BCM RESOURCES CORPORATION
Financial Statements
May 31, 2008
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The Company’s independent auditor has not performed a review of these financials statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.
BCM RESOURCES CORP.
Balance Sheet
(Unaudited)
| May 31, | August 31, | ||
| 2008 | 2007 | ||
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Assets |
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Current |
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|
Cash | $ | 71,878 | $ | 206,379 |
Term deposit |
| 112,793 |
| 1,370,334 |
Amounts receivable |
| 72,394 |
| 176,431 |
Income tax receivable |
| 389,591 |
| - |
Prepaid expenses |
| 10,237 |
| 10,237 |
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|
|
|
|
|
| 656,893 |
| 1,763,381 |
Equipment (note 6) |
| 20,970 |
| 27,432 |
Mineral Property costs (note 3) |
| 4,328,156 |
| 3,459,276 |
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| $ | 5,006,019 | $ | 5,250,089 |
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Liabilities |
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Current |
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Accounts payable and accrued liabilities | $ | 4,144 | $ | 85,964 |
Due to related party (note 4) |
| 3,081 |
| 2,909 |
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| 7,225 |
| 88,873 |
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Shareholders’ Equity |
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Share capital (note 6) |
| 5,640,910 |
| 5,601,686 |
Contributed surplus (note 7a) |
| 672,304 |
| 672,304 |
Deficit |
| (1,314,420) |
| (1,112,774) |
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|
|
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| 4,998,794 |
| 5,161,216 |
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| $ | 5,006,019 | $ | 5,250,089 |
Approved by:
“Scott Steeds | , Director | “Dale McClanaghan” | , Director |
Scott Steeds |
|
Dale McClanaghan |
|
BCM RESOURCES CORP.
Statement of Operations and Deficit
(Unaudited)
| Three | Three | Nine | Nine | |||||||||
| Month | Month | Month | Month | |||||||||
| Period | Period | Period | Period | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| May 31, | May 31, | May 31, | May 31, | |||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Expenses | ||||||||||||
| Amortization | $ 2,740 | $ 5,492 | $ 8,219 | $ 7,055 | ||||||||
| Bank charges and interest, net | 654 | (503 | ) | 1,643 | (6,502 | ) | ||||||
| Consulting fees | 15,000 | 12,900 | 52,654 | 59,578 | ||||||||
| Filing and transfer agent fees | 2,985 | 24,187 | 2,930 | 28,186 | ||||||||
| Management fees | 21,844 | 404,630 | 60,762 | 682,829 | ||||||||
| Office, telephone and misc | 13,616 | 8,401 | 35,344 | 24,971 | ||||||||
| Professional fees | (694 | ) | 65,571 | 20,626 | 82,893 | |||||||
| Travel, promotion & entertainment | 10,642 | 24,748 | 40,512 | 36,273 | ||||||||
| - | - | - | - | |||||||||
| Net (loss) before other items | (66,787 | ) | (545,426 | ) | (222,690 | ) | (915,283 | ) | ||||
| Future income tax recovery | - | - | - | 9,839 | ||||||||
| Interest income | 8 | - | 21,044 | |||||||||
| Net (loss) for the period | (66,779 | ) | (545,426 | ) | (201,646 | ) | (905,444 | ) | ||||
| (Deficit), beginning of period | (1,247,641 | ) | (525,335 | ) | (1,112,774 | ) | (165,317 | ) | ||||
| (Deficit), end of period | $(1,314,420 | ) | $(1,070,761 | ) | $(1,314,420 | ) | $(1,070,761 | ) | ||||
| Loss per share | $0.01 | $0.091 | $0.02 | $0.14 | ||||||||
| Weighted Average Number of | 13,009,241 | 6,413,489 | 13,009,241 | 6,413,489 | ||||||||
| Common Shares Outstanding | ||||||||||||
SEE ACCOMPANYING NOTES
BCM RESOURCES CORP.
