UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended August 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: 333-180424

 

VALMIE RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		45-3124748
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1001 S Dairy Ashford Road, Suite 100 Houston, TX		77077
(Address of principal executive offices)		(Zip Code)

 

(713) 595-6675

(Registrant’s telephone number, including area code)

 

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 [X] 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.

 

Large accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [  ] 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]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of October 15, 2015 the registrant had 64,092,035 shares of common stock outstanding.

 

 

 

TABLE OF CONTENTS

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion & Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4.	Controls and Procedures	8
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	9
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.	Defaults Upon Senior Securities	9
Item 4.	Mine Safety Disclosures	9
Item 5.	Other Information	9
Item 6.	Exhibits	9

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

VALMIE RESOURCES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

	Page
Consolidated Balance Sheets	F-1
Consolidated Statements of Operations	F-2
Consolidated Statements of Cash Flows	F-3
Notes to the Unaudited Interim Consolidated Financial Statements	F-4 – F-11

  

 

Valmie Resources, Inc.

Consolidated Balance Sheets

(Stated in US Dollars)

 

		August 31, 2015				November 30, 2014
		(unaudited)
ASSETS
Current Assets
Cash and cash equivalents (Note 4)		$	2,702			$	12,565
Prepaid expenses			350				-
Total Current Assets			3,052				12,565
Prototype development (at cost)			32,443				-
Intangible asset (Note 9)			100,000				-
Goodwill (Note 3)			2,777,145				-
Total Assets		$	2,912,640			$	12,565
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 6)		$	199,592			$	83,250
Due to related parties (Note 7)			-				44,809
Total Current Liabilities			199,592				128,059
Promissory Notes (Note 8)			37,593				67,805
Total Liabilities			237,185				195,864
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Capital stock (Note 5)
Authorized:
10,000,000 preferred shares, $0.001 per share (Nil – November 30, 2014)
750,000,000 common shares, $0.001 par value (750,000,000 – November 30, 2014)
Issued and outstanding:
2,000,000 preferred shares (Nil – November 30, 2014)			2,000				-
64,092,035 common shares (296,400,000 – November 30, 2014)			64,092				296,400
Additional paid-in capital			13,743,781				(155,657	)
Retained deficit			(11,134,418	)			(324,042	)
Total Stockholders’ Equity (Deficiency)			2,675,455				(183,299	)
Total Liabilities and Stockholders’ Equity (Deficiency)		$	2,912,640			$	12,565

 

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

  

 

Valmie Resources, Inc.

Consolidated Statements of Operations

(Stated in US Dollars)

(Unaudited)

 

		Three Months Ended August 31, 2015				Three Months Ended August 31, 2014				Nine Months Ended August 31, 2015				Nine Months Ended August 31, 2014
Revenue:		$	-			$	-			$	-			$	-
Operating Expenses:
General and administrative			(3,826	)			149				20,476				1,433
Management fees			15,000				-				37,000				-
Professional fees			177,280				7,321				345,740				39,595
Transfer agent fees			1,775				400				3,928				1,275
Loss from Operations			(190,229	)			(7,870	)			(407,144	)			(42,303	)
Other income (expenses)
Interest			-				-				1,190				-
Loss on settlement of debt			-				-				(10,404,422	)			-
			-				-				(10,403,232	)			-
Net Loss for the Period		$	(190,229	)		$	(7,870	)		$	(10,810,376	)		$	(42,303	)
Basic and Diluted Loss per Common Share			63,987,965				296,400,000				150,774,391				296,400,000
Weighted Average Number of Common Shares Outstanding		$	(0.00	)		$	(0.00	)		$	(0.07	)		$	(0.00	)

 

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

  

 

Valmie Resources, Inc.

