(The accompanying notes are an integral part of these unaudited consolidated financial statements)
(The accompanying notes are an integral part of these unaudited consolidated financial statements)
Notes to the Condensed Consolidated Financial Statements
For the period ended March 31, 2018
(unaudited)
1.
Organization and Nature of Operations
The accompanying unaudited consolidated financial statements of Oroplata Resources, Inc. and its subsidiary (“Oroplata” or the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended September 30, 2017, included in our Annual Report on Form 10-K for the year ended September 30, 2017.
The Company was incorporated under the laws of the state of Nevada on October 6, 2011 for the purpose of acquiring and developing mineral properties. The Company has a wholly-owned subsidiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated in the Dominican Republic on January 10, 2012. On July 26, 2016, the Company incorporated Lithortech Resources Inc., a Nevada company, as a wholly-owned subsidiary. The Company currently holds mineral rights in the Dominican Republic and in the Western Nevada Basin of Nye County in the state of Nevada.
Going Concern
These unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at March 31, 2018, the Company has not earned revenue, has a working capital deficit of $1,436,935, and an accumulated deficit of $34,564,327. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. If the Company is able to obtain financing, there is no certainty that terms will be favorable to the Company. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
(a)
Basis of Presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is September 30.
(b)
Principles of Consolidation
These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL and Lithortech Resources Inc. All inter-company accounts and transactions have been eliminated on consolidation.
3.
Convertible Notes Payable
(a)
On July 18, 2016, the Company entered into a convertible note agreement, as amended, with a non-related party for proceeds of $75,000. The terms of the convertible note became effective on February 15, 2017. The amount owing is secured by assets of the company, bears interest at 10%, is convertible into common shares of the Company at $0.24 per share, and is due on February 18, 2017. In September 2017, the conversion price was amended to $0.115 per share and the due date extended to December 31, 2017. On December 11, 2017, the due date was extended to December 11, 2018. The initial amortized discount was $9,375 and as at March 31, 2018, the carrying value of the note payable is $75,000 (September 30, 2017 - $75,000), and accrued interest of $8,425 (September 30, 2017 - $4,685) has been recorded in accounts payable and accrued liabilities.
7
OROPLATA RESOURCES, INC.
Notes to the Condensed Consolidated Financial Statements
For the period ended March 31, 2018
(unaudited)
3.
Convertible Notes Payable (continued)
(b)
On July 18, 2016, the Company entered into a loan agreement with a non-related party for proceeds of $121,000. The amount owing is unsecured, bears interest at 10% per annum, and is due on April 18, 2017, and is convertible into common shares of the Company at $0.50 per share. On January 31, 2017, the due date was extended to December 31, 2017. In September 2017, the conversion feature on the note payable was adjusted $0.115 per share. On December 11, 2017, the due date was extended to December 11, 2018. During the period ended March 31, 2018, the Company issued 1,157,382 common shares for the conversion of $121,000 of note payable and $12,100 of interest payable. As at March 31, 2018, the carrying value of the note payable is $nil (September 30, 2017 - $121,000), and accrued interest of $5,584 (September 30, 2017 - $15,382) has been recorded in accounts payable and accrued liabilities.
As an incentive for the loan, the Company issued 121,000 cashless warrants to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until July 18, 2021. The fair value of the cashless warrants was $229,069, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 239%, and risk-free rate of 1%.
(c)
On September 28, 2016, the Company entered into a loan agreement with a non-related party for proceeds up to $550,000. On September 30, 2016, the Company received proceeds of $110,000, net of issuance fees of $10,000. The amount owing is unsecured, bears interest at 10% per annum, and is due on September 30, 2017, and is convertible into common shares of the Company at $0.10 per share. In September 2017, the conversion price was amended to $0.115 per share and the due date extended to December 31, 2017. On December 11, 2017, the due date was extended to December 11, 2018. As at March 31, 2018, the carrying value of the note payable is $110,000 (September 30, 2017 - $110,000), and accrued interest of $16,485 (September 30, 2017 - $11,000) has been recorded in accounts payable and accrued liabilities.
