The following discussion should be read in conjunction with our consolidated
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended that involve
substantial risks and uncertainties. All statements, other than statements of
historical fact, included in this annual report regarding our strategy, future
operations, future financial position, future revenues, projected costs,
prospects and plans and objectives of management are forward-looking statements.
The words "anticipates," "believes," "continue," "estimates," "expects,"
"intends," "may," "plans," "potential," "predicts," "projects," "should,"
"will," "would," the negative of these terms and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Our actual results
could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below and elsewhere in this annual report.
Our consolidated audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
The following summary of our results of operations should be read in conjunction
with our financial statements for the year ended June 30, 2021 and 2020, which
are included herein.
Our operating results for year ended June 30, 2021 and 2020, and the changes
between those periods for the respective items are summarized as follows:
Year ended
June 30,
2021 2020 Change %
Sales $ - $ 5,003 $ (5,003 ) (100 %)
Cost of Goods Sold - 92,412 (92,412 ) (100 %)
Gross Profit (Loss) - (87,409 ) 87,409 (100 %)
Operating expenses 581,798 1,060,920 (479,122 ) (45 %)
Other Expense 108,552 194,840 (86,288 ) (48 %)
Net loss $ (690,350 ) $ (1,343,169 ) $ 652,819 (49 %)
-
Other Comprehensive Income (Loss): $ (70,938 ) $ 69,494 $ (140,432 ) (202 %)
-
Comprehensive loss $ (761,288 ) $ (1,273,675 ) $ 512,387 (40 %)
The Company did not recognize any revenues for the year ended June 30, 2021. The
Company recognized revenues of $5,003 and incurred gross loss of $87,409 from
the sales of mined sand from the River Sand Project during the year ended June
30, 2020.
Our financial statements reported a net loss of $690,350 for the year ended June
30, 2021 compared to a net loss of $1,343,169 for the year ended June 30, 2020.
Our losses have decreased on a year-over-year basis, primarily as a result of
the near total lockdown of Malaysia as a result of the COVID 19 pandemic. In the
year ended June 30, 2021, the Company had reduced the level of its operations to
near shutdown levels. The results of this included other income of $137,186 from
the change in the fair value of a derivative liability associated with a
contingent interest liability arising from a project financing arrangement the
Company entered into during the year ended June 30, 2021 as well as decreases in
general and administrative expenses and professional fees as well as items
incurred in the prior year in which there were no similar items in the current
year, a gross loss of $87,409 relating to sales of river sand and amortization
and impairment related to a previous concession acquisition. Offsetting the
overall decrease was an increase in expenditures of $461,734 as part of its need
to renew the sea sand dredging license, which currently expires in January 2022,
and also work towards expanding the amount of sea sand available to dredge as a
result of the Company's upcoming planned operations as the result of JHW
obtaining a sea sand export license in April 2021.
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Other expense decreased to $108,552 for the year ended June 30, 2021, compared
to $194,840 for the year ended June 30, 2020. The decrease in other expense was
mainly related to the change in the fair value of the derivative liability from
the amortization of debt discounts on the Company's project financing debt, in
addition to a reduction in other income and slight increase in interest expense
imputed for our non-interest bearing advances from related parties. We expect
interest expense to increase in future periods until such time as we are able to
generate profitable operations and begin to repay our advances from our
directors and entities related to our directors.
Should we be successful in our efforts to raise additional capital, and to close
one or more of our outstanding offers to purchase mining and explorations rights
and thus begin exploration and mining operations, we expect our expenses to
increase substantially.
Liquidity and Financial Condition
Working Capital
June 30, June 30, Change
2021 2020 Amount %
Cash $ 24,003 $ 1,133 $ 22,870 2,019 %
Current Assets $ 56,159 $ 31,814 $ 24,345 77 %
Current Liabilities $ 4,643,820 $ 4,249,617 $ 394,203 9 %
Working Capital (Deficiency) $ (4,587,661 ) $ (4,217,803 ) $ (369,858 ) 9 %
Our working capital deficit increased as of June 30, 2021, as compared to June
30, 2020, primarily due to an increase in current liabilities to fund operating
losses, increased debt levels and derivative liabilities related to our project
financing investment offset by funds received from the Company's project
financing debt.
In the coming quarters our largest cash outlays will be in regards to (1)
professional fees for work performed for our reporting as part of Nami Corp.
,(2) for the consultants as part of their work performed to respond to any
additional requests received from governmental authorities as part of the
process of obtaining approval for the permits and licenses. (3) repayments of
the project financing debt.
