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VIRTUAL INTERACTIVE TECHNOLOGIES CORP. - Quarter Report: 2018 May (Form 10-Q)




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934
 
For the quarterly period ended May 31, 2018
 
Transition Report Under Section 13 or 15(d) of the Securities Exchange Act Of 1934
 
For the transition period from __________ to __________
 
Commission File Number:  None
 
MASCOTA RESOURCES CORP.
(Exact name of registrant as specified in its charter)

                                                  

NEVADA
 
36-4752858
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)


 7976 East Phillips Circle
Centennial, CO 80112-3231
 (Address of principal executive offices, including Zip Code)
 
(303) 961-7690
(Issuer’s telephone number, including area code)

________________________________________________
(Former name or former address if changed since last report)

 

Check whether the issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☐   No ☒

 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☐  No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


 
 Large acclerated filer
  ☐ 
 Accelerated filer
  ☐
 
 
 
 
 
 
 
 
 Non-accelerated filer
 ☒
 Smaller reporting company 
  ☒
  
 
 
 
 
 
 
 
 
 
 Emerging growth company
  ☐
  

        

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 6,246,190 shares of common stock as of November 15, 2018.


1


MASCOTA RESOURCES CORP.

 CONDENSED CONSOLIDATED BALANCE SHEET 

 (Stated in US Dollars)

(Unaudited)




 May 31,


 November 30,

 ASSETS

2018


2017

 Current Assets






 Cash 

 $                  25,700


 $                    2,846


 Total Current Assets

                     25,700


                       2,846

 Fixed Assets






 Land

                     55,000


                     55,000


 Total Fixed Assets

                     55,000


                     55,000

 Total Assets

 $                80,700


 $                57,846

 LIABILITIES



  

 Current Liabilities






 Accounts Payable

 $                  20,475


 $                  19,530

 

 

Accrued Interest – Notes Payable

1,424

 

74



 Accrued Interest,  Notes Payable - Related Parties 

                       154


                           9



 Accrued Interest, Convertible Notes Payable 

                          612


                          214

 

 

 Accrued Interest, Convertible Notes Payable - Related Parties 

                          876

 

                          577



 Convertible Notes Payable

                     15,216


                     10,000

 

 

 Convertible Notes Payable - Related Parties 

                     10,000

 

                     10,000



 Stock Subscriptions Payable

                     25,500


                              -


 Total Current Liabilities

                     74,257


                     40,404

 Long Term Liabilities




               Notes Payable - Related Party

5,000

 

5,000

               Notes Payable

                     45,000


                     45,000


 Total Long-term Liabilities

                     50,000


                     50,000

  Total Liabilities

                   124,257


                     90,404

 STOCKHOLDERS' DEFICIT






  Preferred Stock, $0.01 par value, 10,000,000 shares
  authorized 50,000, issued or outstanding as of
  May 31, 2018 and November 30, 2017.

                          500


                          500



  Common Stock, $0.001 par value, 90,000,000  shares
  authorized, 4,140,750 shares issued and outstanding

4,141


4,141



  Additional paid in capital

                   160,753


                   160,753



  Accumulated deficit

                 (208,951)


                 (197,952)

  Total Stockholders' Deficit

                   (43,557)


                  (32,558)

  Total Liabilities and Stockholders' Deficit

 $                80,700


 $                57,846

 

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


2


MASCOTA RESOURCES CORP.

 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 (Stated in US Dollars)

 (Unaudited)













 Six Months Ended 






May 31, 2018






2018


2017


 Cash Flows from Operating Activities






 Net loss

   $           (10,999)


 $               (7,627)



 Change in operating assets and liabilities: 








 Accounts payable and accrued liabilities

                       2,693


                  (5,175)





 Accrued interest, related parties

                    444


                       287


 Net Cash used by operating activities

                 (7,862)


               (12,515)










 Cash Flows from Investing Activities

-


-










 Cash Flows from Financing Activities





 

Proceeds from issuance of convertible notes

5,216

 

10,000

 


Proceeds from issuance of convertible notes, related parties

                    -


                  5,000


 

Proceeds from sale of stock subscriptions

                  25,500

 

                            -

 

 Net Cash provided by Financing Activities

                30,716


                15,000










 Net Increase in cash

                  22,854


                    2,485










 Cash at beginning of period

                    2,846


                    1,172










 Cash at end of period

 $             25,700


 $               3,657










 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
















 Cash paid for:








 Interest

 $                        -


 $                        -





 Income taxes

 $                        -


 $                        -


 

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

 

