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EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - Aim Exploration Inc.aexe_ex311.htm
EX-32.2 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - Aim Exploration Inc.aexe_ex322.htm
EX-32.1 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - Aim Exploration Inc.aexe_ex321.htm
EX-31.2 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - Aim Exploration Inc.aexe_ex312.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
  ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended August 31, 2016
 
☐  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 333-182071
  
AIM EXPLORATION INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
67-0682135
(State or Other Jurisdiction of Incorporation of Organization)
 
(I.R.S. Employer Identification No.)
 
179 S Green Valley Pkwy, Suite 300
Henderson, Nevada 89012
 (Address of principal executive offices)
 
1-844-246-7378
 (Registrant’s telephone number, including area code)
 
Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value, Preferred Stock, $0.001 par value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ☐     No ☒
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐       No ☒
 
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 ☒    No ☐
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 
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 definition of large accelerated filer and accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer           Accelerated filer           Non-accelerated filer           Smaller reporting company ☒
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes  ☐   No ☒
 
Aggregate market value of the voting and non-voting stock of the registrant held by non-affiliates of the registrant as of the last day of the Company’s most recently-completed second fiscal quarter (February 29, 2016): $220,753.
 
As of December 15, 2016 the registrant’s outstanding stock consisted of 576,728,348 common shares and 210,000 preferred shares.
 

 
 
TABLE OF CONTENTS
 
Item 1.      
Business
3
Item 1A.  
Risk Factors
13
Item 1B.   
Unresolved Staff Comments
13
Item 2.      
Properties
13
Item 3.      
Legal Proceedings
13
Item 4.      
Mine Safety Disclosures
13
Item 5.      
Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
14
Item 6.      
Selected Financial Data
16
Item 7.      
Management's Discussion and Analysis of Financial Condition and Results of Operations
16
Item 7A.  
Quantitative and Qualitative Disclosures About Market Risk
19
Item 8.      
Financial Statements and Supplementary Data
19
Item 9.      
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
42
Item 9A.  
Controls and Procedures
42
Item 9B.  
Other Information
42
Item 10.    
Directors, Executive Officers and Corporate Governance
43
Item 11.    
Executive Compensation
45
Item 12.    
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
46
Item 13.    
Certain Relationships and Related Transactions, and Director Independence
47
Item 14.    
Principal Accountant Fees and Services
47
Item 15.    
Exhibits, Financial Statement Schedules
48
 
 
2
 
 
PART 1
 
Item 1. BUSINESS
 
We are an exploration stage company engaged in the acquisition and exploration of mineral properties with the intent to take properties into production.  We were incorporated as a Nevada state corporation on February 18, 2010.   We acquired mining concession properties in Peru during the fiscal year ended August 31, 2014.
 
We are considered an exploratory stage company, as we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on the Peruvian properties, and further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined.  We have no known reportable reserves of any type of mineral.  To date, we have not discovered an economically viable mineral deposit on the property, and there is no assurance that we will discover one.
 
As of August 31, 2016, we had cash reserves of $417 and a working capital deficit of $2,897,303.  We do not have sufficient funds to enable us to complete the initial phase of our exploration programs for the mining claims, and will require additional financing in order to do so. There is no assurance that we will be able to obtain additional financing.  Both advanced exploration and an economic determination will be contingent upon the results of our preliminary exploration programs and our ability to raise additional financing in order to proceed with advanced exploration and an economic evaluation.  There is no assurance that we will be able to obtain any additional financing to fund our exploration activities.
 
Philippine Mining Claims
 
Nature of Ownership
 
On August 3, 2016, the Company terminated its management agreement with Paladino Management and Development Corp. to manage operations on the ground in the Philippines. The Philippine government enacted new legislation which made it no longer financially feasible to continue the Philippine feldspar operations.
 
Peruvian Property
 
On June 23, 2014, Aim Exploration, Inc. entered into a Mining Concession Asset Acquisition Agreement (the “Agreement”) with Percana Mining Corp. (“Percana”). Pursuant to the Agreement, the Company has acquired three separate mining concessions. Two of the concession titles are unencumbered and these make up 40% of the mining concessions. These two concessions are known as El Tunel Del Tiempo 1 code 11060780 and El Tunel Del Tiempo 2 code 11060781, and the registered ownership of these two concessions have been transferred to the Company. The third concession property is Agujeros Negros MA-AG makes up the remaining 60%, the documentation has all been completed to transfer ownership to the company however formal registration has not yet been completed however it is expected to be completed soon. Meanwhile however, the Company has a Contract of Mining Assignment providing AIM with full rights and authorities over the concession.
 
In consideration for the above concessions, the Company has issued 15,750, 000 common shares to Percana in two separate blocks; the first In consideration for the above concessions, the Company has issued 63,000 restricted common shares (15,750,000 restricted common shares pre-consolidation) (Note 6) to Percana in two separate blocks; the first block consists of 25,200 common shares (6,300,000 common shares pre-consolidation) which are to be held in escrow until either the Company raises $1,000,000 or when Percana waives this requirement. The second block consists of 37,800 common shares (9,450,000 common shares pre-consolidation) which are to be held in escrow until such time as the Company is satisfied the formal registration has been completed at which time the shares may be released out of escrow at the option of Percana. On April 25, 2016, the Company entered into an amendment to its Agreement with Percana and issued an additional 15,687,000 common shares to Percana to bring its post-consolidation shareholdings back to 15,750,000 common shares. Furthermore, under the terms of the amended Agreement, the Company agreed to issue additional common shares to Percana at any time common shares are issued to any director and/or controlling shareholder of the Company, the number of common shares issued to Percana to be equal to those issued to the director and/or controlling shareholder.
 
These Mining Concessions were acquired based on the assumption the properties are rich in high grade Anthracite Coal, currently there are 20 small tunnels on the property already producing anthracite coal which was being mined by illegal miners. Testing of the coal samples was performed indicating the presence of high-grade anthracite coal. Prior to acquisition AIM reviewed a non-compliant technical report prepared by Engineers/Geologists together with hiring a US based firm Gustavson Associates to visit the property and review the reports. The firm provided AIM with a report, which included recommendation for further exploration.
 
One of the Company’s director is also a director of Percana.
 
The Peruvian Property consists of three separate mining concessions, all are within one contiguous block of property, and all three concessions are located in the Province of Otuzco, La Libertad region. The formal transfer for two of the mining concessions known as El Tunel del Tiempo 1 (Unique code # 01-0209106 – 200 hectares) and El Tunel del Tiempo 2 (Unique code # 01-0209206 – 200 hectares) was executed August1, 2014 and made into public deed on August 5, 2014 within the Peruvian Public Registries.
 
 
3
 
 
The third mining concession, known as Agujeros Negros MA-AG (unique code # 01-0184000, 600 hectares) is under contract with AIM, as a Contract of Mining Assignment and Option to Purchase was executed on August 1, 2014 and was made into a Public Deed on August 5, 2014. By the Assignment and Option AIM has an irrevocable and exclusive option to purchase 100% of the rights and interests of this mining concession. This option was registered into public deed on August 5, 2014. The option to purchase is for 5 years from the date of registration which was completed Oct 2, 2014, in addition contained within the contract AIM has complete control over this mining concession for a period of 5 years following formal registration which was registered October 2, 2014. The option to purchase was exercised and all documentation to transfer the concessions to the company has been completed however formal registration with the Peruvian authorities has not yet been completed.
 
The reason this concession was not formally transferred is the fact that AIM wanted to perform additional due diligence as there was an Arbitration process with the registered owners and the former concession owners of 80% of the concession. Subsequent to this time the former owners who commenced the arbitration process has abandoned the arbitration thus nullifying the process.
 
Royalties
 
The combined concessions are known as “The Black Hole”, the first two concessions, El Tunel del Tiempo 1 & 2 do not have royalties payable. The third concession, Agujeros Negros WA-AG has a royalty consisting of payment of US $1.00 per each metric ton of anthracite coal extracted from and sold. The royalty applies from the time when the sales of anthracite coal reach US $150,000.
 
Process Whereby Mineral Rights Are Acquired in Peru (Peruvian System of Concessions)
 
In Peru, any individual or company can solicit (through a “Petition” to the Government, the grant of a mining concession. Through an administrative process at INGEMMET (the geological Mining and Metallurgical Institute), when all technical and legal requirements are complied with, the Government will grant the mining concession. The mining concession grants the titleholder the right to explore, exploits, process, transport, market and refine mineral whether it is metallic, non-metallic or coal mineral. Once the concession is granted it must be registered at the Public Registries and the concession titleholder can freely transfer, assign, encumber or exercise over it any kind of disposition act.
 
A mining concession in Peru does not have duration of time limit. However, it carries an obligation to pay annual Validity fees to prevent cancellation from the Government as in Peru the nature of a mining concession entails a duty for its development and production in order to grant it added value. In the General Regime this is for medium and large mining, the payment of validity fees is US$ 3.00 per hectare per year.
 
