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2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
This section of this annual report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we obtain an interest in a property, find mineralized material, delineate an ore body, and begin removing and selling minerals.
Plan of Operation
We plan to explore and develop light oil and gas opportunities in Alberta, Canada. We have initiated joint venture discussions with other company to develop oil well in the Alberta, Canada.
We have commenced joint venture operation in drilling one oil well in Alberta, Canada and currently is evaluating the well and intend to further complete the well, if successful, we will equip the well and bring the well into production.
Our plan is to jointly develop oil wells with existing players in Alberta, Canada. The joint venture candidates we are seeking must have established oil reserve or development land with drilling locations identified, studied and ready to drill.
We then have to negotiate a reasonably favorable term with the joint venture partner before progressing to actual drilling the well.
We will consider our financial resources before entering into any joint venture arrangements.
We will engage technical expert in due diligence work before finalizing our joint venture arrangement. Once we have determined the development should proceed, we will attempt to raise additional money through a subsequent private placement, public offering or through loans. If we do not raise all of the money we need, we will have to find alternative sources of funding, like a public offering, a private placement of securities, or loans from our officers or others.
We have discussed this matter with our officers and director. Our director has agreed to loan us money if we should need it, provided the amount needed is not unreasonable in light of all of the facts and circumstances at that time. At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and cannot raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely.
We are not going to buy significant equipment during the next twelve months. We will not buy any equipment until we have generated revenue from oil well we drilled.
If we are unable to complete any phase of our well development program because we don’t have enough money, we will cease operations until we raise more money. If we do not raise more money, we will cease operations. If we cease operations, we don’t know what we will do and we don’t have any plans to do anything. In the event we fail in our exploration activity, we will cease operations and not sell the company. We do not intend to hire additional employees at this time. Any work that would be conducted on a property that we may secure will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.
No Operating History
We have no operations upon which to base an evaluation of our performance. We are an early stage development corporation and have not generated any revenues from operations except that we generated interest income. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of properties we may secure, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we will have to conduct research and due diligence work on the properties we intend to acquire before we start development program. We are actively sourcing and evaluating various oil and gas properties, but there is no assurance we will be able to complete an acquisition of mineral property of merit and successfully producing oil and generate revenue.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of Operations
From Inception on May 17, 2010 to August 31, 2013
Since inception, we obtained a loan from Oliver Xing, our sole director and one of our officers to initiate operations. Cash provided by financing activities from inception on May 17, 2010 to August 31, 2013 is $591,444 which consists of Director advances of $147,744 and repayments of $71,500 in addition to $515,200 from common stock issuance.
Liquidity and Capital Resources
On August 12, 2011, we closed our direct public offering without involvement of brokers or dealers and sold 5,000,000 shares of common stock in our public offering and raised $500,000.
As of August 31, 2013, we have cash of $18,419 (August 31, 2012 - $52,725) and our total assets were $438,222 (August 31, 2012 - $358,571) which consisted of unproved oil and gas assets of $419,515 and our total liabilities were $214,448 (August 31, 2012 - $35,312).