Natural Resource Holdings, Inc 10-Q for FY2022 Q1
Natural Resource Holdings, Inc. (NRHI)
About this 10-Q
Natural Resource Holdings, Inc filed this 10-Q on September 14, 2021, covering the quarter ended July 31, 2021 (FY2022 Q1).
Headline figures
Quarter ended July 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $7130
- compared with net income of $1261 a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Mark One
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to _______
Commission File No.
(Exact name of registrant as specified in its charter) |
| 5960 |
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(State or Other Jurisdiction of Incorporation or Organization) |
| (Primary Standard Industrial Classification Number) |
| (IRS Employer Identification Number) |
boxxyinc@protonmail.com
(Address and telephone number of principal executive offices)
Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) | Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A
Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BOXXY INC.
CONDENSED BALANCE SHEETS
AS OF JULY 31, 2021 AND APRIL 30, 2021
(Unaudited)
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ASSETS |
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Current Assets |
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Total Current Assets |
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Mining Property Rights |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Accrued interest - related party |
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Loan from director |
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Total Current Liabilities |
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Loan payable - related party |
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Loan payable |
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Total Liabilities |
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Stockholders’ Deficit |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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BOXXY INC.
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020
(Unaudited)
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| July 31, |
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| 2020 |
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OPERATING EXPENSES |
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General and administrative expenses |
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Total Operating Expenses |
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Loss from operations |
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OTHER INCOME (EXPENSES) |
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Interest expense |
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Interest expense - related party |
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Gain on extinguishment of debt |
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| 4,184 |
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Other income (expense), net |
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Income (Loss) before income taxes |
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Provision for income taxes |
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NET INCOME (LOSS) |
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NET INCOME (LOSS) PER SHARE: BASIC AND DILUTED |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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BOXXY INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020
(Unaudited)
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| Number of Shares |
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| Paid-in Capital |
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| Accumulated Deficit |
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Balance - April 30, 2021 |
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Net loss |
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Balance - July 31, 2021 |
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Balance - April 30, 2020 |
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Net income |
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Balance - July 31, 2020 |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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BOXXY INC.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020
(Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income (loss) |
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Adjustments to reconcile net loss to net cash from operating activities: |
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Gain on extinguishment of debt |
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Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Net cash used in operating activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issuance of promissory note from director |
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Net cash provided by financing activities |
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Net change in cash and cash equivalents |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period |
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Supplemental Cash Flow Disclosures |
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Cash paid for interest |
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Cash paid for income taxes |
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Supplemental Disclosures of Non-Cash Investing and Financing Activities |
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Issuance of promissory note - related party |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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BOXXY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JULY 31, 2021
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Boxxy Inc. (the “Company”) was incorporated in Nevada on April 19, 2016. We were a development stage company that intended to develop an online beauty sample subscription service.
On November 26, 2020, the Company completed an acquisition of working interests in certain mining properties as discussed in Note 4 below.
We are currently focusing on mining business.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2021 are not necessarily indicative of the results that may be expected for the year ending April 30, 2022. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2020 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended April 30, 2021 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on July 29, 2021.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
ASC 820 “Fair Value Measurements and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
Level 1: defined as observable inputs such as quoted prices in active markets;
Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying value of accounts payable and accrued liabilities, accrued interest, current portion of long-term debt, other party loan and loan from director approximates its fair value due to their short-term maturity.
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Mining Property
Costs of lease, exploration, carrying and retaining unproven mineral properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.
ASC 930-805, “Extractive Activities-Mining: Business Combinations” states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights which are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.
ASC 930-805 provides that in measuring the fair value of mineral assets, an acquirer should take into account both:
(a) The value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining the fair value of the assets.
(b) The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants.
As of July 31, 2021, the Company has capitalized a total of $
Impairment
The Company assesses the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of long-lived assets”, and evaluates its carrying value under ASC 930-360, “Extractive Activities - Mining”, annually. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral properties. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral properties over its estimated fair value.
Based on the Company’s evaluation, no impairment has been recorded on the unproven mining property for the three months ended July 31, 2021.
Revenue Recognition
The Company recognized revenue from the sales of mineral products produced from mining operations in accordance with ASC 606,”Revenue Recognition” following the five steps procedure:
Step 1: The contract has been signed by both parties or when the invoice has been generated and provided to the customer
Step 2: The performance obligations are stated or implied in the contract or invoice
Step 3: The transaction price has been identified in the contract or invoice
Step 4: The Company has allocated the transaction price to the performance obligations pursuant to the contract or invoice
Step 5: The Company satisfied the performance obligations when the mineral products delivered to the purchaser
| 8 |
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The Company recognized revenue from the royalty revenue in accordance with ASC 606,”Revenue Recognition” following the five steps procedure:
Step 1: The contract has been signed by both parties for royalty fees
Step 2: The performance obligations are stated or implied in the contract
Step 3: The transaction price has been identified in the contract
Step 4: The Company has allocated the transaction price to the performance obligations pursuant to the contract
Step 5: The Company has satisfied the performance obligations at the same period as the sales that generate the royalty payment
Asset Retirement Obligations
The Company records a liability for asset retirement obligations (“ARO”) associated with its mining properties when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of mining properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value.
Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the mining property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.
Income Tax
The Company is governed by the Income Tax Law of the U.S. Internal Revenue Code. ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions should be recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period.
Related Party Balances and Transactions
The Company follows FASB ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transaction. (See Note 5)
Basic and Diluted Income (Loss) Per Share
The Company computes income (loss) per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of July 31, 2021 and April 30, 2021, the Company has no dilutive instruments.
Recent accounting pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on the Company’s financial statements.
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
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NOTE 3 – GOING CONCERN
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit of $
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – MINING PROPERTY
On November 26, 2020, the Company entered into an Asset Purchase Agreement with a vendor to acquire undivided
NOTE 5 – RELATED PARTY TRANSACTIONS
The Company has received capital from the director of the Company to pay for the Company expenses.
On July 1, 2021, the Company issued a promissory note of $
On July 31, 2021, the Company issued a promissory note of $
During the three months ended July 31, 2021, the accrued interest on the notes was $
As of July 31, 2021, the loan payable to the director was $
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NOTE 6 – LOAN PAYABLE
The Company has outstanding long-term loan payable of $
Interest expense was $
NOTE 7 – STOCKHOLDER’S EQUITY
The Company has
As of July 31, 2021 and April 30, 2021, the Company had
NOTE 8 – RISK AND UNCERTAINTIES
In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no retroactive material adverse impacts on the Company’s results of operations and financial position at July 31, 2021. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained.
NOTE 9 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to July 31, 2021 to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
GENERAL
We were incorporated in the State of Nevada on April 16, 2016. In December 2020, we acquired several gold mining claims in Canada as we have switched our focus to the mining industry. We plan to begin exploration on the properties later in 2021.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees other than our officer and director. We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any officers, directors or employees.
Results of Operations
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
The following summary of our operations should be read in conjunction with our unaudited condensed financial statements for the three months ended July 31, 2021 and 2020, which are included herein.
Three Months Ended July 31, 2021 and 2020
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Operating expenses |
| $ | (6,772 | ) |
| $ | (2,661 | ) |
| $ | (4,111 | ) |
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| 154 | % |
Other income (expenses) |
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| 3,922 |
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| (4,280 | ) |
| (109 | %) | |
Net Income (Loss) |
| $ | (7,130 | ) |
| $ | 1,261 |
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| $ | (8,391 | ) |
| (665 | %) | |
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During the three months ended July 31, 2021 and 2020, the Company did not earn any revenue.
Net loss for the three months ended July 31, 2021 was $7,130 compared to net income of $1,261 for the three months ended July 31, 2020. The decrease in net income during the three months ended July 31, 2021 was due to an increase in operating expenses and a decrease in other income.
Liquidity and Capital Resources
Working Capital
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| July 31, |
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| April 30, |
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| Changes |
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| 2021 |
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| 2021 |
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| Amount |
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| % |
| ||||
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| ||||
Current Assets |
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 0 | % |
Current Liabilities |
| $ | 45,508 |
|
| $ | 195,113 |
|
| $ | (149,605 | ) |
| (77 | %) | |
Working Capital Deficiency |
| $ | (45,508 | ) |
| $ | (195,113 | ) |
| $ | 149,605 |
|
| (77 | %) | |
Our total current liabilities as of July 31, 2021 were $45,508 as compared to total current liabilities of $195,113 as of April 30, 2021. Our working capital deficiency as of July 31, 2021 was $45,508 as compared $195,113 as of April 30, 2021. The decrease in current liabilities and working capital deficiency were primarily due to a decrease in loan from director of $153,913 with the issuance of promissory note of $156,735 under long-term liabilities during the three months ended July 31, 2021.
Cash Flows
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| Three Months Ended |
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| July 31, |
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| Changes |
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| 2021 |
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| 2020 |
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| Amount |
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| % |
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Cash flows used in operating activities |
| $ | (2,822 | ) |
| $ | (50 | ) |
| $ | (2,772 | ) |
|
| 5,544 | % |
Cash flows provided by financing activities |
|
| 2,822 |
|
|
| 50 |
|
|
| 2,772 |
|
|
| 5,544 | % |
Net changes in cash |
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| - |
|
Cash Flows from Operating Activities
Net cash used in operating activities was $2,822 for the three months ended July 31, 2021 compared with $50 during the three months ended July 31, 2020.
