Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
1.
Organization
Valmie
Resources, Inc. (the “Company”) was incorporated on August 26, 2011, in the State of Nevada, U.S.A. The accounting
and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US
GAAP”), and the Company’s fiscal year end is November 30.
In
early December 2014, the Company changed its business focus from mining to pursuing opportunities for the commercialization of
leading edge products and services in the rapidly expanding technology industry.
On
March, 31, 2015, the Company acquired 100% interest in Vertitek Inc., a Wyoming corporation (“Vertitek”). Vertitek
was established to provide unmanned vehicle software, hardware and cloud services for a wide range of commercial applications
around the globe. Vertitek is in the process of developing the V-1 Drone
SM
, a cutting edge multi-rotor UAV designed
specifically to meet the requirements of a growing commercial user base.
On
April 15, 2016, the Company entered into a Joint Venture Agreement to form AeroLift eXpress LLC (“AeroLift”). The
Company owns 50% of AeroLift and has committed funding up to $500,000 to launch the AeroLift business model.
2.
Basis of Presentation
Unaudited
Interim Financial Statements
The
accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles
for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).
They do not include all information and footnotes required by US GAAP for complete financial statements. However, except as disclosed
herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year
ended November 30, 2015, included in the Company’s Form 10-K filed with the SEC. The unaudited interim consolidated financial
statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management,
all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the nine months ended August 31, 2016 are not necessarily indicative of the results that may be expected
for the year ending November 30, 2016.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
3.
Acquisition of Vertitek Inc.
On
March 31, 2015, the Company issued 1,000,000 shares of common stock in exchange for 100% of the issued and outstanding shares
of Vertitek. Vertitek was previously named Landstar Leasing, Inc. (“Landstar”) and was incorporated pursuant to the
Wyoming Business Corporation Act on February 19, 2014. On November 19, 2014, Landstar changed its name to Vertitek Inc. As a result
of the acquisition, Vertitek became a wholly owned subsidiary of the Company.
In
December 2014, the Company changed its business focus from mining to opportunities in the technology industry. The acquisition
of Vertitek enables the Company to pursue its new business focus as Vertitek has focused on the development of unmanned vehicle
software, hardware and cloud services for a wide range of commercial applications around the globe. Vertitek is in the process
of developing the V-1 Drone
SM
, a cutting edge multi-rotor unmanned aerial vehicle (“UAV”) designed specifically
to meet the requirements of a growing commercial user base.
The
acquisition was accounted for as an asset acquisition in accordance with US GAAP as Vertitek did not meet the definition of a
business. Vertitek did not consist of sufficient processes (systems, standards, protocols, conventions or rules) that would be
able to be applied to those inputs and have the ability to create outputs as required by Accounting Standards Codification 805.
In
exchange for common stock of $2,770,000, the Company acquired $18,355 of financial assets, $2,777,145 of intangible assets related
to intellectual property and $25,500 of financial liabilities. The total value of the intangible assets related to intellectual
property ($2,777,145) was impaired and written-off as of November 30, 2015.
4.
Cash and Cash Equivalents
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August
31, 2016
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|
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November
30, 2015
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|
|
|
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|
|
|
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Cash
on deposit
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$
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45,717
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|
|
$
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22,876
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|
|
|
|
$
|
45,717
|
|
|
$
|
22,876
|
|
5.
Investment in Partnership
On
April 15, 2016, the Company and its partner, James Stafford, a Texas resident (“Stafford”) (collectively the “Members”),
organized a joint venture entity, AeroLift Express LLC (“AeroLift”), to develop and launch integrated service and
solution offerings utilizing the latest advancements in the UAV industry.
The
material terms of the joint venture agreement between the Members are as follows:
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●
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The
Company will contribute to AeroLift startup financing in periodic amounts, the total of which will not exceed $500,000. Such
financing will be made available to AeroLift in monthly installments of $25,000 for the first 3 months from the date of execution
of the joint venture agreement (paid).
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●
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AeroLift
will set aside a reserve fund, for operations, payroll, expansion, and employee bonuses from AeroLift’s after-tax profit.
The ratio of the reserve fund to AeroLift’s after-tax profit will not be lower than 10% and may be a higher percentage
with unanimous approval of the Members. The distributed profit, which is the profit after above funds have been allocated,
will be distributed to Members, in proportion to their member interests.
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Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
5.
Investment in Partnership (continued)
The
carrying value of $63,611 at August 31, 2016 (November 30, 2015 – $Nil) includes $122,000 in advances plus the Company’s
share of the cumulative net loss of AeroLift of $58,389 (November 30, 2015 – $Nil).
Summary
of financial information of AeroLift
For
the period ended August 31,
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2016
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|
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2015
|
|
|
|
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|
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General
and administrative
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$
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10,371
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|
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$
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-
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|
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Payroll
|
|
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19,282
|
|
|
|
-
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|
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Subcontractors
|
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53,672
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|
|
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-
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Travel
and promotion
|
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33,453
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|
|
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-
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Net
loss for the period
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$
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116,778
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$
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-
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6.
