My City Builders, Inc. - Quarter Report: 2015 April (Form 10-Q)

Diamante Minerals Inc.
(Exact name of registrant as specified in its charter)
Nevada		27-3816969
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
203-1634 Harvey Avenue Kelowna, British Columbia, Canada V1Y 6G2
(Address of principal executive offices)
250-860-8599
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

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

DIAMANTE MINERALS, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2015

TABLE OF CONTENTS

 

 

 

---

Forward-Looking Statements

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the sections "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." You should carefully review the risks and other factors described in our most recent Annual Report on Form 10-K, this quarterly report on Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission ("SEC"). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

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

All references in this Form 10-Q to the "Company", "Diamante", "Diamante Minerals", "we" ,"us" ,or "our" are to Diamante Minerals Inc.

 

---

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's July 31, 2014 Form 10-K filed with the Securities and Exchange Commission on October 29, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending July 31, 2015.

DIAMANTE MINERALS, INC.

INDEX TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

April 30, 2015

---

DIAMANTE MINERALS, INC.

Condensed Balance Sheets

(Expressed in US Dollars)

The accompanying notes are an integral part of these condensed financial statements.

---

DIAMANTE MINERALS, INC.

Condensed Statements of Operations

(Unaudited – Expressed in US Dollars)

		Three months ended								Nine months ended
		April 30, 2015				April 30, 2014				April 30, 2015				April 30, 2014
REVENUES		$	-			$	-			$	-			$	-
OPERATING EXPENSES
General and administrative			8,581				6,649				12,570				8,015
Management fees			100,000				-				216,667				-
Professional fees			11,658				18,605				112,788				29,605
Share-based expenses (Note 4)			-				-				5,191,122				-
TOTAL OPERATING EXPENSES			120,239				25,254				5,533,147				37,620
LOSS FROM OPERATIONS			(120,239	)			(25,254	)			(5,533,147	)			(37,620	)
OTHER INCOME AND LOSS
Bad debt expense			-								(38,097	)
Interest income			-				-				554				-
TOTAL OTHER INCOME AND LOSS			-								(37,543	)
LOSS BEFORE INCOME TAXES			(120,239	)			(25,254	)			(5,570,690	)			(37,620	)
Provision for income taxes			-				-				-				-
LOSS		$	(120,239	)		$	(25,254	)		$	(5,570,690	)		$	(37,620	)
Basic and Diluted Loss per Common Share		$	(0.00	)		$	(0.00	)		$	(0.11	)		$	(0.00	)
Basic and Diluted Weighted Average Common Shares Outstanding			52,042,286				46,931,834				50,939,892				46,842,979

The accompanying notes are an integral part of these condensed financial statements.

---

DIAMANTE MINERALS, INC.

Condensed Statements of Changes in Stockholders' Equity

(Unaudited – Expressed in US Dollars)

		Number of  Common Shares				Share Capital				Additional Paid in Capital (Deficiency)				Accumulated Deficit				Total Stockholders' Equity
Balance at July 31, 2014		$	49,333,332			$	49,333			$	949,757			$	(86,001	)		$	913,089
Shares issued for exploration agreement (Note 3)			2,700,000				2,700				7,989,300				-				7,992,000
Shares issued for legal fees (Note 3)			8,954				9				15,212				-				15,221
Share-based compensation (Note 4)			-				-				5,191,122				-				5,191,122
Net loss for the period			-				-				-				(5,570,690	)			(5,570,690	)
Balance at April 30, 2015			52,042,286			$	52,042			$	14,145,391			$	(5,656,691	)		$	8,540,742

The accompanying notes are an integral part of these condensed financial statements.

 

---

---

DIAMANTE MINERALS, INC.

Notes to Unaudited Condensed Financial Statements

April 30, 2015

(Expressed in US Dollars)

NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS

DIAMANTE MINERALS, INC. ("the Company") was incorporated under the laws of the State of Nevada, U.S.A. on October 26, 2010 as Oconn Industries Corp. On March 11, 2014, the Company changed its name to Diamante Minerals, Inc. The Company is in the process of acquiring mineral properties for exploration and, if warranted, future development.

The accompanying condensed financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at April 30, 2015, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's July 31, 2014 audited financial statements.  The results of operations for the period ended April 30, 2015 are not necessarily indicative of the operating results for the full years.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 -   CAPITAL STOCK

Authorized Stock

The Company has authorized 300,000,000 shares of common stock with a par value of $0.001 per share.  Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

Share Issuance

On November 20, 2014, the Company issued 2,700,000 shares of common stock to Kel-Ex Development Ltd. ("Kel-Ex") with a fair market value $2.96 per share in connection with Kel-Ex's anticipated appointment as the operator of the Batovi Diamond Project (Note 8).

---

On December 19, 2014, the Company issued 8,954 shares of common stock with a fair market value of $1.70 per share to DMH Stallard LLP as part of a settlement of legal fees.

There were 52,042,286 and 49,333,332 shares of common stock issued and outstanding as at April 30, 2015 and July 31, 2014, respectively.

