Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 06, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | TGS International Ltd. | |
Entity Central Index Key | 0001701859 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jun. 30, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock Shares Outstanding | 14,908,812 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 68,014 | $ 106,850 |
Other receivables | 517,501 | 459,846 |
Prepayments and deposits | 195,249 | 197,995 |
Accounts receivable | 95,613 | 58,825 |
Total current assets | 876,377 | 823,516 |
Non-current assets | ||
Property, plant and equipment | 2,315,704 | 2,406,368 |
Intangible assets | 1,097,362 | 1,097,362 |
Right-of-use assets | 94,255 | 189,456 |
Total assets | 4,383,698 | 4,516,702 |
Current liabilities | ||
Accounts payable | 45,909 | 9,769 |
Accrued charges | 133,121 | 228,283 |
Other payables | 1,351,134 | 1,304,355 |
Lease liabilities | 94,255 | 189,456 |
Amount due to a director | 0 | 73,950 |
Loan from a related person | 387,073 | 385,158 |
Convertible bond payable, net | 190,624 | 187,995 |
Other loan | 26,540 | 0 |
Total current liabilities | 2,228,656 | 2,378,966 |
Non-current liabilities | ||
Amounts due to stockholders | 1,085,840 | 872,968 |
Amount due to director | 57,074 | 45,045 |
Other loan | 139,677 | 132,423 |
Provision for asset retirement obligations | 32,383 | 33,443 |
Provision for exploration asset compensation | 95,610 | 98,742 |
Total liabilities | 3,639,240 | 3,561,587 |
Commitments | 0 | 0 |
Stockholders' equity | ||
Capital Stock- Preferred stock, $0.0001 par value; 100,000,000 shares authorized, nil issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value; 200,000,000 shares authorized, 14,908,812 shares issued and outstanding as of June 30, 2020 and 14,790,896 shares issued and outstanding as of December 31, 2019 | 1,491 | 1,479 |
Additional paid in capital | 11,269,130 | 10,824,927 |
Accumulated deficit | (10,513,175) | (9,733,167) |
Accumulated other comprehensive loss | (12,988) | (138,124) |
Total stockholders' equity | 744,458 | 955,115 |
Total liabilities and stockholders' equity | $ 4,383,698 | $ 4,516,702 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity | ||
Preferred stock, shares par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, shares par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 14,908,812 | 14,790,896 |
Common stock, shares outstanding | 14,908,812 | 14,790,896 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | ||||
Revenue | $ 38,760 | $ 0 | $ 92,723 | $ 0 |
Cost, expenses and other: | ||||
Exploration | (45,988) | (112,473) | (99,380) | (117,659) |
Selling and distribution | (9,991) | (10,524) | (56,628) | (15,332) |
Depreciation of factory equipment | (9,073) | (6,680) | (18,289) | (11,915) |
Administrative | (318,304) | (406,118) | (659,834) | (663,775) |
Loss from operations | (344,596) | (535,795) | (741,408) | (808,681) |
Other income | 15,591 | 338 | 15,593 | 666 |
Interest expense | (24,372) | (28,452) | (54,193) | (50,444) |
Loss before provision for income taxes | (353,377) | (563,909) | (780,008) | (858,459) |
Income tax | 0 | 0 | 0 | 0 |
Net loss | (353,377) | (563,909) | (780,008) | (858,459) |
Other comprehensive income/(loss), net of tax: | ||||
Foreign currency translation adjustments | 62,811 | (17,265) | 125,136 | (8,996) |
Comprehensive loss | $ (290,566) | $ (581,174) | $ (654,872) | $ (867,455) |
Net loss per share: Basic and diluted net loss per share | $ (0.02) | $ (0.04) | $ (0.05) | $ (0.06) |
Weighted average number of common shares outstanding: Basic and diluted | 14,903,177 | 14,514,438 | 14,868,292 | 14,393,198 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity (Unaudited) - 6 months ended Jun. 30, 2020 - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated other comprehensive loss |
Balance, shares at Dec. 31, 2019 | 14,790,896 | ||||
Balance, amount at Dec. 31, 2019 | $ 955,115 | $ 1,479 | $ 10,824,927 | $ (9,733,167) | $ (138,124) |
Proceeds from issuance of common stock, shares | 117,916 | ||||
Proceeds from issuance of common stock, amount | 444,215 | $ 12 | 444,203 | 0 | 0 |
Net loss | (780,008) | 0 | 0 | (780,008) | 0 |
Foreign currency translation adjustments | 125,136 | $ 0 | 0 | 0 | 125,136 |
