|
ROYAL MINES AND MINERALS CORP.
|
|
CONDENSED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
For the Three Months Ended July 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net loss
|
$
|
(163,948
|
)
|
$
|
(185,995
|
)
|
|
Adjustments to reconcile net
loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,741
|
|
|
17,441
|
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
6,086
|
|
|
-
|
|
|
Other current assets
|
|
-
|
|
|
(5,860
|
)
|
|
Accounts payable
|
|
18,752
|
|
|
(1,107
|
)
|
|
Accounts payable - related parties
|
|
(553
|
)
|
|
5,651
|
|
|
Accrued interest
|
|
6,073
|
|
|
6,073
|
|
|
Accrued interest - related parties
|
|
33,737
|
|
|
24,351
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
(95,112
|
)
|
|
(139,446
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
10,000
|
|
|
-
|
|
|
Proceeds from borrowings -
related parties
|
|
76,000
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
86,000
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
(9,112
|
)
|
|
5,554
|
|
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING OF PERIOD
|
|
12,087
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
$
|
2,975
|
|
$
|
5,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
$
|
189
|
|
$
|
-
|
|
|
Income taxes paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on marketable
securities
|
$
|
-
|
|
$
|
4,248
|
|
See accompanying notes to these condensed unaudited financial
statements.
F-3
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
|
1.
|
DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
SIGNIFICANT POLICIES
|
|
|
|
|
|
Basis of Presentation
– The accompanying financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”). Royal
Mines and Minerals Corp’s (the “Company”) fiscal year-end is April
30.
|
|
|
|
|
|
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial position,
results of operations, cash flows, and stockholders' deficit in conformity
with U.S. GAAP. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a
normal recurring nature. Operating results for the three months ended July
31, 2017 are not necessarily indicative of the results that can be
expected for the year ending April 30, 2018.
|
|
|
|
|
|
Description of Business
– The Company's primary
objectives are to 1) commercially and viably extract and refine precious
metals from specific coal ash (fly and bottom), ores and other leachable
assets, 2) use its proprietary processes to convert specific ore bodies
and coal ash landfills into valuable assets, and 3) joint venture, acquire
and develop mining projects in North America. The Company has not yet
realized significant revenues from its primary objectives.
|
|
|
|
|
|
History
– The Company was incorporated on December
14, 2005 under the laws of the State of Nevada. On June 13, 2007, the
Company incorporated a wholly-owned subsidiary, Royal Mines Acquisition
Corp., in the state of Nevada.
|
|
|
|
|
|
On October 5, 2007, Centrus Ventures Inc. (Centrus)
completed the acquisition of Royal Mines Inc. (“Royal Mines”). The
acquisition of Royal Mines was completed by way of a “triangular merger”
pursuant to the provisions of the Agreement and Plan of Merger dated
September 24, 2007 (the “First Merger Agreement”) among Centrus, Royal
Mines Acquisition Corp. (“Centrus Sub”), a wholly owned subsidiary of
Centrus, Royal Mines and Kevin B. Epp, the former sole executive officer
and director of Centrus. On October 5, 2007, under the terms of the First
Merger Agreement, Royal Mines was merged with and into Centrus Sub, with
Centrus Sub continuing as the surviving corporation (the “First
Merger”).
|
|
|
|
|
|
On October 6, 2007, a second merger was completed
pursuant to an Agreement and Plan of Merger dated October 6, 2007 (the
“Second Merger Agreement”) between Centrus and its wholly owned
subsidiary, Centrus Sub, whereby Centrus Sub was merged with and into
Centrus, with Centrus continuing as the surviving corporation (the “Second
Merger”). As part of the Second Merger, Centrus changed its name from
“Centrus Ventures Inc.” to “Royal Mines And Minerals Corp.” (“the
Company”). Other than the name change, no amendments were made to the
Articles of Incorporation.
|
|
|
|
|
|
Under the terms and conditions of the First Merger
Agreement, each share of Royal Mines’ common stock issued and outstanding
immediately prior to the completion of the First Merger was converted into
one share of Centrus’ common stock. As a result, a total of 32,183,326
shares of Centrus common stock were issued to former stockholders of Royal
Mines. In addition, Mr. Epp surrendered 23,500,000 shares of Centrus
common stock for cancellation in consideration of payment by Centrus of
$0.001 per share for an aggregate consideration of $23,500. As a result,
upon completion of the First Merger, the former stockholders of Royal
Mines owned approximately 69.7% of the issued and outstanding common
stock.