Consolidated Statements of Cash Flows

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

		Nine Months Ended August 31, 2015				Nine Months Ended August 31, 2014
Cash Flows from Operating Activities
Net loss for the period		$	(10,810,376	)		$	(42,303	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on settlement of debt by issuing common stock			10,404,422				-
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities			116,342				22,688
Prepaid expenses			(350	)			5,000
Interest accrual			(313	)			-
Net cash used in operations			(290,275	)			(14,615	)
Cash Flows from Investing Activities
Advances to Vertitek Inc.			(25,500	)			-
Cash acquired on the acquisition of Vertitek Inc.			6,132				-
Increase in prototype development			(20,220	)			-
Net cash used in investing activities			(39,588	)			-
Cash Flows from Financing Activities
Proceeds from related party payable			-				29,073
Proceeds from promissory notes			320,000				-
Net cash provided by financing activities			320,000				29,073
Change in cash and cash equivalents			(9,863	)			14,458
Cash and cash equivalents - beginning of period			12,565				-
Cash and cash equivalents - end of period		$	2,702			$	14,458
Supplementary Cash Flow Information
Cash paid for:
Interest		$	-			$	-
Income taxes		$	-			$	-
Supplementary Disclosure of Non-Cash Investing & Financing Activity
Issuance of common stock for subsidiary		$	2,770,000			$	-
Issuance of common stock to settle debt		$	383,927			$	-
Issuance of common stock for intangible asset		$	100,000			$	-

 

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

  

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

1. Organization

 

Valmie Resources, Inc. (the “Company”) was incorporated on August 26, 2011, in the State of Nevada, USA. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”), and the Company’s fiscal year end is November 30.

 

In early December 2014, the Company changed its business focus from mining to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding technology industry.

 

On March, 31, 2015, the Company acquired 100% interest in Vertitek Inc., a Wyoming corporation (“Vertitek”).

 

Vertitek was established to provide unmanned vehicle software, hardware and cloud services for a wide range of commercial applications around the globe. Vertitek is in the process of developing the V-1 Drone^SM, a cutting edge multi-rotor UAV designed specifically to meet the requirements of a growing commercial user base.

 

2. Basis of Presentation

 

Unaudited Interim Financial Statements

 

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). They do not include all information and footnotes required by US GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended November 30, 2014, included in the Company’s Form 10-K filed with the SEC. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended August 31, 2015, are not necessarily indicative of the results that may be expected for the year ending November 30, 2015.

 

3. Acquisition of Vertitek Inc.

 

On March 31, 2015, the Company issued 1,000,000 shares of common stock in exchange for 100% of the issued and outstanding shares of Vertitek. Vertitek was previously named Landstar Leasing, Inc. (“Landstar”) and was incorporated pursuant to the Wyoming Business Corporation Act on February 19, 2014. On November 19, 2014, Landstar changed its name to Vertitek Inc. As a result of the acquisition, Vertitek became a wholly owned subsidiary of the Company.

 

In December 2014, the Company changed its business focus from mining to opportunities in the technology industry. The acquisition of Vertitek enables the Company to pursue its new business focus as Vertitek has focused on the development of unmanned vehicle software, hardware and cloud services for a wide range of commercial applications around the globe. Vertitek is in the process of developing the V-1 DroneSM, a cutting edge multi-rotor unmanned aerial vehicle (“UAV”) designed specifically to meet the requirements of a growing commercial user base.

  

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

3. Acquisition of Vertitek Inc. (continued)

 

The acquisition was accounted for as a business combination under the acquisition method of accounting in accordance with US GAAP.

 

Fair Value of Consideration Transferred and Recording of Assets Acquired, Liabilities Assumed and Non-controlling Interests

 

The following table summarizes the acquisition date fair value of the consideration transferred, identifiable assets acquired, liabilities assumed and non-controlling interests including an amount for goodwill:

 

Consideration:

 

Common stock issued		$	2,770,000
Fair value of total consideration transferred		$	2,770,000
Recognized amount of identifiable assets acquired and liabilities assumed:
Financial assets		$	18,355
Financial liabilities			(25,500	)
Total identifiable net assets (liabilities)			(7,145	)
Goodwill			2,777,145
		$	2,770,000

 

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the acquisition is attributable to the general reputation of Vertitek’s founding owner and expected synergies. The goodwill is not expected to be deductible for tax purposes.

