Globetech Ventures Corp.
(An exploration stage company)
Consolidated Financial Statements
(Unaudited)
For the six months ended March 31, 2006
in Canadian dollars
In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited financial statements for the period ended March 31, 2006
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Balance Sheets
(in Canadian dollars)
(unaudited)
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| March 31, 2006 | September 30, 2005 |
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ 9,853 | $ 51,085 | |||||
GST Refundable | 8,179 | 10,330 | |||||
Other receivables | - | 18,207 | |||||
Prepaid expenses and deposits | - | 1,503 | |||||
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| 18,032 | 81,125 | ||
Equipment (note 2) | 1,796 | 2,096 | |||||
Mineral properties (note 3) | 67,234 | 50,407 | |||||
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| $ 87,062 | $ 133,628 |
LIABILITIES | |||||||
Current Liabilities | |||||||
Accounts payable and accrued liabilities | $ 143,559 | $ 148,496 | |||||
Loans payable | - | 254,211 | |||||
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| 143,559 | 402,707 | ||
Convertible loans (note 5) |
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| 537,748 | - | ||
681,307 | 402,707 | ||||||
SHAREHOLDERS' DEFICIENCY | |||||||
Capital stock | |||||||
Authorized | |||||||
Unlimited common shares of no par value | |||||||
Issued and outstanding - (note 6) | 33,780,191 | 33,615,191 | |||||
Contributed surplus | 3,008,754 | 3,008,754 | |||||
Deficit accumulated during the exploration stage | (37,383,190) | (36,893,024) | |||||
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(594,245) | (269,079) | ||||||
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| $ 87,062 | $ 133,628 |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Statements of Operations and Deficit
(in Canadian dollars)
(unaudited)
For the three months ended March 31 | For the six months ended March 31 | ||||||
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| 2006 | 2005 | 2006 | 2005 |
Administrative expenses | |||||||
Accounting and legal | 9,612 | 2,873 | 11,792 | 24,849 | |||
Amortization | 149 | 210 | 298 | 420 | |||
Consulting fees | 134,350 | - | 170,350 | 54,000 | |||
Exploration | - | 2,000 | - | 2,000 | |||
Financing cost | 165,000 | - | 165,000 | - | |||
Interest and bank charges | 82,506 | 3,484 | 88,928 | 9,365 | |||
Management fees | 22,500 | 10,500 | 30,000 | 18,000 | |||
Office and miscellaneous | 6,970 | 375 | 12,970 | 4,465 | |||
Public relations | 2,826 | 2,274 | 2,826 | 2,274 | |||
Regulatory and transfer agent fees | 6,341 | 9,323 | 7,378 | 10,461 | |||
Stock-based compensation | - | 671,042 | - | 671,042 | |||
Telephone | 384 | 140 | 624 | 1,140 | |||
Travel and promotion | - | 389 | - | 4,390 | |||
Net loss for the period |
| 430,638 | 702,610 | 490,166 | 802,406 | ||
Deficit, beginning of period | (36,952,552) | (36,213,964) | (36,893,024) | (36,114,168) | |||
Deficit, end of period |
| $ (37,383,190) | $ (36,916,574) | $ (37,383,190) | $ (36,916,574) | ||
Loss per share |
| $ 0.03 | $ 0.06 | $ 0.03 | $ 0.06 | ||
Weighted average number of shares | |||||||
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| Basic and diluted |
| 14,480,533 | 12,246,150 | 14,480,533 | 12,246,150 |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity (Deficiency)
(in Canadian dollars)
(unaudited)
| Number of shares | Common Shares issued and fully paid | Contributed Surplus and Equity portion of convertible debentures | Deficit accumulated during the exploration stage | Total | ||
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Balance December, 1991 | $ - | $ - | $ - | $ - | $ - | ||
Issuance of shares for cash |
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Private placements | 1,280,001 | 159,500 | - | - | 159,500 | ||
Loss for the period | - | - | - | (32,080) | (32,080) | ||
Balance September 30, 1992 | 1,280,001 | 159,500 | - | (32,080) | 127,420 | ||
