Gentor Resources Inc 6-K, filed May 2, 2022
Gentor Resources Inc. (GNTOF)
About this 6-K
Gentor Resources Inc filed this 6-K on May 2, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2022.
Commission File Number: 333-130386
GENTOR RESOURCES INC.
(Exact Name of Registrant as Specified in Charter)
1 FIRST CANADIAN PLACE, SUITE 7070
100 KING
STREET WEST,
TORONTO, ONTARIO, M5X 1E3, CANADA
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Form 20-F
[X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GENTOR RESOURCES INC. | |
| (Registrant) | |
| Date: April 29, 2022 | By: /s/ Donat K. Madilo |
| Name: Donat K. Madilo | |
| Title: Chief Financial Officer |
EXHIBIT INDEX
GENTOR RESOURCES INC.
CONSOLIDATED FINANCIAL STATEMENTS
As at and for the years ended December 31, 2021 and 2020
(Stated in US dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of Gentor Resources Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Gentor Resources Inc. (the "Company") as of December 31, 2021 and 2020, and the related consolidated statements of income (loss) and comprehensive income (loss), cash flows and shareholders' deficiency for the years ended December 31, 2021, 2020 and 2019, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years ended December 31, 2021, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which describe the events and conditions that indicate the existence of material uncertainties that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company's auditor since 2019.
Chartered Professional Accountants
Licensed Public Accountants
Markham, Canada
April 27, 2022
Kreston GTA LLP | 8953 Woodbine Avenue, Markham, Ontario, Canada, L3R 0J9, T. 905.474.5593 | www.krestongta.com
A member of Kreston International | A global network of independent accounting firm
GENTOR RESOURCES INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(Stated in US dollars)
| As at | As at | |||||
| December 31, 2021 | December 31, 2020 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 4,085 | $ | 793 | ||
| Due from related parties (note 4) | - | 319 | ||||
| Advances receivable (note 3) | 16,016 | 15,337 | ||||
| Total current assets | 20,101 | 16,449 | ||||
| Total assets | $ | 20,101 | $ | 16,449 | ||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable | $ | 144,313 | $ | 385,877 | ||
| Accrued liabilities | 72,284 | 142,055 | ||||
| Due to related parties (note 4) | 588,377 | 295,481 | ||||
| Total current liabilities | 804,974 | 823,413 | ||||
| Loan (note 5) | 25,079 | 24,182 | ||||
| Total liabilities | $ | 830,053 | $ | 847,595 | ||
| SHAREHOLDERS' DEFICIENCY | ||||||
| Authorized 500,000,000 Common Shares, $0.0008 per share par value (note 7a) Issued and outstanding 38,906,742 Common Shares (December 31, 2020 - 38,906,742) (note 7b) |
31,125 | 31,125 | ||||
| Additional paid-in capital | 43,325,272 | 43,325,272 | ||||
| Deficit accumulated during the exploration stage | (44,166,349 | ) | (44,187,543 | ) | ||
| Total shareholders' deficiency | (809,952 | ) | (831,146 | ) | ||
| Total liabilities and shareholders' deficiency | $ | 20,101 | $ | 16,449 |
Nature of operations and going concern (note 1)
Environmental contingency (note 10)
See accompanying notes to the consolidated financial statements
GENTOR RESOURCES INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(Stated in US dollars)
| For the year | For the year | For the year | |||||||
| ended | ended | ended | |||||||
| December 31, | December 31, | December 31, | |||||||
| 2021 | 2020 | 2019 | |||||||
| Expenses | |||||||||
| Management and consulting fees | $ | - | $ | - | $ | 62,381 | |||
| Professional fees | 60,474 | 56,874 | 66,159 | ||||||
| General and administrative expenses | 252,492 | 265,767 | 365,016 | ||||||
| Stock-based compensation expense (note 7c) | - | - | 41,227 | ||||||
| Net operating loss | (312,966 | ) | (322,641 | ) | (534,783 | ) | |||
| Interest income | 32 | 80 | 522 | ||||||
| Foreign exchange gain (loss) | 114 | (8,634 | ) | (538 | ) | ||||
| Realized loss on disposal of investment in shares | - | - | (120,809 | ) | |||||
| Gain on common share purchase warrants | - | - | 59,740 | ||||||
| Writeback of accounts payable and accrued liabilities | 334,014 | - | - | ||||||
| Other income including government assistance (notes 5 and 6) | - | 30,110 | - | ||||||
| Gain on settlement | - | - | 300,000 | ||||||
| Net income (loss) and comprehensive (income) loss | $ | 21,194 | $ | (301,085 | ) | $ | (295,868 | ) | |
| Net income (loss) and comprehensive income (loss) per share - basic | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | |
| Net income (loss) and comprehensive income (loss) per share - diluted | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | |
| Weighted average number of shares - basic | 38,906,742 | 38,906,742 | 37,153,317 | ||||||
| Weighted average number of shares - diluted | 39,946,742 | 38,906,742 | 37,153,317 |
See accompanying notes to the consolidated financial statements
GENTOR RESOURCES INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US dollars)
| For the year ended | For the year ended | For the year ended | |||||||
| December 31, 2021 | December 31, 2020 | December 31, 2019 | |||||||
| Operating activities: Net income (loss) | $ | 21,194 | $ | (301,085 | ) | $ | (295,868 | ) | |
| Adjustments required to reconcile net loss with net cash generated by (utilized in) operating activities | |||||||||
| Fair value gain on government loan (note 5) | - | (5,084 | ) | - | |||||
| Accretion expense on government loan (note 5) | 897 | 598 | - | ||||||
| Gain on settlement | - | - | (300,000 | ) | |||||
| Loss on disposal of investment in shares | - | - | 120,809 | ||||||
| Stock-based compensation expense (note 7c) | - | - | 41,227 | ||||||
| Gain on common share purchase warrants | - | - | (59,740 | ) | |||||
| Changes in non-cash working capital balances | |||||||||
| Due from related parties | 319 | 115,701 | 40,810 | ||||||
| Due to related parties | 292,896 | 73,390 | 113,750 | ||||||
| Accounts receivable | - | 50,000 | 50,000 | ||||||
| Advances receivable | (679 | ) | 961 | (1,769 | ) | ||||
| Accounts payable | (241,564 | ) | 40,150 | (6,150 | ) | ||||
| Accrued liabilities | (69,771 | ) | (3,540 | ) | 25,595 | ||||
| Cash generated by (utilized in) operating activities | 3,292 | (28,909 | ) | (271,336 | ) | ||||
