UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10–Q

 

(Mark One)

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

 

For the quarterly period ended January 31, 2018

 

or

 

o 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: 000-55233

 

Diamante Minerals Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

27-3816969

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

203-1634 Harvey Avenue

Kelowna, British Columbia, Canada V1Y 6G2

(Address of principal executive offices)

 

250-860-8599

(Registrant’s telephone number, including area code)

    

____________________________________________________________

(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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one).

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

 

 

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

 

As of March 2, 2018, there were 52,042,286 shares of the issuer’s common stock, par value $0.001, outstanding.

 

 
 
 
 

DIAMANTE MINERALS, INC.

 

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2018

TABLE OF CONTENTS

 

 

 

 

 

PAGE

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

Item 1.

Unaudited Financial Statements.

 

 

 

4

 

 

 

 

 

 

Item 2.

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

 

 

 

15

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

 

 

20

 

 

 

 

 

 

Item 4.

Controls and Procedures.

 

 

 

21

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings.

 

 

 

23

 

 

 

 

 

 

Item 1A.

Risk Factors.

 

 

 

23

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

 

 

23

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities.

 

 

 

23

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures.

 

 

 

23

 

 

 

 

 

 

Item 5.

Other Information.

 

 

 

23

 

 

 

 

 

 

Item 6.

Exhibits.

 

 

 

24

 

 

 

 

 

SIGNATURES

 

 

 

25

 

 

 
2
 
 

 

Forward-Looking Statements

 

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should carefully review the risks and other factors described in our most recent Annual Report on Form 10-K, this quarterly report on Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

 

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

 

All references in this Form 10-Q to the “Company”, “Diamante”, “Diamante Minerals”, “we” ,”us” ,or “our” are to Diamante Minerals Inc.

 

 
3
 
Table of Contents

 

PART I – FINANCIAL INFORMATION

 

Item 1. Unaudited Financial Statements.

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended July 31, 2017, filed with the Securities and Exchange Commission on October 30, 2017. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending July 31, 2018.

 

DIAMANTE MINERALS, INC.

 

INDEX TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

 

January 31, 2018

 

 

 

 

 

Page

 

 

 

 

 

 

Condensed Balance Sheets

 

 

 

5

 

 

 

 

 

 

Condensed Statements of Operations

 

 

 

6

 

 

 

 

 

 

Condensed Statements of Changes in Stockholders’ Equity (Deficiency)

 

 

 

7

 

 

 

 

 

 

Condensed Statements of Cash Flows

 

 

 

8

 

 

 

 

 

 

Notes to Unaudited Condensed Financial Statements

 

 

 

9 – 14

 

 

 
4
 
Table of Contents

 

DIAMANTE MINERALS, INC.

Condensed Balance Sheets

(Expressed in US Dollars)

 

 

 

 

January 31,

2018

 

 

July 31,

2017

 

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash

 

 

$ 126,377

 

 

$ 197,190

 

Prepaid expenses

 

 

 

-

 

 

 

1,450

 

Total Current Assets

 

 

 

126,377

 

 

 

198,640

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

$ 126,377

 

 

$ 198,640

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

$ 8,213

 

 

$ 24,218

 

Due to related parties (Note 3 & 4)

 

 

 

44,572

 

 

 

683,427

 

Total Current Liabilities

 

 

 

52,785

 

 

 

707,645

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIENCY)

 

 

 

 

 

 

 

 

 

Common Stock, par value $0.001, 300,000,000 shares authorized,

 

 

 

 

 

 

 

 

 

52,042,286 (July 31, 2017 - 52,042,286) shares issued and outstanding (Note5)

 

 

52,042

 

 

 

52,042

 

Additional paid-in capital (Note 5)

 

 

 

8,954,269

 

 

 

8,954,269

 

Accumulated deficit

 

 

 

(8,932,719 )

 

 

(9,515,316 )

Total Stockholders’ Equity (Deficiency)

 

 

 

73,592

 

 

 

(509,005 )

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

 

 

$ 126,377

 

 

$ 198,640

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
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DIAMANTE MINERALS, INC.

Condensed Statements of Operations

(Unaudited – Expressed in US Dollars)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

January 31,

2018

 

 

January 31,

2017

 

 

January 31,

2018

 

 

January 31,

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

8,659

 

 

 

6,731

 

 

 

15,216

 

 

 

11,744

 

Management fees (recovery)

 

 

8,915

 

 

 

174,478

 

 

 

(638,855 )

 

 

(186,492 )

Professional fees

 

 

16,635

 

 

 

40,104

 

 

 

41,042

 

 

 

71,304

 

TOTAL OPERATING EXPENSES

 

 

34,209

 

 

 

221,313

 

 

 

(582,597 )

 

 

(103,444 )

INCOME (LOSS) FROM OPERATIONS

 

 

(34,209 )

 

 

(221,313 )

 

 

582,597

 

 

 

103,444

 

OTHER INCOME AND LOSS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

TOTAL OTHER INCOME AND LOSS

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(34,209 )

 

 

(221,313 )

 

 

582,597

 

 

 

103,444

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

NET INCOME (LOSS)

 

$ (34,209 )

 

$ (221,313 )

 

$ 582,597

 

 

$ 103,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Income (Loss) per Common Share (Note 6)

 

$ (0.00 )

 

$ (0.00 )

 

$ 0.01

 

 

$ 0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Income (Loss) per Common Share (Note 6)

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Weighted Average Common Shares Outstanding (Note 6)

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares Outstanding (Note 6)

 

 

52,933,720

 

 

 

54,698,705

 

 

 

52,933,721

 

 

 

55,265,483

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
6
 
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DIAMANTE MINERALS, INC.