Rights and Obligations: Concession titleholder’s rights
 
The properties are all located on vacant land, and vacant land properties are entitled to the free mining use of the surface land that corresponds to the concession and outside of it, for its economic advantage without the need for any additional request, however that being said the titleholder does not have the right for the use of surface land without formal consent, the properties are owned by the government and for a total fee of approx. US$15,000.00 the surface rights are readily available to AIM.
The right to request from the mining authorities easements of third party lands that are necessary for the reasonable use the concession.
The right to free trade of extracted minerals provided they have the respective permits and authorizations.
To build on neighboring concessions the labor work that is necessary for the access, ventilation and drainage of their own concession, mineral transport and safety of the workers.
The right to use the water that is necessary for the domestic service of the staff workers and for the operations of the concession, in accordance with the legal provisions for these matters.
The right to inspect the work of neighboring or adjacent mining concessions when invasion is suspected or when there is danger of flooding, collapse or dire due to the bad state of the labor work of the neighbors or adjacent for the work they are carrying out.
 
Duties of the Concession titleholders:
Validity fee payment of US $3.00 per hectare, due June 30 every year. If not paid for two years, concession returns to the Government. Fee to be paid by AIM. (Paid)
Payment of penalty fees if not in production is US $6.00 per year up to year seven increasing to US $20.00 per year from year 12. After failure to pay for two years the concession reverts to the Government. Fee to be paid by AIM. (Paid)
Follow the occupational health and safety provided for in Regulations of Occupational Health and Safety.
Follow the Environment Management Instruments.
 
We confirm the Environmental Management permits are currently being applied for and we expect to have these in place within the ensuing six months.
 
 
4
 
 
Peruvian Property Location
 
The property is accessible by standard vehicles; all roadways are drivable with the roadways being paved and or gravel roadways. The driving time is approx. 3 hours from the city of Trujillo Peru. In addition, there is roadway running through the property making it feasible for exploration and drilling. The entire property consists of 1,000 hectares. The official location of the property is:
 
Republic: Peru
Department: La Libertad
Province: Otuzco
District: Huaranchal
Spot: Between Huayobamba and Lajon
 
Figure 1 is a map that shows the location of the project and the surrounding area. The coordinates near the centroid of the property are 7° 44’ 13.06” S and 78° 31’ 05.87” W. The property is 1,000 hectares and are all with one contiguous block of property.
↑ North
 
Note: This location map is copied from a previous geological report done for the property by MTC and the map was completed in May of 2012.
 
5
 
 
Figure 1 Property Location
 
Geology
 
The geology in the area of the property and surrounding areas in general have a regional stratigraphy, composed in large percentage of sequences of Mesozoic sedimentary rocks ranging from Jurassic in the western sector, then the Lower Cretaceous superior and in the northwest-northeast with Tertiary volcanic sequences, which cover much of the region, and the upper most are alluvial deposits from the recent Quaternary. There are also some Tertiary intrusive bodies that outcrop in the southwest area of the region.
 
The local geology for the property consists of sedimentary units, corresponding to the Chimú Chicama formations, Santa, Carhuaz and Farrat, and the Alto Chicama River basin is characterized by outcrops of Mesozoic rocks that have the have major folding and fracturing. This folding is apparent in the Jurassic sedimentary rocks (Chicama formation) at lower levels near the Alto Chicama River. Chicama Formation is characterized by the presence of dark gray shale with interbedded sandstones, and slate gray tuffaceous quartz at some levels. The Chimú Formation is present in most of the study area, and is the most noticeable towards the southwest and Chicama formation is exposed near the river. These formations are important because this is the horizon in the area of ​ ​ greatest interest because of the presence of coal seams and in some cases have the presence of sub-anthracite and anthracite, occurring with some areas as "lenses" in the bituminous coal. The following is the sedimentary sequence; sandstones, siltstones, shale, and black shale (Cobbing et al., 1996: 73-74). The two formations are exposed mostly in streams and Quina Shangala (erosional cut within the property), covering most of the local area. The Santa and Carhuaz formations, are not fully differentiated in the study area, having found areas with shale, siltstone, limestone, sandstone, quartzite and in some sectors they have small "lenses" of bituminous coal, but are of smaller magnitude. In summary these formations, especially the formation Chimú, are of great interest, as possible sources for economic development for the "Black Holes Property".
 
There are granodioritic intrusive rocks that outcrop in the form of stocks, with the presence of a large intrusive towards the left of the village of Lajon (northwest corner of the property).  This area is heavily disturbed and altered, and has the presence of metallic minerals, which is an association of the coal deposits of the basin Chicama (usually Au.).
 
These various Shangala features (used in sampling activities) are essentially a creek that dissects perpendicular to the outcrops surrounding the river Alto Chicama, both sectors have significant levels of bituminous coal, quite broken, which could be of value in the economic exploration to exploitation of the property.
 
The oldest rocks in the prospect of coal formations are the Upper Jurassic Chicama and overlie rocks of the Chimú formation, this being the one with the anthracite coal and sub-anthracites plus it includes other sedimentary horizons with bituminous coal. These formations and especially above the village of Chimú is of great interest as a source of possible development of the mining project because they are the carriers of coal in the area and this is this geological unit which covers 80% of the area.
 
The studies done by MTC and later by Gustavson are not done to NI43-101 or coal industry standards to report resources and reserves. The property is currently without known reserves and current and planned exploration programs are exploratory in nature.
 
Current and planned exploration:
 
The previous work completed on or near the property has focused on geologic mapping and sampling via trenches at the outcrop areas and in old, existing tunnels. There are active small mining operations on the northwest area of the property that has also added information on the quality of the coal from the property.
 
The property’s evaluation and database will be greatly improved by a program of additional geologic mapping, trenching and most of all by completing 3-4 drill holes that provide core for sampling and testing, but also will be an important guide to the structure of the coal deposits. More drill holes are required to define resources; the first suggested drilling program may define the need for additional drill holes due to the structural complexity of the coal beds.
 
Figure 2 shows many relevant features of the property. The map is very busy so some explanation is required.
 
 
Note: this figure is also from the MTC Report of 2012 and shows many features of the property that are describe and explained in the text of this report.
 
6
 
 
Figure 2 Property Map showing Site Specific Features
 
The outline of the property is shown by a lavender line that defines a rectangle shape that is extended to the south. There is no north arrow, but there are grid lines that show north-south and east-west. The Alto Chicama River is in the south (bottom) of the figure and the features, some with red markings that cross the property in a northeast to southwest direction, are the features referred to as Shangalas. The small black marks towards the northwest are the small mines mentioned above.
 
The main feature from Figure 2 that will aid the exploration and drilling effort is the existing road that crosses the center of the property and is shown as a light blue, meandering line. The importance of this existing road is that it will give easy access to the center of the property where the proposed drill holes can be located. The coal deposits proposed to define first are south of the road and by setting up at various locations along the road and drilling at an angle towards the south will provide the best possibility to intersect and sample the coal seams. Four drill holes along the road can be spaced to provide data points to define some resources as Indicated. The exact drill sites will be defined in a combination of future site visits and geologic mapping, which is the first phase of exploration.
 
The cost and timing for the Phase I of drill hole siting and mapping is estimated at about $35,000 and will be started as soon as AIM has the necessary funds, the process is expected to take approximately 10 days. The planning for Phase 2, drilling, sampling, analysis and possible more trenching is estimated at $350,000 to include a drilling contractor, geologic support, sample analysis and reporting and could complete the 4 drilling program in 6 weeks. This data provided by Phase 1 and Phase 2 could then be utilized to develop a NI43-101 Resource Report and possible a Preliminary Economic Assessment (PEA).
 