|
|
|
|
|
|
As such, Royal Mines is deemed to be the acquiring
enterprise for financial reporting purposes. All acquired assets and
liabilities of Centrus were recorded at fair value on the date of the
acquisition, as required by the purchase method of accounting, and the
tangible net liabilities were debited against equity of the Company. There
are no continuing operations of Centrus from the date of
acquisition.
|
F-6
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
Going Concern
– The accompanying
financial statements were prepared on a going concern basis in accordance with
U.S. GAAP. The going concern basis of presentation assumes that the Company will
continue in operation for the next twelve months and will be able to realize its
assets and discharge its liabilities and commitments in the normal course of
business and does not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the Company’s inability to
continue as a going concern. The Company’s history of losses, working capital
deficit, capital deficit, minimal liquidity and other factors raise substantial
doubt about the Company’s ability to continue as a going concern. In order for
the Company to continue operations beyond the next twelve months and be able to
discharge its liabilities and commitments in the normal course of business it
must raise additional equity or debt capital and continue cost cutting measures.
There can be no assurance that the Company will be able to achieve sustainable
profitable operations or obtain additional funds when needed or that such funds,
if available, will be obtainable on terms satisfactory to management.
If the Company continues to incur
operating losses and does not raise sufficient additional capital, material
adverse events may occur including, but not limited to, 1) a reduction in the
nature and scope of the Company’s operations and 2) the Company’s inability to
fully implement its current business plan. There can be no assurance that the
Company will successfully improve its liquidity position. The accompanying
financial statements do not reflect any adjustments that might be required
resulting from the adverse outcome relating to this uncertainty.
As of July 31, 2017, the Company had
cumulative net losses of $19,733,967 from operations since inception and had
negative working capital of $1,781,095. For the three months ended July 31,
2017, the Company incurred a net loss of $163,948 and had net cash used in
operating activities of $95,112. For the three months ended July 31, 2016 the
Company incurred a net loss of $185,995 and had net cash used in operating
activities of $139,446. The Company has not fully started its minerals
processing operations, raising substantial doubt about its ability to continue
as a going concern.
To address liquidity constraints, the
Company will seek additional sources of capital through the issuance of equity
or debt financing. Additionally, the Company has reduced expenses, elected to
defer payment of certain obligations, deferred payment of our CEO’s salary and
reduced staffing levels to conserve cash. The Company is focused on continuing
to reduce costs and obtaining additional funding. There is no assurance that
such funding will be available on terms acceptable to the Company, or at all. If
the Company raises additional funds by selling additional shares of capital
stock, securities convertible into shares of capital stock, or by issuing debt
convertible into shares of capital stock, the ownership interest of the
Company’s existing common stock holders will be diluted.
Use of Estimates
- The
preparation of financial statements in conformity with U.S. 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 revenue and
expenses during the reporting period. By their nature, these estimates are
subject to measurement uncertainty and the effect on the financial statements of
changes in such estimates in future periods could be significant. Significant
areas requiring management’s estimates and assumptions include the valuation of
stock-based compensation, impairment analysis of long-lived assets, and the
realizability of deferred tax assets. Actual results could differ from those
estimates.
Cash and Cash Equivalents
- The
Company considers all investments with an original maturity of three months or
less to be a cash equivalent.
Property and Equipment
-
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided principally on the straight-line method over the
estimated useful lives of the assets, which are generally 3 to 10 years. The
cost of repairs and maintenance is charged to expense as incurred. Expenditures
for property betterments and renewals are capitalized. Upon sale or other
disposition of a depreciable asset, cost and accumulated
depreciation are removed from the accounts and any gain or loss is reflected in
operating expenses.
F-7
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
Mineral Exploration and Development
Costs
– Exploration expenditures incurred prior to entering the development
stage are expensed and included in mineral exploration and evaluation expense.
