GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Consolidated Financial Statements
(Stated in U.S. Dollars)
Three Months Ended December 31, 2008
(Unaudited)
NOTICE TO SHAREHOLDERS
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 be reviewed by an auditor.
The accompanying unaudited interim consolidated financial statements of Grand Peak Capital Corp. (the "Company") have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
Consolidated Balance Sheets
As at,
| | | December 31, 2008 | | | September 30, 2008 | |
| | | (Unaudited) | | | | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 606,158 | | | $ | 722,471 | |
| Marketable securities – (Note 12) | | | 1,143,115 | | | | 837,911 | |
| GST receivable | | | - | | | | 8,464 | |
| Prepaid expenses | | | 16,294 | | | | 37,936 | |
| Accounts receivable | | | 563,319 | | | | 153,819 | |
| | | | 2,328,886 | | | | 1,760,601 | |
| | | | | | | | | |
| | | | | | | | | |
| Deposits on asset – (Note 5) | | | 209,417 | | | | 209,417 | |
| Equipment - (Note 6) | | | 19,424 | | | | 19,180 | |
| Mineral properties - (Note 7) | | | 76,566 | | | | 80,393 | |
| Deferred exploration expenses (see schedule) | | | 228,741 | | | | 260,843 | |
| Incorporation costs | | | 429 | | | | 429 | |
| | | $ | 2,863,463 | | | $ | 2,330,863 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 176,552 | | | $ | 151,252 | |
| GST payable | | | 4,608 | | | | -- | |
| Loan payable – (Note 8) | | | 507,758 | | | | 500,255 | |
| | | | 688,918 | | | | 651,507 | |
| | | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | | |
| Share capital - (Note 9) | | | 5,362,234 | | | | 4,329,089 | |
| Contributed surplus | | | 787,342 | | | | 971,859 | |
| Accumulated other comprehensive income (Note 10) | | | (229,358 | ) | | | 29,373 | |
| Deficit | | | (3,745,673 | ) | | | (3,650,965 | ) |
| | | | 2,174,545 | | | | 1,679,356 | |
| | | $ | 2,863,463 | | | $ | 2,330,863 | |
| | | | | | | | | |
| Continuance of Operations – (Note 1) | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Approved by the Board: | | | | | | | | |
| “Navchand Jagpal”, Director | | | | | | | | |
“Lewis Dillman”, Director | | | | | | | | |
See accompanying notes to the financial statements
Consolidated Statements of Operations and Deficit and Comprehensive Income
For the three month periods ended December 31,
(Stated in U.S. Dollars)
(Unaudited)
| | | 2008 | | | 2007 | |
| Revenue | | | | | | |
| Property management | | $ | 282,631 | | | $ | - | |
| Interest and royalty income | | | 12,359 | | | | 18,703 | |
| | | | 294,990 | | | | 18,703 | |
| Expenses | | | | | | | | |
| Amortization | | | 1,553 | | | | 347 | |
| Bank charges and interest | | | 234 | | | | - | |
| Interest on loan payable | | | 7,503 | | | | - | |
| Management fees | | | 62,940 | | | | - | |
| Office, administration and travel | | | 16,236 | | | | 1,564 | |
| Professional fees | | | 4,936 | | | | 17,198 | |
| Telephone | | | 438 | | | | - | |
| Transfer agent and regulatory filing fees | | | 6,438 | | | | 25,707 | |
| | | | 100,278 | | | | (44,816 | ) |
| | | | | | | | | |
| Net income (loss) for the period | | | 194,712 | | | | (26,113 | ) |
| | | | | | | | | |
| Deficit, beginning of the period | | | (3,940,385 | ) | | | (4,066,831 | ) |
| | | | | | | | | |
| Deficit, end of the period | | $ | (3,745,673 | ) | | $ | (4,092,944 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Basic earnings (loss) per common share | | $ | 0.02 | | | $ | (0.01 | ) |
| Diluted earnings (loss) per common share | | | 0.01 | | | | (0.01 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Weighted average number of common shares outstanding | | | 12,153,515 | | | | 4,244,480 | |
| | | | | | | | | |
| Comprehensive Income | | | | | | | | |
| | | | | | | | | |
| Net income (loss) for the period | | $ | 194,712 | | | $ | - | |
| Other Comprehensive income (loss) for the period | | | (258,731 | ) | | | - | |
| Comprehensive income (loss) for the period | | $ | 64,019 | | | $ | - | |
See accompanying notes to the financial statements
Consolidated Statement of Cash Flows
For the three month periods ended December 31,
(Stated in U.S. Dollars)
(Unaudited)
| | | 2008 | | | 2007 | |
| | | | | | | |
| Operating Activities | | | | | | |
| Net income (loss) for the period | | | 194,712 | | | | (26,113 | ) |
| | | | | | | | | |
| Adjustment for items which do not involve cash: | | | | | | | | |