Condensed Statements of Changes in Stockholders’ Equity (Deficiency)

(Unaudited – Expressed in US Dollars)

 

 

 

Number of

Common Shares

 

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated

Deficit

 

 

Total Stockholders' Equity (Deficiency)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 31, 2017

 

 

52,042,286

 

 

$ 52,042

 

 

$ 8,954,269

 

 

$ (9,515,316 )

 

$ (509,005 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

582,597

 

 

 

582,597

 

Balance at January 31, 2018

 

 

52,042,286

 

 

$ 52,042

 

 

$ 8,954,269

 

 

$ (8,932,719 )

 

$ 73,592

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
7
 
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DIAMANTE MINERALS, INC.

Condensed Statements of Cash Flows

(Unaudited – Expressed in US Dollars)

 

 

 

Six months ended

 

 

 

January 31,

2018

 

 

January 31,

2017

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income for the period

 

$ 582,597

 

 

$ 103,444

 

Adjustments to reconcile net income to

 

 

 

 

 

 

 

 

net cash used by operating activities:

 

 

 

 

 

 

 

 

Management fees recovery

 

 

(638,855 )

 

 

(186,492 )

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in prepaid expense

 

 

1,450

 

 

 

260

 

Decrease in accounts payable and accrued liabilities

 

 

(16,005 )

 

 

(45,877 )

Net cash used in operating activities

 

 

(70,813 )

 

 

(128,665 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of Mineracao Batovi Ltda. interest

 

 

-

 

 

 

(30,000 )

Net cash used in investing activities

 

 

-

 

 

 

(30,000 )

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(70,813 )

 

 

(158,665 )

Cash - beginning of period

 

 

197,190

 

 

 

390,660

 

 

 

 

 

 

 

 

 

 

Cash - end of period

 

$ 126,377

 

 

$ 231,995

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Disclosure:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ -

 

 

$ -

 

Cash paid for income taxes

 

$ -

 

 

$ -

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
8
 
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DIAMANTE MINERALS, INC.

Notes to Unaudited Condensed Financial Statements

January 31, 2018

(Expressed in US Dollars)

 

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

 

Diamante Minerals, Inc. (the “Company”) was incorporated under the laws of the State of Nevada, U.S. on October 26, 2010. The Company is in the business of acquiring and exploring mineral properties.

 

The Company has not generated any revenue to date. For the period from inception on October 26, 2010 to January 31, 2018, the Company has accumulated losses of $8,932,719.

 

The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at January 31, 2018, and for all periods presented herein, have been made.

 

Certain information and footnote disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's July 31, 2017 audited financial statements. The results of operations for the period ended January 31, 2018 are not necessarily indicative of the operating results for the full year.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Presentation of Interim Information: The financial information at January 31, 2018 and for the six months ended January 31, 2018 and 2017 are unaudited but include all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information refer to the Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2017.

 

Use of Estimates: The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses, including the valuation of non-cash transactions. Actual results may differ from these estimates.

 

 
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NOTE 3 - RELATED PARTY TRANSACTIONS

 

Included in accounts payable and accrued liabilities is $3,332 (July 31, 2017 – $2,538) in amounts due to companies with common management.

 

The Company shares office space with other companies in order to take advantage of cost sharing opportunities and management services. Two of these companies are: Kel-Ex Developments Ltd., a significant shareholder of the Company, which shares the services of the Chief Financial Officer; and Metalex Ventures Ltd., a publicly traded company which shares the services of the CEO and the CFO. During the three and six month periods ended January 31, 2018, the related parties invoiced the Company for the following services and amounts:

 

 

 

Three month period ended

 

 

Six month period ended

 

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative fees (10%)

 

$ 483

 

 

$ 434

 

 

$ 830

 

 

$ 595

 

Shared office and administrative costs

 

 

2,675

 

 

 

1,925

 

 

 

5,925

 

 

 

4,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 3,158

 

 

$ 2,359

 

 

$ 6,755

 

 

$ 5,473

 

  

 

 

Three month period ended

 

 

Six month period ended

 

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Element 29 Ventures Ltd.

 

$ -

 

 

$ 42

 

 

$ -

 

 

$ 42

 

Kel-Ex Developments Ltd.

 

 

3,158

 

 

 

1,656

 

 

 

6,402

 

 

 

3,320

 

Metalex Ventures Ltd.

 

 

-

 

 

 

661

 

 

 

353

 

 

 

2,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 3,158

 

 

$ 2,359

 

 

$ 6,755

 

 

$ 5,473

 

 

As at January 31, 2018, the following balances have been included within accounts payable:

 

 

 

As at

 

 

 

January 31,

2018

 

 

July 31,

2017

 

 

 

 

 

 

 

 

Kel-Ex Developments Ltd.