Issuance of shares for cash | |||||||
By way of prospectus | 600,000 | 360,000 | - | - | 360,000 | ||
Exercise of options | 112,000 | 67,200 | - | - | 67,200 | ||
Exercise of warrants | 100,000 | 60,000 | - | - | 60,000 | ||
Issuance of shares for property | 150,000 | 90,000 | - | - | 90,000 | ||
Share issue costs | - | (83,205) | - | - | (83,205) | ||
Loss for the year | - | - | - | (105,902) | (105,902) | ||
Balance September 30, 1993 | 2,242,001 | 653,495 | - | (137,982) | 515,513 | ||
Issuance of shares for cash |
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Private placements | 400,000 | 576,000 | - | - | 576,000 | ||
Share issue costs | - | (60,622) | - | - | (60,622) | ||
Loss for the year | - | - | - | (403,571) | (403,571) | ||
Balance September 30, 1994 | 2,642,001 | 1,168,873 | - | (541,553) | 627,320 | ||
Issuance of shares for cash |
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Private placements | 418,000 | 1,121,400 | - | - | 1,121,400 | ||
Exercise of options | 204,000 | 347,440 | - | - | 347,440 | ||
Issuance of shares for finders fees | 35,069 | 99,570 | - | - | 99,570 | ||
Share issue costs | - | (108,570) | - | - | (108,570) | ||
Loss for the year | - | - | - | (343,044) | (343,044) | ||
Balance September 30, 1995 | 3,299,070 | 2,628,713 | - | (884,597) | 1,744,116 | ||
Issuance of shares for cash |
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Private placements | 1,488,000 | 6,178,000 | - | - | 6,178,000 | ||
Exercise of options | 1,128,584 | 4,161,930 | - | - | 4,161,930 | ||
Issuance of shares for finders fees | 75,624 | 197,379 | - | - | 197,379 | ||
Share issue costs | - | (365,874) | - | - | (365,874) | ||
Loss for the year | - | - | - | (1,533,474) | (1,533,474) | ||
Balance September 30, 1996 | 5,991,278 | $ 12,800,148 | $ - | $ (2,418,071) | $ 10,382,077 |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity (Deficiency) (continued)
(in Canadian dollars)
(unaudited)
| Number of shares | Common Shares issued and fully paid | Contributed Surplus and Equity portion of convertible debentures | Deficit accumulated during the exploration stage | Total | ||
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Balance forward | 5,991,278 | $ 12,800,148 | $ - | $ (2,418,071) | $ 10,382,077 | ||
Issuance of shares for cash | |||||||
Exercise of options | 243,000 | 639,730 | - | - | 639,730 | ||
Exercise of warrants | 845,447 | 3,696,723 | - | - | 3,696,723 | ||
Issued on conversion of debt | 2,464,950 | 4,821,079 | - | - | 4,821,079 | ||
Issuance of common shares for | - | - | |||||
acquisition of subsidiary | 171,282 | 1,124,745 | - | - | 1,124,745 | ||
Issuance of shares for finders fees | 65,298 | 457,086 | - | - | 457,086 | ||
Share issue costs | - | (472,562) | - | - | (472,562) | ||
Equity portion of convertible debentures | - | - | 169,760 | - | 169,760 | ||
Loss for the period | - | - | - | (2,822,786) | (2,822,786) | ||
Balance September 30, 1997 | 9,781,255 | 23,066,949 | 169,760 | (5,240,857) | 17,995,852 | ||
Contingent consideration on acquisition of subsidiary | - | (1,086,901) | - | - | (1,086,901) | ||
Issued on conversion of debt | 277,776 | 261,679 | (59,219) | - | 202,460 | ||
10,059,031 | 22,241,727 | 110,541 | (5,240,857) | 17,111,411 | |||
Capital stock consolidation (7.5:1) | (8,717,827) | - | - | - | - | ||
Issued on conversion of debt | 221,234 | 519,691 | (110,541) | - | 409,150 | ||
Issued on settlement of debt | 550,000 | 111,152 | - | - | 111,152 | ||
Loss for year | - | - | - | (20,236,904) | (20,236,904) | ||
Balance September 30, 1998 | 2,112,438 | 22,872,570 | (110,541) | (25,477,761) | (2,605,191) | ||
Issued on settlement of debt | 1,433,364 | 1,604,029 | - | - | 1,604,029 | ||
Loss for the year | - | - | - | (706,147) | (706,147) | ||
Balance September 30, 1999 | 3,545,802 | 24,476,599 | - | (26,183,908) | (1,707,309) | ||
Issuance of shares for cash |
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Exercise of options | 24,100 | 56,321 | - | - | 56,321 | ||