| Amortization | | | 1,553 | | | | - | |
| Interest on loan payable | | | 7,503 | | | | - | |
| Unrealized foreign exchange | | | (473,937 | ) | | | - | |
| | | | (270,169 | ) | | | (26,113 | ) |
| | | | | | | | | |
| Changes in non-cash working capital components: | | | | | | | | |
| GST payable (receivable) | | | 4,608 | | | | (15,821 | ) |
| Marketable securities | | | - | | | | 2,340 | |
| Prepaid | | | 21,642 | | | | - | |
| Accounts receivable | | | (401,036 | ) | | | (15,831 | ) |
| Accounts payable and accrued liabilities | | | 25,300 | | �� | | 170,323 | |
| Loan payable | | | - | | | | 61,064 | |
| | | | (619,655 | ) | | | 175,962 | |
| | | | | | | | | |
| Investing Activities | | | | | | | | |
| Deposits on asset | | | - | | | | (111,605 | ) |
| Purchase of marketable securities | | | (394,387 | ) | | | (220,300 | ) |
| Equipment | | | (1,797 | ) | | | (5,401 | ) |
| Mineral property acquired acquisition | | | - | | | | (121,752 | ) |
| Deferred exploration and development | | | - | | | | (154,162 | ) |
| Incorporation costs | | | - | | | | (429 | ) |
| | | | (396,184 | ) | | | (613,649 | ) |
| Financing Activities | | | | | | | | |
| Common shares issued for cash | | | 1,033,145 | | | | 1,700,991 | |
| | | | | | | | | |
| Effect of foreign exchange on cash | | | (139,616 | ) | | | (102,486 | ) |
| | | | | | | | | |
| Net cash provided (used) during the period | | | (116,313 | ) | | | 1,160,818 | |
| | | | | | | | | |
| Cash and cash equivalents, beginning of period | | | 722,471 | | | | 446,112 | |
| Cash and cash equivalents, end of period | | | 606,158 | | | | 1,606,930 | |
See accompanying notes to the financial statements
Schedule of Deferred Exploration and Development Expenses
For the three month period ended December 31, 2008
(Stated in U.S. Dollars)
(Unaudited)
| | | Amos | | | Vassan | | | Nico | | | Total | |
Balance, September 30, 2008 (1) | | $ | 32,730 | | | $ | 32,730 | | | $ | 163,281 | | | $ | 228,741 |
| | | | | | | | | | | | | | | | |
| Assaying, geological and general | | | - | | | | - | | | | - | | | | - |
| | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 | | $ | 32,730 | | | $ | 32,730 | | | $ | 163,281 | | | $ | 228,741 |
| (1) | Difference in ending balance is due to the fluctuation in the US Dollar. |
See accompanying notes to the financial statements
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated on December 28, 2001 in the Yukon Territory, Canada and is listed on the TSX Venture exchange. The Company changed its name to Grand Peak Capital Corp. on November 15, 2007. The Company changed its year end from December 31 to September 30 in 2007.
These consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has an accumulated operating deficit of $3.89 million at December 31, 2008 (2007 - $4.09 million). The ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate equity financing.
There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to continue as a going-concern; the net realizable values of its net assets may be materially less than the amounts recorded on the balance sheet.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Consolidation
These consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”). Summarized below are those policies considered particularly significant to the Company. References to the Company included herein are inclusive of the accounts of the parent company and its wholly-owned subsidiaries. All intercompany balances have been eliminated.
The Company’s wholly-owned subsidiaries and operating status are as follows:
| Subsidiary | Status |
| Lucky Minerals Inc. | Active |
| 2801 Shangri-La Ltd. | Active |
| 0808964 BC Ltd. | Active |
| Digital Labs Inc. | Inactive |
| Midland Holland Ltd. | Inactive |
| Person Finance Ltd | Inactive |
Use of Estimates
The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Estimates are based on historical experience and on other assumptions that are believed at the time to be reasonable under the circumstances. The actual results may differ from those previously estimated.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Key areas where management has made complex or subjective judgements include fair value of certain assets; accounting for amortization; mineral asset impairment assessments; environmental obligations; income taxes and contingencies.