 

$ 3,332

 

 

$ 1,931

 

Metalex Ventures Ltd.

 

 

-

 

 

 

607

 

 

 

 

 

 

 

 

 

 

 

 

$ 3,332

 

 

$ 2,538

 

 

As at January 31, 2018, the cumulative $35,097 in management fees earned by the Chief Executive Officer and the $9,475 in management fees earned by the Chief Financial Officer pursuant to the Employment Agreements were included as due to related parties (see Note 4).

 

NOTE 4 - COMMITMENTS AND CONTINGENCIES

 

On October 16, 2014, the Company and Chad Ulansky entered into an employment agreement (the “CEO Employment Agreement”), pursuant to which Mr. Ulansky is employed by the Company as its Chief Executive Officer for three years. On July 12, 2015, the Company and Jennifer Irons entered into an employment agreement (the “CFO Employment Agreement”, and together with the CEO Employment Agreement, the “Employment Agreements”), pursuant to which Ms. Irons is employed by the Company as its Chief Financial Officer for three years. Under these plans, deferred stock units (“DSUs”) were issued on a quarterly basis to both Mr. Ulansky and Ms. Irons.

 

Pursuant to their respective Employment Agreements, the Company has structured individual Deferred Share Unit Plans for each of Mr. Ulansky and Ms. Irons effective as of, respectively, October 16, 2014 and July 12, 2015. As of August 1, 2017, Mr. Ulansky and Ms. Irons have agreed, for the advancement of the Company, to waive a portion of the DSUs that have been issued to them under their respective Deferred Share Unit Plans. By mutual agreement, no further DSUs will be issued under these plans.

 

 
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The Company has the right to pay the balance or any other amounts payable to Mr. Ulansky and Ms. Irons in shares of deferred stock units of the Company based on the 90-day volume weighted average price (“VWAP”) of the shares of the common stock of the Company at the end of each quarter. As at January 31, 2018, 701,942 shares (July 31, 2017 – 4,679,613) are issuable if Mr. Ulansky were to leave the Company, which equates to $35,097 (July 31, 2017 – $538,156); 189,492 shares (July 31, 2017 – 1,263,222) are issuable to Ms. Irons if she were to leave the Company, which equates to $9,475 (July 31, 2017 – $145,271). These amounts have been included in due to related parties.

 

During the six month period ended January 31, 2018, the Company recorded a net recovery of $638,855 in management fees and due to related party as a result of the waiver and the decrease in market price of the Company.

 

NOTE 5 - COMMON STOCK

 

Authorized Stock

 

The Company has authorized 300,000,000 shares of common stock with a par value of $0.001 per share. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

Issued and Outstanding Stock

 

There were 52,042,286 shares of common stock issued and outstanding as at January 31, 2018 and July 31, 2017.

 

On January 27, 2017, the Company filed a registration statement with the Securities and Exchange Commission (“SEC”) on Form S-1 under the Securities Act of 1933, as amended, to register the offer and sale of up to 10,000,000 common shares of the Company at a price of $0.1695 per share. The Company planned to use the proceeds from this offering to fund the acquisition of a 17.6% equity interest in Mineracao Batovi, provide working capital and expand the business. The registration statement was declared effective by the SEC as of March 9, 2017; no common stock had been sold pursuant to the registration statement. In connection with the termination of the Amended and Restated Joint Venture Agreement (Note 7), the Company elected not to proceed with the offering of common stock. The Company’s request for the SEC’s consent to withdraw the registration statement was verbally received on August 21, 2017.

 

 
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NOTE 6 – EARNINGS PER SHARE

 

Basic Earnings Per Share

 

Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of common shares outstanding during the financial year of the Company.

 

 

 

Three month period ended

 

 

Nine month period ended

 

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) for the period

 

$ (34,209 )

 

$ (221,313 )

 

$ 582,597

 

 

$ 103,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of common shares outstanding

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Share

 

$ (0.00 )

 

$ (0.00 )

 

$ 0.01

 

 

$ 0.00

 

 

Diluted Earnings Per Share

 

For the purpose of calculating diluted earnings per share, the profit attributable to equity holders of the Company and the weighted average number of shares outstanding during the fiscal period have been adjusted for the dilutive effects of all potential common shares, share options and deferred share units (“DSUs”) granted to management. The dilutive earnings per share is calculated by dividing the adjusted net income (loss) for the period by the weighted average number of shares that would have been in issue upon full exercise of the outstanding DSUs.

 

 

 

Three month period ended

 

 

Six month period ended

 

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

January 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) for the period

 

$ (34,209 )

 

$ (221,313 )

 

$ 582,597

 

 

$ 103,444

 

Gains associated with DSUs

 

 

8,915

 

 

 

174,478

 

 

 

(638,855 )

 

 

(186,492 )

Adjusted Net Income (Loss) for the period

 

$ (25,294 )

 

$ (46,835 )

 

$ (56,258 )

 

$ (83,048 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of common shares outstanding

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

 

 

52,042,286

 

DSUs at beginning of the period

 

 

891,434

 

 

 

1,645,653

 

 

 

5,942,841

 

 

 

1,645,653

 

DSUs issued during the period*

 

 

-

 

 

 

1,010,766

 

 

 

-

 

 

 

1,577,544

 

DSUs waived during the period**

 

 

-

 

 

 

-

 

 

 

(5,051,406 )

 

 

-

 

Adjusted number of common shares outstanding

 

 

52,933,720

 

 

 

54,698,705

 

 

 

52,933,721

 

 

 

55,265,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Loss per Share

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

_________

* Shares were issued on the final day of the three month period; accordingly, for the three month period, any weighted average issued and outstanding would be nil. As of August 1, 2017, no further DSUs are being issued by the Company.

