CANADA CARBON INC.
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED-PREPARED BY MANAGEMENT)
These financial statements have not been reviewed by the Company's auditor.
NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements of Canada Carbon Inc. for the three and six month period ended June 30, 2020 have been prepared by the management of the Company and approved by the Company's Audit Committee and the Company's Board of Directors. Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying condensed interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these condensed interim financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of the interim financial statements by an entity's auditor.
CANADA CARBON INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION (EXPRESSED IN CANADIAN DOLLARS)
AS AT
June 30, | December 31, | |
2020 | 2019 | |
$ | $ | |
ASSETS | ||
Current | ||
Cash and cash equivalents (Note 7) | 204,897 | 315,551 |
Receivables (Note 8) | 11,303 | 6,605 |
Prepaid expenses (Note 9) | 11,882 | 19,399 |
Total current assets | 228,082 | 341,555 |
Exploration and evaluation assets (Note 10) | 6,748,710 | 6,663,323 |
Drilling and reclamation deposits (Note 11) | 5,000 | 5,000 |
Total assets | 6,981,792 | 7,009,878 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current | ||
Accounts payable and accrued liabilities (Note 13) | 889,013 | 1,171,326 |
Flow through liability | - | 5,837 |
Restoration, rehabilitation and environmental obligations (Note 12) | 10,000 | 10,000 |
Total current liabilities | 899,013 | 1,187,163 |
Restoration, rehabilitation and environmental obligations (Note 12) | 30,000 | 30,000 |
Total liabilities | 929,013 | 1,217,163 |
Shareholders' equity | ||
Capital stock (Note 14) | 33,076,835 | 32,362,228 |
Reserves | 849,942 | 970,237 |
Deficit | (27,873,998) | (27,539,750) |
Total shareholders' equity | 6,052,779 | 5,792,715 |
Total liabilities and shareholders' equity | 6,981,792 | 7,009,878 |
Nature and continuance of operations (Note 1)
Commitments and contingencies (Note 17)
On behalf of the Board:
"R. B. Duncan" | , Director | "Greg Lipton" | , Director |
See accompanying notes to the financial statements.
CANADA CARBON INC.
UNAUDITED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30
Three months | Three months | Six months | Six months | |||||
ended June 30, | ended June 30, | ended June 30, | ended June 30, | |||||
2020 | 2019 | 2020 | 2019 | |||||
EXPENSES | ||||||||
Management fees (Note 13) | $ | 66,500 | $ | 71,500 | $ | 138,000 | $ | 143,000 |
Consulting fees | - | 3,200 | 400 | 5,478 | ||||
Professional fees (Note 13) | 36,272 | 84,801 | 143,121 | 210,865 | ||||
Office, rent and miscellaneous | 7,050 | 6,552 | 24,320 | 18,629 | ||||
Shareholder communications and promotion | 1,625 | 28,476 | 20,108 | 39,479 | ||||
Share based compensation (Note 14) | 271 | 2,164 | 812 | (2,106) | ||||
Transfer agent and filing fees | 5,205 | 4,713 | 12,810 | 12,538 | ||||
Travel and accommodation | - | - | - | 2,023 | ||||
Loss before other items | 116,923 | 201,406 | 339,571 | 429,906 | ||||
OTHER ITEMS | ||||||||
Foreign exchange loss | 874 | 94 | 1,051 | 305 | ||||
Investment income | (26) | (764) | (537) | (1,736) | ||||
Flow-through liability (recovery) | - | - | (5,837) | - | ||||
Net loss and comprehensive loss for the period | $ | 117,771 | $ | 200,736 | $ | 334,248 | $ | 428,475 |
Basic and diluted net loss per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
Weighted average number of common shares | 116,729,074 | 109,958,305 | 115,266,162 | 109,774,709 | ||||
outstanding | ||||||||
See accompanying notes to the financial statements.
CANADA CARBON INC.