3


 

 

MASCOTA RESOURCES CORP.
 Condensed Consolidated Statements of Operations
 (Stated in US Dollars)
 (Unaudited)
                   
                   
     
 Three Months Ended
 
 Six Months Ended
     
 May 31,
 
 May 31,
     
2018
 
2017
 
2018
 
2017
                   
 
 Revenue
 $            -
 
 $            -
 
 $           -
 
 $            -
                   
 
 Operating Expenses
           
   
  Professional fees
            730
 
         1,862
 
         6,960
 
         3,962
   
  Legal fees
            635
 
                 -
 
            635
 
         2,530
   
  General and administrative
            893
 
            524
 
         1,212
 
            848
   
 Total Expenses
 $      2,258
 
 $      2,386
 
 $      8,807
 
 $      7,340
                   
 
 Operating loss
               (2,258)
 
        (2,386)
 
       (8,807)
 
        (7,340)
     

           
 
 Interest expense
384
 
--
 
615
 
   14
 
 Interest expense, related parties
754
 
162
 
1,577
 
273
 
 Total interest expense
         1,138
 
            162
 
         2,192
 
            287
                     
 
 Net loss
       (3,396)
 
        (2,548)
 
     (10,999)
 
        (7,627)
                     
 
 Loss per share, basic and fully diluted
 $      (0.00)
 
 $       (0.00)
 
 $      (0.00)
 
 $        (0.00)
                     
 
 Weighted average number of shares
  4,140,750
 
  3,890,750
 
  4,140,750
 
  3,890,750
 
  outstanding - basic and fully diluted
             

 

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

4


MASCOTA RESOURCES CORP.
Notes to Unaudited Consolidated Financial Statements
For the Six Months Ended
May 31, 2018

 

 Note 1.     Basis of presentation

 While the information presented in the accompanying May 31, 2018 financial statements 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 period presented in accordance with the accounting principles generally accepted in the United State 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 adjustment are of a normal recurring nature. These financial statements should be read in conjunction with the Company’s November 30, 2017, financial statements (and notes thereto). Operating results for the six months ended May 31, 2018 are not necessarily indicative of the results that can be expected for the year ending November 30, 2018

 The accompanying financial statements represent the consolidated operations of the Company, MRC, and GNP from the periods of each of the Company’s wholly-owned subsidiaries’ respective formation or acquisition dates forward, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).  All intercompany transactions have been eliminated, and all amounts are presented in the US Dollar.  The consolidated entity is referred to as “the Company,” “we,” “us,” or “our.”

 Note 2.           Business

 Nature of Operations

Mascota Resources Corp. (the “Company”) was incorporated in the state of Nevada on November 3, 2011.  The Company is an exploration stage company and was formed for the purpose of acquiring exploration and development stage mineral properties.

On November 20, 2017, the Company acquired all of the outstanding shares of Great Northern Properties, Inc. ("GNP") for consideration of 250,000 shares of the Company’s restricted common stock valued at $5,000 ($0.02 per share), as well as promissory notes in the principal amount of $50,000, for total purchase price of $55,000. GNP was incorporated in Alaska on September 22, 2017 and had not engaged in any operations, other than the acquisition from its sole officer and director of a parcel of undeveloped land in Anchorage, Alaska.  The Company’s plans for this property are to build a triplex with three rental units, each of which will be approximately 1,200 sq. ft.  The promissory notes bear interest at 6% per year, are unsecured, and are due and payable on October 31, 2022 or upon the sale of the property in Anchorage, Alaska, whichever is the first to occur.  Prior to the acquisition, there were no significant common shareholdings or affiliations between the Company, GNP, or either entity’s shareholders.  As a result of the acquisition, the Company’s capital, operations, and management remained intact.  As such, the transaction was accounted for as a business purchase, whereby the Alaska property (GNP’s only balance sheet item) was recorded on the acquisition date at fair market value.

 Going Concern

These financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the ordinary course of business. Realization values may be substantially different from carrying values as shown and these 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 not yet achieved profitable operations, has accumulated losses of $208,951, since its inception through May 31, 2018 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.

5

 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 may 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 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.

 Use of Estimates

 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimated.

 Exploration Stage Accounting

The Company is an exploration stage company, as defined in pronouncements of the Financial Accounting Standards Board (FASB) and Industry Guide #7 of the Securities and Exchange Commission. US GAAP govern the recognition of revenue by an exploration stage enterprise and the accounting for costs and expenses.

 Cash Equivalents

 The Company considers all short-term investments purchased with an original maturity of three months or less to be cash equivalents.