 

 

** Shares were waived as of August 1, 2017. As such, there were 891,434 DSUs outstanding throughout the entire six month period ended January 31, 2018.

 

NOTE 7 – BATOVI DIAMOND PROJECT

 

The Company had previously entered into a formal joint venture agreement (“the Joint Venture”) with Mineracao Batovi Ltda. (“Mineracao Batovi”), a private Brazilian mineral exploration company which at that time held 21 federal exploration licenses comprising the Batovi Diamond Project located north of Paranatinga in the State of Mato Grosso, Brazil. Under the Joint Venture, the Company had the potential to earn up to a 49% interest in Mineracao Batovi in exchange for a $1,000,000 cash contribution prior to June 30, 2017. The Company capitalized acquisition costs of $7,992,000 associated with this project. As at the July 31, 2017 year end, the agreement has expired, without the Company making any cash contributions to Mineracao Batovi. As such, the previously capitalized acquisition costs for the Brazil project of $7,992,000 have been written off in the year ended July 31, 2017.

 

 
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The Company continues to own a 2.4% minority interest in Mineracao Batovi, which was purchased for $30,000. Mineracao Batovi has advised the Company that it did not make the payments required to renew the mineral claims comprising the Batovi Diamond Project by the deadline of July 29, 2017. Due to the costs that would have to be incurred to determine whether or not Mineracao Batovi continues to retain any interest in the mineral claims, the Company has not taken any steps to do so. However, given the intervening period of time, the Company is treating the mineral claims as having lapsed. Due to this uncertainly, and to the fact that Mineracao Batovi’s only asset of value is these claims, an impairment equal to the original investment purchase of $30,000 has been recorded in the year ended July 31, 2017.

 

NOTE 8 – DERIVATIVE ASSET

 

On January 22, 2016, the Company entered into a loan agreement with Blendcore LLC, a Delaware corporation (“Blendcore”), and Petaquilla Gold, S.A., a Panama corporation (“Petaquilla Gold”), which is a subsidiary of Petaquilla Minerals Ltd., a Canadian public company, pursuant to which the Company agreed to advance a loan in the principal amount of US$250,000 to Blendcore (the “Loan”). Petaquilla Gold, as the owner of the minerals sourced at the Molejon Gold Mine located in Donoso District, Colon Province, Republic of Panama (the “Mine”), had engaged Blendcore, as master contractor, to act as operator in connection with the restarting of the processing of stockpiled ore at the Mine. In exchange for the provision of the Loan, the Company is entitled to a royalty of 12.5% on the first 1,000 ounces of gold produced per month for 12 months (the “Royalty period”). The Royalty Period is to commence once production ramps up to 1,000 ounces per month. For monthly production between 1,001 and 2,000 ounces of gold per month, the Company is to receive a reduced royalty of 5%. In addition to the royalty stream, the Company has the right of first option to provide funding for the expansion and development of the Mine. The Loan is to be forgiven provided that there are at least 12,000 ounces of gold produced during the Royalty Period. Upon the completion of the Royalty Period, the Company has the option to extend the royalty for a further 12 month period through the provision of a second $250,000 loan on substantially the same terms as the initial loan. This right shall survive the royalty agreement by a period of one year. As at January 31, 2018, the Company has advanced $215,000 to Blendcore LLC.

 

Valuation of Derivative

 

As the loan agreement with Blendcore contains a royalty component, there is an embedded derivative in its value. Currently, the Company has elected to account for the entire instrument as a derivative at fair value, with changes in fair value presented in earnings. The fair value of the derivative is determined by using a discounted cash flow analysis related to various expected future cash flows to be received based on weighted probabilities due to the uncertainty of the potential royalty streams. This asset is classified as a Level 3 asset within the fair value hierarchy as our valuation estimates utilize significant unobservable inputs, including estimates as to the probability and timing of future gold production. Transaction related fees and costs are expensed as incurred.

 

The changes in the estimated fair value from the derivative along with cash receipts for each reporting period are presented together on the Statement of Operations under the caption, “Derivative – change in fair value”.

 

Blendcore has failed to restart processing operations at the Molejon Gold Mine, and the Company’s position is that the Loan is in default. The Company has demanded payment from Blendcore and Petaquilla Gold, but has not received satisfactory responses to its demand. The Company has engaged the services of a legal firm in Panama to determine appropriate title to the claim and our course of action to recover the funds advanced. As such, while the Company continues to work to recover the funds, it currently considers there to be negligible chance of recovery and has accordingly valued the derivate as at January 31, 2018 at $Nil (July 31, 2017 – $Nil).