NOTE 4 -SHARE-BASED EXPENSES

Annualized volatility	-123.73%
Risk-free interest rate	-0.23%
Expected life	-18 months
Dividend yield	- nil
Share price	- $2.70 per share
Exercise price	- $1.25 per share

At April 30, 2015, the Company had 2 options outstanding, with exercise price of $1.25 and remaining contract life of 0.876 years to purchase 2,700,000 shares of common stock.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

On October 16, 2014, the Company and Chad Ulansky entered into an Employment Agreement (the "Employment Agreement"), pursuant to which Mr. Ulansky is employed by the Company as its Chief Executive Officer for three years.  As compensation for his services, Ulansky shall receive an annual base salary of $400,000 for the first year of the Employment Agreement, $450,000 for the second year and $500,000 for the third year. The Company shall have the right to pay the salary or any other amounts payable to Mr. Ulansky in shares of deferred stock units of the Company based on the 90-day VWAP of the shares of the common stock of the Company at the end of each quarter.

---

The Employment Agreement shall automatically renew on each anniversary of the Agreement for one additional year term unless one party provides the other with notice prior to such anniversary date that such party does not desire to renew the Employment Agreement. The Company may immediately terminate Mr. Ulansky's employment for cause.  If (i) Mr. Ulansky's employment is terminated by the Company without cause, (ii) Mr. Ulansky terminates his employment as a result of the Company assigning him duties inconsistent with his position or the Company fails to pay his compensation or (iii) there is a change in control in the Company,  then in either case the Company shall pay Mr. Ulansky an amount equal to (a) the product of the number of years and fractional years for the remainder of the term multiplied by (b) 50% of the then current base salary in effect as of the date of termination.

During the period ended April 30, 2015, the Company recorded $216,667 as management fee and due to related party.

The Company has no other commitments or contingencies as at April 30, 2015 and July 31, 2014.

NOTE 6 - RELATED PARTY TRANSACTIONS

During the nine months period ended April 30, 2015, the Company's director advanced $7,636 to the Company to cover the Company's operating expenses. This loan was non-interest bearing, unsecured, and due on demand.  The balance was repaid in full in February 2015.

As at April 30, 2015, the $216,667 in management fees earned by the Chief Executive Officer pursuant to the Employment Agreement was included as due to a related party.

NOTE 7 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the period ended April 30, 2015, the Company incurred a net loss of $5,570,690. As at April 30, 2015, the Company had an accumulated deficit of $5,656,691 and has earned no revenues since inception.  The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending July 31, 2015.

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan.  In response to these problems, management intends to raise additional funds through public or private placement offerings.

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

---

NOTE 8 – BATOVI DIAMOND PROJECT

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

The following discussion of our financial condition, changes in financial condition and results of operations for the nine months period ended April 30, 2015 and 2014 should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the three month periods ended April 30, 2015 and 2014. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those referenced under the heading "Risk Factors" and included in our annual report on Form 10-K for the year ended July 31, 2014, filed with the Securities and Exchange Commission on October 29, 2014.

Overview of Our Business

Our Company was incorporated under the laws of the State of Nevada, U.S. on October 26, 2010 as Oconn Industries Corp.  On March 11, 2014, the Company changed its name to Diamante Minerals, Inc.  We are in the process of acquiring, exploring and developing mineral properties.

On February 10, 2014, we entered into a letter agreement with Mineracao Batovi Ltda., a Brazilian mineral exploration and mining company, to acquire up to a 75% interest in a diamond exploration project located to the north of Paranatinga in Mato Grosso, Brazil (the "Batovi Diamond Project") and form a joint venture valued at approximately $12 million.

Throughout the quarter ended April 30, 2015, we were focused on the due diligence required for this project, and the negotiation of the definitive agreement with Mineracao Batovi that was executed and delivered after the end of the period covered by this quarterly report, on November, 20, 2014.  As described in more detail below, we will contribute $1,000,000 in cash to Mineracao Batovi, in return for a 20% equity interest in Mineracao Batovi which holds the mineral claims underlying the Batovi Diamond Project.  We may earn an additional 29% equity interest in Mineracao Batovi by funding a further $2,000,000 of exploration expenses no later than November 20, 2017.

We currently have no interests in any other mineral exploration projects.

Results of Operations

We have generated no revenues since inception and have incurred $5,570,690 in expenses during the nine months ended April 30, 2015.

The following table provides selected financial data about our Company for the nine months ended April 30, 2015 and the year ended July 31, 2014.

Plan of Operation

As described above, on November 20, 2014, we entered into a formal joint venture agreement (the "Joint Venture Agreement") with Mineracao Batovi.  The Joint Venture Agreement originally contemplated the establishment of a new joint venture company to be formed in Brazil.  Due to certain regulatory requirements in Brazil, the Company and Mineracao have determined that it is preferable to use Mineracao as the joint venture company, and are in the process of finalizing an amendment to the Joint Venture Agreement to reflect this.  Upon its amendment, the Joint Venture Agreement will contemplate the Company acquiring an interest in Mineracao Batovi to develop, finance and operate the Batovi Diamond Project.  Pursuant to the Joint Venture Agreement, we will contribute $1,000,000 in cash to Mineracao Batovi in return for a 20% equity interest in Mineracao Batovi which holds the mineral claims underlying the Batovi Diamond Project.  We may earn an additional 29% equity interest in Mineracao Batovi by funding a further $2,000,000 of exploration expenses no later than November 20, 2017.

