NOTES
TO THE FINANCIAL STATEMENTS
March 31, 2017
NOTE
1 – NATURE OF BUSINESS
Nature
of Business
Altus
Explorations, Inc. (the “Company”) was incorporated in the state of Nevada on November 2, 2001.
On
October 1, 2010, Altus entered into a Share Exchange Agreement (the “Agreement”) with UWD Unitas World Development Inc.
(“UWD”), a privately held Canadian incorporated company. Pursuant to the Agreement, Altus issued 80,000,000 shares of
common stock for the acquisition of 450 shares of common stock of The Canadian Tactical Training Academy Inc., representing 100%
of the issued and outstanding shares of common stock, which were held by UWD. Further, Altus changed its name to Canadian Tactical
Training Academy Inc. and increased the authorized share capital from 40,000,000 to 250,000,000 shares of common stock and then
further from 250,000,000 to 450,000,000. The Company assumed the business Canadian Tactical Training Academy Inc., which is the
training of law enforcement, security, investigation and protection for officers and individuals.
On
June 2, 2014 the Company changed its name to Earth Life Sciences Inc. On June 12, 2015, the Company, through an option agreement,
issued 225,000,000 shares to earn the mineral rights for the White Channel mineral claims located in British Columbia.
These
financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets
and discharge its liabilities in the normal course of business. The Company is unlikely to pay dividends or generate significant
earnings in the immediate or foreseeable future. The continuation of the Company as a going concern and the ability of the Company
to emerge from the Development stage are dependent upon management’s successful efforts to raise additional equity financing to
continue operations and generate sustainable significant revenues.
These
financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company will require significant
additional financial resources and will be dependent on future financings to fund its ongoing operations as well as other working
capital requirements. There is no guarantee that management will be able to raise adequate equity financings or generate profits
from operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
Management
of the Company has undertaken steps as part of a plan with the goal of sustaining Company operations for the next twelve months
and beyond. These steps include: (a) continuing efforts to raise additional capital and/or other forms of financing; and (b) controlling
overhead and expenses. Management is aware that material uncertainties exist, related to current economic conditions, which could
cast a doubt about the Company’s ability to continue to finance its activities. It is to be expected that the Company may incur
further losses in the Development of its business and there can be no assurance that any of these efforts will be successful.
NOTE
2 – SUMMARY OF ACCOUNTING POLICIES
Basis
of Presentation
The
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31. The functional
currency of the Company is Canadian Dollars
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP 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 periods. Actual results could materially differ
from those estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination
of impairment of long-lived assets, expected tax rates for future income tax recoveries and determining the fair values of financial
instruments.
Equipment
Equipment
is recorded at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses
on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated
useful lives of the assets which is three years for computers.
Impairment
of Assets
The
Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that
the historical carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value
cost of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference
between the asset’s carrying value and fair value.
Other
Comprehensive Income
The
Company reports and displays comprehensive income and its components in the financial statements. During the period ended March
31, 2017 and, 2016, the Company had unrealized foreign exchange of $nil in 2017 and $nil in 2016 respectively.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and
liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements
carrying amounts of assets and liabilities and their respective tax bases. 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
Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting this standard, the amount recognized in
the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement with the relevant tax authority.
Basic
and Diluted Loss per Share
Basic
loss per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per
share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common
stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method
and the effect of convertible securities by the “if converted” method. For the years presented, diluted loss per share
is equal to basic loss per share as the effect of the computations are anti-dilutive.
Financial
Instruments
The
carrying value of the Company’s financial instruments, consisting of cash, accounts payable, convertible loans and subscriptions
received in advance approximates their fair value. Unless otherwise noted, it is management’s opinion that the Company is not
exposed to significant interest, currency or credit risks arising from these financial instruments.
Stock-based
Compensation
Compensation
cost related to share-based payments, such as stock options and employee stock purchase plans, are recognized in the financial
statements based on the grant-date fair value of the award. The compensation cost associated with the issuance of stock options
will be recognized over its vesting period based on the estimated grant-date fair value.
Stock
awards outstanding under the Company’s current plans are fully vested, therefore there is no unrecognized compensation cost related
to non-vested options. No options were granted or exercised during the periods ended March 31, 2017 and 2016.
Recent
Accounting Pronouncements
In
August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern
(Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally
accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under
this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes
imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30,
Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is
not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a
going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting,
but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions
and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods
and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in
this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial
statements for additional disclosure.
NOTE
3 – MINERAL PROPERTIES
On
June 19, 2015, the Company entered into an option agreement (“Agreement”) with Song Bo, a private mineral holder,
to earn a 100% beneficial interest in certain mineral concessions known as the White Channel mineral claims (the “Property”).
Under the terms of the Agreement the Company will have the right to purchase the right, title, and interest in the Property
as well as enter onto the Property to conduct reconnaissance, exploration, and development work on the Property. In exchange,
the Company issued 225,000,000 restricted shares and will pay the sum of $180,000 payable in instalments of $30,000 on the 15th
of every month commencing July 15, 2015 through December 15, 2015. In addition, the Company shall pay a further $50,000
on each anniversary of the Agreement for a period of four years commencing June 19, 2016 through June 19, 2019. The fair
value of the issuance of the restricted shares was calculated to be $6,750,000.
The
Property is subject to a 4% NSR on precious metals, and also subject to royalty payments of $0.25 per tonne on the sale of pit
run products or processed products; or $0.35 per tonne on the sale of processed mineral products where the selling price of the
processed minerals products sell for a price in excess of $35 per tonne; or an amount of $1.00 per tonne on the same of processed
mineral products where the selling price of the processed mineral products sell for a price in excess of $100 per tonne. 50% of
the NSR can purchased by the Company for $1,000,000 at any time before the fifth-year anniversary of the Agreement.
NOTE
4 – CONVERTIBLE LOANS PAYABLE
As
at March 31, 2017 the Company had convertible debt of $32,720 (December 31, 2016 - $32,720).
The
Loans are convertible at the shareholders’ option into common stock at a conversion rate of $0.001 per common share. The Company
may prepay the without penalty or bonus.
NOTE
5 – COMMON STOCK
On
April 25, 2014, the Company converted $55,000 of its convertible debt into 184,371 shares of common stock of the Company. Pre-split,
this equated to 55,000,000 shares.
On
June 2, 2015, the Company completed a reverse stock split of 40:1.
On June 10, 2015, the Company completed a reverse stock split of 8:1.
On
June 20, 2015, the Company issued 225,000,000 common shares pursuant to the acquisition of the White Channel property.
On
June 24, 2015, the Company issued a total of 45,000,000 shares to satisfy certain outstanding convertible debt in the amount of
$45,000.
NOTE
6 – INCOME TAXES
The
Company is subject to United States federal and state income taxes at an approximate rate of 35%. The amount taken into income
as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to
be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income
tax loss carry forwards, regardless of their time of expiry.
No
provision for income taxes has been provided in these financial statements due to the net loss for the periods ended March 31,
2017 and 2016.