 

 
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NOTE 9 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS

 

The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the period ended January 31, 2018, the Company had income of $582,597, which is the result of a recovery of management fees. As at January 31, 2018, the Company had an accumulated deficit of $8,932,719 and has earned no revenues since inception. 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 year ending July 31, 2018.

 

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. 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.

 

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

 

The following discussion of our financial condition, changes in financial condition and results of operations for the three and six month periods ended January 31, 2018 and 2017 should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the three and six month periods ended January 31, 2018 and 2017. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those referenced under the heading “Risk Factors” and included in our annual report on Form 10-K for the year ended July 31, 2017, filed with the Securities and Exchange Commission on October 30, 2017.

 

Overview of Our Business

 

Our Company was incorporated under the laws of the State of Nevada, U.S.A. on October 26, 2010 as Oconn Industries Corp. On March 11, 2014, the Company changed its name to Diamante Minerals, Inc. The Company is in the business of acquiring and exploring mineral properties.

 

On November 20, 2014, we entered into a joint venture agreement with Mineracao Batovi Ltda., a private Brazilian mineral exploration company which at that time held 21 federal exploration licenses comprising the Batovi Diamond Project located in the State of Mato Grosso, in west-central Brazil, approximately 360 kilometers northeast of Cuiaba, the state capital. This agreement was superseded by an amended and restated joint venture agreement with Mineracao Batovi and Dr. Charles Fipke as the shareholder of Mineracao Batovi dated January 25, 2017. As per this agreement, we had the right to contribute $1,000,000 in cash to Mineracao Batovi on or before June 30, 2017 in order to acquire a 17.6% equity interest in that company. As of the deadline of June 30, 2017, we had not contributed any of the $1,000,000, and the Amended and Restated Joint Venture Agreement has terminated. As a result, we have written off the previously capitalized acquisition costs of $7,992,000.

 

We have been advised by Mineracao Batovi that it did not make the payments required to renew the mineral claims comprising the Batovi Diamond Project by the deadline of July 29, 2017. In August, 2017, we sought preliminary advice as to the implications of such non-payment from Brazilian counsel, who confirmed at that time that, according to the website maintained by Brazil’s Departamento Nacional de Produção Mineral (National Department of Mineral Production; commonly referred to as the “DNPM”), the mineral claims are valid but subject to notation indicating that an infraction punishable by fines has been lodged in respect of each of them. The nature of each infraction and the amount of each fine are not part of the public record available through the DNPM’s website, and Brazilian counsel advised that a review of the physical records maintained at the DNPM’s offices in Cuiaba city, State of Mato Grosso, Brazil would be required to confirm additional details. We have not instructed counsel to update his review of the DNPM’s the website, or to undertake a review of the DNPM’s physical records in light of the anticipated costs that would be involved.

 

We remain uncertain as to the status of the mineral claims, but, given the intervening period of time since the due date of the payments that were required to renew the mineral claims, we are treating the mineral claims as having lapsed.

 

We currently hold a 2.4% interest in Mineracao Batovi, having purchased that interest from a former shareholder for $30,000. Due to the uncertainty surrounding the status of the mineral claims underlying the Batovi Diamond Project, and to the fact that Mineracao Batovi’s only asset of value is these claims, an impairment equal to the original investment was recorded in our audited annual financial statements for the year ended July 31, 2017; no change to this impairment has been made in the six month period ended January 31. 2018.

 

 
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As discussed elsewhere in this quarterly report, pursuant to an agreement dated January 22, 2016, we have acquired a limited royalty on the first 2,000 ounces of gold that may be produced per month from the processing of ore stockpiled at Petaquilla Minerals Ltd.’s Molejon Gold Mine located in Donoso District, Colon Province, Republic of Panama. Petaquilla Minerals’ ability to continue as a going concern is unclear to our Company’s management, and it is unclear what impact, if any, Petaquilla Minerals’ circumstances – including any potential solvency issues - will have on the planned processing operations at the Molejon Gold Mine, and whether Petaquilla Gold’s interests in the Molejon Gold Mine will be subject to claims by third parties. At present, the planned processing operations at the Molejon Gold Mine have not been restarted. The Company has engaged a law firm in Panama to determine appropriate title to the claim and our course of action to seek recovery of $215,000 advanced by way of loan to Blendcore LLC, as the operator of planned processing activities at the mine. As such, a derivative change in fair value equal to the amount of the loan has been recorded in our financial statements for the six month period ended January 31, 2018.

 

We currently have no interests in any other mineral resource projects, and we are a shell company for the purposes of the Securities Act of 1933, as amended.

 

Our current lack of working capital significantly limits our ability to seek out and identify mineral exploration projects for possible acquisition to replace our lost opportunity to participate in the Batovi Diamond Project, and our ability to undertake due diligence work and meet any earn-in or other requirements for the acquisition of any mineral property interests that me may identify is uncertain unless we are unable to source additional financing.

 

Results of Operations

 

We have generated no revenues since inception and have a net loss of $34,209 during the three months ended January 31, 2018.

 

The following table provides selected financial data about our Company for the six months ended January 31, 2018 and the year ended July 31, 2017.

