EX-99.1 3 ex99_1.htm EXHIBIT 99.1

 

EXHIBIT 99.1

 

Audited financial statements of Ilustrato Pictures, Ltd. for the five months ended September 30, 2012 and the period from inception (August 29, 2011) to April 30, 2012

Audited FS-1
 

 

 

JAMES STAFFORD  

James Stafford, Inc.

Chartered Accountants

Suite 350 – 1111 Melville Street

Vancouver, British Columbia

Canada V6E 3V6

Telephone +1 604 669 0711

Facsimile +1 604 669 0754

www.JamesStafford.ca

 

Report of Independent Registered Public Accounting Firm

 

 

To the Board of Directors and Stockholders of

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd.)

(A Development Stage Company)

 

We have audited the accompanying balance sheets of Ilustrato Pictures Ltd. (formerly 0919008 B.C. Ltd.) (A Development Stage Company) (the “Company”) as of 30 September 2012 and 30 April 2012 and the related statements of loss and other comprehensive loss, cash flows and changes in stockholders’ deficiency for the five month period ended 30 September 2012 and for the period from the date of inception on 29 August 2011 to 30 April 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 September 2012 and 30 April 2012 and the results of its operations and its cash flows for the five month period ended 30 September 2012 and for the period from the date of inception on 29 August 2011 to 30 April 2012 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ James Stafford

Chartered Accountants

 

Vancouver, Canada

18 October 2012

Audited FS-2
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Balance Sheets

(Expressed in U.S. Dollars)

 

  As at
30 September
2012
  As at
30 April
2012
  $  $
Assets     
      
Current     
Cash and cash equivalents  43    4,875 
          
   43    4,875 
          
Liabilities         
          
Current         
Accounts payable and accrued liabilities (Note 4)  313,426    194,543 
Loans payable (Note 5)  221,919    183,569 
          
   535,345    378,112 
          
Due to related parties (Note 6)  332,017    275,457 
          
   867,362    653,569 
          
Stockholders’ deficiency         
Capital stock (Note 7)         
Unlimited authorized common shares, no par value         
Issued and outstanding         
30 September 2012 – 4 common shares, no par value         
30 April 2012 – 4 common shares, no par value  4    4 
Cumulative translation adjustment  (20,161)   (12,505)
Deficit, accumulated during the development stage  (847,162)   (636,193)
          
   (867,319)   (648,694)
          
   43    4,875 

 

Nature and Continuance of Operations (Note 1), Commitment (Note 9) and Subsequent Event (Note 12)

 

On behalf of the Board:

 

/s/ Brian Hammond

Director

Brian Hammond

 

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

Audited FS-3
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Statements of Loss and Comprehensive Loss

(Expressed in U.S. Dollars)

 

  For the
period from
the date of
inception on
29 August 2011 to
30 September 2012
  For the five month
period ended
30 September 2012
  For the
period from
the date of
inception on 29
August 2011 to
30 April 2012
   $    $    $ 
Expenses              
Bank charges and interest  11,638    6,933    4,705 
Consulting  50,110    17,915    32,195 
Editing  1,991    1,991    —   
Management fees (Note 6)  248,255    65,690    182,565 
Meals and entertainment  8,497    757    7,740 
Office and miscellaneous  211,285    86,413    124,872 
Professional fees  9,501    5,036    4,465 
Translation and scripting  2,488    2,488    —   
Travel  278,533    4,835    273,698 
Writing  24,864    18,911    5,953 
               
Net loss for the period  (847,162)   (210,969)   (636,193)
               
Basic and diluted loss per common share       (52,742)   (159,048)
               
Weighted average number of common shares used in per share calculations       4    4 
               
Comprehensive loss              
Net loss for the period  (847,162)   (210,969)   (636,193)
Foreign currency translation adjustment  (20,161)   (7,656)   (12,505)
               
Total comprehensive loss for the period  (867,323)   (218,625)   (648,698)
               
Basic and diluted comprehensive loss per common share  (54,656)   (162,175)

 

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

Audited FS-4
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Statements of Cash Flows

(Expressed in U.S. Dollars)

 

  For the
period from
the date of
inception on
29 August 2011 to
30 September 2012
  For the
five month
period ended
30 September 2012
  For the
period from
the date of
inception on
29 August 2011 to
30 April 2012
  $  $  $
Cash flows used in operating activities              
Net loss for the period  (847,162)   (210,969)   (636,193)
Adjustments to reconcile loss to net cash used by operating activities              
Accrued interest  11,483    6,985    4,498 
Changes in operating assets and liabilities              
       Increase in accounts payable and accrued liabilities  313,426    118,883    194,543 
               