The cost and timing for the required permitting for the property is as follows:
 
COSTS BREAKDOWN
 
DESCRIPTION
 
COSTS $
 
TIME
1. ENVIRONMENTAL IMPACT STUDY
  50,000 
6 months
Conceptual hydrological and hydrogeological study
  25,000 
 
2. START OF MINING OPERATIONS
    
4 months
Authorization of the surface land (titleholder)
  14,999 
 
Mine plan
  15,000 
 
Detailed Ventilation Study
  10,000 
 
Detailed Geomechanics Study
  10,000 
 
Seismic risk studies
  7,000 
 
Design of explosives storage
  2,000 
 
Occupational Health and Safety Plan
  2,000 
 
Design of tailings storage
  15,000 
 
3. CLOSURE PLAN
  35,000 
4 months
4. PREPARATION OF FILE OF WATER USE ISSUED BY ANA
  7,000 
1 month
5. PREPARATION OF FILE FOR DISPOSAL OF WATER (DIGESA AND ANA)
  5,000 
1 month
6. LEGAL COSTS ASSOCIATED TO OBTAIN ALL THE AFOREMENTIONED PERMITS
  50,000 
Throughout the process
TOTAL COSTS $ 
 $247,999 
 
 
Summary
 
Gustavson Associates based out of Boulder Colorado provided the technical information on the Peruvian property. Gustavson Associates is a mining consulting firm with over 30 years of extensive international experience. Mr. Karl D. Gurr of Gustavson Associates completed a site visit of the property together with visiting the Port of Salaverry located in Trujillo Peru and has reviewed numerous reports. Mr. Karl Gurr is a Registered Member of the Society of Mining Engineers and has degrees in Geology and Mining Engineering with over 25 years of direct experience in the coal industry, which defines Mr. Gurr’s status as a qualified person.  As stated Mr. Gurr performed a property visit and a visit to the Port of Salaverry and confirms that the property is a known coal bearing area with sufficient past geologic study to merit additional work (exploration) to better define coal resource and eventually a plan for mining the resource. Any further exploration will be overseen and supervised by or through Mr. Gurr and will be focused on providing additional information to advance the project and to do it in a cost effective manner.  Mr. Gurr has confirmed the infrastructure and property access already exists and the Port of Salaverry has the capability to store and ship the produced coal.
 
In addition to Mr. Gurr’s visit we solicited the efforts of mining engineer and geologist Manuel Chumpitaz Cama. Mr. Cama has known the property for many years and he attended to extractive of coal samples from various mine tunnels within the property. Through the supervision of Mr. Cama samples of coal were taken from the property and delivered to the local university lab for testing. Following is the official results of the testing.
 
The legal and permitting information was provided to AIM by their team of Peruvian legal advisors based in Lima Peru.
 
 
7
 
 
 Analysis of Coal Samples
 
The following report was obtained from world-renowned SGS Canada Inc.:
 
 
 
8
 
 
 
 
 
9
 
 
 
 
10
 
 
WE WILL REQUIRE SIGNIFICANT ADDITIONAL FINANCING IN ORDER TO CONTINUE OUR EXPLORATION ACTIVITIES AND OUR ASSESSMENT OF THE COMMERCIAL VIABILITY OF OUR PROPERTIES.  EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON OUR MINERAL PROPERTY, WE CAN PROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY ADVANCE INTO COMMERCIAL PRODUCTION.
 
While we are very optimistic the properties contain minerals we are not sure.  Our business plan calls for significant expenditures in connection with the exploration of the property.  We will, however, require additional financing in order to complete the remaining phases of the exploration program, and to conduct the economic evaluation that would be necessary for us to assess whether sufficient mineral reserves exist to justify commercial exploitation.  We currently are in the exploration stage and have no revenue from operations.  We currently do not have any arrangements in place for additional financing, and we may not be able to obtain financing on terms that are acceptable to us, or at all.  If we are unable to obtain additional financing, we will not be able to continue our exploration activities and our assessment of the commercial viability of the property.  Further, if we are able to establish that development of the property is commercially viable, our inability to raise additional financing at this stage would result in our inability to place the property into production and recover our investment.
 
 
11
 
 
Competition
 
We are a junior mineral resource exploration company.  We compete with other mineral resource exploration companies for financing and for the acquisition of new mineral properties.  Many of the mineral resource exploration companies with whom we compete have greater financial and technical resources than those available to us.  Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties.  In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties.  This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development.  This competition could adversely impact on our ability to achieve the financing necessary for us to conduct further exploration of our mineral properties.
 
We will also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral exploration companies. The presence of competing junior mineral exploration companies may impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors.
 
We will also compete with other junior and senior mineral companies for available resources, including, but not limited to, professional geologists, camp staff, helicopter or float planes, mineral exploration supplies and drill rigs.
 
As at August 31, 2016, we had cash reserves of $417 and working capital deficit of $2,897,303.  We do not have sufficient funds to enable us to complete this initial phase of our exploration programs for the mining claims. We will require additional financing in order to commence the initial phases of exploration of the properties.  There is no assurance that will be able to obtain additional financing.  Both advanced exploration and an economic determination will be contingent upon the results of our preliminary exploration programs and our ability to raise additional financing in order to proceed with advanced exploration and an economic evaluation.  There is no assurance that we will be able to obtain any additional financing to fund our exploration activities.
 
Patents, Trademarks, Franchises, Royalty Agreements or Labor Contracts
 
We have no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. We will assess the need for any copyright, trademark or patent applications on an ongoing basis.
 
Research and Development
 
We have not spent any amounts on research and development activities during the year ended August 31, 2016.  We anticipate that we will not incur any expenses on research and development over the next 12 months.  Our planned expenditures on our operations or a business combination are summarized under the section of this annual report entitled “Management’s Discussion and Analysis of Financial Position and Results of Operations”.
 
Employees and Employment Agreements
 
At present, we have no employees other than our executive officers and directors.  We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future.  There are presently no personal benefits available to any officers, directors or employees.
 
 
12
 
 
Item 1A. RISK FACTORS
 
As a “smaller reporting company”, we are not required to provide the information required by this Item. 
 
Item 1B. UNRESOLVED STAFF COMMENTS
 
As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
Item 2. PROPERTIES
 
Descriptions of the leases concerning our mining facilities can be found in Item 1 of this report on Form 10-K. We do not currently own any property or real estate of any kind.  Our executive offices are located at 701 North Green Valley Parkway, Suite 200, Henderson Nevada, 89012.
 
Item 3. LEGAL PROCEEDINGS
 
A company called Tarpon Bay commenced legal action with the company as at August 30, 2016 claiming the company owed them $78,678. The company is disputing the claim and it is currently in the hands of the courts. This relates to the S-1 registration statement that became effective June 1, 2015. The S-1 that was registered in the name of Southridge Capital and the amount of the claim represents the “standby fee”. In view of the fact that the equity line of credit with Southridge Capital was completed wrong and could not be utilized technically Southridge or Tarpon Bay was not on “standby”. The S-1 registration statement was approved by Southridge (Tarpon Bay) in- house legal department prior to submitting to the SEC for registration." There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
 
Item 4. MINE SAFETY DISCLOSURES
 
Not applicable.
 
13
 
 
PART II
 
Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Market Information
 
There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained.  A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resales.
 
Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.  We would like to register our shares for resale by our selling stockholders and then obtain a trading symbol to trade our shares over the OTC Bulletin Board.  However, there is no assurance that we will be successful in getting our common stock quoted on the OTC Bulletin Board.   
 
Number of Holders
 
As of December 15, 2016, we had approximately 45 shareholders of record of our common stock.
 
As of December 15, 2016, we had 2 shareholders of record of our preferred stock.
 
Dividend Policy
 
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future.  We plan to retain any future earnings for use in our business.  Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
 
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
 
On October 28, 2015, Aim Exploration Inc. (the “Company”) entered into a Note Purchase Agreement with Tangiers Investment Group, LLC (“Tangiers” or “Holder” in the event of assignment or succession) for the sale of a 10% convertible promissory note (the “Note”), in the principal amount of $330,000 (the “Principal Sum”), convertible into shares of common stock of the Company. Upon execution of the Note, Tangiers delivered $75,000 to the Company. The Note has an original issue discount of $7,500, which Tangiers retained for due diligence and legal bills related to the transaction. The financing closed on October 28, 2015 (the “Closing Date”). The Effective Date is that day when the Note is executed by both parties and the delivery of the first payment of consideration is made (the “Effective Date”).
 
On April 1, 2016, Tangiers delivered another $18,302 to the Company. During the year, Rockwell Capital (“Rockwell”) assumed $92,000 of the Tangiers note. Subsequent to August 31, 2016, the Rockwell note was assumed by a private party, and the balance of the Tangiers note was paid in full by a director of the Company.
 
The Note bears interest at the rate of 10% per annum. All interest and principal must be repaid one (1) year after the Effective Date (the “Maturity Date”). The Note is convertible into common stock, at Tangiers’ option, at the lower of (i) $0.10 per share or (ii) 50% of the lowest trading price of the Company’s common stock during the 25 consecutive trading days prior to the date on which Tangiers elects to convert all or part of the Note (the “Conversion Price”).
 
14
 
  
The Note may be prepaid by the Company, in whole or in party, according to the following: if under 30 days from the Effective Date, Prepayment amount shall be 100% of Principal sum plus accrued interest; between 31 and 60 days, 110% of Principal Sum plus accrued interest; between 61 and 90 days, 120% of Principal Sum plus accrued interest; between 91 and 120 days, 130% of Principal Sum plus accrued interest; between 121 and 150 days, 140% of the Principal Sum plus accrued interest; and between 151 and 180 days, 150% of Principal Sum plus accrued interest. After 180 days from the Effective Date, the Note may not be prepaid without written consent from the Holder.
 
