Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
PART I FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
3
|
Balance Sheets as of February 28, 2015 (unaudited) and May 31, 2014
|
4
|
|
Statements of Operations (unaudited)
|
5
|
|
Statements of Cash Flows (unaudited)
|
6
|
|
Notes to Financial Statements (unaudited)
|
7
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
12
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
13
|
Item 4.
|
Controls and Procedures
|
14
|
PART II OTHER INFORMATION
|
||
Item 6.
|
Exhibits
|
15
|
Signatures
|
16
|
Laredo Oil, Inc.
|
||||||||
Balance Sheets
|
||||||||
February 28,
2015
|
May 31,
2014
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
70,366
|
$
|
88,271
|
||||
Prepaid expenses and other current assets
|
128,540
|
48,223
|
||||||
Total Current Assets
|
198,906
|
136,494
|
||||||
TOTAL ASSETS
|
$
|
198,906
|
$
|
136,494
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$
|
115,713
|
$
|
28,286
|
||||
Accrued payroll liabilities
|
834,721
|
482,515
|
||||||
Accrued interest
|
95,772
|
76,805
|
||||||
Deferred management fee revenue
|
45,833
|
45,833
|
||||||
Warrant liabilities
|
298,762
|
636,428
|
||||||
Notes payable
|
350,000
|
350,000
|
||||||
Total Current Liabilities
|
1,740,801
|
1,619,867
|
||||||
Commitments and Contingencies
|
||||||||
Stockholders’ Deficit
|
||||||||
Preferred stock: $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
|
-
|
-
|
||||||
Common stock: $0.0001 par value; 90,000,000 shares authorized; 53,668,177 and 53,600,013 issued and outstanding, respectively
|
5,367
|
5,360
|
||||||
Additional paid in capital
|
7,171,980
|
6,684,403
|
||||||
Accumulated deficit
|
(8,719,242
|
)
|
(8,173,136
|
)
|
||||
Total Stockholders’ Deficit
|
(1,541,895
|
)
|
(1,483,373
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
|
198,906
|
$
|
136,494
|
||||
Three Months Ended
|
Three Months Ended
|
Nine Months Ended
|
Nine Months Ended
|
|||||||||||||
February 28, 2015
|
February 28, 2014
|
February 28, 2015
|
February 28, 2014
|
|||||||||||||
Management fee revenue
|
$
|
2,636,486
|
$
|
974,398
|
$
|
6,040,479
|
$
|
2,443,246
|
||||||||
Direct costs
|
2,829,375
|
875,582
|
6,059,354
|
2,267,072
|
||||||||||||
Gross profit/(loss)
|
(192,889
|
)
|
98,816
|
(18,875
|
)
|
176,174
|
||||||||||
General, selling and administrative expenses
|
153,548
|
195,158
|
508,436
|
451,555
|
||||||||||||
Consulting and professional services
|
96,351
|
78,345
|
337,145
|
235,850
|
||||||||||||
Total Operating Expense
|
249,899
|
273,503
|
845,581
|
687,405
|
||||||||||||
Operating loss
|
(442,788
|
)
|
(174,687
|
)
|
(864,456
|
)
|
(511,231
|
)
|
||||||||
Other income/(expense)
|
||||||||||||||||
Gain/(loss) on revaluation of warrant liability
|
80,347
|
58,317
|
337,666
|
(67,695
|
)
|
|||||||||||
Interest expense
|
(6,434
|
)
|
(6,105
|
)
|
(19,316
|
)
|
(20,464
|
)
|
||||||||
Net income/(loss)
|
$
|
(368,875
|
)
|
$
|
(122,475
|
)
|
$
|
(546,106
|
)
|
$
|
(599,390
|
)
|
||||
Net income/(loss) per share, basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01)
|
$
|
(0.01
|
)
|
|||||
Weighted average number of common shares outstanding
|
53,432,533
|
53,650,013
|
53,397,811
|
53,612,650
|
||||||||||||
Nine Months Ended
|
Nine Months Ended
|
||||||||
February 28, 2015
|
February 28, 2014
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|||||||||
Net loss
|
$
|
(546,106
|
)
|
$
|
(599,390
|
)
|
|||
Adjustments to Reconcile Net Loss to Net Cash Provided By (Used in) Operating Activities
|
|||||||||
Share based compensation
|
481,084
|
381,389
|
|||||||
(Gain)/Loss on revaluation of warrant liability
|
(337,666
|
)
|
67,695
|
||||||
Increase in prepaid expenses and other current assets
|
(80,317
|
)
|
(2,658
|
)
|
|||||
Increase in accounts payable and accrued liabilities
|
458,600
|
175,442
|
|||||||
Increase in deferred management fee revenue
|
-
|
255,497
|
|||||||
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
|
(24,405
|
)
|
277,975
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
- | - | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Exercise of stock options
|
6,500
|
-
|
|||||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
6,500
|
-
|
|||||||
Net (decrease)/increase in cash and cash equivalents
|
(17,905
|
)
|
277,975
|
||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
88,271
|
107,674
|
|||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
70,366
|
$
|
385,649
|
|||||
Current Liability
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Warrant Liabilities – February 28, 2015
|
$
|
-
|
$
|
298,762
|
$
|
-
|
$
|
298,762
|
||||||||
Warrant Liabilities – May 31, 2014
|