   (522,253)   (85,101)   (437,152)
               
Cash flows from financing activities              
Increase in due to related parties  332,017    56,560    275,457 
Increase in loans payable  210,436    31,365    179,071 
Issuance of common shares  4    4    4 
               
   542,457    87,925    454,532 
               
Effect of exchange rate changes on cash  (20,161)   (7,656)   (12,505)
               
Increase (decrease) in cash and cash equivalents  43    (4,832)   4,875 
               
Cash and cash equivalents, beginning of period  —      4,875    —   
               
Cash and cash equivalents, end of period  43    43    4,875 

 

Supplemental Disclosures with Respect to Cash Flows (Note 10)

 

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

Audited FS-5
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Statements of Changes in Stockholders’ Deficiency

(Expressed in U.S. Dollars)

 

  Number of common
shares issued
  Capital stock  Cumulative
translation
adjustment
  Deficit, accumulated
during the
development stage
  Stockholders’
deficiency
        $    $    $    $ 
Balance at 29 August 2011 (inception)  —      —      —      —      —   
                         
Share issuance  4    4    —      —      4 
Net loss for the period  —      —      —      (636,193)   (636,193)
Cumulative translation adjustment  —      —      (12,505)   —      (12,505)
                         
Balance at 30 April 2012  4    4    (12,505)   (636,193)   (648,694)
                         
Net loss for the period  —      —      —      (210,969)   (210,969)
Cumulative translation  adjustment  —      —      (7,656)   —      (7,656)
                         
Balance at 30 September 2012  4    4    (20,161)   (847,162)   (867,319)

 

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


Audited FS-6
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

1.Nature and Continuance of Operations

 

Ilustrato Pictures Ltd. (the “Company”) was incorporated under the laws of the province of British Columbia on 29 August 2011 under the name 0919008 B.C. Ltd. The Company changed its name to Ilustrato Pictures Ltd. on 14 November 2011. The Company’s year-end is 30 April.

 

The Company was created on 29 August 2011 for the development of feature theatrical films to be financed and distributed domestically by Chinese production companies, and for international release. The Company’s business plan is to earn revenues in China and from worldwide film sales through entertainment mediums such as the movie theatre box-office, DVDs and pay-per-view television channels. The Company will also provide movie pre-production services which include writing original scripts, directing, and educating Chinese film companies on special effects and various film techniques. The Company has made partnerships with various Chinese movie production companies to fund and co-develop featured films in China.

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development stage enterprise, as defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. The Company is devoting all of its present efforts in establishing a new business, and its planned principle operations have not commenced, and accordingly, no revenue has been derived during the organization period.

 

The Company’s financial statements as at 30 September 2012 and 30 April 2012 and for the five month period ended 30 September 2012 and for the period from the date of inception on 29 August 2011 to 30 April 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a loss of $210,969 for the five month period ended 30 September 2012 (for the period from the date of inception on 29 August 2011 to 30 April 2012 - $636,193) and has a working capital deficit of $535,302 at 30 September 2012 (30 April 2012 - $373,237).

 

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 30 April 2013. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

At 30 September 2012, the Company had suffered losses from development activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Audited FS-7
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

2.Significant Accounting Policies

 

The following is a summary of significant accounting policies used in the preparation of these financial statements.

 

Organizational and start-up costs

 

Costs of start-up activities, including organizational costs, are expensed as incurred in accordance with ASC 720-15, “Start-Up Costs”.

 

Cash and cash equivalents

 

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

 

Segments of an enterprise and related information

 

ASC 280, “Segment Reporting” establishes guidance for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

 

Foreign currency translation

 

The Company’s functional currency is in the Canadian dollar and the reporting currency is in the U.S. dollar. The financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

Income taxes

 

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. 

 

Comprehensive income (loss)

 

ASC 220, “Comprehensive Income”, establishes standards for the reporting and disclosure of comprehensive income (loss) and its components in the financial statements. As at 30 September 2012 and 30 April 2012, the Company has items that represent a comprehensive loss and, therefore, has included a schedule of comprehensive loss in the financial statements.

 

Use of estimates

 

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

 

Comparative figures

 

Certain comparative figures have been adjusted to conform to the current period’s presentation.

