10-Q 1 mrc10q053119.htm MASCOTA RESOURCES, INC. 10Q MAY 31, 2019

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the quarterly period end May 31, 2019

 Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934

For the transition period from __________ to __________

Commission File Number: None

MASCOTA RESOURCES CORP.

(Exact name of registrant as specified in its charter)

NEVADA 36-4752858

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

7976 East Phillips Circle

Centennial, CO 80112-3231

(Address of principal executive offices, including Zip Code)

(303) 961-7690

(Issuer’s telephone number, including area code)

Check whether the issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

None N/A N/A

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 6,491,190 shares of common stock as of July 1, 2019.

MASCOTA RESOURCES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	May 31,			November 30,
ASSETS	2019			2018
Current Assets
Cash	$	8,034		$	49,380
Total Current Assets		8,034			49,380
Other Assets
Land and improvements		143,963			101,163
Total Other Assets		143,963			101,163
Total Assets	$	151,997		$	150,543
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current Liabilities
Accounts payable	$	27,405		$	21,205
Accrued interest, related parties		2,208			604
Accrued interest		4,340			2,780
Convertible note payable - related party		2,500			-
Convertible notes payable		25,000			-
Notes payable - related parties, current portion		54,900			24,400
Total Current Liabilities		116,353			48,989
Long-term Liabilities
Notes payable		45,000			45,000
Notes payable - related parties		5,000			5,000
Total Long-term Liabilities		50,000			50,000
Total Liabilities		166,353			98,989
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $0.01 par value, 10,000,000 shares authorized, 50,000 shares issued and outstanding		500			500
		-			-
Common Stock, $0.001 par value, 90,000,000 shares authorized, 6,491,190 shares issued and outstanding		6,491			6,491
Additional paid-in capital		286,611			286,611
Accumulated deficit		(307,958	)		(242,048	)
Total Stockholders' Equity (Deficit)		(14,356	)		51,554
Total Liabilities and Stockholders' Equity (Deficit)	$	151,997		$	150,543

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

MASCOTA RESOURCES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


	Three Months Ended						Six Months Ended
	May 31,			May 31,			May 31,			May 31,
	2019			2018			2019			2018

Revenue	$	-		$	-		$	-		$	-

Operating Expenses
General and administrative		15,582			2,258			62,746			8,807
Total Expenses		15,582			2,258			62,746			8,807

Operating loss		(15,582	)		(2,258	)		(62,746)			(8,807	)
Other income (expense)
Interest expense		(894	)		(384	)		(1,560	)		(615	)
Interest expense, related parties		(975	)		(754	)		(1,604	)		(1,577	)
Total other income (expense)		(1,869	)		(1,138	)		(3,164	)		(2,192	)

Net loss	$	(17,451	)	$	(3,396	)	$	(65,910	)	$	(10,999	)

Loss per share, basic and fully diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Weighted average number of shares		6,491,190			4,140,750			6,491,190			4,140,750
outstanding - basic and fully diluted

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

MASCOTA RESOURCES CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

(Unaudited)

							Total
	Common Stock		Preferred Stock		Additional	Accumulated	Stockholders'
	Shares	Amount	Shares	Amount	Paid-in Capital	Deficit	Deficit
Balance at November 30, 2017	4,140,750	$ 4,141	50,000	$ 500	$ 160,753	$ (197,952)	$ (32,558)

Net loss	-	-	-	-	-	(10,999)	(10,999)

Balances at May 31, 2018	4,140,750	$ 4,141	50,000	$ 500	$ 160,753	$ (208,951)	$ (43,557)

Balance at November 30, 2018	6,491,190	$ 6,491	50,000	$ 500	$ 286,611	$ (242,048)	$ 51,554

Net loss	-	-	-	-	-	(65,910)	(65,910)
Balances at May 31, 2018	6,491,190	$ 6,491	50,000	$ 500	$ 286,611	$ (307,958)	$ 14,356)