 

Pro Forma Information

 

The following unaudited supplemental pro forma information assumes the acquisition referred to above had been completed as of December 1, 2013 and is not indicative of the results of operations that would have been achieved had the transactions been consummated on such date or of results that might be achieved in the future.

 

		Nine months ended August 31, 2015				Nine months ended August 31, 2014
Revenue		$	-			$	-
Loss from operations		$	(407,144	)		$	(53,212	)
Net loss		$	(10,810,376	)		$	(53,212	)

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

4. Cash and Cash Equivalents

 

		August 31, 2015				November 30, 2014
Cash on deposit		$	2,702			$	3,027
Funds held in trust			-				9,538
		$	2,702			$	12,565

 

5. Capital Stock

 

Authorized Stock

 

At inception, the Company authorized 100,000,000 shares of common stock with a par value of $0.001 per share. Each share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

On December 3, 2013, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in its authorized capital from 100,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”). The Company formally effected the Authorized Capital Increase on December 4, 2013 by filing a Certificate of Amendment with the Nevada Secretary of State.

 

On December 3, 2013, the Company’s sole director approved a stock dividend of 59 authorized but unissued shares of its common stock on each one (1) issued and outstanding share of its common stock held by shareholders of record as of December 16, 2013. The payment date for the stock dividend was December 17, 2013, as determined by the Financial Industry Regulatory Authority (FINRA). Upon the payment of the stock dividend, the Company had 296,400,000 issued and outstanding shares of common stock, which represents an increase of 291,460,000 shares over its prior total of 4,940,000 issued and outstanding shares of common stock. The split is reflected retrospectively in the accompanying financial statements.

 

On December 10, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved a set of amended and restated articles of incorporation that, among other things, increased the Company’s authorized capital to 760,000,000 shares, consisting of 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of “blank check” preferred stock, par value $0.001.

 

On December 11, 2014, the Company’ sole director approved the designation of 2,000,000 shares of the Company’s authorized but unissued “blank check” preferred stock, par value $0.001, as Series “A” preferred stock. The shares of Series “A” preferred stock carry certain rights and preferences, may be converted into shares of the Company’s common stock on a 10 for one (1) basis at any time after 18 months from the date of issuance, and each share of Series “A” preferred stock has voting rights and carries a voting weight equal to 50 shares of common stock.

 

The preferred stock ranks senior to (a) any other series of preferred stock of the Company currently existing or hereafter created (b) the common stock of the Company, now existing or hereafter issued and (c) any other class of securities of the Company, in each case with respect to dividend distributions and distributions of assets upon the liquidation, dissolution or winding up of the Company whether voluntary or involuntary.

 

The Company formally effected the designation by filing a Certificate of Designation with the Nevada Secretary of State on January 15, 2015.

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

5. Capital Stock (continued)

 

Share Issuances

 

On January 16, 2015, the owner of an aggregate of 237,360,000 shares of the Company’s common stock agreed to cancel those shares in exchange for the issuance of the 2,000,000 shares of Series “A” preferred stock. As a result, the number of issued and outstanding shares of the Company’s common stock decreased from 296,400,000 to 59,040,000.

 

On April 6, 2015, the Company issued 3,500,000 shares of common stock at a deemed price of $0.10 per share in settlement of promissory notes totaling $350,000, including $300,000 in proceeds received during the current fiscal year. The stock was valued at the $2.81 trading price per share, resulting in a loss on the settlement of debt in the amount of $9,485,000.

 

On April 6, 2015, the Company issued 339,270 shares of common stock at a deemed price of $0.10 per share in settlement of related party loans totaling $33,927. The stock was valued at the $2.81 trading price per share, resulting in a loss on the settlement of debt in the amount of $919,422.

 

On April 6, 2015, the Company issued 1,000,000 shares of common stock at a price of $2.77 per share for the acquisition of Vertitek. The stock was valued at $2.77 per share on the effective date of the acquisition of Vertitek, March 31, 2015.