UNAUDITED STATEMENTS OF CASH FLOWS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE SIX MONTHS ENDED JUNE 30
2020 | 2019 |
$ | $ |
CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) for the period
Items not affecting cash:
Share-based compensation
Flow-through liability (recovery)
Unrealized foreign exchange (gain) loss
Change in non-cash working capital items: (Increase) decrease in receivables Decrease in prepaid expenses
(Decrease) increase in accounts payable and accrued liabilities Net cash flows from operating activities
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from private placements
Share issue costs
Proceeds from warrant and option exercises
Net cash flows from financing activities
CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation assets
Net cash flows from investing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period (Note 7)
Supplemental disclosure with respect to cash flows (Note 15)
(334,248) | (428,475) |
812 | (2,106) |
(5,837) | |
(296) | 245 |
(339,569) | (430,336) |
(4,698) | 12,000 |
7,517 | 3,615 |
(269,952) | 38,348 |
(606,702) | (376,373) |
- | 280,000 |
- | (13,716) |
593,500 | - |
593,500 | 266,284 |
(97,748) | (52,130) |
(97,748) | (52,130) |
296 | (245) |
(110,654) | (162,464) |
315,551 | 604,524 |
204,897 | 442,060 |
See accompanying notes to the financial statements.
CANADA CARBON INC.
UNAUDITED STATEMENTS OF CHANGES IN EQUITY (EXPRESSED IN CANADIAN DOLLARS)
Reserves | ||||||
Equity settled share- | Warrant | |||||
Number of | Capital Stock | based payments reserve | reserve | Deficit | Total | |
Shares | $ | $ | $ | $ | $ | |
Balance December 31, 2018 | 109,589,074 | 32,175,376 | 732,215 | 334,176 | (26,918,615) | 6,323,152 |
Issued pursuant to private placement | 2,800,000 | 194,494 | - | 85,506 | - | 280,000 |
Issue costs | - | (9,642) | - | (4,239) | - | (13,881) |
Share-based compensation | - | - | (2,106) | - | - | (2,106) |
Net loss and comprehensive loss for the six months | - | - | - | - | (428,475) | (428,475) |
Balance June 30, 2019 | 112,389,074 | 32,360,228 | 730,109 | 415,443 | (27,347,090) | 6,158,690 |
Issued pursuant to surface access agreement | 40,000 | 2,000 | - | - | - | 2,000 |
Expiry of options | - | - | (252,753) | - | 252,753 | - |
Share-based compensation | - | - | 77,438 | - | - | 77,438 |
Net loss and comprehensive loss for the six months | - | - | - | - | (445,413) | (445,413) |
Balance December 31, 2019 | 112,429,074 | 32,362,228 | 554,794 | 415,443 | (27,539,750) | 5,792,715 |
Exercise of warrants | 4,050,000 | 568,500 | - | - | - | 568,500 |
Fair value of warrants exercised | - | 104,785 | - | (104,785) | - | - |
Exercise of options | 250,000 | 25,000 | - | - | - | 25,000 |
Fair value of options exercised | - | 16,322 | (16,322) | - | - | - |
Stock-based compensation | - | - | 812 | - | - | 812 |
Net loss and comprehensive loss for the six months | - | - | - | - | (334,248) | (334,248) |
Balance, June 30, 2020 | 116,729,074 | 33,076,835 | 539,284 | 310,658 | 27,873,998 | 6,052,779 |
See accompanying notes to the financial statements.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
1. NATURE AND CONTINUANCE OF OPERATIONS
Canada Carbon Inc. (hereafter the "Company") was incorporated in British Columbia on August 13, 1985 and is listed on the TSX Venture Exchange ("TSX-V").
The Company's principal business is the acquisition, exploration and evaluation of mineral properties. In fiscal 2012 the Company positioned itself as a carbon science company focused on graphite. The Company is in the exploration and evaluation stage on its projects and as such, to date, has not generated significant revenues from its operations.