Balance, shares at Jun. 30, 2020 | 14,908,812 | ||||
Balance, amount at Jun. 30, 2020 | $ 744,458 | $ 1,491 | $ 11,269,130 | $ (10,513,175) | $ (12,988) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (780,008) | $ (858,459) |
Adjustments to reconcile net loss to net cash used in operating activities:- | ||
Depreciation of property, plant and equipment | 24,989 | 20,972 |
Loss on disposal of property, plant and equipment | 4,137 | 0 |
Net foreign exchange losses | 260,097 | 0 |
Amortization of right-of-use asset | 104,288 | 94,122 |
Amortization of non-cash interest expenses and bond discount related to convertible bonds | 15,734 | 0 |
Non-cash interest expenses related to other loans | 8,598 | 0 |
Stock compensation expenses | 0 | 122,100 |
Changes in assets and liabilities:- | ||
Accounts receivable | (39,192) | 0 |
Other receivables | (65,012) | (70,211) |
Prepayments and deposits | 2,023 | (689) |
Accrued charges | (84,860) | (78,373) |
Accounts and other payables | 20,469 | 523,967 |
Lease liabilities | (104,288) | (86,887) |
Net cash used in operating activities | (633,025) | (333,458) |
Cash flows from investing activities | ||
Acquisition of property, plant and equipment | (16,769) | (321,360) |
Proceeds from disposal of property, plant and equipment | 1,077 | 0 |
Deposits for property plant and equipment | 0 | (104,712) |
Net cash used in investing activities | (15,692) | (426,072) |
Cash flows from financing activities | ||
Advances from stockholders | 316,050 | 254,390 |
Advances from a director | 11,789 | 0 |
Repayment to a director | (74,213) | 0 |
Repayment of loans from related persons | 0 | (127,543) |
Proceeds from issuance of common stock | 0 | 825,000 |
Proceeds from new loan - other | 25,641 | 0 |
Proceeds from issuance of convertible bonds | 333,332 | 0 |
Net cash provided by financing activities | 612,599 | 951,847 |
Net (decrease)/increase in cash and cash equivalents | (36,118) | 192,317 |
Effect of exchange rate changes on cash and cash equivalents | (2,718) | 8,736 |
Cash and cash equivalents, beginning of year | 106,850 | 98,121 |
Cash and cash equivalents, end of year | 68,014 | 299,174 |
Supplemental disclosures:- | ||
Interest paid | 12,562 | 41,451 |
Income tax paid | 0 | 0 |
Cash paid for amounts included in measurement of lease liabilities | 104,288 | 86,887 |
Non-cash investing and financing transactions:- | ||
Capitalization of advances from stockholders | 102,564 | 289,578 |
Conversion of convertible bond and accrued interest into common stock | 334,027 | 0 |
Recognition of Beneficial Conversion Feature ("BCF") discount at inception of convertible bonds | $ 7,624 | $ 0 |
NATURE OF OPERATIONS AND GOING
NATURE OF OPERATIONS AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2020 | |
NATURE OF OPERATIONS AND GOING CONCERN | |
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN | TGS International Ltd. (“TGS”, “the Company”) was incorporated in the state of Nevada, United States on December 1, 2016. On September 14, 2018, the Company entered into a Share Exchange Agreement with Arcus Mining Holdings Limited (“Arcus”) and Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited (the “Selling Stockholders”), pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. Arcus, which was incorporated in the Republic of Seychelles on June 17, 2014, and its subsidiaries are engaged in fluorite mining operations in Mongolia, including the processing and sales of fluorite products. Up to June 30, 2020 and the date of this report, the Company owns three mining rights in Mongolia (Mining license numbers: MV-016819, MV-017305 and MV-009918). During the six months ended June 30, 2020, the Company has adopted open-pit mining at Mine A which is located in Uulbayansoum, Sukhbaatar province (Mining license number: MV-009918). Due to COVID-19, the Mongolian Government has closed all ports of entry from and into China until August 31, 2020. There would be a high possibility that the Company would not be able to resume the exploration work at Mine B in 2020. Basis of Presentation These accompanying unaudited Consolidated Financial Statements of TGS as of and for the period ended June 30, 2020 have been prepared in accordance with accounting principles generally accepted in United States of America (“U.S. GAAP”) for interim financial statements. Accordingly, the Consolidated Financial Statements do not include all the information and footnotes required by U.S. GAAP for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2019 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm. These Consolidated Financial Statements should be read in conjunction with the annual financial statements and notes thereto in the Company’s Form 10-K for the year ended December 31, 2019. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results expected for the full year or for any future periods. Going Concern The Company incurred an operating loss of $780,008 for the six months ended June 30, 2020, and as of that date, the Company’s current liabilities exceeded its current assets by $1,352,279. Notwithstanding the operating loss incurred for the six months ended June 30, 2020 and the net current liabilities as of June 30, 2020, the accompanying consolidated financial statements have been prepared on a going concern basis. Since the Company is currently in the exploration stage, it is still in the capital investing period. Management has prepared a business cash flow forecast and it indicates that the Company will have positive cash inflow after the commencement of formal production in 2021. Management believes the Company will have sufficient working capital to meet its financing requirements for the next 12 months based on the financial support of certain stockholders, issuance of new convertible bonds, proceeds from unrelated parties loans and upon their experience and their assessment of the Company’s projected performance, production ability and product market. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Recent changes in accounting standards Pending Adoption as at year end In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will originally become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. As a smaller reporting company, the effective date for the Company has been delayed until fiscal years beginning after December 15, 2022, in accordance with ASU 2019-10, although early adoption is still permitted. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
OTHER PAYABLES
OTHER PAYABLES | 6 Months Ended |
Jun. 30, 2020 | |
OTHER PAYABLES | |
NOTE 3 - OTHER PAYABLES | June 30, 2020 December 31, 2019 (unaudited) Tax and social insurance payable $ 57,976 $ 53,087 Contract liabilities 289,490 289,786 Temporary receipts 771,835 720,278 Other payables 231,833 241,204 $ 1,351,134 $ 1,304,355 |
CONVERTIBLE BONDS
CONVERTIBLE BONDS | 6 Months Ended |
Jun. 30, 2020 | |
CONVERTIBLE BONDS | |
NOTE 4 - CONVERTIBLE BONDS | As of June 30, 2020 and December 31, 2019, the Company had the following convertible bonds outstanding: As of June 30, 2020 December 31, 2019 (unaudited) Principal Accrued Interest Principal Accrued Interest November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due September 30, 2020 $ 192,308 $ 5,717 $ 192,308 $ 930 Less: Bond discount (1,684 ) - (4,313 ) - $ 190,624 $ 5,717 $ 187,995 $ 930 On November 26, 2019, a convertible bond agreement was signed including a HK$1.5 million (equivalent to $192,308) loan bearing interest of 5% per annum for six months. The convertible bond will mature on May 25, 2020 with a conversion price of $3.60 per share. In addition, the Company recognized a beneficial conversion feature discount to the bond of $5,342 that is being amortized over the period using the effective interest method. On May 11, 2020, the Company signed an extension letter with the bondholder to further extend the maturity date from May 25, 2020 to September 30, 2020. Therefore, the Company recognized an additional beneficial conversion feature discount to the bond of $234 that is being amortized over the period using the effective interest method. For the six months ended June 30, 2020, the Company amortized $2,863 of the discount and recognized non-cash interest of $4,786 to interest expenses. The unamortized debt discount on the convertible bond as of June 30, 2020 was $1,684. For the six months ended June 30, 2020, four new convertible bond agreements were entered into between the Company, Arcus and third party investors. All of them matured during the six months ended June 30, 2020 and were settled by issuing 92,275 common shares at a price stated in the respective agreements, representing loans of HK$2.6 million and interest expenses of HK$5,521, for a total of HK$2,605,521 (equivalent to $334,027) (see note 8). In addition, the Company recognized a beneficial conversion feature discount to the bond of $7,390 that is being amortized over the life of the convertible bond using the effective interest method. For the six months ended June 30, 2020, the Company amortized $7,390 of the discount and recognized non-cash interest of $695 to interest expenses. |
