Notes to the Financial Statements
(Unaudited)
_______________________________________________
Note 1 - Organization and Operations
Brookfield Resources Inc. (formerly Movie Trailer Galaxy, Inc.)
Brookfield Resources Inc., formerly Movie Trailer Galaxy, Inc., an exploration stage company, (the Company) was incorporated on April 27, 2010 under the laws of the State of Nevada.
Discontinued Operations
Since April 27, 2010, the Company had planned to provide information for movie lovers and access to related products. On September 27, 2012, the Company entered into an Asset Purchase Agreement for the purchase, transfer and assignment of various exploration licenses from Matteo Sacco to the Company. Effective September 1, 2012, the Company changed its business strategy to the exploitation of mineral mining rights and discontinued the operation of its existing business plan of providing a comprehensive portal to preview the latest movie information. Therefore, as of September 1, 2012, the results of the operations of providing a comprehensive portal to preview the latest movie information have been classified as discontinued operations for all periods presented.
Change in Control
On September 11, 2012, a Stock Purchase Agreement (the SPA) was entered into by and among Movie Trailer Galaxy, Inc. (Movie Trailer or the Company), Stephanie Wyss, (the Seller), and Robert Roon (the Purchaser and together with the Company and the Seller, the Parties). Pursuant to the SPA, the Purchaser purchased an aggregate of 840,000,000 shares of common stock of the Company (64% of the outstanding shares) from the Seller for an aggregate purchase price of $25,000.00.
On September 27, 2012, an Asset Purchase Agreement was entered into for the purchase, transfer and assignment of various exploration licenses from Matteo Sacco (Seller) to the Company. The exploration licenses were originally issued to Seller from the Nova Scotia Department of Natural Resources. The Company issued two hundred ninety eight million seven hundred fifty two thousand and seven hundred twenty (298,752,720) common shares for the acquisition of the exploration licenses to the Seller. The Companys sole director at the time, Robert S. Roon, cancelled eight hundred and forty million (840,000,000) shares of common stock that were held by him which represented approximately 84.2% of the Companys issued and outstanding shares. Upon cancellation of the shares held by Mr. Roon, the Seller owns approximately 68.3% of the Companys issued and outstanding common shares.
Robert S. Roon, the Companys Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director resigned as the Companys Chief Executive Officer, Chief Financial Officer, Secretary, and Treasurer. Matteo Sacco was appointed as the Companys President, Chief Executive Officer, Chief Financial Officer and Secretary. Robert Roons resignation as an officer was not the result of any disagreement with the Company on any matter relating to the Companys operations, policies or practices.
Amendments to the Certificate of Incorporation
On September 17, 2012, effective October 2, 2012, the Company filed a Certificate of Amendment of Certificate of Incorporation and effectuated a forward split of all issued and outstanding shares of common stock, at a ratio of five hundred and sixty-for-one (560:1) (the "Stock Split").
On September 26, 2012, effective November 15, 2012, the Company filed a Certificate of Amendment of Certificate of Incorporation and (i) changed its name to Brookfield Resources Inc. ("Brookfield Resources"); (ii) changed its total number of common shares which the Company is authorized to issue from Two Hundred and Eighty Billion (280,000,000,000) shares, par value $0.0001 per share, to Nine Hundred Million (900,000,000) shares, par value $0.0001 per share.
F-5
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the Stock Split.
Cancellation of Common Shares
In September, 2012, the Company authorized the cancellation of 315,176,400 shares owned by various shareholders which were returned to treasury.
On October 5, 2012, the Company had entered certain agreements with various shareholders to cancel an aggregate of 858,600,400 shares owned by them.
All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the cancellation of those common shares.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation - Unaudited Interim Financial Information
The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (SEC) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended August 31, 2012 and notes thereto contained in the Companys Annual Report on Form 10-K filed with the SEC on December 7, 2012.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.
Exploration Stage Company
The Company is an exploration stage company as defined by section 915-235-50 of the FASB Accounting Standards Codification. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception has been considered as part of the Company's exploration stage activities.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management 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 financial statements and the reported amounts of revenues and expenses during the reporting period.