The Company's head office is located at 5213 Durie Road, Mississauga, Ontario, L5M 2C6.
The condensed interim financial statements were approved by the Board of Directors on August 11, 2020.
The Company is in the process of exploring its exploration and evaluation assets. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves, the achievement of profitable production, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. Changes in future conditions could require material write-downs of the carrying values.
Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Property title may be subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, aboriginal claims, and non-compliance with regulatory and environmental requirements. The Company's assets may also be subject to increases in taxes and royalties, renegotiation of contracts and political uncertainty.
The Company's operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company's operations and ability to finance its operations.
These condensed interim financial statements have been prepared with the assumption that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at June 30, 2020, the Company had a working capital deficit of $670,931 and an accumulated deficit of $27,873,998 compared to a working capital deficit of $845,608 and an accumulated deficit of $27,539,750 as at December 31, 2019. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Management believes it will be successful in raising the necessary funding to continue operations in the normal course of operations. These financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
-
STATEMENT OF COMPLIANCE
These condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"), and its interpretations. Accordingly, these condensed interim financial statements do not include all of the information and footnotes required by International Financial Reporting Standards ("IFRS") for complete financial statements for year-end reporting purposes. - BASIS OF PRESENTATION
These condensed interim financial statements have been prepared on a historical cost basis except for financial instruments recorded at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
In the preparation of these condensed interim financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the year. Actual results could differ from these estimates. - SIGNIFICANT ACCOUNTING POLICIES
These condensed interim financial statements should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2019 and were prepared using the same accounting policies, method of computation and presentation as were applied in the annual financial statements for the year ended December 31, 2019, except for the changes noted below.
Adoption of new and amended IFRS pronouncements
Effective January 1, 2020, the Company adopted the new and amended IFRS pronouncement listed below, in accordance with the transitional provisions outlined in the respective standard.
IAS 1 - Presentation of Financial Statements ("IAS 1") and IAS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors ("IAS 8") were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The implementation of these amendments did not have a material effect on the Company's financial statements. - CAPITAL MANAGEMENT
The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of its properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Management considers the
Company's capital structure to primarily consist of the components of shareholders' equity.
The properties in which the Company currently has an interest are in the exploration and evaluation stage; as such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
-
CAPITAL MANAGEMENT (Continued)
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the three and six months ended June 30, 2020. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange
("TSXV") which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months.
As at June 30, 2020, the Company may not be compliant with the policies of the TSXV. The impact of this violation is not known and is ultimately dependent on the discretion of the TSXV. - FINANCIAL RISK FACTORS
There have been no significant changes in the risks, objectives, policies and procedures during the three and six months ended June 30, 2020. The Company's risk exposures and the impact on the Company's financial instruments are summarized below:
Credit risk
The Company's credit risk is primarily attributable to receivables. The receivables primarily relate to sales tax due from the Federal and Provincial Governments. The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to its receivables is remote.
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. All of the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. Additional funding will be required to get the Miller project through the current legal proceedings and the feasibility stage; however, management believes it will be able to obtain the necessary funding.
Market risk
(a) Interest rate risk
The Company has cash balances and no interest-bearing debt, therefore, interest rate risk is minimal.
(b) Foreign currency risk
The majority of the Company's administrative expenditures are transacted in Canadian dollars. The Company funds certain expenses in the United States on a cash call basis using US dollar currency converted from its Canadian dollar bank accounts held in Canada. Management does not hedge its foreign exchange risk. The Company holds negligible cash balances in US dollars.
(c) Price risk
The Company is exposed to price risk with respect to commodity prices. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company.
- Title risk
Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.