 

Balance Sheet Date

 

January 31,

2018

 

 

July 31,

2017

 

 

 

 

 

 

 

 

Cash

 

$ 126,377

 

 

$ 197,190

 

Total Assets

 

$ 126,377

 

 

$ 198,640

 

Total Liabilities

 

$ 52,785

 

 

$ 707,645

 

Stockholders’ Equity (Deficiency)

 

$ 73,592

 

 

$ (509,005 )

 

Plan of Operation

 

On January 27, 2017, we filed a registration statement with the Securities and Exchange Commission on Form S-1 under the Securities Act of 1933, as amended, to register the offer and sale of up to 10,000,000 common shares of our Company (SEC File No. 333-215779). The registration statement was declared effective by the SEC as of March 9, 2017. No common stock was sold pursuant to the registration statement. Upon learning of uncertainty of the status of the Mineracao Batovi claims, and the expiration of our agreement with Mineracao Batovi, we requested the SEC’s consent to withdraw the registration statement pursuant to Rule 477 under the Securities Act on August 18, 2017; verbal approval of this was granted on August 21, 2017.

 

 
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On January 22, 2016, we entered into a loan agreement (the “Loan Agreement”) with Blendcore LLC, a Delaware corporation (“Blendcore”) and Petaquilla Gold, S.A., a Panama corporation (“Petaquilla Gold”), pursuant to which our Company agreed to advance a loan in the principal amount of US$250,000 to Blendcore (the “Loan”).

 

Petaquilla Gold, as the owner of minerals sourced from the Molejon Gold Mine located in Donoso District, Colon Province of Panama, engaged Blendcore, as master contractor, to act as operator in connection with the restarting of the processing of stockpiled ore at the Mine. The Loan proceeds were to be applied by Blendcore in that capacity in accordance with a use-of-funds budget (the “Budget”) that was annexed to the Loan Agreement. Petaquilla Gold is a party to the Loan Agreement in its capacity as the title holder of the minerals, but is not entitled to receive any advances under the Loan Agreement.

 

Pursuant to the terms of the Loan Agreement, the Loan was to be advanced in three tranches as follows:

 

 

· US$50,000 was advanced upon execution of the Loan Agreement;

 

 

 

 

· US$100,000 was required to be advanced within 2 weeks from the execution of the Loan Agreement, and was in fact advanced on January 27, 2016; and

 

 

 

 

· US$100,000 was to be advanced as required in accordance with the Budget.
 

As at January 31, 2018, we have advanced $215,000 to Blendcore LLC.

 

In exchange for the provision of the Loan, our Company is to receive a royalty of 12.5% on the first 1,000 ounces of gold produced per month for 12 months (the “Royalty Period”). The Royalty Period is to commence once production ramps up to 1,000 ounces per month. For monthly production between 1,001 and 2,000 ounces of gold per month, our Company is to receive a reduced royalty of 5%. In addition to the royalty stream, our Company has a right of first option to provide funding for the expansion and development of the Mine.

 

Under the terms of the Loan Agreement, the Loan is to be forgiven provided that there is at least 12,000 ounces of gold produced during the Royalty Period. Upon the completion of the Royalty Period, our Company has the option to extend the royalty for a further 12 month period through the provision of a second $250,000 loan on substantially the same terms as the initial Loan. This right shall survive the royalty agreement by a period of one year.

 

Petaquilla Gold and Blendcore entered into a Collateral Assignment Agreement dated January 11, 2016 (the “Collateral Assignment Agreement”; a copy of which is annexed to the Loan Agreement), pursuant to which Petaquilla Gold collaterally assigned to Blendcore such number of ounces of gold from that which is mined at the Mine as shall be necessary to enable Blendcore to satisfy its obligations to our Company under the Loan Agreement. By letter of authorization dated January 18, 2016, Petaquilla Gold has consented to the transfer by Blendcore to our Company of Blendcore’s rights under the Collateral Assignment Agreement.

 

Blendcore has failed to restart processing operations at the Mine, and our position is that the Loan is in default. We have demanded payment from Blendcore and Petaquilla Gold S.A., but have not received satisfactory responses to our demand. Separate and apart from the issues arising with respect to the loan to Blendcore, we have engaged a law firm in Panama to pursue the acquisition of the Molejon Gold Mine. Representatives of this firm are in discussions with a committee formed by the Panamanian government to oversee the transfer of interests of the Molejon Gold Mine.

 

 
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Limited Operating History; Need for Additional Capital

 

In order to move forward with exploration projects, we will need to raise a significant amount of funds. We have no assurance that 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 would result in additional dilution to existing shareholders.

 

There is no historical financial information about us upon which to base an evaluation of our performance. We are a start-up company and have not generated any revenues. We cannot guarantee success of our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

 

We anticipate that we will need $2,400,000 to fund the next 12 months of our operations, including our efforts to acquire the Molejon Gold Mine. If we are unable to meet our needs for cash from either the money that we raise from future financings, or possible alternative sources, then we may be unable to continue, develop, or expand our operations. We currently do not have sufficient funds to operate our business for the next 12 months.

