Tianci International, Inc. - FORM 10-Q/A

Attached files

file	filename
EX-32.2 - Tianci International, Inc.	ex32-2.htm
EX-31.2 - Tianci International, Inc.	ex31-2.htm
EX-32.1 - Tianci International, Inc.	ex32-1.htm
EX-31.1 - Tianci International, Inc.	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM 10–Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ________________

Commission file number: 333-184061

FREEDOM PETROLEUM INC.

(Exact name of registrant as specified in its charter)

Nevada		45-5540446
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

650 Poydras Street, Office 15 Suite 1400, New Orleans LA 70130

(Address of principal executive offices)

1-504-799-2550

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [ ] No [ ]

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

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)		Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of March 20, 2015, there were 53,469,477 shares of the issuer’s common stock, par value $0.0001, outstanding.

EXPLANATORY NOTE

We are filing this Amendment No. 1 to the Quarterly Report on Form 10-Q (“Amended Report”) that we filed on March 23, 2015 (the "Original Report") in order to make revisions to certain parts of Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Specifically, (i) certain typos that were contained in the Balance Sheet Data table within Results of Operations have been revised and corrected to match the information in our Balance Sheet; and (ii) we added a section of Critical Accounting Procedures. This Amended Report speaks as of the date of the Original Report and may not reflect events occurring after the filing of the Original Report, nor does it modify or update the disclosures presented therein, except with regard to the modifications described in this Explanatory Note. Accordingly, this Amended Report should be read in conjunction with the Original Report and our other reports filed with the SEC subsequent to the filing of our Original Report, including any amendments to those filings.

In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this Amended Report, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to the Original Report have been re-executed and re-filed as of the date of this Amended Report and are included as exhibits hereto.

FREEDOM PETROLEUM INC.

Form 10-Q

Part I	FINANCIAL INFORMATION

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Part II.	OTHER INFORMATION

Item 6.	Exhibits	10

Signatures		11

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

Forward-Looking Statements

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Description of Business – Risk Factors” section in our Annual Report on Form 10-K, as filed on October 29, 2014. You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

All references in this Form 10-Q to the “Company,” “Freedom Petroleum,” “we,” “us,” or “our” are to Freedom Petroleum, Inc.

Our unaudited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Overview

Freedom Petroleum, Inc. (the “Company”), an exploration stage company, was incorporated in the State of Nevada on June 13, 2012. We are engaged in the exploration and development of oil and gas properties.

In January 2014, we were a party to that certain Securities Purchase Agreement (the "Agreement") by and among ourselves, certain of our shareholders (the "Selling Shareholders") owning an aggregate of 27,000,000 shares (approximately 51.7%) of our common stock (the "Sold Stock") and Anton Lin ("Lin"). Pursuant to the Agreement, Lin purchased the Sold Stock for $27,000 (the "Purchase Price") from the Selling Shareholders in a private sale transaction (the "Private Sale"). The Selling Shareholders were our former sole officer and director: Thomas Hynes ("Hynes") and corporate secretary: Nina Bijedic ("Bijedic"). Pursuant to the Agreement, Hynes and Bijedic submitted their resignations from all positions held with us; prior to the closing of the Private Sale, our Board of Directors appointed Lin as our sole director and Chief Executive Officer, which appointment took effect immediately following the close of the Private Sale. Following the Private Sale, a change in control occurred since Mr. Lin gained ownership of almost 52% of our outstanding common stock.

We have had limited operations and have been issued a "going concern" opinion by our auditor, based upon our reliance on the sale of our common stock as the sole source of funds for our future operations.

Plan of Operation

We are a start-up, exploration-stage company and have not yet generated or realized any revenues from our business operations.

During the last period, the Company has been assessing the impact of the fall in oil prices on the sector, and considering the outlook for the sector. To this end, it has been a relatively quiet period without further investment into oil and gas properties. However the Company has not terminated its agreement with Shalex entered into on October 10, 2014 (see below) and still holds a very promising oil and gas exploration stage property in the Bentley region of Alberta, Canada.

Our auditors have issued a going concern opinion on our audited financial statements for the year ended July 31, 2014. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. There is no assurance we will ever reach this point. Accordingly, we must raise cash from other sources. Our only other source for cash at this time is investments by others. We must raise cash to implement our project and stay in business. As of January 31, 2015 and July 31, 2014, the Company had $0 and $76,108 in cash on hand, respectively. As at January 31, 2015, our bank account was overdrawn $295.

