FAVO FAVO Capital Inc (PK)

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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common stock" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our", “Beeston” and "our company" mean Beeston Enterprises Ltd., unless otherwise indicated.

General Overview

We are an exploration stage company engaged in the search of mineral deposits that can be developed to a state of commercially viable producing mine. We owned a 100% interest in three mineral claims comprising 1,475.52 hectares known as the “Ruth Lake Property” located 25 kilometers from Lac La Hache, British Columbia, Canada.   All of the mineral claims are currently in good standing.   There is no guarantee of locating a deposit of some mineral product that could result in a producing mine. However, we are of the opinion that the location of the mining property is such as to warrant retention of a portion of the claims that originally comprised the Ruth Lake Property for further exploration.

The property is situated within the Quesnel Trough, a geologic belt that hosts numerous base and precious metal deposits along with current and formerly producing mines. It is located 10 kilometres northeast of GWR Resources Inc’s Lac La Hache property where ongoing exploration continues to delineate porphyry copper-gold-silver/skarn, copper-magnetite-gold-silver deposits and is situated between producing mines at Imperial Metals Corporation’s Mt. Polley copper-gold mine and New Gold Inc.'s New Afton copper-gold project (Teck-Cominco Ltd’s legendary Afton mine).

The terrain in the area in which our mineral properties are located is well forested with rolling hills, and elevations ranging from 915-1525 meters.  The climate is generally dry with a warm summer and a cold winter.  Precipitation ranges from 42-62 centimeters per year with up to 30 centimeters occurring as snow.  While some exploration work such as trenching and drilling could be carried out all year long, generally, exploration in the area is limited to an eight month period running from April to October.  Any exploration programs would be carried out during this eight month period. The area has an excellent infrastructure in place with a skilled workforce, rail, roads and power capacity.

As our directors and officers have no professional training or technical credentials in the field of geology, and specifically in the areas of exploring, developing and operating mining properties, we will have to retain the services of various professionals and technicians in the mining industry to provide such expertise.  Accordingly, we have, and will continue to retain the services of geologists and engineers to advise and assist us in the exploration of our acquired interest in mineral claims.

The Ruth Lake Property has not received as much exploration as some of the surrounding properties, such as GWR Resources Inc.’s Lac La Hache Property. What prior exploration has taken place on or near this property has provided indications that the area has the potential to host a copper-gold deposit or a molybdenite deposit. We utilized the services of geologists to interpret a recent airborne geophysical survey of the area and the existing geological information in relation to the Ruth Lake Property to identify target areas and make recommendations for the further exploration of the property.  Based on our geologists recommendation, an initial exploration program of approximately $50,000 CAD was carried on the Ruth Lake Property, which involved the taking of soil geochemical samples on a regional grid with fill in samples where indicated by anomalous values.  Each target area was then explored by geochemical soil sampling and prospecting.  Anomalous cooper-in-soil was detected near the edge of one target area and cooper mineralization was sighted along a newly constructed logging road near this area.  In addition to the results of the exploration program, historic assessment reports relating to the southern part of the property reported sporadic molybdenite-in-soil geochemical anomalies over a north-south length of 750 metres.  Molybdenite and small amounts of chalcopyrite were described as disseminations and fracture fillings in altered, silicified and locally quartz veined granite float and bedrock.  While some drilling was performed, there are no records of results.  Based on the results of our initial exploration program and the historic data on the property, we believe that further exploration is warranted for the Ruth Lake Property.  However, we had been delaying further exploration on our part pending the results of the exploration work that was to have been carried out on various large parcels of the Ruth Lake Property under option agreements entered into by the Company with other junior mining companies.    

In our efforts to further the exploration and development of this large tract of acquired mineral claims, we have continuously reviewed the possibility of participating in some form of joint venture or option arrangement with other entities on a portion of these mineral claim holdings.  Accordingly, since acquiring this property, we have entered into various arrangements with other companies to carry out exploration work on various mineral claims that comprise the Ruth Lake Property.  We have also been able to maintain our remaining interest in the Ruth Lake Property, in part, through the conduct of exploration and development work programs, by ourselves as well as by others, and then filing assessment reports of the exploration work for credit towards the maintenance costs plus paying cash in lieu of exploration work as required.  All of the mining claims currently comprising the Ruth Lake Property are in good standing.

At present, we have no option agreements or other arrangements with any party for the exploration of this property.  As a result, based on the recommendations of our geologist, a work program of approximately $30,000 has been planned for a portion of the remaining Ruth Lake Property for the summer of 2014.

We are currently considering the acquisition of other gold/silver mineral properties.

Results of Operations

You should read the following discussion of our financial condition and results of operations together with our unaudited financial statements and the notes thereto included elsewhere in this filing. Our unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

The following provides selected financial data about our company for the three and nine month periods ended March 31, 2014 and 2013.

Three months ended March 31, 2014 and 2013.

 Revenue

There were no revenues from operations for the three month periods ended March 31, 2014 and 2013. The reason for the differences reported in the net income (loss) positions is due in part to a reduction in the costs for services provided to the company.  Overall expense were also greater in 2012 due to the effort made during this period related to investigating and review of potential mining projects and financing for the Company.

Expenses for the three months period ended March 31, 2014, decreased significantly from the comparative period in 2013 as a result of a decrease in the costs charged for administrative expense and professional fees from that of the prior period as well as a reduction in activity  related to the investigation and review of potential mining projects and financing for the Company.

Equity Compensation

We currently do not have any stock option or equity compensation plans or arrangements.