 

On July 21, 2015, the Company issued 212,765 shares of common stock at a deemed price of $0.47 per share for the purchase of all of the rights, title and interest in and to certain intellectual property from the Company’s President.

 

As of August 31, 2015 the Company had 64,092,035 issued and outstanding shares of common stock and 2,000,000 issued and outstanding shares of Series “A” preferred stock.

 

As of August 31, 2015, the Company had no issued or outstanding stock options or warrants.

 

6. Mineral Property Costs

 

Lander County, Nevada Claims

 

On September 30, 2011, the Company entered into an option agreement that would provide for the purchase of a 100% interest in the Carico Lake Valley Property (the “Property”). The Property is located in the State of Nevada.

 

To complete the option, the agreement requires the Company to make the following payments and incur the following amounts on exploration and development:

 

a)	$15,000 cash on September 30, 2011 (paid);
b)	an additional $30,000 cash on September 30, 2013 (not paid);
c)	an additional $60,000 cash on September 30, 2013 (not paid);
d)	an additional $120,000 cash on September 30, 2014 (not paid) and
e)	incur a minimum of $125,000 ($12,654 has been incurred as of August 31, 2015) on exploration and development work by December 31, 2013 and every subsequent year thereafter, through 2014.

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

6. Mineral Property Costs (continued)

 

The entity that owns the Property has made the 2014 payments due to the Bureau of Land Management, Nevada (“BLM”) and Lander County. The payments ($6,406) are reflected in accounts payable and accrued liabilities.

 

The Company is responsible for any and all property payments due to any government authority on the property during the term of this option agreement (BLM: $3,920 yr., Lander County: $294 yr.).

 

The entity that owns the Property terminated the option agreement with the Company on July 28, 2014 and the above mentioned reimbursement of $6,406 remains outstanding. The Company has no further rights to the Property.

 

7. Related Party Transactions

 

On July 15, 2015, the Company entered into an asset purchase agreement with its current President pursuant to which the Company acquired all of the right, title and interest in and to certain intellectual property from the President in consideration for the issuance of $100,000 worth of common stock on that date at a deemed price of $0.47 per share. As a result, the Company issued 212,765 shares of common stock to the President.

 

During the period ended August 31, 2015, the Company paid management fees of $5,000 (2014 – $Nil) to a former director and $32,000  (2014 – $Nil) to its current President, and converted $33,927 (2014 – $Nil) into common stock for debt repayment to a former director resulting in a loss on the settlement of debt in the amount of $919,422. The Company had $10,782 (2014 – $Nil) of debt forgiven from a former director.

 

As of August 31, 2015, the Company was obligated to a former director for non-interest bearing, unsecured and with no fixed terms of repayment loans with a balance of $Nil (November 30, 2014 – $19,146). The Company also owed $Nil to its majority shareholder at August 31, 2015 (November 30, 2014 – $25,663).

 

8. Promissory Notes

 

On August 18, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on August 18, 2016. On April 6, 2015, the promissory note was settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt settlement.

 

On October 7, 2014, the Company entered into a promissory note agreement with Investor A for an aggregate amount of $25,000 plus simple interest at an annual interest rate of 15%, repayable on October 7, 2016. On April 6, 2015, the promissory note was settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with the debt settlement.

 

On October 22, 2014, the Company entered into a promissory note agreement with Investor B for an aggregate amount of $15,000 plus simple interest at an annual interest rate of 15%, repayable on October 22, 2016. As of August 31, 2015, $15,000 was received and interest accrued of $1,769.

 

On November 23, 2014, the Company entered into a promissory note agreement with Investor C for an aggregate amount of $75,000 plus simple interest at an annual interest rate of 15%, repayable on November 23, 2016. On April 6, 2015, the promissory note was settled through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 in connection with the debt settlement.

 

On December 29, 2014, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $75,000 plus simple interest at an annual interest rate of 15%, repayable on December 29, 2016. On April 6, 2015, the promissory note was settled through the issuance of 750,000 shares of common stock. The Company recognized a loss of $2,032,500 for the debt settlement.