| Investing activities: | |||||||||
| Proceeds on disposal of investment in shares | - | - | 79,191 | ||||||
| Cash utilized in investing activities | - | - | 79,191 | ||||||
| Financing activities: | |||||||||
| Proceeds from common shares issued, net of costs (note 7b) | - | - | 187,125 | ||||||
| Loan received (note 5) | - | 28,668 | - | ||||||
| Cash provided by financing activities | - | 28,668 | 187,125 | ||||||
| Net cash inflow (outflow) | 3,292 | (241 | ) | (5,020 | ) | ||||
| Cash, beginning of the year | 793 | 1,034 | 6,054 | ||||||
| Cash, end of the year | $ | 4,085 | $ | 793 | $ | 1,034 |
See accompanying notes to the consolidated financial statements
GENTOR RESOURCES INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
(Stated in US dollars)
| Number of | Common | Total | |||||||||||||
| common | shares | Additional | Accumulated | shareholders' | |||||||||||
| shares | amount | paid-in capital | deficit | deficiency | |||||||||||
| Balance at December 31, 2018 | 33,906,742 | $ | 27,125 | $ | 43,100,920 | $ | (43,590,590 | ) | $ | (462,545 | ) | ||||
| Net loss for the year | - | - | - | (295,868 | ) | (295,868 | ) | ||||||||
| Stock-based compensation expense | - | - | 41,227 | - | 41,227 | ||||||||||
| Common shares issued | 5,000,000 | 4,000 | 183,125 | - | 187,125 | ||||||||||
| Balance at December 31, 2019 | 38,906,742 | $ | 31,125 | $ | 43,325,272 | $ | (43,886,458 | ) | $ | (530,061 | ) | ||||
| Net loss for the year | - | - | - | (301,085 | ) | (301,085 | ) | ||||||||
| Balance at December 31, 2020 | 38,906,742 | $ | 31,125 | $ | 43,325,272 | $ | (44,187,543 | ) | $ | (831,146 | ) | ||||
| Net income for the year | - | - | - | 21,194 | 21,194 | ||||||||||
| Balance at December 31, 2021 | 38,906,742 | $ | 31,125 | $ | 43,325,272 | $ | (44,166,349 | ) | $ | (809,952 | ) |
See accompanying notes to the consolidated financial statements
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GENTOR RESOURCES INC. |
1. NATURE OF OPERATIONS AND GOING CONCERN
NATURE OF OPERATIONS
Gentor Resources Inc. (the "Company" or "Gentor"), a Cayman Islands corporation, is an exploration stage corporation formed for the purpose of prospecting and developing mineral properties.
The business of exploring for minerals involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish ore reserves, to develop metallurgical processes, to acquire construction and operating permits and to construct mining and processing facilities.
GOING CONCERN
The accompanying audited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2021, the Company had a net income and comprehensive income of $21,194 (2020 - net loss and comprehensive loss of $301,085 and 2019 - $295,868, repectively). The Company also had a deficit accumulated during the exploration stage of $44,166,349 as at December 31, 2021 (December 31, 2020 - $44,187,583), and a working capital deficiency of $784,873 as at December 31, 2021 (December 31, 2020 - working capital deficiency of $806,964).
In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or ability to raise funds.
Management is also closely monitoring the impact of COVID-19 on the Company's business, including the impact on employees and liquidity. In order for the Company to continue as a going concern and fund its operations, the Company will require additional financing. The availability of financing will be affected by, among other things, the state of the capital markets considering the impact of COVID-19.
The Company intends to fund operations through equity financing arrangements. Such financings may be insufficient to fund its ongoing working capital and other cash requirements. The Company's continued existence is dependent upon it emerging from the exploration stage, obtaining additional financing to continue operations, exploring and developing mineral properties and the discovery, development and sale of ore reserves.
These circumstances represent material uncertainties which cast substantial doubt on the Company's ability to continue on a going concern basis. These audited consolidated financial statements do 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 possible inability of the Company to continue as a going concern. Such adjustments may be material.
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GENTOR RESOURCES INC. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
a) BASIS OF CONSOLIDATION
The Company's audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Gentor International Limited ("Gentor International"). Gentor International was incorporated on December 12, 2011 under the laws of the British Virgin Islands. Intercompany balances and transactions have been eliminated in preparing the consolidated financial statements.
b) MINERAL PROPERTIES AND EXPLORATION COSTS
Exploration costs pertaining to mineral properties with no proven reserves are charged to operations as incurred. When it is determined that mineral properties can be economically developed as a result of establishing proven and probable reserves, costs incurred to develop such properties are capitalized. Such costs will be depreciated using the units-of-production method over the estimated life of the proven and probable reserves. The Company is in the exploration stage and has not yet realized any revenue from operations. All exploration expenditures have been expensed as incurred (see Note 3).
c) CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation. Depreciation and amortization has been recorded as follows:
Office equipment - Straight line basis over four years
Leasehold improvements - Straight line basis over five years
d) ASSET IMPAIRMENT
The Company monitors events and changes in circumstances, which may require an assessment of the recoverability of its long-lived assets. If required, the Company would assess recoverability using estimated undiscounted future operating cash flows of the related asset or asset grouping. Assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the carrying amount of an asset is not recoverable, an impairment loss is recognized in operations, measured by comparing the carrying amount of the asset to its fair value. No impairment losses or reversals of previously recorded impairments were recorded during the years ended December 31, 2021, 2020 and 2019.