We had cash of $95 as of March 31, 2014 as compared to cash of $0 as of December 31, 2013. We had a working capital deficit of $39,479 as of March 31, 2014 as compared to a working capital deficit of $26,695 as of December 31, 2013.

We will need to raise funds in order to cover our ongoing general operating costs as well as to facilitate the acquisition of additional mining properties, or an interest in such other mining properties and the exploration and development of such acquisitions or interest in mining properties in the near future.

In the past, we have raised funds by means of various equity financings.  On January 8, 2014 our Board of Directors approved a private placement offering of 125,000,000 common shares of the Company at a price $0.0012 per share, for total proceeds of $150,000.  Proceeds under this private placement offering will be used to pay off debt due and owing by the Company and to provide the company with working capital. This private placement offering has a termination date of June 30, 2014, unless extended by the Board of Directors.  As of the date of this report the Company has received no subscriptions for shares under this private placement offering.   

We have also had to borrow funds from time to time in order to fund part of our ongoing operations.  For some of this borrowing, we issued convertible debentures as security.  All of the debt under these convertible debentures has since been converted into common shares of the Company.   We have also raised funds and set off debt through the exercise of the share purchase warrants that were attached to these convertible debentures.  A number of these share purchase warrants are still outstanding and remain another source of funds for the Company in the event they are exercised.  On March 1, 2013, Beeston’s Board of Directors authorized and approved the extension of the expiry date for all share purchase warrants of the company that were still outstanding as of that date.  All of the outstanding share purchase warrants now expire on December 31, 2014. As a result of the reverse stock split approved by the Board of Directors of the Company (See “ Stock Split ” below), upon the reverse stock split becoming effective, proportional adjustments will be made to shares of the Company’s common stock issuable upon exercise of the Company’s outstanding warrants in accordance with their terms. The Company has not received any notices of election to exercise the right to purchase any shares of the Company under these outstanding warrants to date.

On occasion, we have also borrowed funds for working capital purposes from stockholders of the Company.  As of March 31, 2014 there was $22,063 in loans outstanding to stockholders.  These loans have been evidenced by promissory notes and are payable on demand and non-interest bearing.  We currently have no agreement with any of our officers and directors or any of our shareholders for the provision of additional funding.

We anticipate being able to raise the funds that are required for our ongoing operating, acquisitions and exploration costs by means of  both further debt and equity funding.  The equity funding would be in the form of our current and future private placement offerings as well as the exercise of our outstanding warrants by the warrant holders.  To the extent we are unable to raise additional funds, the planned exploration of our acquired mining properties as well as the acquisition of additional mining property interests will be delayed and/or we could be unable to continue to operate.

Stock Split

On April 18, 2014, the Board of Directors, with the authorization and approval of a majority of its shareholders obtained by written consent in lieu of a meeting, authorized a 1:10 reverse stock split of the issued and outstanding common shares of the Company, subject to the approval of the Financial Industry Regulatory Authority, Inc.

(”FINRA”). The Company has submitted a request to FINRA for approval of the reverse stock split.  The effectiveness of the reverse stock split (the “effective date”) is determined by FINRA. The record date for the reverse stock split will be the effective date as determined by FINRA.  In the event the reverse stock split is approved by FINRA the issued and outstand shares of common stock of the Company would be reduced from 266,093,479 shares to approximately 26,609,348 shares. The authorized number of shares of common stock of the Company and the par value of the common stock would remain unchanged.  Proportional adjustments will be made to shares of the Company’s common stock issuable upon exercise of the Company’s outstanding warrants in accordance with their terms.  We have not received approval from FINRA for the reverse stock split as of the date of this report.  As the reverse split of the issued and outstanding shares of common stock is subject to the approval of FINRA, all references herein and in the accompanying financial statements to the number of common shares have not been restated to reflect the reverse stock split.  

Cash Requirements

We estimate that our expenses over the next 12 months will be approximately $75,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

We intend to commence exploration activities on our newly optioned properties over the next twelve months.  We estimate our operating expenses and working capital requirements for the next twelve month period to be as follows:

We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way. 

These cash requirements are in excess of our current cash and working capital resources. As a result, we will require additional financing in order to pay for our anticipated ongoing expenditures as outlined above.  These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities. We hope to meet our cash requirements for the next 12 months through equity financing by way of a private placement offerings and/or through the exercise of the existing outstanding warrants held by our investors. We currently do not have any arrangements in place to complete any private placement financing and there is no assurance that we will be successful in completing any such financing on terms that will be acceptable to us or that the holders of our outstanding warrants will exercise the warrants.  

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

Due to our limited amount of capital, recurring losses, negative cash flows from operations and our ability to pay outstanding liabilities,  our independent auditors stated in their report for the fiscal year ended December 31, 2013, that there is substantial doubt about our ability to continue as a going concern.  Since inception on July 12, 1999, we have incurred operating losses and negative cash flows from operations.  As of March 31, 2014, we had an accumulated deficit of $2,310,009, with total stockholders’ deficit of $39,479.  We had a working capital deficit of $39,479 at March 31, 2014.  

Our 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 next twelve months. The ability of our company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. These factors, among others, raise substantial doubt about our company’s ability to continue as a going concern.

The financial statements included elsewhere in this report have been prepared in accordance with United States generally accepted accounting principles, assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty .

Off-Balance Sheet Arrangements

We have no 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 stockholders.

Critical Accounting Policies

We have identified certain accounting policies that are most important to the portrayal of our current financial condition and results of operations.  Please refer to our Form 10-K for the year ended December 31, 2013, filed with the SEC for our critical accounting policies, from which there has been no change as of the date of this file.