Financial Instruments
The Company adopted the provisions of CICA Sections 3855, Financial Instruments – Recognition and Measurement, and 1530, Comprehensive Income, on October 1, 2006 which address the classification, recognition and measurement of financial instruments in the financial statements and the inclusion of other comprehensive income. Financial instruments are classified as ‘held for trading” for accounting purposes with the exception of marketable securities which are considered to be available for sale. Accordingly, unrealized gains and losses on marketable securities are reflected within other comprehensive income while all other unrealized items are recorded in operations.
The Company’s financial instruments comprise cash and cash equivalents, marketable securities, accounts payable and accrued liabilities, and loan payable.
Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values on the consolidated balance sheet. The fair values are the same as the carrying values due to their short-term nature.
Cash and cash equivalents include highly liquid investments with a maturity date of three months or less from the date of acquisition.
The fair value of marketable securities and loan payable are disclosed in the respective notes to the financial statements.
Foreign Exchange Risk
The Company faces certain foreign risks as most of its expenses are deferred exploration expenses incurred in Canadian dollars and the Canadian dollar may appreciate or depreciate against the US dollar, the Company’s reporting currency. It also has exposure to risks with the amounts due from the Company as these amounts are owed in US dollars. In recent quarters the fluctuations between the Canadian and the US dollar had not warranted the Company to actively manage its foreign exchange risk. Notwithstanding, the Company continuously monitors this exposure to determine if any mitigation strategies become necessary.
Mineral Properties and Deferred Exploration Costs
Mineral properties, including options to mineral claims, are stated at cost. The recorded cost of mineral properties and exploration and development interests is based on cash paid and assigned value, if any, of share considerations given for mineral properties and exploration and development costs incurred.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
All direct and indirect costs relating to the acquisition of mineral properties are capitalized on the basis of specific claim blocks or areas of geological interest until the properties to which they relate are placed into production, sold or when management has determined that there is impairment in the carrying values of those mineral properties.
The Company defers expenditures directly attributable to the exploration and development of mineral properties, pending a decision as to the commercial viability of a property. At such times as the Company loses or abandons title on its interest in property, the accumulated expenditures on such property are charged to operations. If any property reaches commercial production, the applicable costs of the mineral property and the deferred exploration and development expenditures will be amortized against related production revenues on the unit of production method, based on the property’s estimated reserves. Properties which have reached a production stage will have a gain or loss calculated.
Based on the information available to date, the Company has not yet determined whether the mineral properties it is exploring and developing contain economically recoverable reserves. The recoverability of the amounts capitalized as mineral properties and deferred exploration and development costs is dependent upon the confirmation of economically recoverable reserves, the ability of the Company to obtain necessary financing to successfully complete its exploration and development programs and upon future profitable production.
The amounts shown for mineral properties and deferred exploration and development expenses represent costs incurred to date, and do not necessarily represent present or future values as they are entirely dependent upon various factors as noted above.
The Company does not accrue the estimated future costs of maintaining its mineral properties in good standing.
Environmental Protection and Rehabilitation Costs
The Company’s policy relating to environmental protection and land rehabilitation programs is to charge to income any such costs incurred during the period. Presently, the Company does not foresee the necessity to make any material expenditure in this area. The Company is engaged in mineral exploration and development and is accordingly exposed to environmental risks associated with mining activity. The Company is currently in the exploration stages with its mineral interests and has not determined whether significant site reclamation costs will be required. The Company would record a liability for site reclamation only when it is reasonably determinable and quantifiable.
Revenue Recognition
Interest, and property management fees receivable in cash are recorded on an accrual basis when services are rendered and collectability is reasonably assured. All costs directly attributable to revenue generation are expensed as incurred and netted against the appropriate income earned. Realized gains and losses on disposals of investments are reflected in the consolidated statement of operations and calculated on an average cost basis.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Impairment of Long-Lived Assets
The company reviews long-lived assets for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset or net realizable value.
Equipment
Equipment consists of office equipment, computer equipment and leaseholds. The office equipment and computer equipment and leaseholds are recorded at cost and amortized at an annual rate of 20% to 45% and software at an annual rate of 100% using the declining balance method.