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GENTOR RESOURCES INC. |
e) ASSET RETIREMENT OBLIGATIONS
The fair value of the liability of an asset retirement obligation is recorded when it is incurred and the corresponding increase to the asset is depreciated over the estimated life of the asset. The liability is periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the asset retirement obligation. The Company has not identified or recorded any asset retirement obligations on its balance sheet as at December 31, 2021 and 2020.
f) STOCK-BASED COMPENSATION
The Company has a stock option plan, which is described in note 9(c). The Company uses the fair value method of accounting for stock options granted to directors, officers and employees whereby the fair value of options granted measured at the grant date is recorded as a compensation expense in the financial statements on a straight line basis over the requisite employee service period (usually the vesting period). Compensation expense on stock options granted to non-employees is measured at the earlier of the completion of performance and the date the options are vested using the fair value method and is recorded as an expense in the same period as if the Company had paid cash for the goods or services received. Any consideration paid by directors, officers, employees and consultants on exercise of stock options or purchase of shares is credited to capital stock. Shares are issued from treasury upon the exercise of stock options. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For 2021 and 2020, the Company estimated that all options previously granted will vest. As the stock options are exercisable in Canadian dollars, and the Company's shares trade on a Canadian exchange, stock options are determined to be equity instruments.
g) CASH
Cash consists of bank balances. The Company maintains cash in bank deposit accounts in Canada that at times may exceed Canadian federally insured limits. The Company has not experienced any losses in such accounts.
h) FOREIGN EXCHANGE
The Company's functional and reporting currency is United States dollars. The functional currency of any foreign operations is United States dollars. Amounts in other than the functional currency are translated as follows: monetary assets and liabilities are translated at the spot rates of exchange in effect at the end of the period; non-monetary items are translated at historical exchange rates in effect on the dates of the transactions. Revenues and expense items are translated at average rates of exchange in effect during the period, except for depreciation, which is translated at its corresponding historical rate. Realized and unrealized exchange gains and losses are included in the consolidated statements of loss and comprehensive loss.
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GENTOR RESOURCES INC. |
i) USE OF ESTIMATES
The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. The Company bases its estimates and assumptions on historical experience, current facts, 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. Significant estimates and assumptions include those related to estimation of deferred income taxes, tax loss recoverability and fair value estimates for stock options and common share purchase warrants.
j) FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Instruments
The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor's carrying amount or exchange amount.
Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in any net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in operations.
Fair Value
The Company follows "Accounting Standards Codification" ASC 820-10 Fair Value Measurements and Disclosures for its financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period.
Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable in the market such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity.
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GENTOR RESOURCES INC. |
Derivative Financial Instruments
The Company reviews the terms of its equity instruments and other financing arrangements to determine whether or not there are embedded derivative instruments that are required to be accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services.
Derivative financial instruments are measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to profit or loss. For warrant-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to estimate fair value of the derivative instruments. For more complex derivative financial instruments, the Company uses acceptable pricing models to estimate fair value of the derivative instrument.
The classification of derivative instruments, including whether or not such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
k) INCOME TAXES
Deferred income taxes are reported for temporary differences between items of income or expense reported in the financial statements and those reported for income tax purposes, which require the use of the asset / liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, and for the tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the enacted 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 deferred taxes for the estimated future tax effects attributable to deductible temporary differences and loss carryforwards when realization is more likely than not. The deferred taxes for the Company amount to $nil at the balance sheet date.
ASC 740, "Income Taxes" requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not of being sustained upon examination and on the technical merits of the position. The Company does not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.
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GENTOR RESOURCES INC. |
l) LOSS PER SHARE
Basic loss per share calculations are based on the weighted-average number of common shares issued and outstanding during the period. Diluted earnings per share is calculated using the treasury method. The treasury method assumes that outstanding stock options and warrants with an average exercise price below market price of the underlying shares are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price of the common shares for the period.
m) ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE
Certain new standards, interpretations, amendments and improvements to existing standards were issued that are mandatory for accounting periods beginning on or after January 1, 2021. For the year ended December 31, 2021, there were no updates that are applicable or are consequential to the Company.
3. ADVANCES RECEIVABLE
The advances receivable include an unsecured loan of $15,282 (December 31, 2020 - $15,282), which is non-interest bearing and due on demand. Advances receivable as at December 31, 2021 also include prepaid expenses of $734 (December 31, 2020 - $55).
4. RELATED PARTY TRANSACTIONS
As of December 31, 2021, an amount of $359,938 (December 31, 2020 - $258,032) was owed to Arnold Kondrat, a director, Chief Executive Officer and President of the Company, which includes both salary and management fees in arrears and advances.
As of December 31, 2021, an amount of $228,439 was owed to Loncor Gold Inc. (December 31, 2020 - $37,449), a company with common directors, in relation to the payment of common general and administrative expenses.
All of the above related party transactions occurred in the normal course of operations and are unsecured, non-interest bearing, due on demand, and measured at the exchange amount as determined by management.
5. LOAN
In May 2020, the Company received a $28,668 (Cdn$40,000) line of credit ("CEBA LOC") with Toronto-Dominion Bank under the Canada Emergency Business Account ("CEBA") program funded by the Government of Canada. The CEBA LOC is non-interest bearing and can be repaid at any time without penalty.
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GENTOR RESOURCES INC. |
On January 1, 2021, the outstanding balance of the CEBA LOC automatically converted to a 2-year interest free term loan ("CEBA Term Loan"). The CEBA Term Loan may be repaid at any time without notice or the payment of any penalty. If 75% of the CEBA Term Loan is repaid on or before December 31, 2022, the repayment of the remining 25% of such CEBA Term Loan shall be forgiven. If on December 31, 2022, the Company exercises the option for a 3-year extension, 5% interest during the term extension period will aply on any balance remaining.
The Company recorded the CEBA LOC upon initial recognition at its fair value of $23,584 (Cdn$32,906) as at May 5th, 2020 using an effective interest rate of 3.45%. The difference of $5,084 between the fair value and the total amount of the CEBA LOC received has been recorded as a fair value gain on loans advanced in the consolidated statement of income (loss) and comprehensive income (loss). During the year ended December 31, 2021, interest of $897 has been accreted on the CEBA LOC and is included within "other income including government assistance" in the consolidated statement of income (loss) and comprehensive income (loss) (years ended December 31, 2020 and 2019 - $598 and $Nil, respectively).