 

Liquidity and Capital Resources

 

Working Capital

 

 

 

January 31,

2018

 

 

July 31,

2017

 

 

 

 

 

 

 

 

Current Assets

 

$ 126,377

 

 

$ 198,640

 

Current Liabilities

 

 

52,785

 

 

 

707,645

 

Working Capital (Deficiency)

 

$ 73,592

 

 

$ (509,005 )

 

Cash Flows

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

January 31,

2018

 

 

January 31,

2017

 

Cash Flows used in Operating Activities

 

$ (70,813 )

 

$ (128,665 )

Cash Flows used in Investing Activities

 

 

-

 

 

 

(30,000 )

Cash Flows provided by Financing Activities

 

 

-

 

 

 

-

 

Net change in Cash During the Period

 

$ (70,813 )

 

$ (158,665 )

 

As at January 31, 2018, our Company’s cash balance was $126,377 compared to $197,190 as at July 31, 2017. The decrease in cash was due to cash used in general office activities.

 

As at January 31, 2018, our Company had total liabilities of $52,785 compared with total liabilities of $707,645 as at July 31, 2017. The decrease in total liabilities was primarily attributed to a recovery of management fees pursuant to the waiver of the employment agreements with our Chief Executive Officer and our Chief Financial Officer.

 

As at January 31, 2018, our Company had working capital of $73,592 compared with working capital deficit of $509,005 as at July 31, 2017. The decrease in working capital deficit was primarily attributed to management fees adjusted during the period.

 

 
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Cash Flow from Operating Activities

 

During the six months ended January 31, 2018, our Company used $70,813 in cash from operating activities compared to cash used by operating activities of $128,665 during the six months ended January 31, 2017.

 

Cash Flow from Investing Activities

 

During the six months ended January 31, 2018, our Company used $nil cash for investing activities compared to cash used by investing activities of $30,000 during the six months ended January 31, 2017.

 

Cash Flow from Financing Activities

 

During the six months ended January 31, 2018 and 2017, our Company used $nil cash for financing activities.

 

For the six months ended January 31, 2018 and 2017

 

Revenues

 

Our Company did not generate any revenues during the six months ended January 31, 2018 and 2017.

 

Total operating expenses

 

For the six months ended January 31, 2018, total operating expenses were a net recovery of $582,597, which included general and administrative expenses of $15,216, management fee recovery adjustment of $638,855, and professional fees of $41,042.

 

For the six months ended January 31, 2017, total operating expenses were a net recovery of $103,444, which included general and administrative expenses of $11,744, management fees recovery of $186,492, and professional fees of $71,304.

 

Income

 

For the six months ended January 31, 2018, our Company had income of $582,597, as compared to income for the six months ended January 31, 2017 of $103,444. General and administrative costs during these periods have increased in the current year, due to higher admin staff costs. In the current period, our Company recorded a recovery of management fees due to a waiver of management fees, along with a decline in the fair market value of the stock price; as total accrued management fees are based on this price, there was a decrease in the total amount owing to the CEO and the CFO under their respective employment agreements. In the prior period, management fees were comprised of the amounts issued, along with the resulting decrease due to fluctuations in market price. Professional fees during these periods have decreased; in the prior year period, the Company incurred additional legal costs related to the Loan to Blendcore, as well as additional legal and accounting costs for the filing of our registration statement on Form S-1 under the Securities Act of 1933, as amended.

 

 
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Going Concern Consideration

 

Our Company intends to fund operations through equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements for the year ending July 31, 2018. Our auditors have issued a going concern opinion on our audited financial statements for the year ended July 31, 2017. 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 for our expenses. We may in the future attempt to obtain financing through private offerings of debt or equity. Equity financing would result in additional dilution to existing stockholders. We currently have no agreements or arrangements to obtain funds through bank loans, lines of credit or any other sources. There is no assurance we will ever be successful doing so.

 

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 that is material to investors.

 

Properties

 

Our executive offices are located at 203 – 1634 Harvey Ave, Kelowna, BC, Canada, V1Y 6G2. We believe that this office space will be adequate for the foreseeable future.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Our exposure to market risks includes, but is not necessarily limited to, equity price risk, commodity price risk, foreign currency risk and country risk.

 

Equity Price Risk

 

We are subject to market risk related to the market price of our common stock which trades over the counter on the OTCQB. Historically, we have relied upon equity financings from the sale of our common stock to fund our operations. Movements in the price of our common stock have been volatile in the past and may continue to be volatile in the future. As a result, there is risk that we may not be able to complete an equity financing at an acceptable price when required.

 

Commodity Price Risk

 

We may in the future be subject to market risk related to the market price of rough diamonds, which are priced per carat, and gold, which is priced per ounce. However, at January 31, 2018, we had only a minor interest in the Mineracao Batovi Ltda. (2.4%) whose interests in the exploration licenses underlying the Batovi Diamond Project are likely to have lapsed, and the Royalty Period on Petaquilla Gold’s Molejon Gold Mine project had not yet begun. Accordingly, fluctuations in the market price of rough diamonds or gold do not currently have a direct impact on our operations.

 

Foreign Currency Risk

 

We are subject to market risk related to foreign currency exchange rate fluctuations. Our functional currency is the United States dollar; however, a portion of our business is transacted in the Canadian dollar. To date, foreign exchange currency fluctuations have not had a material impact on our results of operations. We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure to manage our foreign currency fluctuation risk.

