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EXCEL - IDEA: XBRL DOCUMENT - CN Resources Inc. | Financial_Report.xls |
EX-31.01 - CERTIFICATION - CN Resources Inc. | f10q0215ex31i_cnresources.htm |
EX-32.01 - CERTIFICATION - CN Resources Inc. | f10q0215ex32i_cnresources.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2015
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-54482
CN RESOURCES INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
255 Duncan Mill Road, Suite 203
Toronto, Ontario
Canada M3B 3H9
(Address of principal executive offices, including zip code)
(416) 510-2991
(Registrant’s telephone number, including area code)
Check whether the issuer (1) 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 last 90 days. YES x NO o
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 (SS 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 o NO x
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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | o | Accelerated Filer | o | |
Non-accelerated Filer | o | 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 o NO x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 56,100,000 as of April 20, 2015.
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PART I - FINANCIAL INFORMATION
Balance Sheets
(Unaudited)
February 28, 2015 | May 31, 2014 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 275,556 | $ | 6,052,324 | ||||
Accounts receivable | 22,901 | 61,332 | ||||||
Note receivable | 5,364,673 | - | ||||||
Interest receivable | 41,649 | - | ||||||
Other receivable | 6,355 | 4,296 | ||||||
Total current assets | $ | 5,711,134 | $ | 6,117,952 | ||||
Oil and gas properties (successful efforts), net | $ | 427,767 | $ | 451,043 | ||||
Total assets | $ | 6,138,901 | $ | 6,568,995 | ||||
Liabilities and Stockholders' Equity | ||||||||
Liabilities | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 15,157 | $ | 5,952 | ||||
Due to director | 355,061 | 319,492 | ||||||
Total current liabilities | 370,218 | 325,444 | ||||||
Asset retirement obligation | 6,502 | 5,960 | ||||||
Total liabilities | 376,720 | 331,404 | ||||||
Stockholders' equity | ||||||||
Common stock,100,000,000 of shares authorized with $0.00001 par value, 56,100,000 issued and outstanding | 561 | 561 | ||||||
Preferred stock,100,000,000 shares authorized with $0.00001par value, none issued | - | - | ||||||
Additional paid-in capital | 6,514,639 | 6,514,639 | ||||||
Accumulated deficit | (753,019 | ) | (277,609 | ) | ||||
Total stockholders' equity | 5,762,181 | 6,237,591 | ||||||
Total liabilities and stockholders' equity | $ | 6,138,901 | $ | 6,568,995 |
The accompanying notes are an integral part of these unaudited financial statements.
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Statements of Operations
(Unaudited)
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
February 28 | February 28 | February 28 | February 28 | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenue, net of royalty | $ | 11,837 | $ | 83,336 | $ | 151,693 | $ | 114,371 | ||||||||
Operating expenses | ||||||||||||||||
Bank service charge and bad debt | 79 | 98 | 176 | 234 | ||||||||||||
Depreciation and depletion | 19,754 | 3,770 | 63,334 | 6,283 | ||||||||||||
Management fee | 6,000 | 6,000 | 18,000 | 18,000 | ||||||||||||
Production cost | 19,510 | 30,069 | 32,383 | 36,639 | ||||||||||||
Professional fees | 39,396 | 3,200 | 59,456 | 13,378 | ||||||||||||
Regulatory filing | 3,200 | 2,859 | 16,447 | 2,859 | ||||||||||||
General and administrative expenses | 8,845 | 9,274 | 31,608 | 27,824 | ||||||||||||
Total operating expenses | 96,784 | 55,270 | 221,404 | 105,217 | ||||||||||||
Foreign Exchange Gain/(Loss) | (449,752 | ) | (713 | ) | (449,752 | ) | (713 | ) | ||||||||
Interest income | $ | 44,058 | $ | - | $ | 44,058 | $ | - | ||||||||
Net income (loss) for the period | $ | (490,642 | ) | $ | 27,354 | $ | (475,405 | ) | $ | 8,441 | ||||||
Income (Loss) per common share - basic and diluted | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | ||||||
Weighted average common shares outstanding - basic and diluted | 56,100,000 | 26,100,000 | 56,100,000 | 26,100,000 |
The accompanying notes are an integral part of these unaudited interim financial statements.
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Statements of Cash Flows
Unaudited
For the nine months | For the nine months | |||||||
ended | ended | |||||||
February 28, 2015 | February 28, 2014 | |||||||
Cash Flows From Operating Activities | ||||||||
Net Income (loss) for the period | $ | (475,410 | ) | $ | 8,441 | |||
Adjustments to reconcile net loss to net cash in operating activities | ||||||||
Depreciation and depletion | 63,334 | 6,283 | ||||||
Unrealized loss on foreign currency | 449,752 | - | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | 38,430 | (24,128 | ) | |||||
Accounts payable | 9,205 | (97,940 | ) | |||||
Interest receivable | (41,648 | ) | - | |||||
Other receivable | (75,441 | ) | (4,142 | ) | ||||
Net cash used in operating activities | (31,778 | ) | (111,486 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Due to Director | 60,133 | 107,449 | ||||||
Payment to Director for advances | (24,564 | ) | (9,412 | ) | ||||
Net cash provided by financing activities | 35,569 | 98,037 | ||||||
Cash Flows used in Investing Activities | ||||||||
Oil and Gas properties | (39,516 | ) | - | |||||
Note receivable | (5,741,043 | ) | - | |||||
Net cash used in financing activities | (5,780,559 | ) | - | |||||
Net increase (decrease) in cash and cash equivalents | (5,776,768 | ) | (13,449 | ) | ||||
Cash and cash equivalents, beginning of the period | 6,052,324 | 25,468 | ||||||
Cash and cash equivalents, end of the period | 275,556 | 12,019 | ||||||
Supplemental disclosure | ||||||||
Due to Director for equipment purchased | - | 91,837 | ||||||
Cash paid for interest: | - | - | ||||||
Cash paid for taxes | - | - |
The accompanying notes are an integral part of these unaudited interim financial statements.