SIGNIFICANT TRANSACTIONS WITH R
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 6 Months Ended |
Jun. 30, 2020 | |
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | |
NOTE 5 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | (a) Loan from a related person As of June 30, 2020 and December 31, 2019, loan from a related person included HK$3 million (equivalent to $387,073 and $385,158 respectively) borrowed from the wife of one of the Company’s stockholders on May 21, 2018. The loan is unsecured, has no collateral or guarantee and carried interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term. The loan originally was due to be repaid on May 20, 2019, however, on April 24, 2019, the repayment date was extended to May 20, 2020. On April 28, 2020, the repayment date was extended to May 20, 2021, and the interest changed to be at a monthly rate of 2.08% for the first month and a monthly rate of 1.08% for the rest of the term. (b) Interest expense paid to related persons During the six months ended June 30, 2020 and 2019, interest expense of HK$225,000 (equivalent to $28,989) and HK$267,326 (equivalent to $34,096), respectively, was paid to related persons. (c) Amounts due to stockholders As of June 30, 2020 and December 31, 2019, amounts due to stockholders, Chi Kin Loo, Kwong Bun Mak, Xianqin Pan and Tak Leung Ho, included $1,085,840 and $872,968 respectively. The Company is currently in the exploration stage, and the stockholders advanced $316,050 working capital to meet the financing requirement for the six months ended June 30, 2020. On April 20, 2020, the Company issued 25,641 common shares at a price of $4.00 to settle the amount due to a stockholder of HK$800,000 (equivalent to $102,564) (see note 8). Amounts due to stockholders are unsecured, interest-free and there are no fixed terms for repayment. The stockholders have agreed not to demand for repayment within the next 12 months from the balance sheet date. (d) Amount due to directors As of December 31, 2019, amount due to a director, Tak Shing Eddie Wong, of HK$576,000 (equivalent to $73,950). The amount was unsecured, had no collateral or guarantee and was interest-free. The amount was fully repaid on March 13, 2020. As of June 30, 2020 and December 31, 2019, amount due to a director, Sai Kit Leung, was HK$442,355 (equivalent to $57,074) and HK$350,855 (equivalent to $45,045) respectively. The amount is unsecured, has no collateral or guarantee, interest-free and there are no fixed terms for repayment. The director has agreed not to demand for repayment within the next 12 months from the balance sheet date. |
OTHER LOAN
OTHER LOAN | 6 Months Ended |
Jun. 30, 2020 | |
OTHER LOAN | |
NOTE 6 - OTHER LOAN | As of June 30, 2020, a loan of HK$200,000 (equivalent to $25,641) was borrowed from an unrelated party and the interest payable was HK$6,959 (equivalent to $899). The loan is unsecured, has no collateral or guarantee and carries interest at 10% per annum and repayable on December 23, 2020. As of June 30, 2020 and December 31, 2019, a loan of $139,677 and $132,423 respectively was borrowed from an unrelated party. The loan is unsecured, has no collateral or guarantee and carries interest at 11.61% per annum and repayable on December 31, 2029. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
NET LOSS PER SHARE | |
NOTE 7 - NET LOSS PER SHARE | The following table presents the computation of basic and diluted net loss per share for the three and six months ended June 30, 2020 and 2019: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net loss per share – basic and diluted Net loss $ (353,377 ) $ (563,909 ) $ (780,008 ) $ (858,459 ) Weighted-average number of common shares outstanding – basic and diluted 14,903,177 14,514,438 14,868,292 14,393,198 Net loss per share Basic and diluted (Note) $ (0.02 ) $ (0.04 ) $ (0.05 ) $ (0.06 ) Note: During the three and six months ended June 30, 2020 and 2019, the Company had warrants outstanding which could potentially dilute basic loss per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive due to the net losses. |