F-6
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
The Companys significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment, if any, of long-lived assets; income tax rate, income tax provision, deferred tax assets and the valuation allowance of deferred tax assets, and the assumption that the Company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (Paragraph 820-10-35-37) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
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Level 1
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Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
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Level 2
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Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
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Level 3
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Pricing inputs that are generally observable inputs and not corroborated by market data.
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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Companys financial assets and liabilities, such as cash, accrued expenses and shareholder advances, approximate their fair values because of the short maturity of these instruments.
F-7
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.
Fiscal Year-End
The Company elected August 31 as its fiscal year end date.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Mineral Properties
The Company follows Section 930 of the FASB Accounting Standards Codification for its mineral properties. Mineral properties and related mineral rights acquisition costs are capitalized pending determination of whether the drilling has found proved reserves. If a mineral ore body is discovered, capitalized costs will be amortized on a unit-of-production basis following the commencement of production. Otherwise, capitalized acquisition costs are expensed when it is determined that the mineral property has no future economic value. General exploration costs and costs to maintain rights and leases, including rights of access to lands for geophysical work and salaries, equipment, and supplies for geologists and geophysical crews are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs as well as interest costs relating to exploration and development projects that require greater than six (6) months to be readied for their intended use incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset categories and amortized on a unit-of-production basis. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future will be written off. The sale of a partial interest in a proved property is accounted for as a cost recovery and no gain or loss is recognized as long as this treatment does not significantly affect the unit-of-production amortization rate. A gain or loss will be recognized for all other sales of proved properties and will be classified in other operating revenues. Maintenance and repairs are charged to expense, and renewals and betterments are capitalized to the appropriate property and equipment accounts.
The provision for depreciation, depletion and amortization (DD&A) of mineral properties will be calculated on a property-by-property basis using the unit-of-production method. Taken into consideration in the calculation of DD&A are estimated future dismantlement, restoration and abandonment costs, which are net of estimated salvage values. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all general exploration costs, if any, are being expended.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
F-8
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitment and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Companys consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows.
F-9
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Mineral Exploration and Development Costs
All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop mineral deposits, to expand the capacity of mines or to develop mine areas substantially in advance of production are also capitalized once proven and probable reserves exist, and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the cost of mineral rights will be expensed at that time. Costs of abandoned projects, including related property and equipment costs, are charged to mining costs. To determine if these costs are in excess of their recoverable amount, periodic evaluations of the carrying value of capitalized costs and any related property and equipment costs are performed. These evaluations are based upon expected future cash flows and/or estimated salvage value.
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (Sub-topic 505-50).
Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Companys most recent private placement memorandum (PPM), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
F-10
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (Section 740-10-25). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In managements opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the interim period ended November 30, 2012 or 2011.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
There were no potentially dilutive common shares outstanding for the interim period ended November 30, 2012 or 2011.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (Indirect method) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
F-11
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Issued Accounting Pronouncements
FASB Accounting Standards Update No. 2011-08
In September 2011, the FASB issued the FASB Accounting Standards Update No. 2011-08
IntangiblesGoodwill and Other: Testing Goodwill for Impairment (ASU 2011-08).
This Update is to simplify how public and nonpublic entities test goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.
The guidance is effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.
FASB Accounting Standards Update No. 2011-11
In December 2011, the FASB issued the FASB Accounting Standards Update No. 2011-11
Balance Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11).
This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.
The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB Accounting Standards Update No. 2012-02
In July 2012, the FASB issued the FASB Accounting Standards Update No. 2012-02
IntangiblesGoodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02).
This Update is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. This guidance builds upon the guidance in ASU 2011-08, entitled
Testing Goodwill for Impairment
. ASU 2011-08 was issued on September 15, 2011, and feedback from stakeholders during the exposure period related to the goodwill impairment testing guidance was that the guidance also would be helpful in impairment testing for intangible assets other than goodwill.
The revised standard allows an entity the option to first assess qualitatively whether it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired, thus necessitating that it perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired.
F-12
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
This Update is effective for annual and interim impairment tests performed in fiscal years beginning after September 15, 2012. Earlier implementation is permitted.
Other Recently Issued, but not yet Effective Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Note 3 - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying financial statements, the Company had a deficit accumulated during its exploration stage at November 30, 2012, a net loss and net cash used in operating activities for the interim period then ended, respectively, with no revenues earned during the period. These factors raise substantial doubt about the Companys ability to continue as a going concern.