As an incentive for the loan, the Company issued 121,000 cashless warrants to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until September 30, 2021. The fair value of the cashless warrants was $65,990, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 233%, and risk-free rate of 1%.
(d)
On February 16, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $250,000. On February 16, 2017, the Company received proceeds of $32,428, net of issuance fees of $2,948. On February 24, 2017, the Company received proceeds of $77,000, net of issuance fees of $7,000. On April 17, 2017, the Company received proceeds of $13,750, net of issuance fees of $1,250. On April 26, 2017, the Company received proceeds of $88,000, net of issuance fees of $8,000. On June 13, 2017, the Company received proceeds of $38,822 net of issuance fees of $3,882. The aggregate principal amount owed of $250,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.10 per share. In September 2017, the conversion price was amended to $0.115 per share. On December 11, 2017, the due date for all tranches was extended to December 11, 2018. As at December 31, 2017, the carrying value of the note payable is $250,000 (September 30, 2017 - $250,000), and accrued interest of $24,702 (September 30, 2017 - $12,236) has been recorded in accounts payable and accrued liabilities.
(e)
On July 25, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $550,000. On July 25, 2017 the Company received proceeds of $44,000, net of issuance fees of $4,000. On August 17, 2017, the Company received proceeds of $110,000, net of issuance fees of $10,000. The aggregate principal amount owed of $154,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.115 per share. On October 23, 2017, the Company received proceeds of $82,500, net of issuance costs of $7,500. On December 1, 2017, the Company received proceeds of $55,000, net of issuance costs of $5,000. On December 11, 2017, the due date was extended to December 11, 2018. On December 15, 2017, the Company received proceeds of $55,000, net of issuance costs of $5,000. On February 9, 2018, the Company received proceeds of $56,100, net of issuance costs of $5,100. As at March 31, 2018, the carrying value of the note payable is $378,817 (September 30, 2017 - $140,937), the unamortized discount on the note is $23,783 (September 30, 2017 - $13,063), and accrued interest of $18,022 (September 30, 2017 - $2,507) has been recorded in accounts payable and accrued liabilities.
8
OROPLATA RESOURCES, INC.
Notes to the Condensed Consolidated Financial Statements
For the period ended March 31, 2018
(unaudited)
4.
Related Party Transactions
(a)
As of March 31, 2018, the Company owes $120,146 (September 30, 2017 - $120,146) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.
(b)
As of March 31, 2018, the Company owes $85,500 (September 30, 2017 - $85,500) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.
(c)
As of March 31, 2018, the Company owes $239,211 (September 30, 2017 - $100) to the Chief Executive Officer of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.
(d)
As of March 31, 2018, the Company owes $84,092 (September 30, 2017 – $85,000) to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.
5.
Common Shares
The Company’s authorized common stock consists of 500,000,000 shares of common stock, with par value of $0.001.
(a)
On December 5, 2017, the Company issued 578,696 common shares with a fair value of $66,500 as part of a conversion of convertible notes payable and accrued interest at $0.115 per share.
(b)
On December 18, 2017, the Company cancelled 1,000,000 common shares issued to the Chief Executive Officer of the Company which was previously issued in error.
(c)
On December 29, 2017, the Company issued 19,700,000 common shares with a fair value of $1,970,000 for services, including 5,000,000 common shares to the Chief Executive Officer of the Company, and 4,000,000 common shares to directors of the Company. In addition, the Company also issued 1,000,000 common shares to the Chief Executive Officer of the Company to replace the common shares that were previously issued in error and cancelled on December 18, 2017.
(d)
On January 29, 2018, the Company issued 3,600,000 common shares with a fair value of $360,000 to the directors of the Company, of which $135,000 has been recorded in prepaid expense as at March 31, 2018. In addition, the Company issued 2,400,000 common shares for consulting services with a fair value of $240,000, of which $180,000 has been recorded as prepaid expense as at March 31, 2018. All amounts in prepaid expenses will be amortized over one year from the date of issuance of the common shares.