CAPITAL STOCK
CAPITAL STOCK | 6 Months Ended |
Jun. 30, 2020 | |
CAPITAL STOCK | |
NOTE 8 - CAPITAL STOCK | On January 2, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On February 1, 2020, the convertible bond matured and was settled by issuing 53,236 common shares at a price of $3.62 per share representing loans of HK$1.5 million and interest expenses of HK$3,185, for a total of HK$1,503,185 (equivalent to $192,708). In addition, the Company recognized a beneficial conversion feature discount to the bond of $4,265 that is being amortized over the life of the convertible bond using the effective interest method. On January 14, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On February 13, 2020, the convertible bond matured and was settled by issuing 14,196 common shares at a price of $3.62 per share representing loans of HK$400,000 and interest expenses of HK$849, for a total of HK$400,849 (equivalent to $51,389). In addition, the Company recognized a beneficial conversion feature discount to the bond of $1,136 that is being amortized over the life of the convertible bond using the effective interest method. On February 24, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On March 25, 2020, the convertible bond matured and was settled by issuing 7,098 common shares at a price of $3.62 per share representing loans of HK$200,000 and interest expenses of HK$425, for a total of HK$200,425 (equivalent to $25,695). In addition, the Company recognized a beneficial conversion feature discount to the bond of $568 that is being amortized over the life of the convertible bond using the effective interest method. On February 29, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On March 30, 2020, the convertible bond matured and was settled by issuing 17,745 common shares at a price of $3.62 per share representing loans of HK$500,000 and interest expenses of HK$1,062, for a total of HK$501,062 (equivalent to $64,235). In addition, the Company recognized a beneficial conversion feature discount to the bond of $1,421 that is being amortized over the life of the convertible bond using the effective interest method. On April 20, 2020, the Company issued 25,641 common shares at a price of $4.00 per share to settle the amount due to a stockholder of HK$800,000 (equivalent to $102,564). |
WARRANT EQUITY
WARRANT EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
WARRANT EQUITY | |
NOTE 9 - WARRANT EQUITY | In 2018, the Company issued First Subscription Package of up to $52,500, consisting of 150,000 common shares and 50,000 warrants exercisable at $1.00 (the “Warrants”) to purchase common stock within three years from the respective issuance date, November 21, 2018, to accredited subscribers. In 2019, the Company issued Second Subscription Package of up to $825,000, consisting of 330,000 common shares and 66,000 warrants exercisable at $3.00 to purchase common stock within three years from the respective issuance dates, to accredited subscribers. The two investors in the First Subscription Package, which was completed on November 21, 2018, forfeited their rights to exercise the total of 50,000 warrant at $1.00 of their own accord. The Company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock included in the subscriptions. All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms. The warrants outstanding and fair values at each of the respective valuation dates are summarized below: Grant date Warrants Outstanding Fair Value per Share Fair Value $ 2018 50,000 $ 0.07 $ 3,490 2019 66,000 2.11 139,115 Less: warrants forfeited (50,000 ) (0.07 ) (3,490 ) As at December 31, 2019 and June 30, 2020 66,000 $ 139,115 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
SUBSEQUENT EVENTS | |
