HIGHCLIFF METALS CORP. General
We were incorporated under the laws of
The Company was engaged in the exploration, evaluation and development of the
Helmer-
As a result of the disposition, the Company has no mineral properties and will
need to identify and, if successful, acquire a new business, which it will be
positioned to do with a balance sheet free of existing indebtedness to
Our principal executive office is located at Suite 1100,
We are dependent on debt and equity financing as our primary source of operating working capital.
18 Discontinued Operations
On
Key Terms of the Transaction:
- Immediately prior to closing of the Transaction, the Company contributed an
intercompany debt owed by
Value").
- The Share Value was satisfied by BV Lending on a non-cash basis by the set off
of an equal amount of debt owed by the Company to BV Lending (the "Set Off"). - Immediately following the Set Off, BV Lending transferred to the Company the
balance of the debt owed by the Company to BV Lending (which debt was
$36,186,056 before the Set Off). - Previously entered into loan agreements datedJune 1, 2016 ,September 11, 2018
and
including all security granted thereunder, was terminated and/or discharged. - The Company will be subject to non-competition and non-solicitation covenants
in favour of BV Lending for a period of five years commencing on closing of the
Transaction.
- The Transaction was subject to the approval of the Transaction by shareholders
of the Company (the "Shareholders") and the
were received. - As part of the Transaction, BV Lending has agreed to pay taxes that will
become payable upon closing by the Company as a result of the Transaction
(approximately
Company will issue a promissory note in favor of BV Lending for the amount of
the taxes so paid. The promissory note will be repaid out of any refund
received by the Company from the applicable government agency.
The Transaction is considered to be a discontinued operation for the Company and
accordingly, loss from discontinued operations is included in the consolidated
statements of loss for all periods presented. Included on the consolidated
balance sheets at
January 31, April 30,
2023 2022
$ $
Cash and cash equivalents 5,424 6,427
Prepaids 7,617 5,725
Equipment and right-of-use asset 64,865 18,242
Mineral property interest and deferred development costs 1,892,410 1,892,410 Deposits
29,208 29,208
Assets held-for-sale 1,999,524 1,952,012
Account payable and accrued liabilities 169,217 139,389
Lease liability 47,797 13,475
Liabilities held-for sale 217,014 152,864
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Plan of Operation and Outlook
As a result of completion of the Transaction with BV Lending, the Company has
disposed of substantially all of its assets, being the shares held in
Results of Operations
Three months ended
We recorded a net loss of
• Management and consulting fees of$23,975 (2022 -$25,913 ) are comprised of fees to manage our Company. Approximately 75% of the fees to manage our Company are charged to management and consulting fees and the other 25% is charged to mineral property expenditures. • General and miscellaneous expenses of$22,191 (2022 -$27,565 ) are comprised of office and telephone expenses, payroll taxes, medical benefits, insurance premiums, travel expenses, promotional expenses, shareholder communication fees, transfer agent fees and filing fees. The decrease during the current period was due primarily to a decrease in office rent, insurance and transfer agent fees. • Professional fees of$111,267 (2022 -$36,764 ) include legal fees, audit fees and financial consulting fees. The increase during the period was due to higher audit and legal fees relating to the Transaction. • Interest and penalty expense of$20,177 (2022 - $nil) is interest on unpaid withholding tax. Interest from promissory notes is included in loss from discontinued operations. • Loss from discontinued operations of$290,221 (2022 -$210,303 ) is the loss included inI-Minerals USA which is treated as a discontinued operation due to the Transaction. Included in the loss from discontinued operations are management and consulting fees of$24,750 (2022 -$24,750 ), mineral property expenditures of$193,331 (2022 -$150,828 ) general and miscellaneous expenses of$16,301 (2022 -$14,340 ), and interest on promissory notes of$12,503 (2022 -$14,717 ) amongst other items.
Nine months ended
We recorded a net loss of
• Management and consulting fees of$75,071 (2022 -$78,079 ) are comprised of fees to manage our Company. Approximately 75% of the fees to manage our Company are charged to management and consulting fees and the other 25% is charged to mineral property expenditures. • General and miscellaneous expenses of$52,297 (2022 -$109,314 ) are comprised of office and telephone expenses, payroll taxes, medical benefits, insurance premiums, travel expenses, promotional expenses, shareholder communication fees, transfer agent fees and filing fees. The decrease during the current period was due primarily to a decrease in office rent, insurance and transfer agent fees. • Professional fees of$273,155 (2022 -$180,445 ) include legal fees, audit fees and financial consulting fees. The increase during the period was due to higher audit and legal relating to the Transaction. • Interest and penalty expense of$224,188 (2022 -$60,000 ) is interest and penalties on unpaid withholding tax. Interest from promissory notes is included in loss from discontinued operations. • Loss from discontinued operations of$659,845 (2022 -$598,540 ) is the loss included inI-Minerals USA which is treated as a discontinued operation due to the proposed Transaction. Included in the loss from discontinued operations are management and consulting fees of$74,250 (2022 -$74,250 ), mineral property expenditures of$484,733 (2022 -$435,478 ) general and miscellaneous expenses of$19,097 (2022 -$44,225 ), and interest on promissory notes of$35,550 (2022 -$33,107 ) amongst other items. 20
Liquidity and Capital Resources
Our aggregate operating, investing and financing activities during the nine
months ended
During the nine months ended
We have been financed by advances pursuant to promissory notes advanced by
We are dependent on debt and equity financing as our primary source of operating
working capital. Until such time that the Company is able to acquire a new
mineral property or alternative business, the
We do not have the ability to internally generate sufficient cash flows to support our operations for the next twelve months. We have no formal plan in place to address this going concern issue but consider that we will be able to obtain additional funds by equity financing and/or debt financing; however, there is no assurance of additional funding being available. As a result, there is substantial doubt about the Company's ability to continue as a going concern.
After completion of the Transaction with BV Lending, the Company will be required to undertake an equity financing to fund review of asset opportunities.
Beginning in 2020, there was an outbreak of COVID-19 that has impacted the economic environment and the capital markets. COVID-19 could have a material impact on the Company's financial position, results of operation and cash flows. The Company's liquidity and its ability to continue as a going concern may also be impacted.
Critical Accounting Policies Measurement Uncertainty
The preparation of these consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long lived assets, stock-based compensation, valuation of convertible debentures and derivative liabilities, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to our condensed consolidated financial statements relate to the determination of fair values of derivative liabilities and stock-based transactions.
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