 

 
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Country Risk

 

We are subject to market risk related to our operations in foreign jurisdictions. In light of the borrower’s default under our Loan Agreement with Blendcore and Petaquilla Gold, we have taken preliminary steps to seize the Molejon Gold Mine in the Republic of Panama.

 

Foreign countries expose our Company to risks that may not otherwise be experienced if our operations were domestic. The risks include, but are not limited to, those arising under local laws relating to environmental protection, land use, water use, health and safety, labor, restrictions on production, price controls, currency remittance, and maintenance of mineral tenure and expropriation of property. For example, changes to regulations in Panama relating to royalties, allowable production, importing and exporting of gold and environmental protection, may result in our Company not receiving an adequate return on investment capital.

 

Although the operating environments in Panama are considered more favourably compared to those in certain other developing countries, there are still political risks. These risks include, but are not limited to: terrorism, hostage taking, military repression, expropriation, extreme fluctuations in currency exchange rates, high rates of inflation and labor unrest. Changes in mining or investment policies or shifts in political attitudes in these countries may also adversely affect our Company's business. In addition, there may be greater exposure to a risk of corruption and bribery (including possible prosecution under the federal Corruption of Foreign Public Officials Act). Also, in the event of a dispute arising in foreign operations, our Company may be subject to the exclusive jurisdiction of foreign courts and may be hindered or prevented from enforcing its rights. Furthermore, it is possible that future changes in taxes in any of the countries in which our Company operates will adversely affect our Company's operations and economic returns.

 

Interest Rate Risk

 

We have no significant exposure to interest rate fluctuation risk.

 

Item 4. Controls and Procedures.

 

Management’s Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our President (who serves as our principal executive officer) and our chief financial officer (our principal financial officer) are responsible for establishing and maintaining disclosure controls and procedures for our Company.

 

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our President (our principal executive officer) and Chief Financial Officer (our principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our President (our principal executive officer and principal financial officer) and our Chief Financial Officer (our principal financial officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

 

 
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Changes in Internal Control over Financial Reporting

 

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

 

· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

 

 

 

 

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

 

 

 

 

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

 

As disclosed in our most recent annual report on Form 10-K, our President (our principal executive officer and principal financial officer) assessed the effectiveness of our internal control over financial reporting at July 31, 2017, and determined that, as of July 31, 2017, our internal control over financial reporting was not effective due to the existence of certain material weaknesses disclosed in the annual report.

 

There have been no changes in our internal controls over financial reporting that occurred during the period ended January 31, 2018, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

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

 

The Company did not complete any unregistered sales of equity securities during the period covered by this quarterly report on Form 10-Q that have not already been disclosed in a current report filed by the Company with the SEC on Form 8-K.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

We did not purchase any of our shares of common stock during the period covered by this quarterly report on Form 10-Q.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 
23
 
Table of Contents

 

Item 6. Exhibits.

 

The following exhibits are included as part of this report:

 

Exhibit

 

Description

 

3.1

 

Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Form S-1 filed with the SEC on November 8, 2012)

 

3.2

 

By-Laws (incorporated by reference to Exhibit 3.2 to the Company's Form S-1 filed with the SEC on November 8, 2012)

 

3.3

 

Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.3 to the Company's Form 8-K filed with the SEC on June 16, 2014)

 

10.1

 

Employment Agreement dated October 16, 2014 by and between Diamante Minerals, Inc. and Chad Ulansky (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed with the SEC on October 20, 2014)

 

10.2

 

Deferred Share Unit Plan for Chad Ulansky (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K/A filed with the SEC on September 8, 2015)

 

10.3

 

Employment Agreement dated July 12, 2015 by and between Diamante Minerals, Inc. and Jennifer Irons (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on September 8, 2015)

 

10.4

 

Deferred Share Unit Plan for Jennifer Irons (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed with the SEC on September 8, 2015)

 

10.5

 

Amended and Restated Joint Venture Agreement dated January 25, 2017 between Diamante Minerals, Inc. and Mineracao Batovi Ltda. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on January 27, 2017)

 

14.1

 

Code of Ethics (incorporated by reference to Exhibit 14 to the Company's Form 10-K filed with the SEC on October 29, 2013)

 

31.1

 

Certification of Principal Executive Officer pursuant to Exchange Act Rule 13(a)-14(a)/15(d)-14(a)

 

31.2

 

Certification of Principal Financial Officer pursuant to Exchange Act Rule 13(a)-14(a)/15(d)-14(a)

 

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. section 1350

 

101.INS

 

XBRL Instance

 

101.SCH

 

XBRL Taxonomy Extension Schema

 

101.CAL

 

XBRL Taxonomy Extension Calculations

 

101.DEF

 

XBRL Taxonomy Extension Definitions

 

101.LAB

 

XBRL Taxonomy Extension Labels

 

101.PRE

 

XBRL Taxonomy Extension Presentation

 

 
24
 
Table of Contents

 

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.

 

 

 

DIAMANTE MINERALS INC.

 

 

 

(Registrant)

 

 

 

Dated: March 2, 2018

 

/s/ “Chad Ulansky”

 

 

 

Chad Ulansky

 

 

 

 

 

President, Secretary, Treasurer and a director (Principal Executive Officer)

 

 

 

25 

 

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