Impairment of Long-Lived Assets
– The Company reviews and evaluates long-lived assets for impairment when events
or changes in circumstances indicate the related carrying amounts may not be
recoverable. The assets are subject to impairment consideration under ASC
360-10-35-17,
Measurement of an Impairment Loss
, if events or
circumstances indicate that their carrying amount might not be recoverable.
Various factors could impact our
ability to achieve forecasted production schedules. Additionally, commodity
prices, capital expenditure requirements and reclamation costs could differ from
the assumptions the Company may use in cash flow models used to assess
impairment. The ability to achieve the estimated quantities of recoverable
minerals from mineral interests involves further risks in addition to those
factors applicable to mineral interests where proven and probable reserves have
been identified, due to the lower level of confidence that the identified
mineralized material can ultimately be mined economically.
Research and Development
- All
research and development expenditures are expensed as incurred.
Per Share Amounts
- Basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding. In computing diluted
earnings per share, the weighted average number of shares outstanding is
adjusted to reflect the effect of potentially dilutive securities. Potentially
dilutive shares, such as stock options and warrants, are excluded from the
calculation when their inclusion would be anti-dilutive, such as when the
exercise price of the instrument exceeds the fair market value of the Company’s
common stock and when a net loss is reported. The dilutive effect of convertible
debt securities is reflected in the diluted earnings (loss) per share
calculation using the if-converted method. Conversion of the debt securities is
not assumed for purposes of calculating diluted earnings (loss) per share if the
effect is anti-dilutive. As of July 31, 2017, and 2016, stock options and
warrants outstanding were 169,325,129 and 165,785,129, respectively, but were
not considered in the computation of diluted earnings per share as their
inclusion would be anti-dilutive.
Income Taxes
– For interim
reporting periods, the Company uses the annualized effective tax rate (“AETR”)
method to calculate its income tax provision. Under this method, the AETR is
applied to the interim year-to-date pre-tax losses to determine the income tax
benefit or expense for the year-to-date period. The income tax benefit or
expense for a quarter represents the difference between the year-to-date income
tax benefit or expense for the current year-to-date period less such amount for
the immediately preceding year-to-date period. Management considers the impact
of all known events in its estimation of the Company’s annual operating results
and AETR.
The Company follows the liability
method of accounting for income taxes. This method recognizes certain temporary
differences between the financial reporting basis of liabilities and assets and
the related income tax basis for such liabilities and assets. This method
generates either a net deferred income tax liability or asset as measured by the
statutory tax rates in effect. The effect of a change in tax rates is recognized
in operations in the period that includes the enactment date. The Company
records a valuation allowance against any portion of those deferred income tax
assets when it believes, based on the weight of available evidence, it is more
likely than not that some portion or all the deferred income tax asset will not
be realized.
Stock-Based Compensation
– The
Company accounts for share based payments in accordance with ASC 718,
Compensation - Stock Compensation
, which requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on the grant date fair value of the
award. In accordance with ASC 718-10-30-9,
Measurement Objective – Fair Value
at Grant Date
, the Company estimates the fair value of the award using a
valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company
believes this model provides the best estimate of fair value due to its
ability to incorporate inputs that change over time, such as volatility
and interest rates. Compensation cost is recognized over the requisite
service period which is generally equal to the vesting period. Upon
exercise, shares issued will be newly issued shares from authorized common
stock.
F-8
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
|
|
ASC 505, "Compensation-Stock Compensation", establishes
standards for the accounting for transactions in which an entity exchanges
its equity instruments to non-employees for goods or services. Under this
transition method, stock compensation expense includes compensation
expense for all stock-based compensation awards granted on or after
January 1, 2006, based on the grant-date fair value estimated in
accordance with the provisions of ASC 505.
|
|
|
|
|
|
Recent Accounting Standards
– From time to time,
new accounting pronouncements are issued by the Financial Accounting
Standards Board (FASB) that are adopted by the Company as of the specified
effective date. Unless otherwise discussed, management believes that the
impact of recently issued standards did not or will not have a material
impact on the Company’s financial position, results of operations, or cash
flows upon adoption.
|
|
|
|
|
|
In February 2016, the FASB issued Accounting Standard
(“ASU”) 2016-02, “Leases,” which requires lessees to put most leases on
their balance sheets, but recognize the expenses on their income
statements in a manner like current practice. ASU 2016-02 states that a
lessee would recognize a lease liability for the obligation to make lease
payments and a right-to-use asset for the right to use the underlying
asset for the lease term. The new standard is effective for annual periods
beginning after December 15, 2018 and interim periods within those years.