 

---

As at April 30, 2015, our Company's cash balance was $765,683 compared to $915,853 as at July 31, 2014. The decrease in cash was primarily due to cash used in operations.

As at April 30, 2015, our Company had total liabilities of $218,667 compared with total liabilities of $5,199 as at July 31, 2014. The increase in total liabilities was primarily attributed to management fees accrued pursuant to the employment agreement with the Chief Executive Officer.

As at April 30, 2015, our Company had working capital of $548,742 compared with working capital of $913,089 as at July 31, 2014. The decrease in working capital was primarily attributed to cash used in operations.

Cash Flow from Operating Activities

During the nine months ended April 30, 2015, our Company used $150,170 in cash from operating activities compared to cash used by operating activities of $31,445 during the nine months ended April 30, 2014.

Cash Flow from Investing Activities

During the nine months ended April 30, 2015 and 2014, our Company used $Nil cash for investing activities.

Cash Flow from Financing Activities

During the nine months ended April 30, 2015, our Company used $Nil cash for investing activities; during the nine months ended April 30, 2014, our Company received $9,100 in proceeds from a former stock holder and $50,000 in proceeds from a share subscription.

---

For the three months ended April 30, 2015 and April 30, 2014

Revenues

Our Company did not generate any revenues during the three months ended April 30, 2015 and 2014.

Total operating expenses

For the three months ended April 30, 2015, total operating expenses were $120,239, which included general and administrative expenses of $8,581, management fees of $100,000, and professional fees of $11,658, and share-based expense of $Nil.

For the three months ended April 30, 2014, total operating expenses were $25,254, which included general and administrative expenses of $6,649 and professional fees in the amount of $18,605.

Loss

For the three months ended April 30, 2015, our Company had a loss of $120,239, as compared to a loss for the three months ended April 30, 2014 of $25,254. The increase in operating expenses relates to the Employment Agreement with Mr. Ulansky, which was signed in the current year.  The increase in professional fees relates to additional legal fees in transferring over the management of the Company.  For the period October 26, 2010 (inception) to April 30, 2015, the Company incurred a net loss of $5,656,691.

For the nine months ended April 30, 2015 and April 30, 2014

Revenues

Our Company did not generate any revenues during the nine months ended April 30, 2015 and 2014.

Total operating expenses

For the nine months ended April 30, 2015, total operating expenses were $5,533,147, which included general and administrative expenses of $12,570, management fees of $216,667, and professional fees of $112,778; total share-based expense was $5,191,122.

For the nine months ended April 30, 2014, total operating expenses were $37,620, which included general and administrative expenses of $8,015 and professional fees in the amount of $29,605.

Other income and loss

For the nine months ended April 30, 2015, the Company received $554 interest from cash deposited in bank and had $38,097 in bad debt expenses related to the Batovi Diamond Project.

Loss

For the nine months ended April 30, 2015, our Company had a loss of $5,570,690, as compared to a loss for the nine months ended April 30, 2014 of $37,620. The significant increase in the Company's loss is due mainly to stock-based compensation of $5,191,122 and management fees of $216,667; the Company signed a management agreement in the current year with Mr. Ulansky and issued stock-based compensation to the former officer and director of the Company.  The increase in professional fees relates to additional fees in establishing the Joint Venture Agreement with Kel-Ex and transferring management over.  For the period October 26, 2010 (inception) to April 30, 2015, the Company incurred a net loss of $5,656,691.

---

Going Concern Consideration

Our Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending July 31, 2015. Our auditors have issued a going concern opinion on our audited financial statements for the year ended July 31, 2014. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses.  We may in the future attempt to obtain financing through private offerings of debt or equity. Equity financing would result in additional dilution to existing stockholders. We currently have no agreements or arrangements to obtain funds through bank loans, lines of credit or any other sources. There is no assurance we will ever be successful doing so.

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

Item 3. 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 4. Controls and Procedures.

Management's Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Our President (who serves as our principal executive officer and principal accounting officer) is responsible for establishing and maintaining disclosure controls and procedures for our Company.

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our President (who serves as our principal executive officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our President (our principal executive officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

---

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

·	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements.

As disclosed in our most recent annual report on Form 10-K, our President (our principal executive officer and principal accounting officer) assessed the effectiveness of our internal control over financial reporting at July 31, 2014, and determined that, as of July 31, 2014, our internal control over financial reporting was not effective due to the existence of certain material weaknesses disclosed in the annual report.

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended April 30, 2015, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors.

As a "smaller reporting company", we are not required to provide the information required by this Item.

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

The Company did not complete any unregistered sales of equity securities during the period covered by this quarterly report on Form 10-Q that have not already been disclosed in a current report filed by the Company with the SEC on Form 8-K.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock during the period covered by this quarterly report on Form 10-Q.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

 

---

Item 6. Exhibits.

The following exhibits are included as part of this report:

 

---

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.

20