 Income Taxes

We account for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Current tax benefits are offset by a valuation reserve as they are considered not likely to be realized in the foreseeable future.

 Net Income (Loss) Per Share

 In accordance with ASC 260 Earnings per Share, basic earnings per share ("EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive. 

 New Accounting Pronouncements

 The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

6

 Employees

The Company does not have any employees, other than Mark Rodenbeck who serves as the Company’s only officer.  Mr. Rodenbeck does not receive any compensation for his services to the Company.

 Note 3.      Long-Lived Assets

On November 20, 2017 the Company acquired a parcel of undeveloped land in Anchorage, Alaska via its acquisition of 100% stock ownership of GNP. The Company's plans for this property are to build a triplex with 3 rental units, each of which will consist of approximately 1,200 sq. ft.  Upon acquisition, the land was recorded at its fair market value, which was deemed to be the value of the $55,000 in consideration paid for the GNP stock.  The Company intends to evaluate the property for impairment periodically in accordance with ASC 360 Property, Plant, and Equipment

Note 4.           Stockholders’ Equity

The Company’s common stock is quoted under the symbol “MACR” on the OTC Pink tier operated by OTC Markets Group, Inc.  To date, an active trading market for the Company’s common stock has not developed.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of its $0.01 par value preferred stock.  As of May 31, 2018, and November 30, 2017 the Company had 50,000 outstanding shares of preferred stock.  The preferred shares are not convertible into shares of the Company’s common stock.

Common Stock

The Company is authorized to issue 90,000,000 shares of its $0.001 par value common stock.  As of May 31, 2018 and November 30, 2017 the Company had 4,140,750 shares, of common stock issued and outstanding.

Note 5.   Notes Payable

(a) Convertible Notes Payable - Related Parties

On December 14, 2016, the Company received $10,000 from Mark Rodenbeck pursuant to an unsecured promissory note.  The note was due December 14, 2017, carried an interest rate of 6%, and is convertible into shares of the Company’s common stock at $0.02 per share.   This note was converted in August 2018 (Note 8).

(b) Convertible Notes Payable

On May 18, 2017 an unaffiliated investor advanced the Company $5,000.  On September 25, 2017, a second unaffiliated investor also advanced the Company $5,000.  In February 2018, an investor advanced $5,216. The $15,216 total proceeds were received pursuant to unsecured promissory notes that are due one year from their respective issuance dates, carry an interest rate of 6%, and are convertible into shares of the Company’s common stock at $0.02 per share. This note was converted in August 2018 (Note 8).

 (c) Notes Payable - Related Parties

 In connection with the Company's acquisition of GNP, on November 20, 2017 the Company issued a $5,000 unsecured note payable to GNP's former sole officer and director, Jerry Lewis, who became a director of the Company in February 2018.  The note carries a 6% interest rate and is payable upon the earlier of October 31, 2022 or the sale of the Company's Anchorage, Alaska property acquired from GNP. 

(d) Notes Payable

 In connection with the Company’s acquisition of GNP, on November 20, 2017 the Company issued $45,000 in unsecured notes payable to two of GNP’s former shareholders, who each own approximately 1% of the Company's issued and outstanding common stock and have no further affiliation with the Company or GNP.  The notes carry a 6% interest rate and are payable upon the earlier of October 31, 2022 or the sale of the Company’s Anchorage, Alaska property acquired from GNP. 

7

 (d) Summary

 

Loan Amount

   

Accrued Interest

 

Item

 

May 31, 2018

   

Nov. 30, 2017

   

May 31, 2018

   

Nov. 30, 2017

 

 Convertible Notes Payable –  Related Parties 

 

$

10,000

   

$

10,000

   

$

876

   

$

577

 

 Convertible Notes Payable

   

15,216

     

10,000

     

612

     

214

 

 Notes Payable – Related  Parties 

   

5,000

     

5,000

     

154

     

9

 

 Notes Payable

   

45,000

     

45,000

     

1,424

     

74

 

 Total

 

$

75,216

   

$

70,000

   

$

3,066

   

$

874

 

 
Note 6.   Related Party Transactions

In support of the Company's efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. The Company engaged in various note payable transactions with related parties during the six months ended May 31, 2018 and 2017. (See Note 5).

 Note 7.   Stock Subscriptions Payable

On May 23, 2018 the Company received $25,500 from the sale to private investors of 255,000 Units at a price of $0.10 per unit.   Each Unit consisted of one share of the Company’s common stock and one Series A Warrant.  Each Series A warrant allows the holder to purchase one share of the Company’s common stock at a price of $1.00 per share at any time on or before June 1, 2019.  The Units were issued subsequent to May 31, 2018.