Capital Stock
Authorized
Stock
At
inception, the Company authorized 100,000,000 shares of common stock with a par value of $0.001 per share. Each share entitles
the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On
December 3, 2013, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in
its authorized capital from 100,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value
$0.001 (the “Authorized Capital Increase”). The Company formally effected the Authorized Capital Increase on December
4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.
On
December 3, 2013, the Company’s sole director approved a stock dividend of 59 authorized but unissued shares of its common
stock on each one (1) issued and outstanding share of its common stock held by shareholders of record as of December 16, 2013.
The payment date for the stock dividend was December 17, 2013, as determined by the Financial Industry Regulatory Authority (FINRA).
Upon the payment of the stock dividend, the Company had 296,400,000 issued and outstanding shares of common stock, which represents
an increase of 291,460,000 shares over its prior total of 4,940,000 issued and outstanding shares of common stock. The split is
reflected retrospectively in the consolidated financial statements.
On
December 10, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved a set of amended
and restated articles of incorporation that, among other things, increased the Company’s authorized capital to 760,000,000
shares, consisting of 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of “blank check”
preferred stock, par value $0.001.
On
December 11, 2014, the Company’s sole director approved the designation of 2,000,000 shares of the Company’s authorized
but unissued “blank check” preferred stock, par value $0.001, as Series “A” preferred stock. The shares
of Series “A” preferred stock carry certain rights and preferences and may be converted into shares of the Company’s
common stock on a 10 for one (1) basis at any time after 18 months from the date of issuance, and that each share of Series “A”
preferred stock has voting rights and carries a voting weight equal to 50 shares of common stock.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
6.
Capital Stock (continued)
The
preferred stock ranks senior to (a) any other series of preferred stock of the Company currently existing or hereafter created
(b) the common stock of the Company, now existing or hereafter issued and (c) any other class of securities of the Company, in
each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of
the Company whether voluntary or involuntary.
The
Company formally effected the designation by filing a Certificate of Designation with the Nevada Secretary of State on January
15, 2015.
Share
Issuances
On
January 16, 2015, the owner of an aggregate of 237,360,000 shares of the Company’s common stock agreed to cancel those shares
in exchange for the issuance of the 2,000,000 shares of Series “A” preferred stock. As a result, the number of issued
and outstanding shares of the Company’s common stock decreased from 296,400,000 to 59,040,000.
On
April 6, 2015, the Company issued 3,500,000 shares of common stock at a deemed price of $0.10 per share in settlement of promissory
notes totaling $350,000, including $300,000 in proceeds received during the fiscal year. The stock was valued at the $2.81 trading
price per share, resulting in a loss on the settlement of debt in the amount of $9,485,000.
On
April 6, 2015, the Company issued 339,270 shares of common stock at a deemed price of $0.10 per share in settlement of related
party loans totaling $33,927. The stock was valued at the $2.81 trading price per share, resulting in a loss on the settlement
of debt in the amount of $919,422.
On
April 6, 2015, the Company issued 1,000,000 shares of common stock at a price of $2.77 per share for the acquisition of Vertitek.
The stock was valued at $2.77 per share on the effective date of the acquisition of Vertitek, March 31, 2015.
On
July 21, 2015, the Company issued 212,765 shares of common stock at a deemed price of $0.47 per share for the purchase of all
of the rights, title and interest in and to certain intellectual property from the Company’s President.
On
April 26, 2016, the Company issued 2,000,000 shares of common stock at a deemed price of $0.10 per share in settlement of promissory
notes totaling $200,000. The stock was valued at the $0.24 trading price per share, resulting in a loss on the settlement of debt
in the amount of $280,000.
On
May 9, 2016, the Company issued 360,360 shares of common stock to an investor at a deemed price of $0.14 per share for proceeds
of $50,000.
On
June 20, 2016, the Company issued 317,360 shares of common stock to an investor at a deemed price of $0.32 per share for proceeds
of $100,000.
On
June 29, 2016, the Company issued 155,738 shares of common stock to an investor at a deemed price of $0.64 per share for net proceeds
of $98,495.
On
July 14, 2016, the Company issued 127,114 shares of common stock to an investor at a deemed price of $0.79 per share for net proceeds
of $98,495.
On
August 25, 2016, the Company issued 210,704 shares of common stock to an investor at a deemed price of $0.47 per share. Total
proceeds of $100,000 were received subsequent to the period ended August 31, 2016 and the amount is recorded as subscription receivable
on the balance sheet.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
6.
Capital Stock (continued)
As
of August 31, 2016, the Company had 67,263,311 issued and outstanding shares of common stock and 2,000,000 issued and outstanding
shares of Series “A” preferred stock.
At
August 31, 2016, the Company had no issued or outstanding stock options or warrants.
7.
Mineral Property Costs
Lander
County, Nevada Claims
On
September 30, 2011, the Company entered into an option agreement that would provide for the purchase of a 100% interest in the
Carico Lake Valley Property (the “Property”). The Property is located in the State of Nevada.