During the three months ended July 31, 2021, the net cash used in operating activities was attributed to net loss of $7,130, decreased by an increase in accounts payable and accrued liabilities of $3,949 and an increase in accrued interest of $359.
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| Table of Contents |
During the three months ended July 31, 2020, the net cash used in operating activities was attributed to net income of $1,261, increased by an increase in accounts payable and accrued liabilities of $2,611 and an increase in accrued interest of $262, and was reduced by gain on extinguishment of debt of $4,184.
Cash Flows from Investing Activities
There were not investing activities during the three months ended July 31, 2021 and 2020.
Cash Flows from Financing Activities
During the three months ended July 31, 2021, net cash from financing activities was $2,822 derived from director loan compared to $50 during the three months ended July 31, 2020.
Going Concern
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit of $111,016, and working capital deficit of $45,508 at July 31, 2021.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of software; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
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| Table of Contents |
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The preparation of financial statements in accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A change in managements’ estimates or assumptions could have a material impact on our financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Our financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Mining Property
Costs of lease, exploration, carrying and retaining unproven mineral properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.
ASC 930-805, “Extractive Activities-Mining: Business Combinations” states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights which are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.
ASC 930-805 provides that in measuring the fair value of mineral assets, an acquirer should take into account both:
(a) The value beyond proven and probable reserves (“VBPP”) to the extent that a market participant would include VBPP in determining the fair value of the assets.
(b) The effects of anticipated fluctuations in the future market price of minerals in a manner that is consistent with the expectations of market participants.
As of July 31, 2021, the Company has capitalized a total of $125,000 in mining property rights.
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Impairment
The Company assesses the carrying costs of the capitalized mineral properties for impairment under ASC 360-10, “Impairment of long-lived assets”, and evaluates its carrying value under ASC 930-360, “Extractive Activities - Mining”, annually. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral properties. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral properties over its estimated fair value.
Based on the Company’s evaluation, no impairment has been recorded on the unproven mining property for the nine months ended July 31, 2021.
Revenue Recognition
The Company recognized revenue from the sales of mineral products produced from mining operations in accordance with ASC 606,”Revenue Recognition” following the five steps procedure:
Step 1: The contract has been signed by both parties or when the invoice has been generated and provided to the customer
Step 2: The performance obligations are stated or implied in the contract or invoice
Step 3: The transaction price has been identified in the contract or invoice
Step 4: The Company has allocated the transaction price to the performance obligations pursuant to the contract or invoice
Step 5: The Company satisfied the performance obligations when the mineral products delivered to the purchaser
The Company recognized revenue from the royalty revenue in accordance with ASC 606,”Revenue Recognition” following the five steps procedure:
Step 1: The contract has been signed by both parties for royalty fees
Step 2: The performance obligations are stated or implied in the contract
Step 3: The transaction price has been identified in the contract
Step 4: The Company has allocated the transaction price to the performance obligations pursuant to the contract
Step 5: The Company has satisfied the performance obligations at the same period as the sales that generate the royalty payment
Asset Retirement Obligations
The Company records a liability for asset retirement obligations (“ARO”) associated with its mining properties when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of mining properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value.
Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the mining property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. Our company’s management believes that these recent pronouncements will not have a material effect on our financial statements.
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| Table of Contents |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (our principal executive officer, principal financial officer and principal accounting officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer has concluded that as of such date, our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 17 |
| Table of Contents |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None
Item 6. Exhibits
| Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act | |
|
|
|
31.2 |
| Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act |
|
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| 18 |
| Table of Contents |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BOXXY INC. |
| ||
|
|
| |
Dated: September 14, 2021 | By: | /s/ Lian Yao Bin |
|
|
| Lian Yao Bin, President and Chief Executive Officer and Chief Financial Officer | |
19 |
EXHIBIT 31.1
CERTIFICATION
I, Lian Yao Bin, Chief Executive Officer and Chief Financial Officer of Boxxy Inc., certify that:
| 1. | I have reviewed this Form 10-Q of Boxxy Inc. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
| d) | disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: September 14, 2021
| /s/ Lian Yao Bin |
|
| Lian Yao Bin |
|
| President, Chief Executive Officer, Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Boxxy Inc. (the "Company") on Form 10-Q for the period ended July 31, 2021 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: September 14, 2021
| /s/ Lian Yao Bin |
|
| Lian Yao Bin |
|
| President, Chief Executive Officer, Chief Financial Officer |
|