On October 10, 2014, we entered into a Purchase and Sale Agreement with Shalex Corporation (“Shalex”) (the “Agreement”) whereby we purchased a one hundred percent (100%) undivided working interest and shall receive an 87% Net Revenue Interest (NRI) in certain oil and gas interests (Crown Land) and properties arising from the oil and gas leases (the “Leases”), which together comprise a parcel of 2,304 hectares in the Bentley area of Alberta, Canada (the “Property”) and (ii) the Pre-Existing Well (the "Well"). In exchange for the Leases, we will pay an aggregate of four hundred thousand dollars (US$400,000) (the “Purchase Price”) incrementally, at an agreed upon payment schedule, following the completion of certain administrative benchmarks as set forth in the Agreement, such as the requirement to provide certain financial materials regarding the Leases to us; such benchmarks are also therefore a condition to closing the transaction. The closing of the transaction, and transfer of title from Shalex to us, shall occur within 30 days after payment of the full Purchase Price; provided however, that it shall not take place later than 135 days following the signing of the Agreement. The Purchase Price shall be reduced to $360,000 if a continuation application for one of the Leases on the Property is not approved. We have not yet made the payment due in December 2014 or January 2015, but as of the date of this Report, Shalex has not terminated the Agreement.

The parties agreed to pay all maintenance costs, as such term is defined in the Agreement, associated with the leases for the calendar years ending December 31, 2014 and 2015, on a pro-rata basis based upon the date the Agreement was signed and such costs were previously paid by Shalex. We maintain the right to surrender in whole or part any of the Leases by non-payment of delay rentals, provided that we give Shalex at least 60 days prior written notice. If Shalex does not agree to the surrender, we must assign all interest conveyed pursuant to the Agreement on the Lease(s) to Shalex absolutely free and clear of any liens, overriding royalty or other encumbrances of any kind whatsoever other than those in existence at the time of the Agreement or placed thereon pursuant thereto.

Our plan now is to explore the Leases and hope that we will ultimately be able to develop same.

If we are unable to complete any phase of our exploration program because we do not have sufficient capital, we may cease operations until we raise more money. If we cannot or do not raise additional capital, we will cease operations. If we cease operations, we do not have any additional plans at this time.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

To become profitable and competitive, we must conduct the research and exploration of our properties before we start production of any minerals we may find. We sought equity financing to provide for the capital required to implement our research and exploration phases. We do not believe we have sufficient funds to operate our business for the next 12 months.

We have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

If we are unable to complete any phase of our exploration program or fail to raise additional capital to maintain our operations in the future, we may be unable to carry out our full business plan or we may be forced to cease operations.

We are currently dependent on our sole officer and director for providing the necessary capital to operate. For the period ended January 31, 2015, our officer has advanced a total of $40,218, for operating expenses.

Results of Operations

The following summary of our results of operations, for the three months ended January 31, 2015 and 2014, should be read in conjunction with our audited financial statements for the year ended July 31, 2014, as included in our Form 10-K filed on October 29, 2014.

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities, but we cannot guarantee that we will be able to achieve same.

The following table provides selected financial data about our company as of January 31, 2015 and July 31, 2014.

Balance Sheet Data

	January 31, 2015		July 31, 2014

Cash	$	-	$	76,108
Total Assets	$	62,617	$	77,426
Total Liabilities	$	169,333	$	60,574
Stockholders’ Equity (Deficit)	$	(106,716)	$	16,852

We have not generated any revenues since inception (June 13, 2012) through January 31, 2015.

For the Three Months Ended January 31, 2015 Compared to the Three Months Ended January 31, 2014

	Three Months Ended January 31,
	2015		2014

Operating revenues	$	-	$	-
Operating expenses:
General and administrative		17,956		22,028
Professional fees		33,303		23,225
Consulting fees – related party		30,000		-
Website design		14,856		-
Total Operating expenses		96,115		45,253
Loss from Operations		(96,115)		(45,253)
Other income		-		-
Provision for income tax		-		-
Net loss	$	(96,115)	$	(45,223)

Our operating expenses, for the three months ended January 31, 2015 increased $50,862 or 112% as compared to the same period in 2014. During the three month period ended January 31, 2015, we recorded $14,856 for website development costs and a $30,000 consulting fee to the sole officer and director, who is also our majority shareholder pursuant to his employment contract, compared to no expenses for these items for the same period in 2014. Expenses, from professional, general and administrative fees, were $51,259 for the three months ended January 31, 2015 as compared to $45,253 for the same period in 2014. This increase was largely due to increased professional fees during the three month period ended January 31, 2015 of $10,078, which were offset by a decrease in general and administrative expenses of $4,072.