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

MASCOTA RESOURCES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	May, 31
	2019			2018
Cash Flows from Operating Activities
Net loss	$	(65,910	)	$	(10,999	)
Change in operating assets and liabilities:
Accounts payable		6,200			2,693
Accrued interest, related parties		1,604			444
Accrued interest		1,560			-
Net Cash used by Operating Activities		(56,546	)		(7,862	)
Cash Flows from Investing Activities
Land improvement costs		(42,800	)		-
Net Cash used by Investing Activities		(42,800	)		-
Cash Flows from Financing Activities
Proceeds from issuance of convertible notes		25,000			5,216
Proceeds from issuance of convertible note - related party		2,500			-
Proceeds from sale of stock subscriptions		-			25,500
Proceeds from issuance of notes payable, related parties		30,500			-
Net Cash provided by Financing Activities		58,000			30,716

Net increase (decrease) in cash		(41,346	)		22,854

Cash at beginning of period		49,380			2,846

Cash at end of period	$	8,034		$	25,700

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	-		$	-
Income taxes	$	-		$	-

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

MASCOTA RESOURCES CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

For the Six Months Ended

May 31, 2019

Note 1. Basis of Presentation

While the information presented in the accompanying May 31, 2019 financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s November 30, 2018 financial statements (and notes thereto). Operating results for the six months ended May 31, 2019 are not necessarily indicative of the results that can be expected for the year ending November 30, 2019.

The accompanying financial statements represent the consolidated operations of Mascota Resources Corp. (“MRC”) and Great Northern Properties, Inc. (“GNP”) from the periods of formation (MRC) or acquisition (GNP) forward, prepared in accordance with US GAAP. All intercompany transactions have been eliminated, and all amounts are presented in the US Dollar. The consolidated entity is referred to as “the Company,” “we,” “us,” or “our.”

Note 2. Business

Nature of Operations

MRC was incorporated in the state of Nevada on November 3, 2011. MRC is an exploration stage company and was formed for the purpose of acquiring exploration and development stage mineral properties.

On November 20, 2017, the Company acquired all of the outstanding shares of GNP for consideration of 250,000 shares of the Company’s restricted common stock valued at $5,000 ($0.02 per share), as well as promissory notes in the principal amount of $50,000, for total purchase price of $55,000. GNP was incorporated in Alaska on September 22, 2017 and had not engaged in any operations, other than the acquisition from its sole officer and director of a parcel of undeveloped land in Anchorage, Alaska. The Company’s plans for this property are to build a triplex with three rental units, each of which will be approximately 1,200 sq. ft. The promissory notes bear interest at 6% per year, are unsecured, and are due and payable on October 31, 2022 or upon the sale of the property in Anchorage, Alaska, whichever is the first to occur. Prior to the acquisition, there were no significant common shareholdings or affiliations between the MRC, GNP, or either entity’s shareholders. As a result of the acquisition, MRC’s capital, operations, and management remained intact. As such, the transaction was accounted for as a business purchase, whereby the Alaska property (GNP’s only balance sheet item) was recorded on the acquisition date at fair market value.

Going Concern

These consolidated financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the ordinary course of business. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has not yet achieved profitable operations, has accumulated losses of $307,958 since its inception through May 31, 2019, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company may be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated.

Income Taxes

We account for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Current tax benefits are offset by a valuation reserve as they are considered not likely to be realized in the foreseeable future.

Net Income (Loss) Per Share

In accordance with ASC 260 Earnings per Share, basic earnings per share ("EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

At May 31, 2019 and November 30, 2018, the Company had 1,015,000 Series A Warrants issued and outstanding, and notes payable convertible into 550,000 and 0 shares of common stock, respectively. Each Series A warrant allowed the holder to purchase one share of the Company’s common stock at a price of $1.00 per share at any time on or before their June 1, 2019 expiration date. No additional potentially dilutive investments were outstanding at May 31, 2019 or November 30, 2018.

New Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

Employees

The Company does not have any employees, other than Mark Rodenbeck who serves as the Company’s only officer. Mr. Rodenbeck does not receive any compensation for his services to the Company.

Note 3. Long-Lived Assets

On November 20, 2017 the Company acquired a parcel of undeveloped land in Anchorage, Alaska via its acquisition of 100% stock ownership of GNP. The Company's plans for this property are to build a triplex with 3 rental units, each of which will consist of approximately 1,200 sq. ft. Upon acquisition, the land was recorded at its fair market value, which was deemed to be the value of the $55,000 in consideration paid for the GNP stock. Land improvements are recorded at cost, which totaled $88,963 and $46,163 at May 31, 2019 and November 30, 2018, respectively. The Company intends to evaluate the land and land improvements for impairment periodically in accordance with ASC 360 Property, Plant, and Equipment.

Note 4. Stockholders’ Deficit

The Company’s common stock is quoted under the symbol “MACR” on the OTC Pink tier operated by OTC Markets Group, Inc. To date, an active trading market for the Company’s common stock has not developed.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of its $0.01 par value preferred stock. As of May 31, 2019, and November 30, 2018, the Company had 50,000 outstanding shares of preferred stock. The preferred shares are not convertible into shares of the Company’s common stock.

Common Stock

During the six months ended May 31, 2018, the Company sold 255,500 Units at a price of $.10 per Unit in a private offering, for total proceeds of $25,500. Each Unit consisted of one share of our common stock and one Series A Warrant. Although the $25,500 was received during the six months ended May 31, 2018, the Units were not issued until after May 31, 2019. The Series A warrants expired on June 1, 2019.

As of May 31, 2019 and November 30, 2018, the Company had 6,491,190 shares of common stock issued and outstanding.

Note 5. Notes Payable

Convertible Note Payable - Related Party

On March 14, 2019, the Company received $2,500 from Mark Rodenbeck pursuant to an unsecured promissory note. The note will be due March 14, 2020, carries an interest rate of 6%, and is convertible into shares of the Company’s common stock at the fixed rate of $0.05 per share. There is no beneficial conversion feature on the note, as the fair market value of the Company’s common stock on the note’s issuance date is deemed to have been lower than the fixed conversion rate.

Convertible Notes Payable

During the six months ended May 31, 2019, the Company received $25,000 from unaffiliated investors. The notes were issued between March 20 and April 16, 2019 and are due one year from issuance date, carry an interest rate of 6%, and are convertible into shares of the Company’s common stock at the fixed rate of $0.05 per share. There is no beneficial conversion feature on the note, as the fair market value of the Company’s common stock on the notes’ issuance dates is deemed to have been lower than the fixed conversion rate.

During the six months ended May 31, 2018, the Company received $5,216 pursuant to a convertible note with a one-year maturity, 6% interest rate, and fixed $.02 conversion rate. There was no beneficial conversion feature, as the fair market value of the Company’s common stock on the note’s issuance date was deemed to equal the fixed conversion rate. This note was converted in full in August 2018.

Notes Payable - Related Parties

In connection with the Company's acquisition of GNP, on November 20, 2017 the Company issued a $5,000 unsecured note payable to GNP's former sole officer and director, Jerry Lewis, who became a director of the Company in February 2018. The note carries a 6% interest rate and is payable upon the earlier of October 31, 2022 or the sale of the Company's Anchorage, Alaska property acquired from GNP.

During the six months ended May 31, 2019 and 2018, Mr. Lewis, and a company controlled by Mr. Lewis, loaned the Company $24,400 and $30,500, respectively, resulting in loan balances of $54,900 and $24,400 at May 31, 2019 and November 30, 2018, respectively. The loans are unsecured, due on demand, and bear 6% interest per year.

Notes Payable

In connection with the Company’s acquisition of GNP, on November 20, 2017 the Company issued $45,000 in unsecured notes payable to two of GNP’s former shareholders, who each own approximately 1% of the Company's issued and outstanding common stock and have no further affiliation with the Company or GNP. The notes carry a 6% interest rate and are payable upon the earlier of October 31, 2022 or the sale of the Company’s Anchorage, Alaska property acquired from GNP.