As at December 31, 2021, the CEBA LOC is valued at $25,079 (Cdn$31,794) (December 31, 2020 - $24,182 (Cdn$ 30,789)).
6. GOVERNMENT ASSISTANCE
In April 2020, the Government of Canada announced the Canada Emergency Wage Subsidy ("CEWS") in order to help employers retain and/or return Canadian-based employees to payrolls in response to challenges posed by the COVID-19 pandemic. Gentor determined that it met the employer eligibility criteria and applied for the CEWS retroactively to March 15, 2020. Cash payments of $25,026 were received in the year 2020. The Company recorded a total gross subsidy of $25,026 under "interest and other income" in the consolidated statement of income (loss) and comprehensive income (loss) for the year ended December 31, 2020.
In July 2020, the program was redesigned and extended until December 2020. In September and November 2020, the Government of Canada announced further extensions of the program to June 2021. The Company intends to continue its participation in the CEWS program, subject to meeting the eligibility requirements. There are no unfulfilled conditions or other contingencies attaching to the current CEWS program.
7. SHARE CAPITAL
a) Authorized Share Capital
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GENTOR RESOURCES INC. |
The authorized share capital of the Company consists of 500,000,000 common shares with a par value of $0.0008 per share. Each common share entitles the holder to one vote and no holder of the common shares shall be entitled to any right of cumulative voting.
b) Issued Share Capital
In May 2019, the Company closed a non-brokered private placement of 5,000,000 common shares of the Company at a price of Cdn$0.05 per share for gross proceeds of Cdn$250,000 (US $187,125). Mr Kondrat purchased 3,000,000 of the said shares.
As of December 31, 2021, the Company had 38,906,742 issued and outstanding common shares (December 31, 2020 - 38,906,742).
c) Stock-Based Compensation
The Company has a stock option plan (the "Plan"). Stock options may be granted under the Plan from time to time by the board of directors of the Company to such directors, officers, employees and consultants of the Company or a subsidiary of the Company, and in such numbers, as are determined by the board at the time of the granting of the stock options. The total number of common shares of the Company issuable upon the exercise of all outstanding stock options granted under the Plan shall not at any time exceed 10% of the total number of outstanding common shares, from time to time. The exercise price of each stock option granted under the Plan shall be determined in the discretion of the board of directors of the Company at the time of the granting of the stock option, provided that the exercise price shall not be lower than the last closing price of the Company's common shares on the TSX Venture Exchange prior to the date the stock option is granted.
In June 2019, 1,000,000 stock options were granted under the Plan to the Company's officers and directors. Each such stock option entitles the holder to purchase one common share of the Company at a purchase price of $0.05 (Cdn$0.065) for a period of 5 years. The options vested on the four month anniversary of the grant date.
In July 2019, 40,000 stock options were granted under the Plan. Each such stock option entitles the holder to purchase one common share of the Company at a purchase price of $0.05 (Cdn$0.065) for a period of 5 years. The options vested on the four month anniversary of the grant date.
The following table summarizes the stock option information for the years ended December 31, 2021 and 2020:
|
GENTOR RESOURCES INC. |
| Weighted | ||||||||||||
| Weighted | average | |||||||||||
| average | Weighted | remaining | ||||||||||
| Number of | exercise price | average fair | contractual | |||||||||
| options | ($Cdn) | value ($Cdn) | life (in years) | |||||||||
| Closing Balance, December 31, 2019 | 1,040,000 | 0.065 | 0.065 | 4.49 | ||||||||
| Closing Balance, December 31, 2020 | 1,040,000 | 0.065 | 0.065 | 3.49 | ||||||||
| Closing Balance, December 31, 2021 | 1,040,000 | 0.065 | 0.065 | 2.49 |
The Black-Scholes option-pricing model was used to estimate values of all stock options granted based on the following assumptions for the options granted in June and July 2019:
(i) Risk-free interest rates: 1.40% - 1.53%, which are based on the Bank of Canada benchmark bonds, average yield 5-year rate in effect at the time of grant for bonds with maturity dates at the estimated term of the options ;
(ii) Expected volatility: 119.33% - 119.56%, which is based on the Company's historical stock prices;
(iii) Expected life: 5 years; and
(iv) Expected dividends: $nil
During the year ended December 31, 2021, the Company recognized $nil as stock-based compensation expense (years ended December 31, 2020 and 2019 - $nil and $41,227, respectively). As at December 31, 2021, the unrecognized stock based compensation expense is $nil (December 31, 2020 - $nil).
d) Loss Per Share
Basic and diluted loss per share was calculated on the basis of the weighted average number of common shares outstanding for the year ended December 31, 2021, amounting to 38,906,742 common shares (years ended December 31, 2020 and 2019 - 38,906,742 and 37,153,317, respectively).
The calculation of the weighted average number of diluted common shares outstanding does not include 1,040,000 stock options for the years ended December 31, 2021, 2020 and 2019 as they are anti-dilutive.
