NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
April
30, 2017 and 2016
Note
1
Nature of Operations and Ability to Continue as a Going Concern
The
Company was incorporated in the state of Nevada, USA on April 9, 2014. The Company was formed for the purpose of acquiring and
developing mineral properties.
Basis
of presentation
These
consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to
a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next
fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do
not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should
the Company be unable to continue as a going concern. The Company has yet to achieve profitable operations, has accumulated losses
of $166,292 and expects to incur further losses in the development of its business, all of which casts substantial doubt about
the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other
sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management
has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by
equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable
terms, if at all. The consolidated financial statements do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot
continue in existence.
Note
2
Summary of Significant Accounting Policies
Use
of Estimates
The
consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates,
which may have been made using careful judgment. Actual results may vary from these estimates.
Principles
of Consolidation
These
consolidated financial statements include the accounts of the Company and NRC Exploration LLC., a wholly owned subsidiary incorporated
in Nevada, USA on May 8, 2014. All inter-company transactions and balances have been eliminated.
Cash
Cash
consists of all highly liquid investments that are readily convertible to cash within 90 days when purchased.
Related
party
The
Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party
transactions.
Note
2
Summary of Significant Accounting Policies
– (cont’d)
Mineral
Property
The
Company is primarily engaged in the acquisition, exploration and development of mineral properties.
Mineral
property acquisition costs are capitalized in accordance with FASB ASC 930, “Extractive Activities-Mining,” when management
has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate
financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted
exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization
are not met.
In
the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair
value at the time the shares are due in accordance with the terms of the property agreements.
Mineral
property exploration costs are expensed as incurred.
When
it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves
and pre-feasibility, the costs incurred to develop such property are capitalized.
Estimated
future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production
basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management
based on current regulations, actual expenses incurred, and technology and industry standards.
Any
charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration
expenditures are charged to the accumulated provision amounts as incurred.
To
date the Company has not established any proven or probable reserves on its mineral properties.
Asset
Retirement Obligations
Asset
retirement obligations (“ARO”) associated with the retirement of a tangible long-lived asset, are recognized as liabilities
in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated
assets. The cost of tangible long-lived assets, including the initially recognized ARO, is amortized, such that the cost of the
ARO is recognized over the useful life of the assets.
The
ARO is recorded at fair value, and accretion expense is recognized over time as the discounted fair value is accreted to the expected
settlement value.
The
fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free
interest rate. As of April 30, 2017 the Company has determined no provision for ARO’s is required.
Note
2
Summary of Significant Accounting Policies
– (cont’d)
Impairment
of Long- Lived Assets
The
Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17 if events
or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment
analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-0 through
15-5, Impairment or Disposal of Long- Lived Assets.
Foreign
Currency Translation
The
Company’s functional and reporting currency is the United States dollar.
Assets
and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and
capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange
prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included
in the Accumulated Other Comprehensive Income account in stockholder’s deficit, if applicable. Transactions undertaken in
currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction
date. Any exchange gains and losses are included in the Statement of Operations.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing
assets and liabilities and loss carry-forwards and their respective tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
The
effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation
allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Loss
per share
In
accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings per share
(“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common
shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to
all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the
treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased
from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method.
Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.
Recent
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and
does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
Note
3
Financial Instruments
The
carrying value of the Company’s financial assets and liabilities which consist of cash, notes payable, accounts payable
and accrued liabilities, and due to related parties in management’s opinion approximate their fair value due to the short
maturity of such instruments.
Note
4
Mineral Property
On
May 20, 2014, the Company’s wholly owned subsidiary, NRC Exploration Ltd (“NRC”) entered into a property option
agreement whereby NRC was granted an option to earn up to an 100% interest in the Donald mineral claim #1028301”. The Donald
claim is located in the Omineca mining district of the Province of British Columbia Canada, and comprises 517 hectares.
Consideration
for the option consists of cash payments totalling $11,150, of which $1,150 is payable upon the execution of the agreement (paid)
and $ 10,000 is due on or before April 30, 2017.
In
May 2015, the underlying claims lapsed and the Company recorded an impairment of $1,150 during the year ended April 30, 2015,
resulting in the property being recorded at $nil at April 30, 2017 and 2016.