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

8. Promissory Notes (continued)

 

On January 26, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on January 26, 2017. On April 6, 2015, the promissory note was settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt settlement.

 

On February 27, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $25,000 plus simple interest at an annual interest rate of 15%, repayable on February 27, 2017. On April 6, 2015, the promissory note was settled through the issuance of 250,000 shares of common stock. The Company recognized a loss of $677,500 in connection with the debt settlement.

 

On March 20, 2015, the Company entered into another promissory note agreement with Investor A for an aggregate amount of $50,000 plus simple interest at an annual interest rate of 15%, repayable on March 20, 2017. On April 6, 2015, the promissory note was settled through the issuance of 500,000 shares of common stock. The Company recognized a loss of $1,355,000 in connection with the debt settlement.

 

On July 30, 2015, the Company entered into a promissory note agreement with Investor D for an aggregate amount of $20,000 plus simple interest at an annual interest rate of 15%, repayable on July 30, 2017. The note is secured by all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of the note or hereafter acquired, and all proceeds thereof. As of August 31, 2015, $20,000 was received and interest accrued of $263.

 

9. Intangible Asset

 

On July 15, 2015, the Company entered into an asset purchase agreement with its current President pursuant to which the Company acquired all of the right, title and interest in and to certain intellectual property from the President in consideration for the issuance of $100,000 worth of common stock on that date at a deemed price of $0.47 per share. As a result, the Company issued 212,765 shares of common stock to the President.

 

10. Provision for Income Taxes

 

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 718-740-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.

 

Deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from August 26, 2011 (date of inception) through August 31, 2015 of $11,134,418 will begin to expire in 2031. Accordingly, deferred tax assets of approximately $3,897,046 were offset by the valuation allowance.

 

The Company follows the provisions of uncertain tax positions as addressed in FASC 740-10-65-1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

10. Provision for Income Taxes (continued)

 

The Company has no tax position at August 31, 2015 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at August 31, 2015. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended exploration stage activities. The tax years for November 30, 2014, 2013, 2012 and 2011 are still open for examination by the Internal Revenue Service (IRS).

 

		Nine months ended August 31, 2015
		Amount				Tax Effect (35%)
Net operating losses		$	10,810,376			$	3,783,632
Valuation allowance			(10,810,376	)			(3,783,632	)
Net deferred tax asset (liability)		$	-			$	-

 

		Nine months ended August 31, 2014
		Amount				Tax Effect (35%)
Net operating losses		$	42,303			$	14,806
Valuation allowance			(42,303	)			(14,806	)
Net deferred tax asset (liability)		$	-			$	-

 

11. Going Concern and Liquidity Considerations

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at August 31, 2015, the Company had a working capital deficiency of $196,540 (November 30, 2014 – $115,494) and a retained deficit of $11,134,418 (November 30, 2014 – $324,042). The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next 12 months.

 

The ability of the Company to continue in existence is dependent upon, among other things obtaining additional financing to continue operations and the operations of Vertitek.

 

In response to these problems, management intends to raise additional funds through public or private placement offerings.

 

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

Valmie Resources, Inc.

Notes to Consolidated Financial Statements

August 31, 2015

(Stated in US Dollars)

(Unaudited)

 

12. Commitments

 

Consulting

 

Pursuant to a consulting agreement dated September 1, 2014, the Company is obligated to pay one consultant $25,000 per month for a term of one year and reimburse the consultant’s reasonable expenses incurred in the course of providing services under the agreement. For the nine months ended August 31, 2015, the Company had paid or accrued $366,286 in fees and expenses under the agreement and $448,786 from the beginning of the agreement.

 

Memorandum of Understanding (“MOU”)

 

On April 29, 2015, the Company entered into a MOU with Alpha Search and Recover (“ASAR”) to facilitate and promote cooperation between ASAR and the Company in a subsequent Agreement that will outline ASAR’s interest in utilizing the Company’s UAV technology and AIMD software platform for search and rescue missions. This MOU will expire 180 days from the date set forth above if no definitive Agreement is executed. As at August 31, 2015, no final formal agreement is in place as negotiation continues in regards to specification of the drone that will be provided.