Asset Retirement Obligations
The fair value of a liability for an asset retirement obligation is recognized on an undiscounted cash flow basis when a reasonable estimate of the fair value of the obligation can be made. The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related long-lived asset. Subsequently, the asset retirement cost is allocated to expense using a systematic and rational method and is adjusted to reflect period-to-period changes in the liability resulting from the passage of time and from revisions to either expected payment dates or the amounts comprising the original estimate of the obligation. As of September 30, 2008 and 2007, the Company does not have any asset retirement obligations.
Future Income Taxes
The Company accounts for potential future net tax assets which are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and which are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled. When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of potential future benefit is taken and no net asset is recognized. Such an allowance has been applied to all potential income tax assets of the Company.
Retirement of long-lived Assets
Long-lived assets are assessed for impairment when events and circumstances warrant, when the carrying amounts of the assets exceeds its estimated undiscounted net cash flow from use or its fair value, at which time the impairment is charged to earnings.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Foreign Currency Translation
The Company’s functional currency is the Canadian dollar and its reporting currency for the presentation of its consolidated financial statements is the US dollar. Under this method, the income statement and the cash flow statement items for each period are translated into the reporting currency using the rates in effect at the date of the transactions, and the assets and liabilities are translated using the exchange rate at the end of that period. All resulting exchange differences are reported as a separate component of shareholders’ equity within accumulated other comprehensive income.
Share Capital
Common shares issued for non-monetary consideration are recorded at their fair market value based upon the lower of the trading price of the Company’s shares on the TSX Venture Exchange on the date of the agreement to issue the shares and the date of share issuance.
Royalty income
The Company records royalty income when earned.
Stock-based Compensation
The Company follows the Recommendations of the Canadian Institute of Chartered Accountants (“CICA”) in connection with accounting for stock option-based compensation. The standard now requires that all stock option-based awards made to consultants and employees be recognized in these consolidated financial statements and measured using a fair value-based method.
Consideration received on the exercise of stock options and compensation options and warrants is recorded as share capital. The related contributed surplus originally recognized when the options were granted, is transferred to share capital.
Earnings (loss) per share
Earnings (loss) per share has been calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share is not presented as it is anti-dilutive to the loss per share figures.
Comparative Figures
Certain prior period figures have been reclassified to conform to the current period’s financial statement presentation.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
| | Adoption of new accounting standards |
| | Effective October 1, 2007 the Company adopted the following new accounting standards: |
| | Section 1400 – Assessing Going Concern |
CICA Handbook Section 1400, as amended, changed the guidance related to management’s responsibility to assess the ability of an entity to continue as a going concern. Management is required to make an assessment of the Company’s ability to continue as a going concern, taking into account all information available for at least, but not limited to 12 months from the balance sheet date. Disclosure is required of material uncertainties related to events or conditions that cast significant doubt upon the Company’s ability to continue as a going concern. The adoption of this standard had no impact on the Company’s disclosures as these uncertainties have been, and continue to be, fully described herein.
| | Section 1535 – Capital Disclosures |
This Section establishes standards for disclosing information about an entity’s capital and how it is managed. The Company has a simple capital structure given that it is largely dependent on unsecured equity financing, and therefore adoption of this standard has required no additional disclosures in these notes.
| | Section 3862 – Financial Instruments – Disclosures |
This Section requires additional disclosures to enable users of the Company’s financial statements to evaluate the significance of financial instruments to the Company’s financial position and performance. In addition, qualitative and quantitative disclosures are provided as appropriate to enable users to evaluate the nature and extent of risks arising from the Company’s financial instruments. These disclosures were presented above within the financial instruments accounting policies.
| 3. | ACCOUNTING POLICIES NOT YET ADOPTED |
| | International Financial Reporting Standards (“IFRS”) |
In February 2008, the Canadian Accounting Standards Board announced 2011 as the changeover date for publicly-listed companies to use IFRS, replacing Canada’s own generally accepted accounting principles. The specific implementation is set for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 3. | ACCOUNTING POLICIES NOT YET ADOPTED (Continued) |
Goodwill and intangible assets
In February 2008, the CICA issued Handbook section 3064 "Goodwill and intangible assets" which is required to be adopted for fiscal year-ends beginning on or after October 1, 2008. It establishes standards for the recognition, measurement, presentation and disclosure of Goodwill subsequent to its initial recognition and of intangible assets by profit orientated enterprises. The Company does not expect that the adoption of this new section will have any material impact on its financial statements.
| 4. | RELATED PARTY TRANSACTIONS |
During the quarter ended December 31, 2008 (2007 – $nil), there were no related party transactions.