8. INCOME TAXES
a) The reconciliation of income taxes at statutory income tax rates in the United States of 21% (2020 - 21% and 2019 - 21%) to the income tax expense is as follows:
|
GENTOR RESOURCES INC. |
| Year ended December 31, | 2021 | 2020 | 2019 | ||||||
| $ | $ | $ | |||||||
| Gain(Loss) for the year before income tax | (48,023 | ) | (301,000 | ) | (296,000 | ) | |||
| Expected income tax recovery based on statutory rate | (10,000 | ) | (63,000 | ) | (62,000 | ) | |||
| Adjustment to expected income tax benefit: | |||||||||
| Permanent differences | - | - | (4,000 | ) | |||||
| Change in tax rate | - | - | - | ||||||
| Change in benefit of tax assets not recognized | 10,000 | 63,000 | 66,000 | ||||||
| - | - | - |
b) Deferred income tax
Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:
| Year ended December 31, | 2021 | 2020 | ||||
| $ | $ | |||||
| Non-capital loss carryforwards | 14,209,000 | 14,161,000 | ||||
| Capital loss carryforwards | 25,540,000 | 25,540,000 | ||||
| Capital assets | 108,000 | 108,000 | ||||
| Other | 115,000 | 115,000 | ||||
| Total | 39,972,000 | 39,924,000 |
|
GENTOR RESOURCES INC. |
The Company has non-capital losses in the United States of approximately $14.2 million available, which may be applied against future taxable income and which expire as follows:
| 2025 | 98,000 | ||
| 2026 | 224,000 | ||
| 2027 | 1,874,000 | ||
| 2028 | 3,340,000 | ||
| 2029 | 504,000 | ||
| 2030 | 1,017,000 | ||
| 2031 | 1,810,000 | ||
| 2032 | 1,690,000 | ||
| 2033 | 865,000 | ||
| 2034 | 667,000 | ||
| 2035 | 520,000 | ||
| 2036 | 238,000 | ||
| 2037 | 276,000 | ||
| 2038 | 361,000 | ||
| 2039 | 313,000 | ||
| 2040 | 364,000 | ||
| 2041 | 48,000 | ||
| 14,209,000 |
9. FINANCIAL RISK MANAGEMENT
a) FOREIGN CURRENCY RISK
Foreign currency risk is the risk that a variation in exchange rates between the United States dollar and other foreign currencies will affect the Company's operations and financial results. A portion of the Company's transactions are denominated in Canadian dollars. The Company is also exposed to the impact of currency fluctuations on its monetary assets and liabilities. Significant foreign currency gains or losses are reflected as a separate component in the consolidated statement of income (loss) and comprehensive income (loss). The Company has not used derivative instruments to reduce its exposure to foreign currency risk.
The following table indicates the impact of foreign currency risk on net working capital as at December 31, 2021. The table below also provides a sensitivity analysis of a 10 percent strengthening of the US dollar against the Canadian dollar which would have increased (decreased) the Company's net income (loss) by the amounts shown in the table below. A 10 percent weakening of the US dollar against the Canadian dollar would have had an equal but opposite effect as at December 31, 2021.
|
GENTOR RESOURCES INC. |
| Canadian | |||
| Dollars | |||
| Cash | $ | 3,899 | |
| Accounts payable | (138,709 | ) | |
| Loan | (40,000 | ) | |
| Total foreign currency working capital | (174,810 | ) | |
| US$ exchange rate at December 31, 2021 | 0.7888 | ||
| Total foreign currency net working capital in US$ | (137,890 | ) | |
| Impact of a 10% strengthening of the US$ on net income | (13,789 | ) |
b) MARKET RISK
Market risk is the potential for financial loss from adverse changes in underlying market factors, including foreign-exchange rates, commodity prices and stock based compensation costs.
c) DISCLOSURES OF FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
At December 31, 2021, the carrying values of the Company's cash, advances receivable, accounts payable, due to related parties and accrued liabilities approximate fair value.
10. ENVIRONMENTAL CONTINGENCY
Any exploration and evaluation activities of the Company are subject to laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its activities are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.
GENTOR RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2021
The following management's discussion and analysis ("MD&A"), which is dated as of April 27, 2022, provides a review of the activities, results of operations and financial condition of Gentor Resources Inc. (the "Company" or "Gentor") as at and for the financial year of the Company ended December 31, 2021 ("fiscal 2021") in comparison with those as at and for the financial years of the Company ended December 31, 2020 ("fiscal 2020") and December 31, 2019 ("fiscal 2019"), as well as future prospects of the Company. This MD&A should be read in conjunction with the audited consolidated financial statements of the Company for fiscal 2021, fiscal 2020 and fiscal 2019 (the "Annual Financial Statements"). As the Company's consolidated financial statements are prepared in United States dollars, all dollar amounts in this MD&A are expressed in United States dollars unless otherwise specified. Additional information relating to the Company, including the Company's annual report on Form 20-F, is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Forward-Looking Statements
The following MD&A contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding future plans and objectives of the Company) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: having relinquished its only project (the Karaburun project in Turkey) effective at the end of 2017, the Company currently does not have any commercial operations and has no material assets; while the Company is currently evaluating new business opportunities, the Company has only limited funds with which to identify and evaluate a potential asset or business for acquisition or participation, and no assurance can be given that a suitable asset or business will be identified and acquired on suitable terms; uncertainties relating to the availability and costs of financing in the future; changes in equity markets; the Company's history of losses and expectation of future losses; activities of the Company (including the Company's ability to secure financing) may be adversely impacted by the continued spread of COVID-19; and the other risks disclosed under the heading "Risk Factors" in the Company's annual report on Form 20-F.
Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
General
As described in the Going Concern note to the Annual Financial Statements (Note 1), the Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its cash requirements. The Company's continued existence is dependent upon it emerging from the exploration stage, obtaining additional financing to continue operations, exploring and developing mineral properties and the discovery, development and sale of ore reserves. Thus, management uses its judgment in determining whether the Company is able to continue as a going concern. See also the "Liquidity and Capital Resources" section of this MD&A.
In May 2019, the Company closed a non-brokered private placement of 5,000,000 common shares of the Company at a price of Cdn$0.05 per share for gross proceeds of Cdn$250,000 (US$187,125). Mr. Arnold T. Kondrat ("Mr. Kondrat"), who is Chief Executive Officer, President and a director of the Company, purchased 3,000,000 of the said shares.
In June 2019, the Company entered into a settlement agreement (the "Settlement Agreement") with Savannah Resources plc ("Savannah") relating to the deferred consideration payable to Gentor pursuant to the terms of the sale by Gentor to Savannah in July 2014 of the Company's properties in Oman (see Gentor's press release dated June 20, 2019 for a description of the said deferred consideration). Savannah is an AIM-listed resource development company. Under the Settlement Agreement, the Company and Savannah agreed to fully settle the said deferred consideration in exchange for (a) the payment by Savannah to the Company of $100,000 (with $50,000 being payable 30 days from the date of signing the Settlement Agreement and $50,000 being payable six months from the date of signing the Settlement Agreement), and (b) the issuance to the Company by Savannah of $200,000 worth of Savannah shares (being 3,008,025 shares). Such shares were subject to a six-month orderly market restriction and had all been disposed of by the Company by December 31, 2019.