In the event of a default, the Note may be accelerated by Tangiers, whereby the outstanding balance is immediately due and payable in cash at 150% of the outstanding Principal Sum of the Note. In addition, an interest rate of the lesser of 18% per annum or the maximum rate permitted under law will be applied to the outstanding balance. Tangiers is prohibited from owning more than 9.99% of the Company’s outstanding shares pursuant to the Note.
 
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other things, the transaction did not involve a public offering, Tangiers is an accredited investor, Tangiers had access to information about the Company and their investment, Tangiers took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.
 
Related to entering into the Note, the parties documented their intention that the Company’s obligations to repay under the terms of the Note be secured by certain assets, represented by the Security Agreement and Memorandum of Security Agreement, entered into by the parties on October 28, 2015.
On October 28, 2015, the Company entered into a Strategic Consulting Agreement with Tangiers for strategic advising and consulting services. The Term is twelve months, although it may be terminated at any time. As consideration for providing consulting services, the Company shall pay Tangiers one hundred twenty thousand dollars ($120,000) in restricted shares of the Company’s common stock, payable in four equal installments of $30,000 per month each, due at ninety-day intervals. Additionally, the Company shall issue to Tangiers 500,000 five-year warrants with an exercise price of fifteen cents ($.15) a share and a cashless exercise option. The Company also granted Tangiers the option to purchase up to fifteen thousand (15,000) tons of coal per month (FOB) at a fifteen percent (15%) discount to market on a to be determined formula.
 
On that same date, the Company entered into an Investment Agreement and Registration Rights Agreement with Tangiers (the “Investment Agreement”) through which the Company has agreed to issue and sell to Tangiers an indeterminate number of shares of the Company’s common stock, par value of $.001 per share, up to an aggregate purchase price of five million dollars ($5,000,000). The Company is obligated to register these shares to be sold under the Investment Agreement on Form S-1.
 
On August 14, 2015, the Company issued to Auctus Fund, LLC a convertible promissory note in the principal amount of $76,750, in connection with a securities purchase agreement entered into by the parties on August 14, 2015. The note accrues interest at a rate of 10% per annum, with a maturity date of May 14, 2016. The holder of the note may convert any or all of the principal outstanding into shares of the Company’s common stock at a price equal to 55% of the lowest trading price of the common stock during the fifteen trading days prior to issuing a notice of conversion to the Company. During the year, Rockwell Capital (“Rockwell”) assumed $40,000 of the Auctus note. Subsequent to August 31, 2016, the Rockwell note was assumed by a private party.
 
On August 31, 2015, the Company issued to St. George Investments LLC a convertible promissory note in the principal amount of $40,000, in connection with a securities purchase agreement entered into by the parties on August 31, 2015. The purchase price for this note and warrant (as described in the securities purchase agreement) shall be $25,000, computed as follows: original principal balance of $40,000, less a $10,000 original issue discount and $5,000 to cover lender’s legal fees, accounting costs, due diligence, and other transaction costs incurred in connection with the note. Interest does not accrue on the outstanding principal. The note matures six months after the purchase price is delivered to the Company by the lender. The holder of the note may convert any or all of the principal outstanding into shares of the Company’s common stock at a price equal to 60% of the lowest trading price of the common stock during the twenty trading days prior to issuing a notice of conversion to the Company. Subsequent to August 31, 2016, a private party assumed the St. George note.
 
On September 17, 2015, the Company issued to EMA Financial, LLC a convertible promissory note in the principal amount of $40,000, in connection with a securities purchase agreement entered into by the parties on September 17, 2015. The note accrues interest at a rate of 12% per annum, with a maturity date of September 17, 2016. The holder of the note may convert any or all of the principal outstanding into shares of the Company’s common stock at a price equal to 55% of the lowest trading price of the common stock during the 20 trading days prior to issuing a notice of conversion to the Company.
 
On January 12, 2016, the Company issued to Yoshar Trading, LLC a convertible promissory note in the principal amount of $30,000, in connection with a Securities Purchase Agreement entered into by the parties on January 12, 2016. The note accrues interest at a rate of 10% per annum, with a maturity date of January 12, 2017. The holder of the note may convert any or all of the principal outstanding into shares of the Company’s common stock at a price equal to 55% of the lowest trading price of the common stock during the 20 trading days prior to issuing a notice of conversion to the Company.
 
15
 
 
Equity Compensation Plan Information
 
We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
 
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
 
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended August 31, 2016.
 
Item 6. SELECTED FINANCIAL DATA
 
As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
You should read the following discussion and analysis in conjunction with our financial statements, including the notes thereto, included in this Report.  Some of the information contained in this Report may contain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements.  Forward-looking statements which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.  These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that the projections included in these forward-looking statements will come to pass.  Our actual results could differ materially from those expressed or implied by the forward looking statements as a result of various factors.  We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
 
Purchase of Significant Equipment
 
We do not intend to purchase any significant equipment over the next twelve months.
 
Personnel Plan
 
We do not expect any material changes in the number of employees over the next 12-month period (although we may enter into employment or consulting agreements with our officers or directors).  We do and will continue to outsource contract employment as needed.
 
 
16
 
 
Results of Operations for the Fiscal Year Ended August 31, 2016 compared to the Fiscal Year Ended August 31, 2015
 
We did not earn any revenues for the period from February 18, 2010 (Inception) to August 31, 2016.  We incurred a net loss in the amount of $1,141,304 during the fiscal year ended August 31, 2016, compared to a net loss of $1,448,618 for the fiscal year ended August 31, 2015.  These operating expenses were comprised of mineral property expenditures of $22,916 (2015: recapture of $21,843), consulting fees of $70,437 (2015: $128,451), filing fees of $15,831 (2015: $15,923), finder’s fees of $15,000 (2015: $113,603), foreign exchange gain of $61,517 (2015: loss of $664); management fees of $216,000 (2015: $241,500), office and general fees of $54,710 (2015: $70,142), professional fees of $105,409 (2015: $306,925), and public relations expense of $72,854 (2015: $180,452).  We wrote-down accounts receivable of $45,800 (2015: $Nil), wrote-down accounts payable by $Nil (2015: $11,285), and incurred the following expenses related to the convertible: accretion of $529,914 (2015: $85,329), interest expense of $62,431 (2015: $49,112), finance costs of $197,571 (2015: $305,998) from amortization of debt discounts and excess of derivative liability over the face value of the notes, and a change in the fair value of the derivative liability of $206,052 (2015: $16,353).
 
Revenues
 
We have had no operating revenues since our inception on February 18, 2010 to August 31, 2016.  
 
Expenses
We incurred a net loss in the amount of $1,141,304 during the fiscal year ended August 31, 2016, compared to a net loss of $1,448,618 for the fiscal year ended August 31, 2015.  These operating expenses were comprised of mineral property expenditures of $22,916 (2015: recapture of $21,843), consulting fees of $70,437 (2015: $128,451), filing fees of $15,831 (2015: $15,923), finder’s fees of $15,000 (2015: $113,603), foreign exchange gain of $61,517 (2015: loss of $664); management fees of $216,000 (2015: $241,500), office and general fees of $54,710 (2015: $70,142), professional fees of $105,409 (2015: $306,925), and public relations expense of $72,854 (2015: $180,452).  We wrote-down accounts receivable of $45,800 (2015: $Nil), wrote-down accounts payable by $Nil (2015: $11,285), and incurred the following expenses related to the convertible: accretion of $529,914 (2015: $85,329), interest expense of $62,431 (2015: $49,112), finance costs of $197,571 (2015: $305,998) from amortization of debt discounts and excess of derivative liability over the face value of the notes, and a change in the fair value of the derivative liability of $206,052 (2015: $16,353).
 
Liquidity and Capital Resources
 
As at August 31, 2016, we had cash reserves of $417 and working capital deficit of $2,227,835.  As at August 31, 2015, we had cash reserves of $2,349 and working capital deficit of $1,209,747.
 
Cash Used in Operating Activities
 
Net cash used in operating activities was $409,984 during the fiscal year ended August 31, 2016, compared to $812,788 for the fiscal year ended August 31, 2015. 
 
Cash from Financing Activities
 
We have funded our business to date primarily from the issuance of convertible notes, loans from related parties, as well as sales of our common stock.  During the fiscal year ended August 31, 2016, we raised a total of $408,052 in financing activities.  This was comprised of the issuance of convertible debt in the amount of $215,000, loans received in the amount of $69,350, and loans from our director and key management personnel of $123,702.  During the fiscal year ended August 31, 2015, we raised a total of $813,275 in financing activities.  This was comprised of the issuance of convertible debt in the amount of $385,553, offset by payment on convertible notes of $47,250, issuance of convertible debt to related parties in the amount of $170,000, and loans from our director and key management personnel of $304,972
 
 
17
 
 
Off-Balance Sheet Arrangements
 
We have no significant 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 stockholders.
 