NOTE 10 - SUBSEQUENT EVENTS | The Company was supposed to resume exploratory and construction work at Mine B in the early second quarter of 2020. However, the global COVID-19 outbreak, which is gradually getting worse, has resulted in delays in the resumption of the work, since the Chinese workers cannot enter Mongolia until August 31, 2020 the earliest. These developments are expected to result in lower sales, compared to the Company’s business cash flow forecast prepared. Given that the Chinese workers will be allowed to enter Mongolia immediately after August 31, 2020, the first thing the Company has to do is to apply for working visas which approximately takes 21 working days. However, the Company is not able to do it in advance because the Visa Section of the Mongolian Immigration Department has been suspended since early March 2020. Thereafter, the Chinese workers will be subject to a 21-day quarantine which each worker has to pay a fee per day for the whole quarantine period. This would be an additional cost, including the time and finances to the Company. Due to the extreme weather in Mongolia, the Company may have barely a month to work before the coming winter break, provided that the Mongolian Government does not further delay the open-up of the borders by August 31, 2020. This would significantly hinder and reduce the Company’s mining and production operations and, thus, reduce the production output, and impact on sales. There may be further uncertainties, given the global economy is already in a tough period. In view of such a situation, the Company expects a negative impact on the operating results. However, the related financial impact and duration cannot be reasonably estimated at this time as the management cannot predict when the pandemic will be eradicated. |
COMPARATIVE AMOUNTS
COMPARATIVE AMOUNTS | 6 Months Ended |
Jun. 30, 2020 | |
COMPARATIVE AMOUNTS | |
NOTE 11 - COMPARATIVE AMOUNTS | Certain comparative figures have been reclassified to conform with the current period's presentation and disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Recent changes in accounting standards | Pending Adoption as at year end In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will originally become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. As a smaller reporting company, the effective date for the Company has been delayed until fiscal years beginning after December 15, 2022, in accordance with ASU 2019-10, although early adoption is still permitted. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
OTHER PAYABLES (Tables)
OTHER PAYABLES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
OTHER PAYABLES (Tables) | |
Schedule of other payables | June 30, 2020 December 31, 2019 (unaudited) Tax and social insurance payable $ 57,976 $ 53,087 Contract liabilities 289,490 289,786 Temporary receipts 771,835 720,278 Other payables 231,833 241,204 $ 1,351,134 $ 1,304,355 |
CONVERTIBLE BONDS (Tables)
CONVERTIBLE BONDS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
CONVERTIBLE BONDS | |
Schedule of convertible bond outstanding | As of June 30, 2020 and December 31, 2019, the Company had the following convertible bond outstanding: As of June 30, 2020 December 31, 2019 (unaudited) Principal Accrued Interest Principal Accrued Interest November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due September 30, 2020 $ 192,308 $ 5,717 $ 192,308 $ 930 Less: Bond discount (1,684 ) - (4,313 ) - $ 190,624 $ 5,717 $ 187,995 $ 930 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
NET LOSS PER SHARE (Tables) | |
Schedule of Net loss per share basic and diluted | The following table presents the computation of basic and diluted net loss per share for the three and six months ended June 30, 2020 and 2019: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net loss per share – basic and diluted Net loss $ (353,377 ) $ (563,909 ) $ (780,008 ) $ (858,459 ) Weighted-average number of common shares outstanding – basic and diluted 14,903,177 14,514,438 14,868,292 14,393,198 Net loss per share Basic and diluted (Note) $ (0.02 ) $ (0.04 ) $ (0.05 ) $ (0.06 ) |
WARRANT EQUITY (Tables)
WARRANT EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
WARRANT EQUITY (Tables) | |
Summary of major parameters adopted in valuation | Grant date Warrants Outstanding Fair Value per Share Fair Value $ 2018 50,000 $ 0.07 $ 3,490 2019 66,000 2.11 139,115 Less: warrants forfeited (50,000 ) (0.07 ) (3,490 ) As at December 31, 2019 and June 30, 2020 66,000 $ 139,115 |