While the Company is attempting to commence operations and generate revenues, the Companys cash position may not be sufficient enough to support the Companys daily operations. Management intends to raise additional funds by way of a private or public offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Companys ability to further implement its business plan and generate revenues.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 - Stockholders Deficit
Shares Authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Five Hundred Ten Million (510,000,000) shares of which Ten Million (10,000,000) shares shall be Preferred Stock, par value $0.0001 per share, and Five Hundred Million (500,000,000) shares shall be Common Stock, par value $0.0001 per share.
On September 17, 2012, effective October 2, 2012, the Company filed a Certificate of Amendment of Certificate of Incorporation and effectuated a forward split of all issued and outstanding shares of common stock, at a ratio of five hundred and sixty-for-one (560:1) (the "Stock Split").
All shares and per share amounts in the financial statements have been adjusted to give retroactive effect to the Stock Split.
On September 26, 2012, effective November 15, 2012, the Company filed a Certificate of Amendment of Certificate of Incorporation and changed its total number of common shares which the Company is authorized to issue from Two Hundred and Eighty Billion (280,000,000,000) shares, par value $0.0001 per share, to Nine Hundred Million (900,000,000) shares, par value $0.0001 per share.
F-13
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Common Stock
On April 27, 2010, the Company issued 840,000,000 common shares to its Chief Executive Officer valued at $150 for compensation upon formation of the Company.
For the period from June 23, 2010
through November 30, 2010, the Company sold 472,528,000 shares of its common stock in a private placement at $0.000089 per share to 40 individuals for $42,190.
On September 11, 2012, in a private transaction, 840,000,000 shares of common stock, which represented 64% of the issued and outstanding shares of common stock, were sold to Robert Roon for the total price of $25,000. This resulted in a change in control of the Company. In connection with this transaction, also on September 11, 2012, Stephanie Wyss resigned from her position as Chief Executive Officer of the Company and Robert Roon was appointed as the new President as well as Chief Executive Officer, Secretary, and Treasurer of the Company.
In September, 2012, the Company authorized the cancellation of 315,176,400 shares owned by various shareholders and returned them to treasury.
On September 27, 2012, the Company issued 298,752,720 common shares for the acquisition of the exploration licenses at $0.000089 per share or $26,674. The price was determined based on the last known private placement memorandum price.
On October 5, 2012, the Company had entered into certain agreements with various shareholders to cancel an aggregate of 858,600,400 shares owned by them.
Capital Contribution
In May 2010, the Companys former Chief Executive Officer contributed $100 for general working capital to the Company.
During the interim period ended November 30, 2012, the Companys former Chief Executive Officer contributed $41,115 for general working capital to the Company.
Note 5 - Related Party Transactions
Free Office Space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statement.
Employment Agreement
On September 1, 2010, the Company entered into an employment agreement (Employment Agreement) with its then president and chief executive officer (Employee), which requires that the Employee to be paid a minimum of $500 per month for three (3) years from date of signing. Either employee or the Company has the right to terminate the Employment Agreement upon thirty (30) days notice to the other party.
This agreement was mutually terminated in September 2012.
F-14
Brookfield Resources Inc.
(An Exploration Stage Company)
November 30, 2012 and 2011
Notes to the Financial Statements
(Unaudited)
_______________________________________________
Shareholder Advances
Cash shortfall was funded by the Companys former majority shareholder and Chief Executive Officer, Stephanie Wyss. Cash shortfall in the next 12 months may be funded by the current majority shareholder and Chief Executive Officer; however, there was no agreement between Mr. Sacco and the Company with regard to the future funding of the Company, and Mr. Sacco is not obligated to provide the funding to the Company. In the event of no funding or insufficient funding from Mr. Sacco, the Company may have to scale back or stop its business development.
From February 29, 2012 through August 31, 2012, the Company received $14,500 from the former majority shareholder. All advances are due on demand and non-interest bearing. On September 11, 2012, as part of the change in control, Stephanie Wyss sold all her shares to Robert Roon and resigned from her position as Chief Executive Officer of the Company. At this time, the shareholder advance of $14,500 was converted to a capital contribution.
From September 1, 2012 through November 30, 2012, the Company received $42,226 from the majority shareholder. All advances are due on demand and non-interest bearing.
Note 6 - Subsequent Events
The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.
F-15