We have not attained profitable operations and are dependent upon obtaining financing to pursue marketing and distribution activities.  For these reasons, there is substantial doubt that we will be able to continue as a going concern.  
 
Critical Accounting Policies
 
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.  These estimates and assumptions are affected by management’s application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
 
Basis of Accounting
 
Our Company’s financial statements are prepared using the accrual method of accounting.  The Company has elected an August year-end.
 
Cash Equivalents
 
Our Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
 
Use of Estimates and Assumptions
 
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
Stock-Based Compensation
 
Our Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, using the fair value method.  All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
 
Recently Issued Accounting Pronouncements
 
Our Company has evaluated all the recent accounting pronouncements and believes that none of them will have a material effect on the company’s financial statement.
 
Contractual Obligations
 
As a “smaller reporting company” we are not required to provide tabular disclosure obligations.
 
18
 
 
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
As a “smaller reporting company” we are not required to provide the information required by this Item.
 
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 
19
 
 
 
AIM EXPLORATION INC.
CONSOLIDATED FINANCIAL STATEMENTS
 
August 31, 2016
 
 
 
 
20
 
 
Report of Independent Registered Public Accounting Firm
 
Consolidated Balance Sheets of August 31, 2016 and 2015
 
Consolidated Statements of Operations for the years ended August 31, 2016 & 2015
 
Consolidated Statements of Stockholder’s Equity (Deficit)
 
Consolidated Statements of Cash Flows for the years ended August 31, 2016 and 2015
 
Notes to Consolidated Financial Statements
 
 
 
21
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Stockholders and Board of Directors
AIM Exploration Inc.
701 North Green Valley Parkway, Suite 200
Henderson, NV 89012
 
We have audited the accompanying consolidated balance sheets of AIM Exploration Inc. (the “Company”) as of August 31, 2016 and 2015, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to the above present fairly, in all material respects, the financial position of AIM Exploration Inc. as of August 31, 2016 and 2015, and the results of their operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company has incurred an accumulated deficit from inception to August 31, 2016. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
/s/Anton & Chia, LLP
Newport Beach, California
 
December 15, 2016
 
 
22
 
 
AIM EXPLORATION INC.
 CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
Aug 31, 2016
 
 
Aug 31, 2015
(Restated)
 
CURRENT ASSETS
 
 
 
 
 
 
Cash
 $417 
 $2,349 
Loans receivable
   
  45,800 
Deposits
  72,873 
  39,303 
Total Current Assets
  73,290 
  87,452 
 
    
    
Mineral property
 342,656
  326,969 
 
    
    
TOTAL ASSETS
 $415,946
 $414,421 
 
    
    
LIABILITIES AND STOCKHOLDERS’ DEFICIT
    
    
 
    
    
CURRENT LIABILITIES
    
    
Accounts payable and accrued liabilities
 $211,601 
 $214,513 
Loans payable
  69,350 
   
Loans payable – related party
  598,955 
  478,453 
Convertible note – related party
  191,264 
  103,762 
Convertible note, net of unamortized discount
  433,446 
  86,707 
Derivative liability
  796,509 
  571,687 
TOTAL LIABILITIES
  2,301,125 
  1,455,122 
 
    
    
STOCKHOLDERS' DEFICIT
    
    
Capital Stock
    
    
Authorized
    
    
250,000,000 shares of common stock, $0.001 par value Issued and outstanding 22,392,729 shares (356,400 shares outstanding as at August 31, 2015)
    
    
1,000,000 shares of preferred stock, $0.001 par value Issued and outstanding 100,000 shares (Nil as at August 31, 2015)
  145,707 
  89,200 
Additional paid in capital
  871,507 
  626,098 
Shares receivable
  (5,090)
   
Accumulated deficit
  (2,897,303)
  (1,755,999)
 
    
    
TOTAL STOCKHOLDERS' DEFICIT
  (1,885,179)
  (1,040,701)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 $415,946
 $414,421 
The accompanying notes are an integral part of these consolidated financial statements
 
24
 
AIM EXPLORATION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
12 months ended
Aug 31, 2016
 
 
12 months ended
Aug 31, 2015
(Restated)
 
 
 
 
 
 
 
 
REVENUE
 
 
 
 
 
 
Total Revenue
 $-
 $-
 
    
    
Gross Profit
 -
 -
 
    
    
MINERAL PROPERTY OPERATIONS
    
    
Acquisition expenses
   
  (37,556)
Exploration expenses
 22,916
  15,713 
Total Mineral Property Operations
 22,916
  (21,843)
 
    
    
EXPENSES
    
    
Accretion
  529,914 
  85,329 
Consulting fees
  70,437 
  128,451 
Filling fees
  15,831 
  15,923 
Finder’s fees
  15,000 
  113,603 
Foreign exchange (gain) loss
  (61,658)
  664 
Management fees
  216,000 
  241,500 
Office & general
  54,710 
  70,142 
Professional fees
  105,409 
  306,925 
Public relations
  72,854 
  180,452 
 
    
    
Total Expenses
  1,018,638
  1,142,989 
 
    
    
Net Loss
  (1,041,554)
  (1,121,146)
 
    
    
   Interest expense
  (62,431)
  (49,112)
   Finance costs
  (197,571)
  (305,998)
   Change in fair value of derivative liability
  206,052 
  16,353 
   Write-down of accounts receivable
  (45,800)
   
   Write-down of accounts payable
   
  11,285 
 
    
    
Total Other Expense
  (99,750)
  (327,472)
 
    
    
Net Loss
 $(1,141,304)
 $(1,448,618)
 
    
    
BASIC AND DILUTED LOSS PER COMMON SHARE
 $(0.05)
 $(0.01)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
  6,391,865 
  353,784 
BASIC AND DILUTED LOSS PER PREFERRED SHARE
 $(0.00)
 $(0.00)
WEIGHTED AVERAGE NUMBER OF PREFERRED SHARES OUTSTANDING
  100,000 
  99,452 
The accompanying notes are an integral part of these consolidated financial statements
 
25
 
AIM EXPLORATION INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
 
 
 
Common Stock     
 
 
Preferred Stock 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of 
 
 
Amount 
 
 
Number of  
 
 
Amount 
 
 
Additional Paid-in Capital 
 
 
Share Subscriptions Receivable 
 
 
Accumulated Deficit 
 
 
Total 
 
 
 shares 
 $ 
 shares 
 $ 
 $ 
 $ 
 $ 
 $ 
Balance at inception – February 18, 2010
  - 
  - 
  - 
  -
 
  - 
  - 
  - 
  - 
Founders shares, issued for cash
  40,000 
  10,000 
  - 
  - 
  - 
  (10,000)
  - 
  - 
Net Loss to August 31, 2010
  - 
  - 
  - 
  - 
  - 
  - 
  (29,400)
  (29,400)
Balance, August 31, 2010
  40,000 
  10,000 
  - 
  - 
  - 
  (10,000)
  (29,400)
  (29,400)
Subscription Received
  - 
  - 
  - 
  - 
  - 
  10,000 
  - 
  10,000 
Common stock issued for cash
  160,000 
  40,000 
  - 
  - 
  - 
  - 
  - 
  40,000 
Net loss for the year ended August 31, 2011
  - 
  - 
  - 
  - 
  - 
  - 
  (18,939)
  (18,939)
Balance, August 31, 2011
  200,000 
  50,000 
  - 
  - 
  - 
  - 
  (48,339)
  1,661 
Net loss to August 31, 2012
   
   
   
   
  - 
  - 
  (28,109)
  (28,109)
 
    
    
    
    
    
    
    
    
Balance, August 31, 2012
  200,000 
  50,000 
  - 
  - 
  - 
  - 
  (76,448)
  (26,448)
Sale of common stock 18,000,000 common shares at $0.001 par value
  72,000 
  18,000 
  - 
  - 
  - 
  - 
  - 
  18,000 
Imputed Interest
  - 
  - 
  - 
  - 
  2,035 
  - 
  - 
  2,035 
Net loss for the year ended August 31, 2013
  - 
  - 
  - 
  - 
  - 
  - 
  (47,901)
  (47,901)
Balance, August 31, 2013
  272,000 
  68,000 
  - 
  - 
  2,035 
  - 
  (124,349)
  (54,314)
15,750,000 common shares at $0.001 par value
  63,000 
  15,750 
  - 
  - 
  311,219 
  - 
  - 
  326,969 
Net loss for the year ended August 31, 2014
  - 
  - 
  - 
  - 
  - 
  - 
  (183,032)
  (183,032)
Balance, August 31, 2014
  335,000 
  83,750 
  - 
  - 
  313,254 
  - 
  (307,381)
  89,623 
Shares issued for services
  1,400 
  350 
  1,000,000 
  100 
  192,550 
  - 
  - 
  193,000 
Shares issued in deposit
  20,000 
  5,000 
  - 
  - 
  - 
  - 
  - 
  5,000 
Convertible debt discount
  - 
  - 
  - 
  - 
  99,630 
  - 
  - 
  99,630 
Gain on repurchase of convertible note
  - 
  - 
  - 
  - 
  20,664 
  - 
  - 
  20,664 
Net loss for the year ended August 31, 2015
  - 
  - 
  - 
  - 
  - 
  - 
  (1,448,618)
  (1,448,618)
Balance, August 31, 2015 (Restated)
  356,400 
  89,100 
  1,000,000 
  100 
  626,098 
  - 
  (1,755,999)
  (1,040,701)
The accompanying notes are an integral part of these consolidated financial statements
 