(e)
On January 29, 2018, the Company issued 1,440,000 common shares for professional fees with a fair value of $144,000.
(f)
On February 2, 2018, the Company issued 578,696 common shares with a fair value of $66,550 as part of a conversion of convertible notes payable and accrued interest at $0.115 per share.
(g)
On March 8, 2018, the Company issued 2,000,000 common shares to officers of the Company for management fees with a fair value of $190,000, of which 1,000,000 common shares were issuable on each of January 1, 2018 and March 1, 2018.
(h)
On March 8, 2018, the Company issued 350,000 common shares for consulting services with a fair value of $33,250.
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OROPLATA RESOURCES, INC.
Notes to the Condensed Consolidated Financial Statements
For the period ended March 31, 2018
(unaudited)
6.
Share Purchase Warrants
In December 2017, the Company granted 1,000,000 share purchase warrants to a consultant of the Company for professional services. The warrants are exercisable into common shares at $0.10 per share for a period of five years. The fair value of the share purchase warrants was $101,310 calculated using the Black-Scholes Option Pricing Model assuming volatility of 154%, risk-free rate of 1.0%, expected life of 5 years, and no expected dividends.
|
Number of
cashless warrants
|
|
Weighted average exercise price
$
|
|
|
|
|
Balance, September 30, 2017
|
2,742,000
|
|
0.05
|
Issued
|
1,000,000
|
|
0.10
|
|
|
|
|
Balance, March 31, 2018
|
3,742,000
|
|
0.08
|
Additional information regarding share purchase warrants as of March 31, 2018, is as follows:
|
|
Outstanding and exercisable
|
Range of
Exercise Prices
$
|
|
Number of Warrants
|
|
Weighted Average
Remaining Contractual Life
(years)
|
|
|
|
|
|
0.001
|
|
2,000,000
|
|
3.9
|
0.10
|
|
1,000,000
|
|
4.7
|
0.15
|
|
500,000
|
|
4.1
|
0.50
|
|
242,000
|
|
3.4
|
|
|
|
|
|
|
|
3,742,000
|
|
4.1
|
7.
Subsequent Events
(a)
On April 3, 2018, the Company entered into a loan agreement with a non-related party for $85,800, net of an original issue discount of $7,800. The amounts owing are unsecured, bear interest at 12% per annum, are due on January 3, 2019, and are convertible into common shares at $0.15 per share until October 3, 2018 (180 days following the issuance date of the loan) when the conversion price is equal to 75% of the lowest closing bid price during the fifteen trading days prior to conversion. Upon the due date on January 15, 2019, if the loan remains unpaid, the interest will increase to 22% per annum.
(b)
On April 13, 2018, the Company entered into a loan agreement with a non-related party for $150,000, of which $75,000 is a front-end note and $75,000 is a back-end note. The amounts owing are unsecured, bear interest at 10% per annum, are due in 12 months, and are convertible into common shares at 66% of the lowest trading price for the twenty trading days prior to conversion.
(c)
On April 19, 2018, the Company issued 717,391 common shares with a fair value of $82,500 as part of a conversion of convertible notes payable at $0.115 per share.
(d)
On April 20, 2018, the Company entered into a loan agreement with a non-related party for $58,800, net of an original issue discount of $5,800. The amounts owing are unsecured, bear interest at 12% per annum, are due on January 30, 2019, and are convertible into common shares at $0.15 per share until October 20, 2018 (180 days following the issuance date of the loan) when the conversion price is equal to 75% of the lowest trading price during the fifteen trading days prior to conversion. Upon the due date on January 30, 2019, if the loan remains unpaid, the interest will increase to 22% per annum.
(e)
On May 8, 2018, the Company issued 1,052,174 common shares with a fair value of $121,000 as part of a conversion of convertible notes payable at $0.115 per share.
10