Early adoption is permitted. The standard will be effective for the
Company beginning May 1, 2019. The Company is currently evaluating the
impact to its condensed financial statements.
|
|
|
|
|
2.
|
SCOTTSDALE FACILITY AGREEMENT
|
|
|
|
|
|
On April 16, 2014, the Company entered into a loan and
joint venture agreement (the “Agreement”) with GJS Capital Corp. (the
"Creditor"). Under the terms of the Agreement, the Creditor loaned the
Company $150,000 convertible note (the “Principal”) and agreed to form a
joint venture with the Company for constructing and operating a processing
plant at the Scottsdale facility, an existing facility, utilizing the
Company’s licensed Technology. In addition, the Creditor was to advance
$250,000 plus up to 15% for contingencies, a total of $287,500, to fund
the initial construction and operation costs of the joint venture. The
advances were not expected to be paid back to the Creditor. The Company
received a total of $329,000 towards the joint venture and treated the
funds as contributed capital, since in substance the Creditor secured
future revenue of the Scottsdale facility operations with such
funds.
|
|
|
|
|
|
On September 23, 2016, the Company entered into an
amended and restated loan and joint venture agreement (the “Amendment
Agreement”) with the Creditor and Gregg Sedun (the “Consultant”). The
Amendment Agreement replaces in its entirety the Agreement, between the
Company and the Creditor.
|
|
|
|
|
|
Under the terms of the Amendment Agreement, the Creditor
has agreed to extend the Principal. The loan bears interest at a rate of
6% per annum, compounded annually and is due on demand. The Company
settled the $329,000 joint venture advance in exchange for 15,065,570
shares of common stock of the Company, along with 1,400,000 of the
Company’s common shares of Gainey Capital Corp.
|
|
|
|
|
|
At any time prior to the Principal being paid back in
full, the Creditor may elect to receive units (each a “Unit") of the
Company in exchange for any portion of the Principal outstanding based on
one Unit for each $0.05 of indebtedness converted (the “Unit Conversion
Option"). Each Unit consists of one share of the Company’s common stock
and one warrant to purchase an additional share of the Company's common
stock at a price of $0.10 per share for two years from the date of
issuance. If the Creditor exercises the Unit Conversion Option, the
Creditor will forgive the interest that accrued on the converted portion
of the Principal.
|
F-9
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
|
|
If the Creditor exercises the Unit Conversion Option, the
Creditor will receive a net profits interest (the “Net Profits Interest”)
on any future profits received by the Company that are derived from the
Company’s Technology on the basis of 1% of the Company’s net profits for
every $10,000 of converted Principal. The Net Profits Interest will
terminate when the Creditor receives eight times the amount of converted
Principal.
|
|
|
|
|
|
The Company also agreed that in circumstances where the
Consultant introduces sub-licensees or joint venture partners
(“Partnership Interest”) to the Company for the purpose of using the
Company’s Technology, the Company shall pay 20% of the net cash proceeds
received by the Company from the Partnership Interest to the Consultant.
The Company is under no obligation to enter into an agreement or terminate
any future agreement with any Partnership Interest
|
|
|
|
|
3.
|
PROPERTY AND EQUIPMENT
|
|
|
|
|
|
Property and equipment consists of the
following:
|
|
|
|
As of
|
|
|
As of
|
|
|
|
|
July
31, 2017
|
|
|
April 30, 2017
|
|
|
Process, lab and office equipment
|
$
|
406,316
|
|
$
|
406,316
|
|
|
Less: accumulated depreciation
|
|
(358,364
|
)
|
|
(353,623
|
)
|
|
|
$
|
47,952
|
|
$
|
52,693
|
|
|
|
Depreciation expense was $4,741 and $17,441 for the three
months ended July 31, 2017 and 2016, respectively.
|
|
|
|
|
4.
|
ACCOUNTS PAYABLE - RELATED PARTIES
|
|
|
|
|
|
As of July 31, 2017 and April 30, 2017, accounts payable
– related parties of $445,705 and $446,258, respectively, mainly consisted
of expenses paid by and consulting fees due to the CEO of the
Company.