Results of Operations
For fiscal 2021, the Company reported net income and comprehensive income of $21,194 ($0.00 per share), as compared to a net loss and comprehensive loss of $301,085 ($0.01 per share) and $295,868 ($0.01 per share) during fiscals 2020 and 2019, respectively. During fiscal 2021, variances in expenses occurred in the expense categories described below as compared to fiscals 2020 and 2019.
Management and consulting fees
Consulting fees for fiscal 2021 were $nil as compared to $nil and $62,381 for fiscals 2020 and 2019, respectively. The consulting fees incurred in fiscal 2019 were due to the Company's efforts to seek and evaluate new business opportunities.
Professional fees
Professional fees, which include legal and audit fees, slightly increased to $60,474 during fiscal 2021 compared to $56,874 during fiscal 2020 and $66,159 during fiscal 2019. The increase in professional fees in fiscal 2021 as compared to fiscal 2020 was related to increased legal fees. The decrease in professional fees in fiscal 2020 as compared to fiscal 2019 was mainly related to decreased legal fees.
General and administrative expenses
The Company incurred general and administrative expenses of $252,492 during fiscal 2021 as compared to $265,767 during fiscal 2020 and $365,016 during fiscal 2019. The expense items listed below are included in general and administrative expenses:
Travel and promotional
The Company incurred travel and promotional expenses of $1,383 during fiscal 2021 compared to $12,449 during fiscal 2020 and $22,149 incurred during fiscal 2019. The movements in travel and promotional expenses are in accordance with the Company seeking new business opportunities during fiscal 2019 and decreased promotional activity during fiscals 2021 and 2020.
Employee benefits
The Company's employee benefits expense was $155,346 for fiscal 2021 and $167,328 for fiscal 2020 as compared to $214,828 during fiscal 2019. The Company's personnel are paid out of the Canadian corporate office.
Other
Other general and administrative expenses incurred during fiscal 2021 include rent expense of $59,526 (2020 - $55,431 and 2019 - $90,761); shareholder information expenses of $16,795 (2020 - $15,918 and 2019 - $21,875) and other office expenses of $19,442 (2020 - $14,641 and 2019 - $15,403).
Stock-based compensation expense
Stock-based compensation expense was $nil for fiscal 2021 as compared to $nil and $41,227, respectively for fiscals 2020 and 2019, due to the expense recorded on the stock options issued in 2019.
Foreign exchange loss / gain
The Company recorded a foreign exchange gain of $114 during fiscal 2021 compared to a foreign exchange loss of $8,634 during fiscal 2020 and a foreign exchange loss of $538 during fiscal 2019, due to fluctuations in the value of the United States dollar relative to the Canadian dollar.
Realized loss on disposal of investment in shares
The realized loss on disposal of investment in shares was $120,809 for fiscal 2019 (as compared to $nil and $nil, respectively for fiscals 2021 and 2020) and was as a result of the sale of the Savannah shares during fiscal 2019.
Gain on settlement
The gain on settlement of $300,000 related to the settlement with Savannah with respect to the deferred consideration payable to the Company from the disposal of its Oman properties and the value of the said Savannah shares received during fiscal 2019 pursuant to this settlement (fiscals 2021 and 2020 - $nil and $nil, respectively).
Canadian dollar common share purchase warrants
The gain on Canadian dollar common share purchase warrants was $nil during fiscals 2021 and 2020 compared to a gain of $59,740 during fiscal 2019. This gain was related to the fair value adjustments for the derivative instruments.
Writeback of accounts payable and accrued liabilities
The Company recorded a gain of $334,014 during fiscal 2021 as a result of a write-back of certain accounts payable and accrued liabilities (as compared to $nil and $nil, respectively for fiscals 2020 and 2019.
Other income
The Company recognized other income of $30,110 during fiscal 2020, compared to $nil and $nil, respectively, for fiscals 2021 and 2019. During fiscal 2020, the Company qualified for, and obtained, an amount of $30,110 under the Canada Emergency Wage Subsidy (CEWS) program offered by the Canadian government due to the COVID-19 pandemic.
Selected Annual Information
The following financial data is derived from the Company's Annual Financial Statements for each of the three most recently completed financial years. This data has been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
| 2021 $ |
2020 $ |
2019 $ |
|||||||
| Net income (loss) and comprehensive income (loss) | $ | 21,194 | $ | (301,085 | ) | $ | (295,868 | ) | |
| Net income (loss) and comprehensive income (loss) per share | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | |
| Total assets | $ | 20,101 | $ | 16,449 | $ | 183,352 | |||
| Total current liabilities | $ | 804,974 | $ | 823,413 | $ | 713,413 | |||
| Total non-current liabilities | $ | 25,079 | $ | 24,182 | $ | - |
For fiscal 2021, the Company had net income and comprehensive income of $21,194 compared to a net loss and comprehensive loss of $301,085 in fiscal 2020. The difference is mainly due to the writeback of accounts payable and accrued liabilities of $334,014 during fiscal 2021.
For fiscal 2020, the Company had a net loss and comprehensive loss of $301,085 compared to a net loss and comprehensive loss of $295,868 in fiscal 2019. The difference is mainly due to lower management and consulting fees, general and administrative expenses and stock-based compensation expense during fiscal 2020 as compared to fiscal 2019 being offset by the gain on settlement during fiscal 2019 and a lower gain on common share purchase warrants.
For fiscal 2019, the Company had a net loss and comprehensive loss of $295,868 compared to a net loss and comprehensive loss of $40,742 in fiscal 2018. The difference is mainly due to higher general and administrative expenses and stock-based compensation expense during fiscal 2019 as compared to fiscal 2018 being offset by the gain on settlement during fiscal 2019 and a lower gain on common share purchase warrants.