Sensitivity analysis
Based on management's knowledge and experience of the financial markets, the Company does not expect material movements in the underlying market risk variables over the next three-month period.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents of the Company are comprised of the following items:
June 30, | December 31, | |||
2020 | 2019 | |||
Cash balances | $ | 204,897 | $ | 98,710 |
Short term money market instruments | - | 216,841 | ||
Total | $ | 204,897 | $ | 315,551 |
The Company's short term money market instruments accrued interest at a rate of 0.25% - 1.25% (2019: 1.25% - 1.35%) per annum and were redeemable at any time without penalty.
8. RECEIVABLES
The receivables balance is comprised of the following items:
June 30, | December 31, | |||
2020 | 2019 | |||
Sales tax due from federal and provincial governments | $ | 11,303 | $ | 6,605 |
Total | $ | 11,303 | $ | 6,605 |
9. PREPAID EXPENSES
The prepaid expense balance is comprised of the following items:
June 30, | December 31, | |||
2020 | 2019 | |||
Insurance | $ | 9,464 | $ | 9,251 |
Investor information/promotion | 2,418 | 2,696 | ||
Consulting and advisory fee | - | 7,452 | ||
Total | $ | 11,882 | $ | 19,399 |
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
10. EXPLORATION AND EVALUATION ASSETS
At June 30, 2020, expenditures incurred on exploration and evaluation assets were as follows:
Acquisition costs:
Balance, beginning of year
Additions during the period
Balance, end of period
Deferred exploration costs: Balance, beginning of year Assays
Field supplies and equipment Surveys and other studies Community consultations Geologists, consultants and other labour Excavation, drilling and transportation Travel, meals and accommodation Admin and other expenses
Additions during the period Balance, end of period Total
Asbury | |||||
Graphite | Miller | ||||
Property, | Property, | June 30, | |||
Quebec | Quebec | 2020 | |||
$ | 654,379 | $ | 385,014 | $ | 1,039,393 |
- | - | - | |||
654,379 | 385,014 | 1,039,393 | |||
554,509 | 5,069,421 | 5,623,930 | |||
- | - | - | |||
- | - | - | |||
- | - | - | |||
- | 5,681 | 5,681 | |||
- | 67,406 | 67,406 | |||
- | 7,764 | 7,764 | |||
- | - | - | |||
- | 4,536 | 4,536 | |||
- | 85,387 | 85,387 | |||
554,509 | 5,154,808 | 5,709,317 | |||
$ | 1,208,888 | $ | 5,539,822 | $ | 6,748,710 |
11. DRILLING AND RECLAMATION DEPOSITS
The following table details the outstanding drilling and reclamation deposits:
Property | June 30, | December 31, | ||
2020 | 2019 | |||
Rare Earth (Note 12) | $ | 5,000 | $ | 5,000 |
Total | $ | 5,000 | $ | 5,000 |
12. RESTORATION, REHABILITATION AND ENVIRONMENTAL OBLIGATIONS
The Company has recorded an obligation of $10,000 for the Rare Earth property. The restoration costs are expected to be incurred in 2021. See Note 11.
The Company has also recorded an obligation of $30,000 for the Miller graphite property to reclaim disturbance caused by the work programs. The restoration costs are expected to be incurred in 2040.
The following is an analysis of the restoration, rehabilitation and environmental obligations: | |||
Balance, December 31, 2018 and 2017 | $ | 45,089 | |
Deductions (Arcadia) | (5,089) | ||
Additions | - | ||
Balance, December 31, 2019 and June 30, 2020 | $ | 40,000 |
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
13. RELATED PARTY TRANSACTIONS
Related parties include the Board of Directors, Executive Officers and any companies owned or controlled by them.
Trading transactions
The Company entered into the following transactions with related parties
Six Months Ended June 30, | ||||||
Nature of transactions | Notes | 2020 | 2019 | |||
R. Bruce Duncan | Management | a | $ | 120,000 | $ | 125,000 |
Directors | Management | b | $ | 18,000 | $ | 18,000 |
Olga Nikitovic | Professional fees | c | $ | 65,000 | $ | 60,000 |
Aird & Berlis | Professional fees | d | $ | 3,018 | $ | 2,192 |
- The fees for R. B. Duncan, CEO, are included in management fees. As at June 30, 2020, $544,583 (2019 - $515,416) was included in accounts payable.