NATURE OF OPERATIONS AND GOIN_2
NATURE OF OPERATIONS AND GOING CONCERN (Detail Narrative) - USD ($) | Sep. 14, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Operating loss | $ (353,377) | $ (563,909) | $ (780,008) | $ (858,459) | |
Working capital deficit | $ (1,352,279) | ||||
Arcus [Member] | Share Exchange Agreement [Member] | |||||
Common stock shares issued for exchange shares | 7,000,000 |
OTHER PAYABLES (Details)
OTHER PAYABLES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Other payables | $ 1,351,134 | $ 1,304,355 |
Tax and social insurance payable [Member] | ||
Other payables | 57,976 | 53,087 |
Contract liabilities [Member] | ||
Other payables | 289,490 | 289,786 |
Temporary receipts [Member] | ||
Other payables | 771,835 | 720,278 |
Other payables [Member] | ||
Other payables | $ 231,833 | $ 241,204 |
CONVERTIBLE BONDS (Details)
CONVERTIBLE BONDS (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Convertible bond, net | $ 190,624 | $ 187,995 |
Accrued Interest [Member] | ||
November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due May 25, 2020 | 5,717 | 930 |
Convertible bond, net | 5,717 | 930 |
Principal [Member] | ||
November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due May 25, 2020 | 192,308 | 192,308 |
Less: Bond discount | (1,684) | (4,313) |
Convertible bond, net | $ 190,624 | $ 187,995 |
CONVERTIBLE BONDS (Details Narr
CONVERTIBLE BONDS (Details Narrative) - USD ($) | May 11, 2020 | Nov. 26, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Non cash interest expenses | $ 24,372 | $ 28,452 | $ 54,193 | $ 50,444 | ||
Four convertible bond agreements [Member] | Arcus and third party investors [Member] | ||||||
Debt discount, beneficial conversion feature | 7,390 | |||||
Amortization of debt discount | 7,390 | |||||
Non cash interest expenses | $ 695 | |||||
Debt conversion, converted instrument, share issued | 92,275 | |||||
Debt conversion, converted instrument, principal amount | 334,027 | $ 334,027 | ||||
Convertible bond agreement [Member] | Convertible bond [Member] | ||||||
Debt instrument, unamortized discount | $ 1,684 | 1,684 | ||||
Debt instrument, Maturity date | May 25, 2020 | |||||
Amortization of debt discount | 2,863 | |||||
Debt discount, beneficial conversion feature | $ 234 | $ 5,342 | ||||
Extended maturity date | Sep. 30, 2020 | |||||
Non cash interest expenses | $ 4,786 | |||||
Debt instrument face amount | $ 192,308 | |||||
Debt instrument, interest rate | 5.00% | |||||
Debt instrument, conversion price | $ 3.60 |
SIGNIFICANT TRANSACTIONS WITH_2
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Apr. 28, 2020 | Apr. 20, 2020 | May 21, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Loans from related parties | $ 387,073 | $ 387,073 | $ 385,158 | |||||
Interest expense | 24,372 | $ 28,452 | 54,193 | $ 50,444 | ||||
Wife of shareholder [Member] | Loans Payable [Member] | ||||||||
Extended maturity date | May 20, 2021 | |||||||
Variation in interest rate, description | Interest changes to be at a monthly rate of 2.08% for the first month and a monthly rate of 1.08% for the rest of the term | |||||||
Loans from related parties | 387,073 | 387,073 | 385,158 | |||||
Interest rate, description | Interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term | |||||||
Maturity date | May 20, 2019 | |||||||
Stockholders [Member] | ||||||||
Loans from related parties | 1,085,840 | 1,085,840 | 872,968 | |||||
Proceeds from related party advances | $ 316,050 | |||||||
Debt conversion, converted instrument, shares issued | 25,641 | |||||||
Debt conversion, converted instrument, amount | $ 102,564 | |||||||
Shares issued price per share | $ 4 | |||||||
Debt repayment term, description | The director has agreed not to demand for repayment within 12 months of the balance sheet date | |||||||
Sai Kit Leung [Member] | ||||||||
Debt repayment term, description | The director has agreed not to demand for repayment within 12 months of the balance sheet date | |||||||
Due to related party | $ 57,074 | $ 57,074 | 45,045 | |||||
Tak Shing Eddie Wong [Member] | Loans Payable [Member] | ||||||||
Loans from related parties | $ 73,950 | |||||||
Related persons [Member] | Loans Payable [Member] | ||||||||
Interest expense | $ 28,989 | $ 34,096 |
