the Company issued 100,000 preferred shares to 1 shareholder at fair value of $18,000, a related party of the Company, in connection with services rendered.
NOTE 7 – LOAN PAYABLE - RELATED PARTIES
During the period ended May 31, 2015 and 2014, advances from a director of the Company were $Nil and $500, respectively. The amounts are unsecured, non-interest bearing and are due on demand.
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AIM EXPLORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2015 (unaudited)
NOTE 7 – LOAN PAYABLE - RELATED PARTIES (Continued)
During the period ended May 31, 2015 and 2014, advances from related parties were $166,128 and $39,887, respectively, and amounts advanced to one related party were $25,500 and $Nil, respectively. The amounts are unsecured, non-interest bearing and are due on demand.
NOTE 8 – SUBSEQUENT EVENTS
On August 7, 2015, the Company received a non-binding Letter of Intent to Purchase Anthracite Coal (the “LOI”) from Prina Energy Private Limited (“Prina”) in which Prina agrees to annually purchase 500,000 metric tons of anthracite coal from the Company. The Company notified Prina of its intent to accept the terms of the LOI on August 10, 2015. Coal delivered to Prina must meet certain specifications as provided by Prina and the Company must provide a two percent performance bond. The specific terms of the agreement between Prina and the Company, such as the price and contract period, are still being negotiated in good faith and will be memorialized in a separate, binding agreement between the parties.
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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
Results of Operation
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
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Results of Operations for the Nine months Ended May 31, 2015 Compared to the Same Period in 2014, and From February 18, 2010 (Inception) to May 31, 2015
No Revenues
Since our inception on February 18, 2010 to May 31, 2015, we have not yet earned any revenues. As of May 31, 2015, we have an accumulated deficit of $803,284. At this time, our ability to generate any significant revenues continues to be uncertain. Our financial statements contain an additional explanatory paragraph in Note 1, which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Net Loss
We incurred a net loss of $495,903 for the nine months ended May 31, 2015 compared to our net loss of $110,910 for the nine months ended May 31, 2014. The increase in net loss was mainly due to increased public relation, professional, finder’s fees, consulting and exploration fees as well as finance and interest costs related to the derivative liability component of the convertible notes issued during the period, offset by a gain realized on the repurchase of convertible notes. Since February 18, 2010 (date of inception) to May 31, 2015, we have incurred a net loss of $803,284.
Expenses
Our total net loss for the nine months ended May 31, 2015 were $495,903 compared to $110,910, for the same period in 2014. Our finder’s fee expense increased by $9,000 from $Nil for the nine months ended May 31, 2014. Office and general expenses increased by $16,417 from $19,826 for the nine months ended May 31, 2014 compared to $36,244 for the nine months ended May 31, 2015. Our office and general expenses consist of management and consulting fees, bank charges, travel, meals and entertainment, office maintenance, communications (cellular, internet, fax and telephone), courier, postage costs and office supplies. Our professional fees increased from $35,470 for the nine months ended May 31, 2014 to $121,396 for the nine months ended May 31, 2015. Public relation costs increased from $Nil for the nine months ended May 31, 2014 to $179,599 for the nine months ended May 31, 2015. Finance costs increased from $Nil for the nine months ended May 31, 2014 to $67,135 for the nine months ended May 31, 2015, and were related to the derivative liability component of the convertible notes issued during the period.
Liquidity and Capital Resources
As at May 31, 2015, our total assets were $395,767 compared to $354,336 in total assets at August 31, 2014. As at May 31, 2015, our current liabilities were $527,827, which was comprised of accounts payable of $55,625, loans from related party of $323,813, convertible notes, net of unamortized discount of $28,891, convertible debt to a related party, net of unamortized discount, of $49,529, and a derivative liability of $69,969. Stockholders’ deficit was $132,060 as of May 31, 2015 compared to stockholders' equity of $89,623 as of August 31, 2014.
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Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the nine months period ended May 31, 2015, net cash flows used in operating activities was $290,530, compared to $85,935 for the same period in 2014. For the period from inception (February 18, 2010) to May 31, 2015, net cash from operating activities was $530,149.
Cash Flows from Financing Activities
We have financed our operations primarily from advancements, convertible notes or the issuance of equity. For the nine month period ended May 31, 2015 net cash provided by financing activities was $295,332 compared to the nine month period ended in 2014, which was $79,556. For the period from inception (February 18, 2010) to May 31, 2015, net cash provided by financing activities was $536,813 received from proceeds from issuance of common stock, convertible notes, convertible notes to a related party, and related party loans.
Plan of Operation
Our plan of operation for the next twelve months is to grow our business through the exploration of our current properties and additional properties that we acquire.
Going Concern
Our independent auditors' review report accompanying our August 31, 2014 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Off-Balance Sheet Arrangements
As of May 31, 2015, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 4. CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting.
Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As management, it is our responsibility to establish and maintain adequate internal control over financial reporting. As of May 31, 2015, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting using criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, we concluded that the Company maintained ineffective internal control over financial reporting as of May 31, 2015, based on criteria established in the Internal Control Integrated Framework issued by the COSO.
This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this quarterly report.
Evaluation of disclosure controls and procedures.
As of May 31, 2015, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as of the date of filing this annual report applicable for the period covered by this report.
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Changes in internal controls.
During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of December 15, 2015 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
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Exhibit
Number
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Exhibit
Description
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31.1
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Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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EX-101.INS
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XBRL Instance Document
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EX-101.SCH
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XBRL Taxonomy Extension Schema
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EX-101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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EX-101.LAB
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XBRL Taxonomy Extension Label Linkbase
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EX-101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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EX-101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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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 our behalf by the undersigned thereunto duly authorized.
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SIGNATURE
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CAPACITY IN WHICH SIGNED
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DATE
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/s/ James Robert Todhunter
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President,
Chief Executive Officer
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December 16, 2015
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James Robert Todhunter
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/s/ Gregorio Formoso
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Secretary, Treasurer, Principal Accounting Officer,
Principal Financial Officer and Director
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December 16, 2015
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Gregorio Formoso
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