Note 8.   Subsequent Events

Between June 1, 2018 and November 15, 2018, the Company sold 770,000 Units at a price of $.10 per Unit in a private offering for total proceeds of $77,000.  Each Unit consisted of one share of the Company’s common stock and one Series A Warrant.  Each Series A warrant allows the holder to purchase one share of the Company’s common stock at a price of $1.00 per share at any time on or before June 1, 2019.

In August and July 2018, Jerry Lewis, a director of the Company, and a company controlled by Mr. Lewis, loaned the Company $16,500.  The loans are unsecured, due on demand, and bear 6% interest per year.

In August 2018, the convertible notes referenced in Notes 5(a) and 5(b) to these financial statements totaling $26,709 including accrued interest, were converted into 1,335,440 shares of the Company’s common stock.

The Company has evaluated subsequent events through the date these financial statements were issued.  There have been no additional subsequent events after May 31, 2018 for which disclosure is required.
8

ITEM 2.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 We did not conduct any operations during the six months ended May 31, 2017.

On November 20, 2017 we acquired all of the outstanding shares of Great Northern Properties, Inc. ("GNP") for consideration of 250,000 shares of our restricted common stock valued at $5,000 ($0.02 per share), as well as promissory notes in the principal amount of $50,000, for total purchase price of $55,000. The promissory notes bear interest at 6% per year and are due and payable on October 31, 2022 or the sale of this property in Anchorage, Alaska, whichever is the first to occur.  We plan to build a triplex with 3 rental units, each of which will consist of approximately 1,200 sq. ft., on this property.  In August 2018 we applied for a construction permit and began soil testing for the project.

Our operating expenses during the three months ended May 31, 2018 and 2017 were consistent at $2,258 and $2,386, respectively, and were comprised primarily of professional fees.  Interest expense for the three months ended May 31, 2018 and 2017 totaled $1,138 and $162, respectively.  The increase is due to interest recorded on new debt described in Note 5 to the financial statements.  This resulted in an increase in net loss from $2,548 for the three months ended May 31, 2017 to $3,396 for the three months ended May 31, 2018.

During the six months ended May 31, 2018, our net loss increased to $10,999 as compared to a net loss of $7,627 during the six months ended May 31, 2017.  This is due to an increase in operating expenses from $7,340 for the six months ended May 31, 2017 to $8,807 for the six months ended May 31, 2018.  The increase is due to professional fees incurred for engineering services required for our property in Alaska.  Additionally, we incurred increased interest expense of $2,192 during the six months ended May 31, 2018 as compared to $287 during the six months ended May 31, 2017 due to the issuance of new debt.

We received proceeds from the issuance of stock subscriptions (pursuant to the below private offering) and convertible notes payable of $25,500 and $5,216, respectively, during the six months ended May 31, 2018, as compared to the receipt of $15,000 for the issuance of convertible notes payable during the six months ended May 31, 2017.

 Between May 1, 2018 and November 15, 2018, we sold 1,025,000 Units at a price of $.10 per Unit in a private offering, for total proceeds of $102,500 (including the $25,500 mentioned above).  Each Unit consisted of one share of our common stock and one Series A Warrant.  Each Series A warrant allows the holder to purchase one share of our common stock at a price of $1.00 per share at any time on or before June 1, 2019.

In August and July 2018, Jerry Lewis, one of our directors, and a company controlled by Mr. Lewis, loaned the Company $16,500.  The loans are unsecured, due on demand, and bear 6% interest per year.

In August 2018 the notes and accrued interest referenced in Notes 5(a) and 5(b) to the financial statements which are part of this report were converted into 1,335,440 shares of our common stock.

 

We have relied on advances from related parties until such time that we can earn revenue to support our operations or obtain financing through sales of our equity or securities.  There is no
formal written commitment from any person to provide us with capital.
9

ITEM 4.       CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures as of May 31, 2018.  This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive and Financial Officer.

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 Securities Exchange Act of 1934 is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive and Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period ended May 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

Item 6.  Exhibits

31.2                   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32                     Certification pursuant to Section 906 of the Sarbanes-Oxley Act.
 
10

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.

 

     MASCOTA RESOURCES CORP.

 

 

November 27, 2018                                                                            By: /s/Mark Rodenbeck______________________
                                            Mark Rodenbeck, Principal Executive and Financial Officer

11