All transactions with related parties have occurred in the normal course of operations and are measured at their fair value as determined by management.
Refer to Note 8.
The Company’s deposit consists of a cash deposit of CDN $221,605 for the purchase of a real estate condominium for a price of CDN $1,116,050 with the balance to be paid as follows: CDN $55,803 on January 1, 2009 and CDN $837,037 due upon completion.
| | | Cost | | | Accumulated Amortization | | | 2008 Net Book Value | | | 2007 Net Book Value | |
| Computer equipment | | $ | 57,895 | | | $ | 53,188 | | | $ | 4,707 | | | $ | 5,401 | |
| Software | | | 540 | | | | 67 | | | | 473 | | | | -- | |
| Vehicle | | | 18,117 | | | | 3,873 | | | | 14,244 | | | | -- | |
| | | $ | 76,552 | | | $ | 57,128 | | | $ | 19,424 | | | $ | 5,401 | |
| | | Bedford | | | Amos | | | Vassan | | | Nico | | | Total | |
Balance September 30, 2008 (1) | | $ | 52,019 | | | $ | 4,091 | | | $ | 4,091 | | | $ | 16,365 | | | $ | 76,566 | |
| Acquisition costs | | | - | | | | - | | | | - | | | | - | | | | - | |
| Balance December 31, 2008 | | $ | 52,019 | | | $ | 4,091 | | | $ | 4,091 | | | $ | 16,365 | | | $ | 76,566 | |
| (1) | Difference in ending balance is due to the fluctuation in the US Dollar. |
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
| 7. | MINERAL PROPERTIES (Continued) |
Bedford Properties pursuant
In fiscal 2008, the Company had the right to acquire interests in iron ore exploration properties located in close proximity to Shefferville, Quebec.
The Option Agreement executed in August 2008, with Bedford Partners and 743584 Ontario Inc. consisted of a total area of 88 claims. In order to earn its 100% undivided interest in the property the Company must, over a six year period, pay an acquisition fee of CDN $230,000 and implement an exploration work program to the stage of a pre-feasibility study.
The second Option Agreement entered into in July, 2008 with Bedford Partners and 743584 Ontario Inc. consists of Blocks 44 and 97 and constitutes a total area of 4,525 hectares. In order to acquire its 100% undivided interest in the property, the Company must, over a six year period, pay an acquisition fee of CDN $205,000 and implement an exploration work program to the stage of a pre-feasibility study.
In October, 2007, the Company concluded an option agreement with Bedford Resource Partners to acquire an iron ore exploration project in Northern Quebec. The option to acquire up to a 90% ownership interest in the property was obtained with an initial payment of CDN $10,000. For the Company to complete the transaction, it must make additional payments totalling $36,000 over the next 3 years and bear 100% of the costs to develop the property to a pre-feasibility stage on or before December 31, 2012.
Amos and Vassan
Pursuant to an Option Agreement dated February 20, 2007, the Company acquired the right to acquire a 100% interest in two mineral properties located in the Abitibi region of the Province of Quebec, Canada, consisting of 75 mineral claims by paying cash of CDN $10,000. If an economic discovery is made on the property, the Company must issue $70,000 in common shares as a bonus. There is a 2% Net Smelter Return ("NSR") royalty, of which 1% of the NSR may be purchased for CDN $1,000,000.
Nico
Pursuant to an Option Agreement dated June 20, 2007, the Company acquired the right to acquire a 100% interest in 51 mineral claims located in the Abitibi region of the Province of Quebec, Canada by paying cash of CDN $20,000. The property is subject to the same economic discovery commitments and NSR as the above-noted February 20, 2007 Option Agreement.
The Company owes the former President’s private company $507,758 at December 31, 2008 (2007 - $404,000) plus accrued interest of $7,503 (2007 - $67,938), which has been included in accounts payable and accrued liabilities. The loan is an unsecured demand loan bearing interest at 6% per annum.
GRAND PEAK CAPITAL CORP.