 

Letter of Intent

 

Pursuant to a Letter of Intent dated July 7, 2015, the Company is obligated to pay one vendor $5,000 for costs incurred to construct a prototype and testing of such prototype. As at August 31, 2015, $3,000 has been paid in relations to this agreement.

 

13. Intangible Assets

 

The following table sets forth the changes in the carrying amount of the Company’s goodwill and intangible assets for the nine months ended August 31, 2015:

 

		August 31, 2015				November 30, 2014
Acquisition of Vertitek, Inc.		$	2,777,145			$	-
Acquisition of AIMD		$	100,000			$	-

 

The Company reviews identifiable intangible assets for impairment whenever events or change in circumstances indicate that the carrying amount of an asset may not be recoverable. For the nine months ended August 31, 2015, the Company recorded $Nil (2014 – $Nil) impairment loss for intangible assets.

 

14. Subsequent Events

 

The Company has evaluated subsequent events from August 31, 2015, through the date these financial statements were issued and determined there are no additional items to disclose.

   

 

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

 

As used in this quarterly report, the terms “we”, “us” and “our” mean Valmie Resources, Inc. and all dollar amounts refer to U.S. dollars, unless otherwise indicated.

 

Forward-Looking Statements

 

This quarterly report contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements”, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by any forward-looking statements.

 

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.

 

The following discussion of our financial condition and results of operations is based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements, including the notes thereto, that appear elsewhere in this quarterly report. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

Overview

 

We were incorporated pursuant to the laws of the State of Nevada on August 26, 2011. We have one wholly owned subsidiary, Vertitek Inc. (“Vertitek”), a Wyoming corporation. From our inception until the quarter ended August 31, 2014, we were a mineral exploration company exploring for precious metals, or gold and silver targets. Our property, known as the Carico Lake Valley Property (the “Property”), was located in Lander County, Nevada.

 

In July 2014, the landowner notified us that our option to acquire an interest in the Property had been terminated and that the Property had been sold to a third party. Our efforts from that date until the end of our most recently completed fiscal year were primarily directed to identifying new development properties.

 

In early December 2014, our majority shareholder determined it was in the best interests of our shareholders to change our business focus from mining to pursuing opportunities for the commercialization of leading edge products and services in the rapidly expanding technology industry. We therefore sought to develop or acquire concepts with valid business models positioned to make a significant impact within the four key technology “megasectors”: software, hardware, networking and semiconductors.

 

Business Strategy

 

The first major step in our shift to the technology sector was the appointment of Gerald B. Hammack as our sole officer and director on December 8, 2014. Mr. Hammack has more than 30 years of experience in a variety of technology-related fields, including programming, digital telephony and database management, as well as substantial expertise in the setup and management of complex data processing systems.

 

 

Over the past several years, Mr. Hammack has been developing a series of software platforms and technologies designed to provide the near real-time data processing required by the ever-expanding use of commercial Unmanned Aerial Vehicles or UAV’s (more commonly referred to as drones). Towards the end of 2014, we rebranded Mr. Hammack’s development efforts to date as the AIMD (Automated Intelligence for Mobile Devices) data processing platform and adopted them as our own.

 

While in the process of launching the AIMD platform, we determined that it would be necessary to find a partner that had the technology and experience in the design and manufacture of UAV’s in order to design and build a prototype unit to test and refine our product and service offerings. After extensive investigation we located an up-and-coming UAV manufacturer, Vertitek. Vertitek’s hardware and software technology enables a sophisticated level of autonomy for UAV’s and other autonomous mobilized devices, including precision guidance controls and advanced safety features. Vertitek’s under development commercial V-1 Drone^SM is a multi-rotor platform that incorporates an integrated, fully autonomous autopilot, which could be connected to, and controlled from, the AIMD platform.