- Fees for independent directors are included in management fees. As at June 30, 2020, $60,000 (2019 - $63,000) was included in accounts payable.
- Fees for Olga Nikitovic, CFO relate to financial management and accounting services which are charged to professional fees. As at June 30, 2020, $262,000 (2019 - $248,000) was included in accounts payable.
- Tom Fenton, Corporate Secretary for the Company is a partner with Aird & Berlis, LLP. Legal fees of $3,018 (2019 - $461) are included in professional fees and $Nil (2019 - $1,731) are included in share issuance costs. As at June 30, 2020, $Nil (2019 - $3,881) was included in accounts payable.
All related party amounts included in accounts payable are unsecured, non-interest bearing and payable on demand.
Compensation of key management personnel
Six months ended June 30 | |||||
Notes | 2020 | 2019 | |||
Salaries | a | $ | 203,000 | $ | 203,000 |
Share-based payments | b | - | - | ||
$ | 203,000 | $ | 203,000 |
- The Company does not pay any health or post-employment benefits. The salaries represent the fees for the CEO, CFO and directors which are included in the transactions above.
- Share-basedpayments include the fair value of options issued for services granted to key management and directors.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
14. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS Capital Stock
The Company has authorized an unlimited number of common shares without par value. As at June 30, 2020, the Company had 116,729,074 common shares outstanding (December 31, 2019 - 112,429,074).
- In February 2020, 250,000 options were exercised for gross proceeds of $25,000.
- In February and March 2020, 4,050,000 warrants were exercised for gross proceeds of $568,500.
Share Purchase Warrants
At June 30, 2020, the following warrants were outstanding.
Exercise | Remaining | Remaining | |||
Price | Number of | contractual life | Currently | contractual life | |
Expiry Date | $ | Warrants | (years) | exercisable | (years) |
April 12, 2021 (i) | 0.30 | 2,500,000 | 0.78 | 2,500,000 | 0.78 |
April 26, 2021 (i) | 0.30 | 3,430,000 | 0.82 | 3,430,000 | 0.82 |
May 11, 2021 | 0.11 | 1,400,000 | 0.86 | 1,400,000 | 0.86 |
December 11, 2021 | 0.18 | 1,400,000 | 1.45 | 1,400,000 | 1.45 |
June 18, 2022 | 0.13 | 1,550,000 | 1.97 | 1,550,000 | 1.97 |
10,280,000 | 1.08 | 10,280,000 | 1.08 |
- The expiry date of 5,930,000 warrants that were to expire in April 2020 was extended by one year to April 2021.
The following is a summary of the warrant transactions for the six months ended June 30, 2020 and the year ended December 31, 2019.
Six months ended | Year ended | |||
June 30, 2020 | December 31, 2019 | |||
Weighted | Weighted | |||
Average | Average | |||
Number of | Exercise Price | Number of | Exercise Price | |
Warrants | $ | Warrants | $ | |
Balance, beginning of period | 14,330,000 | 0.21 | 11,530,000 | 0.22 |
Warrants issued | - | - | 2,800,000 | 0.13 |
Warrants exercised | (4,050,000) | 0.14 | - | - |
Warrants expired | - | - | - | - |
Balance, end of period | 10,280,000 | 0.25 | 14,330,000 | 0.21 |
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
14. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS (Continued)
The following weighted average assumptions were used for the Black-Scholes option pricing model valuation of warrants issued during the six months ended June 30, 2020 and the year ended December 31, 2019.