Audited FS-8
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

3.Changes in accounting policies

 

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-12, “Comprehensive Income”. This ASU effectively defers the changes in ASU No. 2011-05, “Presentation of Comprehensive Income” that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. ASU No. 2011-12 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after 15 December 2011. As ASU No. 2011-12 relates only to the presentation of Comprehensive Income, the adoption of this update did not have a material effect on the Company’s financial statements.

 

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”. This ASU presents an entity with the option to present the total of comprehensive income, the components of net income, and the component of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity (deficiency). The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after 15 December 2011. As ASU No. 2011-05 relates only to the presentation of Comprehensive Income, the adoption of this update did not have a material effect on the Company’s financial statements. 

 

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement” to amend the accounting and disclosure requirements on fair value measurements. This ASU limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, this update expands the disclosure on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. ASU No. 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after 15 December 2011. The adoption of this update did not have a material effect on the Company’s financial statements.

 

4.Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

 

5.Loans Payable

 

  30 September
2012
  30 April
2012
  $  $
          
On 14 October 2011, a director of the Company issued a loan of CAD$25,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management Inc. (“880 Management”) (Note 6).  The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $25,415 (30 April 2012 - $25,293) and $1,961 (30 April 2012 - $1,104), respectively.  27,376    26,397 
          
On 10 November 2011, a company controlled by a director of the Company issued a loan of CAD$30,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management (Note 6).  The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $30,498 (30 April 2012 - $30,351) and $2,172 (30 April 2012 - $1,144), respectively.  32,670    31,495 
          
Subtotal  60,046    57,892 
          

Audited FS-9
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

 
 
 

 

 

30 September

2012

    

 

 

30 April

2012

 
   $    $ 
          
Balance carried forward  60,046    57,892 
          
On 16 December 2011, a company controlled by a director of the Company issued a loan of CAD$30,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management (Note 6).  The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $30,498 (30 April 2012 - $30,351) and $1,932 (30 April 2012 - $905), respectively.  32,430    31,256 
          
On 4 January 2012, a company controlled by a director of the Company issued a loan of CAD$10,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management (Note 6).  The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $10,166 (30 April 2012 - $10,117) and $602 (30 April 2012 - $259), respectively.  10,768    10,376 
          
On 31 January 2012, a company controlled by a director of the Company issued a loan of CAD$12,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management (Note 6). The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $12,199 (30 April 2012 - $12,140) and $650 (30 April 2012 - $239), respectively.  12,849    12,379 
          
Subtotal  116,093    111,903 
          
   

30 September

2012

    

30 April

2012

 
   $    $ 
          
Balance carried forward  116,093    111,903 
          
On 14 February 2012, a company controlled by a director of the Company issued a loan of CAD$40,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 20123, the debt was assigned to 880 Management (Note 6). The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $40,664 (30 April 2012 - $40,468) and $2,041 (30 April 2012 - $674), respectively.  42,705    41,142 
          
On 4 April 2012, a company controlled by a director of the Company issued a loan of CAD$30,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During the period from the date of inception on 29 August 2011 to 30 April 2012, the debt was assigned to 880 Management (Note 6). The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $30,498 (30 April 2012 - $30,351) and $1,196 (30 April 2012 - $173), respectively.  31,694    30,524 
          
On 14 May 2012, a director of the Company issued a loan of CAD$30,000 to the Company. The loan is unsecured, bears interest at a rate of 8% per annum and is due on demand.  During five month period ended 30 September 2012, the debt was assigned to 880 Management (Note 6). The loan payable to 880 Management as at 30 September 2012 consists of principal and accrued interest of $30,498 (30 April 2012 - $Nil) and $929 (30 April 2012 - $Nil), respectively.  31,427    —   
          
   221,919    183,569 

Audited FS-10
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

6.Due to Related Parties and Related Party Transactions

 

As at 30 September 2012, the amount due to related parties includes $170,888 payable to the President and director of the Company (30 April 2012 $139,385). This balance is non-interest bearing, unsecured and has no fixed terms of repayment. 

 

As at 30 September 2012, the amount due to related parties includes $161,129 payable to a director of the Company (30 April 2012 $136,072). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

 

During the five month period ended 30 September 2012, management fees of $35,831 (for the period from the date of inception on 29 August 2011 to 30 April 2012 - $88,306) were paid/accrued to the President and director of the Company.

 

During the five month period ended 30 September 2012, management fees of $29,859 (for the period from the date of inception on 29 August 2011 to 30 April 2012 - $94,259) were paid/accrued to a director of the Company.