 

After significant discussion with Vertitek and its principal shareholder, on January 20, 2015 we entered into a letter of intent (the “LOI”) with Vertitek to acquire 100% of the capital stock of that company in exchange for the issuance of shares of our common stock to the principal shareholder of Vertitek, contingent upon certain due diligence requirements. On January 27, 2015 we entered into a share exchange agreement with Vertitek and the sole shareholder of Vertitek, Masamos Services Ltd., a Cypriot corporation (“Masamos”), on substantially the same terms as the LOI. On March 31, 2015, the closing of the share exchange agreement occurred and we issued 1,000,000 shares of our common stock to Masamos in exchange for 100% of the issued and outstanding shares of Vertitek (the “Acquisition”). As a result of the Acquisition, Vertitek became our wholly owned subsidiary.

 

As of August 31, 2015, we had advanced a total of $33,500 to Vertitek under a line of credit in the amount of $150,000 to continue the development of the V-1 Drone^SM.

 

Results of Operations

 

Revenues

 

We have not generated any revenue since our inception. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenue during the next 12 months continues to be uncertain.

 

Three Months ended August 31, 2015 and 2014

 

Expenses

 

During the three months ended August 31, 2015, we incurred $190,229 in operating expenses, including $177,280 in professional fees, $15,000 in management fees and $1,775 in transfer agent fees, as offset by a $3,826 gain in general and administrative expenses. During the same period in fiscal 2014, we incurred $7,870 in operating expenses, including $7,321 in professional fees, $149 in general and administrative expenses and $400 in transfer agent fees. The $182,359 increase in our operating expenses between the two periods was primarily attributable to the significant increase in our professional fees, which was in turn related to our obligations under a consulting agreement we entered into on September 1, 2014. During the three months ended August 31, 2015, our management fees and transfer agent fees also increased due to the general increase in our operations subsequent to the acquisition of Vertitek.

 

Net Loss

 

During the three months ended August 31, 2015, we incurred a net loss of $190,229, whereas we incurred a net loss of $7,870 during the same period in fiscal 2014. Our basic and diluted net loss per share during each of those periods was $0.00.

 

 

Nine Months ended August 31, 2015 and 2014

 

Expenses

 

During the nine months ended August 31, 2015, we incurred $407,144 in operating expenses, including $345,740 in professional fees, $37,000 in management fees, $20,476 in general and administrative expenses and $3,928 in transfer agent fees. During the same period in fiscal 2014, we incurred $42,303 in operating expenses, including $39,595 in professional fees, $1,433 in general and administrative expenses and $1,275 in transfer agent fees. The $364,841 increase in our operating expenses between the two periods was therefore largely attributable to the increases in our professional fees and operations as described above.

 

During the nine months ended August 31, 2015, we also incurred a $10,404,422 loss on the settlement of debt as offset by $1,190 in interest income, whereas we did not incur any such expense during the same period in fiscal 2014. The loss on the settlement of debt was entirely due to the issuances of common stock to various creditors that we completed on April 6, 2015, including 3,500,000 shares pursuant to the settlement of various promissory notes at a deemed price of $0.10 per share, which was well below the market price of our common stock on that day.

 

Net Loss

 

During the nine months ended August 31, 2015, we incurred a net loss of $10,810,376, whereas we incurred a net loss of $42,303 during the same period in 2013. Our basic and diluted net loss per share during those periods was $0.07 and $0.00, respectively.

 

Liquidity and Capital Resources

 

As of August 31, 2015, we had $2,702 in cash and cash equivalents, $3,052 in current assets, $2,912,640 in total assets, $199,592 in current liabilities, $237,185 in total liabilities, a working capital deficit of $196,540 and a retained deficit of $11,134,418.

 

During the nine months ended August 31, 2015, we used $290,275 in net cash on operating activities and our accounts payable decreased by $116,342. During the same period in fiscal 2014, we used $14,615 in net cash on operating activities, our accounts payable increased by $22,688 and our prepaid expenses decreased by $5,000. The majority of our spending on operating activities for the nine months ended August 31, 2015 was attributable to our net loss as described above, as adjusted for the loss on the settlement of debt and changes in our accounts payable and accrued liabilities, and was associated with carrying out our reporting obligations under applicable securities laws and transitioning our business focus from mining to pursuing opportunities for the commercialization of products and services in the technology industry.