For the Six Months Ended January 31, 2015 Compared to the Six Months Ended January 31, 2014

	Six Months Ended January 31,
	2015		2014

Operating revenues	$	-	$	-
Operating expenses:
General and administrative		31,663		23,445
Professional fees		64,217		26,226
Consulting fees – related party		60,000		-
Website design		22,688		-
Total Operating expenses		178,568		49,670
Loss from Operations		(178,568)		(49,670)
Other income		-		900
Provision for income tax		-		-
Net loss	$	(178,568)	$	(48,770)

Our operating expenses, for the six months ended January 31, 2015 increased $128,898 or 260% as compared to the same period in 2014. During the six month period ended January 31, 2015, we recorded $22,688 for website development costs and a $60,000 consulting fee to the sole officer and director, who is also our majority shareholder pursuant to his employment contract, compared to no expenses for these items for the same period in 2014. Expenses, from professional, general and administrative fees, were $95,880 for the six months ended January 31, 2015 as compared to $49,670 for the same period in 2014. This increase was largely due to increased general and administrative fees and professional fees during the six month period ended January 31, 2015 of $8,218 and $37,992 respectively.

The six month period ending January 31, 2014 was principally the start-up period for the Company. Costs were lower due to less activities and cash flow was realized through the issuance of shares to fund the Company’s initial operations. During the six month period ended January 31, 2015, we sought to increase the focus of the Company's activity and operations. We spent significant resources on finding and vetting a new oil and gas property, commenced development of a new website, and incurred increased professional and administrative expenses, thus increasing operating expenditures. We expect operating expenses to continue to increase over the next 12 months as we expand our operations and development of our oil and gas property.

Liquidity and Capital Resources

Working Capital

	Six months Ended January 31, 2015		Six months Ended July 31, 2014

Current Assets	$	1,318	$	77,426
Current Liabilities	$	169,333	$	60,574
Working Capital (Deficiency)	$	(168,015)	$	16,852

Cash Flows

	Six months Ended January 31, 2015		Six months Ended January 31, 2014

Cash Flows used in Operating Activities	$	(110,322)	$	(53,488)
Cash Flows used in Investing Activities	$	(61,299)	$	-
Cash Flows provided by Financing Activities	$	95,513	$	52,014
Net decrease in Cash During Period	$	(76,108)	$	(1,474)

Cash Flow from Operating Activities

During the six month period ended January 31, 2015, cash used in operating activities was $110,322 compared to cash used in operating activities of $53,488 during the period ended January 31, 2014. The increase in cash used in operating activities was attributed to the increase in operating losses offset by increased operating liabilities owed and unpaid at January 31, 2015. The Company had a net loss of $178,568 but this loss was offset by an increase in accounts payable and accrued compensation of $68,246. Of these accounts payable, $28,246 was for trade accounts payable and accrued expenses and another $40,000 in compensation to our sole officer and director. For the six month period ended January 31, 2014, the company had a net loss of $48,770 and used cash to pay accounts payable and accrued compensation of $3,400 and 1,318, respectively.

Cash Flow from Investing Activities

During the six month period ended January 31, 2015 cash used in investing activities was $61,299 as compared to no investments for the same period in 2014. During the period ended January 31, 2015, we spent $61,299 cash on our prior acquisition of certain oil and gas property on October 10, 2014.

Cash Flow from Financing Activities

During the six month period ended January 31, 2015, cash provided by financing activities was $95,513 compared to cash provided by financing activities of $52,014, for the same period in 2014. The increase in 2015 is largely attributable to $55,000 in proceeds from the issuance of shares of common stock. Our sole officer and director advanced $40,218 during 2015, for operating expenses, compared to $52,014 advanced from related parties in the same period for 2014.

Critical Accounting Policy and Estimates

We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended July 31, 2014, for disclosures regarding the Company's critical accounting policies and estimates, as well as any updates further disclosed in our interim financial statements as described in this Form 10-Q.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

PART II – OTHER INFORMATION

Item 6. Exhibits.

Exhibit Number		Description of Exhibit

(3)		Articles of Incorporation and Bylaws

3.1		Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on September 24, 2012)

3.2		Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on September 24, 2012)

(10)		Material Contracts

10.4		Securities Purchase Agreement dated June 5, 2014 (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed on June 13, 2014)

10.5		Purchase and Sale Agreement between the Company and Shalex Corporation (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 15, 2014)

(31)		Rule 13a-14(a) / 15d-14(a) Certifications

31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

(32)		Section 1350 Certifications

32.1*		Rule 1350 Certification of Chief Executive Officer.

32.2*		Rule 1350 Certification of Chief Financial Officer.

101		Interactive Data File (incorporated by reference to our Quarterly Report on Form 10-Q for quarter ended January 31, 2015, filed on March 23, 2015)
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE		XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

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.

	FREEDOM PETROLEUM INC.
	(Registrant)


Dated: March 25, 2015	/s/ Anton Lin
	Anton Lin
	President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director
	(Principal Executive Officer and Financial and Accounting Officer)

Tianci International, Inc. - FORM 10-Q/A - March 25, 2015

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Tianci International, Inc. Reports