Exercise of warrants | 227,273 | 370,612 | - | - | 370,612 | ||
Issued on conversion of debt | 1,830,073 | 1,078,550 | - | - | 1,078,550 | ||
Issued on settlement of debt | 220,748 | 489,660 | - | - | 489,660 | ||
Subscriptions received in advance | - | 369,875 | - | - | 369,875 | ||
Share issue costs | - | (74,141) | - | - | (74,141) | ||
Loss for the year | - | - | - | (438,663) | (438,663) | ||
Balance September 30, 2000 | 5,847,996 | $ 26,767,476 | - | $ (26,622,571) | $ 144,905 |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity (Deficiency) (continued)
(in Canadian dollars)
(unaudited)
| Number of shares | Common Shares issued and fully paid | Contributed Surplus and Equity portion of convertible debentures | Deficit accumulated during the exploration stage - unaudited | Total | ||
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Balance forward | 5,847,996 | $ 26,767,476 | - | $ (26,622,571) | $ 144,905 | ||
Issuance of shares for cash |
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Private placement | 2,000,000 | 456,840 | - | - | 456,840 | ||
Issued for subscriptions received in advance | 227,273 | 369,875 | - | - | 369,875 | ||
Subscriptions received in advance | - | (369,875) | - | - | (369,875) | ||
Issued on acquisition of equity investment | 500,000 | 192,075 | - | - | 192,075 | ||
Issued on settlement of debt | 914,670 | 502,784 | - | - | 502,784 | ||
Share issue costs | - | (45,492) | - | - | (45,492) | ||
Loss for the year | - | - | - | (1,822,692) | (1,822,692) | ||
Balance September 30, 2001 | 9,489,939 | 27,873,683 | - | (28,445,263) | (571,580) | ||
Loss for the year | - | - | - | (319,713) | (319,713) | ||
Balance September 30, 2002 | 9,489,939 | 27,873,683 | - | (28,764,976) | (891,293) | ||
Loss for the year | - | - | - | (47,171) | (47,171) | ||
Balance September 30, 2003 | 9,489,939 | 27,873,683 | - | (28,812,147) | (938,464) | ||
Issuance of shares for cash | |||||||
Private placements | 1,797,674 | 1,299,990 | - | - | 1,299,990 | ||
Issued on conversion of debt | 652,000 | 432,000 | - | - | 432,000 | ||
Acquisition of Brazil Gold Ltda. | 2,000,000 | 4,050,000 | - | - | 4,050,000 | ||
Share issue costs | - | (135,690) | - | - | (135,690) | ||
Contributed surplus | - | - | 2,429,100 | - | 2,429,100 | ||
Loss for the year | - | - | - | (7,302,024) | (7,302,024) | ||
Balance September 30, 2004 | 13,939,613 | 33,519,983 | 2,429,100 | (36,114,171) | (165,088) | ||
Issuance of shares for cash | |||||||
Private placement - August 4, 2004 - shares issued due to repricing clause | 302,326 | - | - | - | - | ||
Acquisition of Gladys Lake option | 50,000 | 18,504 | - | - | 18,504 | ||
Issued on conversion of debt | 180,000 | 76,704 | - | - | 76,704 | ||
Contributed surplus | - | - | 579,654 | - | 579,654 | ||
Loss for the year | - | - | - | (778,853) | (778,853) | ||
Balance September 30, 2005 | 14,471,939 | 33,615,191 | 3,008,754 | (36,893,024) | (269,079) | ||
Issued on conversion of warrants | 257,812 | 165,000 | 165,000 | ||||
Loss for the period | - | - | - | (490,166) | (490,166) | ||
Balance March 31, 2006 | 14,729,751 | $ 33,780,191 | $ 3,008,754 | $ (37,383,190) | $ (594,245) |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
(An exploration stage company)
Consolidated Statements of Cash Flows
(in Canadian dollars)
(unaudited)
For the three months ended March 31 | For the six months ended March 31 | ||||||
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| 2006 | 2005 | 2006 | 2005 |
Operating Activities | |||||||
Net loss for the period | $ (430,638) | $ (702,610) | $ (490,166) | $ (802,406) | |||
Items not involving cash | |||||||
Amortization | 149 | 210 | 298 | 420 | |||
Stock-based compensation | - | 671,042 | - | 671,042 | |||
Exercise of cashless warrants | 165,000 | - | 165,000 | - | |||
Change in non-cash working capital | |||||||
GST refundable and other receivables | 2,369 | (830) | 20,358 | (4,577) | |||
Prepaid expenses and deposits | - | - | 1,503 | - | |||
Accounts payable and accrued liabilities | (17,463) | (5,337) | (4,935) | (39,075) | |||