 

During the nine months ended August 31, 2015, we used $39,588 in net cash on investing activities, substantially all of which was in the form of advances to Vertitek and prototype development costs. During the same period in fiscal 2014, we did not use any net cash on investing activities.

 

During the nine months ended August 31, 2015, we received $320,000 from financing activities, all of which was in the form of proceeds from promissory notes. During the same period in fiscal 2014, we received $29,073 from financing activities, all of which was in the form of proceeds from a related party.

 

During the nine months ended August 31, 2015, our cash position decreased by $9,863 due to a combination of our operating, investing and financing activities.

 

Our plans for the next 12 months are uncertain due to our current financial condition; however, we intend to raise additional funds through public or private placement offerings. If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us. In the absence of such financing, we may be forced to cease or significantly curtail our operations.

 

 

Plan of Operations

 

We will need to raise additional capital to fully develop our business plan. We have a 24-month plan during which we intend to implement our business development and marketing plan. We believe we must raise approximately $1,500,000 to pay for expenses associated with the continued development of our AIMD platform as well as the development and commercialization of the Vertitek V-1 Drone^SM. Of this, we plan to use $500,000 to finance anticipated activities during Phase I of our development plan as described below, and $1,000,000 to finance anticipated activities during Phase II.

 

Phase I

 

Description		Estimated Amount ($)
Complete the development of the AIMD platform			200,000
Finalize the design of the Vertitek V-1 DroneSM			150,000
Hire sales staff to work with potential clients			50,000
Additional working capital to cover general and administrative expenses			100,000
Total			500,000

 

Phase II

 

Description		Estimated Amount ($)
Complete small-scale manufacturing of the Vertitek V-1 DroneSM			500,000
Sales literature, displays and advertising expenses			200,000
Management and consulting fees, employee salaries			200,000
Additional working capital to cover general and administrative expenses			100,000
Total			1,000,000

 

Many of the developments enumerated in Phase II are dependent on the completion of our Phase I objectives, and both phases are dependent on us obtaining additional financing. There can be no assurance that we will be able to secure such financing, and if we are able to raise some but not all of the funds required to undertake the developments in Phase I and Phase II our management will likely need to re-examine our proposed business activities to use our resources most efficiently. In this event, our focus will likely be on spending available funds to maintain our reporting status with the SEC and developing our product designs to attract investors.

 

 

If we are unable to raise additional funds, we will not be able to complete any of the milestones in either Phase I or Phase II. Due to the fact that many of the milestones are dependent on each other, if we are unsuccessful in obtaining additional financing we may not be able to implement any facets of our business plan.

 

We intend to pursue capital through public or private financing as well as borrowings and other sources, such as loans from our existing shareholders in order to finance our business activities. We cannot guarantee that additional funding will be available on favourable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis, which contemplates, among other things, that we will continue to realize our assets and satisfy our liabilities in the normal course of business. As at August 31, 2015, we had a working capital deficit of $196,540 and a retained deficit of $11,134,418. We intend to fund our operations through equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements for the next 12 months.

 

Our ability to continue in existence is dependent upon, among other things, obtaining additional financing to continue our operations and the operations of Vertitek. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, management, with the participation of our Chief Executive and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, management concluded that our disclosure controls and procedures were effective as of the date of filing this report applicable for the period covered by this report.

 

Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our properties is the subject. Our management is not aware of any such legal proceedings contemplated by any governmental authority against us.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit Number		Exhibit Description
31.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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 Taxonomy Presentation Linkbase

 

 

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.

 

	VALMIE RESOURCES, INC.
	(Registrant)
Date: October 15, 2015	/s/ Gerald B. Hammack
	Gerald B. Hammack
	Chairman, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, Director