 

During the five month period ended 30 September 2012, a director of the Company issued a loan of CAD$30,000 to the Company that was subsequently assigned to 880 Management, a non-related company (Note 5).

 

During the period from the date of inception on 29 August 2011 to 30 April 2012, a director of the Company issued a loan of CAD$25,000 to the Company that was subsequently assigned to 880 Management, a non-related company (Note 5).

 

During the period from the date of inception on 29 August 2011 to 30 April 2012, a company controlled by a director of the Company issued loans totaling CAD$152,000 to the Company that were subsequently assigned to 880 Management, a non-related company (Note 5).

 

7.Capital Stock

 

Authorized

 

The authorized capital is unlimited common shares with no par value.

 

Issued and outstanding

 

The total issued and outstanding capital stock is 4 common shares with no par value.

 

During the period from the date of inception on 29 August 2011 to 30 April 2012, the Company issued 4 common shares of the Company at $1 per share for a total proceed of $4.

 

Audited FS-11
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

8.Income Taxes

 

Income tax expense differs from the amount that would result from applying the federal income tax rate to earnings before income taxes. These differences result from the following items:

 

  For the five month
period ended
30 September 2012
  For the period ended from the date of inception on 29 August 2011 to 30 April 2012
  $  $
          
Loss before income taxes  (210,969)   (636,193)
          
Federal income tax rates  13.5%   13.5%
          
Income tax recovery based on the above rates  (28,481)   (85,886)
          
Increase (decrease) due to:         
     Permanent differences  52    522 
     Change in valuation allowance  28,429    85,364 
          
Income tax expense  —      —   


The composition of the Company’s deferred tax assets as at 30 September 2012 and 30 April 2012 are as follows:

 

  As at
30 September
2012
  As at
30 April
2012
  $  $
      
Net income tax operating loss carryforward  842,914    632,323 
          
Deferred tax assets  113,793    85,364 
Less: Valuation allowance  (113,793)   (85,364)
          
Net deferred tax asset  —      —   

  

The Company has non-capital loss carry-forwards of approximately $842,914 that may be available to offset future taxable income, which, if unutilized will expire as follows:

 

$
2032 632,323
2033 210,591
842,914

 

A full valuation allowance has been recorded against the potential deferred tax assets associated with all the loss carry-forwards as their utilization is not considered more likely than not at this time.

Audited FS-12
 

Ilustrato Pictures Ltd.

(formerly 0919008 B.C. Ltd)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in U.S. Dollars)

30 September 2012

 

9.Commitment

 

On 6 March 2012, the Company entered into an agreement with Beijing Hairun Pictures Co. Ltd., a film financing and production company incorporated and existing under the laws of People’s Republic of China, to co-create and co-develop two feature films for both the domestic Chinese market and the oversee international market.

 

10.Supplemental Disclosures with Respect to Cash Flows

 

For the period from the date of inception on 29 August 2011

to 30 September

2012

$

 

For the five month period

ended

30 September

2012

$

For the period from the date of inception on 29 August 2011

to 30 April

2012

$

Cash paid during the period for interest - - -
Cash paid during the period for income taxes - - -

  

During the five month period ended 30 September 2012, the Company accrued interest of $6,985 (for the period from the date of inception on 29 August 2011 to 30 April 2012 - $4,498) related to the loans payable (Note 5).

 

11.Financial Instruments

 

The carrying values of cash and cash equivalents, accounts payable, loans payable and due to related parties approximate their fair values due to the short term maturity and the nature of these financial instruments. 

 

Credit Risk

 

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions as determined by rating agencies.

 

Interest Rate Risk

 

The Company has cash balances and interest-bearing debts.  It is management’s opinion that the Company is not exposed to significant interest risk arising from these financial instruments. 

 

Liquidity Risk

 

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Company is reliant upon related parties and loans payable as its sole source of cash. The Company has received financing from related parties in the past; however, there is no assurance that it will be able to do so in the future.

 

Foreign Currency Risk

 

The Company is exposed to foreign currency risk by incurring expenditures and holding assets dominated in Canadian dollar. Assuming all other variables remain constant, a 1% change in the Canadian dollar against the U.S. dollar would not result in a significant change to the Company’s operations.

 

Other Risks

 

Unless otherwise noted, the Company is not exposed to other risks.

 

12.Subsequent Event

 

There are no reportable events for the period from 1 October 2012 to the date the financial statements were available to be issued on 18 October 2012.

Audited FS-13