Net cash used in operating activities |
| (280,583) | (37,525) | (307,942) | (174,596) | ||
Financing Activities | |||||||
Advances from related parties | - | (231,101) | - | (267,848) | |||
Convertible loans | 537,748 | - | 537,748 | - | |||
Loans payable | (260,619) | 240,101 | (254,211) | 240,101 | |||
Net cash provided from (used in) financing activities |
| 277,129 | 9,000 | 283,537 | (27,747) | ||
Investing Activities | |||||||
Expenditures on mineral properties | (16,789) | (10,000) | (16,827) | (10,000) | |||
Net cash used in investing activities |
| (16,789) | (10,000) | (16,827) | (10,000) | ||
Change in cash and cash equivalents | (20,243) | (38,525) | (41,232) | (212,343) | |||
Cash and cash equivalents at beginning of period | 30,096 | 130,569 | 51,085 | 304,387 | |||
Cash and cash equivalents at end of period |
| $ 9,853 | $ 92,044 | $ 9,853 | $ 92,044 |
The accompanying notes form an integral part of these consolidated financial statements
Globetech Ventures Corp.
Notes to Consolidated Financial Statements
March 31, 2006
(in Canadian dollars)
(unaudited)
1.
Nature of Operations and significant accounting policies
The Company is incorporated under the laws of British Columbia, Canada, and its principal business activities included the acquiring and developing of mineral properties and the processing of related mineral resources. During the year ended September 30, 1998, the Company determined that it was not feasible to continue its mineral property operations. The Company is currently pursuing and evaluating potential business ventures in the mineral field.
These interim consolidated financial statements should be read in conjunction with the audited September 30, 2005 annual financial statements.
These interim financial statements follow the same accounting policies and methods of their application as in the September 30, 2005 annual financial statements. These interim consolidated financial statements do not conform in all respects to the requirements of Canadian generally accepted accounting principles for annual financial statements in that they do not include all note disclosures.
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and expenses for the periods reported. Actual results could differ from those estimates.
2. Equipment
| For the six months ended March 31, 2006 | September 30, 2005 | ||||
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| Cost | Accumulated amortization | Net book value | Net book value |
Office equipment | $ 5,222 | $ 4,932 | $ 290 | $ 323 | ||
Computer equipment | 26,313 | 24,807 | 1,506 | 1,773 | ||
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| $ 31,535 | $ 29,739 | $ 1,796 | $ 2,096 |
3.
Mineral Properties and Deferred Resource Property Expenditures
On February 28, 2005, Globetech announced that it entered into an option agreement whereby the Company can earn a 100% interest in the Gladys Lake porphyry molybdenum property from Mr. John Peter Ross of Whitehorse, Yukon. The Gladys Lake property is situated in northwestern British Columbia approximately 50 km northeast of Atlin and 15 km north of the Adanac molybdenum deposit presently undergoing final engineering studies and permitting.
In order to earn a 100% interest, the Company is required to pay a total of $95,000, in ascending payments over a period of four years. The agreement also calls for the issuing of 400,000 shares of Globetech over this same period. On April 12, 2005, the Company issued 50,000 shares from treasury. After the four-year period, the Company agrees to pay an annual advance royalty of $25,000 commencing February 28, 2010. On completion of a bankable feasibility, the Company will issue to the vendor a further 400,000 shares of Globetech. The vendor will retain a 3% Net Smelter Return Royalty, 2% of which can be purchased by the Company on a pro-rata basis for the sum of $2,000,000 at any time within five years of commencement of commercial production. An initial down payment of $10,000 was made.