|
|
|
|
|
5.
|
CONVERTIBLE LOANS PAYABLE AND ACCRUED
INTEREST
|
|
|
|
|
|
As of July 31, 2017 and April 30, 2017, convertible loans
payable of $268,030 and $258,030, respectively, mainly consists of
borrowings payable to unrelated third parties. Convertible loans were
assessed for the beneficial conversion feature (“BCF”), but none. As of
July 31, 2017 and April 30, 2017, accrued interest on these loans was
$92,530 and $87,224, respectively.
|
|
|
|
|
|
On April 16, 2014, the Company entered into a loan and
joint venture agreement (the “Agreement”) with GJS Capital Corp. (the
"Creditor"). Under the terms of the Agreement, the Creditor loaned the
Company $150,000 convertible note (the “Principal”).
|
|
|
|
|
|
On September 23, 2016, the Company entered into an
amended and restated loan and joint venture agreement (the “Amendment
Agreement”) with the Creditor and Gregg Sedun (the “Consultant”). The
Amendment Agreement replaces in its entirety the Agreement, between the
Company and the Creditor.
|
|
|
|
|
|
The Creditor has agreed to extend the Principal. The loan
bears interest at a rate of 6% per annum, compounded annually and is due
on demand. As of July 31, 2017 and April 30, 2017, accrued interest on
this loan was $33,092 and $30,792, respectively. Interest expense on this
loan was $2,300 for the three months ended July 31, 2017 and
2016.
|
|
|
|
|
|
The Creditor may elect to receive units (each a “Unit")
of the Company in exchange for any portion of the Principal outstanding
based on one Unit for each $0.05 of indebtedness converted (the “Unit
Conversion Option"). Each Unit consists of one share of the Company’s
common stock and one warrant to purchase an additional share of the
Company's common stock at a price of $0.10 per share for two years from
the date of issuance. If the Creditor exercises the Unit Conversion
Option, the Creditor will forgive the interest that accrued on the
converted portion of the Principal.
|
F-10
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
|
|
(UNAUDITED)
|
|
|
If the Creditor exercises the Unit Conversion Option, the
Creditor will receive a net profits interest (the “Net Profits Interest”)
on any future profits received by the Company that are derived from the
Company’s Technology based on 1% of the Company’s net profits for every
$10,000 of converted Principal. The Net Profits Interest will terminate
when the Creditor receives eight times the amount of converted
Principal.
|
|
|
|
|
|
|
A separate loan from another unrelated party bears 12%
interest, is unsecured and is due on demand. As of July 31, 2017 and April
30, 2017, accrued interest on this loan was $59,438 and $56,432,
respectively. Interest expense was $3,006 for the three months ended July
31, 2017 and 2016.
|
|
|
|
|
|
|
The creditor may elect to receive units (each a “Unit")
of the Company in exchange for any portion of their loan outstanding based
on one Unit for each $0.05 of indebtedness converted. Each Unit consists
of one share of the Company’s common stock and one warrant to purchase an
additional share of the Company's common stock at a price of $0.10 per
share for two years from the date of issuance.
|
|
|
|
|
|
6.
|
CONVERTIBLE LOANS PAYABLE AND ACCRUED INTEREST –
RELATED PARTIES
|
|
|
|
|
|
|
As of July 31, 2017 and April 30, 2017, convertible loans
payable – related parties of $1,353,000 and $1,277,000, respectively,
mainly consists of borrowings, directly and indirectly, from the CEO of
the Company. Convertible loans – related parties were assessed for the
beneficial conversion feature (“BCF”), but none. The balance bears 10%
interest, is secured by the equipment in the Scottsdale plant and is due
December 31, 2018. The creditor may elect to receive units (each a “Unit")
of the Company in exchange for any portion of the loan outstanding based
on one Unit for each $0.05 of indebtedness converted. Each Unit consists
of one share of the Company’s common stock and one warrant to purchase an
additional share of the Company's common stock at a price of $0.10 per
share for two years from the date of issuance.
|
|
|
|
|
|
|
As of July 31, 2017 and April 30, 2017, accrued interest
– related party was $350,598 and $316,861, respectively. Related parties –
interest expense was $33,737 and $24,351 for the three months ended July
31, 2017 and 2016, respectively.