26
 
AIM EXPLORATION INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
 
 
 
Common Stock   
 
 
Preferred Stock   
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Number of
 
 
Amount
 
 
Number of
 
 
Amount
 
 
Additional Paid-in Capital
 
 
Share Subscriptions Receivable (Refundable)
 
 
Accumulated Deficit
 
 
Total
 
 
 
shares
 
 
 
 
shares 
 
 
 
 
$
 
 
 
 
 
 
 
Shares issued for services
  1,286,494 
  715 
  - 
  - 
  125,875 
  - 
  - 
  126,590 
Shares issued for debt
  3,200,000 
  3,200 
  - 
  - 
  - 
  - 
  - 
  3,200 
Shares issued on conversion of notes
  1,862,835 
  36,905 
  - 
  - 
  119,534 
  - 
  - 
  156,439 
Shares issued for mineral property
  15,687,000 
  15,687 
  - 
  - 
  - 
  - 
  - 
  15,687 
Shares to be returned to treasury
  - 
  - 
  - 
  - 
  - 
  (5,090)
  - 
  (5,090)
Net loss for the year ended August 31, 2016
  - 
  - 
  - 
  - 
  - 
  - 
  (1,141,304)
  (1,141,304)
 
    
    
    
    
    
    
    
    
Balance, August 31, 2016
  22,392,729 
  145,607 
  1,000,000 
  100 
  871,507 
  (5,090)
  (2,897,303)
  (1,885,179)
The accompanying notes are an integral part of these consolidated financial statements
 
27
 
AIM EXPLORATION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
12 months ended
August 31, 2016
 
 
12 months ended
August 31, 2015
(Restated)  
 
 
 
 
 
 
   
 
OPERATING ACTIVITIES
 
 
 
 
   
 
Net Loss
 $(1,141,304)
 $(1,448,618)
Adjustments to reconcile Net Income (Loss) to netCash used in operating activities:
    
    
   Accretion related to convertible note
  529,914 
  85,329 
   Debt discount related to convertible note
   
  (35,478)
   Finance costs and derivative expense
  260,002 
  305,998 
   Accrued interest on convertible note
   
  13,987 
   Loss on derivative liability
  (206,052)
  (16,353)
   Loss on repurchase of convertible note
   
  20,664 
   Shares issued for services
  126,500 
  193,000 
   Write-down of accounts receivable
  45,800 
   
   Write-down of accounts payable
   
  (11,285)
Changes in non-cash working capital:
    
    
Loans Receivable
   
  (45,800)
Deposits
  (38,570)
  (8,798)
Provisions
   
  (55,000)
Accounts Payable
  13,726 
  189,566 
 
    
    
NET CASH USED IN OPERATING ACTIVITIES
  (409,984)
  (812,788)
 
    
    
INVESTING ACTIVITIES
    
    
Mineral property expenditures
  (17,400)
   
NET CASH USED IN INVESTING ACTIVITIES
  (17,400)
   
 
    
    
 
    
    
FINANCING ACTIVITIES
    
    
Convertible debt – related party
   
  170,000 
Convertible debt
  215,000 
  385,553 
Payments on convertible notes
   
  (47,250)
Loans received
  69,350 
   
Loans from related party
  123,702 
  304,972 
NET CASH PROVIDED BY FINANCING ACTIVITIES
  408,052 
  813,275 
 
    
    
NET INCREASE (DECREASE) IN CASH
  (1,932)
  487 
 
    
    
CASH, BEGINNING OF YEAR
  2,349 
  1,862 
 
    
    
CASH, END OF YEAR
 $417 
 $2,349 
 
The accompanying notes are an integral part of these consolidated financial statements
 
28
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
 
Aim Exploration, Inc. (“Company”) is an exploration stage company as defined by FASB ASC 915. The Company was organized to engage in mineral exploration and has incurred losses totaling $2,897,303 since inception. The Company was incorporated on February 18, 2010 in the State of Nevada and established a fiscal year end at August 31.
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
The condensed consolidated financial statements present the condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
 
Principles of Consolidation
The condensed consolidated statements incorporate the financial statements of the Company and its wholly-owned subsidiary, Aim Exploration SA, of Peru. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at August 31, 2016 or 2015.
 
Advertising
Advertising costs are expensed as incurred. As of August 31, 2016, no advertising costs have been incurred.
 
Property
The Company does not own or rent any property. The Company’s office space is being provided by the president at no charge to the Company.
 
Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
 
Income Taxes
The Company follows the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
 
 
29
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Fair Value of Financial Instruments
 
The Company has adopted Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10"). ASC 820-10 defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure The adoption of ASC 820-10 requires that the Company disclose assets and liabilities that are recognized and measured at fair value on a non-recurring basis, presented in a three-tier fair value hierarchy, as follows:
 
- Level 1. Observable inputs such as quoted prices in active markets;
- Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
- Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The following presents the gross value of assets that were measured and recognized at fair value:
 
- Level 1: none
- Level 2: none
- Level 3: none
 
The Company adopted ASC 825-10, Financial Instruments, which permits entities to choose to measure many financial instruments and certain other items at fair value. The adoption of this standard did not have an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash and cash equivalents, accounts payable and accrued expenses, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.
 
Derivative Liability
 
The conversion features embedded in the outstanding convertible notes payable are separately accounted for as a derivative liability in accordance with ASC 815-15, Embedded Derivative. This is because the number of shares that may be acquired upon conversion is indeterminable as the conversion rates are expressed as a percentage discount to the current fair market value of common stock at the time of conversion. Derivative liabilities are valued when the host instruments (convertible notes) are initially issued and are also revalued at each reporting date, with the change in the respective fair values being recorded as a gain or loss to the derivative liability.
 
Net Loss per Share
 
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
 
Impairment of Long-Lived Assets
 
In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair
 
 
30
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Impairment of Long-Lived Assets (Continued)
 
value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
 
Mineral Property Costs
 
Mineral property exploration costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. The Company has capitalized $342,656 of mineral property acquisition costs reflecting its investment in its properties.
 
Stock-based Compensation
 
The Company adopted FASB guidance on stock based compensation upon inception at February 18, 2010. ASC 718-10-30-2 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company has not had any stock and stock options issued for services and compensation for the period from inception (February 18, 2010) through August 31, 2016.
 
Recent Accounting Pronouncements
 
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.
 
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This new standard will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount it expects to receive for those goods and services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The ASU will be effective for the Company beginning January 1, 2017, and allows for both retrospective and modified- retrospective methods of adoption. The Company is in the process of determining the method of adoption it will elect and is currently assessing the impact of this ASU on its consolidated financial statements and footnote disclosures.
 
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those
 
 
31
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
Recent Accounting Pronouncements (Continued)
 
annual periods beginning after December 15, 2016. Earlier adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.
 
In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period.
 
In September, 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805). Topic 805 requires that an acquirer retrospectively adjust provisional amounts recognized in a business combination, during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in the Update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.  In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of ASU 2015-016 is not expected to have a material effect on the Company’s financial statements.
 
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
 
 
32
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 3 – GOING CONCERN
 
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has a working capital deficit of $2,227,835, an accumulated deficit of $2,897,303 and net loss from operations since inception of $2,897,303. The Company does not have a source of revenue sufficient to cover its operation costs giving substantial doubt for it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merging with an operating company. There can be no assurance that the Company will be successful in either situation in order to continue as a going concern. The Company is funding its initial operations by way of issuing common shares.
 
The officers and directors have committed to advancing certain operating costs of the Company, including Legal, Audit, Transfer Agency and Edgarizing costs.
 
NOTE 4 – MINERAL PROPERTY
 
Peruvian Mining Claims:
 
On June 23, 2014, Aim Exploration, Inc. entered into a Mining Concession Asset Acquisition Agreement (the “Agreement”) with Percana Mining Corp. (“Percana”). Pursuant to the Agreement, the Company acquired three separate mining concessions. Two of the concession titles are unencumbered and comprise 40% of the mining concessions. These two concessions are known as El Tunel Del Tiempo 1 code 11060780 and El Tunel Del Tiempo 2 code 11060781, and the registered ownership of these two concessions have been transferred to the Company. The third concession property known as Agujeros Negros MA-AG comprising the remaining 60% has not yet been transferred to the Company, however the Company has entered into a Contract of Mining Assignment and Option to Purchase the concession for a five year term. This contract provides AIM with full rights and authorities over the concession.
 