Summary of Quarterly Results
The following table sets out certain consolidated financial information of the Company for each of the last eight quarters, from the first quarter of fiscal 2020 to the fourth quarter of fiscal 2021. This financial information has been prepared in accordance with US Generally Accepted Accounting Principles ("US GAAP"). The Company's presentation and functional currency is the United States dollar.
| 2021 | 2021 | 2021 | 2021 | |||||||||
| 4th Quarter | 3nd Quarter |
2nd Quarter | 1st Quarter | |||||||||
| Net (loss) income | $ | (80,083 | ) | $ | (44,679 | ) | $ | (121,716 | ) | $ | 267,672 | |
| Net (loss) income per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.01 | |
| 2020 | 2020 | 2020 | 2020 | |||||||||
| 4th Quarter | 3nd Quarter | 2nd Quarter | 1st Quarter | |||||||||
| Net loss | $ | (83,525 | ) | $ | (63,146 | ) | $ | (99,186 | ) | $ | (55,228 | ) |
| Net loss per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
The Company reported a net loss of $80,083 during the fourth quarter of 2021 compared to a net loss of $44,679 in the third quarter of 2021. The increase in net loss for the fourth quarter of 2021 was mainly due to an increase in professional fees of $21,199 and a foreign exchange loss of $14,482 during the fourth quarter of 2021 as compared to the third quarter of 2021.
The Company reported a net loss of $44,679 during the third quarter of 2021 compared to a net loss of $121,716 in the second quarter of 2021. The decrease in net loss was mainly due to a reduction in professional fees of $26,567, a decrease in office expenses of $15,415, a decrease of $11,159 in shareholder information expenses, as well as a foreign exchange gain of $12,177 during the third quarter of 2021 as compared to the second quarter of 2021.
The Company reported a net loss of $121,716 during the second quarter of 2021 compared to a net income of $267,672 in the first quarter of 2021, mostly due to regular course of business expenses for the second quarter of 2021. The increase in net loss was mainly due to an increase in professional fees of $29,573, and an increase of $14,573 in shareholder information expenses during the second quarter of 2021 as compared to first quarter of 2021 where the Company also recorded a write-back of certain account payables and accrued liabilities of $334,014.
The Company reported net income of $267,672 during the first quarter of 2021 compared to a net loss of $83,525 during the fourth quarter of 2020. The net income in the first quarter of 2021 was mainly due a gain of $334,014 recorded in relation to a write-back of certain accounts payable and accrued liabilities offset by lower professional fees (decrease of $15,594) and general and administrative expenses (decrease of $3,927) incurred during the first quarter of 2021 compared to the fourth quarter of 2020.
The Company reported a net loss of $83,525 during the fourth quarter of 2020 compared to net loss of $63,146 during the third quarter of 2020. The higher net loss in the fourth quarter was mainly due to higher professional fees of $19,284 incurred during the fourth quarter of 2020 compared to $1,662 during the third quarter of 2020.
The Company reported a net loss of $63,146 during the third quarter of 2020 compared to a net loss of $99,186 during the second quarter of 2020. The decrease in the net loss was related to lower professional fess of $1,662 during the third quarter of 2020 compared to $32,341 during the second quarter of 2020 being offset by an increase in employee benefits of $52,039 in the third quarter of 2020 compared to $36,363 during the second quarter of 2020. In addition, general and administrative expenses were $16,924 in the third quarter compared to $44,094 in the second quarter mostly due to additional shareholder information expenses in the second quarter.
The Company reported a net loss of $99,186 during the second quarter of 2020 compared to a net loss of $55,228 during the first quarter of 2020. The increase in the net loss was related to higher professional fees of $32,341 during the second quarter of 2020 compared to $3,587 during the first quarter of 2020 being offset by other income of $18,660 in the second quarter of 2020 compared to $nil during the first quarter of 2020. As well, general and administrative expenses were $80,457 in the second quarter compared to $51,418 in the first quarter, with the increase mainly attributed to additional shareholder information, office and promotional expenses.
Liquidity and Capital Resources
The Company has historically relied primarily on equity financings to fund its activities. Although the Company has been successful in completing equity financings in the past, there is no assurance that the Company will secure the necessary financings in the future.
The Company's cash balance at December 31, 2021 was $4,085 as compared to $793 at December 31, 2020. The increase was due to $3,292 of cash generated by operating activities during the year ended December 31, 2021.
In May 2019, the Company closed a non-brokered private placement of 5,000,000 common shares of the Company at a price of Cdn$0.05 per share for gross proceeds of Cdn$250,000 (US$187,125). Mr. Kondrat purchased 3,000,000 of the said shares.
Reference is also made to the disclosure under "General" above with respect to the Settlement Agreement entered into by Gentor with Savannah in June 2019 relating to the settlement of certain deferred consideration payable to Gentor.
The Company expects to raise additional funds through additional offerings of its equity securities to funds its activities. However, there is no assurance that such financing will be available on acceptable terms, if at all. If the Company raises additional funds by issuing additional equity, the ownership percentages of existing shareholders will be reduced and the securities that the Company may issue in the future may have rights, preferences or privileges senior to those of the current holders of the Company's common shares. Such securities may also be issued at a discount to the market price of the Company's common shares, resulting in possible further dilution to the book value per share of common shares. If the Company is unable to raise sufficient funds through equity offerings, the Company may need to sell an interest in any property held by it. There can be no assurance the Company would be successful in selling any such property.
Outstanding Share Data
The authorized share capital of the Company consists of 500,000,000 common shares, with a par value of $0.0008 per share. As of April 27, 2022, the Company had outstanding 38,906,742 common shares and 1,040,000 stock options.
Related Party Transactions
As of December 31, 2021, an amount of $359,938 (December 31, 2020 - $258,032) was owed to Arnold Kondrat, a director, Chief Executive Officer and President of the Company, which includes both salary and management fees in arrears and advances.
As of December 31, 2021, an amount of $228,439 was owed to Loncor Gold Inc. (December 31, 2020 - $37,449), a company with common directors, in relation to the payment of common general and administrative expenses.
All of the above related party transactions occurred in the normal course of operations and are unsecured, non-interest bearing, due on demand, and measured at the exchange amount as determined by management.
Accounting Pronouncements Not Yet Effective
Certain new standards, interpretations, amendments and improvements to existing standards were issued that are mandatory for accounting periods beginning on or after January 1, 2021. For the year ended December 31, 2021, there were no updates that are applicable or are consequential to the Company.