Note
5
Related Party Transactions
An
officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such
costs are immaterial to the financial statements and accordingly are not reflected herein.
On
April 28, 2014, the Company’s former president loaned $23,000 to the Company and the Company issued a promissory note in
the amount of $23,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On
June 29, 2015, the Company’s former president loaned $7,000 to the Company and the Company issued a promissory note in the
amount of $7,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On
August 26, 2015, the Company’s former president loaned $3,600 to the Company and the Company issued a promissory note in
the amount of $3,600. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On
October 26, 2015, the Company’s former president loaned $4,000 to the Company and the Company issued a promissory note in
the amount of $4,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On
February 9, 2016, the Company’s former president loaned $1,500 to the Company and the Company issued a promissory note in
the amount of $1,500. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
No
payments have been made on the above notes, and the total principal due on these notes at April 30, 2017 and 2016 is $39,100.
(Note 9)
During
the year ended April 30, 2017, the Company accrued interest expense of $2,346 (year ended April 30, 2016 - $2,025) pursuant to
these notes payable. Total accrued interest on these note as of April 30, 2017 and 2016 was $5,759 and $3,413, respectively. (Note
9)
During
the year ended April 30, 2017 the Company’s President advanced the Company $34,602. The advance is unsecured, bears no interest,
and has no set repayment date.
Note
6
Capital Stock
The
authorized common stock of the Company consists of 90,000,000 shares of common stock with par value of $0.001 and 10,000,000 shares
of preferred stock with a par value of $0.001.
Note
7
Notes Payable
On
April 6, 2016, $23,978 was loaned to the Company by an unrelated party. The loan has an interest rate of 6 % per annum, is unsecured
and is due on demand. (Note 9)
On
April 30, 2016, $25,000 was loaned to the Company by an unrelated party. The loan has an interest rate of 6 % per annum, is unsecured
and is due on demand. (Note 9)
No
payments have been made on the above notes, and the total interest due on these notes at April 30, 2017 and 2016 is $3,033 and
$nil, respectively. (Note 9)
Note 8
Income Taxes
A
reconciliation of the income tax provision computed at statutory rates to the reported tax provision is as follows:
|
|
Year
Ended
April 30, 2017
|
|
|
|
Year
Ended
April 30, 2016
|
|
Basic
statutory and state income tax rate
|
|
35%
|
|
|
|
35%
|
|
Approximate
loss before income taxes
|
$
|
79,279
|
|
|
$
|
43,532
|
|
Expected
approximate tax recovery on net loss, before income tax
|
|
27,748
|
|
|
|
15,236
|
|
Changes
in valuation allowance
|
|
(27,748
|
)
|
|
|
(15,236
|
)
|
Deferred
income tax recovery
|
$
|
—
|
|
|
$
|
—
|
|
Significant
components of the Company’s deferred tax assets and liabilities are as follows:
|
Year
Ended
|
|
Year
Ended
|
|
April
30, 2017
|
|
April
30, 2016
|
Deferred
income tax assets
|
|
|
|
|
|
|
|
Non-capital
losses carried forward
|
$
|
58,203
|
|
|
$
|
30,455
|
|
Less:
valuation allowance
|
|
(58,203
|
)
|
|
|
(30,455
|
)
|
|
|
|
|
|
|
|
|
Deferred
income tax assets
|
$
|
—
|
|
|
$
|
—
|
|
At
April 30, 2017, the Company has incurred accumulated net operating losses in the United States of America totalling approximately
$166,292 which are available to reduce taxable income in future taxation years.
These
losses expire as follows:
Year
of Expiry
|
|
Amount
|
|
|
|
|
2033
|
|
|
$
|
1,482
|
|
|
2034
|
|
|
|
41,999
|
|
|
2035
|
|
|
|
43,532
|
|
|
2036
|
|
|
|
79,279
|
|
|
Total
|
|
|
$
|
166,292
|
|
Note
8
Subsequent events
Subsequent
to year end the Company’s former president forgave a series of loans totalling $44,859 in principal and interest.
Also subsequent the year end an unrelated third party forgave a pair of loans totalling $52,011 in principal and interest. (Notes
5 & 7)