$
|
-
|
$
|
636,428
|
$
|
-
|
$
|
636,428
|
●
|
Affiliates of the entity;
|
●
|
Entities for which investments in their equity securities are typically accounted for under the equity method by the investing entity;
|
●
|
Trusts for the benefit of employees;
|
●
|
Principal owners of the entity and members of their immediate families; and
|
●
|
Management of the entity and members of their immediate families;
|
Nine Months Ended
|
Nine Months Ended
|
|||||||
February 28, 2015
|
February 28, 2014
|
|||||||
Share-based compensation:
|
||||||||
General, selling and administrative expenses
|
$
|
335,110
|
$
|
340,279
|
||||
Consulting and professional services
|
145,974
|
41,110
|
||||||
481,084
|
381,389
|
|||||||
Share-based compensation by type of award:
|
||||||||
Stock options
|
458,584
|
340,279
|
||||||
Restricted stock
|
22,500
|
41,110
|
||||||
$
|
481,084
|
$
|
381,389
|
2015
|
2014
|
|||||||
Risk-free interest rates
|
0.09
|
%
|
0.28
|
%
|
||||
Contractual life
|
0.8 years
|
1.65 years
|
||||||
Expected volatility
|
122.9
|
%
|
202.4
|
%
|
||||
Dividend yield
|
0
|
%
|
0
|
%
|
3.1
|
Certificate of Incorporation, included as Exhibit 3.1 in our Form S-1 filed August 25, 2008, File No. 333-153168 and incorporated herein by reference.
|
3.2
|
Certificate of Amendment of Certificate of Incorporation, included as Exhibit 10.1 to our Form 8-K filed October 22, 2009 and incorporated herein by reference.
|
3.3
|
Bylaws, included as Exhibit 3.2 in our S-1 filed August 25, 2008, File No. 333-153168 and incorporated herein by reference.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Extension Presentation Linkbase
|
Date: April 14, 2015
|
By:
|
/s/ Mark See
|
|
Mark See
|
|||
Chief Executive Officer and Chairman of the Board
|
|||
Date: April 14, 2015
|
By:
|
/s/ Bradley E. Sparks
|
|
Bradley E. Sparks
|
|||
Chief Financial Officer, Treasurer and Director
|
|||
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended February 28, 2015 of Laredo Oil, Inc., the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended February 28, 2015 of Laredo Oil, Inc., the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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4. FAIR VALUE OF FINANCIAL INSTRUMENTS
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2015
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4. FAIR VALUE OF FINANCIAL INSTRUMENTS | The Company's financial instruments as defined by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825-10-50, Financial Instruments, include cash, trade accounts receivable, accounts payable, accrued liabilities, warrant liabilities and notes payable. All instruments, with the exception of the warrant liabilities which are measured at fair value, are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at February 28, 2015. Based on the borrowing rates currently available to the Company for loans with similar terms and maturities, the fair value of long term notes payable approximates the carrying value.
FASB ASC 820, Fair Value Measurements (FASB ASC 820), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FASB ASC 820 provides a framework for measuring fair value, establishes a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterpartys creditworthiness when valuing certain assets.
The three level fair value hierarchies for disclosure of fair value measurements defined by FASB ASC 820 are as follows:
Level 1 Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instruments anticipated life.
Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Valuation under level 3 generally involves a significant degree of judgment from management.
A financial instruments level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The Company has warrant liabilities which are measured at fair value on a recurring basis at February 28, 2015 and 2014. The Company recorded a gain on revaluation of warrant liability of $80,347 and $337,666 for the three and nine months ended February 28, 2015. The Company recorded a gain on revaluation of warrant liability of $58,317 for the three months ended February 28, 2014 and a loss on revaluation of warrant liability of $67,695 for the nine months ended February 28, 2014. The Company measures the fair value of the warrant liabilities using the Black Scholes method. Inputs used to determine fair value under this method include the Companys stock price volatility and expected remaining life as disclosed in Note 6.
The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of February 28, 2015 and May 31, 2014:
Fair Value Measurements on a Recurring Basis
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