Significant Accounting Estimates
The preparation of the Company's Annual Financial Statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the Company's Annual Financial Statements include the following:
Asset Impairment
The Company monitors events and changes in circumstances, which may require an assessment of the recoverability of its long-lived assets. If required, the Company would assess recoverability using estimated undiscounted future operating cash flows of the related asset or asset grouping. Assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the carrying amount of an asset is not recoverable, an impairment loss is recognized in operations, measured by comparing the carrying amount of the asset to its fair value. No impairment losses or reversals of previously recognized impairment losses were recorded during fiscals 2021, 2020 or 2019.
Income taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes, which require the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, and for the tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the enacted 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 deferred taxes for the estimated future tax effects attributable to deductible temporary differences and loss carryforwards when realization is more likely than not. The deferred taxes for the Company amount to $nil as at December 31, 2021.
Accounting Standards Codification 740, "Income Taxes" requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not of being sustained upon examination and on the technical merits of the position. At December 31, 2021 the Company has no material unrecognized tax benefits. The Company does not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.
Stock-based compensation
The Company has a stock option plan, which is described in note 9(c) of the Annual Financial Statements. The Company uses the fair value method of accounting for stock options granted to directors, officers and employees whereby the fair value of options granted measured at the grant date is recorded as a compensation expense in the financial statements on a straight-line basis over the requisite employee service period (usually the vesting period). Compensation expense on stock options granted to non-employees is measured at the earlier of the completion of performance and the date the options are vested using the fair value method and is recorded as an expense in the same period as if the Company had paid cash for the goods or services received. Any consideration paid by directors, officers, employees and consultants on exercise of stock options or purchase of shares is credited to capital stock. Shares are issued from treasury upon the exercise of stock options. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. As at December 31, 2021, the Company estimates that all the outstanding options previously granted will vest.
Fair value of financial instruments
The Company follows "Accounting Standards Codification" ASC 820-10 Fair Value Measurements and Disclosures for its financial assets and financial liabilities that are re-measured and reported at fair value at each reporting period.
Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.
At December 31, 2021 and December 31, 2020, the carrying values of the Company's cash, amounts due from and to related parties, advances receivable, accounts payable and accrued liabilities approximate fair value.
Financial Risk Management
Foreign Currency Risk
Foreign currency risk is the risk that a variation in exchange rates between the United States dollar and other foreign currencies will affect the Company's operations and financial results. A portion of the Company's transactions are denominated in Canadian dollars. The Company is also exposed to the impact of currency fluctuations on its monetary assets and liabilities. Significant foreign currency gains or losses are reflected as a separate component of the consolidated statement of income (loss) and comprehensive income (loss). The Company has not used derivative instruments to reduce its exposure to foreign currency risk.
The following table indicates the impact of foreign currency risk on net working capital as at December 31, 2021. The table below also provides a sensitivity analysis of a 10 percent strengthening of the US dollar against the Canadian dollar which would have increased (decreased) the Company's net loss by the amounts shown in the table below. A 10 percent weakening of the US dollar against the Canadian dollar would have had the equal but opposite effect as at December 31, 2021.
| Canadian | |||
| Dollars | |||
| Cash | $ | 3,899 | |
| Accounts payable | (138,709 | ) | |
| Loan | (40,000 | ) | |
| Total foreign currency working capital | (174,810 | ) | |
| US$ exchange rate at December 31, 2021 | 0.7888 | ||
| Total foreign currency net working capital in US$ | (137,890 | ) | |
| Impact of a 10% strengthening of the US$ on net income | (13,789 | ) |
Market Risk
Market risk is the potential for financial loss from adverse changes in underlying market factors, including foreign-exchange rates, commodity prices and stock-based compensation costs.
Other Risks and Uncertainties
Since December 31, 2019, the COVID-19 pandemic has caused a widespread health crisis that has affected economies and financial markets around the world resulting in an economic downturn. In response to the outbreak, governmental authorities in Canada and internationally have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals, including unprecedented business, employment and economic disruptions. The continued spread of COVID-19 nationally and globally could have an adverse impact on the Company's business, operations and financial results, as well as a deterioration of general economic conditions including a possible national or global recession. Due to the speed with which the COVID-19 situation continues to develop and the uncertainty of its magnitude, outcome and duration, it is not possible to estimate its impact on the Company's business, operations or financial results, including the Company's ability to secure financing; however, the impact could be material.
Effective at the end of 2017, the Company relinquished its Karaburun project in Turkey (which was the Company's only project). The Company is currently evaluating new business opportunities. As the Company currently does not have any commercial operations and has no material assets, an investment in the Company's common shares is considered highly speculative and involves a very high degree of risk. While the Company is currently evaluating new business opportunities, the Company has only limited funds with which to identify and evaluate a potential asset or business for acquisition or participation, and no assurance can be given that a suitable asset or business will be identified and acquired on suitable terms (the continued spread of COVID-19 may also adversely impact the ability of the Company to identify and acquire a suitable asset or business). Further, even if a proposed transaction is identified, there can be no assurance that the Company will be able to complete the transaction. The transaction may be financed in whole, or in part, by the issuance of additional securities of the Company and this may result in further dilution to investors, which dilution may be significant, and which may also result in a change of control of the Company.
Reference is made to the Company's annual report on Form 20-F for additional risk factor disclosure (a copy of such document can be obtained from SEDAR at www.sedar.com and EDGAR at www.sec.gov).
FORM 52-109FV1
CERTIFICATION OF ANNUAL FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Arnold T. Kondrat, Chief Executive Officer and President of Gentor Resources Inc., certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Gentor Resources Inc. (the "issuer") for the financial year ended December 31, 2021.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
Date: April 27, 2022.
(signed) "Arnold T. Kondrat"
Name: Arnold T. Kondrat
Title: Chief Executive Officer and President
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
FORM 52-109FV1
CERTIFICATION OF ANNUAL FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Donat K. Madilo, Chief Financial Officer of Gentor Resources Inc., certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Gentor Resources Inc. (the "issuer") for the financial year ended December 31, 2021.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
Date: April 27, 2022.
(signed) "Donat K. Madilo"
Name: Donat K. Madilo
Title: Chief Financial Officer
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.