In consideration for the above concessions, the Company has issued 63,000 restricted common shares (15,750,000 restricted common shares pre-consolidation) (Note 6) to Percana in two separate blocks; the first block consists of 25,200 common shares (6,300,000 common shares pre-consolidation) which are to be held in escrow until either the Company raises $1,000,000 or when Percana waives this requirement. The second block consists of 37,800 common shares (9,450,000 common shares pre-consolidation) which are to be held in escrow until such time as the Company is satisfied at its discretion that any arbitration issues have been resolved with the third concession, at which time the shares may be released out of escrow at the option of Percana. The fair value of these shares is $326,969 which was based on fair market value. On April 25, 2016, the Company entered into an amendment to its Agreement with Percana and issued an additional 15,687,000 common shares to Percana to bring its post-consolidation shareholdings back to 15,750,000 common shares. The fair value of these additional shares is $15,687. Furthermore, under the terms of the amended Agreement, the Company agreed to issue additional common shares to Percana at any time common shares are issued to any director and/or controlling shareholder of the Company, the number of common shares issued to Percana to be equal to those issued to the director and/or controlling shareholder.
 
These Mining Concessions were acquired based on the assumption the properties are rich in high grade Anthracite Coal, currently there are 20 small tunnels on the property already producing anthracite coal which was being mined by illegal miners. Testing of the coal samples was performed indicating the presence of high-grade anthracite coal. Prior to acquisition AIM reviewed a non-compliant technical report prepared by Engineers/Geologists together with hiring a US based firm Gustavson Associates to visit the property and review the reports. The firm provided AIM with a report, which included recommendation for further exploration.
 
One of the Company’s director is also a director of Percana.
 
 
33
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 5 – CONVERTIBLE NOTE
 
During the year ended August 31, 2016, the Company issued convertible notes with a principal balance of $233,302, with maturity dates ranging from February 29, 2016 to January 12, 2017, and an interest rate per annum ranging from 10% to 22%. The principal is convertible into common shares of the Company at a conversion rate equal to 50% - 60% of the lowest trading price of the Company’s common stock for the fifteen prior trading days, as defined in the agreements.
 
During the year ended August 31, 2016, 1,862,835 common shares were issued in relation to conversion options exercised during the year valued at $156,439; $129,475 related to principal of the convertible notes, $15,864 to accrued interest, and $11,100 to fees.
During the year ended August 31, 2015, the Company issued convertible notes with a principal balance of $306,875, with maturity dates ranging from November 6, 2015 to July 22, 2016, and an interest rate per annum ranging from 8% to 12%. The principal is convertible into common shares of the Company at a conversion rate equal to 55% - 60% of the lowest trading price of the Company’s common stock for the fifteen prior trading days, as defined in the agreements.
 
The Company is accounting for the conversion feature as a separate derivative liability under ASC 815. As such, the Company will carry the conversion feature liability at fair value on the balance sheet. The Company determined the fair value of the conversion feature as at the dates of issue and also as of the year ended August 31, 2016. To determine the put and call values, the Company used the Black-Scholes option valuation model using the following inputs:
 
 
August 31, 2016
 
August 31, 2015
Fair value of common stock
$0.03 - $0.40
 
$0.21 - $0.42
Exercise price
$0.015 - $0.22
 
$0.1350 - $0.2585
Contractual term
3 months – 1 year
 
9 months – 1 year
Volatility
141.9% - 675.9%
 
119.50% - 143.10%
Risk-free interest rate
0.33% - 0.69%
 
0.12% - 0.41%
 
On May 11, 2015, the Company exercised its option to redeem convertible notes with a principal balance of $47,250 within 180 days of their issuance, by opting to prepay the note at 150% of the principal amount plus accrued interest in the amount of $1,853. The Company recorded a loss on the repurchase of the convertible note in the amount of $20,664, which was credit to the additional paid in capital account.
.
During the year ended August 31, 2016, the Company recognized change in fair value of the derivative liability of $206,052 related to the change in fair value of the conversion feature. The change in fair value of the conversion feature is being recorded through operating results.
 
When recording the conversion feature liability at during the year, the Company recognized a 100% debt discount on the convertible notes payable of $233,302 and finance costs expense of $197,571 from amortization of debt discounts and excess of derivative liability over the face value of the note. The debt discount is being accreted to finance costs using the straight-line method over the one-year contractual term of the debt. During the year ended August 31, 2016, the Company also recognized in the normal course accretion of $529,914.
 
 
34
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 6 – CAPITAL STOCK
 
On April 25, 2016, the Company consolidated its share capital on a 250:1 basis. All common shares and per share amounts have been restated to reflect this share consolidation.
 
The Company has authorized 250,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 shares of preferred stock with a par value of $0.001 per share.
 
At August 31, 2016, 22,392,729 shares of common stock were issued and outstanding, and 100,000 shares of preferred stock were issued and outstanding.
 
Year ended August 31, 2016
 
On April 25, 2016, the Company issued an additional 15,687,000 to Percana to bring their post-consolidation shareholdings back up to 15,750,000 common shares. The value of these shares is $342,656 which is based on fair market value. These shares were issued in connection with the acquisition of certain mining property. (Note 4)
 
During the year ended August 31, 2016, the Company issued 1,862,835 common shares pursuant to the exercise of the option attached to outstanding convertible notes. (Note 5)
 
During the year ended August 31, 2016, the Company issued 1,286,494 common shares in connection with services rendered. Such services had a fair value of $126,590.
 
During the year ended August 31, 2016, the Company issued 3,200,000 common shares in connection with paying down $3,200 of debt to two related parties.
 
Year ended August 31, 2015
 
During the year ended August 31, 2015, the Company issued 20,000 shares to 1 shareholder in connection with an asset acquisition agreement at fair value of $5,000. The Company also issued 1,400 common shares to 1 shareholder in connection with a six-month investor relations campaign at fair value of $175,000.
 
During the period ended August 31, 2015, the Company issued 100,000 preferred shares to 1 shareholder at fair value of $18,000, a related party of the Company, in connection with services rendered.
 
As of August 31, 2016, the Company has not granted any stock options and has not recorded any stock-based compensation.
 
NOTE 7 – LOAN PAYABLE - RELATED PARTIES
 
During the period ended August 31, 2016 and 2015, advances from a director of the Company were $24,111 and $Nil, respectively. The amounts are unsecured, non-interest bearing and are due on demand. During the same period, the Company made repayments of $99,643 to a director.
 
During the period ended August 31, 2016 and 2015, advances from related parties were $43,934 and $294,972, respectively. During the period ended August 31, 2014, advances from related parties totaled $183,481. The amounts are unsecured, non-interest bearing and are due on demand. During the same period, the Company made repayments of $63,900 to related parties; of this amount of $60,700 was paid in cash and $3,200 in common shares of the Company.
 
During the period ended August 31, 2016 and 2015, management fees totaling $216,000 and $Nil, respectively, where accrued as payable to two directors of the Company.
 
 
35
 
 
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
NOTE 8 – RESTATEMENTS
 
During the year ended August 31, 2016, accounting errors were discovered that required a restatement of amounts previously reported, related to loan payable that was issued against a finder's fee incurred. The loan payable was amended, and the terms revised to a convertible note payable. The loan payable and its subsequent amendment to a convertible note payable were not reported during the year ended August 31, 2015. This error resulted in changes to the convertible note, derivative liability, accretion expense, finder's fee expense, interest expense, finance costs, and the change in fair value of derivative liability. As a result of correcting these errors, the Company’s net loss increased by $157,923 for the year ended August 31, 2015.
 