Management believes that the level of our pre-operating losses are normal for
companies in the mining business, and that we will be able to off-set such
losses against future revenues once the Company commences its operations and
exports. However, our financial statements include a statement that there is a
going concern in regards to the Company. Without significant additional
investment in the form of debt or equity we may have difficulty meeting our
obligations as they come due prior to our obtaining all the necessary permits to
begin contracting for sea sand mining operations.
Cash Flows
Year ended
June 30, Change
2021 2020 Amount %
Cash Flows used in operating
activities $ (577,023 ) $ (179,616 ) $ (397,407 ) 221 %
Cash Flows provided by (used in) - %
investing activities $ - $ (71,373 ) $ 71,373
Cash Flows provided by financing
activities $ 604,154 $ 230,426 $ 373,728 162 %
Effects on changes in foreign
exchange rate $ (4,261 ) $ (520 ) $ (3,741 ) 719 %
Net decrease in cash during period $ 22,870 $ (21,083 ) $ 43,953 108 %
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Operating Activities
Net cash used in operating activities was $577,023 for the year ended June 30,
2021 compared to $179,616 in the same period in 2020.
During the year ended June 30, 2021, cash used in operating activities consisted
of a net loss of $690,350, depreciation of property and equipment of $6,211,
imputed interest on non-interest bearing related party advances contributed as
paid in capital of $214,234, amortization of debt discount of $35,420, change in
fair value of derivative liability of $(137,186), expenses paid directly through
unrelated party advances of $16,196 other receivable and deposits of $(594) and
accounts payable and accrued liabilities of $(20,954).
During the year ended June 30, 2020, cash used in operating activities consisted
of a net loss of $1,343,169, amortization and impairment of concession
acquisition costs of $370,058, depreciation of property and equipment of $7,716,
imputed interest on non-interest bearing related party advances contributed as
paid in capital of $210,232, expenses paid directly through unrelated party
advances of $368,357, and changes in prepaid assets of $99,478, other receivable
and deposits of $(11,311) and accounts payable and accrued liabilities of
$119,023.
Investing Activities
There were no investing cash flows for the year ended June 30, 2021 compared to
$71,373 in the same period in 2020. During the year ended June 30, 2020, the
Company incurred concession acquisition costs of $71,373.
Financing Activities
Net cash provided by financing activities was $604,154 for the year ended June
30, 2021, compared to net cash provided by financing of $230,426 in the same
period in 2020. Net cash used in financing during the year ended June 30, 2021
was the result of project financing advances of $97,712, project financing
investments of $484,760, advances to related parties of $44,447, advances from
an unrelated party of $10,907, repayments of related party advances of $11,338,
and repayments of advances to an unrelated party of $22,334. Net cash from
financing activities for the year ended June 30, 2020 included $17,617 from
advances received from related parties and $218,670 from unrelated parties,
offset by dividends on Series A Preferred Stock of $5,861.
Contractual Obligations
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
Going Concern
Our financial statements are prepared using accounting principles generally
accepted in the United States of America applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, our company has negative working capital,
recurring losses, and does not have an established source of revenues sufficient
to cover its operating costs. These factors raise substantial doubt about our
company's ability to continue as a going concern.
The ability of our company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying financial
statements do not include any adjustments that may be necessary if our company
is unable to continue as a going concern.
In the coming year, our company's foreseeable cash requirements will relate to
continual development of the operations of our business, maintaining our good
standing and making the requisite filings with the Securities and Exchange
Commission, and the payment of expenses associated with operations and business
developments. Our company may experience a cash shortfall and be required to
raise additional capital.
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Historically, we have mostly relied upon internally generated funds such as
shareholder loans and advances to finance our operations and growth. Management
may raise additional capital by retaining net earnings or through future public
or private offerings of our Company's stock or through loans from private
investors, although there can be no assurance that we will be able to obtain
such financing. Our Company's failure to do so could have a material and adverse
effect upon us and our shareholders.
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations section discusses our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and judgments, including those related to
revenue recognition, accrued expenses, financing operations, and contingencies
and litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The most significant accounting estimates
inherent in the preparation of our financial statements include estimates as to
the appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources.
Off-Balance Sheet Arrangements
We have no 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.
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.
Use of Estimates
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 amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Recent Accounting Pronouncements
Our company has implemented all new accounting pronouncements that are in effect
and that may impact its financial statements and does not believe that there are
any other new accounting pronouncements that have been issued that might have a
material impact on its financial position or results of operations.
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