Statements of Cash Flows
(Unaudited)
| Three | Three | Nine | Nine |
| Month | Month | Month | Month |
| Period | Period | Period | Period |
| Ended | Ended | Ended | Ended |
| May 31, | May 31, | May 31, | May 31, |
| 2008 | 2007 | 2008 | 2007 |
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Operating Activities |
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Net income (loss) for the period | $ (66,779) | $ (545,426) | $ (201,646) | $ (905,444) |
Items not affecting cash |
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Amortization | 2,740 | 5,492 | 8,219 | 7,055 |
Stock based compensation | - | 392,130 | - | 725,117 |
Future income tax recovery | - | - | - | (9,839) |
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Changes in non-cash working capital items: |
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GST receivable | (2,447) | (61,700) | 104,037 | (119,512) |
Income tax receivable | (389,591) | - | (389,591) | - |
Prepaid expenses | - | (8,937) | - | (8,937) |
Due to shareholders | - | - | - | (51,357) |
Accounts payable and accrued liabilities | (878) | 368,544 | (81,821) | 89,583 |
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Cash used in operating activities | (456,955) | 150,103 | (560,802) | (273,334) |
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Investing Activity |
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Resource Property costs | 350,725 | (1,252,672) | (868,880) | (2,254,540) |
Capital assets | - | (16,694) | (1,757) | (16,694) |
Short-term investments | - | 9,000 | 1,257,541 | 9,000 |
Cash used in Investing Activity | 350,725 | (1,260,366) | 386,904 | (2,262,204) |
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Financing Activities |
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Issuance of common shares, net of costs | - | 3,755,576 | 39,225 | 5,234,028 |
Due to related party | - | - | 172 | - |
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Cash provided by financing activities | - | 3,755,576 | 39,397 | 5,234,028 |
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Increase (decrease) in cash during the period | (106,230) | 2,645,313 | (134,501) | 2,698,490 |
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Cash, beginning of the period | 178,108 | 76,376 | 206,379 | 23,199 |
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Cash, end of the period | $ 71,878 | $ 2,721,689 | $ 71,878 | $ 2,721,689 |
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Supplemental cash flow information |
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Cash paid for: |
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Interest | $ - | $ 762 | $ - | $ 7,115 |
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SEE ACCOMPANYING NOTES
BCM RESOURCES CORP.
Notes to the Financial Statements
May 31, 2008 and August 31, 2007
1. | NATURE AND CONTINUANCE OF OPERATIONS |
The Company was incorporated on February 15, 2005 under the Canada Business Corporations Act as 716576 B.C. Ltd. and changed its name to BC Moly Ltd. on June 15, 2005 and then to BCM Resources Corporation on February 16, 2006. The Company is an exploration stage company whose business activity is the exploration of mineral rights located in British Columbia, Canada. The Company has incurred losses since inception has an accumulated a deficit of $1,314,420 ($1,112,774 - 2007). The Company does not generate cash flows from operations to fund its exploration activities and as a result has relied principally upon the issuance of equity securities for financing. The Company intends to continue relying upon the issuance of these securities to finance its operations and exploration activities to the extent such instruments are issuable under terms acceptable to the Company. The Company’s financial statements are presented on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its liabilities in the normal course of operations. If future financing is unavailable, the Company may not be able to meet its ongoing obligations, in which case the realizable values of its assets may decline materially from current estimates.
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Accounting Principles and use of estimates
The accompanying unaudited interim financial statements of the Company should be read in conjunction with the Company’s annual audited financial statements dated August 31, 2007. All material adjustments which are necessary for a fair presentation of the results for the interim periods have been reflected. The results for the nine month period ended May 31, 2008 are stated utilizing the same accounting principles as those reflected in the Company’ most recent annual financial statements but are not necessarily indicative of the results to be expected for the full year.
3. | UNPROVEN MINERAL RIGHTS |
Carter Property
| Terrace, British Columbia, Canada |
|
| August 31, |
| Additions |
| May 31, |
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| 2007 |
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| 2008 |
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Acquisition costs | $ | 83,418 | $ | 66,088 | $ | 149,506 |
Assay |
| 78,149 |
| 26,318 |
| 104,467 |
Camp, supplies and miscellaneous |
| 37,266 |
| 198,151 |
| 235,417 |
Drilling |
| 1,538,920 |
| 532,604 |
| 2,071,524 |
Geological |
| 1,016,729 |
| 125,017 |
| 1,141,746 |
Mapping |
| 104,545 |
| (2,931) |
| 101,614 |
Survey |
| 180,906 |
| - |
| 180,906 |
Helicopter |
| 419,343 |
| 313,224 |
| 732,567 |
Mining exploration tax credit |
| - |
| (389,591) |
| (389,591) |
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Balance, end of period | $ | 3,459,276 | $ | 868,880 | $ | 4,328,156 |
BCM RESOURCES CORP.
Notes to the Financial Statements
May 31, 2008 and August 31, 2007
| 3. | UNPROVEN MINERAL RIGHTS (continued) |
The Company has an option agreement to earn a 100% interest in 10 mineral rights subject to a 1.5% net smelter return, of which, 0.75% can be acquired for $750,000 by paying $90,000 ($65,000 paid) and issuing 350,000 common shares (150,000 issued). The Company has agreed to maintain the rights in good standing for a minimum of two years, which is estimated to cost $4,000.
| 4. | RELATED PARTY TRANSACTIONS |
All transactions with related parties have occurred in the normal course of operations and management represents that they have occurred on a basis consistent with those involving unrelated parties, and accordingly that they are measured at fair value.
| a) | During the nine months ended May 31, 2008, the President charged the Company $50,000 in management fees (2007 - $42,500). At May 31, 2008 the Company owes $3,081 (2007 - $2,909). |
| b) | During the nine months ended May 31, 2008, a director charged the Company $50,000 in consulting fees (2007 - $42,500). At May 31, 2008 the Company owes $nil (2007 - $nil). |
| c) | During the nine months ended May 31, 2008, a private company controlled by a director charged the Company $2,356 in legal fees (2007 - $87,397). |
| 5. | COMMITMENTS |
The Company has agreed to pay each of two directors of the Company $5,000 per month for management and consulting services through to August 31, 2008.
