PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended August 31, 2017 are not necessarily indicative of the results that can be expected for the full year.

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PUEBLA RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

F-1

PUEBLA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

F-2

PUEBLA RESOURCES CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDER’S DEFICIT

For the Nine Months Ended August 31, 2017

(Unaudited)

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

F-3

PUEBLA RESOURCES CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

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PUEBLA RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AUGUST 31, 2017

(Unaudited)

Note 1

Basis of Presentation

While the information presented in the accompanying consolidated financial statements for the three and nine months ended August 31, 2017 is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with the accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes for the period from Inception November 7, 2016 to November 30, 2016 included in the Company’s Form S-1.

Operating results for the three and nine months ended August 31, 2017 are not necessarily indicative of the results that can be expected for the year ending November 30, 2017.

Note 2

Nature of Operations and Ability to Continue as a Going Concern

Puebla Resources Corp (“Puebla”) was incorporated in the state of Nevada, United States of America on November 7, 2016.  PRC Exploration LLC (“PRC”), a wholly-owned subsidiary of Puebla, was incorporated in Nevada on November 7, 2016.  In the financial statements, the “Company” refers to Puebla and PRC.  The Company was formed for the purpose of acquiring and developing mineral properties.  The Company’s year-end is November 30.

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.  Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has yet to achieve profitable operations, has an accumulated deficit of $42,735 and expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however, there is no assurance of additional funding being available or on acceptable terms, if at all. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.

Note 3

Fair Value Measures

The carrying value of the Company’s financial assets and liabilities, which consist of cash and accounts payable and accrued liabilities approximate their fair value due to the short nature of such instruments.  The carrying value of the note payable - related party and the accrued interest thereon approximated its fair value as of August 31, 2017 as the interest rate approximated market.

F-5

PUEBLA RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AUGUST 31, 2017

(Unaudited)

Note 4

Mineral Property

a)

Copau and Copau 2 Property

On December 12, 2016, the Company entered into a property option agreement whereby it was granted an option to earn up to a 40% interest in both the Copau and Copau 2 mineral claims, (the “Copau Property”).

On December 16, 2016, subsequent to performing additional due diligence on the Copau Property, the Company and the option holder mutually agreed to the cancellation of the property option agreement.  On January 10, 2017, the $15,000 paid upon signing the agreement, was returned to the Company.

b)

Goldstar Property

On January 10, 2017, the Company entered into a property option agreement whereby the Company was granted an option to earn a 100% interest in the Goldstar mineral claim, (the “Goldstar Property”).  The Goldstar Property is located in the Vernon Mining Division of the Province of British Columbia, Canada, and comprises 443 hectares.  The Goldstar Property is subject to a 2% Net Smelter Royalty.

In order to earn the 100% interest in the Goldstar Property, the Company must incur $1,000 upon signing the agreement (paid) and $75,000 of aggregate exploration expenditures, which are to be incurred, on the Goldstar Property on or before December 31, 2022. As of the date of this filing, the Company has incurred $4,000 of exploration expenditures.

Note 5

Notes payable - related party

Note 1

On December 8, 2016, the Company’s President loaned $22,000 to the Company and the Company issued a promissory note for such amount.  The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2019.  

During the three and nine months ended August 31, 2017, the Company incurred interest expense of $333 and $962 respectively pursuant to this note payable.  Total accrued interest on this note as of August 31, 2017 was $962 (November 30, 2016 - $nil).

Note 2

On June 6, 2017, the Company’s President loaned $10,000 to the Company and the Company issued a promissory note for such amount.  The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2019.

During the three and nine months ended August 31, 2017, the Company incurred interest expense of $141 pursuant to this note payable.  Total accrued interest on this note as of August 31, 2017 was $141 (November 30, 2016 - $nil).

F-6

PUEBLA RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AUGUST 31, 2017

(Unaudited)

Note 6

Capital Stock

Authorized

10,000,000

Preferred stock of par value $0.001, currently have no rights or restrictions assigned.

90,000,000

Common shares of par value $0.001, voting and participating shares.

Issued

On November 28, 2016, the Company received and accepted a subscription to purchase 1,800,000 common shares at $0.005 per share for aggregate proceeds of $9,000 from the Company’s president.  The shares were issued on March 10, 2017.  Prior to the issuance of the shares of common stock the proceeds were classified as shares to be issued.

On September 6, 2017, the Company filed an amended prospectus for the issuance of a maximum of 1,500,000 shares of its common stock at a price of $0.0055 per share.  The offering closed on September 18, 2017 and the Company has issued 1,410,000 shares for gross proceeds of $7,755.

Note 7

Income Taxes

The Company recorded no income tax expense for the three and nine months ended August 31, 2017 because the estimated annual effective tax rate as zero.  As of August 31, 2017, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.  

Note 8

Subsequent Event

Except as disclosed above, there were no other subsequent events which took place after August 31, 2017, which require disclosure in the financial statements.