Summary

	Loan Amount				Accrued Interest
Note Description	May 31, 2019		Nov. 30, 2018		May 31, 2019		Nov. 30, 2018
Convertible note payable - related party	$	2,500	$	-	$	32	$	-
Convertible notes payable		25,000		-		250		-
Notes Payable - related parties		59,900		29,400		2,176		604
Notes payable		45,000		45,000		4,090		2,780
Total	$	132,400	$	74,400	$	6,548	$	3,384

Note 6. Related Party Transactions

In support of the Company's efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. The Company engaged in related party transactions during six months ended May 31, 2019 and 2018. (See Note 5).

Note 7. Subsequent Events

On June 1, 2019, the Company’s outstanding Series A Warrants expired.

The Company has evaluated subsequent events through the date these financial statements were issued. There have been no additional subsequent events for which disclosure is required.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We did not conduct any operations for the six months ended May 31, 2019 and 2018.

Operating expenses are comprised primarily of legal and professional fees. During the three months ended May 31, 2019, operating expenses totaled $15,582, which is a significant increase from $2,258 during the three months ended May 31, 201. Interest expense increased from $1,138 for the three months ended May 31, 2018 to $1,869 for the three months ended May 31, 2019, mainly due to the increase in debt during the three months ended May 31, 2019 compared to the same period ended May 31, 2018. This resulted in an increase in net loss of $14,055 from $3,396 for the three months ended May 31, 2018 to $17,451 for the three months ended May 31, 2019.

Operating expenses increased significantly from $8,807 for the six months ended May 31, 2018 to $62,746 for the six months ended May 31, 2019. Interest expense for the six months ended May 31, 2019 and 2018 totaled $3,164 and $2,192, respectively. The increase is due to interest on new debt acquired during the six months ended May 31, 2019 as compared to the same period ended May 31, 2018. See Note 5 to the accompanying financial statements. This resulted in an increase in net loss of $54,911 from $10,999 for the six months ended May 31, 2018 to $65,910 for the six months ended May 31, 2019.

The factors that will most significantly affect future operating results will be:

·	Ability to raise capital to construct residential properties

·	Condition of housing market in Anchorage, Alaska

·	Interest rates

Other than the foregoing we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on our revenues or expenses.

The Company used $56,546 and $7,862 for operating activities during the six months ended May 31, 2019 and 2018, all of which were funded by proceeds received from loans and the sale of common stock.

During the six months ended May 31, 2019, the Company received $58,000 from the issuance of convertible notes and notes payable. The loans are unsecured, due in one year, and bear 6% interest per year. The convertible notes are convertible into shares of the Company’s common stock at $0.05 per share. During the six months ended May 31, 2018, the Company had received $30,716 from the issuance of convertible debt and sale of stock subscriptions.

The Company incurred land improvement costs on the Alaska property totaling $42,800 and $0 in the six months ended May 31, 2019 and 2018, respectively.

Other than $600,000 needed to improve the land and construct the triplex we plan to build in Alaska, we do not anticipate any material capital requirements for the twelve months ending May 31, 2020. Since we have only $8,000 cash on hand at May 31, 2019, we plan to fund these expenditures through the sale of equity and/or debt securities.

We do not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity significantly increasing or decreasing in any material way. We are unaware of any commitments or arrangements from any person to provide us with any equity capital.

We have relied on advances from related parties until such time that we can earn revenue to support our operations or obtain financing through sales of our equity or securities. There is no formal written commitment from any person to provide us with capital.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures as of May 31, 2019. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive and Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive and Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period ended May 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 6. Exhibits

Exhibits

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MASCOTA RESOURCES CORP.

July 3, 2019
By:/s/Mark Rodenbeck

Mark Rodenbeck

Principal Executive and Financial Officer