| 6. | EQUIPMENT |
| May 31, 2008 | August 31, 2007 | |||||||||
| Cost | Accumulated Amortization | Net | Net | |||||||
| Computer equipment | $ | 4,796 | $ | 2,366 | $ | 2,430 | $ | 2,120 | ||
| Software | 11,530 | 10,089 | 1,441 | 5,765 | ||||||
| Office furniture | 24,706 | 7,607 | 17,099 | 19,547 | ||||||
| $ | 41,032 | $ | 20,062 | $ | 20,970 | $ | 27,432 | |||
BCM RESOURCES CORP.
Notes to the Financial Statements
May 31, 2008 and August 31, 2007
| 7. | SHARE CAPITAL |
| a) | The authorized share capital of the Company consists of an unlimited number of common shares. |
Issued:
|
| Number of Shares |
| Amount |
| Contributed Surplus |
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|
Balance, September 1, 2006 |
| 3,236,000 | $ | 341,499 | $ | - |
Initial public offering |
|
|
| 1,500,000 |
| - |
Private placement |
| 4,791,664 |
| 4,000,000 |
| - |
Mineral property |
| 75,000 |
| 37,500 |
| - |
Finders’ fee |
| 407,493 |
| 331,744 |
| - |
Warrants exercised |
| 432,824 |
| 181,968 |
| - |
Stock based compensation |
| - |
| - |
| 641,174 |
Stock based agents’ compensation |
| - |
| - |
| 42,450 |
Stock options exercised |
| 10,000 |
| 5,000 |
| - |
Agents’ options exercised |
| 47,530 |
| 26,225 |
| - |
Fair value of options exercised |
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|
| 11,320 |
| (11,320) |
Share issue costs |
|
|
| (833,570) |
| - |
Balance, August 31, 2007 |
| 12,000,511 | $ | 5,601,686 | $ | 672,304 |
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Mineral property |
| 75,000 |
| 37,500 |
| - |
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Balance, May 31, 2008 |
| 12,075,511 | $ | 5,639,186 | $ | 672,304 |
During the period ending May 31, 2008:
| a) | On September 4, 2007 the Company issued 75,000 common shares pursuant to the mineral property option agreement. The shares have a deemed value of $0.50. |
At May 31, 2008, 675,000 common shares are held in escrow and are to be released in stages up to September 25, 2008.
| b) | Stock-based compensation and share purchase options |
The Company recorded stock-based compensation for the nine months ending May 31, 2008 of $nil (2007 - $683,624 of which $641,174 was expensed).
The fair values of stock-based compensation and share issue costs are estimated using the Black-Scholes
BCM RESOURCES CORP.
Notes to the Financial Statements
May 31, 2008 and August 31, 2007
| 7. | SHARE CAPITAL (continued) |
Option Pricing Model based on the following assumptions: a risk-free interest rate of 3.9% to 4%; an expected life of 1 to 5 years; an expected volatility of 87% to 92%; and no expectation for the payment of dividends.
Option pricing models require the input of highly-subjective assumptions, particularly as to the expected price volatility of the stock and the expected life of the option. Changes in these assumptions can materially affect the fair value estimate and therefore it is management’s view that the existing models do not necessarily provide a single reliable measure of the fair value of the Company’s stock option grants and warrant issuances.
The continuity of share purchase options is as follows:
| May 31, 2008 |
| August 31, 2007 | ||
|
| Weighted |
| Number of | Weighted |
| Shares | Price $ |
| Shares | Price $ |
Opening balance |
1,035,000 |
0.85 |
|
275,000 |
0.50 |
Granted | - | - |
| 770,000 | 0.98 |
Exercised/cancelled | - | - |
| (10,000) | 0.50 |
Balance of warrants at end of the period |
1,035,000 |
- |
|
1,035,000 |
0.85 |
Weighted remaining life in years |
3.57 |
|
| 4.32 |
|
| c) | Share purchase warrants |
The continuity of share purchase warrants is as follows:
| May 31, 2008 |
| August 31, 2007 | ||
|
| Weighted |
| Number of | Weighted |
| Shares | Price $ |
| Shares | Price $ |
Opening balance |
2,170,490 |
0.90 |
|
317,000 |
0.30 |
Granted | - | - |
| 2,333,844 | 0.89 |
Exercised | - | - |
| (480,350) | 0.43 |
Expired | 2,170,490 |
|
| - |
|
Balance of warrants at end of the period |
- |
0.90 |
|
2,170,494 |
0.90 |
Remaining life in years | 0.00 |
|
| 0.42 |
|
| 8. | SUBSEQUENT EVENTS - NIL |
_________________________
1 Of the share purchase warrants issued, 258,884 were agents’ warrants and 2,075,000 are issued as a part of the units issued on the initial public offering and the private placement