The balance of payments and schedule of share issuances is as follows: | Date | Amount | Shares | |
March 21, 2006 | $ 15,000 | 50,000 | ||
March 21, 2007 | 20,000 | 50,000 | ||
March 21, 2008 | 25,000 | 100,000 | ||
March 21, 2009 | 25,000 | 150,000 |
The Company has incurred the following costs on the Gladys Lake property: |
| March 31, 2006 | September 30, 2005 | |||||
Acquisition costs | $ 43,504 | $ 28,504 | ||||||
Exploration costs | ||||||||
Report | 13,199 | 13,161 | ||||||
Assessment work | 1,789 | |||||||
Geologist | 4,000 | 4,000 | ||||||
Transportation | 4,742 | 4,742 | ||||||
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Total | $ 67,234 | $ 50,407 |
4. Related Parties
The Company has entered into the following transactions with related parties:
For the three months ended March 31, 2006 | For the three months ended March 31, 2005 | |||
Management fees to officers of the Company | $ 30,000 | $ 18,000 |
Included in accounts payable is $72,007 due to a director.
5.
Convertible loans
Agreements have been negotiated with two old creditors to issue shares at $0.20 USD to retire indebtedness of $537,748.
6.
Share Capital
a)
Common Shares
The authorized share capital of the Company is unlimited without par value.
b) | Issued |
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| Number of Shares |
| Share Capital |
Balance, September 30, 2004 | 14,471,939 | $ 33,615,191 | ||||||
Exercise of warrants | - | - | ||||||
Exercise of stock options | - | - | ||||||
Balance, September 30, 2005 |
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| 14,471,939 |
| 33,615,191 | ||
Warrant shares issued (note 6d) | 257,812 | $ 0.64 | 165,000 | |||||
Balance, March 31, 2006 |
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| 14,729,751 |
| $ 33,780,191 |
c)
Stock Options
The Company has adopted an incentive stock option plan (the "Plan"). The essential elements of the Plan provide that the agrregate number of shares of the Company's capital stock issuable pursuant to options granted under the Plan may not exceed 5,800,630 shares. Options granted under the Plan may have a maximum term of five (5) years. The exercise price of the options granted under the Plan will not be less than the fair market value of the common stock at the date of grant. The Plan Administrator shall specify the vesting schedule for each stock option granted.
The Company is authorized to grant options to directors, employees and consultants. Stock option transactions and the number of stock options outstanding are summarized as follows:
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| Number of Options | Weighted average exercise price | |
Outstanding and exercisable at September 30, 2005 | 2,100,000 | US$ 0.54 | |||||
Options granted | - | - | |||||
Options cancelled / expired | - | - | |||||
Options exercised |
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| - |
| - |
Outstanding and exercisable at March 31, 2006 |
| 2,100,000 |
| US$ 0.54 |
The Company had 2,100,000 stock options of which 1,700,000 were granted on February 3, 2005 that expire on February 3, 2008 and 400,000 were granted on March 12, 2004, expiring on March 12, 2008.
The following table summarizes information about fixed stock options outstanding at March 31, 2006:
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| Options Outstanding | Options Exercisable | |||
Range of exercise prices (USD$) | Number outstanding at March 31, 2006 | Weighted average remaining contractual life (years) | Weighted average exercise price (USD$) | Number exercisable at March 31, 2006 | Weighted average exercise price (USD$) | ||
$ 0.60 |
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| 2,100,000 | 3.5 | $ 0.60 | 2,100,000 | 0.54 |
6.
Share Capital continued
d)
Warrants
Pursuant to a convertible debenture agreement dated July 28, 2004 the holders held 1,000,000 warrants to purchase shares at $0.475 USD per share and exercised their right to obtain 257,812 cashless warrants in lieu of exercising the 1,000,000 warrants. The Company issued 257,812 shares at a deemed value of $0.64 USD per share.
At March 31, 2006, the Company had 1,100,000 (2005 - 2,100,000) common share purchase warrants outstanding to purchase 1,100,000 common shares of the Company.
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| Issue date | Warrants outstanding | Purchase price | Expiry date | |
June 30, 2004 | 300,000 | USD $ 0.90 | 30-Jun-06 | ||||
USD $ 1.00 | 30-Jun-07 | ||||||
April 23, 2004 | 300,000 | USD $ 0.90 | 23-Apr-06 | ||||
USD $ 1.00 | 23-Apr-07 | ||||||
June 30, 2004 | 500,000 | USD $ 0.60 | 30-Jun-06 |
7.
Contingencies
The Company has made a demand for the return of 2,000,000 shares issued in connection with the Amapa property due to breach of the contract. The Company is of the opinion that the breaches incurred by the defendants occurred before any non-performance of the contract on its part and that it should able to exercise its rights under the contract to repurchase the 2,000,000 shares issued for $100.00. The outcome is not determinable.