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are an exploration stage mineral exploration company incorporated in Nevada on November 7, 2016.  On November 7, 2016, we incorporated a wholly-owned subsidiary, PRC Exploration LLC in the state of Nevada. On January 1, 2017, our consulting geologist introduced us to an attractive mineral property. We acquired an option on that property whereupon we can acquire 100% legal and beneficial ownership interest in the Goldstar Mineral Property (hereafter the “Mineral Property”). The Mineral Property is located in the Vernon Mining District located in the south-central part of the Province of British Columbia, Canada. It is located on provincial lands administered by the Province of British Columbia.  The legal and ownership rights on the claim are limited to the exploration and extraction of mineral deposits subject to applicable regulations.  The Mineral Property totals roughly 1,120 acres or 1.75 square miles in size and is located approximately 9 miles northeast of the community of the town of Lumby, British Columbia

We have no proven or probable reserves of commercially viable mineral deposits on our Mineral Claim. Our ongoing exploration activities may include numerous costly exploration phases and we may never find commercially viable mineral deposits on our Mineral Claim. Were we to locate sizable mineral deposits on our Mineral Claim, we would commission an economic feasibility study prior to our development of the mineral deposit. The development of a viable mineral deposit could cost millions of dollars.

The Mineral Property comprises a rectangular shaped block of land of approximately 1.0 miles long by 0.75 miles wide and is underlain by volcanic and sedimentary rocks belonging to the Nicola Group of Upper Triassic and Lower Jurassic age. The Goldstar property has produced consistently high gold values from stream silt samples, with placer gold production reported from Putnam Creek, which is within our mineral claim area.

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The budget for our initial exploration program is as follows:

Initial Exploration Budget

Our overall operating budget for the fiscal year ending November 30 2017 consists of planned expenditures for our initial mineral exploration program, as described above, and for necessary legal and accounting expenses.

We have not identified commercially exploitable reserves of minerals on our Mineral Claim to date.  We are an exploration stage company and there is no assurance that commercially viable minerals quantities exist on our Mineral Claim.

Results of Operations for the nine months ended August 31, 2017.

We have not earned any revenues since the inception of our current business operations.

We incurred expenses and a net loss in the amount of $37,770 for the nine months ended August 31, 2017. Our expenses for the nine-month period consisted of audit and accounting fees of $18,284, bank charges of $430, a $11 gain on foreign exchange, interest expense of $1,103, legal fees of $8,600, property exploration costs of $4,000, office expenses of $2,519, and transfer and filing fees of $2,845.

Our losses are attributable to incurring operating expenses and generating no revenues. We anticipate that our legal and accounting expenses will decline over the remainder of the year, while our exploration expenses will likely increase following the completion of our public offering and the initiation of exploration of our Mineral Claim.

Results of Operations for the three months ended August 31, 2017.

We have not earned any revenues since the inception of our current business operations.

We incurred expenses and a net loss in the amount of $5,011 for the three months ended August 31, 2017. Our expenses consisted of audit and accounting fees of $2,735, bank charges of $73, a $11 gain on foreign exchange, interest expense of $474, legal fees of $300, office expenses of $790, and transfer and filing fees of $650.

Liquidity and Capital Resources

As of August 31, 2017, we had cash of $1,603. During the nine months ended August 31, 2017, the Company utilized $38,353 of cash to fund the loss of the operating activities.

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Vargas has offered to fund our basic legal and accounting compliance expenses through additional infusions of equity or debt capital on an as-needed basis, although he is under no legal obligation to provide funding.  This offer is not the subject of a formal written agreement with us, and there are no specific limits as to time or dollar amount.

On September 6, 2017, the Company filed an amended prospectus for the issuance of a maximum of 1,500,000 shares of its common stock at a price of $0.0055 per share.  The offering was closed on September 18, 2017.  On September 18, 2017, the Company issued 1,410,000 shares for aggregate gross proceeds of $7,755 and the shares were issued on September 20, 2017. As a result, we believe we will have sufficient funds to meet our immediate working capital requirements.

Beyond the current fiscal year, we will also require significant additional capital to conduct additional phases of exploration on the Mineral Claim, and, if warranted by the geological results, to undertake commercial mineral production on our mineral claims following completion of exploration activities.  We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

Going Concern

As discussed in the notes to our financial statements, we have no established source of revenue.  This has raised substantial doubt for our auditors about our ability to continue as a going concern.  Without realization of additional capital, it would be unlikely for us to continue as a going concern.

As of August 31, 2017, we had total current assets of $2,103, consisting of cash of $1,603 and prepaid expenses of $500.  We also had current liabilities of $3,735, resulting in working capital deficit at August 31, 2017 of $1,632.

Our activities to date have been supported by equity financing.  Management continues to seek funding from shareholders and other qualified investors to pursue its business plan.

Off Balance Sheet Arrangements

As of August 31, 2017, there were no off balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

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Item 4. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Mr. Alejandro Vargas. Based upon this evaluation, we have determined that, as of August 31, 2017, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the quarter ended August 31, 2017.

Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.   Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

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

None.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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SIGNATURES

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

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