 
36
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
 
 
NOTE 8 – RESTATEMENTS – CONTINUED
 
BALANCE SHEET
 
August 31, 2015
ASSETS
Originally
Stated
 
Adjustments
Note
 
Restated
CURRENT ASSETS
 
 
 
 
Cash
 $ 2,349
 
 
 $ 2,349
Loans receivable
45,800
 
 
45,800
Deposits
           39,303
 
 
        39,303
Total Current Assets
           87,452
 
 
        87,452
Mineral property investment
        326,969
 
 
     326,969
TOTAL ASSETS
 $ 414,421
 
 
 $ 414,421
 
 
 
 
 
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Accounts payable and accrued liabilities
 $ 214,513
 
 
$ 214,513
Loans payable – related party
         478,453
 
 
      478,453
Convertible note – related party
103,762
 
 
103,762
Convertible note, net of unamortized discount
70,936
13,328 + 2,443
b
86,707
Derivative liability
          429,535
146,204 – 4,052
a, c
      571,687
TOTAL LIABILITIES
       1,297,199
157,923
 
   1,455,122
 
 
 
 
 
STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
Capital Stock
 
 
 
 
Authorized
 
 
 
 
250,000,000 shares of common stock, $0.001 par valueIssued and outstanding 126,126,678 shares (89,100,000 shares outstanding as at August 31, 2015)
           89,200
 
 
           89,200
1,000,000 shares of preferred stock, $0.001 par value Issued and outstanding 100,000 shares (1,000,000 as at August 31, 2015)
 
 
 
 
Additional paid in capital
626,098
 
 
626,098
Accumulated deficit
(1,598,076)
(157,923)
 
(1,755,999)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
         (882,778)
(157,923)
 
         (1,040,701)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 $ 414,421
 
 
 $ 414,421
 
Notes:
 
a.
Record issuance of convertible note
b.
Record accretion and accrue interest
c.
Mark-to market convertible note
 
 
37
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
 
 
NOTE 8 – RESTATEMENTS – CONTINUED
 
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
August 31, 2015
 
Originally
Stated
 
Adjustments
Note
 
Restated
 
 
 
 
 
REVENUE
 
 
 
 
Total Revenue
$ 0
 
 
$ 0
Gross Profit
                  0
 
 
                  0
MINERAL PROPERTY OPERATIONS
 
 
 
 
Acquisition expenses
       (37,556)
 
 
       (37,556)
Exploration expenses
          15,713
 
 
          15,713
Total Mineral Property Operations
       (21,843)
 
 
       (21,843)
 
 
 
 
 
EXPENSES
 
 
 
 
Accretion
        72,001
13,328
b
        85,329
Consulting fees
        128,451
 
 
        128,451
Filling fees
          15,923
 
 
          15,923
Finder’s fees
          34,925
78,678
a
          113,603
Management fees
        241,500
 
 
        241,500
Office & general
         70,806
 
 
         70,806
Professional fees
       306,925
 
 
       306,925
Public relations
       180,452
 
 
       180,452
Total Expenses
     1,050,983
92,006
 
     1,142,989
 
 
 
 
 
Net Loss
    (1,029,140)
 
 
    (1,121,146)
 
 
 
 
 
   Interest expense
     (46,669)
(2,443)
b
     (49,112)
   Finance costs
(238,472)
(67,526)
a
(305,998)
   Change in fair value of derivative liability
12,301
4,052
c
16,353
   Write-down of accounts payable
          11,285
 
 
          11,285
 
 
 
 
 
Total Other Expense
    (261,555)
(65,917)
 
    (327,472)
 
 
 
 
 
Net Loss
$ (1,290,695)
$ (157,923)
 
$ (1,448,618)
 
 
 
 
 
BASIC AND DILUTED LOSS PER COMMON SHARE
$ 0.01
 
 
$ 0.01
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
88,446,164
 
 
88,446,164
BASIC AND DILUTED LOSS PER PREFERRED SHARE
$ 0.00
 
 
$ 0.00
WEIGHTED AVERAGE NUMBER OF PREFERRED SHARES OUTSTANDING
99,452
 
 
99,452
 
Notes:
 
a.
Record issuance of convertible note
b.
Record accretion and accrue interest
c.
Mark-to market convertible note
 
 
38
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
 
NOTE 8 – RESTATEMENTS – CONTINUED
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
 
 
 
Common Stock
 
 
Preferred Stock
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of  
 
 
Amount 
 
 
Number of
 
 Amount 
 
Additional Paid-in Capital
 
 
Share Subscriptions Receivable
 
 
Accumulated Deficit
Originally Stated
 
 
 Adjustments
 
 
 Notes
 
 
Total 
 
 
 
shares 
 
 $ 
 
shares
 
 
  $ 
 
 
$
 
 $ 
 $ 
 $ 
 $ 
 $ 
Balance at inception – February 18, 2010
  - 
  - 
  - 
  - 
  - 
  - 
  - 
    
    
  - 
  Founders shares, issued for cash
  10,000,000 
  10,000 
  -
 
  -
 
  -
 
  (10,000)
  -
 
    
    
  -
 
Net Loss to August 31, 2010
  - 
  - 
  - 
  - 
  - 
  - 
  (29,400)
    
    
  (29,400)
Balance, August 31, 2010
  10,000,000 
  10,000 
  - 
  - 
  - 
  (10,000)
  (29,400)
    
    
  (29,400)
Subscription Received
  - 
  - 
  - 
  - 
  - 
  10,000 
  - 
    
    
  10,000 
Common stock issued for cash
  40,000,000 
  40,000 
  - 
  - 
  - 
  - 
  - 
    
    
  40,000 
Net loss for the year ended August 31, 2011
  - 
  - 
  - 
  - 
  - 
  - 
  (18,939)
    
    
  (18,939)
Balance, August 31, 2011
  50,000,000 
  50,000 
  - 
    
  - 
  - 
  (48,339)
    
    
  1,661 
Net loss to August 31, 2012
   
   
   
   
  - 
  - 
  (28,109)
    
    
  (28,109)
Balance, August 31, 2012
  50,000,000 
  50,000 
  - 
  - 
  - 
  - 
  (76,448)
    
    
  (26,448)
Sale of common stock 18,000,000 common shares at $0.001 par value
  18,000,000 
  18,000 
  - 
  - 
  - 
  - 
  - 
    
    
  18,000 
Imputed Interest
  - 
  - 
  - 
  - 
  2,035 
  - 
  - 
    
    
  2,035 
Net loss for the year ended August 31, 2013
  - 
  - 
  - 
  - 
  - 
  - 
  (47,901)
    
    
  (47,901)
Balance, August 31, 2013
  68,000,000 
  68,000 
  - 
  - 
  2,035 
  - 
  (124,349)
    
    
  (54,314)
15,750,000 common shares at $0.001 par value
  15,750,000 
  15,750 
  - 
  - 
  311,219 
  - 
  - 
    
    
  326,969 
Net loss for the year ended August 31, 2014
  - 
  - 
  - 
  - 
  - 
  - 
  (183,032)
    
    
  (183,032)
Balance, August 31, 2014
  83,750,000 
  83,750 
  - 
  - 
  313,254 
  - 
  (307,381)
    
    
  89,623 
Shares issued for services
  350,000 
  350 
  1,000,000 
  100 
  192,550 
  - 
  - 
    
    
  193,000 
Shares issued in deposit
  5,000,000 
  5,000 
  - 
  - 
  - 
  - 
  - 
    
    
  5,000 
Convertible debt discount
  - 
  - 
  - 
  - 
  99,630 
  - 
  - 
    
    
  99,630 
Gain on repurchase of convertible note
  - 
  - 
  - 
  - 
  20,664 
  - 
  - 
    
    
  20,664 
Net loss for the year ended August 31, 2015
  - 
  - 
  - 
  - 
  - 
  - 
  (1,290,695)
  (157,923)
  a 
  (1,448,618)
Balance, August 31, 2015
  89,100,000 
  89,100 
  1,000,000 
  100 
  626,098 
  - 
  (1,598,076)
  (157,923)
    
  (1,755,999)
 
Notes:
 
a.
Record issuance of convertible note
 
 
39
AIM EXPLORATION INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2016
 
 
NOTE 8 – RESTATEMENTS – CONTINUED
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
August 31, 2015
 
 
 
Originally
Stated
 
 
 
Adjustments
 
 
Note
 
 
 
Restated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 $(1,290,695)
 $(157,923)
  a, b, c 
 $(1,448,618)
   Accretion related to convertible note
  72,001 
  13,328 
  b 
  85,329 
   Debt discount related to convertible note
  (35,478)
    
    
  (35,478)
   Finance costs
  238,472 
  67,526 
  a 
  305,998 
   Accrued interest on convertible note
  11,544 
  2,443 
  b 
  13,987 
   Loss on derivative liability
  (12,301)
  (4,052)
  c 
  (16,353)
   Loss on repurchase of convertible note
  20,664 
    
    
  20,664 
   Shares issued for services
  193,000 
    
    
  193,000 
   Write-down of accounts payable
  (11,285)
    
    
  (11,285)
Adjustments to reconcile Net Income (Loss) to netCash used in operating activities:
    
    
    
    
Loans Receivable
  (45,800)
    
    
  (45,800)
Deposits
  (8,798)
    
    
  (8,798)
Provisions
  (55,000)
    
    
  (55,000)
Accounts Payable
  189,566 
    
    
  189,566 
 
    
    
    
    
NET CASH USED INOPERATING ACTIVITIES
  (734,110)
  (78,678)
    
  (812,788)
 
    
    
    
    
FINANCING ACTIVITIES