OTHER LOAN (Details Narrative)
OTHER LOAN (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Unrelated party [Member] | ||
Loan payable | $ 25,641 | |
Interest payable | $ 899 | |
Interest rate | 10.00% | |
Maturity date | Dec. 23, 2020 | |
Unrelated party 1 [Member] | ||
Loan payable | $ 139,677 | $ 132,423 |
Interest rate | 11.61% | |
Maturity date | Dec. 31, 2029 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net loss per share - basic and diluted | ||||
Net loss | $ (353,377) | $ (563,909) | $ (780,008) | $ (858,459) |
Weighted-average number of common stock outstanding - basic and diluted | 14,903,177 | 14,514,438 | 14,868,292 | 14,393,198 |
Basic and diluted (Note) | $ (0.02) | $ (0.04) | $ (0.05) | $ (0.06) |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - USD ($) | Jan. 14, 2020 | Jan. 02, 2020 | Apr. 20, 2020 | Feb. 29, 2020 | Feb. 24, 2020 | Jun. 30, 2020 | Jun. 30, 2019 |
Beneficial conversion feature, debt discount | $ 7,624 | $ 0 | |||||
Arcus [Member] | Convertible Bond Agreement [Member] | Third Party Investor [Member] | February 1, 2020 [Member] | |||||||
Debt conversion, converted instrument, shares issued | 53,236 | ||||||
Conversion price | $ 3.62 | ||||||
Beneficial conversion feature, debt discount | $ 4,265 | ||||||
Loan payable | $ 192,708 | ||||||
Arcus [Member] | Convertible Bond Agreement [Member] | Third Party Investor [Member] | February 13, 2020 [Member] | |||||||
Debt conversion, converted instrument, shares issued | 14,196 | ||||||
Conversion price | $ 3.62 | ||||||
Beneficial conversion feature, debt discount | $ 1,136 | ||||||
Loan payable | $ 51,389 | ||||||
Arcus [Member] | Convertible Bond Agreement [Member] | Third Party Investor [Member] | March 25, 2020 [Member] | |||||||
Debt conversion, converted instrument, shares issued | 7,098 | ||||||
Conversion price | $ 3.62 | ||||||
Beneficial conversion feature, debt discount | $ 568 | ||||||
Loan payable | $ 25,695 | ||||||
Arcus [Member] | Convertible Bond Agreement [Member] | Third Party Investor [Member] | March 30, 2020 [Member] | |||||||
Loan payable | $ 64,235 | ||||||
Conversion price | $ 3.62 | ||||||
Beneficial conversion feature, debt discount | $ 1,421 | ||||||
Common stock, shares issued upon conversion of debt | 17,745 | ||||||
Stockholders [Member] | |||||||
Debt conversion, converted instrument, shares issued | 25,641 | ||||||
Debt conversion, converted instrument, amount | $ 102,564 | ||||||
Shares issued price per share | $ 4 |
WARRANT EQUITY (Details)
WARRANT EQUITY (Details) | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Warrants outstanding, warrants forfeited | shares | (50,000) |
Fair Value per share, warrants forfeited | $ / shares | $ (0.07) |
Fair value, warrants forfeited | $ | $ (3,490) |
Warrants outstanding As at December 31, 2019 and June 30, 2020 | shares | 66,000 |
Fair value of warrant outstanding As at December 31, 2019 and June 30, 2020 | $ | $ 139,115 |
2018 [Member] | |
Warrants outstanding As at December 31, 2019 and June 30, 2020 | shares | 50,000 |
Fair value of warrant outstanding As at December 31, 2019 and June 30, 2020 | $ | $ 3,490 |
Fair Value per share | $ / shares | $ 0.07 |
2019 [Member] | |
Warrants outstanding As at December 31, 2019 and June 30, 2020 | shares | 66,000 |
Fair Value per share | $ / shares | $ 2.11 |
Fair value | $ | $ 139,115 |
WARRANT EQUITY (Details Narrati
WARRANT EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Nov. 21, 2018 | Jun. 30, 2020 | Dec. 31, 2019 | |
Warrants exercise right forfeited | (50,000) | ||
First Subscription package [Member] | |||
Amount of subscription package issued | $ 52,500 | ||
Class of warrants or rights reserved for future issuance | 150,000 | ||
Common stock shares reserved for future issuance | 50,000 | ||
Exercise price | $ 1 | ||
Term of warrants | 3 years | ||
First Subscription package [Member] | Investor [Member] | November 21, 2018 [Member] | |||
Exercise price | $ 1 | ||
Warrants exercise right forfeited | 50,000 | ||
Second Subscription package [Member] | |||
Amount of subscription package issued | $ 825,000 | ||
Class of warrants or rights reserved for future issuance | 330,000 | ||
Common stock shares reserved for future issuance | 66,000 | ||
Exercise price | $ 3 | ||
Term of warrants | 3 years |