Six months | ||
ended | Year ended | |
June 30, | December 31, | |
2020 | 2019 | |
Share price | - | $0.07 |
Risk-free interest rate | - | 1.36% |
Expected dividend yield | - | 0.00% |
Expected stock volatility | - | 91% |
Expected warrant life in years | - | 3.0 years |
Stock Options
The Company is authorized to grant to directors, employees and consultants up to 20% of the issued and outstanding capital stock of the Company. Under the plan, the exercise price of each option equals the market price, less any applicable discounts of the Company's stock as calculated on the date of grant. The options can be granted for a maximum term of 5 years.
As at June 30, 2020, the following incentive stock options were outstanding:
Options Outstanding | Options Exercisable | ||||
Weighted | Weighted | ||||
average | average | ||||
Exercise | Number of | remaining | Number of | remaining | |
Price | Options | contractual life | Options | contractual life | |
Expiry Date | $ | Outstanding | (years) | Vested | (years) |
October 30, 2020 | 0.245 | 1,000,000 | 0.33 | 1,000,000 | 0.33 |
August 4, 2022 | 0.19 | 2,100,000 | 2.09 | 2,100,000 | 2.09 |
June 8, 2023 | 0.10 | 650,000 | 2.94 | 650,000 | 2.94 |
November 12, 2023 | 0.15 | 100,000 | 3.37 | 100,000 | 3.37 |
July 18, 2024 | 0.10 | 1,200,000 | 4.05 | 1,200,000 | 4.05 |
5,050,000 | 2.34 | 5,050,000 | 2.34 |
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
14. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS (Continued)
The following is a summary of stock option transactions for the six months ended June 30, 2020 and the year ended December 31, 2019.
Six months ended | Year ended | |||
June 30, 2020 | December 31, 2019 | |||
Weighted | Weighted | |||
Average | Average | |||
Exercise | Exercise | |||
Number of | Price | Number of | Price | |
Options | $ | Options | $ | |
Balance, beginning of period | 5,300,000 | 0.16 | 6,300,000 | 0.19 |
Options granted | - | - | 1,200,000 | 0.10 |
Options exercised | (250,000) | 0.10 | - | - |
Options expired (forfeited) | - | - | (2,200,000) | 0.19 |
Balance end of period | 5,050,000 | 0.17 | 5,300,000 | 0.16 |
Share-Based Compensation
There were no options granted in the six months ended June 30, 2020 and 2019. Share based compensation for the six months ended June 30, 2020 was $812 (2019: $(2,106)) has been charged to share based compensation expense with a corresponding amount being recorded in the equity settled share-based payments reserve.
The following weighted average assumptions were used for the Black-Scholes option pricing model valuation of options granted during the six month ended June 30, 2020 and the year ended December 31, 2019.
Six months ended | Year ended | |
June 30, | December 31, | |
2020 | 2019 | |
Share Price | - | $0.10 |
Risk-free interest rate | - | 1.40% |
Expected dividend yield | - | 0.00% |
Expected stock volatility | - | 77.32% |
Expected option life in years | - | 5.0 years |
15. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Significant non-cash investing and financing transactions for the six months ended June 30, 2020 consisted of:
- A decrease in accrued exploration and evaluation assets of $12,361.
Significant non-cash investing and financing transactions for the six months ended June 30, 2019 consisted of:
- A decrease in accrued exploration and evaluation assets of $27,341.
- An increase in accrued share issuance costs of $165.
CANADA CARBON INC.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
-
SEGMENTED INFORMATION
The Company primarily operates in one reportable operating segment, being the acquisition and exploration of mineral properties in Canada. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent segment amounts. - COMMITMENTS AND CONTINGENCIES
The Company's exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations 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. See Note 12.
The Company entered into employment contracts with its CEO and CFO. The Company is committed to pay $370,000 per annum with respect to these contracts. These contracts contain clauses requiring additional payments of up to $370,000 to be made upon the occurrence of certain events such as change of control. As a triggering event has not taken place, the contingent payments have not been reflected in the financial statements.
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Canada Carbon Inc. published this content on 12 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 September 2020 16:04:06 UTC