To
complete the option, the agreement requires the Company to make the following payments and incur the following amounts on exploration
and development:
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a)
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$15,000
cash on September 30, 2011 (paid);
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b)
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an
additional $30,000 cash on September 30, 2013 (not paid);
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c)
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an
additional $60,000 cash on September 30, 2013 (not paid);
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d)
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an
additional $120,000 cash on September 30, 2014 (not paid); and
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e)
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incur
a minimum of $125,000 ($12,654 was incurred as of February 29, 2016) on exploration and development work by December 31, 2013
and every subsequent year thereafter, through 2014.
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The
entity that owns the Property made the 2014 payments due to the Bureau of Land Management, Nevada (“BLM”) and Lander
County. The payments ($6,406) are reflected in accounts payable and accrued liabilities and the annual exploration and development
work.
The
Company was responsible for any and all property payments due to any government authority on the property during the term of the
option agreement (BLM: $3,920 yr., Lander County: $294 yr.).
The
entity that owns the Property terminated the option agreement with the Company on July 28, 2014 and the above mentioned reimbursement
of $6,406 remains outstanding. The Company has no further rights to the Property.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
8.
Related Party Transactions
On
July 15, 2015, the Company entered into an asset purchase agreement with its current President pursuant to which the Company acquired
all of the right, title and interest in and to certain intellectual property from the President in consideration for the issuance
of $100,000 worth of common stock on that date at a deemed price of $0.47 per share. As a result, the Company issued 212,765 shares
of common stock to the President. The entire $100,000 of intellectual property was impaired and written-off as of November 30,
2015.
During
the period ended August 31, 2016, the Company paid management fees of $52,500 (2015 – $32,000) to its current President
and $Nil (2015 – $5,000) to a former director, and converted $Nil (2015 – $33,927) in debt owed to a former director
into common stock resulting in a loss on the settlement of debt in the amount of $Nil (2015 – $919,422). The Company had
$Nil (2015 – $10,782) in debt forgiven by its majority shareholder.
9.
Promissory Notes
On
August 18, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus
simple interest at an annual interest rate of 15%, repayable on August 18, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt
settlement.
On
October 7, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000
plus simple interest at an annual interest rate of 15%, repayable on October 7, 2016. On April 6, 2015, the promissory note was
settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with the
debt settlement.
On
October 22, 2014, the Company entered into a promissory note agreement with Investor B for an aggregate amount of $15,000 plus
simple interest at an annual interest rate of 15%, repayable on October 22, 2016. As of August 31, 2016, $15,000 was received
and interest accrued of $4,592 ($2,897 as at November 30, 2015).
On
November 23, 2014, the Company entered into a promissory note agreement with Investor C for an aggregate amount of $75,000 plus
simple interest at an annual interest rate of 15%, repayable on November 23, 2016. On April 6, 2015, the promissory note was settled
through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 in connection with the debt
settlement.
On
December 29, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $75,000
plus simple interest at an annual interest rate of 15%, repayable on December 29, 2016. On April 6, 2015, the promissory note
was settled through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 in connection
with the debt settlement.
On
January 26, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on January 26, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
Valmie
Resources, Inc.
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
9.
Promissory Notes (continued)
On
February 27, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000
plus simple interest at an annual interest rate of 15%, repayable on February 27, 2017. On April 6, 2015, the promissory note
was settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with
the debt settlement.
On
March 20, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000
plus simple interest at an annual interest rate of 15%, repayable on March 20, 2017. On April 6, 2015, the promissory note was
settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with
the debt settlement.
During
the period ended August 31, 2016, the Company entered into multiple promissory note agreements with Investor D for an aggregate
amount of $172,500 ($102,500 in aggregate during the year ended November 30, 2015). The promissory notes mature two years from
the date of the inception of the notes and bear simple interest at an annual interest rate of 15%. The notes are secured by all
of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments,
chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent
applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on
the date of the note or hereafter acquired, and all proceeds thereof. On April 27, 2016, $200,000 of the promissory notes was
settled through the issuance of 2,000,000 shares of common stock, and the associated accrued interest of $13,854 was waived. The
Company recognized a loss of $266,146 in connection with the debt settlement. During the period ended August 31, 2016, the Company
repaid the remaining promissory notes in full for an aggregate amount of $75,000.
10.
Going Concern and Liquidity Considerations
The
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at August 31,
2016, the Company had working capital of $634 (November 30, 2015 – working capital deficiency of $55,866) and an accumulated
deficit of $14,538,599 (November 30, 2015 – $13,937,744). 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
next 12 months.
The
ability of the Company to continue in existence is dependent upon, among other things, obtaining additional financing to continue
operations and the operations of both Vertitek and Aerolift.
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 consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
11.
Commitments
Pursuant
to a letter of intent dated July 7, 2015, the Company is obligated to pay one vendor $5,000 for costs incurred to construct a
prototype and testing of such prototype. As at August 31, 2016, $3,000 has been paid in relation to this obligation.
12.
Subsequent Events
The
Company has evaluated subsequent events from August 31, 2016, through the date these financial statements were issued and determined
that there are no additional items to disclose.