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Notes to the Financial Statements
(Unaudited)
February 28, 2015
1. BUSINESS OPERATIONS
CN Resources Inc. is an independent energy company engaged in the exploration, development, production, and sale of crude oil. Our operations are conducted through a 100% wholly owned Ontario Corporation (also named CN Resources Inc.) which owns a producing joint venture oil well in the Redwater area in Alberta, Canada.
2. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. Certain prior period balances have been reclassified to conform to current period presentation.
3. NOTES RECEIVABLE
On November 13, 2014, the Company provided a loan in the amount of $1,281,280 (CAD $1,600,000) to a third party with an interest of 7% per annum. On January 12, 2015 and January 21, 2015, the Company provided a further $4,084,080(CAD $5,100,000) to the same third party with an interest of 7% per annum. These loans are unsecured and due on demand. Interest payment is due quarterly in arrears. As of February 28, 2015, we have received $44,058 in interest income. Management intends to earn an interest on the funds on hand and will call the notes as soon as it deem desirable to do so. These Notes are in Canadian dollars, and due to significant devaluation of the Canadian dollars against United States dollars, as at February 28, 2015, we have a material unrealized foreign currency exchange loss in the amount of $449,752.
4. DUE TO DIRECTOR
The director loans the company money from time to time on an interest-free due-on-demand basis. As of February 28, 2015, the total amount advanced and unpaid is $355,061.
The Company is currently using the office space from its President and CEO and on rent free basis.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
This section of this annual report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
The following discussion and analysis presents management's perspective of our business, financial condition, and overall performance. This information is intended to provide investors with an understanding of our past performance, current financial condition, and outlook for the future, and should be read in conjunction with our Audited Annual Financial Statements Form 10-K.
OVERVIEW OF THE COMPANY
CN Resources Inc. is an independent energy company engaged in the exploration, development, production, and sale of crude oil. Our operations are conducted through a 100% wholly owned Ontario Corporation (also named CN Resources Inc.) which owns a producing joint venture oil well in the Redwater area in Alberta, Canada.
The Company’s immediate core strategy is to create and enhance shareholder value by acquiring proved developed and producing light oil assets, optimize the producing assets to increase production and fully develop the assets potential for reserves. Management believes that this is the best approach to create shareholder value based on risk and rewards analysis.
Results of Operations
The following is a discussion of our results of operations, financial condition and capital resources. You should read this discussion in conjunction with our Financial Statements and the Notes thereto contained elsewhere in this Form 10-Q.
Oil and gas industry has experienced a substantial decline in crude oil prices, as a result, many small leveraged oil and gas companies are struggling in meeting its lenders demand. For the past Quarter ended February 28, 2015, the Company has taken the opportunity of low oil price to perform the necessary maintenance and repair works for the joint venture well. As a result, the production is significantly reduced and resulted in a small loss.
For the Quarter ended February 28, 2015, the company only produced 420 barrels of crude oil, and resulted in an operating loss $7,673. For the nine months ended February 28, 2015, we achieved an operating income of $119,305. Due to significant decrease in Canadian dollar against United States dollars and all our operations are in Canadian dollars, we had an unrealized foreign currency loss of $449,752.
Liquidity and Capital Resources
On May 28, 2014, we closed an equity financing of $6,000,000 and as at February 28, 2015, we have cash on hand of $275,556, notes receivables on demand of $5,364,673, and oil revenue receivable of $22,901. We have no material third party debt other than debt owed to our Director and Officer.
Planned Capital Expenditures
The Company is evaluating its various options in its development strategies, have not committed to any specific capital expenditure at this time.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
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ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective due to limited segregation of duties, lack of independent directors, and no written internal control procedure manual. The Company plans to address the weakness in control as soon as the Company considers that the financial situation allows the Company to spend the limited resources to mitigate the weakness in control.
There were no material changes in our internal control over financial reporting during the quarter ended February 28, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
We are not aware of any pending or threatened litigation against us or our officers and director in their capacity as such.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
There is no change in securities in the three-month period ended February 28, 2015.
Exhibit | Description | |
31.01 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.01 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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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.
CN Resources Inc. | ||
Date: April 20, 2015 | By: | /s/ Oliver Xing |
Oliver Xing | ||
President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and sole member of the Board of Directors |
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