(formerly Black Mountain Capital Corporation)
Notes to the Consolidated Financial Statements
December 31, 2008
9. SHARE CAPITAL
a) Authorized share capital consists of unlimited common shares without par value.
| | | December 31, | |
| | | 2008 | | | 2007 | |
| | | Shares | | | $ | | | | Shares | | | $ | | |
| Balance, beginning of period | | | 8,466,702 | | | | 4,329,089 | | | | 17,333,514- | | | | 3,279,089 | |
| Share consolidation on a 5 to 1 basis | | | - | | | | | | | | (13,866,812 | ) | | | - | |
| Shares issued for warrants | | | - | | | | | | | | -- | | | | - | |
| Private placements | | | 5,500,000 | | | | 1,033,145 | (1) | | | 5,000,000- | | | | 1,050,000 | |
| Balance, end of period | | | 13,966,702 | | | | 5,362,234 | | | | 8,466,702- | | | | 4,329,089 | |
| | (1) The Company paid a finder’s fee to an arm’s length party in the aggregate amount of $46,750, which represents an amount equal to 5% of the gross proceeds raised from the private placement. |
During the current period, the private placement was completed and consisted of 5,500,000 units at a price of $0.17 per unit. Each unit consisted of one share and one share purchase warrant, which is exercisable at a price of $0.23 per share for a period of two years from the date of issue.
The private placement completed during the fiscal 2008 year consisted of 5,000,000 units at a price of $0.21 per unit. Each unit consisted of one share and one share purchase warrant, which is exercisable at a price of $0.28 per share for a period of two years from the date of issue.
The private placement competed during fiscal 2008 year consisted of 3,800,000 units at a price of $0.10 per unit. Each unit consisted of one share and one share purchase warrant. Each warrant entitled the holder to purchase one further share of the company at a price of $0.12 within two years.
b) Stock Options
The Corporation has an incentive stock option plan authorizing the Company to grant options up to 10% of the issued and outstanding common stock of the Company to directors, officers, employees and consultants of the Company. No specific vesting terms are required. The term of each grant shall be no greater than five years from the date of grant. The option price shall be no less than the price permitted by the TSX Venture Exchange.
No options are outstanding have been granted the prior two fiscal years.
| | | December 31, 2008 | | | December 31, 2007 | |
| | | Number of Shares | | | Weighted Price | | | Number of Shares | | | Weighted Price | |
| Balance, beginning of quarter | | | 5,760,000 | | | | 0.34 | | | | 17,333,514- | | | | - | |
| Share consolidation | | | - | | | | - | | | | (13,866,812 | ) | | | - | |
| Private placement | | | 5,500,000 | | | | 0.23 | | | | 5,000,000 | | | | 0.21 | |
| Closing balance | | | 11,260,000 | | | | 0.28 | | | | 8,466,702- | | | | 0.14 | |
| Weighted remaining life in years | | | | | | | 1.84 | | | | | | | | 1.03 | |
10. ACCUMULATED OTHER COMPREHENSIVE INCOME
| | | December 31, 2008 $ Amount | | | December 31, 2007 $ Amount | |
| Balance, beginning of the period | | | 29,373 | | | | - | |
| Unrealized loss on marketable securities | | | (89,183 | ) | | | - | |
| Cumulative translation adjustment | | | (169,548 | ) | | | - | |
| Balance, end of the period | | | 229,358 | ) | | | - | |
The Company owns publicly-traded securities classified as held for trading as follows:
| | | December 31, 2008 | | | December 31, 2007 | |
| | | Aggregate cost | | | Market value | | | Aggregate cost | | | Market value | |
| | | $ | | | $ | | | $ | | | $ | |
| Publicly-traded securities | | | 1,416,329 | | | | 1,143,115 | | | | 220,300 | | | | 220,300 | |
In January 2009, the Company received an Order from the Supreme Court of Yukon authorizing it to convene an annual and special meeting of its shareholders for the purpose of, among other things, considering and approving a plan of arrangement (the "Arrangement"). Under the Arrangement, Lucky Minerals Inc. ("Lucky Minerals"), a wholly owned subsidiary of the Company, will acquire all of the Company's interest in the Nico Property, located north of the town of Amos, in the Abitibi Regional County Municipality, in exchange for common shares of Lucky Minerals, which will be distributed to Grand Peak's shareholders pursuant to the Arrangement. Upon closing of the Arrangement, each Grand Peak shareholder, as of the record date, set out in the Arrangement, will receive one new common share in the capital of the Company and its pro-rata share of the Lucky Minerals common shares to be distributed under the Arrangement for each currently held Grand Peak share.