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7.
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CONVERTIBLE NOTES PAYABLE
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|
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As of July 31, 2017 and April 30, 2017, convertible notes
payable consists of an unsecured $50,000 payable to New Verde River Mining
and Robert H. Gunnison. Convertible notes payable was amended in the prior
year and assessed for BCF, but none. The note payable bears 6% interest
annually, is unsecured and is due on demand. As of July 31, 2017 and April
30, 2017, accrued interest was $29,842 and $29,075, respectively. Interest
expense was $766 for the three months ended July 31, 2017 and 2016,
respectively.
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The Creditor may elect to receive units (each a “Unit")
of the Company in exchange for any portion of the note outstanding based
on one Unit for each $0.05 of indebtedness converted. Each Unit consists
of one share of the Company’s common stock and one warrant to purchase an
additional share of the Company's common stock at a price of $0.10 per
share for two years from the date of issuance.
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8.
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COMMITMENTS AND CONTINGENCIES
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Lease obligations
– The Company has operating
leases for its corporate office, corporate housing and plant facilities.
All operating leases are month-to-month. Future minimum lease payments
under the operating leases as of July 31, 2017 are as
follows:
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|
Fiscal year ending April 30, 2018
|
$
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6,486
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|
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Fiscal year ending April 30, 2019
|
$
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-
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|
F-11
|
ROYAL MINES AND MINERALS CORP.
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
|
|
JULY 31, 2017
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|
(UNAUDITED)
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|
Fiscal year ending April 30, 2020
|
$
|
-
|
|
|
Fiscal year ending April 30, 2021
|
$
|
-
|
|
|
Fiscal year ending April 30, 2022
|
$
|
-
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|
Lease expense was $19,458 and $20,883 for the three
months ended July 31, 2017 and 2016, respectively.
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|
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|
Legal proceedings
– On May 1, 2015, the Company
received an amended notice of civil claim (the “Claim”), dated April 1,
2015 (original filed on December 31, 2014), that was filed in the Supreme
Court of British Columbia, by 1254859 Ontario Inc. (the “Plaintiff”),
alleging breach of specific performance and breach of contract in relation
to the Golden Anvil Asset Purchase by Gainey (see Note 3). The Plaintiff
seeks to recover damages of including, but not limited to: 1) 1,000,000
shares of Gainey stock; 2) damages in lieu of specific performance; and 3)
damages for breach of contract.
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On June 1, 2015, the Company filed a response to the
Claim, denying: 1) entering into any oral agreement; 2) that the Plaintiff
presented a potential transaction with Gainey; 3) that there was any fee
payable to Plaintiff upon completion of a transaction with Gainey; 4) any
existence of an agreement with Plaintiff and as such, the Gainey
transaction was not related to any agreement with Plaintiff; and 5) any
obligation to pay a fee to Plaintiff, contractually or otherwise. While
the Company intends to vigorously defend the lawsuit, there is no
assurance that the Company will be able to successfully defend the
lawsuit.
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On January 29, 2016, the Plaintiff filed a Notice of
Application (the “Application”) in the Supreme Court of British Columbia,
seeking an injunction to prohibit the distribution of shares of Gainey
Capital Corp. held by the Company. A hearing took place on March 17, 2016.
On June 16, 2016, the Application was dismissed against the
Company.
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No other legal proceedings are pending, threatened or
contemplated.
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9.
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STOCKHOLDERS’ EQUITY
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Common and Preferred Stock:
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|
As of July 31, 2017 and April 30, 2017, there were
245,199,204 shares of common stock outstanding and zero shares of
preferred stock outstanding.
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10.
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STOCK OPTIONS AND WARRANTS
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|
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|
As of July 31, 2017 and April 30, 2017, there were
34,300,000 stock options and 135,025,129 stock warrants outstanding and
exercisable.
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11.
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RELATED PARTY TRANSACTIONS
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|
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|
For the three months ended July 31, 2017 and 2016, the
Company incurred $51,000 and $49,000, respectively, in consulting fees
expense from companies with a common director or officer.
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12.
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SUBSEQUENT EVENTS
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|
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None
|
F-12